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Schedule 14A Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.____)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Preliminary Additional Materials
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.149-11(c) or
Section 240.14a-12
Municipal Income Trust II . . . . . . . . . . . . . . . . . . .
(Name of Registrant as Specified in its Charter)
Marilyn K. Cranney . . . . . . . . . . . . . . . . . . . . . .
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(j)(1), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(j)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(j)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2) Aggregate number of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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4) Proposed maximum aggregate value of transaction:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2) Form, Schedule or Registration Statement No.:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3) Filing Party:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4) Date Filed:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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MUNICIPAL INCOME TRUST II
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 15, 1994
The Annual Meeting of Shareholders of MUNICIPAL INCOME TRUST II (the
"Trust"), an unincorporated business trust organized under the laws of the
Commonwealth of Massachusetts, will be held in the Conference Center,
Forty-Fourth Floor, 2 World Trade Center, New York, New York 10048, on June 15,
1994 at 9:00 a.m., New York City time, for the following purposes:
1. To elect six (6) Trustees, four (4) to serve until the 1997 Annual
Meeting, one (1) to serve until the 1995 Annual Meeting and one (1) to serve
until the 1996 Annual Meeting or, in each case, until their successors shall
have been elected and qualified;
2. To approve or disapprove continuance of the currently effective
Investment Advisory Agreement with Dean Witter InterCapital Inc.;
3. To ratify or reject the selection of Price Waterhouse as the Trust's
independent accountants for the fiscal year ending December 31, 1994; and
4. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Shareholders of record as of the close of business on April 14, 1994 are
entitled to notice of and to vote at the Meeting. If you cannot be present in
person, your management would greatly appreciate your filling in, signing and
returning the enclosed proxy promptly in the envelope provided for that purpose.
In the event that the necessary quorum to transact business is not obtained
at the Meeting, the persons named as proxies may propose one or more
adjournments of the meeting for a total of not more than 60 days in the
aggregate to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of the holders of a majority of the Trust's shares
present in person or by proxy at the Meeting. The persons named as proxies will
vote in favor of such adjournment those proxies which they are entitled to vote
in favor of the proposal to approve continuance of the Investment Advisory
Agreement and will vote against any such adjournment those proxies required to
be voted against that proposal.
SHELDON CURTIS,
April 21, 1994 SECRETARY
New York, New York
IMPORTANT
YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF SENDING
FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE
ENCLOSED PROXY. IF YOU ARE UNABLE TO BE PRESENT IN PERSON, PLEASE FILL
IN, SIGN AND RETURN THE ENCLOSED PROXY IN ORDER THAT THE NECESSARY
QUORUM MAY BE REPRESENTED AT THE MEETING. THE ENCLOSED ENVELOPE
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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MUNICIPAL INCOME TRUST II
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
-----------------------
PROXY STATEMENT
-----------------------
ANNUAL MEETING OF SHAREHOLDERS
JUNE 15, 1994
This statement is furnished in connection with the solicitation of proxies
by the Trustees of MUNICIPAL INCOME TRUST II (the "Trust") for use at the Annual
Meeting of Shareholders of the Trust to be held on June 15, 1994, and at any
adjournments thereof.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon.
Unmarked proxies will be voted for each of the nominees for election as Trustee
and in favor of Proposals 2 and 3 as set forth in the Notice of Annual Meeting
of Shareholders. A proxy may be revoked at any time prior to its exercise by any
of the following: written notice of revocation, execution and delivery of a
later dated proxy to the Secretary of the Trust, or attendance and voting at the
Annual Meeting of Shareholders.
Shareholders as of the close of business on April 14, 1994, the record date
for the determination of shareholders entitled to notice of and to vote at the
Meeting, are entitled to one vote for each share held and a fractional vote for
a fractional share. On April 14, 1994 there were 28,512,316 shares of beneficial
interest of the Trust outstanding, all with $0.01 par value. No person was known
to own as much as 5% of the outstanding shares of the Trust on that date. The
Trustees and officers of the Trust, together, owned less than 1% of the Trust's
outstanding shares on that date. The percentage ownership of shares of the Trust
changes from time to time depending on purchases and sales by shareholders and
the total number of shares outstanding.
The cost of soliciting proxies for this Annual Meeting of Shareholders,
consisting principally of printing and mailing expenses, will be borne by the
Trust. The solicitation of proxies will be by mail, which may be supplemented by
solicitation by mail, telephone or otherwise through Trustees, officers and
regular employees of the Trust, or Dean Witter InterCapital Inc. ("InterCapital"
or the "Investment Adviser"), without special compensation therefor. The first
mailing of this proxy statement is expected to be made on or about April 21,
1994.
(1) ELECTION OF TRUSTEES
The number of Trustees has been fixed by the Trustees, pursuant to the
Trust's Declaration of Trust, at twelve. At the Meeting, six nominees are to be
elected to the Trust's Board of Trustees. There are presently twelve Trustees,
four of whom (Manuel H. Johnson, Paul Kolton, John L. Schroeder and Edward R.
Telling) are standing for election at this Meeting to serve until the 1997
Annual Meeting, one of whom (Philip J. Purcell) is standing for
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election at this Meeting to serve until the 1995 Annual Meeting, and one of whom
(Michael Bozic) is standing for election at this Meeting to serve until the 1996
Annual Meeting, in accordance with the Trust's Declaration of Trust, as amended.
