<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1996
REGISTRATION NOS.: 2-85148
811-3800
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 14 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
AMENDMENT NO. 15 /X/
-------------------
DEAN WITTER WORLD WIDE
INVESTMENT TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN DECLARATION OF TRUST)
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
SHELDON CURTIS, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
------------------------
COPY TO:
DAVID M. BUTOWSKY, ESQ.
GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
----------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Post-Effective Amendment becomes effective.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
_X_ immediately upon filing pursuant to paragraph (b)
___ on (date) pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)
___ on (date) pursuant to paragraph (a) of rule 485.
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO SECTION (A) (1) OF RULE 24F-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940. THE REGISTRANT HAS FILED THE RULE 24F-2 NOTICE,
FOR ITS FISCAL YEAR ENDED MARCH 31, 1996, WITH THE SECURITIES AND EXCHANGE
COMMISSION ON MAY 3, 1996.
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
-------------------------------------------------------
-------------------------------------------------------
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
CROSS-REFERENCE SHEET
FORM N-1A
<TABLE>
<CAPTION>
ITEM CAPTION
- ----------------------------------------------- -----------------------------------------------------------------------
<S> <C>
PART A PROSPECTUS
1. .......................................... Cover Page
2. .......................................... Prospectus Summary; Summary of Fund Expenses
3. .......................................... Financial Highlights; Performance Information
4. .......................................... Investment Objective and Policies; The Fund and Its Management; Cover
Page; Investment Restrictions; Prospectus Summary; Financial
Highlights
5. .......................................... The Fund and Its Management; Back Cover; Investment Objectives and
Policies
6. .......................................... Dividends, Distributions and Taxes; Additional Information
7. .......................................... Purchase of Fund Shares; Shareholder Services
8. .......................................... Redemptions and Repurchases; Shareholder Services
9. .......................................... Not Applicable
PART B STATEMENT OF ADDITIONAL INFORMATION
10. .......................................... Cover Page
11. .......................................... Table of Contents
12. .......................................... The Fund and Its Management
13. .......................................... Investment Practices and Policies; Investment Restrictions; Portfolio
Transactions and Brokerage
14. .......................................... The Fund and Its Management; Trustees and Officers
15. .......................................... The Fund and Its Management; Trustees and Officers
16. .......................................... The Fund and Its Management; The Distributor; Shareholder Services;
Custodian and Transfer Agent; Independent Accountants
17. .......................................... Portfolio Transactions and Brokerage
18. .......................................... Shares of the Fund
19. .......................................... The Distributor; Redemptions and Repurchases; Financial Statements;
Determination of Net Asset Value; Shareholder Services
20. .......................................... Dividends, Distributions and Taxes; Financial Statements
21. .......................................... The Distributor
22. .......................................... Performance Information
23. .......................................... Experts; Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
PROSPECTUS
MAY 29, 1996
Dean Witter World Wide Investment Trust (the "Fund") is an
open-end diversified management investment company whose investment objective is
total return on its assets primarily through long-term capital growth and to a
lesser extent from income. The Fund will seek to achieve such objective through
investments in all types of common stocks and equivalents, preferred stocks and
bonds and other debt obligations of domestic and foreign companies and
governments and international organizations.
Shares of the Fund are continuously offered at net asset value
without the imposition of a sales charge. However, redemptions and/or
repurchases are subject in most cases to a contingent deferred sales charge,
scaled down from 5% to 1% of the amount redeemed, if made within six years of
purchase, which charge will be paid to the Fund's Distributor, Dean Witter
Distributors Inc. (See "Redemptions and Repurchases--Contingent Deferred Sales
Charge.") In addition, the Fund pays the Distributor a Rule 12b-1 distribution
fee pursuant to a Plan of Distribution at the annual rate of 1% of the lesser of
the (i) average daily aggregate net sales or (ii) average daily net assets of
the Fund. (See "Purchase of Fund Shares--Plan of Distribution.")
This Prospectus sets forth concisely the information you should
know before investing in the Fund. It should be read and retained for future
reference. Additional information about the Fund is contained in the Statement
of Additional Information, dated May 29, 1996, which has been filed with the
Securities and Exchange Commission, and which is available at no charge upon
request of the Fund at the address or telephone numbers listed on this page. The
Statement of Additional Information is incorporated herein by reference.
DEAN WITTER DISTRIBUTORS INC.
DISTRIBUTOR
TABLE OF CONTENTS
Prospectus Summary/2
Summary of Fund Expenses/3
Financial Highlights/4
The Fund and its Management/5
Investment Objective and Policies/5
Risk Considerations and Investment Practices/6
Investment Restrictions/13
Purchase of Fund Shares/14
Shareholder Services/16
Redemptions and Repurchases/19
Dividends, Distributions and Taxes/21
Performance Information/22
Additional Information/23
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Dean Witter
World Wide Investment Trust
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 869-NEWS (toll-free)
<PAGE>
PROSPECTUS SUMMARY
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<TABLE>
<S> <C>
The The Fund is organized as a trust, commonly known as a Massachusetts business trust, and is an open-end
Fund diversified management investment company investing in all types of common stocks and equivalents (such as
convertible debt securities and warrants), preferred stocks and bonds and other debt obligations of domestic
and foreign companies and governments and international organizations.
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Shares Offered Shares of beneficial interest with $.01 par value (see page 23).
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Offering At net asset value without sales charge (see page 14). Shares redeemed within six years of purchase are
Price subject to a contingent deferred sales charge under most circumstances (see page 19).
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Minimum Minimum initial investment, $1,000 ($100 if the account is opened through EasyInvest-SM-); minimum subsequent
Purchase investment, $100 (see page 14).
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Investment The investment objective of the Fund is total return on its assets primarily through long-term capital growth
Objective and to a lesser extent from income.
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Investment The Fund maintains a flexible investment policy and invests in a diversified portfolio of securities of
Policies companies and countries located throughout the world. The percentage of the Fund's assets invested in
particular geographic sectors will shift from time to time in accordance with the judgment of the Investment
Manager and the Sub-Adviser (see pages 5-13).
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Dean Witter InterCapital Inc. ("InterCapital"), the Investment Manager of the Fund, and its wholly-owned
Manager and subsidiary, Dean Witter Services Company Inc., serve in various investment management, advisory, management
Sub-Adviser and administrative capacities to ninety-seven investment companies with assets of approximately $83.9 billion
at April 30, 1996. InterCapital has retained Morgan Grenfell Investment Services Limited as Sub-Adviser to
provide investment advice and manage the Fund's non-U.S. portfolio. Morgan Grenfell Investment Services
Limited currently serves as investment adviser for U.S. corporate and public employee benefit plans,
endowments, investment companies and foundations with assets of approximately $12.9 billion at December 31,
1995.
- ------------------------------------------------------------------------------------------------------------------------------------
Management Fees The Investment Manager receives a monthly fee from the Fund at the annual rate of 1.0% of daily net assets
not exceeding $500 million and 0.95% of daily net assets exceeding $500 million. The Sub-Adviser receives a
monthly fee from the Investment Manager equal to 40% of the Investment Manager's monthly fee (see page 5).
Although the management fee is higher than that paid by most other investment companies, the fee reflects the
specialized nature of the Fund's investment policies.
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Dividends and Dividends from net investment income and distributions from net capital gains are paid at least once per
Capital Gains year. Dividends and capital gains distributions are automatically reinvested in additional shares at net
Distributions asset value unless the shareholder elects to receive cash (see page 21).
- ------------------------------------------------------------------------------------------------------------------------------------
Distributor Dean Witter Distributors Inc. is the distributor of the Fund's shares. The Distributor receives from the Fund
a distribution fee accrued daily and payable monthly at the rate of 1.0% per annum of the lesser of (i) the
Fund's average daily aggregate net sales or (ii) the Fund's average daily net assets. This fee compensates
the Distributor for the services provided in distributing shares of the Fund and for sales-related expenses.
The Distributor also receives the proceeds of any contingent deferred sales charges (see pages 14 and 19).
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Redemption-- Shares are redeemable by the shareholder at net asset value. An account may be involuntarily redeemed if the
Contingent Deferred total value of the account is less than $100 or, if the account was opened through EasyInvest-SM-, if after
Sales Charge twelve months the shareholder has invested less than $1,000 in the account. Although no commission or sales
charge is imposed upon the purchase of shares, a contingent deferred sales charge (scaled down from 5% to 1%)
is imposed on any redemption of shares if after such redemption the aggregate current value of an account
with the Fund is less than the aggregate amount of the investor's purchase payments made during the six years
preceding the redemption. However, there is no charge imposed on redemption of shares purchased through
reinvestment of dividends or distributions (see pages 19-21).
- ------------------------------------------------------------------------------------------------------------------------------------
Risks The Fund is intended for long-term investors who can accept the risks involved in investments in the
securities of companies and countries located throughout the world. The net asset value of the Fund's shares
will fluctuate with changes in the market value of its portfolio securities. It should be recognized that the
foreign securities and markets in which the Fund will invest pose different and greater risks than those
customarily associated with domestic securities and their markets. Furthermore, investors should consider
other risks associated with a portfolio of international securities, including fluctuations in foreign
currency exchange rates (i.e., if a substantial portion of the Fund's assets is denominated in foreign
currencies which decrease in value with respect to the U.S. dollar, the value of the investor's shares and
the distributions made on those shares will, likewise, decrease in value), foreign securities exchange
controls and foreign tax rates, as well as risks associated with transactions in forward currency contracts,
options and futures contracts (see pages 5-13).
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</TABLE>
THE ABOVE IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION APPEARING
ELSEWHERE
IN THIS PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION.
2
<PAGE>
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
The following table illustrates all expenses and fees that a shareholder of
the Fund will incur. The expenses and fees set forth in the table are for the
fiscal year ended March 31, 1996.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
- ---------------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases.............................................. None
Maximum Sales Charge Imposed on Reinvested Dividends................................... None
Deferred Sales Charge
(as a percentage of the lesser of original purchase price or redemption proceeds).... 5.0%
A contingent deferred sales charge is imposed at the following declining rates:
</TABLE>
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE
PAYMENT MADE PERCENTAGE
- -------------------------------------------------------------------------------------------- ---------------
<S> <C>
First....................................................................................... 5.0%
Second...................................................................................... 4.0%
Third....................................................................................... 3.0%
Fourth...................................................................................... 2.0%
Fifth....................................................................................... 2.0%
Sixth....................................................................................... 1.0%
Seventh and thereafter...................................................................... None
</TABLE>
<TABLE>
<S> <C>
Redemption Fees....................................................................... None
Exchange Fee.......................................................................... None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------------
Management Fees....................................................................... 1.00%
12b-1 Fees*........................................................................... 1.00%
Other Expenses........................................................................ 0.45%
Total Fund Operating Expenses......................................................... 2.45%
<FN>
- ------------
* A PORTION OF THE 12b-1 FEE EQUAL TO 0.25% OF THE FUND'S AVERAGE DAILY NET
ASSETS IS CHARACTERIZED AS A SERVICE FEE WITHIN THE MEANING OF NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. ("NASD") GUIDELINES (SEE "PURCHASE OF
FUND SHARES").
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time
period:.............................................................. $ 75 $ 106 $ 151 $ 279
You would pay the following expenses on the same investment, assuming
no redemption:....................................................... $ 25 $ 76 $ 131 $ 279
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES OF THE FUND MAY BE GREATER OR
LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For a more complete description of these costs and expenses, see
"The Fund and its Management," "Plan of Distribution" and "Redemptions and
Repurchases."
Long-term shareholders of the Fund may pay more in sales charges and
distribution fees than the economic equivalent of the maximum front-end sales
charge permitted by the NASD.
3
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following ratios and per share data for a share of beneficial interest
outstanding throughout each period have been audited by Price Waterhouse LLP,
independent accountants. The financial highlights should be read in conjunction
with the financial statements, notes thereto, and the unqualified report of
independent accountants which are contained in the Statement of Additional
Information. Further information about the performance of the Fund is contained
in the Fund's Annual Report to Shareholders, which may be obtained without
charge upon request to the Fund.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
----------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE
OPERATING PERFORMANCE:
Net asset value,
beginning of
period.......... $ 15.71 $ 18.20 $ 14.72 $ 14.65 $ 14.57 $ 14.84 $ 14.98 $ 14.93 $ 17.36 $ 15.45
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Net investment
income (loss)... (0.06) (0.02) (0.05) -- -- 0.23 0.11 0.08 0.04 0.11
Net realized and
unrealized gain
(loss).......... 2.60 (1.83) 4.24 0.39 1.05 0.18 0.82 1.24 (0.07) 3.88
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Total from
investment
operations...... 2.54 (1.85) 4.19 0.39 1.05 0.41 0.93 1.32 (0.03) 3.99
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Less dividends
and
distributions:
From net
investment
income........ -- -- -- -- (0.05) (0.23) (0.11) (0.08) (0.15) (0.10)
In excess of
net investment
income........ -- (0.02) -- -- -- -- -- -- -- --
From net
realized
gain.......... (0.02) (0.39) (0.71) (0.32) (0.92) (0.45) (0.96) (1.19) (2.25) (1.98)
In excess of
net realized
gain.......... -- (0.23) -- -- -- -- -- -- -- --
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Total dividends
and
distributions... (0.02) (0.64) (0.71) (0.32) (0.97) (0.68) (1.07) (1.27) (2.40) (2.08)
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Net asset value,
end of period... $ 18.23 $ 15.71 $ 18.20 $ 14.72 $ 14.65 $ 14.57 $ 14.84 $ 14.98 $ 14.93 $ 17.36
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
TOTAL INVESTMENT
RETURN+......... 16.20% (10.37)% 28.40% 2.69% 7.33% 2.80% 6.09% 9.31% 0.39% 28.22%
RATIOS TO AVERAGE
NET ASSETS:
Expenses......... 2.45% 2.41% 2.40% 2.42% 2.27% 2.29% 2.21% 2.18% 2.13% 2.10%
Net investment
income (loss)... (0.21)% (0.32)% (0.61)% 0.06% 0.03% 1.53% 0.70% 0.50% 0.23% 0.86%
SUPPLEMENTAL DATA:
Net assets, end
of period,
in millions..... $520 $512 $494 $218 $263 $279 $306 $312 $368 $470
Portfolio
turnover rate... 126% 67% 68% 139% 89% 68% 75% 67% 70% 65%
Average
commission rate
paid............ $0.0169 -- -- -- -- -- -- -- -- --
<FN>
- ---------------
+ Does not reflect the deduction of sales charge. Calculated as of the last
business day of the period.
</TABLE>
4
<PAGE>
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------------
Dean Witter World Wide Investment Trust (the "Fund") is an open-end
diversified management investment company organized under the laws of the
Commonwealth of Massachusetts as a business trust on July 11, 1983.
Dean Witter InterCapital Inc. ("InterCapital" or the "Investment Manager"),
whose address is Two World Trade Center, New York, New York 10048, is the Fund's
Investment Manager. The Investment Manager, which was incorporated in July,
1992, is a wholly-owned subsidiary of Dean Witter, Discover & Co. ("DWDC"), a
balanced financial services organization providing a broad range of nationally
marketed credit and investment products.
InterCapital and its wholly-owned subsidiary, Dean Witter Services Company
Inc., serve in various investment management, advisory, management and
administrative capacities to ninety-seven investment companies, thirty of which
are listed on the New York Stock Exchange, with combined total assets of
approximately $81.2 billion at April 30, 1996. InterCapital also manages
portfolios of pension plans, other institutions and individuals which aggregated
approximately $2.7 billion at such date.
The Fund has retained the Investment Manager to manage its business affairs
and manage the investment of the Fund's United States assets, including the
placing of orders for the purchase and sale of portfolio securities, and to
supervise the investment of all the Fund's assets. In addition, the Fund has
retained InterCapital to provide it with administrative services and
InterCapital has, in turn, retained Dean Witter Services Company Inc. to perform
these administrative services.
Under a Sub-Advisory Agreement between Morgan Grenfell Investment Services
Limited (the "Sub-Adviser") and the Investment Manager, the Sub-Adviser provides
the Fund with investment advice and portfolio management relating to the Fund's
investments in securities issued by issuers located outside the United States,
subject to the overall supervision of the Investment Manager. The Sub-Adviser,
whose address is 20 Finsbury Circus, London, England, manages, as of December
31, 1995, assets of approximately $12.9 billion primarily for U.S. corporate and
public employee benefit plans, endowments, investment companies and foundations.
The Sub-Adviser is an indirect subsidiary of Deutsche Bank AG, the largest
commercial bank in Germany.
The Fund's Trustees review the various services provided by the Investment
Manager and the Sub-Adviser to ensure that the Fund's general investment
policies and programs are being properly carried out and that administrative
services are being provided to the Fund in a satisfactory manner. As full
compensation for the services and facilities furnished to the Fund and expenses
of the Fund assumed by the Investment Manager, the Fund pays the Investment
Manager monthly compensation calculated daily by applying the annual rate of
1.0% to the portion of the net assets of the Fund not exceeding $500 million and
0.95% to the portion of the net assets of the Fund exceeding $500 million. As
compensation for the services provided pursuant to the Sub-Advisory Agreement,
the Investment Manager pays the Sub-Adviser monthly compensation equal to 40% of
its monthly compensation. The total fee is greater than that paid by most other
investment companies.
For the fiscal year ended March 31, 1996, the Fund accrued total
compensation to the Investment Manager and the Fund's two former investment
advisers (which served the Fund until July 31, 1995) amounting to 1.00% of the
Fund's average daily net assets and the Fund's total expenses amounted to 2.45%
of the Fund's average daily net assets.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The investment objective of the Fund is to seek to obtain total return on
its assets primarily through long-term capital growth and to a lesser extent
from income. This objective is fundamental and may not be changed without
shareholder approval. There can be no assurance that the Fund will achieve its
5
<PAGE>
objective. The Fund will seek to achieve such objective through investments in
all types of common stocks and equivalents (such as convertible debt securities
and warrants), preferred stocks and bonds and other debt obligations of domestic
and foreign companies and governments and international organizations. There is
no limitation on the percent or amount of the Fund's assets which may be
invested for growth or income.
The application of the Fund's investment policies is basically dependent
upon the judgment of the Investment Manager and the Sub-Adviser. As a
fundamental policy, the Fund will maintain a flexible investment policy and,
based on a worldwide investment strategy, will invest in a diversified portfolio
of securities of companies and governments located throughout the world.
The percentage of the Fund's assets invested in particular geographic areas
will shift from time to time in accordance with the judgment of the Investment
Manager and the Sub-Adviser. The Investment Manager will meet with the
Sub-Adviser, at least quarterly, to discuss the Fund's overall strategy and the
geographic distribution of the Fund's assets between the United States and the
rest of the world. The final determination of such geographic distribution will
be made by the Investment Manager. Once the determination of such geographic
distribution has been made, each of the Investment Manager and the Sub-Adviser
will be responsible for the individual security selection within its geographic
areas of responsibility and will act on behalf of the Fund in the purchase, sale
and disposition of assets in such areas.
Notwithstanding the Fund's investment objective of seeking total return, the
Fund may, for defensive purposes, without limitation, invest in: obligations of
the United States Government, its agencies or instrumentalities; cash and cash
equivalents in major currencies; repurchase agreements; money market
instruments; and high quality commercial paper.
The Fund may also invest in securities of foreign issuers in the form of
American Depository Receipts ("ADRs"), European Depository Receipts ("EDRs") or
other similar securities convertible into securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically issued
by a United States bank or trust company evidencing ownership of the underlying
securities. EDRs are European receipts evidencing a similar arrangement.
Generally, ADRs, in registered form, are designed for use in the United States
securities markets and EDRs, in bearer form, are designed for use in European
securities markets.
The Fund may also invest in repurchase agreements, private placements, zero
coupon securities, foreign investment companies and real estate investment
trusts, may purchase securities on a when-issued or delayed delivery basis, may
purchase securities on a "when, as and if issued" basis, and may lend its
portfolio securities, as discussed under "Risk Considerations and Investment
Practices" below.
To hedge against adverse price movements in the securities held in its
portfolio and the currencies in which they are denominated (as well as in the
securities it might wish to purchase and their denominated currencies) the Fund
may engage in transactions in forward foreign currency exchange contracts,
options on securities and currencies, and futures contracts on securities,
currencies and indexes and options on such futures contracts. The Fund may also
write (sell) put and call options on securities to aid in achieving its
investment objective. A discussion of these transactions follows under "Risk
Considerations and Investment Practices" below and is supplemented by further
disclosure in the Statement of Additional Information.
RISK CONSIDERATIONS AND INVESTMENT PRACTICES
The Fund is intended to provide individual and institutional investors with
the opportunity to invest in a diversified portfolio of securities of companies
and governments located throughout the world and is intended for long-term
investors who can accept the risks involved in such investments. In making the
allocation of assets among the various markets, the Investment Manager or the
Sub-Adviser will
con-
6
<PAGE>
sider such factors as recent developments in the various countries, the
condition and growth potential of various economies and securities markets,
currency and tax considerations and other pertinent financial, social, national
and political factors. The Fund has an unlimited right to purchase equity
securities if they are listed on a stock exchange and may invest up to 25% of
the Fund's total assets in such securities not listed on any exchange, including
not more than 10% of the Fund's total assets invested in securities for which no
readily available market exists.
FOREIGN SECURITIES. Investors should carefully consider the risks of
investing in securities of foreign issuers and securities denominated in
non-U.S. currencies. Fluctuations in the relative rates of exchange between the
currencies of different nations will affect the value of the Fund's investments.
Changes in foreign currency exchange rates relative to the U.S. dollar will
affect the U.S. dollar value of the Fund's assets denominated in that currency
and thereby impact upon the Fund's total return on such assets.
Foreign currency exchange rates are determined by forces of supply and
demand on the foreign exchange markets. These forces are themselves affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. Moreover,
foreign currency exchange rates may be affected by the regulatory control of the
exchanges on which the currencies trade. The foreign currency transactions of
the Fund will be conducted on a spot (i.e., cash) basis or through forward
foreign currency exchange contracts (see below). The Fund may incur certain
costs in connection with these currency transactions.
Investments in foreign securities will also occasion risks relating to
political and economic developments abroad, including the possibility of
expropriations or confiscatory taxation, limitations on the use or transfer of
Fund assets and any effects of foreign social, economic or political
instability. Political and economic developments in Europe, especially as they
relate to changes in the structure of the European Union and the anticipated
development of a unified common market, may have profound effects upon the value
of a large segment of the Fund's portfolio. Continued progress in the evolution
of, for example, a united European common market may be slowed by unanticipated
political or social events and may, therefore, adversely affect the value of
certain of the securities held in the Fund's portfolio.
Foreign companies are not subject to the regulatory requirements of U.S.
companies and, as such, there may be less publicly available information about
such companies. Moreover, foreign companies are not subject to uniform
accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies.
Securities of foreign issuers may be less liquid than comparable securities
of U.S. issuers and, as such, their price changes may be more volatile.
Furthermore, foreign exchanges and broker-dealers are generally subject to less
government and exchange scrutiny and regulation than their American
counterparts. Brokerage commissions, dealer concessions and other transaction
costs may be higher on foreign markets than in the U.S. In addition, differences
in clearance and settlement procedures on foreign markets may occasion delays in
settlements of Fund trades effected in such markets. Inability to dispose of
portfolio securities due to settlement delays could result in losses to the Fund
due to subsequent declines in value of such securities and the inability of the
Fund to make intended security purchases due to settlement problems could result
in a failure of the Fund to make potentially advantageous investments. In
addition, the tax implications of the Fund's investments in passive foreign
investment companies are discussed below under "Dividends, Distributions and
Taxes."
Certain of the foreign markets in which the Fund may invest will be emerging
markets. These new and incompletely formed markets will have increased risk
levels above those occasioned by investing in foreign markets generally. The
types of these risks are set forth above. The Fund's management will take
cognizance of these risks in allocating
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any of the Fund's investments in either fixed-income or equity securities issued
by issuers in emerging market countries.
The operating expense ratio of the Fund can be expected to be higher than
that of an investment company investing exclusively in domestic securities since
the expenses of the Fund, such as the management fee and the custodial costs,
are higher.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") involves an obligation to purchase or
sell a currency at a future date, which may be any fixed number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. The Fund may enter into forward contracts as a hedge against
fluctuations in future foreign exchange rates.
The Fund will enter into forward contracts under various circumstances. When
the Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may, for example, desire to "lock in" the
price of the security in U.S. dollars or some other foreign currency which the
Fund is temporarily holding in its portfolio. By entering into a forward
contract for the purchase or sale, for a fixed amount of dollars or other
currency, of the amount of foreign currency involved in the underlying security
transactions, the Fund will be able to protect itself against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar or
other currency which is being used for the security purchase and the foreign
currency in which the security is denominated during the period between the date
on which the security is purchased or sold and the date on which payment is made
or received.
At other times, when, for example, the Investment Manager or Sub-Adviser
believes that the currency of a particular foreign country may suffer a
substantial decline against the U.S. dollar or some other foreign currency, the
Fund may enter into a forward contract to sell, for a fixed amount of dollars or
other currency, the amount of foreign currency approximating the value of some
or all of the Fund's portfolio securities (or securities which the Fund has
purchased for its portfolio) denominated in such foreign currency. Under
identical circumstances, the Fund may enter into a forward contract to sell, for
a fixed amount of U.S. dollars or other currency, an amount of foreign currency
other than the currency in which the securities to be hedged are denominated
approximating the value of some or all of the portfolio securities to be hedged.
This method of hedging, called "cross-hedging," will be selected when it is
determined by the Investment Manager or Sub-Adviser that the foreign currency in
which the portfolio securities are denominated has insufficient liquidity or is
trading at a discount as compared with some other foreign currency with which it
tends to move in tandem.
In addition, when the Fund anticipates purchasing securities at some time in
the future, and wishes to lock in the current exchange rate of the currency in
which those securities are denominated against the U.S. dollar or some other
foreign currency, it may enter into a forward contract to purchase an amount of
currency equal to some or all of the value of the anticipated purchase, for a
fixed amount of U.S. dollars or other currency. The Fund may, however, close out
the forward contract without purchasing the security which was the subject of
the "anticipatory" hedge.
Lastly, the Fund is permitted to enter into forward contracts with respect
to currencies in which certain of its portfolio securities are denominated and
on which options have been written (see "Options and Futures Transactions").
In all of the above circumstances, if the currency in which the Fund's
portfolio securities (or anticipated portfolio securities) are denominated rises
in value with respect to the currency which is being purchased (or sold), then
the Fund will have realized fewer gains than had the Fund not entered into the
forward contracts. Moreover, the precise matching of the forward contract
amounts and the value of the securities involved will not generally be possible,
since the future value of such securities in foreign currencies will change as a
consequence of market movements in the value of those securities between the
date the forward contract is entered
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<PAGE>
into and the date it matures. The Fund is not required to enter into such
transactions with regard to its foreign currency-denominated securities and will
not do so unless deemed appropriate by the Investment Manager and/or
Sub-Adviser.
The Fund generally will not enter into a forward contract with a term of
greater than one year, although it may enter into forward contracts for periods
of up to five years. To the extent that the Fund enters into forward foreign
currency contracts to hedge against a decline in the value of portfolio holdings
denominated in a particular foreign currency resulting from currency
fluctuations, there is a risk that the Fund may nevertheless realize a gain or
loss as a result of currency fluctuations after such portfolio holdings are sold
if the Fund is unable to enter into an "offsetting" forward foreign currency
contract with the same party or another party. The Fund may be limited in its
ability to enter into hedging transactions involving forward contracts by the
Internal Revenue Code requirements relating to qualifications as a regulated
investment company (see "Dividends, Distributions and Taxes").
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements, which
may be viewed as a type of secured lending by the Fund, and which typically
involve the acquisition by the Fund of debt securities from a selling financial
institution such as a bank, savings and loan association or broker-dealer. The
agreement provides that the Fund will sell back to the institution, and that the
institution will repurchase, the underlying security at a specified price and at
a fixed time in the future, usually not more than seven days from the date of
purchase. While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed to
minimize those risks. These procedures include effecting repurchase transactions
only with large, well-capitalized and well-established financial institutions
whose financial condition will be continually monitored by the Investment
Manager subject to procedures established by the Board of Trustees of the Fund.
In addition, the value of the collateral underlying the repurchase agreement
will be at least equal to the repurchase price, including any accrued interest
earned on the repurchase agreement. In the event of a default or bankruptcy by a
selling financial institution, the Fund will seek to liquidate such collateral.
However, the exercising of the Fund's right to liquidate such collateral could
involve certain costs or delays and, to the extent that proceeds from any sale
upon a default of the obligation to repurchase were less than the repurchase
price, the Fund could suffer a loss. The Fund may not invest in repurchase
agreements that do not mature within seven days if any such investment, together
with any other illiquid assets held by the Fund, amounts to more than 10% of its
total assets.
PRIVATE PLACEMENTS. The Fund may invest in securities which are subject to
restrictions on resale because they have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or which are
otherwise not readily marketable. These securities are generally referred to as
private placements or restricted securities. The Securities and Exchange
Commission has adopted Rule 144A under the Securities Act, which permits the
Fund to sell restricted securities to qualified institutional buyers without
limitation. The Investment Manager, pursuant to procedures adopted by the
Trustees of the Fund, will make a determination as to the liquidity of each
restricted security purchased by the Fund. If a restricted security is
determined to be "liquid," such security will not be included within the
category "illiquid securities", which is limited by the Fund's investment
restrictions to 10% of the Fund's total assets. Limitations on the resale of
private placements may have an adverse effect on their marketability, and may
prevent the Fund from disposing of them promptly at reasonable prices. The Fund
may have to bear the expense of registering such securities for resale and the
risk of substantial delays in effecting such registration. Investing in Rule
144A securities could have the effect of increasing the level of Fund
illiquidity to the extent the Fund, at a particular point in time, may be unable
to find qualified institutional buyers interested in purchasing such securities.
CONVERTIBLE SECURITIES. Among the fixed-income securities in which the Fund
may invest are
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<PAGE>
"convertible" securities. A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different issuer within a
particular period of time at a specified price or formula. Convertible
securities rank senior to common stocks in a corporation's capital structure
and, therefore, entail less risk than the corporation's common stock. The value
of a convertible security is a function of its "investment value" (its value as
if it did not have a conversion privilege), and its "conversion value" (the
security's worth if it were to be exchanged for the underlying security, at
market value, pursuant to its conversion privilege).
To the extent that a convertible security's investment value is greater than
its conversion value, its price will be primarily a reflection of such
investment value and its price will be likely to increase when interest rates
fall and decrease when interest rates rise, as with a fixed-income security (the
credit standing of the issuer and other factors may also have an effect on the
convertible security's value). If the conversion value exceeds the investment
value, the price of the convertible security will rise above its investment
value and, in addition, the security will sell at some premium over its
conversion value. (This premium represents the price investors are willing to
pay for the privilege of purchasing a fixed-income security with a possibility
of capital appreciation due to the conversion privilege.) At such times the
price of the convertible security will tend to fluctuate directly with the price
of the underlying equity security.
Because of the special nature of the Fund's permitted investments in lower
rated convertible securities, the Investment Manager or Sub-Adviser must take
account of certain special considerations in assessing the risks associated with
such investments. The prices of lower rated securities have been found to be
less sensitive to changes in prevailing interest rates than higher rated
investments, but are likely to be more sensitive to adverse economic changes or
individual corporate developments. During an economic downturn or substantial
period of rising interest rates, highly leveraged issuers may experience
financial stress which would adversely affect their ability to service their
principal and interest payment obligations, to meet their projected business
goals or to obtain additional financing. If the issuer of a lower rated
convertible security owned by the Fund defaults, the Fund may incur additional
expenses to seek recovery. In addition, periods of economic uncertainty and
change can be expected to result in an increased volatility of market prices of
lower rated securities and a corresponding volatility in the net asset value of
a share of the Fund.
RIGHTS AND WARRANTS. The Fund may acquire rights and/or warrants which are
attached to other securities in its portfolio, or which are issued as a
distribution by the issuer of a security held in its portfolio. Rights and/or
warrants are, in effect, options to purchase equity securities at a specific
price, generally valid for a specific period of time, and have no voting rights,
pay no dividends and have no rights with respect to the corporation issuing
them.
INVESTMENT IN OTHER INVESTMENT VEHICLES. Under the Investment Company Act of
1940, as amended, the Fund generally may invest up to 10% of its total assets in
shares of foreign investment companies. In addition, the Fund may invest in real
estate investment trusts, which pool investors' funds for investments primarily
in commercial real estate properties. Investment in foreign investment companies
may be the sole or most practical means by which the Fund may participate in
certain foreign securities markets, and investment in real estate investment
trusts may be the most practical available means for the Fund to invest in the
real estate industry (the Fund is prohibited from investing in real estate
directly). As a shareholder in an investment company or real estate investment
trust, the Fund would bear its ratable share of that entity's expenses,
including its advisory and administration fees. At the same time the Fund would
continue to pay its own investment management fees and other expenses, as a
result of which the Fund and its shareholders in effect will be absorbing
duplicate levels of fees with respect to investments in other investment
companies and in real estate investment trusts.
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<PAGE>
ZERO COUPON SECURITIES. A portion of the fixed-income securities purchased
by the Fund may be zero coupon securities. Such securities are purchased at a
discount from their face amount, giving the purchaser the right to receive their
full value at maturity. The interest earned on such securities is, implicitly,
automatically compounded and paid out at maturity. While such compounding at a
constant rate eliminates the risk of receiving lower yields upon reinvestment of
interest if prevailing interest rates decline, the owner of a zero coupon
security will be unable to participate in higher yields upon reinvestment of
interest received on interest-paying securities if prevailing interest rates
rise.
A zero coupon security pays no interest to its holder during its life.
Therefore, to the extent the Fund invests in zero coupon securities, it will not
receive current cash available for distribution to shareholders. In addition,
zero coupon securities are subject to substantially greater price fluctuations
during periods of changing prevailing interest rates than are comparable
securities which pay interest on a current basis. Current federal tax law
requires that a holder (such as the Fund) of a zero coupon security accrue a
portion of the discount at which the security was purchased as income each year
even though the Fund receives no interest payments in cash on the security
during the year.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS. From
time to time, in the ordinary course of business, the Fund may purchase
securities on a when-issued or delayed delivery basis or may purchase or sell
securities on a forward commitment basis. When such transactions are negotiated,
the price is fixed at the time of the commitment, but delivery and payment can
take place a month or more after the date of the commitment. There is no overall
limit on the percentage of the Fund's assets which may be committed to the
purchase of securities on a when-issued, delayed delivery or forward commitment
basis. An increase in the percentage of the Fund's assets committed to the
purchase of securities on a when-issued, delayed delivery or forward commitment
basis may increase the volatility of the Fund's net asset value.
WHEN, AS AND IF ISSUED SECURITIES. The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security depends
upon the occurrence of a subsequent event, such as approval of a merger,
corporate reorganization, leveraged buyout or debt restructuring. If the
anticipated event does not occur and the securities are not issued, the Fund
will have lost an investment opportunity. There is no overall limit on the
percentage of the Fund's assets which may be committed to the purchase of
securities on a "when, as and if issued" basis. An increase in the percentage of
the Fund's assets committed to the purchase of securities on a "when, as and if
issued" basis may increase the volatility of the Fund's net asset value.
OPTIONS AND FUTURES TRANSACTIONS
The Fund may purchase and sell (write) call and put options on portfolio
securities which are denominated in either U.S. dollars or foreign currencies,
on stock indexes and on the U.S. dollar and foreign currencies, which are or may
in the future be listed on several U.S. and foreign securities exchanges or are
written in over-the-counter transactions ("OTC options"). OTC options are
purchased from or sold (written) to dealers or financial institutions which have
entered into direct agreements with the Fund.
The Fund is permitted to write covered put and call options on portfolio
securities, the currencies in which such securities are denominated and stock
indexes, without limit, in order to hedge against the decline in the value of a
security or currency in which such security is denominated (although such hedge
is limited to the value of the premium received), to close out long call option
positions and to generate income. The Fund may write covered put options, under
which the Fund incurs an obligation to buy the security (or currency) underlying
the option from the purchaser of the put at the option's exercise price at any
time during the option period, at the purchaser's election.
The Fund may purchase listed and OTC call and put options in amounts
equalling up to 5% of its total assets. The Fund may purchase call options to
close out a covered call position or to protect
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<PAGE>
against an increase in the price of a security it anticipates purchasing or, in
the case of call options on a foreign currency, to hedge against an adverse
exchange rate change of the currency in which the security it anticipates
purchasing is denominated vis-a-vis the currency in which the exercise price is
denominated. The Fund may purchase put options on securities which it holds in
its portfolio to protect itself against a decline in the value of the security
and to close out written put positions in a manner similar to call option
closing purchase transactions. There are no limits on the Fund's ability to
purchase call and put options other than compliance with the foregoing policies.
The Fund may purchase and sell futures contracts that are currently traded,
or may in the future be traded, on U.S. and foreign commodity exchanges and that
are based on any currency ("currency" futures), on U.S. and foreign fixed-income
securities ("interest rate" futures) and on such indexes of U.S. or foreign
equity or fixed-income securities as may exist or come into being ("index"
futures). The Fund may purchase or sell interest rate futures contracts for the
purpose of attempting hedging some or all of the value of its portfolio
securities (or anticipated portfolio securities) against anticipated changes in
prevailing interest rates. The Fund may purchase or sell index futures contracts
for the purpose of hedging some or all of its portfolio (or anticipated
portfolio) securities against changes in their prices. The Fund may purchase or
sell currency futures contracts to hedge against an anticipated rise or decline
in the value of the currency in which a portfolio security is denominated
vis-a-vis another currency. As a futures contract purchaser, the Fund incurs an
obligation to take delivery of a specified amount of the obligation underlying
the contract at a specified time in the future for a specified price. As a
seller of a futures contract, the Fund incurs an obligation to deliver the
specified amount of the underlying obligation at a specified time in return for
an agreed upon price.
The Fund also may purchase and write call and put options on futures
contracts which are traded on an exchange and enter into closing transactions
with respect to such options to terminate an existing position.
New futures contracts, options and other financial products and various
combinations thereof continue to be developed. The Fund may invest in any such
futures, options or products as may be developed, to the extent consistent with
its investment objective and applicable regulatory requirements.
RISKS OF OPTIONS AND FUTURES TRANSACTIONS. The Fund may close out its
position as writer of an option, or as a buyer or seller of a futures contract,
only if a liquid secondary market exists for options or futures contracts of
that series. There is no assurance that such a market will exist, particularly
in the case of OTC options, as such options may generally only be closed out by
entering into a closing purchase transaction with the purchasing dealer. Also,
exchanges may limit the amount by which the price of any futures contracts may
move on any day. If the price moves equal the daily limit on successive days,
then it may prove impossible to liquidate a futures position until the daily
limit moves have ceased.
While the futures contracts and options transactions to be engaged in by the
Fund for the purpose of hedging the Fund's portfolio securities are not
speculative in nature, there are risks inherent in the use of such instruments.
One such risk is that the Investment Manager or Sub-Adviser could be incorrect
in its expectations as to the direction or extent of various interest rate or
price movements or the time span within which the movements take place. For
example, if the Fund sold futures contracts for the sale of securities in
anticipation of an increase in interest rates, and then interest rates went down
instead, causing bond prices to rise, the Fund would lose money on the sale.
Another risk which may arise in employing futures contracts to protect against
the price volatility of portfolio securities is that the prices of securities,
currencies and indexes subject to futures contracts (and thereby the futures
contract prices) may correlate imperfectly with the behavior of the U.S. dollar
cash prices of the Fund's portfolio securities and their denominated currencies.
See the Statement of Additional
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<PAGE>
Information for a further discussion of risks of options and futures
transactions.
For additional risk disclosure, please refer to the "Investment Objective
and Policies" section of the Prospectus and to the "Investment Practices and
Policies" section of the Statement of Additional Information.
PORTFOLIO MANAGEMENT
The Fund's portfolio is actively managed by the Investment Manager and the
Sub-Adviser with a view to achieving the Fund's investment objective. Mark
Bavoso, Senior Vice President of InterCapital, has been the primary portfolio
manager of the Fund with respect to investments in securities of United States
issuers since August, 1995 and has been a portfolio manager at InterCapital for
over five years. Patrick W.W. Disney, Managing Director of the Sub-Adviser, has
been the primary portfolio manager of the Fund with respect to non-United States
investments since August, 1995 and has been a manager of international
portfolios at the Sub-Adviser for over five years.