Nine of the current twelve Trustees (Jack F. Bennett, Michael Bozic, Edwin
J. Garn, John R. Haire, John E. Jeuck, Manuel H. Johnson, Paul Kolton, Michael
E. Nugent and John L. Schroeder) are "Independent Trustees," that is, Trustees
who are not "interested persons" of the Trust, as that term is defined in the
Investment Company Act of 1940, as amended (the "Act"). The nominees for
election as Trustees have been proposed by the Trustees now serving or, in the
case of the nominees for positions as Independent Trustees, by the Independent
Trustees now serving. Messrs. Bozic, Purcell and Schroeder were elected as
Trustees by the Trustees on April 8, 1994. All of the other Trustees have been
elected by the shareholders of the Trust.
The Board of Trustees has two committees--an Audit Committee and a Committee
of the Independent Trustees--consisting, in both cases, of the Independent
Trustees of the Trust. Mr. Haire serves as the Chairman of both Committees.
There are no nominating or compensation committees of the Trustees.
The functions of the Audit Committee are: recommendation to the Trustee of
the engagement or discharge of the independent accountants; direction and
supervision of investigations into matters within the scope of the independent
accountants' duties, including the power to retain outside specialists; review
with the independent accountants of the audit plan and results of the auditing
engagement; approval of each professional service, audit and non-audit, provided
by the independent accountants and other accounting firms prior to the
performance of such service; review of the independence of the independent
accountants; consideration of the range of audit and nonaudit fees; and review
of the adequacy of the Trust's system of internal accounting controls.
The functions of the Committee of the Independent Trustees are:
recommendation of the full Board of approval of any management, advisory and/or
administration agreements; recommendation to the full Board of any underwriting
and/or distribution agreements; review of the fidelity bond and premium
allocation; review of errors and omissions, uncollectible items of deposit and
any other joint insurance policies and premium allocation; review of, and
monitoring of compliance with, procedures adopted pursuant to certain rules
promulgated under the Act and such other duties as the Independent Trustees
shall, from time to time, conclude are necessary to carry out their duties under
the Act.
The nominees of the Board of Trustees for election as Trustees are listed
below. It is the intention of the persons named in the enclosed form of proxy to
vote the shares represented by them for the election of these nominees: Manuel
H. Johnson, Paul Kolton, John L. Schroeder, Edward R. Telling, Philip J. Purcell
and Michael Bozic. Should any of the nominees become unable or unwilling to
accept nomination or election, the persons named in the proxy will exercise
their voting power in favor of such person or persons as the Board may
recommend. All of the nominees have consented to being named in this proxy
statement and to serve if elected. The Trust knows no reason why said nominees
would be unable or unwilling to accept nomination or election. Trustees will be
elected by a plurality of the votes cast at the meeting. Abstentions and broker
"non-votes" will have the same effect as a vote against the proposal.
Pursuant to the provisions of the Trust's Declaration of Trust, as amended,
the nominees for election as Trustees are divided into three separate classes,
each class having a term of three years. The term of office of one of the three
classes will expire each year.
The Board of Trustees has determined that the nominees for election as
Trustee shall stand for election as Trustee in each of the three classes of
Trustee as follows: Class I -- Messrs. Bennett, Bozic, Fiumefreddo and
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Jeuck; Class II -- Messrs. Johnson, Kolton, Schroeder and Telling; and Class III
- -- Messrs. Garn, Haire, Nugent and Purcell. Each nominee will, if elected, serve
a term of up to approximately three years running for the period assigned to
that class and terminating at the date of the Annual Meeting of Shareholders so
designated by the Board of Trustees, or any adjournment thereof. As a
consequence of this method of election, the replacement of a majority of the
Board of Trustees could be delayed for up to two years. As stated above, the
Trustees in Class II are standing for election at this meeting and, if elected,
will serve until the 1997 Annual Meeting or until their successors shall have
been elected and qualified, one Trustee in Class III is standing for election at
this Meeting and, if elected, will serve until the 1995 Annual Meeting or until
his successor shall have been elected and qualified, and one Trustee in Class I
is standing for election at this Meeting and, if elected, will serve until the
1996 Annual Meeting or until his successor shall have been elected and
qualified.