Personnel of the Investment Manager and Sub-Adviser have substantial
experience in the use of the investment techniques described above under the
heading "Options and Futures Transactions," which techniques require skills
different from those needed to select the portfolio securities underlying
various options and futures contracts.
Orders for transactions in portfolio securities and commodities may be
placed for the Fund with a number of brokers and dealers, including Dean Witter
Reynolds Inc. ("DWR"), a broker-dealer affiliate of the Investment Manager, and
certain affiliated broker-dealers of the Sub-Adviser. Pursuant to an order of
the Securities and Exchange Commission, the Fund may effect principal
transactions in certain money market instruments with DWR. In addition, the Fund
may incur brokerage commissions on transactions conducted through DWR and
certain affiliated broker-dealers of the Sub-Adviser.
Although the Fund does not intend to engage in short-term trading as a means
of achieving its investment objective, it may sell portfolio securities without
regard to the length of time they have been held when such sale will, in the
opinion of the Investment Manager or the Sub-Adviser, strengthen the Fund's
position and contribute to its investment objective.
Except as specifically noted, all investment policies and practices
discussed above are not fundamental policies of the Fund and, as such, may be
changed without shareholder approval.
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
The investment restrictions listed below are among the restrictions which
have been adopted by the Fund as fundamental policies. Under the Investment
Company Act of 1940, as amended (the "Act"), a fundamental policy may not be
changed without the vote of a majority of the outstanding voting securities of
the Fund, as defined in the Act.
For purposes of the following restrictions: (i) all percentage limitations
apply immediately after a purchase or initial investment; and (ii) any
subsequent change in any applicable percentage resulting from market
fluctuations or other changes in total or net assets does not require
elimination of any security from the portfolio.
The Fund may not:
1. Invest more than 5% of the value of its total
assets in the voting securities of any one issuer or with respect to 75% of the
Fund's total assets invest more than 5% in the securities of any one issuer
(other than obligations of the United States Government, its agencies or
instrumentalities).
2. Purchase more than 10% of the outstanding
voting securities or any class of securities of any one issuer.
3. Invest more than 25% of the value of its total
assets in securities of issuers in any one industry other than for defensive
purposes.
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<PAGE>
4. Invest more than 5% of the value of its total
assets in securities of issuers having a record, together with predecessors, of
less than three years of continuous operation. This restriction shall not apply
to any obligation issued or guaranteed by the United States Government, its
agencies or instrumentalities.
5. Purchase securities of other United States
investment companies, except in connection with a merger, consolidation,
reorganization or acquisition of assets. However, the Fund may invest up to 10%
of the value of its total assets in the securities of foreign investment
companies.
PURCHASE OF FUND SHARES
- --------------------------------------------------------------------------------
The Fund offers its shares for sale to the public on a continuous basis.
Pursuant to a Distribution Agreement between the Fund and Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager,
shares of the Fund are distributed by the Distributor and offered by DWR and
other dealers which have entered into selected dealer agreements with the
Distributor ("Selected Broker-Dealers"). The principal executive office of the
Distributor is located at Two World Trade Center, New York, New York, 10048.
The minimum initial purchase is $1,000. Subsequent purchases of $100 or more
may be made by sending a check, payable to Dean Witter World Wide Investment
Trust, directly to Dean Witter Trust Company (the "Transfer Agent") at P.O. Box
1040, Jersey City, NJ 07303 or by contacting an account executive of DWR or
other Selected Broker-Dealer. The minimum initial purchase in the case of
investments through EasyInvest-SM-, an automatic purchase plan (see "Shareholder
Services"), is $100, provided that the schedule of automatic investments will
result in investments totalling at least $1,000 within the first twelve months.
In the case of investments pursuant to Systematic Payroll Deduction Plans
(including Individual Retirement Plans), the Fund, in its discretion, may accept
investments without regard to any minimum amounts which would otherwise be
required, if the Fund has reason to believe that additional investments will
increase the investment in each account under such Plans to at least $1,000.
Certificates for shares purchased will not be issued unless requested by the
shareholder in writing to the Transfer Agent.
Shares of the Fund are sold through the Distributor on a normal three
business day settlement basis; that is, payment is due on the third business day
(settlement date) after the order is placed with the Distributor. Since DWR and
other Selected Broker-Dealers forward investors' funds on settlement date, they
will benefit from the temporary use of the funds if payment is made prior
thereto. As noted above, orders placed directly through the Transfer Agent must
be accompanied by payment. Investors will be entitled to receive income
dividends and capital gain distributions if their order is received by the close
of business on the day prior to the record date for such dividends and
distributions.
The offering price will be the net asset value per share next determined
following receipt of an order (see "Determination of Net Asset Value" below).
While no sales charge is imposed at the time shares are purchased, a contingent
deferred sales charge may be imposed at the time of redemption (see "Redemptions
and Repurchases"). Sales personnel are compensated for selling shares of the
Fund at the time of their sale by the Distributor and/or the Selected
Broker-Dealer. In addition, some sales personnel of the Selected Broker-Dealer
will receive various types of non-cash compensation as special sales incentives,
including trips, educational and/or business seminars and merchandise. The Fund
and the Distributor reserve the right to reject any purchase orders.
PLAN OF DISTRIBUTION
The Fund has adopted a Plan of Distribution, pursuant to Rule 12b-1 under
the Act (the "Plan"), under which the Fund pays the Distributor a fee, which is
accrued daily and payable monthly, at an annual rate of 1.0% of the lesser of:
(a) the average daily aggregate gross sales of the Fund's shares since the
inception of the Fund (not including
rein-
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<PAGE>
vestments of dividends or capital gains distributions), less the average daily
aggregate net asset value of the Fund's shares redeemed since the Fund's
inception upon which a contingent deferred sales charge has been imposed or
waived, or (b) the Fund's average daily net assets. This fee is treated by the
Fund as an expense in the year it is accrued. A portion of the fee payable
pursuant to the Plan, equal to 0.25% of the Fund's average daily net assets, is
characterized as a service fee within the meaning of NASD guidelines. The
service fee is a payment made for personal service and/or the maintenance of
shareholder accounts.
Amounts paid under the Plan are paid to the Distributor to compensate it for
the services provided and the expenses borne by the Distributor and others in
the distribution of the Fund's shares, including the payment of commissions for
sales of the Fund's shares and incentive compensation to and expenses of DWR's
account executives and others who engage in or support distribution of shares or
who service shareholder accounts, including overhead and telephone expenses;
printing and distribution of prospectuses and reports used in connection with
the offering of the Fund's shares to other than current shareholders; and
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may utilize fees paid pursuant to the
Plan to compensate DWR and other Selected Broker-Dealers for their opportunity
costs in advancing such amounts, which compensation would be in the form of a
carrying charge on any unreimbursed distribution expenses.
For the fiscal year ended March 31, 1996, the Fund accrued payments under
the Plan amounting to $5,141,595, which amount is equal to 1.00% of the Fund's
average daily net assets for the fiscal year. The payments accrued under the
Plan were calculated pursuant to clause (b) of the compensation formula under
the Plan.
At any given time, the expenses in distributing shares of the Fund may be in
excess of the total of (i) the payments made by the Fund pursuant to the Plan,
and (ii) the proceeds of contingent deferred sales charges paid by investors
upon the redemption of shares (see "Redemptions and Repurchases--Contingent
Deferred Sales Charge"). For example, if $1 million in expenses in distributing
shares of the Fund had been incurred and $750,000 had been received as described
in (i) and (ii) above, the excess expense would amount to $250,000. The
Distributor has advised the Fund that such excess amount, including the carrying
charge described above, totalled $21,996,185 at March 31, 1996, which was equal
to 4.23% of the Fund's net assets on such date.
Because there is no requirement under the Plan that the Distributor be
reimbursed for all expenses or any requirement that the Plan be continued from
year to year, this excess amount does not constitute a liability of the Fund.
Although there is no legal obligation for the Fund to pay expenses incurred in
excess of payments made to the Distributor under the Plan and the proceeds of
contingent deferred sales charges paid by investors upon redemption of shares,
if for any reason the Plan is terminated the Trustees will consider at that time
the manner in which to treat such expenses. Any cumulative expenses incurred,
but not yet recovered through distribution fees or contingent deferred sales
charges, may or may not be recovered through future distribution fees or
contingent deferred sales charges.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined once daily at 4:00
p.m., New York time (or, on days when the New York Stock Exchange closes prior
to 4:00 p.m., at such earlier time), on each day that the New York Stock
Exchange is open, by taking the value of all the assets of the Fund, subtracting
all liabilities, dividing by the number of shares outstanding and adjusting the
result to the nearest cent. The net asset value per share will not be calculated
on Good Friday and on such other federal and non-federal holidays observed by
the New York Stock Exchange.
In the calculation of the Fund's net asset value: (1) an equity security
listed or traded on the New York or American Stock Exchange or other domestic or
foreign stock exchange or quoted by NASDAQ is valued at its latest sale price on
that exchange or
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<PAGE>
quotation service prior to the time when assets are valued; if there were no
sales that day, the security is valued at the latest bid price (in cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated as the primary market pursuant to procedures adopted by
the Trustees); and (2) all other portfolio securities for which over-the-counter
market quotations are readily available are valued at the latest available bid
price prior to the time of valuation. When market quotations are not readily
available, including circumstances under which it is determined by the
Investment Manager or the Sub-Adviser that sale or bid prices are not reflective
of a security's market value, portfolio securities are valued at their fair
value as determined in good faith under procedures established by and under the
general supervision of the Fund's Trustees. For valuation purposes, quotations
of foreign portfolio securities, other assets and liabilities and forward
contracts stated in foreign currency are translated into U.S. dollar equivalents
at the prevailing market rates prior to the close of the New York Stock
Exchange. Dividends receivable are accrued as of the ex-dividend date or as of
the time that the relevant ex-dividend date and amounts become known, if after
the ex-dividend date.
Short-term debt securities with remaining maturities of sixty days or less
at the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees.
Generally, trading in foreign securities, as well as corporate bonds, United
States government securities and money market instruments, is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. The values of such securities used in computing the net asset value of
the Fund's shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the New York Stock
Exchange. Occasionally, events which affect the values of such securities and
such exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange and will therefore not be reflected in
the computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at their fair value as determined in good faith under procedures
established by and under the supervision of the Trustees.
Certain of the Fund's portfolio securities may be valued by an outside
pricing service approved by the Fund's Trustees. The pricing service may utilize
a matrix system incorporating security quality, maturity and coupon as the
evaluation model parameters, and/or research and evaluations by its staff,
including review of broker-dealer market price quotations, in determining what
it believes is the fair valuation of the portfolio securities valued by such
pricing service.
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. All income dividends
and capital gains distributions are automatically paid in full and fractional
shares of the Fund (or, if specified by the shareholder, any other open-end
investment company for which InterCapital serves as investment manager
(collectively, with the Fund, the "Dean Witter Funds")), unless the shareholder
requests that they be paid in cash. Shares so acquired are not subject to the
imposition of a contingent deferred sales charge upon their redemption (see
"Redemptions and Repurchases").
INVESTMENT OF DIVIDENDS OR DISTRIBUTIONS RECEIVED IN CASH. Any shareholder
who receives a cash payment representing a dividend or capital gains
distribution may invest such dividend or distribution at the net asset value
next determined after receipt by the Transfer Agent, by returning the check or
the proceeds to the Transfer Agent within
16
<PAGE>
thirty days after the payment date. Shares so acquired are not subject to the
imposition of a contingent deferred sales charge upon their redemption (see
"Redemptions and Repurchases").
EASYINVEST-SM-. Shareholders may subscribe to EasyInvest, an automatic
purchase plan which provides for any amount from $100 to $5,000 to be
transferred automatically from a checking or savings account, on a semi-monthly,
monthly or quarterly basis, to the Transfer Agent for investment in shares of
the Fund (see "Purchase of Fund Shares" and "Redemptions and
Repurchases--Involuntary Redemption").
SYSTEMATIC WITHDRAWAL PLAN. A systematic withdrawal plan (the "Withdrawal
Plan") is available for shareholders who own or purchase shares of the Fund
having a minimum value of $10,000 based upon the then current net asset value.
The Withdrawal Plan provides for monthly or quarterly (March, June, September
and December) checks in any dollar amount, not less than $25, or in any whole
percentage of the account balance, on an annualized basis. Any applicable
contingent deferred sales charge will be imposed on shares redeemed under the
Withdrawal Plan (see "Redemptions and Repurchases--Contingent Deferred Sales
Charge"). Therefore, any shareholder participating in the Withdrawal Plan will
have sufficient shares redeemed from his or her account so that the proceeds
(net of any applicable contingent deferred sales charge) to the shareholder will
be the designated monthly or quarterly amount.
Shareholders should contact their DWR or other Selected Broker-Dealer
account executive or the Transfer Agent for further information about any of the
above services.
TAX SHELTERED RETIREMENT PLANS. Retirement plans are available for use by
corporations, the self-employed, Individual Retirement Accounts and Custodial
Accounts under Section 403(b)(7) of the Internal Revenue Code. Adoption of such
plans should be on advice of legal counsel or tax adviser.
For further information regarding plan administration, custodial fees and
other details, investors should contact their DWR or other Selected Broker-
Dealer account executive or the Transfer Agent.
EXCHANGE PRIVILEGE
The Fund makes available to its shareholders an "Exchange Privilege"
allowing the exchange of shares of the Fund for shares of other Dean Witter
Funds sold with a contingent deferred sales charge ("CDSC funds"), and for
shares of Dean Witter Short-Term U.S. Treasury Trust, Dean Witter Limited Term
Municipal Trust, Dean Witter Short-Term Bond Fund, Dean Witter Balanced Growth
Fund, Dean Witter Balanced Income Fund, Dean Witter Intermediate Term U.S.
Treasury Trust and five Dean Witter Funds which are money market funds (the
foregoing eleven non-CDSC funds are hereinafter referred to as the "Exchange
Funds"). Exchanges may be made after the shares of the fund acquired by purchase
(not by exchange or dividend reinvestment) have been held for thirty days. There
is no waiting period for exchanges of shares acquired by exchange or dividend
reinvestment.
An exchange to another CDSC fund or any Exchange Fund that is not a money
market fund is on the basis of the next calculated net asset value per share of
each fund after the exchange order is received. When exchanging into a money
market fund from the Fund, shares of the Fund are redeemed out of the Fund at
their next calculated net asset value and the proceeds of the redemption are
used to purchase shares of the money market fund at their net asset value
determined the following business day. Subsequent exchanges between any of the
money market funds and any of the CDSC funds can be effected on the same basis.
No contingent deferred sales charge ("CDSC") is imposed at the time of any
exchange, although any applicable CDSC will be imposed upon ultimate redemption.
Shares of the Fund acquired in exchange for shares of another CDSC fund having a
different CDSC schedule than that of this Fund will be subject to the CDSC
schedule of this Fund, even if such shares are subsequently reexchanged for
shares of the CDSC fund originally purchased. During the period of time the
shareholder remains in the Exchange Fund (calculated from the last day of the
month in which the Exchange Fund shares were acquired), the holding period (for
the purpose of determining the rate of the CDSC) is frozen. If those
17
<PAGE>
shares are subsequently reexchanged for shares of a CDSC fund, the holding
period previously frozen when the first exchange was made resumes on the last
day of the month in which shares of a CDSC fund are reacquired. Thus, the CDSC
is based upon the time (calculated as described above) the shareholder was
invested in a CDSC fund (see "Redemptions and Repurchases--Contingent Deferred
Sales Charge"). However, in the case of shares exchanged into an Exchange Fund
on or after April 23, 1990, upon a redemption of shares which results in a CDSC
being imposed, a credit (not to exceed the amount of the CDSC) will be given in
an amount equal to the Exchange Fund 12b-1 distribution fees incurred on or
after that date which are attributable to those shares. (Exchange Fund 12b-1
distribution fees, if any, are described in the prospectuses for those funds).
In addition, shares of the Fund may be acquired in exchange for shares of
Dean Witter Funds sold with a front-end sales charge ("front-end sales charge
funds"), but shares of the Fund, however acquired, may not be exchanged for
shares of front-end sales charge funds. Shares of a CDSC fund acquired in
exchange for shares of a front-end sales charge fund (or in exchange for shares
of other Dean Witter Funds for which shares of a front-end sales charge fund
have been exchanged) are not subject to any CDSC upon their redemption.
Purchases and exchanges should be made for investment purposes only. A
pattern of frequent exchanges may be deemed by InterCapital to be abusive and
contrary to the best interests of the Fund's other shareholders and, at
InterCapital's discretion, may be limited by the Fund's refusal to accept
additional purchases and/or exchanges from the investor. Although the Fund does
not have any specific definition of what constitutes a pattern of frequent
exchanges, and will consider all relevant factors in determining whether a
particular situation is abusive and contrary to the best interests of the Fund
and its other shareholders, investors should be aware that the Fund and each of
the other Dean Witter Funds may in their discretion limit or otherwise restrict
the number of times this Exchange Privilege may be exercised by any investor.
Any such restriction will be made by the Fund on a prospective basis only, upon
notice to the shareholder not later than ten days following such shareholder's
most recent exchange. Also, the Exchange Privilege may be terminated or revised
at any time by the Fund and/or any of such Dean Witter Funds for which shares of
the Fund have been exchanged, upon such notice as may be required by applicable
regulatory agencies. Shareholders maintaining margin accounts with DWR or
another Selected Broker-Dealer are referred to their account executive regarding
restrictions on exchange of shares of the Fund pledged in the margin account.
The current prospectus for each fund describes its investment objective(s)
and policies, and shareholders should obtain a copy and examine it carefully
before investing. Exchanges are subject to the minimum investment requirement
and any other conditions imposed by each Fund. In the case of a shareholder
holding a share certificate or certificates, no exchanges may be made until all
applicable share certificates have been received by the Transfer Agent and
deposited in the shareholder's account. An exchange will be treated for federal
income tax purposes the same as a repurchase or redemption of shares, on which
the shareholder may realize a capital gain or loss. However, the ability to
deduct capital losses on an exchange may be limited in situations where there is
an exchange of shares within ninety days after the shares are purchased. The
Exchange Privilege is only available in states where an exchange may legally be
made.
If DWR or another Selected Broker-Dealer is the current dealer of record and
its account numbers are part of the account information, shareholders may
initiate an exchange of shares of the Fund for shares of any of the Dean Witter
Funds (for which the Exchange Privilege is available) pursuant to this Exchange
Privilege by contacting their account executive (no Exchange Privilege
Authorization Form is required). Other shareholders (and those shareholders who
are clients of DWR or another Selected Broker-Dealer but who wish to make
exchanges directly by writing or telephoning the Transfer Agent) must complete
and forward to the Transfer Agent an Exchange Privilege Authorization
18
<PAGE>
Form, copies of which may be obtained from the Transfer Agent, to initiate an
exchange. If the Authorization Form is used, exchanges may be made in writing or
by contacting the Transfer Agent at (800) 869-NEWS (toll-free).
The Fund will employ reasonable procedures to confirm that exchange
instructions communicated over the telephone are genuine. Such procedures
include requiring various forms of personal identification such as name, mailing
address, social security or other tax identification number and DWR or other
Selected Broker-Dealer account number (if any). Telephone instructions may also
be recorded. If such procedures are not employed, the Fund may be liable for any
losses due to unauthorized or fraudulent instructions.
Telephone exchange instructions will be accepted if received by the Transfer
Agent between 9:00 a.m. and 4:00 p.m. New York time, on any day the New York
Stock Exchange is open. Any shareholder wishing to make an exchange who has
previously filed an Exchange Privilege Authorization Form and who is unable to
reach the Fund by telephone should contact his or her DWR or other Selected
Broker-Dealer account executive, if appropriate, or make a written exchange
request. Shareholders are advised that during periods of drastic economic or
market changes, it is possible that the telephone exchange procedures may be
difficult to implement, although this has not been the case with the Dean Witter
Funds in the past.
For further information regarding the Exchange Privilege, shareholders
should contact their account executive or the Transfer Agent.
REDEMPTIONS AND REPURCHASES
- --------------------------------------------------------------------------------
REDEMPTION. Shares of the Fund can be redeemed for cash at any time at the
net asset value per share next determined; however, such redemption proceeds
will be reduced by the amount of any applicable contingent deferred sales charge
(see below). If shares are held in a shareholder's account without a share
certificate, a written request to the Fund's Transfer Agent at P.O. Box 983,
Jersey City, NJ 07303 for redemption is required. If certificates are held by
the shareholder, the shares may be redeemed by surrendering the certificates
with a written request for redemption, along with any additional information
required by the Transfer Agent.
CONTINGENT DEFERRED SALES CHARGE. Shares of the Fund which are held for six
years or more after purchase (calculated from the last day of the month in which
the shares were purchased) will not be subject to any charge upon redemption.
Shares redeemed sooner than six years after purchase may, however, be subject to
a charge upon redemption. This charge is called a "contingent deferred sales
charge" ("CDSC"), which will be a percentage of the dollar amount of shares
redeemed and will be assessed on an amount equal to the lesser of the current
market value or the cost of the shares being redeemed. The size of this
percentage will depend upon how long the shares have been held, as set forth in
the table below:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
YEAR SINCE SALES CHARGE
PURCHASE AS A PERCENTAGE OF
PAYMENT MADE AMOUNT REDEEMED
- ------------------------------------ -----------------------
<S> <C>
First............................... 5.0%
Second.............................. 4.0%
Third............................... 3.0%
Fourth.............................. 2.0%
Fifth............................... 2.0%
Sixth............................... 1.0%
Seventh and thereafter.............. None
</TABLE>
A CDSC will not be imposed on: (i) any amount which represents an increase
in value of shares purchased within the six years preceding the redemption; (ii)
the current net asset value of shares purchased more than six years prior to the
redemption; and (iii) the current net asset value of shares purchased through
reinvestment of dividends or distributions and/or shares acquired in exchange
for shares of Dean Witter Funds sold with a front-end sales charge or of other
Dean Witter Funds acquired
19
<PAGE>
in exchange for such shares. Moreover, in determining whether a CDSC is
applicable it will be assumed that amounts described in (i), (ii), and (iii)
above (in that order) are redeemed first. In addition, no CDSC will be imposed
on redemptions which are attributable to reinvestment of distributions from, or
the proceeds of, certain Unit Investment Trusts or which were purchased by the
employee benefit plans established by DWR and SPS Transaction Services, Inc. (an
affiliate of DWR) for their employees as qualified under Section 401(k) of the
Internal Revenue Code.
In addition, the CDSC, if otherwise applicable, will be waived in the case
of:
(1)redemptions of shares held at the time a
shareholder dies or becomes disabled, only if the shares are: (A) registered
either in the name of an individual shareholder (not a trust), or in the names
of such shareholder and his or her spouse as joint tenants with right of
survivorship; or (B) held in a qualified corporate or self-employed retirement
plan, Individual Retirement Account ("IRA") or Custodial Account under Section
403(b)(7) of the Internal Revenue Code ("403(b) Custodial Account"), provided in
either case that the redemption is requested within one year of the death or
initial determination of disability;
(2)redemptions in connection with the
following retirement plan distributions: (A) lump-sum or other distributions
from a qualified corporate or self-employed retirement plan following retirement
(or, in the case of a "key employee" of a "top heavy" plan, following attainment
of age 59 1/2); (B) distributions from an IRA or 403(b) Custodial Account
following attainment of age 59 1/2; or (C) a tax-free return of an excess
contribution to an IRA; and
(3)all redemptions of shares held for the
benefit of a participant in a corporate or self-employed retirement plan
qualified under Section 401(k) of the Internal Revenue Code which offers
investment companies managed by the Investment Manager or its subsidiary, Dean
Witter Services Company Inc., as self-directed investment alternatives and for
which Dean Witter Trust Company, an affiliate of the Investment Manager, serves
as recordkeeper or Trustee ("Eligible 401(k) Plan"), provided that
either: (A) the plan continues to be an Eligible 401(k) Plan after the
redemption; or (B) the redemption is in connection with the complete
termination of the plan involving the distribution of all plan assets to
participants.
With reference to (1) above, for the purpose of determining disability, the
Distributor utilizes the definition of disability contained in Section 72(m)(7)
of the Internal Revenue Code, which relates to the inability to engage in
gainful employment. With reference to (2) above, the term "distribution" does
not encompass a direct transfer of IRA, 403(b) Custodial Account or retirement
plan assets to a successor custodian or trustee. All waivers will be granted
only following receipt by the Distributor of confirmation of the shareholder's
entitlement.
REPURCHASE. DWR and other Selected Broker-Dealers are authorized to
repurchase shares represented by a share certificate which is delivered to any
of their offices. Shares held in a shareholder's account without a share
certificate may also be repurchased by DWR and other Selected Broker-Dealers
upon the telephonic request of the shareholder. The repurchase price is the net
asset value next computed (see "Purchase of Fund Shares") after such repurchase
order is received by DWR or other Selected Broker-Dealer, reduced by any
applicable CDSC.
The CDSC, if any, will be the only fee imposed by any of the Fund, the
Distributor, DWR or other Selected Broker-Dealer. The offer by DWR and other
Selected Broker-Dealers to repurchase shares may be suspended by them at any
time. In that event, shareholders may redeem their shares through the Fund's
Transfer Agent as set forth above under "Redemption."
PAYMENT FOR SHARES REDEEMED OR REPURCHASED. Payment for shares presented
for repurchase or redemption will be made by check within seven days after
receipt by the Transfer Agent of the certificate and/or written request in good
order. Such payment may be postponed or the right of redemption suspended under
unusual
circum-
20
<PAGE>
stances, e.g., when normal trading is not taking place on the New York Stock
Exchange. If the shares to be redeemed have recently been purchased by check,
payment of the redemption proceeds may be delayed for the minimum time needed to
verify that the check used for investment has been honored (not more than
fifteen days from the time of receipt of the check by the Transfer Agent).
Shareholders maintaining margin accounts with DWR or another Selected
Broker-Dealer are referred to their account executive regarding restrictions on
redemption of shares of the Fund pledged in the margin account.
REINSTATEMENT PRIVILEGE. A shareholder who has had his or her shares
redeemed or repurchased and has not previously exercised this reinstatement
privilege may, within thirty days after the date of the redemption or
repurchase, reinstate any portion or all of the proceeds of such redemption or
repurchase in shares of the Fund at the net asset value next determined after a
reinstatement request, together with the proceeds, is received by the Transfer
Agent and receive a pro rata credit for any CDSC paid in connection with such
redemption or repurchase.
INVOLUNTARY REDEMPTION. The Fund reserves the right, on sixty days' notice,
to redeem, at their net asset value, the shares of any shareholder (other than
shares held in an Individual Retirement Account or Custodial Account under
Section 403(b)(7) of the Internal Revenue Code) whose shares due to redemptions
by the shareholders have a value of less than $100 or such lesser amount as may
be fixed by the Fund's Trustees or, in the case of an account opened through
EasyInvest-SM-, if after twelve months the shareholder has invested less than
$1,000 in the account. However, before the Fund redeems such shares and sends
the proceeds to the shareholder, it will notify the shareholder that the value
of the shares is less than the applicable amount and allow the shareholder sixty
days to make an additional investment in an amount which will increase the value
of the account to at least the applicable amount before the redemption is
processed. No CDSC will be imposed on any involuntary redemption.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS. The Fund intends to distribute all of its net
investment income and net capital gains, if any, at least once per year. The
Fund may, however, determine either to distribute or to retain all or part of
any net long-term capital gains in any year for reinvestment.
All dividends and any capital gains distributions will be paid in additional
Fund shares and automatically credited to the shareholder's account without
issuance of a share certificate unless the shareholder requests in writing that
all dividends be paid in cash. (See "Shareholder Services--Automatic Investment
of Dividends and Distributions".)
TAXES. Because the Fund intends to distribute all of its net investment
income and net short-term capital gains to shareholders and otherwise continue
to qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code, it is not expected that the Fund will be required to pay any
federal income tax on any such income and capital gains, other than any tax
resulting from investing in passive foreign investment companies, as discussed
below.
Gains or losses on the Fund's transactions in certain listed options on
securities and on futures and options on futures traded on U.S. exchanges
generally are treated as 60% long-term gain or loss and 40% short-term gain or
loss. When the Fund engages in options and futures transactions, various tax
regulations applicable to the Fund may have the effect of causing the Fund to
recognize a gain or loss for tax purposes before that gain or loss is realized,
or to defer recognition of a realized loss for tax purposes. Recognition, for
tax purposes, of an unrealized loss may result in a lesser amount of the Fund's
realized net gains being available for distribution.
As a regulated investment company, the Fund is subject to the requirement
that less than 30% of its gross income be derived from the sale of certain
investments held for less than three months. This
21
<PAGE>
requirement may limit the Fund's ability to engage in options and futures
transactions.
Shareholders will normally have to pay federal income taxes, and any state
and local income taxes, on the dividends and distributions they receive from the
Fund. Such dividends and distributions, to the extent they are derived from net
investment income or short-term capital gains, are taxable to the shareholder as
ordinary income regardless of whether the shareholder receives such
distributions in additional shares or in cash. Any dividends declared in the
last quarter of any calendar year which are paid in the following year prior to
February 1 will be deemed, for tax purposes, to have been received by the
shareholder in the prior year.
Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash. Capital gains distributions are not eligible for
the corporate dividends received deduction.
The Fund may purchase the securities of certain foreign investment funds or
trusts called passive foreign investment companies. Capital gains on the sale of
such holdings may be deemed to be ordinary income regardless of how long the
Fund holds its investment. In addition, the Fund may be subject to income tax
and an interest charge on certain dividends and capital gains earned from these
investments, regardless of whether such income and gains were distributed to
shareholders.
After the end of the calendar year, shareholders will be sent full
information on their dividends and capital gains distributions for tax purposes.
To avoid being subject to a 31% federal backup withholding tax on taxable
dividends, capital gains distributions and the proceeds of redemptions and
repurchases, shareholders' taxpayer identification numbers must be furnished and
certified as to their accuracy.
Dividends, interest and gains received by the Fund from foreign sources may
give rise to withholding and other taxes imposed by foreign countries. If it
qualifies for and makes the appropriate election with the Internal Revenue
Service, the Fund will report annually to its shareholders the amount per share
of such taxes to enable shareholders to claim United States foreign tax credits
or deductions with respect to such taxes. In the absence of such an election,
the Fund would deduct such foreign taxes in computing the amount of its
distributable income. The Fund does not intend to make such election for its
fiscal year ended March 31, 1996.
Shareholders should consult their tax advisers as to the applicability of
the foregoing to their current situation.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund may quote its "total return" in advertisements
and sales literature. The total return of the Fund is based on historical
earnings and is not intended to indicate future performance. The "average annual
total return" of the Fund refers to a figure reflecting the average annualized
percentage increase (or decrease) in the value of an initial investment in the
Fund of $1,000 over periods of one, five and ten years. Average annual total
return reflects all income earned by the Fund, any appreciation or depreciation
of the Fund's assets, all expenses incurred by the Fund and all sales charges
which would be incurred by redeeming shareholders for the stated periods. It
also assumes reinvestment of all dividends and distributions paid by the Fund.
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. Such calculations may or may not reflect the
deduction of the contingent deferred sales charge which, if reflected, would
reduce the performance quoted. The Fund may also advertise the growth of
hypothetical investments of $10,000, $50,000 and $100,000 in shares of the Fund.
The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by independent organizations,
such as Lipper Analytical Services, Inc.
22
<PAGE>
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS. All shares of beneficial interest of the Fund are of $0.01
par value and are equal as to earnings, assets and voting privileges.
The Fund is not required to hold Annual Meetings of Shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call Special Meetings of Shareholders for action by shareholder
vote as may be required by the Act or the Declaration of Trust. Under certain
circumstances the Trustees may be removed by action of the Trustees or by the
shareholders.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Fund. However, the Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Fund, requires that Fund
obligations include such disclaimer, and provides for indemnification and
reimbursement of expenses out of the Fund's property for any shareholder held
personally liable for the obligations of the Fund. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund itself would be unable to meet its
obligations. Given the above limitations on shareholder personal liability, and
the nature of the Fund's assets and operations, the possibility of the Fund
being unable to meet its obligations is remote and thus, in the opinion of
Massachusetts counsel to the Fund, the risk to Fund shareholders of personal
liability is remote.
CODE OF ETHICS. Directors, officers and employees of InterCapital, Dean
Witter Services Company Inc. and the Distributor are subject to a strict Code of
Ethics adopted by those companies. The Code of Ethics is intended to ensure that
the interests of shareholders and other clients are placed ahead of any personal
interest, that no undue personal benefit is obtained from a person's employment
activities and that actual and potential conflicts of interest are avoided. To
achieve these goals and comply with regulatory requirements, the Code of Ethics
requires, among other things, that personal securities transactions by employees
of the companies be subject to an advance clearance process to monitor that no
Dean Witter Fund is engaged at the same time in a purchase or sale of the same
security. The Code of Ethics bans the purchase of securities in an initial
public offering, and also prohibits engaging in futures and options transactions
and profiting on short-term trading (that is, a purchase within sixty days of a
sale or a sale within sixty days of a purchase) of a security. In addition,
investment personnel may not purchase or sell a security for their personal
account within thirty days before or after any transaction in any Dean Witter
Fund managed by them. Any violations of the Code of Ethics are subject to
sanctions, including reprimand, demotion or suspension or termination of
employment. The Code of Ethics comports with regulatory requirements and the
recommendations in the 1994 report by the Investment Company Institute Advisory
Group on Personal Investing.
SHAREHOLDER INQUIRIES. All inquiries regarding the Fund should be directed
to the Fund at the telephone numbers or address set forth on the front cover of
this Prospectus.
23
<PAGE>
Dean Witter
World Wide Investment Trust
Dean Witter
Two World Trade Center
New York, New York 10048
TRUSTEES World Wide
Michael Bozic Investment
Charles A. Fiumefreddo Trust
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive
Officer
Sheldon Curtis
Vice President, Secretary and
General Counsel
Mark Bavoso
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Chase Manhattan Bank
One Chase Plaza
New York, New York 10081
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
SUB-ADVISER
Morgan Grenfell Investment Services
Limited
PROSPECTUS -- MAY 29, 1996
<PAGE>
STATEMENT OF ADDITIONAL
INFORMATION
DEAN WITTER
WORLD WIDE
INVESTMENT TRUST
MAY 29, 1996
- --------------------------------------------------------------------------------
Dean Witter World Wide Investment Trust (the "Fund") is an open-end
diversified management investment company whose investment objective is total
return on its assets primarily through long-term capital growth and to a lesser
extent from income. The Fund will seek to achieve such objective through
investments in all types of common stocks and equivalents, preferred stocks and
bonds and other debt obligations of domestic and foreign companies and
governments and international organizations. (See "Investment Practices and
Policies".)
A Prospectus for the Fund dated May 29, 1996, which provides the basic
information you should know before investing in the Fund, may be obtained
without charge from the Fund at the address or telephone numbers listed below or
from the Fund's Distributor, Dean Witter Distributors Inc., or from Dean Witter
Reynolds Inc. at any of its branch offices. This Statement of Additional
Information is not a Prospectus. It contains information in addition to and more
detailed than that set forth in the Prospectus. It is intended to provide you
additional information regarding the activities and operations of the Fund, and
should be read in conjunction with the Prospectus.
Dean Witter
World Wide Investment Trust
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 869-NEWS
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<S> <C>
The Fund and its Management............................................................ 3
Trustees and Officers.................................................................. 10
Investment Practices and Policies...................................................... 15
Investment Restrictions................................................................ 31
Portfolio Transactions and Brokerage................................................... 32
The Distributor........................................................................ 35
Shareholder Services................................................................... 39
Redemptions and Repurchases............................................................ 43
Dividends, Distributions and Taxes..................................................... 45
Performance Information................................................................ 47
Custodian and Transfer Agent........................................................... 48
Independent Accountants................................................................ 48
Description of Shares of the Fund...................................................... 48
Reports to Shareholders................................................................ 49
Legal Counsel.......................................................................... 49
Experts................................................................................ 49
Registration Statement................................................................. 49
Financial Statements................................................................... 50
Report of Independent Accountants...................................................... 78
</TABLE>
2
<PAGE>
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------------
THE FUND
The Fund is a trust of the type commonly known as a "Massachusetts business
trust" and was organized under the laws of the Commonwealth of Massachusetts on
July 11, 1983.
THE INVESTMENT MANAGER
Dean Witter InterCapital Inc. (the "Investment Manager" or "InterCapital"),
a Delaware corporation, whose address is Two World Trade Center, New York, New
York 10048, is the Fund's Investment Manager. InterCapital is a wholly-owned
subsidiary of Dean Witter, Discover & Co. ("DWDC"), a Delaware corporation. In
an internal reorganization which took place in January, 1993, InterCapital
assumed the investment advisory, administrative and management activities
previously performed by the InterCapital Division of Dean Witter Reynolds Inc.
("DWR"), a broker-dealer affiliate of InterCapital. (As hereinafter used in this
Statement of Additional Information, the terms "InterCapital" and "Investment
Manager" refer to DWR's InterCapital Division prior to the internal
reorganization and Dean Witter InterCapital Inc. thereafter.) The daily
management of the Fund is conducted by or under the direction of officers of the
Fund and of the Investment Manager and Sub-Adviser, subject to periodic review
by the Fund's Board of Trustees. In addition, Trustees of the Fund provide
guidance on economic factors and interest rate trends. Information as to these
Trustees and officers is contained under the caption "Trustees and Officers".
InterCapital is also the investment manager or investment adviser of the
following management investment companies: Active Assets Money Trust, Active
Assets Tax-Free Trust, Active Assets California Tax-Free Trust, Active Assets
Government Securities Trust, InterCapital Income Securities Inc., InterCapital
Insured Municipal Bond Trust, InterCapital Insured Municipal Trust, InterCapital
Insured Municipal Income Trust, InterCapital Insured Municipal Securities,
InterCapital California Insured Municipal Income Trust, InterCapital Insured
California Municipal Securities, InterCapital Quality Municipal Investment
Trust, InterCapital Quality Municipal Income Trust, InterCapital Quality
Municipal Securities, InterCapital California Quality Municipal Securities,
InterCapital New York Quality Municipal Securities, High Income Advantage Trust,
High Income Advantage Trust II, High Income Advantage Trust III, Dean Witter
Government Income Trust, Dean Witter High Yield Securities Inc., Dean Witter
Tax-Free Daily Income Trust, Dean Witter Tax-Exempt Securities Trust, Dean
Witter Dividend Growth Securities Inc., Dean Witter Natural Resource Development
Securities Inc., Dean Witter American Value Fund, Dean Witter Developing Growth
Securities Trust, Dean Witter U.S. Government Money Market Trust, Dean Witter
Variable Investment Series, Dean Witter World Wide Investment Trust, Dean Witter
Select Municipal Reinvestment Fund, Dean Witter U.S. Government Securities
Trust, Dean Witter World Wide Income Trust, Dean Witter California Tax-Free
Income Fund, Dean Witter New York Tax-Free Income Fund, Dean Witter Convertible
Securities Trust, Dean Witter Federal Securities Trust, Dean Witter Value-Added
Market Series, Dean Witter Utilities Fund, Dean Witter California Tax-Free Daily
Income Trust, Dean Witter Strategist Fund, Dean Witter Intermediate Income
Securites, Dean Witter Capital Growth Securities, Dean Witter Precious Metals
and Minerals Trust, Dean Witter New York Municipal Money Market Trust, Dean
Witter European Growth Fund Inc., Dean Witter Global Short-Term Income Fund
Inc., Dean Witter Pacific Growth Fund Inc., Dean Witter Multi-State Municipal
Series Trust, Dean Witter Short-Term U.S. Treasury Trust, Dean Witter Premier
Income Trust, Dean Witter Diversified Income Trust, Dean Witter Health Sciences
Trust, Dean Witter Retirement Series, Dean Witter Global Dividend Growth
Securities, Dean Witter Limited Term Municipal Trust, Dean Witter Short-Term
Bond Fund, Dean Witter Global Utilities Fund, Dean Witter High Income
Securities, Dean Witter National Municipal Trust, Dean Witter International
SmallCap Fund, Dean Witter Mid-Cap Growth Fund, Dean Witter Select Dimensions
Investment Series, Dean Witter Global Asset Allocation Fund, Dean Witter
Balanced Growth Fund, Dean Witter Balanced Income Fund, Dean Witter Hawaii
Municipal Trust, Dean Witter Capital Appreciation Fund, Dean Witter Information
Fund, Dean Witter Intermediate Term U.S. Treasury Trust, Dean Witter Japan Fund,
Dean Witter Income Builder Fund, Municipal Income Trust, Municipal Income Trust
II, Municipal
3
<PAGE>
Income Trust III, Municipal Income Opportunities Trust, Municipal Income
Opportunities Trust II, Municipal Income Opportunities Trust III, Municipal
Premium Income Trust and Prime Income Trust. The foregoing investment companies,
together with the Fund, are collectively referred to as the Dean Witter Funds.
In addition, Dean Witter Services Company Inc. ("DWSC"), a wholly-owned
subsidiary of InterCapital, serves as manager for the following investment
companies for which TCW Funds Management, Inc. is the investment adviser: TCW/DW
Core Equity Trust, TCW/DW North American Government Income Trust, TCW/DW Latin
American Growth Fund, TCW/DW Income and Growth Fund, TCW/DW Small Cap Growth
Fund, TCW/DW Balanced Fund, TCW/DW Total Return Trust, TCW/DW Mid-Cap Equity
Trust, TCW/DW Emerging Markets Opportunities Trust, TCW/DW Term Trust 2000,
TCW/DW Term Trust 2002 and TCW/DW Term Trust 2003 (the "TCW/DW Funds").
InterCapital also serves as: (i) sub-adviser to Templeton Global Opportunities
Trust, an open-end investment company; (ii) administrator of The BlackRock
Strategic Term Trust Inc., a closed-end investment company; and (iii)
sub-administrator of MassMutual Participation Investors and Templeton Global
Governments Income Trust, closed-end investment companies.
Pursuant to an Investment Management Agreement (the "Management Agreement")
with the Investment Manager, the Fund has retained the Investment Manager to
manage the investment of the Fund's United States investments, including the
placing of orders for the purchase and sale of portfolio securities, and to
supervise the investment of all of the Fund's assets. The Investment Manager, in
conjunction with Morgan Grenfell Investment Services Ltd. (the "Sub-Adviser"),
obtains and evaluates such information and advice relating to the economy,
securities markets, and specific securities as it considers necessary or useful
to continuously manage the assets of the Fund in a manner consistent with its
investment objective.
Under the terms of the Management Agreement, in addition to managing the
Fund's investments, the Investment Manager maintains certain of the Fund's books
and records and furnishes, at its own expense, such office space, facilities,
equipment, clerical help and bookkeeping and certain legal services as the Fund
may reasonably require in the conduct of its business, including the preparation
of prospectuses, statements of additional information, proxy statements and
reports required to be filed with federal and state securities commissions
(except insofar as the participation or assistance of independent accountants
and attorneys is, in the opinion of the Investment Manager, necessary or
desirable). In addition, the Investment Manager pays the salaries of all
personnel, including officers of the Fund, who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone service, heat,
light, power and other utilities provided to the Fund.
Pursuant to a Services Agreement between InterCapital and DWSC, InterCapital
has retained DWSC to provide administrative services to the Fund.
Expenses not expressly assumed by the Investment Manager under the
Management Agreement, by the Sub-Adviser pursuant to the Sub-Advisory Agreement
(see below), or by the Distributor of the Fund's shares, Dean Witter
Distributors Inc. ("Distributors" or the "Distributor") (see "The Distributor"),
will be paid by the Fund. The expenses borne by the Fund include, but are not
limited to: expenses of the Plan of Distribution pursuant to Rule 12b-1 (see
"The Distributor"), charges and expenses of any registrar, custodian, stock
transfer and dividend disbursing agent; brokerage commissions; taxes; engraving
and printing of share certificates; registration costs of the Fund 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 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 the Sub-Adviser or
any corporate affiliate of the Investment Manager or the Sub-Adviser; all
expenses incident to any dividend, withdrawal or redemption options; charges and
expenses of any outside service used for pricing of the Fund's shares; fees and
expenses of the Fund's legal counsel, including
4
<PAGE>
counsel to the Trustees who are not interested persons of the Fund or of the
Investment Manager or the Sub-Adviser (not including compensation or expenses of
attorneys who are employees of the Investment Manager or the Sub-Adviser) and
independent accountants; membership dues of industry associations; interest on
Fund borrowings; postage; insurance premiums on property or personnel (including
officers and Trustees) of the Fund which inure to its benefit; extraordinary
expenses (including, but not limited to, legal claims and liabilities and
litigation costs and any indemnification relating thereto); and all other costs
of the Fund's operation.
The Management Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Investment Manager is not liable to the Fund or any
of its investors for any act or omission by the Investment Manager or for any
losses sustained by the Fund or its investors. The Management Agreement in no
way restricts the Investment Manager from acting as investment manager or
adviser to others.
As full compensation for the services and facilities furnished to the Fund
and expenses of the Fund assumed by the Investment Manager, the Fund pays the
Investment Manager monthly compensation calculated daily by applying the
following annual rates to the Fund's daily net assets: 1.00% of the portion of
daily net assets not exceeding $500 million and 0.95% of the portion of daily
net assets exceeding $500 million.
Pursuant to a Sub-Advisory Agreement between the Investment Manager and
Sub-Adviser, the Sub-Adviser has been retained, subject to the overall
supervision of the Investment Manager and the Trustees of the Fund, to
continuously furnish investment advice concerning individual security
selections, asset allocations and overall economic trends with respect to
issuers located outside the United States, and to manage the portion of the
Fund's portfolio invested in securities issued by issuers located outside the
United States.
Morgan Grenfell Investment Services Limited ("MGIS") was organized as a
British corporation in 1972 and manages, as of December 31, 1995, assets of
approximately $12.9 billion primarily for U.S. corporate and public employee
benefit plans, investment companies, endowments and foundations. MGIS' principal
office is located at 20 Finsbury Circus, London, England. MGIS is a subsidiary
of London based Morgan Grenfell Asset Management Limited which is itself a
subsidiary of London-based Morgan Grenfell Group plc (which is owned by Deutsche
Bank AG, an international commercial and investment banking group) and is
registered as an investment adviser under the Investment Advisers Act of 1940.
In 1838 Morgan Grenfell was founded to provide merchant banking services,
primarily trade financing between Great Britain and the United States. In 1958,
its investment management arm began operations. In recent years Morgan Grenfell
Group plc has achieved a prominent position in the securities industry by
providing investment and commercial banking services, financial services, and
discretionary management and advisory services covering all of the world's
leading securities markets. Morgan Grenfell Asset Management Limited, through
its various investment management subsidiaries, which have extensive experience
in global investment management, is managing, as of December 31, 1995,
approximately $95 billion worldwide.
Both the Investment Manager and the Sub-Adviser have authorized any of their
directors, officers and employees who have been elected as Trustees or officers
of the Fund to serve in the capacities in which they have been elected. Services
furnished by the Investment Manager and the Sub-Adviser may be furnished by
directors, officers and employees of the Investment Manager and the Sub-Adviser.
In connection with the services rendered by the Sub-Adviser, the Sub-Adviser
bears the following expenses: (a) the salaries and expenses of its personnel;
and (b) all expenses incurred by it in connection with performing the services
provided by it as Sub-Adviser, as described above.
As full compensation for the services and facilities furnished to the Fund
and the Investment Manager and expenses of the Fund and the Investment Manager
assumed by the Sub-Adviser, the Investment Manager pays the Sub-Adviser monthly
compensation equal to 40% of the Investment Manager's monthly compensation
payable under the Management Agreement.
5
<PAGE>
Pursuant to the Management Agreement and the Sub-Advisory Agreement, total
operating expenses of the Fund are subject to applicable limitations under rules
and regulations of states where the Fund is authorized to sell its shares.
Therefore, operating expenses are effectively subject to the most restrictive of
such limitations as the same may be amended from time to time. Presently, the
most restrictive limitation is as follows. If, in any fiscal year, the Fund's
total operating expenses, exclusive of taxes, interest, brokerage fees,
distribution fees and extraordinary expenses (to the extent permitted by
applicable state securities laws and regulations), exceed 2 1/2% of the first
$30,000,000 of average daily net assets, 2% of the next $70,000,000 and 1 1/2%
of any excess over $100,000,000, the Investment Manager will reimburse the Fund
for the amount of such excess. Pursuant to the Sub-Advisory Agreement, if any
such reimbursement is made by the Investment Manager, the Investment Manager
will, in turn, be reimbursed for 40% of such payment by the Sub-Adviser. The
reimbursement, if any, will be calculated daily and credited on a monthly basis.
The Management Agreement and the Sub-Advisory Agreement (the "Agreements")
were initially approved by the Board of Trustees on July 26, 1995 and by the
shareholders of the Fund at a Special Meeting of Shareholders held on October
31, 1995. Both Agreements may be terminated at any time, without penalty, on
thirty days' notice by the Trustees of the Fund, by the holders of a majority,
as defined in the Investment Company Act of 1940, as amended (the "Act"), of the
outstanding shares of the Fund, or by the Investment Manager or (in the case of
the Sub-Advisory Agreement) by the Sub-Adviser. The Agreements will
automatically terminate in the event of their assignment (as defined in the
Act).
Under their terms, both Agreements have an initial term ending April 30,
1997 and will continue from year to year thereafter, provided continuance of
each Agreement is approved at least annually by the vote of the holders of a
majority, as defined in the Act, of the outstanding shares of the Fund, or by
the Trustees of the Fund; provided that in either event such continuance is
approved annually by the vote of a majority of the Trustees of the Fund who are
not parties to the Agreements or "interested persons" (as defined in the Act) of
any such party (the "Independent Trustees"), which votes must be cast in person
at a meeting called for the purpose of voting on such approval.
The Fund has acknowledged that the name "Dean Witter" is a property right of
DWR. The Fund has agreed that DWR or its parent company may use or, at any time,
permit others to use the name "Dean Witter". The Fund has also agreed that in
the event the Investment Management Agreement between InterCapital and the Fund
is terminated, or if the affiliation between InterCapital and its parent company
is terminated, the Fund will eliminate the name "Dean Witter" from its name if
DWR or its parent company shall so request.
PRIOR INVESTMENT MANAGEMENT AND INVESTMENT ADVISORY AGREEMENTS. Prior to
August, 1995, the Fund was advised by three separate investment advisers:
InterCapital, Daiwa International Capital Management Corp. ("DICAM") and NatWest
Investment Management Limited ("NWIM"). InterCapital, DICAM and NWIM are
sometimes collectively referred to herein as the "Prior Investment Advisers."
Each of the Prior Investment Advisers had exclusive investment responsibility
with respect to the Fund's investments in a particular area of the world.
InterCapital was responsible for investing in North America and South America,
pursuant to an Investment Management Agreement with the Fund, DICAM was
responsible for investing in the Pacific Basin pursuant to an Investment
Advisory Agreement with the Fund, and NWIM was responsible for investing in
Europe and all other areas of the world not covered by InterCapital or DICAM,
pursuant to an Investment Advisory Agreement with the Fund. These agreements are
sometimes collectively referred to as the "Prior Agreements" and sometimes
individually referred to as the "Prior Investment Management Agreement" or the
"Prior Investment Advisory Agreement(s)," as applicable. DICAM was assisted in
providing services to the Fund by its parent, Daiwa International Capital
Management Co., Ltd. ("DICAM, Ltd."), at cost, pursuant to a sub-advisory
agreement between DICAM and DICAM, Ltd. (sometimes referred to as the "Prior
Sub-Advisory Agreement").
6
<PAGE>
Under the terms of the Prior Investment Management Agreement with
InterCapital and the Prior Investment Advisory Agreements with DICAM and NWIM,
each of InterCapital, DICAM and NWIM, subject to the supervision of the Fund's
Trustees and in conformity with the stated policies of the Fund, provided
advisory services with regard to the investment operations and composition of
the Fund's portfolio in the respective geographic regions as noted above,
including the purchase, retention, disposition and loan of securities.
Each of the Prior Investment Advisers had authorized any of its directors,
officers and employees who had been elected as Trustees or officers of the Fund
to serve in the capacities in which they had been elected. Services furnished by
the Prior Investment Advisers could have been furnished by directors, officers
and employees of the respective Prior Investment Adviser. In connection with the
services rendered by each Prior Investment Adviser, such Prior Investment
Adviser bore the following expenses: (a) the salaries and expenses of all
personnel of such Prior Investment Adviser; and (b) all expenses incurred by
such Prior Investment Adviser in connection with performing the services
provided by it as described above.
Under the terms of the Prior Investment Management Agreement, in addition to
managing the Fund's North and South American investments, InterCapital
maintained the Fund's books and records and InterCapital furnished, at its
expense, such office space, facilities, equipment, clerical help, bookkeeping
and legal services as the Fund may reasonably have required in the conduct of
its business, including the preparation of prospectuses and statements of
additional information, proxy statements and reports required to be filed with
federal and state securities commissions (except insofar as the participation or
assistance of independent accountants and attorneys was, in the opinion of
InterCapital, necessary or desirable). InterCapital also bore the cost of
telephone service, heat, light, power and other utilities provided to the Fund.
Effective December 31, 1993, pursuant to a Services Agreement between
InterCapital and DWSC, DWSC began to provide the administrative services to the
Fund which were previously performed directly by InterCapital. On April 17,
1995, DWSC was reorganized in the State of Delaware, necessitating the entry
into a new Services Agreement by InterCapital and DWSC on such date. The
foregoing internal reorganizations did not result in any change in the nature or
scope of the administrative services being provided to the Fund or any of the
fees being paid by the Fund for the overall services being performed under the
terms of the Prior Investment Management Agreement.
Expenses not expressly assumed by the Prior Investment Advisers under the
Prior Agreements or by the Distributor (see "The Distributor"), were paid by the
Fund. The expenses borne by the Fund included, but were not limited to: fees
pursuant to the Plan of Distribution (see "The Distributor"); 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 Fund 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
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 were not employees of
the Prior Investment Advisers or any corporate affiliate of the Prior Investment
Advisers; all expenses incident to any dividend, withdrawal or redemption
options; charges and expenses of any outside service used for pricing of the
Fund's shares; fees and expenses of legal counsel, including counsel to the
Trustees who were not interested persons of the Fund or of the Prior Investment
Advisers (not including compensation or expenses of attorneys who are employees
of the Prior Investment Advisers) and independent accountants; membership dues
of industry associations; interest on Fund borrowings; postage; insurance
premiums on property or personnel (including officers and Trustees) of the Fund
7
<PAGE>
which inured to its benefit; extraordinary expenses (including, but not limited
to, legal claims and liabilities and litigation costs and any indemnification
relating thereto); and all other costs of the Fund's operation.
As full compensation for the services and facilities furnished to the Fund
and expenses of the Fund assumed by the Prior Investment Advisers, the Fund paid
the Prior Investment Advisers aggregate monthly compensation calculated daily by
applying the annual rate of 1.0% to the net assets of the Fund up to $500
million and 0.95% to the net assets of the Fund over $500 million, determined as
of the close of each business day. Pursuant to their respective Prior Agreements
with the Fund, InterCapital, DICAM and NWIM received fees at the annual rates of
0.55%, 0.225% and 0.225%, respectively, of average daily net assets up to $500
million and 0.5225%, 0.21375% and 0.21375%, respectively, of the Fund's average
daily net assets over $500 million. This total fee was greater than that paid by
most other investment companies.
Pursuant to the Prior Agreements, total operating expenses of the Fund were
subject to applicable limitations under rules and regulations of states where
the Fund is authorized to sell its shares. Therefore, operating expenses were
effectively subject to the most restrictive of such applicable expense
limitations as the same may have been amended from time to time. The most
restrictive limitation applicable to the Fund was as follows: If, in any fiscal
year, the Fund'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), exceeded 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, then the Prior Investment Advisers would reimburse the Fund for
the amount of such excess. In the event reimbursement was required, InterCapital
was responsible for 55%, DICAM 22.5% and NWIM 22.5%. Such amount, if any, would
have been calculated daily and paid on a monthly basis.
The respective Prior Agreements provided that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, no Prior Investment Adviser or Sub-adviser was liable to
the Fund or any of its investors for any act or omission by such Prior
Investment Adviser or Sub-adviser or for any losses sustained by the Fund or its
investors.
The Prior Investment Management Agreement with InterCapital was initially
approved by the Board of Trustees of the Fund on October 30, 1992 and by the
shareholders of the Fund at a Meeting of Shareholders held on January 12, 1993.
The Prior Investment Management Agreement was substantially identical to a prior
investment management agreement which was entered into on August 26, 1983 and
originally approved by DWR, the then sole shareholder of the Fund, and by the
Fund's Trustees, including the affirmative vote of a majority of the Independent
Trustees, which vote was cast in person at a meeting called for the purpose of
voting on the approval of such Agreement. The Prior Investment Management
Agreement took effect on June 30, 1993 upon the spin-off by Sears, Roebuck and
Co. of its remaining shares of DWDC. The Prior Agreement provided that it could
have been terminated at any time, without penalty, on thirty days' notice by the
Trustees of the Fund, by the holders of a majority, as defined in the Act, of
the Fund's shares, or by the Investment Manager. The Prior Investment Management
Agreement provided that it would automatically terminate in the event of its
assignment (as defined in the Act and the rules thereunder).
By its terms, the Prior Investment Management Agreement had an initial term
ended April 30, 1994 and provided that it would continue from year to year
thereafter, provided continuance of the Agreement was approved at least annually
by the vote of the holders of a majority, as defined in the Act, of the
outstanding shares of the Fund, or by the Board of Trustees of the Fund;
provided that in either event such continuance was approved annually by the vote
of a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval. At their meeting held on April 8,
1994, the Fund's Board of Trustees, including all of the Independent Trustees,
approved continuation of the Prior Investment Management Agreement until April
30, 1995 and amended its terms to lower
8
<PAGE>
management fees charged on average daily net assets of the Fund in excess of
$500 million to 0.5225%. At their meeting held on April 20, 1995, the Fund's
Board of Trustees, including all of the Independent Trustees, approved
continuation of the Prior Investment Management Agreement until April 30, 1996.
The Prior Investment Advisory Agreements and the Prior Sub-Advisory
Agreement were entered into on August 26, 1983 and were originally approved by
DWR, the then sole shareholder of the Fund, and by the Fund's Trustees,
including the affirmative vote of a majority of the Independent Trustees. By
their terms, these agreements had initial terms ended July 31, 1984 and were
subject to the same renewal and termination provisions as the Prior Investment
Management Agreement. At their meeting held on April 8, 1994, the Fund's Board
of Trustees, including all of the Independent Trustees, approved continuation of
the Prior Investment Advisory Agreements until April 30, 1995 and amended the
terms of the Prior Investment Advisory Agreements to lower advisory fees charged
on average daily net assets of the Fund in excess of $500 million to 0.21375%.
At their meeting held on April 20, 1995, the Fund's Board of Trustees, including
all of the Independent Trustees, approved continuation of the Prior Investment
Advisory Agreements until April 30, 1996.
At their meeting held on July 26, 1995, the Trustees of the Fund, including
all of the Independent Trustees, approved the present management structure of
the Fund, as described above under "The Investment Manager," and also approved
an Investment Management Agreement with InterCapital and a Sub-Advisory
Agreement with InterCapital and MGIS (the "Interim Agreements"), which took
effect on August 1, 1995 and terminated on October 31, 1995 upon the
effectiveness of the present Investment Management and Sub-Advisory Agreements.
Other than the provisions pursuant to which the Interim Agreements took effect
and were terminated, the Interim Agreements were substantially identical to the
present Investment Management and Sub-Advisory Agreements except that under the
Interim Agreements: (i) InterCapital received an investment management fee at
the annual rate of 0.55% on assets up to $500 million and 0.5225% on assets over
$500 million, and (ii) MGIS received a sub-advisory fee directly from the Fund
at the annual rate of 0.45% on assets up to $500 million and 0.4275% on assets
over $500 million.
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 DWR and SPS
Transaction Services, Inc. (an affiliate of DWR) for their employees as
qualified under Section 401(k) of the Internal Revenue Code, owned approximately
7.0% of the outstanding shares of the Fund on April 30, 1996.
------------------------
For the fiscal years ended March 31, 1994, 1995 and 1996, the Fund paid to
the Prior Investment Advisers (which served the Fund in such capacities until
July 31, 1995) and to the Investment Manager (which has served the Fund in such
capacity since August 1, 1995) compensation totalling $3,072,025, $5,588,682 and
$5,134,018, respectively. The Fund's expenses did not exceed the expense
limitation set forth above during the fiscal years ended March 31, 1994, 1995
and 1996.
9
<PAGE>
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
The Trustees and Executive Officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with
InterCapital and with the 81 investment companies managed or advised by
InterCapital (the "Dean Witter Funds"), as well as with the 12 investment
companies for which InterCapital is the Manager and TCW Funds Management, Inc.
is the Investment Adviser ("TCW/ DW Funds"), are shown below.
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND
AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ----------------------------------------- --------------------------------------------------------------------
<S> <C>
Michael Bozic (55) Chairman and Chief Executive Officer of Levitz Furniture Corporation
Trustee (since November, 1995); Director or Trustee of the Dean Witter
c/o Levitz Furniture Corporation Funds; formerly President and Chief Executive Officer of Hills
6111 Broken Sound Parkway, N.W. Department Stores (May, 1991-July, 1995); formerly variously
Boca Raton, Florida Chairman, Chief Executive Officer, President and Chief Operating
Officer (1987-1991) of the Sears Merchandise Group of Sears, Roebuck
and Co.; Director of Eaglemark Financial Services, Inc., the United
Negro College Fund and Weirton Steel Corporation.
Charles A. Fiumefreddo* (63) Chairman, Chief Executive Officer and Director of InterCapital, DWSC
Chairman, President, and Distributors; Executive Vice President and Director of DWR;
Chief Executive Officer and Trustee Chairman, Director or Trustee, President and Chief Executive Officer
Two World Trade Center of the Dean Witter Funds; Chairman, Chief Executive Officer and
New York, New York Trustee of the TCW/DW Funds; Chairman and Director of Dean Witter
Trust Company ("DWTC"); Director and/or officer of various DWDC
subsidiaries; formerly Executive Vice President and Director of DWDC
(until February, 1993).
Edwin J. Garn (63) Director or Trustee of the Dean Witter Funds; formerly United States
Trustee Senator (R-Utah) (1974-1992) and Chairman, Senate Banking Committee
c/o Huntsman Chemical (1980-1986); formerly Mayor of Salt Lake City, Utah (1971-1974);
Corporation formerly Astronaut, Space Shuttle Discovery (April 12-19, 1985);
500 Huntsman Way Vice Chairman, Huntsman Chemical Corporation (since January, 1993);
Salt Lake City, Utah Director of Franklin Quest (time management systems) and John Alden
Financial Corp.; Member of the board of various civic and charitable
organizations.
John R. Haire (71) Chairman of the Audit Committee and Chairman of the Committee of the
Trustee Independent Directors or Trustees and Director or Trustee of the
Two World Trade Center Dean Witter Funds; Trustee of the TCW/DW Funds; formerly President,
New York, New York Council for Aid to Education (1978-1989) and Chairman and Chief
Executive Officer of Anchor Corporation, an Investment Adviser
(1964-1978); Director of Washington National Corporation
(insurance).
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND
AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ----------------------------------------- --------------------------------------------------------------------
<S> <C>
Dr. Manuel H. Johnson (47) Senior Partner, Johnson Smick International, Inc., a consulting
Trustee firm; Koch Professor of International Economics and Director of the
c/o Johnson Smick International, Inc. Center for Global Market Studies at George Mason University;
1133 Connecticut Avenue, N.W. Co-Chairman and a founder of the Group of Seven Council (G7C), an
Washington, DC international economic commission; Director or Trustee of the Dean
Witter Funds; Trustee of the TCW/DW Funds; Director of Greenwich
Capital Markets, Inc. (broker-dealer); Director of NASDAQ (since
June, 1995); formerly Vice Chairman of the Board of Governors of the
Federal Reserve System (February, 1988-August, 1990) and Assistant
Secretary of the U.S. Treasury (1982-1986).
Paul Kolton (72) Director or Trustee of the Dean Witter Funds; Chairman of the Audit
Trustee Committee and Chairman of the Committee of the Independent Trustees
c/o Gordon Altman Butowsky and Trustee of the TCW/DW Funds; formerly Chairman of the Financial
Weitzen Shalov & Wein Accounting Standards Advisory Council and Chief Executive Officer of
Counsel to the Independent the American Stock Exchange; Director of UCC Investors Holding Inc.
Trustees (Uniroyal Chemical Company Inc.); director or trustee of various
114 West 47th Street not-for-profit organizations.
New York, New York
Michael E. Nugent (60) General Partner, Triumph Capital, L.P., a private investment
Trustee partnership (since April, 1988); Director or Trustee of the Dean
c/o Triumph Capital, L.P. Witter Funds; Trustee of the TCW/DW Funds; formerly Vice President,
237 Park Avenue Bankers Trust Company and BT Capital Corporation (1984-1988);
New York, New York Director of various business organizations.
Philip J. Purcell* (52) Chairman of the Board of Directors and Chief Executive Officer of
Trustee DWDC, DWR and Novus Credit Services Inc.; Director of InterCapital,
Two World Trade Center DWSC and Distributors; Director or Trustee of the Dean Witter Funds;
New York, New York Director and/or officer of various DWDC subsidiaries.
John L. Schroeder (65) Retired; Director or Trustee of the Dean Witter Funds; Trustee of
Trustee the TCW/DW Funds; Director of Citizens Utilities Company; formerly
c/o Gordon Altman Butowsky Executive Vice President and Chief Investment Officer of the Home
Weitzen Shalov & Wein Insurance Company (August, 1991-September, 1995), Chairman and Chief
Counsel to the Independent Investment Officer of Axe-Houghton Management and the Axe-Houghton
Trustees Funds (April, 1983-June, 1991) and President of USF&G Financial
114 West 47th Street Services, Inc. (June 1990-June, 1991).
New York, New York
Sheldon Curtis (64) Senior Vice President, Secretary and General Counsel of InterCapital
Vice President, Secretary and and DWSC; Senior Vice President and Secretary of DWTC; Senior Vice
General Counsel President, Assistant Secretary and Assistant General Counsel of
Two World Trade Center Distributors; Assistant Secretary of DWR; Vice President, Secretary
New York, New York and General Counsel of the Dean Witter Funds and the TCW/DW Funds.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND
AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ----------------------------------------- --------------------------------------------------------------------
<S> <C>
Mark Bavoso (35) Senior Vice President of InterCapital; Vice President of various
Vice President Dean Witter Funds.
Two World Trade Center
New York, New York
Thomas F. Caloia (50) First Vice President (since May, 1991) and Assistant Treasurer
Treasurer (since January, 1993) of InterCapital; First Vice President and
Two World Trade Center Assistant Treasurer of DWSC; Treasurer of the Dean Witter Funds and
New York, New York the TCW/DW Funds; previously Vice President of InterCapital.
<FN>
- ------------------------
* Denotes Trustees who are "interested persons" of the Fund, as defined in
the Act.
</TABLE>
In addition, Robert M. Scanlan, President and Chief Operating Officer of
InterCapital and DWSC, Executive Vice President of Distributors and DWTC and
Director of DWTC, David A. Hughey, Executive Vice President and Chief
Administrative Officer of InterCapital, DWSC, Distributors and DWTC and Director
of DWTC, Robert S. Giambrone, Senior Vice President of InterCapital, DWSC,
Distributors and DWTC and Director of DWTC, Joseph J. McAlinden, Executive Vice
President and Chief Investment Officer of InterCapital, and Kenton J.
Hinchliffe, Ira N. Ross and Paul D. Vance, Senior Vice Presidents of
InterCapital, are Vice Presidents of the Fund, and Marilyn K. Cranney and Barry
Fink, First Vice Presidents and Assistant General Counsels of InterCapital and
DWSC, LouAnne D. McInnis and Ruth Rossi, Vice Presidents and Assistant General
Counsels of InterCapital and DWSC, and Carsten Otto, a staff attorney with
InterCapital, are Assistant Secretaries of the Fund.
THE BOARD OF TRUSTEES, THE INDEPENDENT TRUSTEES, AND THE COMMITTEES
The Board of Trustees consists of nine (9) trustees. These same individuals
also serve as directors or trustees for all of the Dean Witter Funds, and are
referred to in this section as Trustees. As of the date of this Statement of
Additional Information, there are a total of 81 Dean Witter Funds, comprised of
121 portfolios. As of April 30, 1996, the Dean Witter Funds had total net assets
of approximately $75.7 billion and more than five million shareholders.
Seven Trustees (77% of the total number) have no affiliation or business
connection with InterCapital or any of its affiliated persons and do not own any
stock or other securities issued by InterCapital's parent company, DWDC. These
are the "disinterested" or "independent" Trustees. The other two Trustees (the
"management Trustees") are affiliated with InterCapital. Five of the seven
independent Trustees are also Independent Trustees of the TCW/DW Funds.
Law and regulation establish both general guidelines and specific duties for
the Independent Trustees. The Dean Witter Funds seek as Independent Trustees
individuals of distinction and experience in business and finance, government
service or academia; these are people whose advice and counsel are in demand by
others and for whom there is often competition. To accept a position on the
Funds' Boards, such individuals may reject other attractive assignments because
the Funds make substantial demands on their time. Indeed, by serving on the
Funds' Boards, certain Trustees who would otherwise be qualified and in demand
to serve on bank boards would be prohibited by law from doing so.
All of the Independent Trustees serve as members of the Audit Committee and
the Committee of the Independent Trustees. Three of them also serve as members
of the Derivatives Committee. During the calendar year ended December 31, 1995,
the three Committees held a combined total of fifteen meetings. The Committees
hold some meetings at InterCapital's offices and some outside InterCapital.
Management Trustees or officers do not attend these meetings unless they are
invited for purposes of furnishing information or making a report.
The Committee of the Independent Trustees is charged with recommending to
the full Board approval of management, advisory and administration contracts,
Rule 12b-1 plans and distribution and
12
<PAGE>
underwriting agreements; continually reviewing Fund performance; checking on the
pricing of portfolio securities, brokerage commissions, transfer agent costs and
performance, and trading among Funds in the same complex; and approving fidelity
bond and related insurance coverage and allocations, as well as other matters
that arise from time to time. The Independent Trustees are required to select
and nominate individuals to fill any Independent Trustee vacancy on the Board of
any Fund that has a Rule 12b-1 plan of distribution. Most of the Dean Witter
Funds have such a plan.
The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing engagement;
approving professional services provided by the independent accountants and
other accounting firms prior to the performance of such services; reviewing the
independence of the independent accountants; considering the range of audit and
non-audit fees; reviewing the adequacy of the Fund's system of internal
controls; and preparing and submitting Committee meeting minutes to the full
Board.
Finally, the Board of each Fund has formed a Derivatives Committee to
establish parameters for and oversee the activities of the Fund with respect to
derivative investments, if any, made by the Fund.
DUTIES OF CHAIRMAN OF COMMITTEES
The Chairman of the Committees maintains an office at the Funds'
headquarters in New York. He is responsible for keeping abreast of regulatory
and industry developments and the Funds' operations and management. He screens
and/or prepares written materials and identifies critical issues for the
Independent Trustees to consider, develops agendas for Committee meetings,
determines the type and amount of information that the Committees will need to
form a judgment on various issues, and arranges to have that information
furnished to Committee members. He also arranges for the services of independent
experts and consults with them in advance of meetings to help refine reports and
to focus on critical issues. Members of the Committees believe that the person
who serves as Chairman of all three Committees and guides their efforts is
pivotal to the effective functioning of the Committees.
The Chairman of the Committees also maintains continuous contact with the
Funds' management, with independent counsel to the Independent Trustees and with
the Funds' independent auditors. He arranges for a series of special meetings
involving the annual review of investment advisory, management and other
operating contracts of the Funds and, on behalf of the Committees, conducts
negotiations with the Investment Manager and other service providers. In effect,
the Chairman of the Committees serves as a combination of chief executive and
support staff of the Independent Trustees.
The Chairman of the Committees is not employed by any other organization and
devotes his time primarily to the services he performs as Committee Chairman and
Independent Trustee of the Dean Witter Funds and as an Independent Trustee of
the TCW/DW Funds. The current Committee Chairman has had more than 35 years
experience as a senior executive in the investment company industry.
ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL DEAN
WITTER FUNDS
The Independent Trustees and the Funds' management believe that having the
same Independent Trustees for each of the Dean Witter Funds avoids the
duplication of effort that would arise from having different groups of
individuals serving as Independent Trustees for each of the Funds or even of
sub-groups of Funds. They believe that having the same individuals serve as
Independent Trustees of all the Funds tends to increase their knowledge and
expertise regarding matters which affect the Fund complex generally and enhances
their ability to negotiate on behalf of each Fund with the Fund's service
providers. This arrangement also precludes the possibility of separate groups of
Independent Trustees arriving at conflicting decisions regarding operations and
management of the Funds and avoids the cost and confusion that would likely
ensue. Finally, having the same Independent Trustees serve on all Fund Boards
enhances the ability of each Fund to obtain, at modest cost to each separate
Fund, the services of Independent Trustees, and a Chairman of their Committees,
of the caliber, experience and business acumen of the individuals who serve as
Independent Trustees of the Dean Witter Funds.
13
<PAGE>
COMPENSATION OF INDEPENDENT TRUSTEES
The Fund pays each Independent Trustee an annual fee of $1,000 ($1,200 prior
to September 30, 1995) plus a per meeting fee of $50 for meetings of the Board
of Trustees or committees of the Board of Trustees attended by the Trustee (the
Fund pays the Chairman of the Audit Committee an annual fee of $750 and pays the
Chairman of the Committee of the Independent Trustees an additional annual fee
of $2,400, in each case inclusive of the Committee meeting fees). The Fund also
reimburses such Trustees for travel and other out-of-pocket expenses incurred by
them in connection with attending such meetings. Trustees and officers of the
Fund who are or have been employed by the Investment Manager or an affiliated
company receive no compensation or expense reimbursement from the Fund.
The following table illustrates the compensation paid to the Fund's
Independent Trustees by the Fund for the fiscal year ended March 31, 1996.
FUND COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
- -------------------------------------------------------------- ---------------
<S> <C>
Michael Bozic................................................. $1,600
Edwin J. Garn................................................. 1,650
John R. Haire................................................. 4,575(1)
Dr. Manuel H. Johnson......................................... 1,650
Paul Kolton................................................... 1,600
Michael E. Nugent............................................. 1,600
John L. Schroeder............................................. 1,600
</TABLE>
- ------------------------
(1) Of Mr. Haire's compensation from the Fund, $3,150 is paid to him as Chairman
of the Committee of the Independent Trustees ($2,400) and as Chairman of the
Audit Committee ($750).
The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1995 for services
to the 79 Dean Witter Funds and, in the case of Messrs. Haire, Johnson, Kolton,
Nugent and Schroeder, the 11 TCW/DW Funds that were in operation at December 31,
1995. With respect to Messrs. Haire, Johnson, Kolton, Nugent and Schroeder, the
TCW/ DW Funds are included solely because of a limited exchange privilege
between those Funds and five Dean Witter Money Market Funds. Mr. Schroeder was
elected as a Trustee of the TCW/DW Funds on April 20, 1995.
COMPENSATION FROM DEAN WITTER FUNDS AND TCW/DW FUNDS
<TABLE>
<CAPTION>
TOTAL
FOR SERVICE AS COMPENSATION
FOR SERVICE CHAIRMAN OF PAID
AS DIRECTOR OR COMMITTEES OF FOR SERVICES
TRUSTEE AND FOR SERVICE AS INDEPENDENT TO
COMMITTEE MEMBER TRUSTEE AND DIRECTORS/ 79 DEAN
OF 79 DEAN COMMITTEE MEMBER TRUSTEES AND WITTER
WITTER OF 11 TCW/DW AUDIT FUNDS AND 11
NAME OF INDEPENDENT TRUSTEE FUNDS FUNDS COMMITTEES TCW/DW FUNDS
- --------------------------- ---------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C>
Michael Bozic.............. $126,050 -- -- $126,050
Edwin J. Garn.............. 136,450 -- -- 136,450
John R. Haire.............. 98,450 $82,038 $217,350(2) 397,838
Dr. Manuel H. Johnson...... 136,450 82,038 -- 218,488
Paul Kolton................ 136,450 54,788 36,900(3) 228,138
Michael E. Nugent.......... 124,200 75,038 -- 199,238
John L. Schroeder.......... 136,450 46,964 -- 183,414
</TABLE>
- ------------------------
(2) For the 79 Dean Witter Funds in operation at December 31, 1995.
(3) For the 11 TCW/DW Funds in operation at December 31, 1995.
As of the date of this Statement of Additional Information, 57 of the Dean
Witter Funds, including the Fund, have adopted a retirement program under which
an Independent Trustee who retires after serving
14
<PAGE>
for at least five years (or such lesser period as may be determined by the
Board) as an Independent Director or Trustee of any Dean Witter Fund that has
adopted the retirement program (each such Fund referred to as an "Adopting Fund"
and each such Trustee referred to as an "Eligible Trustee") is entitled to
retirement payments upon reaching the eligible retirement age (normally, after
attaining age 72). Annual payments are based upon length of service. Currently,
upon retirement, each Eligible Trustee is entitled to receive from the Adopting
Fund, commencing as of his or her retirement date and continuing for the
remainder of his or her life, an annual retirement benefit (the "Regular
Benefit") equal to 25.0% of his or her Eligible Compensation plus 0.4166666% of
such Eligible Compensation for each full month of service as an Independent
Director or Trustee of any Adopting Fund in excess of five years up to a maximum
of 50.0% after ten years of service. The foregoing percentages may be changed by
the Board.(4) "Eligible Compensation" is one-fifth of the total compensation
earned by such Eligible Trustee for service to the Adopting Fund in the five
year period prior to the date of the Eligible Trustee's retirement. Benefits
under the retirement program are not secured or funded by the Adopting Funds.
The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees by the Fund for the fiscal year ended March 31, 1996
and by the 57 Dean Witter Funds (including the Fund) as of December 31, 1995,
and the estimated retirement benefits for the Fund's Independent Trustees from
the Fund as of March 31, 1996 and from the 57 Dean Witter Funds as of December
31, 1995.
RETIREMENT BENEFITS FROM THE FUND AND ALL DEAN WITTER FUNDS
<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS ESTIMATED ANNUAL
-------------------------------------- RETIREMENT BENEFITS BENEFITS
ESTIMATED ACCRUED AS EXPENSES UPON RETIREMENT(5)
CREDITED YEARS ESTIMATED ---------------------- ----------------------
OF SERVICE AT PERCENTAGE OF BY ALL FROM FROM ALL
RETIREMENT ELIGIBLE BY THE ADOPTING THE ADOPTING
NAME OF INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION FUND FUNDS FUND FUNDS
- --------------------------------- ------------------- ----------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael Bozic.................... 10 50.0% $ 436 $ 26,359 $ 950 $ 51,550
Edwin J. Garn.................... 10 50.0 660 41,901 950 51,550
John R. Haire.................... 10 50.0 2,692 261,763 2,363 130,404
Dr. Manuel H. Johnson............ 10 50.0 269 16,748 950 51,550
Paul Kolton...................... 10 49.6 902 113,186 1,121 58,325
Michael E. Nugent................ 10 50.0 472 30,370 950 51,550
John L. Schroeder................ 8 41.7 854 51,812 792 42,958
</TABLE>
- ------------------------
(4) An Eligible Trustee may elect alternate payments of his or her retirement
benefits based upon the combined life expectancy of such Eligible Trustee
and his or her spouse on the date of such Eligible Trustee's retirement. The
amount estimated to be payable under this method, through the remainder of
the later of the lives of such Eligible Trustee and spouse, will be the
actuarial equivalent of the Regular Benefit. In addition, the Eligible
Trustee may elect that the surviving spouse's periodic payment of benefits
will be equal to either 50% or 100% of the previous periodic amount, an
election that, respectively, increases or decreases the previous periodic
amount so that the resulting payments will be the actuarial equivalent of
the Regular Benefit.