The following information regarding each of the nominees for election as
Trustee includes his principal occupations and employment for at least the last
five years, his age, shares of the Trust owned, if any, as of April 14, 1994
(shown in parentheses), positions with the Trust, and directorships (or
trusteeships) in other companies which file periodic reports with the Securities
and Exchange Commission, including other investment companies for which
InterCapital serves as investment manager or investment adviser, namely,
InterCapital Income Securities Inc., Dean Witter High Yield Securities Inc.,
Dean Witter American Value Fund, Dean Witter Tax-Exempt Securities Trust, Dean
Witter Tax-Free Daily Income Trust, Dean Witter Natural Resource Development
Securities Inc., Dean Witter Dividend Growth Securities Inc., Dean Witter Liquid
Asset Fund Inc., Dean Witter Variable Investment Series, Dean Witter Select
Municipal Reinvestment Fund, Dean Witter U.S. Government Money Market Trust,
Dean Witter U.S. Government Securities Trust, Dean Witter World Wide Investment
Trust, Dean Witter Developing Growth Securities Trust, Dean Witter California
Tax-Free Income Fund, Dean Witter New York Tax-Free Income Fund, Dean Witter
Government Income Trust, Dean Witter Federal Securities Trust, Dean Witter New
York Municipal Money Market Trust, Dean Witter European Growth Fund Inc., Dean
Witter Capital Growth Securities, Dean Witter Precious Metals and Minerals
Trust, Dean Witter Pacific Growth Fund Inc., Dean Witter Multi-State Municipal
Series Trust, Dean Witter Global Short-Term Income Fund Inc., Dean Witter
Premier Income Trust, Dean Witter Short-Term U.S. Treasury Trust, Dean Witter
Diversified Income Trust, InterCapital Insured Municipal Bond Trust,
InterCapital Quality Municipal Investment Trust, InterCapital Quality Municipal
Income Trust, InterCapital Insured Municipal Trust, InterCapital Insured
Municipal Income Trust, InterCapital California Insured Municipal Income Trust,
High Income Advantage Trust, Dean Witter Value-Added Market Series, Dean Witter
Utilities Fund, Municipal Income Trust, Municipal Income Opportunities Trust,
Dean Witter California Tax-Free Daily Income Trust, Dean Witter Managed Assets
Trust, Dean Witter Strategist Fund, High Income Advantage Trust II, High Income
Advantage Trust III, Municipal Premium Income Trust, Dean Witter Convertible
Securities Trust, Dean Witter Intermediate Income Securities, Dean Witter World
Wide Income Trust, Dean Witter Health Sciences Trust, Dean Witter Retirement
Series, Municipal Income Opportunities Trust II, Municipal Income Opportunities
Trust III, Municipal Income Trust III, Prime Income Trust, Active Assets Money
Trust, Active Assets California Tax-Free Trust, Active Assets Tax-Free Trust,
Active Assets Government Securities Trust, InterCapital Quality Municipal
Securities, InterCapital California Quality Municipal Securities, InterCapital
New York Quality Municipal Securities, InterCapital Insured Municipal
Securities, InterCapital Insured California Municipal Securities, Dean Witter
Global Dividend Growth Securities, Dean Witter Limited Term Municipal Trust,
Dean Witter Short-Term Bond Fund and Dean Witter Global Utilities Fund (said
investment companies, together with the Trust, are referred to herein
collectively as the "Dean Witter Funds"), and investment companies for which
InterCapital's wholly-owned subsidiary, Dean Witter Services Company Inc.
("DWSC"), serves as manager and TCW Funds Management, Inc. serves as investment
adviser, namely, TCW/DW Core Equity Trust, TCW/DW North American Government
Income Trust, TCW/DW Latin
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American Growth Fund, TCW/DW Income and Growth Fund, TCW/DW Balanced Fund,
TCW/DW Small Cap Growth Fund, TCW/DW North American Intermediate Income 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").
The nominees for Trustee to be elected at this Meeting are:
MICHAEL BOZIC, Trustee since April, 1994; age 53; President and Chief
Executive Officer of Hills Department Stores (since May, 1991); formerly
Chairman and Chief Executive Officer (January, 1987-August, 1990) and President
and Chief Operating Officer (August, 1990-February, 1991) of the Sears
Merchandise Group of Sears, Roebuck and Co. ("Sears"); Director or Trustee of
the Dean Witter Funds; Director of Harley Davidson Credit Inc., the United Negro
College Fund and Domain Inc. (home decor retailer).
DR. MANUEL H. JOHNSON, Trustee since July, 1991; age 45; Senior Partner,
Johnson Smick International, Inc., a consulting firm; Koch Professor of
International Economics and Director of the Center for Global Market Studies at
George Mason University (since September, 1990); Co-Chairman and a founder of
the Group of Seven Council (G7C), an international economic commission (since
September, 1990); Director or Trustee of the Dean Witter Funds; Trustee of the
TCW/DW Funds; Director of Greenwich Capital Markets Inc.. (broker-dealer);
formerly Vice Chairman of the Board of Governors of the Federal Reserve System
(February, 1988-August 1990) and Assistant Secretary of the U.S. Treasury
(1982-1986).
PAUL KOLTON, Trustee since April, 1988; age 70; Director or Trustee of the
Dean Witter Funds; Chairman of the Audit Committee and Chairman of the Committee
of the Independent Trustees and Trustee of the
TCW/DW Funds; formerly Chairman of the Financial Accounting Standards Advisory
Council; formerly Chairman and Chief Executive Officer of the American Stock
Exchange; Director of UCC Investors Holding Inc. (Uniroyal Chemical Company
Inc.); director or trustee of various not-for-profit organizations.
PHILIP J. PURCELL,* Trustee since April, 1994; age 50; Chairman of the Board
of Directors and Chief Executive Officer of Dean Witter, Discover & Co.
("DWDC"), Dean Witter Reynolds Inc. ("DWR") and Novus Credit Services Inc.;
Director of InterCapital, DWSC and Dean Witter Distributors Inc.