(5) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in Footnote (4) above.
As of the date of this Statement of Additional Information, the aggregate
number of shares of beneficial interest of the Fund owned by the Fund's officers
and Trustees as a group was less than 1 percent of the Fund's shares of
beneficial interest outstanding.
INVESTMENT PRACTICES AND POLICIES
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
As discussed in the Prospectus, the Fund may enter into forward foreign
currency exchange contracts ("forward contracts") as a hedge against
fluctuations in future foreign exchange rates. The Fund will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through entering
into forward contracts
15
<PAGE>
to purchase or sell foreign currencies. A forward contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. These contracts are traded
in the interbank market conducted directly between currency traders (usually
large, commercial and investment banks) and their customers. Such forward
contracts will only be entered into with United States banks and their foreign
branches or foreign banks whose assets total $1 billion or more. A forward
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades.
When management of the Fund believes that the currency of a particular
foreign country may suffer a substantial movement against the U.S. dollar, it
may enter into a forward contract to purchase or sell, for a fixed amount of
dollars or other currency, the amount of foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in such
foreign currency. The Fund will not enter into such forward contracts or
maintain a net exposure to such contracts where the consummation of the
contracts would obligate the Fund to deliver an amount of foreign currency in
excess of the value of the Fund's portfolio securities or other assets
denominated in that currency. Under normal circumstances, consideration of the
prospect for currency parities will be incorporated into the longer term
investment decisions made with regard to overall diversification strategies.
However, management of the Fund believes that it is important to have the
flexibility to enter into such forward contracts when it determines that the
best interests of the Fund will be served. The Fund's custodian bank will place
cash, U.S. Government securities or other appropriate liquid high grade debt
securities in a segregated account of the Fund in an amount equal to the value
of the Fund's total assets committed to the consummation of forward contracts
entered into under the circumstances set forth above. If the value of the
securities placed in the segregated account declines, additional cash or
securities will be placed in the account on a daily basis so that the value of
the account will equal the amount of the Fund's commitments with respect to such
contracts.
Where, for example, the Fund is hedging a portfolio position consisting of
foreign fixed-income securities denominated in a foreign currency against
exchange rate moves vis-a-vis the U.S. dollar, at the maturity of the forward
contract for delivery by the Fund of a foreign currency, the Fund may either
sell the portfolio security and make delivery of the foreign currency, or it may
retain the security and terminate its contractual obligation to deliver the
foreign currency by purchasing an "offsetting" contract with the same currency
trader obligating it to purchase, on the same maturity date, the same amount of
the foreign currency (however, the ability of the Fund to terminate a contract
is contingent upon the willingness of the currency trader with whom the contract
has been entered into to permit an offsetting transaction). It is impossible to
forecast the market value of portfolio securities at the expiration of the
contract. Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security is less than the amount of foreign currency the
Fund is obligated to deliver and if a decision is made to sell the security and
make delivery of the foreign currency. Conversely, it may be necessary to sell
on the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or loss to the extent that there has
been movement in spot or forward contract prices. If the Fund engages in an
offsetting transaction, it may subsequently enter into a new forward contract to
sell the foreign currency. Should forward prices decline during the period
between the Fund's entering into a forward contract for the sale of a foreign
currency and the date it enters into an offsetting contract for the purchase of
the foreign currency, the Fund will realize a gain to the extent the price of
the currency it has agreed to sell exceeds the price of the currency it has
agreed to purchase. Should forward prices increase, the Fund will suffer a loss
to the extent the price of the currency it has agreed to purchase exceeds the
price of the currency it has agreed to sell.
If the Fund purchases a fixed-income security which is denominated in U.S.
dollars but which will pay out its principal based upon a formula tied to the
exchange rate between the U.S. dollar and a
16
<PAGE>
foreign currency, it may hedge against a decline in the principal value of the
security by entering into a forward contract to sell an amount of the relevant
foreign currency equal to some or all of the principal value of the security.
At times when the Fund has written a call option on a fixed-income security
or the currency in which it is denominated, it may wish to enter into a forward
contract to purchase or sell the foreign currency in which the security is
denominated. A forward contract would, for example, hedge the risk of the
security on which a call option has been written declining in value to a greater
extent than the value of the premium received for the option. The Fund will
maintain with its Custodian at all times, cash, U.S. Government securities, or
other appropriate high grade debt obligations in a segregated account equal in
value to all forward contract obligations and option contract obligations
entered into in hedge situations such as this.
Of course, the Fund is not required to enter into such transactions with
regard to its foreign currency-denominated securities and will not do so unless
deemed appropriate by the Investment Manager or the Sub-Adviser. It also should
be realized that this method of protecting the value of the Fund's portfolio
securities against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. It simply establishes a
rate of exchange which one can achieve at some future point in time.
Additionally, although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, at the same time, they tend to
limit any potential gain which might result should the value of such currency
increase.
Although the Fund values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. It will, however, do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the spread
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer.
PRIVATE PLACEMENTS
The Fund may invest up to 10% of its total assets in securities which are
subject to restrictions on resale because they have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or which are
otherwise not readily marketable. These securities are generally referred to as
private placements or restricted securities. Limitations on the resale of such
securities may have an adverse effect on their marketability, and may prevent
the Fund from disposing of them promptly at reasonable prices. The Fund may have
to bear the expense of registering such securities for resale and the risk of
substantial delays in effecting such registration.
The Securities and Exchange Commission has adopted Rule 144A under the
Securities Act, which permits the Fund to sell restricted securities to
qualified institutional buyers without limitation. The Investment Manager,
pursuant to procedures adopted by the Trustees of the Fund, will make a
determination as to the liquidity of each restricted security purchased by the
Fund.
The procedures require that the following factors be taken into account in
making a liquidity determination: (1) the frequency of trades and price quotes
for the security; (2) the number of dealers and other potential purchasers who
have issued quotes on the security; (3) any dealer undertakings to make a market
in the security; and (4) the nature of the security and the nature of the
marketplace trades (the time needed to dispose of the security, the method of
soliciting offers, and the mechanics of transfer). If a restricted security is
determined to be "liquid", such security will not be included within the
category "illiquid securities", which is limited by the Fund's investment
restrictions to 10% of the Fund's total assets.
The Rule 144A marketplace of sellers and qualified institutional buyers is
new and still developing and may take a period of time to develop into a mature
liquid market. As such, the market for certain private placements purchased
pursuant to Rule 144A may be initially small or may, subsequent to
17
<PAGE>
purchase, become illiquid. Furthermore, the Investment Manager may not possess
all the information concerning an issue of securities that it wishes to purchase
in a private placement to which it would normally have had access, had the
registration statement necessitated by a public offering been filed with the
Securities and Exchange Commission.
WARRANTS
The Fund may acquire warrants, including warrants which are attached to
fixed-income securities purchased for its portfolio, and hold such warrants
until the relevant Investment Adviser determines it is prudent to sell. Warrants
are, in effect, an option to purchase equity securities at a specific price,
generally valid for a specific period of time, and have no voting rights, pay no
dividends and have no rights with respect to the corporations issuing them.
LENDING OF PORTFOLIO SECURITIES
Consistent with applicable regulatory requirements, the Fund may lend its
United States portfolio securities to brokers, dealers and other financial
institutions, provided that such loans are callable at any time by the Fund
(subject to notice provisions described below), and are at all times secured by
cash or appropriate high grade debt obligations, which are maintained in a
segregated account pursuant to applicable regulations and that are equal to at
least the market value, determined daily, of the loaned securities. The
advantage of such loans is that the Fund continues to receive the income on the
loaned securities while at the same time earning interest on the cash amounts
deposited as collateral, which will be invested in short-term obligations.
A loan may be terminated by the borrower on one business day's notice, or by
the Fund on four business days' notice. If the borrower fails to deliver the
loaned securities within four days after receipt of notice, the Fund could use
the collateral to replace the securities while holding the borrower liable for
any excess of replacement cost over collateral. As with any extensions of
credit, there are risks of delay in recovery and in some cases, even loss of
rights in the collateral should the borrower of the securities fail financially.
However, these loans of portfolio securities will only be made to firms deemed
by the Fund's management to be creditworthy and when the income which can be
earned from such loans justifies the attendant risks. Upon termination of the
loan, the borrower is required to return the securities to the Fund. Any gain or
loss in the market price during the loan period would inure to the Fund. The
Fund will pay reasonable finder's, administrative and custodial fees in
connection with a loan of its securities. The creditworthiness of firms to which
the Fund lends its portfolio securities will be monitored on an ongoing basis by
the Fund's management pursuant to procedures adopted and reviewed, on an ongoing
basis, by the Board of Trustees of the Fund.
When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loaned securities, to
be delivered within one day after notice, to permit the exercise of such rights
if the matters involved would have a material effect on the Fund's investment in
such loaned securities. The Fund will not lend its portfolio securities if such
loans are not permitted by the laws or regulations of any state in which its
shares are qualified for sale and will not lend more than 10% of the value of
its total assets. The Fund may lend its non-United States portfolio securities
after the Trustees adopt procedures consistent with applicable regulatory
requirements. During the fiscal year ended March 31, 1996, the Fund did not loan
any of its portfolio securities.
BORROWING OF MONEY
The Fund did not borrow any money from any source during the fiscal year
ended March 31, 1996.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS
From time to time the Fund may purchase securities on a when-issued or
delayed delivery basis or may purchase or sell securities on a forward
commitment basis. When such transactions are negotiated, the price is fixed at
the time of the commitment, but delivery and payment can take place a month or
more after the date of commitment. While the Fund will only purchase securities
on a when-issued, delayed delivery or forward commitment basis with the
intention of acquiring the securities, the Fund may sell the securities before
the settlement date, if it is deemed advisable. The securities so purchased
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or sold are subject to market fluctuation and no interest or dividends accrue to
the purchaser prior to the settlement date. At the time the Fund makes the
commitment to purchase or sell securities on a when-issued, delayed delivery or
forward commitment basis, it will record the transaction and thereafter reflect
the value, each day, of such security purchased, or if a sale, the proceeds to
be received, in determining its net asset value. At the time of delivery of the
securities, their value may be more or less than the purchase or sale price. The
Fund will also establish a segregated account with its custodian bank in which
it will continually maintain cash or U.S. Government securities or other high
grade debt portfolio securities equal in value to commitments to purchase
securities on a when-issued, delayed delivery or forward commitment basis;
subject to this requirement, the Fund may purchase securities on such basis
without limit. An increase in the percentage of the Fund's assets committed to
the purchase of securities on a when-issued or delayed delivery basis may
increase the volatility of the Fund's net asset value. The Fund's management and
the Trustees do not believe that the Fund's net asset value or income will be
adversely affected by its purchase of securities on such basis.
WHEN, AS AND IF ISSUED SECURITIES
The Fund may purchase securities on a "when, as and if issued" basis under
which the issuance of the security depends upon the occurence of a subsequent
event, such as approval of a merger, corporate reorganization or debt
restructuring. The commitment for the purchase of any such security will not be
recognized in the portfolio of the Fund until InterCapital determines that
issuance of the security is probable. At such time, the Fund will record the
transaction and, in determining its net asset value, will reflect the value of
the security daily. At such time, the Fund will also establish a segregated
account with its custodian bank in which it will maintain cash or U.S.
Government securities or other high grade debt portfolio securities equal in
value to recognized commitments for such securities. The value of the Fund's
commitments to purchase the securities of any one issuer, together with the
value of all securities of such issuer owned by the Fund, may not exceed 5% of
the value of the Fund's total assets at the time the initial commitment to
purchase such securities is made (see "Investment Restrictions"). Subject to the
foregoing, the Fund may purchase securities on such basis without limit. An
increase in the percentage of the Fund's assets committed to the purchase of
securities on a "when, as and if issued" basis may increase the volatility of
its net asset value. The Fund's management and the Trustees do not believe that
the Fund's net asset value will be adversely affected by its purchase of
securities on such basis. The Fund may also sell securities on a "when, as and
if issued" basis provided the issuance of the security will result automatically
from the exchange or conversion of a security owned by the Fund at the time of
sale.
REPURCHASE AGREEMENTS
When cash may be available for only a few days, it may be invested by the
Fund in repurchase agreements until such time as it may otherwise be invested or
used for payments of obligations of the Fund. A repurchase agreement may be
viewed as a type of secured lending by the Fund which typically involves the
acquisition by the Fund of government securities or other securities from a
selling financial institution such as a bank, savings and loan association or
broker-dealer. The agreement provides that the Fund will sell back to the
institution, and that the institution will repurchase, the underlying security
("collateral") at a specified price and at a fixed time in the future, usually
not more than seven days from the date of purchase. The Fund will accrue
interest from the institution until the time when the repurchase is to occur.
Although such date is deemed by the Fund to be the maturity date of a repurchase
agreement, the maturities of securities subject to repurchase agreements are not
subject to any limits and may exceed one year.
While repurchase agreements involve certain risks not associated with direct
investments in debt securities, the Fund follows procedures designed to minimize
such risks. Repurchase agreements will be transacted only with large,
well-capitalized and well-established United States financial institutions whose
financial condition will be continuously monitored by the management of the Fund
subject to procedures established by the Trustees. In addition, the collateral
will be maintained in a segregated account and will be marked-to-market daily to
determine that the full value of the collateral, as specified in the agreement,
does not decrease below the purchase price plus accrued interest. If such
decrease
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occurs, additional collateral will be requested and, when received, added to
maintain full collateralization. In the event of a default or bankruptcy by a
selling financial institution, the Fund will seek to liquidate such collateral.
However, the exercise of the Fund's right to liquidate such collateral could
involve certain costs or delays and, to the extent that proceeds from any sale
upon a default of the obligation to repurchase were less than the repurchase
price, the Fund could suffer a loss. It is the current policy of the Fund not to
invest in repurchase agreements that do not mature within seven days if any such
investment, together with any other illiquid assets held by the Fund, amount to
more than 10% of its total assets. The Fund's investments in repurchase
agreements may at times be substantial when, in the view of the Investment
Manager or the Sub-Adviser, liquidity or other considerations warrant.
OPTIONS AND FUTURES TRANSACTIONS
As discussed in the Prospectus, the Fund may 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 Fund may purchase put and call
options on eligible portfolio securities (and the currencies in which they are
denominated) and purchase and sell financial futures contracts and options on
such contracts.
Call and put options on U.S. Treasury notes, bonds and bills and on various
foreign currencies 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 Fund 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 Fund 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.
OPTIONS ON TREASURY BONDS AND NOTES. Because trading in options written on
Treasury bonds and notes tends to center on the most recently auctioned issues,
the exchanges on which such securities trade will not continue indefinitely to
introduce options with new expirations to replace expiring options on particular
issues. Instead, the expirations introduced at the commencement of options
trading on a particular issue will be allowed to run their course, with the
possible addition of a limited number of new expirations as the original ones
expire. Options trading on each issue of bonds or notes will thus be phased out
as new options are listed on more recent issues, and options representing a full
range of expirations will not ordinarily be available for every issue on which
options are traded.
OPTIONS ON TREASURY BILLS. Because a deliverable Treasury bill changes from
week to week, writers of Treasury bill calls cannot provide in advance for their
potential exercise settlement obligations by acquiring and holding the
underlying security. However, if the Fund holds a long position in Treasury
bills with a principal amount of the securities deliverable upon exercise of the
option, the position may be hedged from a risk standpoint by the writing of a
call option. For so long as the call option is outstanding, the Fund will hold
the Treasury bills in a segregated account with its Custodian, so that they will
be treated as being covered.
OPTIONS ON FOREIGN CURRENCIES. The Fund may 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 Fund may purchase put options on an
amount of such foreign currency
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equivalent to the current value of the portfolio securities involved. As a
result, the Fund 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 Fund may 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 Fund may also purchase call and put options
to close out written option positions.
The Fund may also write call options on foreign currency 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 Fund occasioned by
such value decline would be ameliorated by receipt of the premium on the option
sold. At the same time, however, the Fund 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 Fund may also write options to close out long call
option positions.
The markets in foreign currency options are relatively new and the Fund's
ability to establish and close out positions on such options is subject to the
maintenance of a liquid secondary market. While in the opinion of the management
of the Fund, the market for such options 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. In
addition, options on foreign currencies are affected by all of those factors
which influence foreign exchange rates and investments generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of the
option position may vary with changes in the value of either or both currencies
and have no relationship to the investment merits of a foreign security,
including foreign securities held in a "hedged" investment portfolio. 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, investors 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
(i.e., less than $1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around-the-clock market. To the extent
that the U.S. options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that are not reflected in the options market.
OTC OPTIONS. Exchange-listed options are issued by the OCC (in the U.S.) or
other clearing corporation or exchange which assures that all transactions in
such options are properly executed. OTC options are purchased from or sold
(written) to dealers or financial institutions which have entered into direct
agreements with the Fund. With OTC options, such variables as expiration date,
exercise price and premium will be agreed upon between the Fund 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 Fund would lose the premium paid for the
option as well as any anticipated benefit of the transaction. The Fund will
engage in OTC option transactions only with member banks of the Federal
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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.
COVERED CALL WRITING. As stated in the Prospectus, the Fund is permitted to
write covered call options on portfolio securities, on stock indexes and on the
U.S. dollar and foreign currencies, without limit, in order to aid in achieving
its investment objectives. Generally, a call option is "covered" if the Fund
owns, or has the right to acquire, without additional cash consideration (or for
additional cash consideration held for the Fund 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 Fund 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 Fund 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 Fund in cash,
U.S. Government securities or other high grade debt obligations which the Fund
holds in a segregated account maintained with its Custodian.
The Fund 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 Fund 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
Fund if the securities (currencies) underlying the option are ultimately sold
(exchanged) by the Fund at a loss. Furthermore, a premium received on a call
written on a foreign currency will ameliorate any potential loss of value on the
portfolio security due to a decline in the value of the currency. The value of
the premium received will fluctuate with varying economic market conditions.
As regards listed options and certain OTC options, during the option period,
the Fund 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 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 Fund to write another call option on
the underlying security (currency) with either a different exercise price or
expiration date or both. The Fund 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 Fund 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 Fund
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 on the option less the commission paid.
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Options written by the Fund 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 and Futures
Transactions," below.
COVERED PUT WRITING. As a writer of a covered put option, the Fund 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 Fund
will be exercisable by the purchaser only on a specific date). A put is
"covered" if the Fund maintains, in a segregated account maintained on its
behalf at the Fund's Custodian, cash, U.S. Government securities or other high
grade debt 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 Fund 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 Fund in cash, U.S. Government securities
or other high grade debt obligations which the Fund holds in a segregated
account maintained at its Custodian. In the case of listed options, during the
option period, the Fund 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 Fund will 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
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).
The Fund may also purchase put options to close out written put positions in
a manner similar to call options closing purchase transactions. In addition, the
Fund may sell a put option which it has previously purchased prior to the sale
of the securities (currency) 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
which is sold. Any 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 Fund expired without being sold or exercised, the
premium would be lost.
PURCHASING CALL AND PUT OPTIONS. As stated in the Prospectus, the Fund may
purchase listed and OTC call and put options in amounts equalling up to 5% of
its total assets. The Fund 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. The purchase
of the call option 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 Fund.
The Fund may purchase put options on securities and currencies (or related
currencies) which it holds in its portfolio only to protect itself against a
decline in the value of the security (currency). 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 Fund would incur
no additional loss. In addition, the Fund may sell a put option which it has
previously purchased prior to the sale of the
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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 which
is sold. And 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 Fund expired 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 Fund 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 Fund 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). During the option period, the covered call writer has, in return for
the premium on the option, given up the opportunity for capital appreciation
above the exercise price should the market price of the underlying security (or
the currency in which it is denominated) increase, but has retained the risk of
loss should the price of the underlying security (currency) decline. The covered
put writer also retains the risk of loss should the market value of the
underlying security (currency) decline below the exercise price of the option
less the premium received on the sale of the option. In both cases, 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. A covered put option writer who is unable to
effect a closing purchase transaction or to purchase an offsetting OTC option
would continue to bear the risk of decline in the market price of the underlying
security (currency) until the option expires or is exercised. In addition, a
covered put writer would be unable to utilize the amount held in cash or U.S.
Government or other high grade short-term debt obligations as security for the
put option for other investment purposes until the exercise or expiration of the
option.
Prior to exercise or expiration, an option position can only be terminated
by entering into a closing purchase or sale transaction. If a covered call
option writer is unable to effect a closing purchase transaction or to purchase
an offsetting OTC option, it cannot sell the underlying security until the
option expires or the option is exercised. Accordingly, a covered call option
writer may not be able to sell (exchange) an underlying security (currency) at a
time when it might otherwise be advantageous to do so.
The Fund's ability to close out its position as a writer of an option is
dependent upon the existence of a liquid secondary market on option exchanges.
There is no assurance that such a market will exist, particularly in the case of
OTC options, as such options will generally only be closed out by entering into
a closing purchase transaction with the purchasing dealer. However, the Fund may
be able to purchase an offsetting option which does not close out its position
as a writer but constitutes an asset of equal value to the obligation under the
option written. If the Fund is not able to either enter into a closing purchase
transaction or purchase an offsetting position, 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).
Among the possible reasons for the absence of a liquid secondary market on
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)
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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 Fund engages in
transactions in options, the Fund 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 Fund,
the Fund could experience a loss of all or part of the value of the option.
Transactions are entered into by the Fund only with brokers or financial
institutions deemed creditworthy by the Fund'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 Fund may write.
The hours of trading for options may not conform to the hours during which
the underlying securities are traded. To the extent that the option markets
close before the markets for the underlying securities, significant price and
rate movements can take place in the underlying markets that cannot be reflected
in the option markets.
The extent to which the Fund 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 Fund's intention to qualify as such (see
"Dividends, Distributions and Taxes" in the Prospectus).
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 "multiplier"). 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 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 provide the Fund 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 Fund
would be able to purchase a stock index put option. If the expected market
decline materialized, the resulting decrease in the value of the Fund'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 Fund would be able to purchase a stock
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index call option to enable the Fund to participate in such rise until
completion of anticipated common stock purchases by the Fund. Purchases and
sales of stock index options also enable the Investment Manager and/or the
Sub-Adviser to more speedily achieve changes in the Fund's equity positions.
The Fund 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 Fund in a segregated account maintained for it by the Fund's
Custodian. All call options on stock indexes written by the Fund 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 Fund.
RISKS OF INDEX OPTIONS. Because exercises of stock index options are
settled in cash, the Fund, 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
corresponding 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.
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 Fund will not purchase or sell commodities or
commodity futures contracts, except that the Fund may purchase and sell
financial futures contracts and related options as described herein. As stated
in the Prospectus, the Fund may 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").
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As a futures contract purchaser, the Fund incurs an obligation to take
delivery of a specified amount of the obligation underlying the contract at a
specified time in the future for a specified price. As a seller of a futures
contract, the Fund incurs an obligation to deliver the specified amount of the
underlying obligation at a specified time in return for an agreed upon price.
The Fund 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 Fund may sell an interest rate
futures contract or a bond index futures contract. If declining interest rates
are anticipated, the Fund may purchase an interest rate futures contract to
protect against a potential increase in the price of fixed-income securities the
Fund intends to purchase. Subsequently, appropriate fixed-income securities may
be purchased by the Fund in an orderly fashion; as securities are purchased,
corresponding futures positions would be terminated by offsetting sales of
contracts.
The Fund 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 Fund may fall, the
Fund 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 Fund intends to purchase, the Fund may purchase a
stock index futures contract.
The Fund 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 Fund
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
Fund 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 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 Fund will be able to enter into a
closing transaction.
INTEREST RATE FUTURES. When the Fund enters into an interest rate futures
contract, it is initially required to deposit with the Fund'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 2% 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 Fund upon the proper termination of the
futures contract. The margin deposits made are marked to market daily and the
Fund may be required to make subsequent deposits of cash or U.S. Government
securities called "variation margin", with the Fund's
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<PAGE>
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 exercise 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. The
Investment Manager will assess such factors as cost spreads, liquidity and
transaction costs in determining whether to utilize futures contracts or forward
contracts its in 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 foreign currency
futures contract must occur within the country issuing the underlying currency.
Thus, the Fund must accept or make delivery of the underlying foreign currency
in accordance with any U.S. or foreign restrictions or regulations 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 foreign currency futures contracts may involve certain additional
risks. Trading options on foreign 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 Fund will
not purchase or write options on foreign 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.
INDEX FUTURES. As discussed in the Prospectus, the Fund may invest in index
futures contracts. Futures contracts on indexes 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.
The Fund 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, due to current industry practice, daily variations in
gains and losses on open contracts are required to be reflected in cash in the
form of variation margin payments. The Fund may be required to make additional
margin payments during the term of the contract.
At any time prior to expiration of the futures contract, the Fund may elect
to close the position by taking an opposite position which will operate to
terminate the Fund's position in the futures contract. A final determination of
variation margin is then made, additional cash is required to be paid by or
released to the Fund and the Fund 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 Fund 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
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<PAGE>
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 Fund 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 Fund'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 Fund might write a call option on an interest rate futures
contract, the underlying security of which correlates with the portion of the
portfolio the Fund 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 Fund's portfolio.
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Fund may not
enter into futures contracts or purchase related options thereon if, immediately
thereafter, the amount committed to initial margin plus the amount paid for
premiums for unexpired options on futures contracts exceeds 5% of the value of
the Fund's total assets, after taking into account unrealized gains and
unrealized losses on such contracts. 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 Fund's assets which may be subject
to a hedge position. In accordance with the regulations of the Commodity Futures
Trading Commission ("CFTC") under which the Fund is exempted from registration
as a commodity pool operator, the Fund may only enter into futures contracts and
options on futures contracts transactions in accordance with the limitation
described above. If the CFTC changes its regulations so that the Fund would be
permitted more latitude to write options on futures contracts for purposes other
than hedging the Fund's investments without CFTC registration, the Fund 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 Fund.
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. As stated in the Prospectus, the Fund may sell a
futures contract to protect against the decline in the value of securities (or
the currency in which they are denominated) held by the Fund. 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 Fund may
decline. If this occurred, the Fund 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 Fund purchases a futures contract to hedge against the increase in
value of securities it intends to buy (or the currency in which they are
denominated), and the value of such securities (currencies) decreases, then the
Fund 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.
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<PAGE>
In addition, if the Fund holds a long position in a futures contract or has
sold a call option on a futures contract, it will hold cash, U.S. Government
securities or other high grade debt obligations equal to the purchase price of
the contract or the exercise price of the put option (less the amount of initial
or variation margin on deposit) in a segregated account maintained for the Fund
by its Custodian. Alternatively, the Fund could cover its long position by
purchasing a put option on the same futures contract with an exercise price as
high or higher than the price of the contract held by the Fund.
If the Fund maintains a short position in a futures contract or has sold a
call option on a futures contract, it will cover this position by holding, in a
segregated account maintained at its Custodian, cash, U.S. Government securities
or other high grade debt obligations equal in value (when added to any initial
or variation margin on deposit) to the market value of the securities underlying
the futures contract or the exercise price of the option. Such position may also
be covered by owning the securities underlying the futures contract (in the case
of a stock index futures contract a portfolio of securities substantially
replicating the relevant index), or by holding a call option permitting the Fund
to purchase the same contract at a price no higher than the price at which a
short position was established.
Exchanges limit the amount by which the price of a futures contract may move
on any day. If the price moves equal the daily limit on successive days, then it
may prove impossible to liquidate a futures position until the daily limit moves
have ceased. In the event of adverse price movements, the Fund would continue to
be required to make daily cash payments of variation margin on open futures
positions. In such situations, if the Fund has insufficient cash, it may have to
sell portfolio securities to meet daily variation margin requirements at a time
when it may be disadvantageous to do so. In addition, the Fund may be required
to take or make delivery of the instruments underlying interest rate futures
contracts it holds at a time when it is disadvantageous to do so. The inability
to close out options and futures positions could also have an adverse impact on
the Fund's ability to effectively hedge its portfolio.
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 Fund'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 Fund's transactions effected on foreign exchanges.
In the event of the bankruptcy of a broker through which the Fund engages in
transactions in futures or options thereon, the Fund 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 Fund, the Fund could experience a loss of all or part of the
value of the option. Transactions are entered into by the Fund only with brokers
or financial institutions deemed creditworthy by the Investment Manager.
While the futures contracts and options transactions to be engaged in by the
Fund for the purpose of hedging the Fund's portfolio securities are not
speculative in nature, there are risks inherent in the use of such instruments.
One such risk 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 the cash prices of the Fund'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 Fund 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
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<PAGE>
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 may still not result in a successful hedging transaction.
As stated in the Prospectus, there is no assurance that a liquid secondary
market will exist for futures contracts and related options in which the Fund
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 Fund 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 Fund from closing
out a contract which may result in reduced gain or increased loss to the Fund.
The absence of a liquid market in futures contracts might cause the Fund 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 Fund may enter into transactions involving futures
contracts and options thereon may be limited by the Internal Revenue Code's
requirements for qualification as a regulated investment company and the Fund's
intention to qualify as such (see "Dividends, Distributions and Taxes" in the
Prospectus).
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 Fund
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 Fund
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 INSTRUMENTS. New futures contracts, options and other financial
products and various combinations thereof continue to be developed. The Fund may
invest in any such futures, options or products as may be developed, to the
extent consistent with its investment objective and applicable regulatory
requirements.
PORTFOLIO TRADING
It is anticipated that the Fund's portfolio turnover rate will not exceed
150% in any one year. A 150% turnover rate would occur, for example, if 150% of
the securities held in the Fund's portfolio (excluding all securities whose
maturities at acquisition were one year or less) were sold and replaced within
one year.
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
In addition to the investment restrictions enumerated in the Prospectus, the
investment restrictions listed below have been adopted by the Fund as
fundamental policies, except as otherwise indicated. Under the Act, a
fundamental policy may not be changed without the vote of a majority of the
outstanding voting securities of the Fund, as defined in the Act. Such a
majority is defined in the Act as the lesser of (a) sixty-seven percent or more
of the shares present at a meeting of shareholders, if the holders of more than
fifty percent of the outstanding shares of the Fund are present or represented
by proxy, or (b) more than fifty percent of the outstanding shares of the Fund.
For purposes of the following restrictions: (i) all percentage limitations apply
immediately after a purchase or initial investment; and (ii) any subsequent
change in any applicable percentage resulting from market fluctuations or other
changes in total or net assets does not require elimination of any security from
the portfolio.
The Fund may not:
1. Invest in securities of any issuer if, to the knowledge of the Fund,
any officer or Trustee of the Fund or any officer or director of
InterCapital or MGIS owns more than 1/2 of 1% of the outstanding securities
of such issuer, and such officers, trustees or directors who own more than
1/2 of 1% own in the aggregate more than 5% of the outstanding securities of
such issuer.
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<PAGE>
2. Purchase or sell real estate or interests therein, although the Fund
may purchase readily marketable securities of issuers which engage in real
estate operations and securities which are secured by real estate or
interests therein, including real estate investment trusts.
3. Purchase oil, gas or other mineral leases, rights or royalty
contracts or exploration or development programs, except that the Fund may
invest in the securities of companies which operate, invest in, or sponsor
such programs.
4. Invest more than 5% of the value of its total assets in warrants,
including not more than 2% of such assets in warrants not listed on either
the New York or American Stock Exchange. However, the acquisition of
warrants attached to other securities is not subject to this restriction.
5. Borrow money, except that the Fund may borrow from a bank for
temporary or emergency purposes in amounts not exceeding 5% (taken at the
lower of cost or current value) of the value of its total assets (not
including the amount borrowed).
6. Pledge its assets or assign or otherwise encumber them except to
secure borrowings effected within the limitations set forth in restriction
(7). (To meet the requirements of regulations in certain states, the Fund,
as a matter of operating policy but not as a fundamental policy, will limit
any pledge of its assets to 10% of its net assets so long as shares of the
Fund are being sold in those states.)
7. Issue senior securities as defined in the Act except insofar as the
Fund may be deemed to have issued a senior security by reason of: (a)
entering into any repurchase agreement; (b) borrowing money in accordance
with restrictions described above; (c) lending portfolio securities; (d)
entering into forward foreign currency contracts; or (e) purchasing or
selling futures contracts or options.
8. Make loans of money or securities, except: (a) by the purchase of
debt obligations in which the Fund may invest consistent with its investment
objective and policies; (b) by investment in repurchase agreements; or (c)
by lending its portfolio securities, but not to exceed 10% of its total
assets at the time of the loan.
9. Make short sales of securities.
10. Purchase securities on margin.
11. Engage in the underwriting of securities, except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in disposing
of a portfolio security.
12. Invest for the purpose of exercising control or management of any
other issuer.
13. Invest in securities which cannot be readily resold because of legal
or contractual restrictions or which are not otherwise readily marketable
if, regarding all such securities, more than 10% of its total assets, taken
at market value, would be invested in such securities.
In addition, as stated in the Prospectus, the Fund may not purchase
securities of other United States investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets. However,
the Fund may invest up to 10% of the value of its total assets in the securities
of foreign investment companies. The ability to invest in foreign investment
companies increases the Investment Advisers flexibility in the management of the
Fund's portfolio by enabling the Fund to access world markets, such as Korea and
Taiwan, in which markets the Fund may be limited in investing directly, due in
part to foreign laws and regulations.
PORTFOLIO TRANSACTIONS AND BROKERAGE
- --------------------------------------------------------------------------------
Subject to the general supervision of the Fund's Trustees, the Investment
Manager and the Sub-Adviser are responsible for decisions to buy and sell
securities of the Fund, the selection of brokers and dealers to effect the
transactions, and the negotiation of brokerage commissions, if any. Purchases
and
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sales of securities on a stock exchange are effected through brokers who charge
a commission for their services. In the over-the-counter market, securities are
generally traded on a "net" basis with non-affiliated dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. The Fund also expects
that securities will be purchased at times in underwritten offerings where the
price includes a fixed amount of compensation, generally referred to as the
underwriter's concession or discount. In the underwritten offerings, securities
are purchased at a fixed price which includes an amount of compensation to the
underwriter, generally referred to as the underwriter's concession or discount.
On occasion, certain money market instruments may be purchased directly from an
issuer, in which case no commissions or discounts are paid. For the fiscal years
ended March 31, 1994, 1995 and 1996, the Fund paid a total of $1,506,380,
$1,884,537 and $2,671,155, respectively, in brokerage commissions.
The Investment Manager and the Sub-Adviser currently serve as investment
advisers to a number of clients, including other investment companies, and may
in the future act as investment manager or adviser to others. It is the practice
of each of the Investment Manager and the Sub-Adviser to cause purchase and sale
transactions to be allocated among the Fund and others whose assets it manages
in such manner as it deems equitable. In making such allocations among the Fund
and other client accounts, various factors may be considered, including the
respective investment objectives, the relative size of the portfolio holdings of
the same or comparable securities, the availability of cash for investment, the
size of the investment commitments generally held and the opinions of the
persons responsible for managing the portfolios of the Fund and other client
accounts. In the case of certain initial and secondary public offerings, the
Investment Manager or the Sub-Adviser may utilize a pro-rata allocation process
based on the size of the Dean Witter Funds involved and the number of shares
available from the public offering. This procedure may, under certain
circumstances, have an adverse effect on the Fund.
The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with this
policy, when securities transactions are effected on a stock exchange, the
Fund's policy is to pay commissions which are considered fair and reasonable
without necessarily determining that the lowest possible commissions are paid in
all circumstances. The Fund believes that a requirement always to seek the
lowest commission cost could impede effective portfolio management and preclude
the Fund and the Investment Manager and the Sub-Adviser from obtaining a high
quality of brokerage and research services. In seeking to determine the
reasonableness of brokerage commissions paid in any transaction, the Investment
Advisers rely on their experience and knowledge regarding commissions generally
charged by various brokers and on their judgment in evaluating the brokerage and
research services received from the broker effecting the transaction. Such
determinations are necessarily subjective and imprecise, as in most cases an
exact dollar value for those services is not ascertainable.
The Fund anticipates that its transactions involving foreign securities will
be effected primarily on a principal stock exchange for such securities. Fixed
commissions on such transactions are generally higher than negotiated
commissions on domestic transactions. There is also generally less government
supervision and regulaton of foreign stock exchanges and brokers than in the
United States.
In seeking to implement the Fund's policies, the Investment Manager and the
Sub-Adviser effect transactions with those brokers and dealers who the
Investment Advisers believe provide the most favorable prices and which are
capable of providing efficient executions. If the Investment Advisers believe
such price and execution are obtainable from more than one broker or dealer,
they will give consideration to placing portfolio transactions with those
brokers and dealers who also furnish research and other services to the Fund or
the Investment Manager and the Sub-Adviser. Such services may include, but are
not limited to, any one or more of the following: information as to the
availability of securities for purchase or sale; statistical or factual
information or opinions pertaining to investments; wire services; and appraisals
or evaluations of portfolio securities. During the fiscal year ended
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March 31, 1996, the Fund directed the payment of $335,704 in brokerage
commissions in connection with transactions in the aggregate amount of
$215,509,508 to brokers because of research services provided.
Consistent with the policy described above, brokerage transactions in
securities listed on exchanges or admitted to unlisted trading privileges may be
effected through DWR and/or affiliated brokers of the Sub-Adviser. In order for
these broker-dealers to effect any portfolio transactions for the Fund, the
commissions, fees or other remuneration received by them must be reasonable and
fair compared to the commissions, fees or other remuneration paid to other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on an exchange during a comparable period of time. This
standard would allow these broker-dealers to receive no more than the
remuneration which would be expected to be received by an unaffiliated broker in
a commensurate arm's-length transaction. Furthermore, the Trustees of the Fund,
including a majority of the Trustees who are not interested persons of the Fund
or of its Distributor, as defined in the Act, have adopted procedures which are
reasonably designed to provide that any commissions, fees or other remuneration
paid to DWR and affiliates of the Sub-Adviser are consistent with the foregoing
standard. During the fiscal years ended March 31, 1994, 1995 and 1996, the Fund
paid a total of $38,787, $89,120 and $69,800, respectively, in brokerage
commissions to DWR. The Fund does not reduce the management fee it pays to
InterCapital by any amount of the brokerage commissions it may pay to DWR.
During the fiscal year ended March 31, 1996, the brokerage commissions paid to
DWR represented approximately 2.61% of the total brokerage commissions paid by
the Fund during the year and were paid on account of transactions having a
dollar value equal to approximately 8.29% of the aggregate dollar value of all
portfolio transactions by the Fund during the year for which commissions were
paid.
During the fiscal year ended March 31, 1996, the Fund paid a total of
$17,903 in brokerage commissions to affiliated brokers of the Sub-Adviser for
transactions as follows:
<TABLE>
<CAPTION>
BROKERAGE
COMMISSIONS PAID PERCENTAGE OF
TO AFFILIATED AGGREGATE DOLLAR
BROKER OF MORGAN AMOUNT OF EXECUTED
GRENFELL TRADES ON WHICH
INVESTMENT PERCENTAGE OF BROKERAGE
SERVICES LTD. FOR AGGREGATE BROKERAGE COMMISSIONS WERE
FISCAL YEAR COMMISSIONS FOR PAID FOR FISCAL
ENDED FISCAL YEAR ENDED YEAR ENDED
NAME OF BROKER 3/31/96 3/31/96 3/31/96
- ------------------------------------------------------- ------------------ ------------------- -------------------
<S> <C> <C> <C>
Morgan Grenfell Asia and Partners
Securities Pte Ltd.................................... $ 1,441 0.05% 0.02%
Morgan Grenfell Asia Securities (Hong Kong) Limited.... 16,462 0.62 0.20
</TABLE>
The information and services received by the Investment Manager and the
Sub-Adviser from brokers and dealers may be of benefit to the Investment Manager
and the Sub-Adviser in the management of accounts of some of their other clients
and may not in all cases benefit the Fund directly. While the receipt of such
information and services is useful in varying degrees and would generally reduce
the amount of research or services otherwise performed by the Investment Manager
and/or the Sub-Adviser, it is of indeterminable value and the management fee
paid to the Investment Manager is not reduced by any amount that may be
attributable to the value of such services.
Under the investment advisory arrangements in effect prior to August 1,
1995, it had been contemplated that, consistent with the above policy, a
substantial amount of the Fund's brokerage transactions with respect to Pacific
Basin equities would be conducted through brokerage affiliates of DICAM, Ltd. In
order for brokerage affiliates of DICAM, Ltd. to effect any portfolio
transactions for the Fund, the commissions, fees or other remuneration received
by those affiliates had to be reasonable and fair compared to the commissions,
fees or other remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on an exchange
during a
34
<PAGE>
comparable period of time. This standard allowed such affiliates to receive no
more than the remuneration which would be expected to be received by an
unaffiliated broker in a commensurate arm's-length transaction. Furthermore, the
Trustees of the Fund, including a majority of the Trustees who are not
interested persons of the Fund or of its Distributor, as defined in the Act, had
adopted procedures which are reasonably designed to provide that any
commissions, fees or other remuneration paid to such affiliates were consistent
with the foregoing standard. During the fiscal years ended March 31, 1994 and
1995, the Fund paid a total of $80,826 and $2,667, respectively, in brokerage
commissions to affiliates of DICAM, Ltd. The Fund did not reduce the advisory
fee it paid to DICAM by any amount of the brokerage commissions it might have
paid to such affiliates. The Fund did not pay any brokerage commissions to
affiliates to DICAM, Ltd. during the period from April 1, 1995 through July 31,
1995.
Pursuant to an order of the Securities and Exchange Commission, the Fund may
effect principal transactions in certain money market instruments with DWR. The
Fund will limit its transactions with DWR to U.S. Government and Government
Agency Securities, Bank Money Instruments (i.e. Certificates of Deposit and
Bankers' Acceptances) and Commercial Paper. Such transactions will be effected
with DWR only when the price available from DWR is better than that available
from other dealers. During its fiscal years ended March 31, 1994, 1995 and 1996,
the Fund did not effect any principal transactions with DWR.
During the fiscal year ended March 31, 1996, the Fund purchased common stock
issued by Sanwa Bank, Ltd., Ford Motor Company and Morgan Stanley Group, Inc.,
which issuers were among the ten brokers or the ten dealers which executed
transactions for or with the Fund in the largest dollar amounts during the year.
At March 31, 1996, the Fund held common stock of Sanwa Bank, Ltd., Ford Motor
Company and Morgan Stanley Group, Inc. with market values of $4,473,733,
$2,234,375 and $2,225,250, respectively.
The Trustees have considered the possibilities of seeking to recapture, for
the benefit of the Fund, brokerage commissions and other expenses of possible
portfolio transactions by conducting portfolio transactions through affiliated
entities. For example, brokerage commissions received by affiliated brokers
could be offset against the advisory fees paid by the Fund. After considering
all factors deemed relevant, the Trustees made a determination not to seek such
recapture. The Trustees will reconsider this matter from time to time.
THE DISTRIBUTOR
- --------------------------------------------------------------------------------
As discussed in the Prospectus, shares of the Fund are distributed by Dean
Witter Distributors Inc. (the "Distributor"). The Distributor has entered into a
selected dealer agreement with DWR, which through its own sales organization
sells shares of the Fund. In addition, the Distributor may enter into similar
agreements with other selected broker-dealers. The Distributor, a Delaware
corporation, is a wholly-owned subsidiary of DWDC. The Trustees who are not, and
were not at the time they voted, interested persons of the Fund, as defined in
the Act (the "Independent Trustees"), approved, at their meeting held on October
30, 1992, the current Distribution Agreement appointing the Distributor as
exclusive distributor of the Fund's shares and providing for the Distributor to
bear distribution expenses not borne by the Fund. By its terms, the Distribution
Agreement had an initial term ending April 30, 1994, and will remain in effect
from year to year thereafter if approved by the Board. At their meeting held on
April 17, 1996, the Trustees of the Fund, including all of the Independent
Trustees, approved the continuation of the Distribution Agreement until April
30, 1997.
The Distributor bears all expenses it may incur in providing services under
the Distribution Agreement. Such expenses include the payment of commissions for
sales of the Fund's shares and incentive compensation to account executives. The
Distributor also pays certain expenses in connection with the distribution of
the Fund's shares, including the costs of preparing, printing and distributing
advertising or promotional materials, and the costs of printing and distributing
prospectuses and supplements thereto used in connection with the offering and
sale of the Fund's shares. The Fund bears the costs of initial typesetting,
printing and distribution of prospectuses and supplements thereto to
shareholders. The
35
<PAGE>
Fund also bears the costs of registering the Fund and its shares under federal
and state securities laws. The Fund and the Distributor have agreed to indemnify
each other against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. Under the Distribution Agreement, the
Distributor uses its best efforts in rendering services to the Fund, but in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations, the Distributor is not liable to the Fund or any
of its shareholders for any error of judgment or mistake of law or for any act
or omission or for any losses sustained by the Fund or its shareholders.
PLAN OF DISTRIBUTION
To compensate the Distributor for the services provided and for the expenses
borne under the Distribution Agreement, the Fund has adopted a Plan of
Distribution pursuant to Rule 12b-1 under the Act (the "Plan") pursuant to which
the Fund pays the Distributor compensation accrued daily and payable monthly at
the annual rate of 1.0% of the lesser of: (a) the average daily aggregate gross
sales of the Fund's shares since the inception of the Fund (not including
reinvestments of dividends or capital gains distributions), less the average
daily aggregate net asset value of the Fund's shares redeemed since the Fund's
inception upon which a contingent deferred sales charge has been imposed or upon
which such charge has been waived, or (b) the average daily net assets of the
Fund. The Distributor also receives the proceeds of contingent deferred sales
charges imposed on certain redemptions of shares (see "Redemptions and
Repurchases--Contingent Deferred Sales Charge" in the Prospectus). The
Distributor has informed the Fund that it and/or DWR received approximately
$179,000, $755,000 and $998,000 in contingent deferred sales charges for the
fiscal years ended March 31, 1994, 1995 and 1996, respectively.
The Distributor has informed the Fund that a portion of the fees payable by
the Fund each year pursuant to the Plan equal to 0.25% of the Fund's average
daily net assets is characterized as a "service fee" under the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. (of which the
Distributor is a member). Such portion of the fee is a payment made for personal
service and/or the maintenance of shareholder accounts. The remaining portion of
the Plan fees payable by the Fund is characterized as an "asset-based sales
charge" as such is defined by the aforementioned Rules of Fair Practice.
The Plan was originally adopted by a majority vote of the Board of Trustees,
including all of the Independent Trustees (none of whom had or have any direct
or indirect financial interest in the operation of the Plan) (the "Independent
12b-1 Trustees"), cast in person at a meeting called for the purpose of voting
on the Plan, at their Meeting held on July 19, 1983 (continued after adjournment
on July 27, 1983), and by DWR, the then sole shareholder of the Fund, on August
6, 1983. The Plan was amended (as a result of the resignation of Daiwa as a
Distributor of the Fund's shares) by the Trustees at their Meeting held on July
17, 1984, and such amendment was ratified by the shareholders holding a
majority, as defined in the Act, of the outstanding shares of the Fund, at their
Annual Meeting held on October 1, 1984. At their meeting held on October 30,
1992, the Trustees of the Fund, including all of the Independent 12b-1 Trustees,
approved certain amendments to the Plan which took effect in January, 1993 and
were designed to reflect the fact that upon the reorganization described above
the share distribution activities theretofore performed for the Fund by DWR were
assumed by the Distributor and DWR's sales activities are now being performed
pursuant to the terms of a selected dealer agreement between the Distributor and
DWR. The amendments provide that payments under the Plan will be made to the
Distributor rather than to DWR as before the amendment, and that the Distributor
in turn is authorized to make payments to DWR, its affiliates or other selected
broker-dealers (or direct that the Fund pay such entities directly). The
Distributor is also authorized to retain part of such fee as compensation for
its own distribution-related expenses. At their meeting held on April 28, 1993,
the Trustees of the Fund, including all of the Independent 12b-1 Trustees,
approved certain technical amendments to the Plan in connection with recent
amendments adopted by the National Association of Securities Dealers, Inc. to
its Rules of Fair Practice. At their meeting held on October 26, 1995, the
Trustees of the Fund, including all of the Independent 12b-1 Trustees, approved
an amendment to the Plan to permit payments to be made under
36
<PAGE>
the Plan with respect to certain distribution expenses incurred in connection
with the distribution of shares, including personal services to shareholders
with respect to holdings of such shares, of an investment company whose assets
are acquired by the Fund in a tax-free reorganization.
Under the Plan and as required by Rule 12b-1, the Trustees receive and
review promptly after the end of each calendar quarter a written report provided
by the Distributor of the amounts expended by the Distributor under the Plan and
the purpose for which such expenditures were made. The Fund accrued amounts
payable to the Distributor under the Plan, during the fiscal year ended March
31, 1996, of $5,141,595. This amount is equal to payments required to be paid
monthly by the Fund which were computed at the annual rate of 1.0% of the
average daily net assets of the Fund for the fiscal year and was calculated
pursuant to clause (b) under the Plan. This amount is treated by the Fund as an
expense in the year it is accrued.
The Plan was adopted in order to permit the implementation of the Fund's
method of distribution. Under this distribution method shares of the Fund are
sold without a sales load being deducted at the time of purchase, so that the
full amount of an investor's purchase payment will be invested in shares without
any deduction for sales charges. Shares of the Fund may be subject to a
contingent deferred sales charge, payable to the Distributor, if redeemed during
the six years after their purchase. DWR compensates its account executives by
paying them, from its own funds, commissions for the sale of the Fund's shares,
currently a gross sales credit of up to 5% of the amount sold and an annual
residual commission of up to 0.25 of 1% of the current value (not including
reinvested dividends and distributions) of the amount sold. The gross sales
credit is a charge which reflects commissions paid by DWR to its account
executives and DWR's Fund associated distribution-related expenses, including
sales compensation, and overhead and other branch office distribution-related
expenses including: (a) the expenses of operating DWR's branch offices in
connection with the sale of Fund shares, including lease costs, the salaries and
employee benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies, (b) the costs of
client sales seminars, (c) travel expenses of mutual fund sales coordinators to
promote the sale of Fund shares and (d) other expenses relating to branch
promotion of Fund share sales. The distribution fee that the Distributor
receives from the Fund under the Plan, in effect, offsets distribution expenses
incurred on behalf of the Fund and opportunity costs, such as the gross sales
credit and an assumed interest charge thereon ("carrying charge"). In the
Distributor's reporting of the distribution expenses to the Fund, such assumed
interest (computed at the "broker's call rate") has been calculated on the gross
sales credit as it is reduced by amounts received by the Distributor under the
Plan and any contingent deferred sales charges received by the Distributor upon
redemption of shares of the Fund. No other interest charge is included as a
distribution expense in the Distributor's calculation of its distribution costs
for this purpose. The broker's call rate is the interest rate charged to
securities brokers on loans secured by exchange-listed securities.
The Fund paid 100% of the $5,141,595 accrued under the Plan for the fiscal
year ended March 31, 1996 to the Distributor. DWR and the Distributor estimate
that they have spent, pursuant to the Plan, $67,937,271 on behalf of the Fund
since the inception of the Fund. It is estimated that this amount was spent in
approximately the following ways: (i) 5.92% ($4,024,737)--advertising and
promotional expenses; (ii) 0.77% ($521,096)--printing of prospectuses for
distribution to other than current shareholders; and (iii) 93.31%
($63,391,438)--other expenses, including the gross sales credit and the carrying
charge, of which 16.21% ($10,273,816) represents carrying charges, 34.30%
($21,741,043) represents commission credits to DWR branch offices for payments
of commissions to account executives and 49.49% ($31,376,579) represents
overhead and other branch office distribution-related expenses.
At any given time, the expenses in distributing shares of the Fund may be
more or less than the total of (i) the payments made by the Fund pursuant to the
Plan and (ii) the proceeds of contingent deferred sales charges paid by
investors upon redemption of shares. The Distributor has advised the Fund that
such excess amount, including the carrying charge designed to approximate the
opportunity costs incurred by DWR which arise from it having advanced monies
without having received the amount of any sales charges imposed at the time of
sale of the Fund's shares, totalled $21,996,185 as of March 31,
37
<PAGE>
1996, which amount constitutes 4.23% of the Fund's net assets on such date.
Because there is no requirement under the Plan that the Distributor be
reimbursed for all expenses or any requirement that the Plan be continued from
year to year, this excess amount does not constitute a liability of the Fund.
Although there is no legal obligation for the Fund to pay expenses incurred in
excess of payments made to the Distributor under the Plan and the proceeds of
contingent deferred sales charges paid by investors upon redemption of shares,
if for any reason the Plan is terminated, the Trustees will consider at that
time the manner in which to treat such expenses. Any cumulative expenses
incurred, but not yet recovered through distribution fees or contingent deferred
sales charges, may or may not be recovered through future distribution fees or
contingent deferred sales charges.
No interested person of the Fund nor any Trustee of the Fund who is not an
interested person of the Fund, as defined in the Act, had any direct or indirect
financial interest in the operation of the Plan except to the extent that the
Investment Manager or certain of its employees may be deemed to have such
interest as a result of benefits derived from the successful operation of the
Plan or as a result of receiving a portion of the amounts expended thereunder by
the Fund.
Under its terms, the Plan had an initial term ending July 31, 1984, and will
remain in effect from year to year thereafter, provided such continuance is
approved annually by a vote of the Trustees in the manner described above.
Continuance of the Plan for one year, until April 30, 1997, was approved by the
Board of Trustees of the Fund, including a majority of the Independent 12b-1
Trustees, at a Board meeting held on April 17, 1996. Prior to approving the
continuation of the Plan, the Board requested and received from the Distributor
and reviewed all the information which it deemed necessary to arrive at an
informed determination. In making their determination to continue the Plan, the
Trustees considered: (1) the Fund's experience under the Plan and whether such
experience indicates that the Plan is operating as anticipated; (2) the benefits
the Fund had obtained, was obtaining and would be likely to obtain under the
Plan; and (3) what services had been provided and were continuing to be provided
under the Plan by the Distributor to the Fund and its shareholders. Based upon
their review, the Trustees of the Fund, including each of the Independent 12b-1
Trustees, determined that continuation of the Plan would be in the best interest
of the Fund and would have a reasonable likelihood of continuing to benefit the
Fund and its shareholders. In the Trustees' quarterly review of the Plan, they
will consider its continued appropriateness and the level of compensation
provided therein.
The Plan may not be amended to increase materially the amount to be spent
for the services described therein without approval of the shareholders of the
Fund, and all material amendments of the Plan must also be approved by the
Trustees in the manner described above. The Plan may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent 12b-1
Trustees or by a vote of a majority of the outstanding voting securities of the
Fund (as defined in the Act) on not more than thirty days' written notice to any
other party to the Plan. So long as the Plan is in effect, the election and
nomination of Independent 12b-1 Trustees shall be committed to the discretion of
the Independent 12b-1 Trustees.
DETERMINATION OF NET ASSET VALUE
As stated in the Prospectus, short-term debt securities with remaining
maturities of sixty days or less at the time of purchase are valued at amortized
cost, unless the Board of Trustees determines such does not reflect the
securities' market value, in which case these securities will be valued at their
fair value as determined by the Trustees. Other short-term debt securities will
be valued on a mark-to-market basis until such time as they reach a remaining
maturity of sixty days, whereupon they will be valued at amortized cost using
their value on the 61st day unless the Trustees determine such does not reflect
the securities' market value, in which case these securities will be valued at
their fair value as determined by the Trustees. All other securities and other
assets are valued at their fair value as determined in good faith under
procedures established by and under the supervision of the Trustees.
As stated in the Prospectus, InterCapital will compute the Fund's net asset
value once daily as of 4:00 p.m., New York time (or, on days when the New York
Stock Exchange closes prior to 4:00 p.m., at
38
<PAGE>
such earlier time), on days the New York Stock Exchange is open for trading. The
New York Stock Exchange currently observes the following holidays: New Year's
Day; Presidents' Day; Good Friday; Memorial Day; Labor Day; Independence Day;
Thanksgiving Day; and Christmas Day.
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
Upon the purchase of shares of the Fund, a Shareholder Investment Account is
opened for the investor on the books of the Fund and maintained by Dean Witter
Trust Company (the "Transfer Agent"). This is an open account in which shares
owned by the investor are credited by the Transfer Agent in lieu of issuance of
a share certificate. If a share certificate is desired, it must be requested in
writing for each transaction. Certificates are issued only for full shares and
may be redeposited in the account at any time. There is no charge to the
investor for issuance of a certificate. Whenever a shareholder-instituted
transaction takes place in the Shareholder Investment Account, the shareholder
will be mailed a confirmation of the transaction from the Fund or from DWR or
other selected broker-dealer.
AUTOMATIC INVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. As stated in the
Prospectus, all income dividends and capital gains distributions are
automatically paid in full and fractional shares of the Fund, unless the
shareholder requests that they be paid in cash. Each purchase of shares of the
Fund is made upon the condition that the Transfer Agent is thereby automatically
appointed as agent of the investor to receive all dividends and capital gains
distributions on shares owned by the investor. Such dividends and distributrions
will be paid, at the net asset value per share, in shares of the Fund (or in
cash if the shareholder so requests) as of the close of business on the record
date. At any time an investor may request the Transfer Agent, in writing, to
have subsequent dividends and/or capital gains distributions paid to him or her
in cash rather than shares. To assure sufficient time to process the change,
such request must be received by the Transfer Agent at least five business days
prior to the record date of the dividend or distribution. In the case of
recently purchased shares for which registration instructions have not been
received on the record date, cash payments will be made to DWR or another
selected broker-dealer, which will be forwarded to the shareholder, upon the
receipt of proper instructions.
TARGETED DIVIDENDS.-SM- In states where it is legally permissible,
shareholders may also have all income dividends and capital gains distributions
automatically invested in shares of an open-end Dean Witter Fund other than Dean
Witter World Wide Investment Trust. Such investment will be made as described
above for automatic investment in shares of the Fund, at the net asset value per
share of the selected Dean Witter Fund as of the close of business on the
payment date of the dividend or distribution and will begin to earn dividends,
if any, in the selected Dean Witter Fund the next business day. To participate
in the Targeted Dividends program, shareholders should contact their DWR or
other selected broker-dealer account executive or the Transfer Agent.
Shareholders of the Fund must be shareholders of the Dean Witter Fund targeted
to receive investments from dividends at the time they enter the Targeted
Dividends program. Investors should review the prospectus of the targeted Dean
Witter Fund before entering the program.
EASYINVEST.-SM- Shareholders may subscribe to EasyInvest, an automatic
purchase plan which provides for any amount from $100 to $5,000 to be
transferred automatically from a checking or savings account, on a semi-monthly,
monthly or quarterly basis, to the Transfer Agent for investment in shares of
the Fund. Shares purchased through EasyInvest will be added to the shareholder's
existing account at the net asset value calculated the same business day the
transfer of funds is effected. For further information or to subscribe to
EasyInvest, shareholders should contact their account executive or the Transfer
Agent.
INVESTMENT OF DIVIDENDS OR DISTRIBUTIONS RECEIVED IN CASH. As discussed in
the Prospectus, any shareholder who receives a cash payment representing a
dividend or distribution may invest such dividend or distribution at net asset
value, without the imposition of a contingent deferred sales charge upon
redemption, by returning the check or the proceeds to the Transfer Agent within
thirty days after the payment date. If the shareholder returns the proceeds of a
dividend or distribution, such funds must be
39
<PAGE>
accompanied by a signed statement indicating that the proceeds constitute a
dividend or distribution to be invested. Such investment will be made at the net
asset value per share next determined after receipt of the check or proceeds by
the Transfer Agent.
SYSTEMATIC WITHDRAWAL PLAN. As discussed in the Prospectus, a systematic
withdrawal plan (the "Withdrawal Plan") is available for shareholders who own or
purchase shares of the Fund having a minimum value of $10,000 based upon the
then current net asset value. The Withdrawal Plan provides for monthly or
quarterly (March, June, September and December) checks in any dollar amount, not
less than $25, or in any whole percentage of the account balance, on an
annualized basis. Any applicable contingent deferred sales charge will be
imposed on shares redeemed under the Withdrawal Plan (see "Redemptions and
Repurchases--Contingent Deferred Sales Charge" in the Prospectus). Therefore,
any shareholder participating in the Withdrawal Plan will have sufficient shares
redeemed from his or her account so that the proceeds (net of any applicable
contingent deferred sales charge) to the shareholder will be the designated
monthly or quarterly amount.
The Transfer Agent acts as agent for the shareholder in tendering to the
Fund for redemption sufficient full and fractional shares to provide the amount
of the periodic withdrawal payment designated in the application. The shares
will be redeemed at their net asset value determined, at the shareholder's
option, on the tenth or twenty-fifth day (or next following business day) of the
relevant month or quarter and normally a check for the proceeds will be mailed
by the Transfer Agent, or amounts credited to a shareholder's DWR or other
selected broker-dealer brokerage account, within five business days after the
date of redemption. The Withdrawal Plan may be terminated at any time by the
Fund.
Withdrawal Plan payments should not be considered as dividends, yields or
income. If periodic withdrawal plan payments continuously exceed net investment
income and net capital gains, the shareholder's original investment will be
correspondingly reduced and ultimately exhausted.
Each withdrawal constitutes a redemption of shares and any gain or loss
realized must be recognized for federal income tax purposes. Although the
shareholder may make additional investments of $2,500 or more under the
Withdrawal Plan, withdrawals made concurrently with purchases of additional
shares may be inadvisable because of the contingent deferred sales charge
applicable to the redemption of shares purchased during the preceding six years
(see "Redemptions and Repurchases-- Contingent Deferred Sales Charge").
Any shareholder who wishes to have payments under the Withdrawal Plan made
to a third party or sent to an address other than the one listed on the account
must send complete written instructions to the Transfer Agent to enroll in the
Withdrawal Plan. The shareholder's signature on such instructions must be
guaranteed by an eligible guarantor acceptable to the Transfer Agent
(shareholders should contact the Transfer Agent for a determination as to
whether a particular institution is such an eligible guarantor). A shareholder
may, at any time, change the amount and interval of withdrawal payments through
his or her DWR or other selected broker-dealer account executive or by written
notification to the Transfer Agent. In addition, the party and/or the address to
which checks are mailed may be changed by written notification to the Transfer
Agent, with signature guarantees required in the manner described above. The
shareholder may also terminate the Withdrawal Plan at any time by written notice
to the Transfer Agent. In the event of such termination, the account will be
continued as a regular shareholder investment account. The shareholder may also
redeem all or part of the shares held in the Withdrawal Plan account (see
"Redemptions and Repurchases" in the Prospectus) at any time. Shareholders
wishing to enroll in the Withdrawal Plan should contact their account executive
or the Transfer Agent.
DIRECT INVESTMENTS THROUGH TRANSFER AGENT. As discussed in the Prospectus,
a shareholder may make additional investments in Fund shares at any time by
sending a check in any amount, not less than $100, payable to Dean Witter World
Wide Investment Trust, directly to the Fund's Transfer Agent. Such amounts will
be applied to the purchase of Fund shares at the net asset value per share next
computed after receipt of the check or purchase payment by the Transfer Agent.
The shares so purchased will be credited to the investor's account.
40
<PAGE>
EXCHANGE PRIVILEGE
As discussed in the Prospectus, the Fund makes available to its shareholders
an Exchange Privilege whereby shareholders of the Fund may exchange their shares
for shares of other Dean Witter Funds sold with a contingent deferred sales
charge ("CDSC funds"), and for shares of Dean Witter Limited Term Municipal
Trust, Dean Witter Short-Term Bond Fund, Dean Witter Short-Term U.S. Treasury
Trust, Dean Witter Balanced Growth Fund, Dean Witter Balanced Income Fund, Dean
Witter Intermediate Term U.S. Treasury Trust and five Dean Witter Funds which
are money market funds (the foregoing eleven non-CDSC funds are hereinafter
referred to as the "Exchange Funds"). Exchanges may be made after the shares of
the fund acquired by purchase (not by exchange or dividend reinvestment) have
been held for thirty days. There is no waiting period for exchanges of shares
acquired by exchange or dividend reinvestment. An exchange will be treated for
federal income tax purposes the same as a repurchase or redemption of shares, on
which the shareholder may realize a capital gain or loss.
Any new account established through the Exchange Privilege will have the
same registration and cash dividend or dividend reinvestment plan as the present
account, unless the Transfer Agent receives written notification to the
contrary. For telephone exchanges, the exact registration of the existing
account and the account number must be provided.
Any shares held in certificate form cannot be exchanged but must be
forwarded to the Transfer Agent and deposited into the shareholder's account
before being eligible for exchange. (Certificates mailed in for deposit should
not be endorsed.)
As described below, and in the Prospectus under the captions "Exchange
Privilege" and "Contingent Deferred Sales Charge", a contingent deferred sales
charge ("CDSC") may be imposed upon a redemption, depending on a number of
factors, including the number of years from the time of purchase until the time
of redemption or exchange ("holding period"). When shares of the Fund or any
other CDSC fund are exchanged for shares of an Exchange Fund, the exchange is
executed at no charge to the shareholder, without the imposition of the CDSC at
the time of the exchange. During the period of time the shareholder remains in
the Exchange Fund (calculated from the last day of the month in which the
Exchange Fund shares were acquired), the holding period or "year since purchase
payment made" is frozen. When shares are redeemed out of the Exchange Fund, they
will be subject to a CDSC which would be based upon the period of time the
shareholder held shares in a CDSC fund. However, in the case of shares of the
Fund exchanged into an Exchange Fund on or after April 23, 1990, upon a
redemption of shares which results in a CDSC being imposed, a credit (not to
exceed the amount of the CDSC) will be given in an amount equal to the Exchange
Fund 12b-1 distribution fees incurred on or after that date which are
attributable to those shares. Shareholders acquiring shares of an Exchange Fund
pursuant to this exchange privilege may exchange those shares back into a CDSC
fund from the Exchange Fund, with no charge being imposed on such exchange. The
holding period previously frozen when shares were first exchanged for shares of
the Exchange Fund resumes on the last day of the month in which shares of a CDSC
fund are reacquired. A CDSC is imposed only upon an ultimate redemption, based
upon the time (calculated as described above) the shareholder was invested in a
CDSC fund.
In addition, shares of the Fund may be acquired in exchange for shares of
Dean Witter Funds sold with a front-end sales charge ("front-end sales charge
funds") but shares of the Fund, however acquired, may not be exchanged for
shares of front-end sales charge funds. Shares of a CDSC fund acquired in
exchange for shares of a front-end sales charge fund (or in exchange for shares
of other Dean Witter Funds for which shares of a front-end sales charge fund
have been exchanged) are not subject to any CDSC upon their redemption.
When shares initially purchased in a CDSC fund are exchanged for shares of
another CDSC fund, or for shares of an Exchange Fund, the date of purchase of
the shares of the fund exchanged into, for purposes of the CDSC upon redemption,
will be the last day of the month in which the shares being exchanged were
originally purchased. In allocating the purchase payments between funds for
purposes of the CDSC, the amount which represents the current net asset value of
shares at the time of the exchange which were (i) purchased more than three or
six years (depending on the CDSC schedule
41
<PAGE>
applicable to the shares) prior to the exchange, (ii) originally acquired
through reinvestment of dividends or distributions and (iii) acquired in
exchange for shares of front-end sales charge funds, or for shares of other Dean
Witter Funds for which shares of front-end sales charge funds have been
exchanged (all such shares called "Free Shares"), will be exchanged first.
Shares of Dean Witter American Value Fund acquired prior to April 30, 1984,
shares of Dean Witter Dividend Growth Securities Inc. and Dean Witter Natural
Resource Development Securities Inc. acquired prior to July 2, 1984, and shares
of Dean Witter Strategist Fund acquired prior to November 8, 1989, are also
considered Free Shares and will be the first Free Shares to be exchanged. After
an exchange, all dividends earned on shares in an Exchange Fund will be
considered Free Shares. If the exchanged amount exceeds the value of such Free
Shares, an exchange is made, on a block-by-block basis, of non-Free Shares held
for the longest period of time (except that if shares held for identical periods
of time but subject to different CDSC schedules are held in the same Exchange
Privilege account, the shares of that block that are subject to a lower CDSC
rate will be exchanged prior to the shares of that block that are subject to a
higher CDSC rate). Shares equal to any appreciation in the value of non-Free
Shares exchanged will be treated as Free Shares, and the amount of the purchase
payments for the non-Free Shares of the fund exchanged into will be equal to the
lesser of (a) the purchase payments for, or (b) the current net asset value of,
the exchanged non-Free Shares. If an exchange between funds would result in
exchange of only part of a particular block of non-Free Shares, then shares
equal to any appreciation in the value of the block (up to the amount of the
exchange) will be treated as Free Shares and exchanged first, and the purchase
payment for that block will be allocated on a pro rata basis between the
non-Free Shares of that block to be retained and the non-Free Shares to be
exchanged. The prorated amount of such purchase payment attributable to the
retained non-Free Shares will remain as the purchase payment for such shares,
and the amount of purchase payment for the exchanged non-Free Shares will be
equal to the lesser of (a) the prorated amount of the purchase payment for, or
(b) the current net asset value of, those exchanged non-Free Shares. Based upon
the procedures described in the Prospectus under the caption "Contingent
Deferred Sales Charge," any applicable CDSC will be imposed upon the ultimate
redemption of shares of any fund, regardless of the number of exchanges since
those shares were originally purchased.
With respect to the redemption or repurchase of shares of the Fund, the
application of proceeds to the purchase of new shares in the Fund or any other
of the funds and the general administration of the Exchange Privilege, the
Transfer Agent acts as agent for the Distributor and for the shareholder's
selected broker-dealer, if any, in the performance of such functions.
With respect to exchanges, redemptions and repurchases, the Transfer Agent
shall be liable for its own negligence and not for the default or negligence of
its correspondents or for losses in transit. The Fund shall not be liable for
any default or negligence of the Transfer Agent, the Distributor or any selected
broker-dealer.
The Distributor and various selected broker-dealers have authorized and
appointed the Transfer Agent to act as their agent in connection with the
application of proceeds of any redemption of Fund shares to the purchase of
shares of any other fund and the general administration of the Exchange
Privilege. No commission or discounts will be paid to the Distributor or any
selected broker-dealer for any transactions pursuant to this Exchange Privilege.
Exchanges are subject to the minimum investment requirement and any other
conditions imposed by each fund. (The minimum initial investment is $5,000 for
Dean Witter Liquid Asset Fund Inc., Dean Witter Tax-Free Daily Income Trust,
Dean Witter California Tax-Free Daily Income Trust, and Dean Witter New York
Municipal Money Market Trust although those funds may, at their discretion,
accept initial investments of as low as $1,000. The minimum initial investment
for Dean Witter Short-Term U.S. Treasury Trust is $10,000, although that fund
may, at its discretion, accept purchases as low as $5,000. The minimum initial
investment for all other Dean Witter Funds for which the Exchange Privilege is
available is $1,000.) Upon exchange into an Exchange Fund, the shares of that
fund will be held in a special Exchange Privilege Account separately from
accounts of those shareholders who have acquired their shares directly from that
fund. As a result, certain services normally available to shareholders of those
funds, including the check writing feature, will not be available for funds held
in that account.
42
<PAGE>
The Fund and each of the other Dean Witter Funds may limit the number of
times this Exchange Privilege may be exercised by any investor within a
specified period of time. Also, the Exchange Privilege may be terminated or
revised at any time by the Fund and/or any of the Dean Witter Funds for which
shares of the Fund have been exchanged, upon such notice as may be required by
applicable regulatory agencies (presently sixty days' prior written notice for
termination or material revision), provided that six months' prior written
notice of termination will be given to shareholders who hold shares of Exchange
Funds pursuant to this Exchange Privilege, and provided further that the
Exchange Privilege may be terminated or materially revised without notice at
times (a) when the New York Stock Exchange is closed for other than customary
weekends and holidays, (b) when trading on that Exchange is restricted, (c) when
an emergency exists as a result of which disposal by the Fund of securities
owned by it is not reasonably practicable or it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, (d) during any
other period when the Securities and Exchange Commission by order so permits
(provided that applicable rules and regulations of the Securities and Exchange
Commission shall govern as to whether the conditions prescribed in (b) or (c)
exist) or (e) if the Fund would be unable to invest amounts effectively in
accordance with its investment objective, policies and restrictions.
Shareholders maintaining margin accounts with DWR or another selected
broker-dealer are referred to their account executive regarding restrictions on
exchange of shares of the Fund pledged in the margin account.
For further information regarding the Exchange Privilege, shareholders
should contact their DWR or other selected broker-dealer account executive or
the Transfer Agent.
REDEMPTIONS AND REPURCHASES
- --------------------------------------------------------------------------------
REDEMPTION. As stated in the Prospectus, shares of the Fund can be redeemed
for cash at any time at the net asset value per share next determined; however,
such redemption proceeds may be reduced by the amount of any applicable
contingent deferred sales charges (see below). If shares are held in a
shareholder's account without a share certificate, a written request for
redemption to the Fund's Transfer Agent at P.O. Box 983, Jersey City, NJ 07303
is required. If certificates are held by the shareholder, the shares may be
redeemed by surrendering the certificates with a written request for redemption.
The share certificate, or an accompanying stock power, and the request for
redemption, must be signed by the shareholder or shareholders exactly as the
shares are registered. Each request for redemption, whether or not accompanied
by a share certificate, must be sent to the Fund's Transfer Agent, which will
redeem the shares at their net asset value next computed (see "Purchase of Fund
Shares" in the Prospectus) after it receives the request, and certificate, if
any, in good order. Any redemption request received after such computation will
be redeemed at the next determined net asset value. The term "good order" means
that the share certificate, if any, and request for redemption are properly
signed, accompanied by any documentation required by the Transfer Agent, and
bear signature guarantees when required by the Fund or the Transfer Agent. If
redemption is requested by a corporation, partnership, trust or fiduciary, the
Transfer Agent may require that written evidence of authority acceptable to the
Transfer Agent be submitted before such request is accepted.
Whether certificates are held by the shareholder or shares are held in a
shareholder's account, if the proceeds are to be paid to any person other than
the record owner, or if the proceeds are to be paid to a corporation (other than
the Distributor or a selected broker-dealer for the acccount of the
shareholder), partnership, trust or fiduciary, or sent to the shareholder at an
address other than the registered address, signatures must be guaranteed by an
eligible guarantor acceptable to the Transfer Agent (shareholders should contact
the Transfer Agent for a determination as to whether a particular institution is
such an eligible guarantor). A stock power may be obtained from any dealer or
commercial bank. The Fund may change the signature guarantee requirements from
time to time upon notice to shareholders, which may be by means of a new
prospectus.
CONTINGENT DEFERRED SALES CHARGE. As stated in the Prospectus, a contingent
deferred sales charge ("CDSC") will be imposed on any redemption by an investor
if after such redemption the current
43
<PAGE>
value of the investor's shares of the Fund is less than the dollar amount of all
payments by the shareholder for the purchase of Fund shares during the preceding
six years. However, no CDSC will be imposed to the extent that the net asset
value of the shares redeemed does not exceed: (a) the current net asset value of
shares purchased more than six years prior to the redemption, plus (b) the
current net asset value of shares purchased through reinvestment of dividends or
distributions of the Fund or another Dean Witter Fund (see "Shareholder
Services--Targeted Dividends"), plus (c) the current net asset value of shares
acquired in exchange for (i) shares of Dean Witter front-end sales charge funds,
or (ii) shares of other Dean Witter Funds for which shares of front-end sales
charge funds have been exchanged (see "Shareholder Services--Exchange
Privilege"), plus (d) increases in the net asset value of the investor's shares
above the total amount of payments for the purchase of Fund shares made during
the preceding six years. In addition, no CDSC will be imposed on redemptions
which are attributable to reinvestment of distributions from, or the proceeds
of, certain Unit Investment Trusts or which were purchased by the employee
benefit plans established by DWR and SPS Transaction Services, Inc. (an
affiliate of DWR) for their employees as qualified under Section 401(k) of the
Internal Revenue Code. The CDSC will be paid to the Distributor.
In determining the applicability of the CDSC to each redemption, the amount
which represents an increase in the net asset value of the investor's shares
above the amount of the total payments for the purchase of shares within the
last six years will be redeemed first. In the event the redemption amount
exceeds such increase in value, the next portion of the amount redeemed will be
the amount which represents the net asset value of the investor's shares
purchased more than six years prior to the redemption and/or shares purchased
through reinvestment of dividends or distributions and/or shares acquired in
exchange for shares of Dean Witter front-end sales charge funds or for shares of
other Dean Witter funds for which shares of front-end sales charge funds have
been exchanged. A portion of the amount redeemed which exceeds an amount which
represents both such increase in value and the value of shares purchased more
than six years prior to the redemption and/or shares purchased through
reinvestment of dividends or distributions and/or shares acquired in the
above-described exchanges will be subject to a CDSC.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of Fund shares until the time of
redemption of such shares. For purposes of determining the number of years from
the time of any payment for the purchase of shares, all payments made during a
month will be aggregated and deemed to have been made on the last day of the
month. The following table sets forth the rates of the CDSC:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
YEAR SINCE SALES CHARGE AS
PURCHASE A PERCENTAGE OF
PAYMENT MADE AMOUNT REDEEMED
- ---------------------------------------------------------------------------------- ---------------------
<S> <C>
First............................................................................. 5.0%
Second............................................................................ 4.0%
Third............................................................................. 3.0%
Fourth............................................................................ 2.0%
Fifth............................................................................. 2.0%
Sixth............................................................................. 1.0%
Seventh and thereafter............................................................ None
</TABLE>
In determining the rate of the CDSC, it will be assumed that a redemption is
made of shares held by the investor for the longest period of time within the
applicable six-year period. This will result in any such CDSC being imposed at
the lowest possible rate. Accordingly, shareholders may redeem, without
incurring any CDSC, amounts equal to any net increase in the value of their
shares above the amount of their purchase payments made within the past six
years and amounts equal to the current value of shares purchased more than six
years prior to the redemption and shares purchased through reinvestment of
dividends or distributions or acquired in exchange for shares of Dean Witter
front-end sales charge funds, or for shares of other Dean Witter Funds for which
shares of front-end sales charge funds have been exchanged. The CDSC will be
imposed, in accordance with the table shown above, on any
44
<PAGE>
redemptions within six years of purchase which are in excess of these amounts
and which redemptions are not (a) requested within one year of death or initial
determination of disability of a shareholder, or (b) made pursuant to certain
taxable distributions from retirement plans or retirement accounts, as described
in the Prospectus.
PAYMENT FOR SHARES REDEEMED OR REPURCHASED. As discussed in the prospectus,
payment for shares presented for repurchase or redemption will be made by check
within seven days after receipt by the Transfer Agent of the certificate and/or
written request in good order. Such payment may be postponed or the right of
redemption suspended at times (a) when the New York Stock Exchange is closed for
other than customary weekends and holidays, (b) when trading on that Exchange is
restricted, (c) when an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets, or (d) during any other period when the Securities and Exchange
Commission by order so permits; provided that applicable rules and regulations
of the Securities and Exchange Commission shall govern as to whether the
conditions prescribed in (b) or (c) exist. If the shares to be redeemed have
recently been purchased by check (including a certified or bank cashier's
check), payment of redemption proceeds may be delayed for the minimum time
needed to verify that the check used for investment has been honored (not more
than fifteen days from the time of receipt of the check by the Transfer Agent).
Shareholders maintaining margin accounts with DWR or another selected
broker-dealer are referred to their account executive regarding restrictions on
redemption of shares of the Fund pledged in the margin account.
TRANSFERS OF SHARES. In the event a shareholder requests a transfer of any
shares to a new registration, such shares will be transferred without sales
charge at the time of transfer. With regard to the status of shares which are
either subject to the contingent deferred sales charge or free of such charge
(and with regard to the length of time shares subject to the charge have been
held), any transfer involving less than all of the shares in an account will be
made on a pro-rata basis (that is, by transferring shares in the same proportion
that the transferred shares bear to the total shares in the account immediately
prior to the transfer). The transferred shares will continue to be subject to
any applicable contingent deferred sales charge as if they had not been so
transferred.