("Distributors"); Director or Trustee of the Dean Witter Funds; Director and/or
officer of various DWDC subsidiaries.
JOHN L. SCHROEDER, Trustee since April, 1994; age 63; Executive Vice
President and Chief Investment Officer of The Home Insurance Company (since
August, 1991); Director or Trustee of the Dean Witter Funds; Director of
Citizens Utilities Company; formerly Chairman and Chief Investment Officer of
Axe-Houghton Management and the Axe-Houghton Funds (April, 1983-June, 1991) and
President of USF&G Financial Services, Inc. (June, 1990-June, 1991).
EDWARD R. TELLING,* Trustee since April, 1988; age 75; Retired; Director or
Trustee of the Dean Witter Funds; formerly Chairman of the Board of Directors
and Chief Executive Officer (1978-1985) and President (from January, 1981-March,
1982 and from February, 1984-August, 1984) of Sears; formerly Director of Sears.
The Trustees who are not standing for reelection at this Meeting are:
JACK F. BENNETT, Trustee since April, 1988; age 70; Retired; Director or
Trustee of the Dean Witter Funds; formerly Senior Vice President and Director of
Exxon Corporation (1975-January, 1989) and Under Secretary of
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*Messrs. Fiumefreddo, Purcell and Telling may be deemed "interested persons"
of the Trust and its Investment Adviser as defined in Section 2(a)(19) of the
Act, due to their affiliation with the Investment Adviser and/or its affiliated
companies.
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the U.S. Treasury for Monetary Affairs (1974-1975); Director of Philips
Electronics N.V., Tandem Computers Inc. and Massachusetts Mutual Insurance Co.;
Director or Trustee of various other not-for-profit and business organizations.
CHARLES A. FIUMEFREDDO,* Trustee since July, 1991; age 60; Chairman, Chief
Executive Officer and Director of InterCapital, DWSC and Distributors; Executive
Vice President and Director of DWR; Chairman, Director or Trustee, President and
Chief Executive Officer of the Dean Witter Funds; Chairman, Chief Executive
Officer and Trustee of the TCW/DW Funds; Chairman and Director of Dean Witter
Trust Company ("DWTC"); Director of various DWDC subsidiaries; formerly
Executive Vice President and Director of DWDC (until February 1993).
EDWIN JACOB (JAKE) GARN, Trustee since January, 1993; age 61; Director or
Trustee of the Dean Witter Funds; formerly United States Senator (R-Utah)
(1974-1992), and Chairman, Senate Banking Committee (1980-1986); formerly Mayor
of Salt Lake City, Utah (1971-1974); formerly Astronaut, Space Shuttle Discovery
(April 12-19, 1985); Vice Chairman, Huntsman Chemical Corporation (since
January, 1993); Member of the board of various civic and charitable
organizations.
JOHN R. HAIRE, Trustee since April, 1988; age 69; Chairman of the Audit
Committee and Chairman of the Committee of the Independent Directors or Trustees
and Director or Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds;
formerly President, Council for Aid to Education (from 1978-October, 1989) and
Chairman and Chief Executive Officer of Anchor Corporation, an investment
adviser (1964-1978); Director of Washington National Corporation (insurance) and
Bowne & Co., Inc. (printing).
DR. JOHN E. JEUCK, Trustee since April, 1988; age 77; Retired; Director or
Trustee of the Dean Witter Funds; formerly Robert Law Professor of Business
Administration, Graduate School of Business, University of Chicago (until July,
1989); Business consultant.
MICHAEL E. NUGENT, Trustee since July, 1991; age 58; General Partner,
Triumph Capital, L.P., a private investment partnership (since April, 1988);
Director or Trustee of the Dean Witter Funds; Trustee of the
TCW/DW Funds; formerly Vice President, Bankers Trust Company and BT Capital
Corporation (September, 1984-March 1988); Director of various business
organizations.
The executive officers of the Trust other than shown above are: Sheldon
Curtis, Vice President, Secretary and General Counsel; Robert M. Scanlan, Vice
President; David A. Hughey, Vice President; Edmund C. Puckhaber, Vice President;
James F. Willison, Vice President; and Thomas F. Caloia, Treasurer. In addition,
Peter M. Avelar, Jonathan R. Page, Katherine H. Stromberg and Joseph Arcieri
serve as Vice Presidents and Marilyn K. Cranney, Barry Fink, Lawrence S. Lafer,
Lou Anne D. McInnis and Ruth Rossi serve as Assistant Secretaries. Mr. Curtis is
62 years old and is currently Senior Vice President, Secretary and General
Counsel of InterCapital and DWSC and Assistant Secretary of DWR and DWDC; he is
also Senior Vice President, Assistant Secretary and Assistant General Counsel of
Distributors and Senior Vice President and Secretary of DWTC. Mr. Scanlan is 58
years old and is currently President and Chief Operating Officer of InterCapital
(since March 1993) and DWSC; he is also Executive Vice President of Distributors
and Executive Vice President and Director of DWTC. He was previously Executive
Vice President of InterCapital (November, 1990-March, 1993) and prior thereto
was Chairman of
- ------------------------
*Messrs. Fiumefreddo, Purcell and Telling may be deemed "interested persons"
of the Trust and its Investment Adviser as defined in Section 2(a)(19) of the
Act, due to their affiliation with the Investment Adviser and/or its affiliated
companies.