REINSTATEMENT PRIVILEGE. As discussed in the Prospectus, a shareholder who
has had his or her shares redeemed or repurchased and has not previously
exercised this reinstatement privilege may, within thirty days after the date of
redemption or repurchase, reinstate any portion or all of the proceeds of such
redemption or repurchase in shares of the Fund at the net asset value next
determined after a reinstatement request, together with the proceeds, is
received by the Transfer Agent.
Exercise of the reinstatement privilege will not affect the federal income
tax treatment of any gain or loss realized upon the redemption or repurchase,
except that if the redemption or repurchase resulted in a loss and reinstatement
is made in shares of the Fund, some or all of the loss, depending on the amount
reinstated, will not be allowed as a deduction for federal income tax purposes
but will be applied to adjust the cost basis of the shares acquired upon
reinstatement.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
As discussed in the Prospectus under "Dividends, Distributions and Taxes",
the Fund will determine either to distribute or to retain all or part of any net
long-term capital gains in any year for reinvestment. If any such gains are
retained, the Fund will pay federal income tax thereon, and shareholders will
include such undistributed gains in determining their taxable income and will be
able to claim their share of the tax paid by the Fund as a credit against their
individual federal income tax.
Gains or losses on sales of securities by the Fund generally will be
long-term capital gains or losses if the securities have been held by the Fund
for more than one year. Gains or losses on the sale of securities held for one
year or less generally will be short-term capital gains or losses.
45
<PAGE>
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code (the "Code").
If so qualified, the Fund will not be subject to federal income tax on its net
investment income and net short-term capital gains, if any, realized during any
fiscal year to the extent that it distributes such income and capital gains to
its shareholders, other than any tax resulting from investing in passive foreign
investment companies, as discussed in the Prospectus. In addition, the Fund
intends to distribute to its shareholders each calendar year a sufficient amount
of ordinary income and capital gains to avoid the imposition of a 4% excise tax.
Shareholders will normally have to pay federal income taxes, and any state
income taxes, on the dividends and distributions they receive from the Fund.
Such dividends and distributions, to the extent that they are derived from net
investment income or short-term capital gains, are taxable to the shareholder as
ordinary income regardless of whether the shareholder receives such payments in
additional shares or in cash. Any dividends declared in the last quarter of any
calendar year which are paid in the following year prior to February 1 will be
deemed received by the shareholder in the prior year.
Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash.
Dividend payments will be eligible for the federal dividends received
deduction available to the Fund's corporate shareholders only to the extent the
aggregate dividends received by the Fund would be eligible for the deduction if
the Fund were the shareholder claiming the dividends received deduction. The
amount of dividends paid by the Fund which may qualify for the dividends
received deduction is limited to the aggregate amount of qualifying dividends
which the Fund derives from its portfolio investment which the Fund has held for
a minimum period, usually 46 days. Any distributions made by the Fund will not
be eligible for the dividends received deduction with respect to shares which
are held by the shareholder for 45 days or less. Any long-term capital gain
distributions will also not be eligible for the dividends received deduction.
The ability to take the dividends received deduction will also be limited in the
case of a Fund shareholder which incurs or continues indebtedness which is
directly attributable to its investment in the Fund.
Any dividend or capital gains distribution received by a shareholder from
any investment company will have the effect of reducing the net asset value of
the shareholder's stock in that company by the exact amount of the dividend or
capital gains distribution. Furthermore, capital gains distributions and some
portion of the dividends are subject to federal income taxes. If the net asset
value of the shares should be reduced below a shareholder's cost as a result of
the payment of dividends or the distribution of realized long-term capital
gains, such payment or distribution would be in part a return of the
shareholder's investment to the extent of such reduction below the shareholder's
cost, but nonetheless would be fully taxable. Therefore, an investor should
consider the tax implications of purchasing Fund shares immediately prior to a
distribution record date.
Dividends and interest received by the Fund may give rise to withholding and
other taxes imposed by foreign countries. Tax conventions and treaties between
certain countries and the United States may reduce or eliminate such taxes.
Investors may be entitled to claim United States foreign tax credits with
respect to such taxes, subject to certain provisions and limitations contained
in the Code. If more than 50% of the Fund's total assets at the close of its
fiscal year consist of securities of foreign corporations, the Fund will be
eligible and will determine whether or not to file an election with the Internal
Revenue Service pursuant to which shareholders of the Fund will be required to
include their respective pro rata portions of such withholding taxes in their
United States income tax returns as gross income, treat such respective pro rata
portions as taxes paid by them, and deduct such respective pro rata portions in
computing their taxable incomes or, alternatively, use them as foreign tax
credits against their United States income taxes. If it qualifies for and elects
to file such election with the Internal Revenue Service, the Fund will report
annually to its shareholders the amount per share of such withholding. The Fund
does not intend to make such election for its fiscal year ended March 31, 1996.
46
<PAGE>
If the Fund invests in an entity which is classified as a "passive foreign
investment company" ("PFIC") for U.S. tax purposes, the application of certain
technical tax provisions applying to such companies could result in the
imposition of federal income tax with respect to such investments at the Fund
level which could not be eliminated by distributions to shareholders. It is not
anticipated that any taxes on the Fund with respect to investments in PFICs
would be significant.
The Fund may be subject to taxes in foreign countries in which it invests.
In addition, if the Fund were deemed to be a resident of the United Kingdom for
United Kingdom tax purposes or if the Fund were treated as being engaged in a
trading activity through an agent in the United Kingdom, there is a risk that
the United Kingdom would attempt to tax all or a portion of the Fund's gains or
income. In light of the terms and conditions of the Investment Management and
Sub-Advisory Agreements, it is believed by the Investment Manager that any such
risk is minimal.
SPECIAL RULES FOR CERTAIN FOREIGN CURRENCY TRANSACTIONS. In general, gains
from foreign currencies and from foreign currency options, foreign currency
futures and forward foreign exchange contracts relating to investments in stock,
securities or foreign currencies are currently considered to be qualifying
income for purposes of determining whether the Fund qualifies as a regulated
investment company. It is currently unclear, however, who will be treated as the
issuer of certain foreign currency instruments or how foreign currency options,
futures, or forward currency contracts will be valued for purposes of the
regulated investment company diversification requirements applicable to the
Fund.
Under Code Section 988, special rules are provided for certain transactions
in a foreign currency other than the taxpayer's functional currency (I.E.,
unless certain special rules apply, currencies other than the U.S. dollar). In
general, foreign currency gains or losses from forward contracts, from futures
contracts that are not "regulated futures contracts," and from unlisted options
will be treated as ordinary income or loss under Code Section 988. Also, certain
foreign exchange gains or losses derived with respect to foreign fixed-income
securities are also subject to Section 988 treatment. In general, therefore,
Code Section 988 gains or losses will increase or decrease the amount of the
Fund's investment company taxable income available to be distributed to
shareholders as ordinary income, rather than increasing or decreasing the amount
of the Fund's net capital gain. Additionally, if Code Section 988 losses exceed
other investment company taxable income during a taxable year, the Fund would
not be able to make any ordinary dividend distributions.
Shareholders are urged to consult their own attorneys or tax advisers
regarding specific questions as to federal, state or local taxes.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
As discussed in the Prospectus, from time to time the Fund may quote its
"total return" in advertisements and sales literature. The Fund's "average
annual total return" represents an annualization of the Fund's total return over
a particular period and is computed by finding the annual percentage rate which
will result in the ending redeemable value of a hypothetical $1,000 investment
made at the beginning of a one, five or ten year period, or for the period from
the date of commencement of operations, if shorter than any of the foregoing.
The ending redeemable value is reduced by any contingent deferred sales charge
at the end of the one, five or ten year or other period. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment, taking a root of the quotient (where the root is equivalent to the
number of years in the period) and subtracting 1 from the result.
The average annual total returns of the Fund for the one, five and ten year
periods ended March 31, 1996 were 11.20%, 7.77% and 8.50%, respectively.
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. Such calculations may or may not reflect the
deduction of the contingent deferred sales charge which, if reflected, would
reduce
47
<PAGE>
the performance quoted. For example, the average annual total return of the Fund
may be calculated in the manner described in the preceding paragraph, but
without deduction for any applicable contingent deferred sales charge. Based on
this calculation, the average annual total returns of the Fund for the one, five
and ten year periods ended March 31, 1996 were 16.20%, 8.07% and 8.50%,
respectively.
In addition, the Fund may compute its aggregate total return for specified
periods by determining the aggregate percentage rate which will result in the
ending value of a hypothetical $1,000 investment made at the beginning of the
period. For the purpose of this calculation, it is assumed that all dividends
and distributions are reinvested. The formula for computing aggregate total
return involves a percentage obtained by dividing the ending value (without
reduction for any contingent deferred sales charge) by the initial $1,000
investment and subtracting 1 from the result. Based on the foregoing
calculation, the Fund's total return for the year ended March 31, 1996 was
16.20%, the total return for the five years ended March 31, 1996 was 47.40% and
the total return for the ten year period ended March 31, 1996 was 126.20%.
The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in shares of the Fund by adding 1 to the Fund's
aggregate total return to date (expressed as a decimal and without taking into
account the effect of any applicable CDSC) and multiplying by $10,000, $50,000
or $100,000, as the case may be. Investments of $10,000, $50,000 and $100,000 in
the Fund at inception would have grown to $36,268, $181,340 and $362,680,
respectively, at March 31, 1996.
The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by independent organizations.
CUSTODIAN AND TRANSFER AGENT
- --------------------------------------------------------------------------------
The Chase Manhattan Bank, One Chase Plaza, New York, New York 10081 is the
Custodian of the Fund's assets. As Custodian, The Chase Manhattan Bank has
contracted with various foreign banks and depositaries to hold portfolio
securities of non-U.S. issues on behalf of the Fund. Any of the Fund's cash
balances with the Custodian in excess of $100,000 are unprotected by federal
deposit insurance. Such balances may, at times, be substantial.
Dean Witter Trust Company, Harborside Financial Center, Plaza Two, Jersey
City, New Jersey 07311 is the Transfer Agent of the Fund's shares and Dividend
Disbursing Agent for payment of dividends and distributions of Fund shares and
Agent for shareholders under various investment plans described herein. Dean
Witter Trust Company is an affiliate of Dean Witter InterCapital Inc., the
Fund's Investment Manager, and Dean Witter Distributors Inc., the Fund's
Distributor. As Transfer Agent and Dividend Disbursing Agent, Dean Witter Trust
Company's responsibilities include maintaining shareholder accounts, including
providing subaccounting and recordkeeping services for certain retirement
accounts; disbursing cash dividends and reinvesting dividends; processing
account registration changes; handling purchase and redemption transactions;
mailing prospectuses and reports; mailing and tabulating proxies; processing
share certificate transactions; and maintaining shareholder records and lists.
For these services Dean Witter Trust Company receives a per shareholder account
fee from the Fund.
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
serves as the independent accountants of the Fund. The independent accountants
are responsible for auditing the annual financial statements of the Fund.
DESCRIPTION OF SHARES OF THE FUND
- --------------------------------------------------------------------------------
The shareholders of the Fund are entitled to a full vote for each full share
held. All of the Trustees, except for Messrs. Bozic, Purcell and Schroeder, have
been elected by the shareholders of the Fund, most recently at a Special Meeting
of Shareholders held on January 12, 1993. Messrs. Bozic, Purcell and
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<PAGE>
Schroeder were elected by the other Trustees of the Fund on April 8, 1994. The
Trustees themselves have the power to alter the number and the terms of office
of the Trustees, and they may at any time lengthen their own terms or make their
terms of unlimited duration and appoint their own successors, provided that
always at least a majority of the Trustees has been elected by the shareholders
of the Fund. Under certain circumstances the Trustees may be removed by action
of the Trustees. The shareholders also have the right under certain
circumstances to remove the Trustees. The voting rights of shareholders are not
cumulative, so that holders of more than 50 percent of the shares voting can, if
they choose, elect all Trustees being selected, while the holders of the
remaining shares would be unable to elect any Trustees. The Fund is not required
to hold Annual Meetings of Shareholders.
The Declaration of Trust permits the Trustees to authorize the creation of
additional series of shares (the proceeds of which would be invested in
separate, independently managed portfolios) and additional classes of shares
within any series (which would be used to distinguish among the rights of
different categories of shareholders, as might be required by future regulations
or other unforeseen circumstances). However, the Trustees have not authorized
any such additional series or classes of shares.
The Declaration of Trust further provides that no Trustee, officer, employee
or agent of the Fund is liable to the Fund or to a shareholder, nor is any
Trustee, officer, employee or agent liable to any third persons in connection
with the affairs of the Fund, except as such liability may arise from his or its
own bad faith, willful misfeasance, gross negligence, or reckless disregard of
his duties. It also provides that all third persons shall look solely to the
Fund's property for satisfaction of claims arising in connection with the
affairs of the Fund. With the exceptions stated, the Declaration of Trust
provides that a Trustee, officer, employee or agent is entitled to be
indemnified against all liability in connection with the affairs of the Fund.
The Fund shall be of unlimited duration subject to the provisions in the
Declaration of Trust concerning termination by action of the shareholders.
REPORTS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
The Fund will send to shareholders, at least semi-annually, reports showing
the Fund's portfolio and other information. An annual report, containing
financial statements audited by the independent accountants, will be sent to
shareholders each year. The Fund's fiscal year ends on March 31. The financial
statements of the Fund must be audited at least once a year by independent
accountants whose selection is made annually by the Fund's Board of Trustees.
LEGAL COUNSEL
- --------------------------------------------------------------------------------
Sheldon Curtis, Esq., who is an officer and the General Counsel of
InterCapital, is an officer and the General Counsel of the Fund.
EXPERTS
- --------------------------------------------------------------------------------
The financial statements of the Fund included in this Statement of
Additional Information and incorporated by reference in the Prospectus have been
so included and incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
REGISTRATION STATEMENT
- --------------------------------------------------------------------------------
This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the Securities and Exchange Commission. The complete Registration
Statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the rules and regulations of the Commission.
49
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS, WARRANTS, RIGHTS
AND BONDS (99.1%)
ARGENTINA (0.2%)
AUTOMOBILES
80,000 Ciadea S.A.*.................. $ 368,074
---------------
ENERGY
18,500 Yacimentos Petroliferos
Fiscales S.A. (ADR)........... 372,311
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
12,000 Quilmes Industrial S.A.
(ADR)......................... 144,000
6,000 Quilmes Industrial S.A.
(Pref.)*...................... 66,000
---------------
210,000
---------------
TELECOMMUNICATIONS
15,500 Telecom Argentina Stet -
France Telecom S.A. (Class B)
(ADR)......................... 643,250
---------------
TOTAL ARGENTINA............... 1,593,635
---------------
AUSTRALIA (1.1%)
BUILDING & CONSTRUCTION
400,000 Macmahon Holdings Ltd......... 231,442
---------------
ENERGY
55,000 Broken Hill Proprietary Co.
Ltd........................... 783,542
120,000 Woodside Petroleum Ltd........ 671,809
---------------
1,455,351
---------------
METALS & MINING
800,000 M.I.M. Holdings Ltd........... 1,157,212
120,000 Newcrest Mining Ltd........... 536,696
350,000 Pasminco Ltd.................. 481,651
85,000 Resolute Samantha Ltd......... 222,646
---------------
2,398,205
---------------
RETAIL
120,000 Foodland Associated Ltd....... 440,992
40,000 Harvey Norman Holdings Ltd.... 225,187
300,000 Woolworth's Ltd............... 717,784
---------------
1,383,963
---------------
TRANSPORTATION
170,000 Mayne Nickless Ltd............ 903,876
---------------
TOTAL AUSTRALIA............... 6,372,837
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
AUSTRIA (0.1%)
ELECTRICAL EQUIPMENT
1,180 Austria Mikro Systeme
International AG.............. $ 165,724
---------------
TEXTILES
2,170 Wolford AG.................... 435,676
---------------
TOTAL AUSTRIA................. 601,400
---------------
BELGIUM (0.2%)
RESTAURANTS
1,840 Quick Restaurants S.A......... 187,631
---------------
RETAIL
25,000 G.I.B. Holdings Ltd........... 1,116,932
---------------
TOTAL BELGIUM................. 1,304,563
---------------
BRAZIL (1.7%)
APPLIANCES & HOUSEHOLD DURABLES
29,000 Refrigeracao Parana S.A.
(ADR)......................... 383,090
---------------
CHEMICALS
70,000 Rhodia-Ster S.A. (GDR) -
144A**........................ 630,700
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
20,000 Ceval Alimentos (ADR)......... 253,000
---------------
FOREST PRODUCTS, PAPER & PACKAGING
60,000 Aracruz Celulose S.A. (ADR)... 480,000
---------------
INVESTMENT COMPANIES
1,000,000 Brazilian Smaller Co.
Investment Trust.............. 1,120,000
200,000 Brazilian Smaller Co.
Investment Trust
(Warrants due 09/30/07)*...... 144,000
---------------
1,264,000
---------------
MACHINERY
51,000 Iochpe Maxion S.A. (ADR)...... 129,030
---------------
RETAIL
35,000 Companhia Pao de Acucar
(Pref.) (GDR) - 144A**........ 520,800
67,000 Makro Atacadista S.A.*........ 469,000
---------------
989,800
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
50
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
STEEL & IRON
40,000 Companhia Acos Especia
(ADR)......................... $ 426,400
20,000 Companhia Siderurgica Nacional
(ADR)......................... 590,000
17,500 Companhia Vale do Rio Doce
S.A. (Pref.) (ADR)............ 686,875
20,000 Usinas Siderurgicas de Minas
Gerais S.A. (ADR)............. 220,800
50,000 Usinas Siderurgicas de Minas
Gerais S.A. (ADR) - 144A**.... 543,750
---------------
2,467,825
---------------
TELECOMMUNICATIONS
19,000 Telecomunicacoes Brasileiras
S.A. (ADR).................... 945,250
---------------
UTILITIES - ELECTRIC
24,000 Centrais Electricas
Brasileiras S.A. (Class B)
(ADR)......................... 315,000
20,000 Companhia Energetica de Minas
Gerais S.A. (Pref.) (ADR)* -
144A**........................ 561,000
50,000 Companhia Energetica de Sao
Paulo (Pref.) (ADR)*.......... 509,000
---------------
1,385,000
---------------
TOTAL BRAZIL.................. 8,927,695
---------------
CHILE (0.5%)
BANKING
18,000 Banco de A. Edwards (Series A)
(ADR)*........................ 378,000
---------------
FOREST PRODUCTS, PAPER & PACKAGING
21,500 Cristalerias de Chile (ADR)... 489,125
---------------
RETAIL
23,000 Santa Isabel S.A. (ADR)*...... 583,625
---------------
TELECOMMUNICATIONS
7,500 Compania de
Telecommunicaciones de Chile
S.A. (ADR).................... 635,625
---------------
UTILITIES - ELECTRIC
15,000 Enersis S.A. (ADR)............ 423,750
---------------
TOTAL CHILE................... 2,510,125
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COLOMBIA (0.2%)
FINANCIAL SERVICES
40,000 Corporacion Financiera Valle
(GDR)*........................ $ 390,000
---------------
RETAIL
28,000 Gran Cadena Almacenes (Class
B) (Pref.) (ADR) - 144A**..... 399,000
---------------
TOTAL COLOMBIA................ 789,000
---------------
DENMARK (0.3%)
BUSINESS & PUBLIC SERVICES
12,500 Kobenhavns Lufthavne AS....... 1,228,178
---------------
CONGLOMERATES
2,350 Martin Gruppen*............... 136,065
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
3,784 Oticon Holding AS............. 411,629
---------------
TOTAL DENMARK................. 1,775,872
---------------
FINLAND (0.4%)
TELECOMMUNICATION EQUIPMENT
3,941 Benefon Oy.................... 61,747
59,000 Nokia AB (Series A)........... 2,040,067
---------------
TOTAL FINLAND................. 2,101,814
---------------
FRANCE (2.9%)
APPLIANCES & HOUSEHOLD DURABLES
3,320 Airfeu S.A.................... 141,852
---------------
BUILDING & CONSTRUCTION
2,550 Assystem*..................... 286,318
---------------
BUILDING MATERIALS
7,500 IMETAL........................ 1,114,865
---------------
BUSINESS & PUBLIC SERVICES
1,770 Grand Optical Photoservice.... 207,532
---------------
ELECTRICAL EQUIPMENT
2,421 CIPE France S.A............... 197,741
---------------
ELECTRONICS - SEMICONDUCTORS
21,500 SGS-Thomson Microelectronics
NV*........................... 760,533
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
51
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES
4,000 Cetelem Group................. $ 780,604
12,000 Credit Local de France........ 940,541
---------------
1,721,145
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
1,378 Brioche Pasquier S.A.......... 187,585
2,765 But S.A....................... 171,988
4,400 LVMH Moet-Hennessy Louis
Vuitton....................... 1,117,488
28,000 SEITA......................... 1,162,957
---------------
2,640,018
---------------
HEALTH & PERSONAL CARE
14,400 Sanofi S.A.................... 1,047,377
---------------
INSURANCE
17,000 Scor S.A...................... 638,513
---------------
MEDIA
10,000 Societe Television Francaise
1............................. 1,023,450
---------------
RETAIL
1,500 Carrefour Supermarche......... 1,099,364
6,250 Castorama Dubois
Investissement................ 1,142,687
2,650 Guilbert S.A.................. 382,860
4,200 Promodes...................... 1,097,575
---------------
3,722,486
---------------
TEXTILES
1,012 Deveaux S.A................... 126,299
4,620 Hermes International.......... 1,229,368
---------------
1,355,667
---------------
WHOLESALE & INTERNATIONAL TRADE
2,152 Bertrand Faure................ 68,426
---------------
TOTAL FRANCE.................. 14,925,923
---------------
GERMANY (2.0%)
AUTO PARTS
7,650 Kiekert AG.................... 366,951
---------------
AUTOMOBILES
3,000 Volkswagen AG................. 1,051,829
---------------
BUILDING & CONSTRUCTION
410 Sto AG (Pref.)................ 188,611
---------------
BUSINESS & PUBLIC SERVICES
8,980 SAP AG (Pref.)................ 1,293,461
---------------
CHEMICALS
2,800 Bayer AG...................... 954,011
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
ELECTRICAL EQUIPMENT
2,500 Siemens AG.................... $ 1,376,186
---------------
ENTERTAINMENT
1,043 CeWe Color Holding AG......... 342,720
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
9,650 Berentzen-Gruppe AG (Pref.)... 356,318
---------------
FURNITURE
6,820 Moebel Walther AG............. 286,477
---------------
HEALTH & PERSONAL CARE
96 Rhoen-Klinikum AG............. 10,439
5,108 Rhoen-Klinikum AG (Pref.)..... 534,679
---------------
545,118
---------------
INSURANCE
262 Marschollek, Lautenschlaeger
und Partner AG................ 237,859
---------------
MERCHANDISING
338 Hach AG (Pref.)............... 123,659
---------------
PHARMACEUTICALS
1,300 Gehe AG....................... 748,645
325 Gehe AG (New)................. 183,198
---------------
931,843
---------------
RETAIL
5,965 Fielmann AG (Pref.)........... 283,701
---------------
TEXTILES
19,400 Adidas AG*.................... 1,419,512
320 Hugo Boss AG (Pref.).......... 343,631
400 Jil Sander AG (Pref.)......... 330,623
600 Puma AG (Pref.)............... 199,187
---------------
2,292,953
---------------
TOTAL GERMANY................. 10,631,697
---------------
HONG KONG (4.7%)
AUTOMOBILES
50,000 Jardine International Motor
Holdings Ltd.................. 66,587
---------------
BANKING
130,800 HSBC Holdings PLC............. 1,961,780
120,000 Liu Chong Hing Bank Ltd....... 175,325
309,000 Wing Hang Bank Ltd............ 1,222,544
---------------
3,359,649
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
52
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
BUILDING & CONSTRUCTION
110,000 Harbour Centre Development.... $ 145,070
555,000 New World Infrastructure
Ltd.*......................... 1,184,027
---------------
1,329,097
---------------
CONGLOMERATES
1,266,000 First Pacific Co. Ltd......... 1,800,574
200,000 Four Seas Mercantile Holdings
Ltd........................... 74,992
445,000 Hutchison Whampoa, Ltd........ 2,807,789
297,000 Jardine Matheson Holdings
Ltd........................... 2,316,600
178,000 Swire Pacific Ltd. (Class
A)............................ 1,564,997
603,000 Wheelock & Company, Ltd....... 1,208,464
---------------
9,773,416
---------------
ELECTRICAL EQUIPMENT
26,000 ASM Pacific Technology........ 24,708
---------------
ENTERTAINMENT
400,000 Gold Peak Industries.......... 212,045
---------------
HOTELS/MOTELS
158,000 Grand Hotel Holdings Ltd...... 62,308
500,000 Regal Hotels International.... 123,477
850,000 Shangri-La Asia Ltd........... 1,142,975
---------------
1,328,760
---------------
MACHINERY
70,000 Chen Hsong Holdings........... 38,918
---------------
REAL ESTATE
518,000 Cheung Kong (Holdings) Ltd.... 3,650,151
100,000 China Resources Enterprise
Ltd........................... 57,537
106,600 HKR International Ltd......... 115,777
400,000 Hon Kwok Land Investment
Ltd........................... 134,468
905,000 Hong Kong Land Holdings
Ltd........................... 2,172,000
218,000 Sun Hung Kai Properties
Ltd........................... 1,951,915
---------------
8,081,848
---------------
TOTAL HONG KONG............... 24,215,028
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
INDIA (0.3%)
BUILDING & CONSTRUCTION
30,000 Larsen & Toubro Ltd. (GDR)*... $ 457,500
---------------
METALS & MINING
15,000 Hindalco Industries Ltd.
(GDR)......................... 547,500
---------------
STEEL & IRON
21,000 Steel Authority of India
Ltd.*......................... 246,750
---------------
UTILITIES - ELECTRIC
13,000 BSES Ltd. (GDR) - 144A**...... 211,250
---------------
TOTAL INDIA................... 1,463,000
---------------
INDONESIA (0.7%)
AUTOMOBILES
56,000 PT Astra International........ 80,274
---------------
BANKING
270,000 PT Bank Bali.................. 577,663
40,000 PT Bank Bali
(Warrants due 08/29/00)*...... 18,827
50,000 PT Bank Niaga................. 128,370
---------------
724,860
---------------
CHEMICALS
96,000 PT Aneka Kimia Ray............ 147,882
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
143,000 PT Fast Food Indonesia
(Local)....................... 183,569
---------------
FOREST PRODUCTS, PAPER & PACKAGING
IDR 500,000 PT Tjiwi Kimia 0.00% due
03/26/97 (Conv.)*............. 562,500
---------------
INDUSTRIALS
50,000 PT Bukaka Teknik Utama........ 84,510
---------------
INVESTMENT COMPANIES
2,000,000 Peregrine Indonesia Fund
Ltd.*** *.................... 1,435,000
---------------
MERCHANDISING
43,000 PT Tigaraksa Satria........... 213,436
---------------
TOTAL INDONESIA............... 3,432,031
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
53
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
ITALY (0.7%)
APPLIANCES & HOUSEHOLD DURABLES
8,700 Industrie Natuzzi SpA (ADR)... $ 473,062
---------------
BUILDING & CONSTRUCTION
17,047 Saes Getters Di Risp.......... 287,260
12,791 Saes Getters SpA.............. 293,660
---------------
580,920
---------------
ELECTRICAL EQUIPMENT
32,945 Gewiss SpA.................... 476,151
---------------
ENERGY
225,000 Ente Nazionale Idrocarburi SpA
(ADR)*........................ 819,451
---------------
MACHINERY
21,800 IMA SpA....................... 181,237
---------------
TELECOMMUNICATIONS
546,000 Telecom Italia Mobile SpA..... 995,140
---------------
VISION CARE & INSTRUMENTS
12,020 De Rigo SpA (ADR)*............ 338,062
---------------
TOTAL ITALY................... 3,864,023
---------------
JAPAN (35.0%)
APPLIANCES & HOUSEHOLD DURABLES
20,000 Beltecno Corp................. 233,274
35,000 Itoki Crebio Corp............. 261,267
25,000 Juken Sangyo Co............... 256,602
---------------
751,143
---------------
AUTO PARTS
38,000 Bridgestone Metalpha Corp..... 443,221
---------------
AUTOMOBILES
433,000 Mitsubishi Motors Corp........ 3,692,843
150,000 Suzuki Motor Co. Ltd.......... 1,847,532
---------------
5,540,375
---------------
BANKING
396,000 Asahi Bank, Ltd............... 4,729,682
223,000 Sanwa Bank, Ltd............... 4,473,733
222,000 Sumitomo Bank................. 4,474,386
161,000 Sumitomo Trust & Banking...... 2,208,361
---------------
15,886,162
---------------
BUILDING & CONSTRUCTION
50,000 Cesar Co...................... 464,216
15,000 Higashi Nihon House........... 251,936
30,000 Ichiken Co., Ltd.............. 313,521
18,000 Kaneshita Construction........ 223,383
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
10,000 Maezawa Kaisei Industries..... $ 396,566
25,000 Mitsui Home Co., Ltd.......... 419,894
399,000 Nishimatsu Construction Co.... 4,542,129
16,500 Oriental Construction Co...... 287,907
322,000 Sekisui House Ltd............. 4,026,127
25,000 Tohoku Misawa Homes........... 314,920
---------------
11,240,599
---------------
BUILDING MATERIALS
22,000 Nichiha Corp.................. 390,035
30,000 Shin Nikkei Co., Ltd.......... 204,068
88,000 Tostem Corp................... 2,742,559
40,000 Toyo Shutter.................. 343,380
---------------
3,680,042
---------------
BUSINESS & PUBLIC SERVICES
20,000 Chuo Warehouse Co............. 248,204
8,800 Nichii Gakkan Co.............. 465,578
12,000 Nippon Kanzai................. 363,908
67,000 Secom Co...................... 4,369,973
---------------
5,447,663
---------------
CHEMICALS
600,000 Asahi Chemical Industy Co.
Ltd........................... 4,434,077
337,000 Kaneka Corp................... 2,226,332
323,000 Nippon Shokubai K.K. Co....... 3,285,154
64,000 Sakai Chemical Industry Co.... 477,746
35,000 Sintokogio.................... 306,336
---------------
10,729,645
---------------
COMPUTER SOFTWARE
4,000 Mars Engineering Corp......... 291,126
Y 25,000K Meitec Corp. 3.20% due
03/31/04 (Conv.).............. 312,587
---------------
603,713
---------------
CONGLOMERATES
7,000 Enix Corp..................... 193,991
615,000 Mitsui & Co................... 5,560,651
20,000 Yamae Hisano.................. 188,486
---------------
5,943,128
---------------
DATA PROCESSING
14,300 Daiwabo Information Systems
Co............................ 313,567
14,000 Japan Digital Laboratory...... 282,169
30,000 Ricoh Elemex.................. 433,890
14,000 TKC Corp...................... 389,288
---------------
1,418,914
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
54
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
ELECTRICAL EQUIPMENT
20,000 Alpine Electronics Inc........ $ 334,049
240,000 Canon, Inc.................... 4,568,443
423,000 Hitachi, Ltd.................. 3,410,208
4,000 I-O Data Device, Inc.......... 195,950
40,000 Kyocera Corp.................. 2,709,714
30,700 Mabuchi Motor Co.............. 1,744,546
150,000 Matsushita Electric Industrial
Co. Ltd....................... 2,435,383
30,000 Mitsuba Electric Mfg Co....... 338,714
15,500 Mitsui High-Tec............... 342,773
15,000 Mitsumi Electric Co. Ltd...... 254,735
268,000 NEC Corp...................... 3,100,868
75,000 Nippon Electric Glass Co.,
Ltd........................... 1,371,653
50,000 Nissin Electric............... 373,239
30,000 Nitto Electric Works.......... 394,700
91,000 Rohm Co., Ltd................. 5,179,621
143,000 Ryoyo Electro Corp............ 3,269,105
10,000 Satori Electric Co., Ltd...... 410,563
20,000 Tokin......................... 270,598
---------------
30,704,862
---------------
ELECTRONICS
35,000 Fanuc, Ltd.................... 1,417,374
---------------
ELECTRONICS - SEMICONDUCTORS
11,000 Apic Yamada Corp.............. 277,130
7 Nippon Steel Semiconductor.... 131,940
---------------
409,070
---------------
ENGINEERING & CONSTRUCTION
119,000 Kajima Corp................... 1,276,943
---------------
ENTERTAINMENT
12,000 Honma Golf Co. Ltd............ 265,373
---------------
FINANCIAL SERVICES
405,000 New Japan Securities*......... 2,664,225
11,700 Nissin Co. Ltd................ 534,944
150,000 Nomura Securities Co., Ltd.... 3,289,167
97,000 Orix Corp..................... 3,665,671
4,000 Sanyo Shinpan Finance Co.,
Ltd........................... 294,859
12,000 Shinki Co. Ltd................ 428,851
---------------
10,877,717
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
5,500 Plenus Company, Ltd........... 215,545
22,000 Stamina Foods................. 231,968
18,000 Yukiguni Maitake Co., Ltd..... 171,317
---------------
618,830
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
FOREST PRODUCTS, PAPER & PACKAGING
45,000 Daishowa Paper Manufacturing
Co. Ltd.*..................... $ 369,506
---------------
HEALTH & PERSONAL CARE
262,500 Eisai Co. Ltd................. 5,241,672
243,000 Kao Corp...................... 3,015,676
20,000 Kawasumi Laboratories, Inc.... 242,605
10,000 Seijo Corp.................... 271,531
40,000 Terumo Corp................... 444,154
5,500 Towa Pharmaceutical Co.,
Ltd........................... 147,289
---------------
9,362,927
---------------
HEALTHCARE PRODUCTS & SERVICES
5,500 Paramount Bed Co.............. 353,597
---------------
INSURANCE
205,000 Dai-Tokyo Fire & Marine
Insurance Co. Ltd............. 1,511,150
312,000 Tokio Marine & Fire Insurance
Co............................ 4,046,655
---------------
5,557,805
---------------
MACHINE TOOLS
50,000 Nippon Thompson Co............ 457,217
11,000 Nitto Kohki Co. Ltd........... 408,510
---------------
865,727
---------------
MACHINERY
35,000 Aichi Corp.................... 333,116
346,080 Asahi Diamond Industries Co.
Ltd........................... 4,553,259
35,000 CKD Corp...................... 355,976
10,000 Fuji Machine Manufacturing
Co............................ 270,598
405,000 Komatsu Ltd................... 3,601,428
225,000 Minebea Co., Ltd.............. 1,921,013
13,200 Misumi Corp................... 400,299
517,000 Mitsubishi Heavy Industries,
Ltd........................... 4,457,479
50,000 OSG Corp...................... 390,968
25,000 Sansei Yusoki Co., Ltd........ 312,587
30,000 Takuma Co., Ltd............... 422,693
---------------
17,019,416
---------------
MANUFACTURING
4,000 Arcland Sakamoto.............. 49,268
---------------
MEDIA
174,000 Dai Nippon Printing Co.
Ltd........................... 3,165,998
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
55
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
MERCHANDISING
6,000 Fast Retailing Co., Ltd....... $ 251,936
6,200 Ryohin Keikaku Co., Ltd....... 491,742
13,000 Shimachu Co., Ltd............. 416,068
10,000 Xebio Co. Ltd................. 340,580
---------------
1,500,326
---------------
MISCELLANEOUS
12,000 Noritsu Koki Co. Ltd.......... 414,295
---------------
REAL ESTATE
27,500 Chubu Sekiwa Real Estate,
Ltd........................... 449,053
12,100 Japan Industrial Land
Development................... 400,812
22,000 Kansai Sekiwa Real Estate..... 375,665
30,000 Sekiwa Real Estate............ 260,054
460,000 Sumitomo Realty &
Development................... 3,523,934
---------------
5,009,518
---------------
RETAIL
13,200 Circle K Japan Co. Ltd........ 527,162
209,000 Izumiya Co. Ltd............... 3,490,809
15,000 Ministop Co., Ltd............. 391,901
13,000 Paris Miki Inc................ 497,341
20 Yoshinoya D & C Company
Ltd........................... 278,063
---------------
5,185,276
---------------
STEEL & IRON
917,000 Nippon Steel Co............... 3,148,792
1,500,000 NKK Corp.*.................... 4,324,904
25,000 Takada Kiko................... 251,936
---------------
7,725,632
---------------
TELECOMMUNICATIONS
446 DDI Corp...................... 3,391,714
195 Nippon Telegraph & Telephone
Corp.......................... 1,422,880
---------------
4,814,594
---------------
TEXTILES
8,000 H.I.S. Company Ltd............ 453,112
192,000 Kuraray Co. Ltd............... 2,060,278
9,000 Maruco Co., Ltd............... 663,432
---------------
3,176,822
---------------
TRANSPORTATION
12,000 Kanto Seino Transportation.... 324,718
434,000 Nippon Yusen Kabushiki
Kaish......................... 2,466,231
387,000 Yamato Transport Co. Ltd...... 4,586,078
---------------
7,377,027
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
UTILITIES
88,700 Kyushu Electric Power......... $ 2,011,206
---------------
WHOLESALE & INTERNATIONAL TRADE
17,000 Trusco Nakayama Corp.......... 380,704
20,000 Wakita & Co................... 307,922
---------------
688,626
---------------
TOTAL JAPAN................... 181,902,340
---------------
MALAYSIA (3.2%)
AUTOMOBILES
20,000 Cycle & Carriage Bintang
Berhad........................ 125,518
100,000 Perusahaan Otomobil Nasional
Berhad........................ 446,023
---------------
571,541
---------------
BANKING
90,000 Arab Malaysian Finance
Berhad........................ 444,050
55,000 Commerce Asset Holding
Berhad........................ 314,782
360,000 DCB Holdings Berhad........... 1,236,235
40,000 Hock Hua Bank Berhad*......... 116,045
150,000 Malayan Banking Berhad........ 1,397,277
75,000 Public Finance Berhad......... 177,620
---------------
3,686,009
---------------
ENTERTAINMENT
150,000 Berjaya Sports Toto Berhad.... 449,970
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
200,000 RJ Reynolds Berhad............ 552,595
---------------
HOTELS/MOTELS
200,000 Genting Berhad................ 1,807,776
---------------
MACHINERY
30,000 Muhibbah Engineering.......... 106,572
130,000 Nylex Berhad.................. 477,205
150,000 UMW Holdings Berhad........... 509,177
315,000 United Engineers Malaysia
Berhad........................ 2,175,844
---------------
3,268,798
---------------
OIL DRILLING & SERVICES
20,000 George Kent Berhad............ 32,051
---------------
REAL ESTATE
30,000 IOI Properties Berhad......... 87,034
150,000 Land & General Berhad......... 396,684
50,000 Shah Alam Properties Berhad... 157,884
---------------
641,602
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
56
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS
600,000 Technology Resource Industries
Berhad*....................... $ 2,155,121
65,000 Telekom Malaysia Berhad....... 597,790
---------------
2,752,911
---------------
UTILITIES
350,000 Petronas Gas Berhad........... 1,574,896
310,000 Tenaga Nasional Berhad........ 1,309,256
---------------
2,884,152
---------------
TOTAL MALAYSIA................ 16,647,405
---------------
MEXICO (1.2%)
BEVERAGES - SOFT DRINKS
14,200 Panamerican Beverages, Inc.
(Class A)..................... 573,325
---------------
BUILDING & CONSTRUCTION
74,000 Apasco S.A. de C.V............ 378,655
120,000 International de Ceramica S.A.
de C.V. (ADR)*................ 167,464
---------------
546,119
---------------
ENGINEERING & CONSTRUCTION
124,240 Corporacion GEO S.A. de C.V.
(Series B)*................... 422,720
33,000 Empresas ICA Sociedad
Controladora S.A. de C.V.
(ADR)......................... 429,000
---------------
851,720
---------------
FINANCIAL SERVICES
100,000 Grupo Financiero Banamex
Accival S.A. de C.V. (Series
L)............................ 192,717
750,000 Grupo Financiero Bancomer S.A.
de C.V. (B Shares)............ 302,033
35,630 Grupo Financiero Bancomer S.A.
de C.V. (L Shares)............ 11,744
---------------
506,494
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
54,000 Grupo Industrial Bimbo S.A. de
C.V. (Series A)............... 247,608
64,000 Grupo Modelo (C Shares)....... 297,714
32,000 Sigma Alimentos S.A........... 216,906
---------------
762,228
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
FOREST PRODUCTS, PAPER & PACKAGING
90,000 Empaques Ponderosa S.A.
(Series B)*................... $ 187,560
---------------
MANUFACTURING
14,500 Grupo Industrial Saltillo S.A.
de C.V. (Class A)............. 289,075
---------------
MEDIA
20,000 Grupo Televisa S.A. (GDR)*.... 497,500
---------------
RETAIL
180,000 Cifra S.A. de C.V. (Series
B)*........................... 240,191
90,000 Cifra S.A. de C.V. (Series B)
(ADR)*........................ 115,200
112,000 Nacional de Drogas S.A. de
C.V. (L Shares)............... 483,785
---------------
839,176
---------------
STEEL & IRON
15,000 Tubos de Acero de Mexico
S.A.*......................... 118,620
30,000 Tubos de Acero de Mexico S.A.
(ADR)*........................ 236,250
---------------
354,870
---------------
TELECOMMUNICATIONS
16,600 Telefonos de Mexico S.A. de
C.V. (Class L) (ADR).......... 545,725
---------------
TRANSPORTATION
30,000 Transportacion Maritimas
Mexicana S.A. de C.V. (ADR)... 247,500
---------------
TOTAL MEXICO.................. 6,201,292
---------------
NETHERLANDS (2.7%)
APPLIANCES & HOUSEHOLD DURABLES
32,000 Ahrend Groep NV............... 1,362,855
---------------
BANKING
22,000 ABN AMRO Holding NV........... 1,094,011
---------------
BUILDING & CONSTRUCTION
11,857 Hunter Douglas NV............. 803,378
6,376 Sphinx Kon Gustavsberg........ 111,860
---------------
915,238
---------------
BUSINESS & PUBLIC SERVICES
5,438 Randstad Holdings NV.......... 330,622
---------------
CONSUMER PRODUCTS
13,000 Gucci Group NV*............... 629,159
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
57
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
ELECTRICAL EQUIPMENT
12,970 Otra NV....................... $ 278,545
---------------
INSURANCE
32,000 Aegon NV...................... 1,509,982
20,425 Internationale Nederlanden
Groep NV...................... 1,482,759
---------------
2,992,741
---------------
MACHINERY
2,904 Aalberts Industries NV........ 229,615
---------------
MEDIA
100,000 Elsevier NV................... 1,530,551
60,000 Ver Ned Utigev Ver
Bezit NV...................... 998,185
11,000 Wegener NV.................... 1,281,004
10,500 Wolters Kluwer NV............. 1,154,809
---------------
4,964,549
---------------
MERCHANDISING
30,300 Koninklijke Ahold NV.......... 1,460,926
---------------
TOTAL NETHERLANDS............. 14,258,261
---------------
NORWAY (0.5%)
BUSINESS & PUBLIC SERVICES
5,000 Sysdeco Group AS*............. 89,706
---------------
DATA PROCESSING
18,979 System Etikettering AS........ 339,027
---------------
ELECTRICAL EQUIPMENT
4,400 Nera AS....................... 170,926
29,120 Sensonor AS*.................. 254,410
---------------
425,336
---------------
ENTERTAINMENT
265,920 NCL Holding AS (Series A)
(Conv. Loan Stock due
12/12/98)*.................... 620,480
---------------
MACHINERY
44,823 Tomra Systems AS.............. 370,623
---------------
OIL DRILLING & SERVICES
5,540 Hitec AS...................... 101,987
6,932 Transocean AS*................ 151,406
---------------
253,393
---------------
TELECOMMUNICATIONS
12,000 Tandberg AS*.................. 138,538
---------------
TRANSPORTATION
19,892 Awilco AS..................... 189,306
---------------
TOTAL NORWAY.................. 2,426,409
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
PERU (0.1%)
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
204,840 Cerveceria Backus & Johnston
S.A........................... $ 269,343
11,019 Jose R Lindley E Hijos S.A.... 16,177
---------------
285,520
---------------
TELECOMMUNICATIONS
139,999 CPT-Telefonica de Peru S.A. (B
Shares)....................... 288,934
---------------
TOTAL PERU.................... 574,454
---------------
PHILIPPINES (0.2%)
BUILDING & CONSTRUCTION
10,971 Bacnotan Consolidated
Industries.................... 42,826
802 Bacnotan Consolidated
Industries (Rights)*.......... 3,131
---------------
45,957
---------------
ENERGY
250,000 Belle Corp.*.................. 32,530
---------------
ENTERTAINMENT
270,000 SM Prime Holdings............. 80,597
---------------
OIL DRILLING & SERVICES
24,000 First Philippine Holdings
Corp. (B Shares).............. 44,546
---------------
REAL ESTATE
62,000 Ayala Corp. (B Shares)........ 90,165
29,808 Ayala Corp. (Series B)
(GDS)......................... 357,696
---------------
447,861
---------------
TELECOMMUNICATIONS
2,000 Philippine Long Distance
Telephone Co. (ADR)........... 108,687
---------------
TRANSPORTATION
52,800 International Container
Terminal...................... 30,815
---------------
TOTAL PHILIPPINES............. 790,993
---------------
PORTUGAL (0.2%)
MEDIA
30,000 Journalgeste*................. 295,043
226,000 TVI Televisao S.A.*........... 777,931
---------------
TOTAL PORTUGAL................ 1,072,974
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
58
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
RUSSIA (0.3%)
INVESTMENT COMPANIES
200,000 First NIS Fund................ $ 1,500,000
---------------
SINGAPORE (1.6%)
APPLIANCES & HOUSEHOLD DURABLES
78,000 Courts (Singapore) Ltd........ 132,354
---------------
BANKING
153,500 Development Bank of Singapore,
Ltd........................... 1,885,374
156,042 Overseas Chinese Banking
Corp., Ltd.................... 2,093,854
---------------
3,979,228
---------------
ELECTRICAL EQUIPMENT
48,000 Amtek Engineering Ltd......... 76,337
50,000 CSA Holdings Ltd.............. 56,443
17,000 Flextech Holdings Ltd......... 10,802
31,000 Venture Manufacturing Ltd..... 110,046
---------------
253,628
---------------
FINANCIAL SERVICES
10,000 Hong Leong Finance Ltd........ 43,308
35,000 ST Capital Ltd................ 54,171
---------------
97,479
---------------
HEALTH & PERSONAL CARE
90,000 Tiger Medicals Ltd............ 154,633
---------------
MACHINERY
27,000 Jurong Engineering Ltd........ 122,684
185,000 Keppel Corp., Ltd............. 1,681,221
---------------
1,803,905
---------------
REAL ESTATE
396,000 DBS Land Ltd.................. 1,518,211
---------------
TRANSPORTATION
40,000 Comfort Group Ltd............. 36,919
83,000 Singapore Technologies
Shipbuilding & Engineering
Ltd........................... 186,212
---------------
223,131
---------------
TOTAL SINGAPORE............... 8,162,569
---------------
SOUTH AFRICA (0.6%)
FINANCIAL SERVICES
30,200 JCI Co. Ltd................... 260,050
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
39,000 Malbak Ltd.................... $ 230,421
26,500 Rembrandt Group Ltd........... 241,515
7,500 South African Breweries
Ltd........................... 237,586
---------------
709,522
---------------
INSURANCE
35,000 Fedsure Holdings Ltd.......... 266,185
15,600 Metropolitan Life Ltd......... 219,635
16,200 Southern Life Assoc........... 189,390
---------------
675,210
---------------
METALS & MINING
2,700 Anglo American Gold Investment
Co............................ 278,316
5,700 Anglovaal Ltd. (N Shares)..... 219,258
15,200 De Beers Consolidated Mines
Ltd. (Units)++................ 489,152
---------------
986,726
---------------
RETAIL
77,000 Metro Cash & Carry Ltd........ 333,941
85,000 Pick'n Pay Stores Ltd......... 301,320
---------------
635,261
---------------
TOTAL SOUTH AFRICA............ 3,266,769
---------------
SOUTH KOREA (0.3%)
AIRLINES
3,000 Korean Air.................... 95,116
---------------
AUTOMOBILES
11,000 Hyundai Motor Co., Ltd.
(GDR)......................... 165,000
---------------
BANKING
5,280 Shinhan Bank.................. 116,778
---------------
BUILDING & CONSTRUCTION
6,657 Dong-Ah Construction
Industrial Co................. 239,999
---------------
ELECTRICAL EQUIPMENT
221 Samsung Electronics Co. (GDR)
- 144A**...................... 12,487
534 Samsung Electronics Co. (GDR)
- 144A**...................... 30,171
160 Samsung Electronics Co. (GDR)
- 144A**...................... 9,019
2,166 Samsung Electronics Co. (GDR)
- 144A**...................... 75,529
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
59
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
66 Samsung Electronics Co. (GDR)
- 144A**...................... $ 3,721
7,187 Samsung Electronics Co. (GDS)*
- 144A**...................... 251,545
---------------
382,472
---------------
STEEL & IRON
5,000 Pohang Iron & Steel, Ltd.
(ADR)......................... 121,250
---------------
UTILITIES - ELECTRIC
7,000 Korea Electric Power Corp..... 272,948
---------------
TOTAL SOUTH KOREA............. 1,393,563
---------------
SPAIN (1.4%)
BANKING
25,000 Banco Bilbao Vizcaya.......... 932,715
6,000 Banco Popular Espanol S.A..... 1,036,583
---------------
1,969,298
---------------
ENERGY
25,000 Repsol S.A.................... 942,788
---------------
FINANCIAL SERVICES
17,500 Corporacion Financiera Alba... 1,359,388
---------------
FOREST PRODUCTS, PAPER & PACKAGING
6,908 Empresa Nacional de Celulosa
S.A........................... 96,022
---------------
NATURAL GAS
9,500 Gas Natural SDG S.A. (Series
E)............................ 1,642,788
---------------
TEXTILES
8,993 Cortefiel S.A................. 210,151
---------------
WHOLESALE & INTERNATIONAL TRADE
40,000 Centros Comerciales Continente
S.A........................... 913,779
---------------
TOTAL SPAIN................... 7,134,214
---------------
SWEDEN (2.1%)
AUTO PARTS
11,000 Garphyttan Industrier AB...... 144,758
190 Opcon (Restricted)*........... 163,377
---------------
308,135
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
BUSINESS & PUBLIC SERVICES
18,776 Assa Abloy AB (Rights)*....... $ 21,059
18,776 Assa Abloy AB (Series B)...... 190,933
100,000 Scribona AB
(Series "B" Free)............. 1,001,944
---------------
1,213,936
---------------
COMMERCIAL SERVICES
28,000 Securitas AB
(Series "B" Free)............. 1,666,517
---------------
ELECTRICAL EQUIPMENT
4,903 Elekta Instrument (Series "AB"
Free)......................... 163,507
6,608 Kanthal Hoganas AB............ 88,443
---------------
251,950
---------------
HEALTH & PERSONAL CARE
19,580 Astra AB
(Series "A" Free)............. 906,237
---------------
HEALTHCARE PRODUCTS & SERVICES
25,600 Getinge Industrier AB (B
Shares)....................... 1,309,287
---------------
INSURANCE
55,500 Scandia Forsakrings AB........ 1,224,204
---------------
MACHINERY
9,710 Hoganas AB.................... 295,496
21,069 Kalmar Industries AB.......... 400,144
---------------
695,640
---------------
MISCELLANEOUS
5,510 Trio*......................... 214,237
---------------
RETAIL
17,500 Hennes & Mauritz AB (B
Shares)....................... 1,243,084
---------------
TELECOMMUNICATIONS
49,500 Ericsson (L.M.) Telephone Co.
AB (Series "B" Free).......... 1,088,156
---------------
TEXTILES
10,313 SinterCast AB
(Series "A" Free)*............ 686,299
---------------
TOTAL SWEDEN.................. 10,807,682
---------------
SWITZERLAND (1.0%)
CONGLOMERATES
177 Zehnder Holdings.............. 78,792
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
60
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
ELECTRICAL EQUIPMENT
450 BBC Brown Boveri AG........... $ 546,909
---------------
MACHINE TOOLS
772 Hilti AG PC................... 596,540
---------------
MERCHANDISING
800 Fust S.A. AG.................. 231,816
---------------
PHARMACEUTICALS
800 Ciba-Geigy AG................. 1,000,504
157 Roche Holdings AG............. 1,302,839
1,400 Sandoz AG..................... 1,640,349
---------------
3,943,692
---------------
TOTAL SWITZERLAND............. 5,397,749
---------------
TAIWAN (0.1%)
INVESTMENT COMPANIES
100,000 Paribas Emerging Markets Fund
- Taiwan Series*.............. 714,000
---------------
THAILAND (0.7%)
BANKING
244,000 Krung Thai Bank PCL........... 1,150,169
---------------
BUILDING & CONSTRUCTION
29,000 Land & House PCL.............. 477,877
---------------
ELECTRICAL EQUIPMENT
15,000 Hana Microelectonics PCL...... 84,373
---------------
FINANCIAL SERVICES
140,000 National Finance & Securities
(Warrants due 11/15/99)*...... 346,603
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
122,000 Srithai Superware Co., Ltd.... 918,202
---------------
MERCHANDISING
24,000 Robinson Dept Store Co........ 53,238
---------------
TELECOMMUNICATIONS
20,000 Advanced Info Service PCL
(ADR)......................... 383,442
---------------
TOTAL THAILAND................ 3,413,904
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
UNITED KINGDOM (6.7%)
AEROSPACE & DEFENSE
60,000 British Aerospace PLC......... $ 787,777
11,500 Fairey Group PLC.............. 104,991
250,000 Rolls-Royce PLC............... 824,418
70,000 Smiths Industries PLC......... 740,602
25,800 Vickers PLC................... 102,411
---------------
2,560,199
---------------
APPLIANCES & HOUSEHOLD DURABLES
87,000 MFI Furniture Group PLC....... 215,731
---------------
AUTOMOBILES
13,100 Trinity Holdings PLC.......... 81,999
---------------
BANKING
100,000 Abbey National PLC............ 859,532
50,000 National Westminster Bank
PLC........................... 486,254
155,000 TSB Group PLC................. 743,045
---------------
2,088,831
---------------
BUILDING & CONSTRUCTION
145,000 Blue Circle Industries PLC.... 754,877
100,000 Bryant Group.................. 179,387
110,000 CRH PLC....................... 972,355
70,000 Meyer International PLC....... 413,049
---------------
2,319,668
---------------
BUILDING MATERIALS
110,000 Scapa Group................... 391,293
---------------
BUSINESS & PUBLIC SERVICES
70,000 Chubb Security PLC............ 395,415
85,000 Reuters Holdings PLC.......... 923,959
---------------
1,319,374
---------------
CHEMICALS
170,000 Albright & Wilson PLC......... 449,003
---------------
COMPUTER SOFTWARE
46,000 SEMA Group PLC................ 459,292
---------------
CONSUMER PRODUCTS
69,000 Vendome Luxury Group PLC
(Units)++..................... 600,451
---------------
ELECTRICAL EQUIPMENT
155,000 General Electric Co. PLC...... 866,097
11,850 The BICC Group PLC............ 60,244
---------------
926,341
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
61
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
ELECTRONICS
15,200 Diploma PLC................... $ 95,608
10,100 Unitech PLC................... 102,541
---------------
198,149
---------------
ENERGY
155,000 Lasmo PLC..................... 442,514
125,000 Shell Transport & Trading Co.
PLC........................... 1,654,561
---------------
2,097,075
---------------
ENTERTAINMENT
80,000 Granada Group PLC............. 918,463
23,750 London Clubs International
PLC........................... 195,437
---------------
1,113,900
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
120,000 Associated British Foods
PLC........................... 736,480
50,000 B.A.T. Industries PLC......... 369,461
60,000 Bass PLC...................... 681,519
24,500 Devro International PLC....... 84,159
100,000 Guinness PLC.................. 728,236
90,000 Northern Foods PLC............ 250,074
---------------
2,849,929
---------------
FOREST PRODUCTS, PAPER & PACKAGING
23,100 David S. Smith (Holdings)
PLC........................... 108,622
---------------
HEALTH & PERSONAL CARE
109,000 Glaxo Wellcome PLC............ 1,367,893
185,000 Medeva PLC.................... 691,977
---------------
2,059,870
---------------
INSURANCE
70,000 General Accident PLC.......... 655,107
145,000 Prudential Corp. PLC.......... 943,043
135,000 Royal Insurance Holdings
PLC........................... 731,671
---------------
2,329,821
---------------
INVESTMENT COMPANIES
157,000 NB Smaller Cos. Trust......... 354,744
166,410 The Throgmorton Trust......... 198,165
45,250 TR Smaller Cos. Investment
Trust......................... 146,456
---------------
699,365
---------------
MACHINERY
165,000 BBA Group PLC................. 811,136
90,000 IMI PLC (Ordinary)............ 491,903
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
10,700 Sprirax-Sarco Engineering
PLC........................... $ 117,290
125,000 Tomkins PLC................... 484,727
---------------
1,905,056
---------------
MANUFACTURING
9,400 Vitec Group PLC............... 108,924
9,100 Vosper Thornycroft Holdings
PLC........................... 114,478
---------------
223,402
---------------
MEDIA
6,500 Daily Mail & General Trust
(Class A)..................... 139,327
77,000 Emap PLC...................... 755,884
65,000 Flextech PLC*................. 494,193
45,100 Mirror Group PLC.............. 150,102
---------------
1,539,506
---------------
MERCHANDISING
140,000 Next PLC...................... 1,085,789
---------------
METALS & MINING
120,000 Antofagasta Holdings PLC...... 657,702
40,000 RTZ Corp...................... 580,146
---------------
1,237,848
---------------
NATURAL GAS
115,000 British Gas PLC............... 400,301
---------------
PHARMACEUTICALS
9,550 British Biotech PLC*.......... 365,958
---------------
REAL ESTATE
28,000 Capital Shopping Centers
PLC........................... 116,701
43,500 Pillar Property Investments
PLC........................... 110,907
---------------
227,608
---------------
RESTAURANTS
9,600 Compass Group PLC............. 55,401
---------------
RETAIL
11,500 Argos PLC..................... 120,090
---------------
TELECOMMUNICATIONS
245,000 British Telecommunications
PLC........................... 1,382,831
55,000 Securicor Group PLC (Class
A)............................ 1,011,820
12,300 Security Services PLC......... 224,871
120,000 Vodafone Group PLC............ 445,186
---------------
3,064,708
---------------
TEXTILES
15,900 Courtaulds Textiles PLC....... 94,671
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
62
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
TRANSPORTATION
31,400 Associated British Ports
Holdings PLC.................. $ 139,021
70,000 British Airways PLC........... 571,749
15,800 Forth Ports PLC............... 149,073
24,800 Stagecoach Holdings PLC....... 162,429
---------------
1,022,272
---------------
UTILITIES
55,220 Yorkshire Water PLC........... 573,270
---------------
TOTAL UNITED KINGDOM.......... 34,784,793
---------------
UNITED STATES (25.0%)
AEROSPACE & DEFENSE
29,000 Boeing Co..................... 2,512,125
42,000 General Motors Corp. (Class
H)............................ 2,656,500
72,000 Watkins-Johnson Co............ 2,574,000
---------------
7,742,625
---------------
AUTOMOBILES
65,000 Ford Motor Co................. 2,234,375
41,000 General Motors Corp........... 2,183,250
---------------
4,417,625
---------------
BANKING
29,000 Citicorp...................... 2,320,000
43,000 Golden West Financial Corp.... 2,305,875
---------------
4,625,875
---------------
BEVERAGES - SOFT DRINKS
30,500 Coca Cola Co.................. 2,520,062
40,000 PepsiCo Inc................... 2,530,000
---------------
5,050,062
---------------
BIOTECHNOLOGY
35,000 Regeneron Pharamaceuticals,
Inc.*......................... 437,500
---------------
CABLE & TELECOMMUNICATIONS
74,000 General Instrument Corp.*..... 2,025,750
---------------
COMMERCIAL SERVICES
80,000 Sierra On-Line, Inc.*......... 2,680,000
---------------
COMMUNICATIONS - EQUIPMENT & SOFTWARE
46,000 Cisco Systems, Inc.*.......... 2,133,250
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMPUTER SOFTWARE
28,000 Computer Associates
International, Inc............ $ 2,005,500
19,500 Microsoft Corp.*.............. 2,008,500
41,500 Oracle Corp.*................. 1,945,313
---------------
5,959,313
---------------
COMPUTERS - PERIPHERAL EQUIPMENT
38,000 Seagate Technology, Inc.*..... 2,080,500
---------------
COMPUTERS - SYSTEMS
21,000 Hewlett-Packard Co............ 1,974,000
---------------
CONGLOMERATES
46,000 Allied-Signal, Inc............ 2,719,750
---------------
ELECTRICAL EQUIPMENT
32,000 Emerson Electric Co........... 2,584,000
---------------
ENERGY
41,000 Chevron Corp.................. 2,301,125
27,500 Exxon Corp.................... 2,244,688
20,000 Mobil Corp.................... 2,317,500
27,000 Texaco, Inc................... 2,322,000
---------------
9,185,313
---------------
ENTERTAINMENT
38,000 ITT Corp. (New)*.............. 2,280,000
---------------
FINANCIAL SERVICES
39,000 Beneficial Corp............... 2,247,375
70,000 Federal National Mortgage
Assoc......................... 2,231,250
43,000 Morgan Stanley Group, Inc..... 2,225,250
---------------
6,703,875
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
29,000 Philip Morris Companies,
Inc........................... 2,544,750
30,000 Procter & Gamble Co........... 2,542,500
---------------
5,087,250
---------------
FOREST PRODUCTS, PAPER & PACKAGING
66,000 International Paper Co........ 2,598,750
---------------
HEALTH & PERSONAL CARE
54,000 Tambrands, Inc................ 2,524,500
---------------
HEALTHCARE PRODUCTS & SERVICES
56,000 Baxter International, Inc..... 2,534,000
48,500 Columbia/HCA Healthcare
Corp.......................... 2,800,875
32,000 PacifiCare Health Systems,
Inc. (Class B)*............... 2,720,000
---------------
8,054,875
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
63
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
HOTELS/MOTELS
45,000 Marriot International Inc..... $ 2,137,500
---------------
INDUSTRIALS
47,000 Honeywell, Inc................ 2,596,750
---------------
INSURANCE
30,000 Aetna Life & Casualty Co...... 2,265,000
24,000 American International Group,
Inc........................... 2,247,000
20,000 CIGNA Corp.................... 2,285,000
---------------
6,797,000
---------------
MEDIA
53,000 Infinity Broadcasting Corp.
(Class A)*.................... 2,298,875
120,000 Westwood One, Inc.*........... 2,205,000
---------------
4,503,875
---------------
OIL DRILLING & SERVICES
29,000 Schlumberger Ltd.............. 2,294,625
---------------
PHARMACEUTICALS
28,000 Johnson & Johnson............. 2,583,000
38,000 Pfizer, Inc................... 2,546,000
---------------
5,129,000
---------------
RETAIL
420,000 Charming Shoppes, Inc.*....... 2,152,500
26,000 Dayton-Hudson Corp............ 2,206,750
39,000 Gap, Inc...................... 2,159,625
45,000 Home Depot, Inc............... 2,154,375
---------------
8,673,250
---------------
STEEL & IRON
193,000 Bethlehem Steel Corp.*........ 2,533,125
106,000 Inland Steel Industries,
Inc........................... 2,623,500
---------------
5,156,625
---------------
TELECOMMUNICATIONS
96,000 MCI Communications Corp....... 2,904,000
77,000 Sprint Corp................... 2,926,000
---------------
5,830,000
---------------
UTILITIES - TELEPHONE
67,000 GTE Corp...................... 2,939,625
58,000 NYNEX Corp.................... 2,892,750
---------------
5,832,375
---------------
TOTAL UNITED STATES........... 129,815,813
---------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
URUGUAY (0.1%)
BANKING
25,000 Banco Commercial S.A. (ADR) -
144A**........................ $ 375,000
---------------
VENEZUELA (0.1%)
STEEL & IRON
155,000 Siderurgica Venezolana Sivens
(ADR)......................... 328,600
---------------
TOTAL COMMON AND PREFERRED
STOCKS, WARRANTS, RIGHTS AND
BONDS
(IDENTIFIED COST
$475,382,825)................. 515,477,427
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (a) (4.5%)
U.S. GOVERNMENT AGENCIES
$ 1,200 Federal Farm Credit Bank 5.20%
due 05/15/96.................. 1,192,374
22,000 Federal Home Loan Mortgage
Corp.
5.30% due 04/01/96............ 22,000,000
---------------
TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST
$23,192,374).................. 23,192,374
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
PURCHASED PUT OPTIONS ON FOREIGN CURRENCY
(0.9%)
FRF 65,381 May 16, 1996/FRF 4.84......... 513,000
Y 10,190,000 May 17, 1996 101.90........... 3,990,000
Y 1,066,300 May 17, 1996 106.63........... 112,500
DEM 9,316 July 19, 1996/DEM 1.48........ 119,700
NLG 14,249 July 19, 1996/NLG 1.66........ 150,500
---------------
TOTAL PURCHASED PUT OPTIONS ON
FOREIGN CURRENCY
(IDENTIFIED COST
$3,815,670)................... 4,885,700
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
64
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
VALUE
- ------------------------------------------------------------------
<C> <S> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST
$502,390,869) (B)........... 104.5% $543,555,501
LIABILITIES IN EXCESS OF
OTHER ASSETS................ (4.5) (23,567,279)
----- ------------
NET ASSETS.................. 100.0% $519,988,222
----- ------------
----- ------------
<FN>
- ---------------------
ADR American Depository Receipt.
ADS American Depository Shares.
GDR Global Depository Receipt.
GDS Global Depository Shares.
PC Participation Certificate.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
*** Partially paid shares. Resale is restricted to qualified institutional
investors.
++ Consists of one or more class of securities traded together as a unit;
generally stocks with attached warrants.
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation was $53,746,288 and the
aggregate gross unrealized depreciation was $12,581,656 resulting in net
unrealized appreciation of $41,164,632.
</TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT MARCH 31, 1996:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO IN DELIVERY APPRECIATION
DELIVER EXCHANGE FOR DATE (DEPRECIATION)
- ----------------------------------------------------
<S> <C> <C> <C>
SGD 37,925 $ 26,974 04/01/96 $ 48
$ 16,997 HKD 131,446 04/01/96 (1)
$ 75,554 JPY 8,054,800 04/01/96 (395)
$ 767,451 JPY 81,518,655 04/02/96 (6,803)
SGD 20,017 $ 14,191 04/03/96 (20)
$ 15,488 SEK 105,140 04/10/96 235
-------
Net unrealized depreciation......... ($6,936)
-------
-------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
65
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
SUMMARY OF INVESTMENTS MARCH 31, 1996
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------
<S> <C> <C>
Aerospace & Defense....................... $ 10,302,825 2.1%
Airlines.................................. 95,116 0.0
Appliances & Household Durables........... 3,460,088 0.7
Auto Parts................................ 1,118,307 0.2
Automobiles............................... 12,343,305 2.4
Banking................................... 39,433,871 7.6
Beverages - Soft Drinks................... 5,623,387 1.1
Biotechnology............................. 437,500 0.1
Building & Construction................... 18,859,345 3.6
Building Materials........................ 5,186,199 1.0
Business & Public Services................ 11,130,472 2.1
Cable & Telecommunications................ 2,025,750 0.4
Chemicals................................. 12,911,240 2.5
Commercial Services....................... 4,346,517 0.8
Communications - Equipment & Software..... 2,133,250 0.4
Computer Software......................... 7,022,319 1.4
Computers - Peripheral Equipment.......... 2,080,500 0.4
Computers - Systems....................... 1,974,000 0.4
Conglomerates............................. 18,651,150 3.6
Consumer Products......................... 1,229,610 0.2
Data Processing........................... 1,757,941 0.3
Electrical Equipment...................... 38,678,924 7.4
Electronics............................... 1,615,523 0.3
Electronics - Semiconductors.............. 1,169,602 0.2
Energy.................................... 14,904,818 2.9
Engineering & Construction................ 2,128,663 0.4
Entertainment............................. 5,365,085 1.0
Financial Services........................ 22,262,752 4.3
Food, Beverage, Tobacco & Household
Products................................ 15,838,610 3.0
Foreign Currency Put Options.............. 4,885,700 0.9
Forest Products, Paper & Packaging........ 4,892,085 0.9
Furniture................................. 286,477 0.1
Health & Personal Care.................... 16,600,662 3.2
Healthcare Products & Services............ 9,717,759 1.9
Hotels/Motels............................. 5,274,036 1.0
Industrials............................... 2,681,260 0.5
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------
<S> <C> <C>
Insurance................................. $ 20,453,153 3.9%
Investment Companies...................... 5,612,365 1.1
Machine Tools............................. 1,462,267 0.3
Machinery................................. 25,642,238 4.9
Manufacturing............................. 561,744 0.1
Media..................................... 16,767,852 3.2
Merchandising............................. 4,669,190 0.9
Metals & Mining........................... 5,170,278 1.0
Miscellaneous............................. 628,532 0.1
Natural Gas............................... 2,043,089 0.4
Oil Drilling & Services................... 2,624,615 0.5
Pharmaceuticals........................... 10,370,493 2.0
Real Estate............................... 15,926,647 3.1
Restaurants............................... 243,032 0.0
Retail.................................... 25,175,644 4.8
Steel & Iron.............................. 16,401,553 3.2
Telecommunication Equipment............... 2,101,814 0.4
Telecommunications........................ 22,234,961 4.3
Textiles.................................. 8,252,239 1.6
Transportation............................ 9,993,928 1.9
U.S. Government Agencies.................. 23,192,374 4.5
Utilities................................. 5,468,629 1.1
Utilities - Electric...................... 2,292,948 0.4
Utilities - Telephone..................... 5,832,375 1.1
Vision Care & Instruments................. 338,062 0.1
Wholesale & International Trade........... 1,670,831 0.3
------------------ -----
$ 543,555,501 104.5%
------------------ -----
------------------ -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
- ------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks............................. $ 507,672,175 97.6%
Convertible Bonds......................... 875,087 0.2
Foreign Currency Put
Options................................. 4,885,700 0.9
Preferred Stocks.......................... 6,396,545 1.2
Rights.................................... 24,190 0.0
Short-Term Investments.................... 23,192,374 4.5
Warrants.................................. 509,430 0.1
------------------ -----
$ 543,555,501 104.5%
------------------ -----
------------------ -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
66
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $502,390,869)............................ $543,555,501
Receivable for:
Investments sold........................................ 27,765,872
Shares of beneficial interest sold...................... 2,566,328
Dividends............................................... 1,062,137
Foreign withholding taxes reclaimed..................... 268,869
Interest................................................ 22,318
Prepaid expenses and other assets........................... 64,061
------------
TOTAL ASSETS........................................... 575,305,086
------------
LIABILITIES:
Payable for:
Investments purchased................................... 53,640,230
Plan of distribution fee................................ 432,059
Investment management fee............................... 431,631
Shares of beneficial interest repurchased............... 340,036
Accrued expenses and other payables......................... 472,908
------------
TOTAL LIABILITIES...................................... 55,316,864
------------
NET ASSETS:
Paid-in-capital............................................. 458,197,677
Net unrealized appreciation................................. 41,148,474
Distributions in excess of net investment income............ (903,011)
Accumulated undistributed net realized gain................. 21,545,082
------------
NET ASSETS............................................. $519,988,222
------------
------------
NET ASSET VALUE PER SHARE,
28,526,474 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$18.23
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
67
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1996
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $833,554 foreign withholding tax)......... $ 8,833,056
Interest.................................................... 2,693,734
-----------
TOTAL INCOME........................................... 11,526,790
-----------
EXPENSES
Plan of distribution fee.................................... 5,141,595
Investment management fee................................... 5,134,018
Transfer agent fees and expenses............................ 1,096,235
Custodian fees.............................................. 798,381
Shareholder reports and notices............................. 198,554
Professional fees........................................... 169,749
Registration fees........................................... 36,647
Trustees' fees and expenses................................. 19,611
Other....................................................... 19,335
-----------
TOTAL EXPENSES......................................... 12,614,125
-----------
NET INVESTMENT LOSS.................................... (1,087,335)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments............................................. 43,345,174
Foreign exchange transactions........................... (1,982,797)
-----------
TOTAL GAIN............................................. 41,362,377
-----------
Net change in unrealized appreciation on:
Investments............................................. 37,735,639
Translation of forward foreign currency contracts, other
assets and liabilities denominated in foreign
currencies............................................ (769,998)
-----------
TOTAL APPRECIATION..................................... 36,965,641
-----------
NET GAIN............................................... 78,328,018
-----------
NET INCREASE................................................ $77,240,683
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
68
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, 1996 MARCH 31, 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss......................................... $ (1,087,335) $ (1,775,444)
Net realized gain (loss).................................... 41,362,377 (8,507,442)
Net change in unrealized appreciation/depreciation.......... 36,965,641 (54,631,655)
-------------- --------------
NET INCREASE (DECREASE)................................ 77,240,683 (64,914,541)
-------------- --------------
DIVIDENDS AND DISTRIBUTIONS:
In excess of net investment income.......................... -- (505,002)
From net realized gain...................................... (692,945) (12,955,871)
In excess of net realized gain.............................. -- (7,793,881)
-------------- --------------
TOTAL.................................................. (692,945) (21,254,754)
-------------- --------------
Net increase (decrease) from transactions in shares of
beneficial interest....................................... (68,817,900) 104,859,190
-------------- --------------
TOTAL INCREASE......................................... 7,729,838 18,689,895
NET ASSETS:
Beginning of period......................................... 512,258,384 493,568,489
-------------- --------------
END OF PERIOD
(INCLUDING DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME $903,011 AND $5,220,531, RESPECTIVELY)........... $ 519,988,222 $ 512,258,384
-------------- --------------
-------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
69
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter World Wide Investment Trust (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund's investment objective is total
return on its assets primarily through long-term capital growth and to a lesser
extent, from income. The Fund seeks to achieve its objective by investing in
common stocks and equivalents, preferred stocks, bonds and other debt
obligations of domestic and foreign companies, governments and international
organizations. The Fund was organized as a Massachusetts business trust on July
7, 1983 and commenced operations on October 31, 1983.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates. The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where securities are traded on more than one exchange; the securities are
valued on the exchange designated as the primary market by the Trustees); (2)
all other portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest available bid price prior to the time
of valuation; (3) when market quotations are not readily available, including
circumstances under which it is determined by the Investment Manager that sale
and bid prices are not reflective of a security's market value, portfolio
securities are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Trustees
(valuation of debt securities for which market quotations are not readily
available may be based upon current market prices of securities which are
comparable in coupon, rating and maturity or an appropriate matrix utilizing
similar factors); and (4) short-term debt securities having a maturity date of
more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-
70
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996, CONTINUED
dividend date except for certain dividends on foreign securities which are
recorded as soon as the Fund is informed after the ex-dividend date. Discounts
are accreted over the life of the respective securities. Interest income is
accrued daily.
C. OPTION ACCOUNTING PRINCIPLES -- When the Fund writes a call option, an amount
equal to the premium received is included in the Fund's Statement of Assets and
Liabilities as a liability which is subsequently marked-to-market to reflect the
current market value of the option written. If a written option either expires
or the Fund enters into a closing purchase transaction, the Fund realizes a gain
or loss without regard to any unrealized gain or loss on the underlying security
or currency and the liability related to such option is extinguished. If a
written call option is exercised, the Fund realizes a gain or loss from the sale
of the underlying security or currency and the proceeds from such sale are
increased by the premium originally received.
When the Fund purchases a call or put option, the premium paid is recorded as an
investment which is subsequently marked-to-market to reflect the current market
value. If a purchased option expires, the Fund will realize a loss to the extent
of the premium paid. If the Fund enters into a closing sale transaction, a gain
or loss is realized for the difference between the proceeds from the sale and
the cost of the option. If a put option is exercised, the cost of the security
or currency sold upon exercise will be increased by the premium originally paid.
If a call option is exercised, the cost of the security purchased upon exercise
will be increased by the premium originally paid.
D. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward contracts are
translated at the exchange rates prevailing at the end of the period; and (2)
purchases, sales, income and expenses are translated at the exchange rates
prevailing on the respective dates of such transactions. The resultant exchange
gains and losses are included in the Statement of Operations as realized and
unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. Federal
income tax regulations, certain foreign exchange gains/losses included in
realized and unrealized gain/loss are included in or are a reduction of ordinary
income for federal income tax purposes. The Fund does not isolate that portion
of the results of operations arising as a result of changes in the foreign
exchange rates from the changes in the market prices of the securities.
E. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward foreign
currency contracts which are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and losses are included in the Statement of
Operations as unrealized gain/loss on
71
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996, CONTINUED
foreign exchange transactions. The Fund records realized gains or losses on
delivery of the currency or at the time the forward contract is extinguished
(compensated) by entering into a closing transaction prior to delivery.
F. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
2. INVESTMENT MANAGEMENT AND ADVISORY AGREEMENTS
Pursuant to an Investment Management Agreement with Dean Witter InterCapital
Inc. (the "Investment Manager" or "InterCapital") and Investment Advisory
Agreements with Daiwa International Capital Management Corp. ("DICAM"), which
had a sub-advisory agreement with its parent Daiwa International Capital
Management Co., Ltd. and NatWest Investment Management Limited ("NWIM"), the
Fund paid InterCapital and each adviser an aggregate management and advisory
fee, accrued daily and payable monthly, by applying the annual rate of 1.0% to
the portion of the daily net assets of the Fund not exceeding $500 million and
0.95% to the portion of the daily net assets of the Fund exceeding $500 million
determined as of the close of each business day. Under their respective
agreements, InterCapital, DICAM and NWIM received fees at the annual rate of
0.55%, 0.225% and 0.225%, respectively, of the daily net assets not exceeding
$500 million and 0.5225%, 0.21375% and 0.21375%, respectively, of the daily net
assets exceeding $500 million.
On July 26, 1995, the Trustees voted to terminate the existing investment
advisory agreements effective August 1, 1995 and approved interim investment
management and sub-advisory agreements
72
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996, CONTINUED
between InterCapital and Morgan Grenfell Investment Services Limited ("Morgan
Grenfell" and "Sub-Adviser"), respectively, hereafter referred to as the
"Agreements". Under the interim investment management agreement, InterCapital
became the sole investment adviser to the Fund. Pursuant to the interim
investment management agreement, the Fund paid InterCapital a management fee,
accrued daily and payable monthly, by applying the following annual rates to the
net assets of the Fund determined as of the close of each business day: 0.55% to
the average daily net assets not exceeding $500 million and 0.5225% to the
portion of daily net assets in excess of $500 million. Pursuant to the interim
sub-advisory agreement with Morgan Grenfell, the Fund paid its sub-adviser a
sub-advisory fee, accrued daily and payable monthly, by applying the following
annual rates to the net assets of the Fund determined as of the close of each
business day; 0.45% to the average daily net assets not exceeding $500 million
and 0.4275% to the portion of daily net assets in excess of $500 million.