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Harborview Group Inc. Mr. Hughey is 62 years old and is currently Executive Vice
President and Chief Administrative Officer of InterCapital and DWSC; he is also
Executive Vice President and Chief Administrative Officer of Distributors and
DWTC as well as a Director of DWTC. He was previously President of DWTC
(October, 1989-March, 1993). Mr. Puckhaber is 53 years old and is currently
Executive Vice President of InterCapital (since January, 1991). Mr. Willison is
50 years old and is currently Senior Vice President of InterCapital. Mr. Caloia
is 47 years old and is currently First Vice President and Assistant Treasurer of
InterCapital and DWSC. Mr. Avelar is 34 years old and is currently Senior Vice
President of InterCapital. He was previously employed by PaineWebber Asset
Management as a senior portfolio manager (March, 1989-December, 1990). Mr. Page
is 47 years old and is currently Senior Vice President of InterCapital. Ms.
Stromberg is 45 years old and is currently Vice President of InterCapital (since
April, 1992). She was formerly a portfolio manager with InterCapital (October,
1991-April, 1992) and Vice President of Kidder Peabody Asset Management
(October, 1985-October, 1991). Mr. Arcieri is 45 years old and is currently Vice
President of InterCapital. Other than Messrs. Scanlan and Avelar and Ms.
Stromberg, each of the above officers has been an employee of InterCapital or
DWR (formerly the corporate parent of InterCapital) for over five years.
Messrs. Fiumefreddo, Purcell and Telling, Trustees of the Trust, and
officers of the Trust own securities of DWDC which in the aggregate constitute
less than 1% of the securities of each class outstanding.
Each of the Independent Trustees is paid by the Trust an annual retainer fee
of $1,200 plus $50 for each meeting of the Board of Trustees, the Audit
Committee or the Committee of the Independent Trustees attended by the Trustee
in person (the Trust pays the Chairman of the Audit Committee an additional
annual fee of $1,000 and pays the Chairman of the Committee of the Independent
Trustees an additional annual fee of $2,400, in each case inclusive of the
Committee meeting fees), together with any out-of-pocket expenses incurred in
connection with attendance at any such meetings. The Trust pays no remuneration
to any Trustee who is not an Independent Trustee or to any of the Trust's
officers. The Trust has adopted a retirement program under which an Independent
Trustee who retires after a minimum required period of service would be entitled
to retirement payments upon reaching the eligible retirement date (normally,
after attaining age 72) based upon length of service and computed as a
percentage of one-fifth of the total compensation earned by such Trustee for
service to the Trust in the five-year period prior to the date of the Trustee's
retirement. For the fiscal year ended December 31, 1993, the Trust accrued a
total of $20,385 in Trustees' fees and expenses and a total of $12,232 for
benefits under the retirement program. During the fiscal year ended December 31,
1993, the Board of Trustees held four meetings, and the Audit Committee of the
Board and the Committee of the Independent Trustees, which are presently
comprised of the nine Independent Trustees, held three meetings and ten
meetings, respectively. No Independent Trustee attended fewer than 75% of the
meetings of the Board of Trustees, the Audit Committee and the Committee of the
Independent Trustees held while he served in such positions.
(2) APPROVAL OR DISAPPROVAL OF CURRENTLY
EFFECTIVE INVESTMENT ADVISORY AGREEMENT
The Trust's investments are managed by Dean Witter InterCapital Inc.
(referred to herein as the "Investment Adviser" or "InterCapital"), pursuant to
an Investment Advisory Agreement dated June 30, 1993 (referred to herein as the
"Advisory Agreement") which took effect upon the distribution by Sears to its
shareholders of all the common shares of DWDC (the parent company of
InterCapital) then owned by Sears. The Advisory Agreement was approved by the
Board of Trustees on October 30, 1992 and by the shareholders of the Trust at a
special meeting of shareholders held on February 25, 1993. The Advisory
Agreement was approved for an initial term ending April 30, 1994. The present
Advisory Agreement supersedes an earlier advisory agreement also approved
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by shareholders on February 25, 1993 in connection with the assumption by
InterCapital of the investment advisory activities previously performed by
another investment adviser and which took effect on March 1, 1993. The terms of
the Advisory Agreement are described below. The Agreement's continuation until
April 30, 1995 was approved by the Trustees, including a majority of the
Independent Trustees, at a meeting of the Board held on April 8, 1994. In the
event shareholders do not approve continuance of the Advisory Agreement by the
required majority vote at the forthcoming meeting or any adjournment thereof,
the Board of Trustees of the Trust will take such action as it deems to be in
the best interest of the Trust and its shareholders, which may include calling a
special meeting of shareholders to vote on a new investment advisory agreement.
In considering whether or not to approve the Advisory Agreement, the Board
of Trustees reviewed the terms of the agreement and considered all materials and
information deemed relevant to its determination. Among other things, the Board
considered the nature and scope of services to be rendered, the quality of the
Adviser's services and personnel, and the appropriateness of the fees that are
paid under the Advisory Agreement. Based upon its review, the Board of Trustees,
including all of the Independent Trustees, determined that the approval of the
Advisory Agreement was in the best interests of the Trust and its shareholders.
The favorable vote of a majority of the outstanding voting securities of the
Trust is required for the approval of the Advisory Agreement. Such a majority is
defined in the Act as the lesser of: (a) 67% or more of the shares present at
the Meeting, if the holders of more than 50% of the outstanding shares of the
Trust are present or represented by proxy, or (b) more than 50% of the
outstanding shares.
THE INDEPENDENT TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS
APPROVED THE ADVISORY AGREEMENT.
THE ADVISORY AGREEMENT
The Advisory Agreement provides that the Investment Adviser shall
continuously manage the assets of the Trust in a manner consistent with the
Trust's investment objectives. The Investment 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 Trust in a manner consistent with its investment objectives and policies.
In addition, the Investment Adviser pays the compensation of all personnel,
including officers of the Trust, who are its employees. The Investment Adviser
has authority to place orders for the purchase and sale of portfolio securities
on behalf of the Trust without prior approval of its Trustees. The Trustees
review the investment portfolio at their regular meetings. In return for its
investment services and the expenses which the Investment Adviser assumes under
the Advisory Agreement, the Trust pays the Investment Adviser compensation which
is computed weekly and payable monthly and which is determined by applying the
following annual rates to the Trust's weekly net assets: 0.40% of the portion of
the average weekly net assets not exceeding $250 million and 0.30% of the
portion of average weekly net assets exceeding $250 million. Pursuant to the
Advisory Agreement, the Trust accrued to the Investment Adviser total
compensation of $985,218 during the period from March 1, 1993 through December
31, 1993. The net assets of the Trust totalled $310,180,464 at December 31,
1993.
Under the Advisory Agreement, the Trust is obligated to bear all of the
costs and expenses of its operation, except those specifically assumed by the
Investment Adviser, including, without limitation: charges and expenses of any
registrar, custodian or depository appointed by the Trust for the safekeeping of
its cash, portfolio securities or commodities and other property, and any stock
transfer or dividend agent or agents appointed by the Trust; brokers'
commissions chargeable to the Trust in connection with portfolio securities
transactions to which the Trust is a party; all taxes, including securities or
commodities issuance and transfer taxes, and fees payable by the Trust to
Federal, state or other governmental agencies; costs and expenses of engraving
or printing certificates
8
<PAGE>
representing shares of the Trust; all costs and expenses in connection with
registration and maintenance of registration of the Trust and of its shares with
the Securities and Exchange Commission and various states and other
jurisdictions (including filing fees and legal fees and disbursements of
counsel); the costs and expense of preparing, printing (including typesetting)
and distributing prospectuses for such purposes; 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 Trust's
administrator or Investment Adviser or any of their corporate affiliates; all
expenses incident to the payment of any dividend or distribution program;
charges and expenses of any outside pricing services; charges and expenses of
legal counsel, including counsel to the Independent Trustees of the Trust, and
independent accountants in connection with any matter relating to the Trust (not
including compensation or expenses of attorneys employed by the Trust's
administrator or Investment Adviser); membership dues of industry associations;
interest payable on Trust borrowings; fees and expenses incident to the listing
of the Trust's shares on any stock exchange; postage; insurance premiums on
property or personnel (including officers and Trustees) of the Trust which inure
to its benefit; extraordinary expenses (including, but not limited to, legal
claims, liabilities, litigation costs and any indemnification related thereto);
and all other charges and costs of the Trust's operations unless otherwise
explicitly provided in the Advisory Agreement.
The Advisory Agreement also provides that it may be terminated at any time
by the Investment Adviser, the Trustees of the Trust or by a vote of a majority
of the outstanding voting securities of the Trust, in each instance without the
payment of any penalty, on thirty days' notice and will automatically terminate
upon any assignment.
THE INVESTMENT ADVISER
Dean Witter InterCapital Inc. is the Trust's investment adviser.
InterCapital maintains its offices at Two World Trade Center, New York, New York
10048. InterCapital, which was incorporated in July, 1992, is a wholly-owned
subsidiary of Dean Witter, Discover & Co. ("DWDC"), a balanced financial
services organization providing a broad range of nationally marketed credit and
investment products. In an internal reorganization which took place in January,
1993, InterCapital assumed the investment advisory, management and
administrative activities previously performed by the InterCapital Division of
DWR.
InterCapital's wholly-owned subsidiary, DWSC, serves as the Administrator of
the Trust and receives from the Trust compensation which is computed weekly and
payable monthly and which is determined by applying the annual rate of 0.30% to
the Trust's weekly net assets. Prior to December 31, 1993, InterCapital served
as Administrator of the Trust and received compensation at the same annual rate.
For the fiscal year ended December 31, 1993, the Trust accrued to InterCapital,
pursuant to an Administration Agreement, total compensation of $739,785.