Effective October 31, 1995, the shareholders approved a new investment
management agreement and sub-advisory agreement. Pursuant to the new Investment
Management Agreement with InterCapital, the Fund pays InterCapital a fee,
accrued daily and payable monthly, by applying the following annual rates to the
net assets of the Fund determined as of the close of each business day: 1.0% to
the daily net assets not exceeding $500 million and 0.95% to the portion of
daily net assets in excess of $500 million. Under the sub-advisory agreement
between Morgan Grenfell and the Investment Manager, the Sub-Adviser provides the
Fund with investment advice and portfolio management relating to the Fund's
non-U.S. investments, subject to the overall supervision of the Investment
Manager. As compensation for its services provided pursuant to the Sub-Advisory
Agreement, the Investment Manager pays the Sub-Adviser monthly compensation
equal to 40% of its monthly compensation.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services as the Fund may reasonably
require in the conduct of its business and also bears the cost of telephone
services, heat, light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act pursuant
to which the Fund pays the Distributor compensation, accrued
73
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996, CONTINUED
daily and payable monthly, at an annual rate of 1.0% of the lesser of: (a) the
average daily aggregate gross sales of the Fund's shares since the Fund's
inception (not including reinvestment of dividend or capital gain distributions)
less the average daily aggregate net asset value of the Fund's shares
redeemed since the Fund's inception upon which a contingent deferred sales
charge has been imposed or upon which such charge has been waived; or (b) the
Fund's average daily net assets. Amounts paid under the Plan are paid to the
Distributor to compensate it for the services provided and the expenses borne by
it and others in the distribution of the Fund's shares, including the payment of
commissions for sales of the Fund's shares and incentive compensation to, and
expenses of, the account executives of Dean Witter Reynolds Inc. ("DWR"), an
affiliate of the Investment Manager and Distributor, and other employees or
selected broker-dealers who engage in or support distribution of the Fund's
shares or who service shareholder accounts, including overhead and telephone
expenses, printing and distribution of prospectuses and reports used in
connection with the offering of the Fund's shares to other than current
shareholders and preparation, printing and distribution of sales literature and
advertising materials. In addition, the Distributor may be compensated under the
Plan for its opportunity costs in advancing such amounts, which compensation
would be in the form of a carrying charge on any unreimbursed expenses incurred
by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered by the Distributor may be recovered through future
distribution fees from the Fund and contingent deferred sales charges from the
Fund's shareholders.
The Distributor has informed the Fund that for the year ended March 31, 1996, it
received approximately $998,000 in contingent deferred sales charges from
redemptions of the Fund's shares.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended March 31, 1996 aggregated
$604,644,160 and $597,672,436, respectively.
For the year ended March 31, 1996, the Fund incurred brokerage commissions of
$69,800, $14,335 and $17,903 with DWR and affiliates of DICAM and Morgan
Grenfell, respectively, for portfolio transactions executed on behalf of the
Fund. At March 31, 1996, the Fund's receivable for investments sold and payable
for investments purchased included unsettled trades with DWR of $3,463,822 and
$10,776,983, respectively.
74
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996, CONTINUED
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At March 31, 1996, the Fund had
transfer agent fees and expenses payable of approximately $114,000.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended March 31, 1996 included
in Trustees' fees and expenses in the Statement of Operations amounted to
$3,207. At March 31, 1996, the Fund had an accrued pension liability of $52,325
which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
MARCH 31, 1996 MARCH 31, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 5,790,518 $ 100,249,259 12,071,397 $218,983,098
Reinvestment of dividends and distributions...................... 37,871 656,681 1,205,947 20,079,027
----------- -------------- ----------- ------------
5,828,389 100,905,940 13,277,344 239,062,125
Repurchased...................................................... (9,903,997) (169,723,840) (7,792,735) (134,202,935)
----------- -------------- ----------- ------------
Net increase (decrease).......................................... (4,075,608) $ (68,817,900) 5,484,609 $104,859,190
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
Foreign currency losses incurred after October 31 ("post-October losses") within
the taxable year are deemed to arise on the first business day of the Fund's
next taxable year. The Fund incurred and will elect to defer net foreign
currency losses of approximately $207,000 during fiscal 1996.
As of March 31, 1996, the Fund had temporary book/tax differences primarily
attributable to post-October losses and income from the mark-to-market of
passive foreign investment companies ("PFICs") and permanent book/tax
differences primarily attributable to a net operating loss, foreign currency
losses and tax adjustments on PFICs sold by the Fund. To reflect
reclassifications arising from permanent book/tax differences for the year ended
March 31, 1996, accumulated undistributed net realized gain was charged
$3,119,901, paid-in-capital was charged $2,284,954 and distributions in excess
of net investment income was credited $5,404,855.
75
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996, CONTINUED
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Fund may enter into forward foreign currency contracts ("forward contracts")
to facilitate settlement of foreign currency denominated portfolio transactions
or to manage foreign currency exposure associated with foreign currency
denominated securities.
At March 31, 1996, there were outstanding forward contracts used to facilitate
settlement of foreign currency denominated portfolio transactions.
Forward contracts involve elements of market risk in excess of the amounts
reflected in the Statement of Assets and Liabilities. The Fund bears the risk of
an unfavorable change in the foreign exchange rates underlying the forward
contracts. Risks may also arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their contracts.
8. COMMITMENT
As of March 31, 1996, the Fund had an outstanding commitment resulting from the
purchase of a partially paid portfolio security which is subject to installment
payments as follows:
<TABLE>
<CAPTION>
TOTAL
OUTSTANDING
ISSUER COMMITMENT
- ---------------------------------- ----------------
<S> <C> <C>
Peregrine Indonesia $ 560,000
<CAPTION>
ISSUER INSTALLMENT PAYMENT TERMS
- ---------------------------------- ------------------------------------------------------------------------------------------------
<S> <C>
Peregrine Indonesia Balance payable in two equal installments on July 1, 1996 and January 1, 1997.
</TABLE>
76
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31
----------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE
OPERATING PERFORMANCE:
Net asset value,
beginning of
period.......... $ 15.71 $ 18.20 $ 14.72 $ 14.65 $ 14.57 $ 14.84 $ 14.98 $ 14.93 $ 17.36 $ 15.45
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Net investment
income (loss)... (0.06) (0.02) (0.05) -- -- 0.23 0.11 0.08 0.04 0.11
Net realized and
unrealized gain
(loss).......... 2.60 (1.83) 4.24 0.39 1.05 0.18 0.82 1.24 (0.07) 3.88
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Total from
investment
operations...... 2.54 (1.85) 4.19 0.39 1.05 0.41 0.93 1.32 (0.03) 3.99
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Less dividends
and
distributions:
From net
investment
income........ -- -- -- -- (0.05) (0.23) (0.11) (0.08) (0.15) (0.10)
In excess of
net investment
income....... -- (0.02) -- -- -- -- -- -- -- --
From net
realized
gain.......... (0.02) (0.39) (0.71) (0.32) (0.92) (0.45) (0.96) (1.19) (2.25) (1.98)
In excess of
net realized
gain.......... -- (0.23) -- -- -- -- -- -- -- --
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Total dividends
and
distributions... (0.02) (0.64) (0.71) (0.32) (0.97) (0.68) (1.07) (1.27) (2.40) (2.08)
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Net asset value,
end of period... $ 18.23 $ 15.71 $ 18.20 $ 14.72 $ 14.65 $ 14.57 $ 14.84 $ 14.98 $ 14.93 $ 17.36
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
TOTAL INVESTMENT
RETURN+.......... 16.20% (10.37)% 28.40% 2.69% 7.33% 2.80% 6.09% 9.31% 0.39% 28.22%
RATIOS TO
AVERAGE NET
ASSETS:
Expenses......... 2.45% 2.41% 2.40% 2.42% 2.27% 2.29% 2.21% 2.18% 2.13% 2.10%
Net investment
income (loss)... (0.21)% (0.32)% (0.61)% 0.06% 0.03% 1.53% 0.70% 0.50% 0.23% 0.86%
SUPPLEMENTAL DATA:
Net assets, end
of period, in
millions........ $520 $512 $494 $218 $263 $279 $306 $312 $368 $470
Portfolio
turnover rate... 126% 67% 68% 139% 89% 68% 75% 67% 70% 65%
Average
commission rate
paid............ $0.0169 -- -- -- -- -- -- -- -- --
<FN>
- ---------------------
+ Does not reflect the deduction of sales charge. Calculated as of the last
business day of the period.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
77
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER WORLD WIDE INVESTMENT TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Dean Witter World Wide Investment
Trust (the "Fund") at March 31, 1996, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the ten years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at March
31, 1996 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
MAY 10, 1996
- --------------------------------------------------------------------------------
1996 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended March 31, 1996, the Fund paid to
shareholders $0.02 per share from long-term capital gains.
78
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS
(1) Financial statements and schedules, included
in Prospectus (Part A): PAGE IN
PROSPECTUS
----------
Financial highlights for the years ended March 31,
1987, 1988, 1989, 1990, 1991, 1992, 1993, 1994,
1995 and 1996 .................................... 4
(2) Financial statements included in the Statement of
Additional Information (Part B): PAGE IN
SAI
-------
Portfolio of Investments at March 31, 1996 ....... 50
Statement of assets and liabilities at
March 31, 1996 ................................... 67
Statement of operations for the year ended March
31, 1996 ........................................ 68
Statement of changes in net assets for the fiscal
years ended March 31, 1995 and March 31, 1996 .... 69
Notes to Financial Statements .................... 70
Financial highlights for the years ended March 31,
1987, 1988, 1989, 1990, 1991, 1992, 1993, 1994,
1995 and 1996 .................................... 77
(3) Financial statements included in Part C:
None
(b) EXHIBITS:
11. -- Consent of Independent Accountants
15. -- Form of Amended and Restated Plan of Distribution
pursuant to Rule 12b-1.
16. -- Schedules for Computations of Performance Quotations
27. -- Financial Data Schedule
- ---------------
All other exhibits previously filed and incorporated by reference.
1
<PAGE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT.
None
Item 26. NUMBER OF HOLDERS OF SECURITIES.
(1) (2)
Number of Record Holders
Title of Class at April 30, 1996
-------------- ------------------------
Shares of Beneficial Interest 66,775
Item 27. INDEMNIFICATION.
Pursuant to Section 5.3 of the Registrant's Declaration of
Trust and under Section 4.8 of the Registrant's By-Laws, the
indemnification of the Registrant's trustees, officers, employees and
agents is permitted if it is determined that they acted under the
belief that their actions were in or not opposed to the best interest
of the Registrant, and, with respect to any criminal proceeding, they
had reasonable cause to believe their conduct was not unlawful. In
addition, indemnification is permitted only if it is determined that
the actions in question did not render them liable by reason of
willful misfeasance, bad faith or gross negligence in the performance
of their duties or by reason of reckless disregard of their
obligations and duties to the Registrant. Trustees, officers,
employees and agents will be indemnified for the expense of
litigation if it is determined that they are entitled to
indemnification against any liability established in such litigation.
The Registrant may also advance money for these expenses provided
that they give their undertakings to repay the Registrant unless
their conduct is later determined to permit indemnification.
Pursuant to Section 5.2 of the Registrant's Declaration of Trust
and paragraph 8 of the Registrant's Investment Management Agreement,
neither the Investment Manager nor any trustee, officer, employee or
agent of the Registrant shall be liable for any action or failure to
act, except in the case of bad faith, willful misfeasance, gross
negligence or reckless disregard of duties to the Registrant.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to trustees,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer, or
controlling person of the Registrant in connection with the
successful defense of any action, suit or proceeding) is asserted
2
<PAGE>
against the Registrant by such trustee, officer or controlling person
in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act, and will be governed by the final
adjudication of such issue.
The Registrant hereby undertakes that it will apply the
indemnification provision of its by-laws in a manner consistent with
Release 11330 of the Securities and Exchange Commission under the
Investment Company Act of 1940, so long as the interpretation of
Sections 17(h) and 17(i) of such Act remains in effect.
Registrant, in conjunction with the Investment Manager,
Registrant's Trustees, and other registered investment management
companies managed by the Investment Manager, maintains insurance on
behalf of any person who is or was a Trustee, officer, employee, or
agent of Registrant, or who is or was serving at the request of
Registrant as a trustee, director, officer, employee or agent of
another trust or corporation, against any liability asserted against
him and incurred by him or arising out of his position. However, in
no event will Registrant maintain insurance to indemnify any such
person for any act for which Registrant itself is not permitted to
indemnify him.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
See "The Fund and Its Management" in the Prospectus regarding
the business of the investment adviser. The following information is
given regarding officers of Dean Witter InterCapital Inc.
InterCapital is a wholly-owned subsidiary of Dean Witter, Discover &
Co. The principal address of the Dean Witter Funds is Two World
Trade Center, New York, New York 10048.
The term "Dean Witter Funds" used below refers to the following
registered investment companies:
CLOSED-END INVESTMENT COMPANIES
(1) InterCapital Income Securities Inc.
(2) High Income Advantage Trust
(3) High Income Advantage Trust II
(4) High Income Advantage Trust III
(5) Municipal Income Trust
(6) Municipal Income Trust II
(7) Municipal Income Trust III
(8) Dean Witter Government Income Trust
(9) Municipal Premium Income Trust
(10) Municipal Income Opportunities Trust
(11) Municipal Income Opportunities Trust II
3
<PAGE>
(12) Municipal Income Opportunities Trust III
(13) Prime Income Trust
(14) InterCapital Insured Municipal Bond Trust
(15) InterCapital Quality Municipal Income Trust
(16) InterCapital Quality Municipal Investment Trust
(17) InterCapital Insured Municipal Income Trust
(18) InterCapital California Insured Municipal Income Trust
(19) InterCapital Insured Municipal Trust
(20) InterCapital Quality Municipal Securities
(21) InterCapital New York Quality Municipal Securities
(22) InterCapital California Quality Municipal Securities
(23) InterCapital Insured California Municipal Securities
(24) InterCapital Insured Municipal Securities
OPEN-END INVESTMENT COMPANIES:
(1) Dean Witter Short-Term Bond Fund
(2) Dean Witter Tax-Exempt Securities Trust
(3) Dean Witter Tax-Free Daily Income Trust
(4) Dean Witter Dividend Growth Securities Inc.
(5) Dean Witter Convertible Securities Trust
(6) Dean Witter Liquid Asset Fund Inc.
(7) Dean Witter Developing Growth Securities Trust
(8) Dean Witter Retirement Series
(9) Dean Witter Federal Securities Trust
(10) Dean Witter World Wide Investment Trust
(11) Dean Witter U.S. Government Securities Trust
(12) Dean Witter Select Municipal Reinvestment Fund
(13) Dean Witter High Yield Securities Inc.
(14) Dean Witter Intermediate Income Securities
(15) Dean Witter New York Tax-Free Income Fund
(16) Dean Witter California Tax-Free Income Fund
(17) Dean Witter Health Sciences Trust
(18) Dean Witter California Tax-Free Daily Income Trust
(19) Dean Witter Global Asset Allocation Fund
(20) Dean Witter American Value Fund
(21) Dean Witter Strategist Fund
(22) Dean Witter Utilities Fund
(23) Dean Witter World Wide Income Trust
(24) Dean Witter New York Municipal Money Market Trust
(25) Dean Witter Capital Growth Securities
(26) Dean Witter Precious Metals and Minerals Trust
(27) Dean Witter European Growth Fund Inc.
(28) Dean Witter Global Short-Term Income Fund Inc.
(29) Dean Witter Pacific Growth Fund Inc.
(30) Dean Witter Multi-State Municipal Series Trust
(31) Dean Witter Premier Income Trust
(32) Dean Witter Short-Term U.S. Treasury Trust
(33) Dean Witter Diversified Income Trust
(34) Dean Witter U.S. Government Money Market Trust
(35) Dean Witter Global Dividend Growth Securities
(36) Active Assets California Tax-Free Trust
(37) Dean Witter Natural Resource Development Securities Inc.
(38) Active Assets Government Securities Trust
(39) Active Assets Money Trust
4
<PAGE>
(40) Active Assets Tax-Free Trust
(41) Dean Witter Limited Term Municipal Trust
(42) Dean Witter Variable Investment Series
(43) Dean Witter Value-Added Market Series
(44) Dean Witter Global Utilities Fund
(45) Dean Witter High Income Securities
(46) Dean Witter National Municipal Trust
(47) Dean Witter International SmallCap Fund
(48) Dean Witter Mid-Cap Growth Fund
(49) Dean Witter Select Dimensions Investment Series
(50) Dean Witter Balanced Growth Fund
(51) Dean Witter Balanced Income Fund
(52) Dean Witter Hawaii Municipal Trust
(53) Dean Witter Capital Appreciation Fund
(54) Dean Witter Intermediate Term U.S. Treasury Trust
(55) Dean Witter Information Fund
(56) Dean Witter Japan Fund
(57) Dean Witter Income Builder Fund
The term "TCW/DW Funds" refers to the following registered investment
companies:
OPEN-END INVESTMENT COMPANIES
(1) TCW/DW Core Equity Trust
(2) TCW/DW North American Government Income Trust
(3) TCW/DW Latin American Growth Fund
(4) TCW/DW Income and Growth Fund
(5) TCW/DW Small Cap Growth Fund
(6) TCW/DW Balanced Fund
(7) TCW/DW Total Return Trust
(8) TCW/DW Mid-Cap Equity Trust
CLOSED-END INVESTMENT COMPANIES
(1) TCW/DW Term Trust 2000
(2) TCW/DW Term Trust 2002
(3) TCW/DW Term Trust 2003
(4) TCW/DW Emerging Markets Opportunities Trust
NAME AND POSITION OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Charles A. Fiumefreddo Executive Vice President and Director of Dean
Chairman, Chief Witter Reynolds Inc. ("DWR"); Chairman, Chief
Executive Officer and Executive Officer and Director of Dean Witter
Director Distributors Inc. ("Distributors") and Dean
Witter Services Company Inc. ("DWSC"); Chairman
and Director of Dean Witter Trust Company
("DWTC"); Chairman, Director or Trustee, President
and Chief Executive Officer of the Dean Witter
Funds and Chairman, Chief Executive Officer and
Trustee of the TCW/DW Funds; Formerly Executive
Vice President and Director of Dean Witter,
Discover & Co. ("DWDC"); Director and/or officer
of various DWDC subsidiaries.
5
<PAGE>
NAME AND POSITION OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Philip J. Purcell Chairman, Chief Executive Officer and Director of
Director of DWDC and DWR; Director of DWSC and
Distributors; Director or Trustee of the Dean
Witter Funds; Director and/or officer of various
DWDC subsidiaries.
Richard M. DeMartini Executive Vice President of DWDC; President and
Director Chief Operating Officer of Dean Witter Capital;
Director of DWR, DWSC, Distributors and DWTC;
Trustee of the TCW/DW Funds; Member (since
January, 1993) and Chairman (since January,
1995) of the Board of Directors of NASDAQ.
James F. Higgins Executive Vice President of DWDC; President and
Director Chief Operating Officer of Dean Witter Financial;
Director of DWR, DWSC, Distributors and DWTC.
Thomas C. Schneider Executive Vice President and Chief Financial
Executive Vice Officer of DWDC, DWR, DWSC and Distributors;
President, Chief Director of DWR, DWSC and Distributors.
Financial Officer and
Director
Christine A. Edwards Executive Vice President, Secretary and General
Director Counsel of DWDC and DWR; Executive Vice President,
Secretary and Chief Legal Officer of Distributors;
Director of DWR, DWSC and Distributors.
Robert M. Scanlan President and Chief Operating Officer of DWSC,
President and Chief Executive Vice President of Distributors;
Operating Officer Executive Vice President and Director of DWTC;
Vice President of the Dean Witter Funds and the
TCW/DW Funds.
David A. Hughey Executive Vice President and Chief Administrative
Executive Vice Officer of DWSC, Distributors and DWTC; Director
President and Chief of DWTC; Vice President of the Dean Witter Funds
Administrative Officer and the TCW/DW Funds.
John Van Heuvelen President, Chief Operating Officer and Director
Executive Vice of DWTC.
President
Joseph J. McAlinden
Executive Vice President
and Chief Investment
Officer Vice President of the Dean Witter Funds.
6
<PAGE>
NAME AND POSITION OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Sheldon Curtis Assistant Secretary of DWR; Senior Vice President,
Senior Vice President, Secretary and General Counsel of DWSC; Senior Vice
General Counsel and President, Assistant General Counsel and Assistant
Secretary Secretary of Distributors; Senior Vice President
and Secretary of DWTC; Vice President, Secretary
and General Counsel of the Dean Witter Funds and
the TCW/DW Funds.
Peter M. Avelar
Senior Vice President Vice President of various Dean Witter Funds.
Mark Bavoso
Senior Vice President Vice President of various Dean Witter Funds.
Richard Felegy
Senior Vice President
Edward Gaylor
Senior Vice President Vice President of various Dean Witter Funds.
Robert S. Giambrone
Senior Vice President Senior Vice President of DWSC, Distributors
and DWTC and Director of DWTC; Vice President
of the Dean Witter Funds and the TCW/DW Funds.
Rajesh K. Gupta
Senior Vice President Vice President of various Dean Witter Funds.
Kenton J. Hinchcliffe
Senior Vice President Vice President of various Dean Witter Funds.
Kevin Hurley
Senior Vice President Vice President of various Dean Witter Funds.
John B. Kemp, III Director of the Provident Savings Bank, Jersey
Senior Vice President City, New Jersey.
Anita Kolleeny
Senior Vice President Vice President of various Dean Witter Funds.
Jonathan R. Page
Senior Vice President Vice President of various Dean Witter Funds.
Ira N. Ross
Senior Vice President Vice President of various Dean Witter Funds.
Rochelle G. Siegel
Senior Vice President Vice President of various Dean Witter Funds.
Paul D. Vance
Senior Vice President Vice President of various Dean Witter Funds.
7
<PAGE>
NAME AND POSITION OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Elizabeth A. Vetell
Senior Vice President
James F. Willison
Senior Vice President Vice President of various Dean Witter Funds.
Ronald J. Worobel
Senior Vice President Vice President of various Dean Witter Funds.
Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President DWSC, Assistant Treasurer of Distributors;
and Assistant Treasurer and Chief Financial Officer of the
Treasurer Dean Witter Funds and the TCW/DW Funds.
Marilyn K. Cranney Assistant Secretary of DWR; First Vice President
First Vice President and Assistant Secretary of DWSC; Assistant
and Assistant Secretary Secretary of the Dean Witter Funds and the TCW/DW
Funds.
Barry Fink First Vice President and Assistant Secretary of
First Vice President DWSC; Assistant Secretary of the Dean Witter
and Assistant Secretary Funds and the TCW/DW Funds.
Michael Interrante First Vice President and Controller of DWSC;
First Vice President Assistant Treasurer of Distributors;First Vice
and Controller President and Treasurer of DWTC.
Robert Zimmerman
First Vice President
Joan Allman
Vice President
Joseph Arcieri
Vice President Vice President of various Dean Witter Funds.
Kirk Balzer
Vice President Vice President of Dean Witter Mid-Cap Growth Fund
Douglas Brown
Vice President
Philip Casparius
Vice President
Thomas Chronert
Vice President
Rosalie Clough
Vice President
8
<PAGE>
NAME AND POSITION OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Patricia A. Cuddy
Vice President Vice President of various Dean Witter Funds.
B. Catherine Connelly
Vice President
Salvatore DeSteno
Vice President Vice President of DWSC.
Frank J. DeVito
Vice President Vice President of DWSC.
Dwight Doolan
Vice President
Bruce Dunn
Vice President
Jeffrey D. Geffen
Vice President
Deborah Genovese
Vice President
Peter W. Gurman
Vice President
John Hechtlinger
Vice President
Peter Hermann
Vice President Vice President of various Dean Witter Funds
Elizabeth Hinchman
Vice President
David Hoffman
Vice President
David Johnson
Vice President
Christopher Jones
Vice President
James Kastberg
Vice President
Stanley Kapica
Vice President
9
<PAGE>
NAME AND POSITION OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Michael Knox
Vice President Vice President of various Dean Witter Funds
Konrad J. Krill
Vice President Vice President of various Dean Witter Funds.
Paula LaCosta
Vice President Vice President of various Dean Witter Funds.
Thomas Lawlor
Vice President
Gerard Lian
Vice President Vice President of various Dean Witter Funds.
LouAnne D. McInnis Vice President and Assistant Secretary of DWSC;
Vice President and Assistant Secretary of the Dean Witter Funds and
Assistant Secretary the TCW/DW Funds.
Sharon K. Milligan
Vice President
Julie Morrone
Vice President
David Myers
Vice President
James Nash
Vice President
Richard Norris
Vice President
Anne Pickrell
Vice President Vice President of Dean Witter Global Short-
Term Income Fund Inc.
Hugh Rose
Vice President
Robert Rossetti
Vice President
Ruth Rossi Vice President and Assistant Secretary of DWSC;
Vice President and Assistant Secretary of the Dean Witter Funds and
Assistant Secretary the TCW/DW Funds.
Carl F. Sadler
Vice President
10
<PAGE>
NAME AND POSITION OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Rafael Scolari
Vice President Vice President of Prime Income Trust
Peter Seeley Vice President of Dean Witter World
Vice President Wide Income Trust
Jayne M. Stevlingson
Vice President Vice President of various Dean Witter Funds.
Kathleen Stromberg
Vice President Vice President of various Dean Witter Funds.
Vinh Q. Tran
Vice President Vice President of various Dean Witter Funds.
Alice Weiss
Vice President Vice President of various Dean Witter Funds.
Marianne Zalys
Vice President
Item 29. PRINCIPAL UNDERWRITERS
(a) Dean Witter Distributors Inc. ("Distributors"), a Delaware
corporation, is the principal underwriter of the Registrant.
Distributors is also the principal underwriter of the following
investment companies:
(1) Dean Witter Liquid Asset Fund Inc.
(2) Dean Witter Tax-Free Daily Income Trust
(3) Dean Witter California Tax-Free Daily Income Trust
(4) Dean Witter Retirement Series
(5) Dean Witter Dividend Growth Securities Inc.
(6) Dean Witter Global Asset Allocation
(7) Dean Witter World Wide Investment Trust
(8) Dean Witter Capital Growth Securities
(9) Dean Witter Convertible Securities Trust
(10) Active Assets Tax-Free Trust
(11) Active Assets Money Trust
(12) Active Assets California Tax-Free Trust
(13) Active Assets Government Securities Trust
(14) Dean Witter Short-Term Bond Fund
(15) Dean Witter Mid-Cap Growth Fund
(16) Dean Witter U.S. Government Securities Trust
(17) Dean Witter High Yield Securities Inc.
(18) Dean Witter New York Tax-Free Income Fund
(19) Dean Witter Tax-Exempt Securities Trust
(20) Dean Witter California Tax-Free Income Fund
(21) Dean Witter Limited Term Municipal Trust
(22) Dean Witter Natural Resource Development Securities Inc.
(23) Dean Witter World Wide Income Trust
(24) Dean Witter Utilities Fund
(25) Dean Witter Strategist Fund
11
<PAGE>
(26) Dean Witter New York Municipal Money Market Trust
(27) Dean Witter Intermediate Income Securities
(28) Prime Income Trust
(29) Dean Witter European Growth Fund Inc.
(30) Dean Witter Developing Growth Securities Trust
(31) Dean Witter Precious Metals and Minerals Trust
(32) Dean Witter Pacific Growth Fund Inc.
(33) Dean Witter Multi-State Municipal Series Trust
(34) Dean Witter Federal Securities Trust
(35) Dean Witter Short-Term U.S. Treasury Trust
(36) Dean Witter Diversified Income Trust
(37) Dean Witter Health Sciences Trust
(38) Dean Witter Global Dividend Growth Securities
(39) Dean Witter American Value Fund
(40) Dean Witter U.S. Government Money Market Trust
(41) Dean Witter Global Short-Term Income Fund Inc.
(42) Dean Witter Premier Income Trust
(43) Dean Witter Value-Added Market Series
(44) Dean Witter Global Utilities Fund
(45) Dean Witter High Income Securities
(46) Dean Witter National Municipal Trust
(47) Dean Witter International SmallCap Fund
(48) Dean Witter Balanced Growth Fund
(49) Dean Witter Balanced Income Fund
(50) Dean Witter Hawaii Municipal Trust
(51) Dean Witter Variable Investment Series
(52) Dean Witter Capital Appreciation Fund
(53) Dean Witter Intermediate Term U.S. Treasury Trust
(54) Dean Witter Information Fund
(55) Dean Witter Japan Fund
(56) Dean Witter Income Builder Fund
(1) TCW/DW Core Equity Trust
(2) TCW/DW North American Government Income Trust
(3) TCW/DW Latin American Growth Fund
(4) TCW/DW Income and Growth Fund
(5) TCW/DW Small Cap Growth Fund
(6) TCW/DW Balanced Fund
(7) TCW/DW Total Return Trust
(8) TCW/DW Mid-Cap Equity Trust
(b) The following information is given regarding directors and officers
of Distributors not listed in Item 28 above. The principal address of
Distributors is Two World Trade Center, New York, New York 10048. None
of the following persons has any position or office with the Registrant.
Positions and
Office with
Name Distributors
- ------------------------------- -------------------------------------
Fredrick K. Kubler Senior Vice President, Assistant
Secretary and Chief Compliance
Officer.
Michael T. Gregg Vice President and Assistant
Secretary.
12
<PAGE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are maintained by the Investment Manager at its offices, except
records relating to holders of shares issued by the Registrant, which are
maintained by the Registrant's Transfer Agent, at its place of business as
shown in the prospectus.
Item 31. MANAGEMENT SERVICES
Registrant is not a party to any such management-related service
contract.
Item 32. UNDERTAKINGS
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York and State of
New York on the 28th day of May, 1996.
DEAN WITTER WORLD WIDE INVESTMENT TRUST
By /s/ Sheldon Curtis
----------------------------
Sheldon Curtis
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 14 has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
(1) Principal Executive Officer President, Chief
Executive Officer,
Trustee and Chairman
By /s/ Charles A. Fiumefreddo 05/28/96
--------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By /s/ Thomas F. Caloia 05/28/96
--------------------------
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman)
Philip J. Purcell
By /s/ Sheldon Curtis 05/28/96
--------------------------
Sheldon Curtis
Attorney-in-Fact
Michael Bozic Paul Kolton
Edwin J. Garn Michael E. Nugent
John R. Haire John L. Schroeder
Manuel H. Johnson
By /s/ David M. Butowsky 05/28/96
---------------------------
David M. Butowsky
Attorney-in-Fact
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
EXHIBIT INDEX
11. -- Consent of Independent Accountants
15. -- Form of Amended and Restated Plan of Distribution between
Registrant and Dean Witter Distributors Inc.
16. -- Schedule for Computation of Performance Quotations
27. -- Financial Data Schedule
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 14 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated May
10, 1996, relating to the financial statements and financial highlights of Dean
Witter World Wide Investment Trust, which appears in such Statement of
Additional Information, and to the incorporation by reference of our report into
the Prospectus which constitutes part of this Registration Statement. We also
consent to the references to us under the headings "Independent Accountants" and
"Experts" in such Statement of Additional Information and to the reference to us
under the heading "Financial Highlights" in such Prospectus.
/s/ Price Waterhouse LLP
- -----------------------------
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
May 28, 1996
<PAGE>
AMENDED AND RESTATED PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
DEAN WITTER WORLD WIDE INVESTMENT TRUST
WHEREAS, Dean Witter World Wide Investment Trust (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, on April 28, 1993, the Fund most recently amended and restated a
Plan of Distribution pursuant to Rule 12b-1 under the Act which had initially
been adopted on August 26, 1983, and the Trustees then determined that there was
a reasonable likelihood that adoption of the Plan of Distribution, as then
amended and restated, would benefit the Fund and its shareholders; and
WHEREAS, the Trustees believe that continuation of said Plan of
Distribution, as amended and restated herein, is reasonably likely to continue
to benefit the Fund and its shareholders; and
WHEREAS, on October 16, 1984, the Fund and Dean Witter Reynolds Inc. ("DWR")
amended and restated a Distribution Agreement which had initially been adopted
on August 23, 1983, pursuant to which the Fund employed DWR as distributor of
the Fund's shares; and
WHEREAS, on January 4, 1993, the Fund and DWR substituted Dean Witter
Distributors Inc. (the "Distributor") in the place of DWR as distributor of the
Fund's shares; and
WHEREAS, the Fund, DWR and the Distributor intend that DWR will continue to
promote the sale of Fund shares and provide personal services to Fund
shareholders with respect to their holdings of Fund shares; and
WHEREAS, the Fund and the Distributor entered into a separate Distribution
Agreement dated as of June 30, 1993, pursuant to which the Fund has employed the
Distributor in such capacity during the continuous offering of shares of the
Fund.
NOW, THEREFORE, the Fund hereby amends the Plan of Distribution previously
adopted and amended and restated, and the Distributor hereby agrees to the terms
of said Plan of Distribution (the "Plan"), as amended herein, in accordance with
Rule 12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of securities
of which the Fund is the issuer, compensation for distribution of its
shares at the rate of the lesser of (i) 1.0% per annum of the average daily
aggregate sales of the shares of the Fund since its inception (not including
reinvestment of dividends and capital gains distributions from the Fund) less
the average daily aggregate net asset value of the shares of the Fund redeemed
since the Fund's inception upon which a contingent deferred sales charge has
been imposed or upon which such charge has been waived, or (ii) 1.0% per annum
of the Fund's average daily net assets. Such compensation shall be calculated
and accrued daily and paid monthly or at such other intervals as the Trustees
shall determine. The Distributor may direct that all or any part of the amounts
receivable by it under this Plan be paid directly to DWR, its affiliates or
other broker-dealers who provide distribution and shareholder services. All
payments made hereunder pursuant to the Plan shall be in accordance with the
terms and limitations of the Rules of Fair Practice of the National Association
of Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan shall be paid for
services of the Distributor, DWR, its affiliates and other broker-dealers
it may select in connection with the distribution of the Fund's shares,
including personal services to shareholders with respect to their holdings of
Fund shares, and may be spent by the Distributor, DWR, its affiliates and such
broker-dealers on any activities or expenses related to the distribution of the
Fund's shares or services to shareholders, including, but not limited to:
compensation to, and expenses of, account executives or other employees of the
Distributor, DWR, its affiliates or other broker-dealers; overhead and other
branch office distribution-related expenses and telephone expenses of persons
who engage in or support distribution of shares or who provide personal services
to shareholders; printing of prospectuses and reports for other than existing
shareholders; preparation, printing and distribution of sales literature and
advertising materials and opportunity costs in incurring the foregoing expenses
(which may be calculated as a carrying charge on the excess of the distribution
expenses incurred by the Distributor, DWR, its affiliates or other
broker-dealers over distribution revenues received by them, such excess being
hereinafter referred to as "carryover expenses"). The overhead and other branch
office distribution-related expenses referred to in this paragraph 2 may
include: (a) the expenses of operating the branch offices of the Distributor or
other broker-dealers, including DWR, in connection
1
<PAGE>
with the sale of Fund shares, including lease costs, the salaries and employee
benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies; (b) the costs of
client sales seminars; (c) travel expenses of mutual fund sales coordinators to
promote the sale of Fund shares; and (d) other expenses relating to branch
promotion of Fund sales. Payments may also be made with respect to distribution
expenses incurred in connection with the distribution of shares, including
personal services to shareholders with respect to holdings of such shares, of an
investment company whose assets are acquired by the Fund in a tax-free
reorganization, provided that carryover expenses as a percentage of Fund assets
will not be materially increased thereby.
3. This Plan, as amended and restated, shall not take effect until it has
been approved, together with any related agreements, by votes of a
majority of the Board of Trustees of the Fund and of the Trustees who are not
"interested persons" of the Fund (as defined in the Act) and have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Trustees"), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan and such related
agreements.
4. This Plan shall continue in effect until April 30, 1996, and from year to
year thereafter, provided such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 3
hereof.
5. The Distributor shall provide to the Trustees of the Fund and the
Trustees shall review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were made. In
this regard, the Trustees shall request the Distributor to specify such items of
expenses as the Trustees deem appropriate. The Trustees shall consider such
items as they deem relevant in making the determinations required by paragraph 4
hereof.
6. This Plan may be terminated at any time by vote of a majority of the Rule
12b-1 Trustees, or by vote of a majority of the outstanding voting
securities of the Fund. In the event of any such termination or in the event of
nonrenewal, the Fund shall have no obligation to pay expenses which have been
incurred by the Distributor, DWR, its affiliates or other broker-dealers in
excess of payments made by the Fund pursuant to this Plan. However, this shall
not preclude consideration by the Trustees of the manner in which such excess
expenses shall be treated.
7. This Plan may not be amended to increase materially the amount the Fund
may spend for distribution provided in paragraph 1 hereof unless such
amendment is approved by a vote of at least a majority (as defined in the Act)
of the outstanding voting securities of the Fund, and no material amendment to
the Plan shall be made unless approved in the manner provided for approval in
paragraph 3 hereof.
8. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Fund shall
be committed to the discretion of the Trustees who are not interested persons.
9. The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to paragraph 5 hereof, for a period of not
less than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
10.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.
2
<PAGE>
IN WITNESS WHEREOF, the Fund, the Distributor and DWR have executed this
amended and restated Plan of Distribution as of the day and year set forth below
in New York, New York.
<TABLE>
<S> <C>
Date: August 26, 1983 DEAN WITTER WORLD WIDE
As amended on July 17, 1984, INVESTMENT TRUST
January 4, 1993, April 28, 1993
and October 26, 1995
By
..........................................
Attest:
.........................................
DEAN WITTER DISTRIBUTORS INC.
By
..........................................
Attest:
.........................................
DEAN WITTER REYNOLDS INC.
By
..........................................
Attest:
.........................................
</TABLE>
3
<PAGE>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
WORLD WIDE INVESTMENT TRUST
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
_ _
| ______________________ |
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL TOTAL RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
<TABLE>
<CAPTION>
(A)
$1,000 ERV AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Mar-96 YEARS - n TOTAL RETURN - T
- ------------- ----------- ----------- ----------------------
<S> <C> <C> <C>
31-Mar-95 $1,112.00 1 11.20%
31-Mar-91 $1,454.00 5.00 7.77%
31-Mar-86 $2,262.00 10.00 8.50%
</TABLE>
(B) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(C) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL TOTAL RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
<TABLE>
<CAPTION>
(C) (B)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Mar-96 RETURN - TR YEARS - n TOTAL RETURN - t
- ------------- ----------- ----------- ----------------- ------------------------
<S> <C> <C> <C>
31-Mar-95 $1,162.00 16.20% 1 16.20%
31-Mar-91 $1,474.00 47.40% 5 8.07%
31-Mar-86 $2,262.00 126.20% 10.00 8.50%
(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000
FORMULA: G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION
TOTAL (D) GROWTH OF (E) GROWTH OF (F) GROWTH OF
INVESTED - P RETURN - TR $10,000 INVESTMENT - G $50,000 INVESTMENT - G $100,000 INVESTMENT - G
- ----------- ----------- ------------------------------------------------------------------
31-Oct-83 262.68 $36,268 $181,340 $362,680
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 502,390,869
<INVESTMENTS-AT-VALUE> 543,555,501
<RECEIVABLES> 31,685,524
<ASSETS-OTHER> 64,061
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 575,305,086
<PAYABLE-FOR-SECURITIES> 53,640,230
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,676,634
<TOTAL-LIABILITIES> 55,316,864
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 458,197,677
<SHARES-COMMON-STOCK> 28,526,474
<SHARES-COMMON-PRIOR> 32,602,082
<ACCUMULATED-NII-CURRENT> (903,011)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 21,545,082
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 41,148,474
<NET-ASSETS> 519,988,222
<DIVIDEND-INCOME> 8,833,056
<INTEREST-INCOME> 2,693,734
<OTHER-INCOME> 0
<EXPENSES-NET> 12,614,125
<NET-INVESTMENT-INCOME> (1,087,335)
<REALIZED-GAINS-CURRENT> 41,362,377
<APPREC-INCREASE-CURRENT> 36,965,641
<NET-CHANGE-FROM-OPS> 77,240,683
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (692,945)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,790,518
<NUMBER-OF-SHARES-REDEEMED> 9,903,997
<SHARES-REINVESTED> 37,871
<NET-CHANGE-IN-ASSETS> 7,729,838
<ACCUMULATED-NII-PRIOR> (5,220,531)
<ACCUMULATED-GAINS-PRIOR> (16,004,449)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,134,018
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,614,125
<AVERAGE-NET-ASSETS> 514,159,512
<PER-SHARE-NAV-BEGIN> 15.71
<PER-SHARE-NII> (.06)
<PER-SHARE-GAIN-APPREC> 2.60
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.02)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.23
<EXPENSE-RATIO> 2.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