The Principal Executive Officer and Directors of InterCapital, and their
principal occupations, are:
Philip J. Purcell, Chairman of the Board of Directors and Chief Executive
Officer of DWDC and DWR and Director of InterCapital, DWSC and Distributors;
Richard M. DeMartini, President, Chief Operating Officer of Dean Witter Capital
and Director of DWR, Distributors, InterCapital and DWSC; James F. Higgins,
President, Chief Operating Officer of Dean Witter Financial and Director of DWR,
Distributors, InterCapital and DWSC; Charles A. Fiumefreddo, Executive Vice
President and Director of DWR and Chairman of the Board of Directors and Chief
Executive Officer of InterCapital, DWSC and Distributors; Christine A. Edwards,
Executive Vice President, Secretary, General Counsel and Director of DWR and
Distributors and Director of InterCapital and DWSC; and Thomas C. Schneider,
Executive Vice President, Chief Financial Officer and Director of DWR,
Distributors, InterCapital and DWSC.
9
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The business address of the foregoing Directors and Executive Officers is
Two World Trade Center, New York, New York 10048.
InterCapital and DWSC serve in various investment management, advisory,
management and administrative capacities to investment companies and pension
plans and other institutional and individual investors. The Appendix lists the
investment companies for which InterCapital provides investment management or
investment advisory services and sets forth the net assets of and the fees
payable by such companies.
DWDC has its offices at Two World Trade Center, New York, New York 10048.
There are various lawsuits pending against DWDC involving material amounts
which, in the opinion of its management, will be resolved with no material
effect on the consolidated financial position of the company.
During the fiscal year ended December 31, 1993, the Trust accrued to Dean
Witter Trust Company, the Trust's Transfer Agent and an affiliate of the
Investment Adviser, transfer agency fees of $139,250.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Trustees, the Investment
Adviser is responsible for decisions to buy and sell securities and futures
contracts for the Trust, the selection of brokers and dealers to effect the
transactions, and the negotiation of brokerage commissions, if any. Purchases of
portfolio securities are made from dealers, underwriters and issuers; sales, if
any, prior to maturity, are made to dealers and issuers. The Trust does not
normally incur any brokerage commission expense on such transactions. In
accordance with its investment policies, the Trust's principal investments are
in debt securities which are generally traded in the over-the-counter market on
a "net" basis with dealers acting as principal for their own accounts without a
stated commission, although the price of the security usually includes a profit
to the dealer. Securities purchased in underwritten offerings include a fixed
amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. When securities are purchased or sold
directly from or to an issuer, no commissions or discounts are paid. Options and
futures transactions will usually be effected through a broker and a commission
will be charged. The Trust may also purchase certain money market instruments
directly from an issuer, in which case no commissions or discounts are paid.
The policy of the Trust regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable price and efficient execution of transactions. In seeking to implement
the Trust's policy, the Investment Adviser will effect transactions with those
dealers who the Investment Adviser believes provide the most favorable prices
and are capable of providing efficient executions. If the Investment Adviser
believes such price and execution can be obtained from more than one dealer, it
may give consideration to placing portfolio transactions with those dealers who
also furnish research and other services to the Trust or the Investment 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. In
transactions effected with a dealer acting as principal, who furnishes research
services to the Trust, the Trust will not purchase securities at a higher price
or sell securities at a lower price, than would be the case if the dealer had
not furnished such services.
The information and services received by the Investment Adviser brokers and
from dealers may be of benefit to the Investment Adviser in the management of
accounts of some or all of its other clients and may not in all cases benefit
the Trust directly. While such services are useful and important in
supplementing its own research and facilities, the Investment Adviser believes
the value of such services is not determinable and does not significantly
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reduce its expenses. The Trust does not reduce the management fee it pays to the
Investment Adviser by any amount that may be attributable to the value of such
services. During the fiscal year ended December 31, 1993, the Trust did not pay
any brokerage commissions. During the same period, the portfolio turnover rate
of the Trust was 12%.
Consistent with the policies described above, brokerage transactions in
securities listed on exchanges or admitted to unlisted trading privileges may be
effected through DWR. In order for DWR to effect any portfolio transactions for
the Trust, the commissions, fees or other remuneration received by DWR must be
reasonable and fair compared to the commissions, fees or other remuneration paid
to other brokers in connection with comparable transactions involving similar
securities being purchased or sold on an exchange during a comparable period of
time. This standard would allow DWR to receive no more than the remuneration
which would be expected to be received by an unaffiliated broker in a
commensurate arm's-length transaction. Furthermore, the Trustees of the Trust,
including a majority of the Independent Trustees, have adopted procedures which
are reasonably designed to provide that any commissions, fees or other
remuneration paid to DWR are consistent with the foregoing standard.
(3) RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Trustees have unanimously selected the firm of Price Waterhouse as the
Trust's independent accountants for the fiscal year ending December 31, 1994.
Price Waterhouse has been the independent accountants for the Trust since its
inception, and have no direct or indirect financial interest in the Trust.
A representative of Price Waterhouse is expected to be present at the Annual
Meeting of Shareholders and will be available to make a statement, if he or she
so desires, and to respond to appropriate questions of shareholders.
The affirmative vote of the holders of a majority of the shares represented
and entitled to vote at the Annual Meeting is required for ratification of the
selection of Price Waterhouse as the independent accountants for the Trust.
Abstentions and broker "non-votes" will have the same effect as a vote against
the proposal.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS RATIFY THE
SELECTION OF PRICE WATERHOUSE AS THE INDEPENDENT ACCOUNTANTS FOR THE TRUST.
ADDITIONAL INFORMATION
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Meeting, the
persons named as proxies may propose one or more adjournments of the Meeting for
a total of not more than 60 days in the aggregate to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of the
holders of a majority of the Trust's shares present in person or by proxy at the
Meeting. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of Proposal Two and will
vote against any such adjournment those proxies required to be voted against
that proposal.
SHAREHOLDER PROPOSALS
Proposals of security holders intended to be presented at the next Annual
Meeting of Shareholders must be received no later than February 23, 1995, for
inclusion in the proxy statement and proxy for that meeting.
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OTHER BUSINESS
The management knows of no other matters which may be presented at the
Meeting. However, if any matters not now known properly come before the Meeting,
it is intended that the persons named in the attached form of proxy, or their
substitutes, will vote such proxy in accordance with their judgment on such
matters.
FINANCIAL STATEMENT OF INVESTMENT ADVISER
The balance sheet of InterCapital, annexed hereto as an Exhibit, is required
by Rule 20a-2 under the Investment Company Act of 1940. THIS IS NOT A FINANCIAL
STATEMENT OF THE TRUST. The Trust's financial statements are set forth in its
Annual Report for the fiscal year ended December 31, 1993, copies of which were
previously sent to shareholders.
By Order of the Trustees
SHELDON CURTIS
SECRETARY
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APPENDIX
InterCapital serves as investment manager or investment adviser to the
following investment companies, with the net assets shown as of April 14, 1994:
(1) Dean Witter High Yield Securities Inc., with assets of approximately
$551 million, for an investment management fee at an annual rate of 0.50% on
assets up to $500 million, scaled down at various asset levels to 0.30% on
assets over $3 billion; (2) Dean Witter Liquid Asset Fund Inc., with assets of
approximately $8.8 billion, for an investment management fee at an annual rate
of 0.50% on assets up to $500 million, scaled down at various asset levels to
0.248% on assets over $17.5 billion; (3) Dean Witter Tax-Exempt Securities
Trust, with assets of approximately $1.5 billion, for an investment management
fee at an annual rate of 0.50% on assets up to $500 million, scaled down at
various assets levels to 0.325% on assets over $1.25 billion; (4) Dean Witter
Tax-Free Daily Income Trust, with assets of approximately $638 million, for an
investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3 billion;
(5) Dean Witter American Value Fund, with assets of approximately $1.4 billion,
for an investment management fee at an annual rate of 0.625% on assets up to
$250 million and 0.50% on assets over $250 million; (6) Dean Witter Dividend
Growth Securities Inc., with assets of approximately $6.5 billion, for an
investment management fee at an annual rate of 0.625% on assets up to $250
million, scaled down at various asset levels to 0.325% on assets over $8
billion; (7) Dean Witter Variable Investment Series, with assets of
approximately $2.5 billion, for an investment management fee at an annual rate
of 1.0% (of which 40% is paid to a Sub-Adviser) of the net assets of each of the
European Growth Portfolio and the Pacific Growth Portfolio, 0.75% of the net
assets of the Global Dividend Growth Portfolio, 0.65% of the net assets of the
Capital Growth Portfolio, 0.65% of the net assets of the Utilities Portfolio up
to $500 million and 0.55% of the net assets of the Portfolio over $500 million,
0.625% of the net assets of the Dividend Growth Portfolio up to $500 million and
0.50% of the net assets of the Portfolio over $500 million, and 0.50% of the net
assets of each of the other five Portfolios; (8) Dean Witter Select Municipal
Reinvestment Fund, with assets of approximately $92 million, for an investment
management fee at an annual rate of 0.50%; (9) Active Assets Money Trust, with
assets of approximately $4.2 billion, for an investment management fee at an
annual rate of 0.50% on assets up to $500 million, scaled down at various asset
levels to 0.25% on assets over $3 billion; (10) Active Assets Tax-Free Trust,
with assets of approximately $1.5 billion, for an investment management fee at
an annual rate of 0.50% on assets up to $500 million, scaled down at various
asset levels to 0.25% on assets over $3 billion; (11) Active Assets California
Tax-Free Trust, with assets of approximately $296 million, for an investment
management fee of 0.50% on assets up to $500 million, scaled down at various
levels to 0.25% on assets over $3 billion; (12) Active Assets Government
Securities Trust, with assets of approximately $532 million, for an investment
management fee at an annual rate of 0.50% on assets up to $500 million, scaled
down at various asset levels to 0.25% on assets over $3 billion; (13) Dean
Witter Natural Resource Development Securities Inc., with assets of
approximately $136 million, for an investment management fee at an annual rate
of 0.625% on assets up to $250 million and 0.50% on assets over $250 million;
(14) Dean Witter U.S. Government Money Market Trust, with assets of
approximately $808 million, for an investment management fee at an annual rate
of 0.50% on assets up to $500 million, scaled down at various asset levels to
0.25% on assets over $3 billion; (15) Dean Witter Developing Growth Securities
Trust, with assets of approximately $310 million, for an investment management
fee at an annual rate of 0.50% on assets up to $500 million and 0.475% on assets
over $500 million; (16) Dean Witter U.S. Government Securities Trust, with
assets of approximately $11 billion, for an investment management fee at an
annual rate of 0.50% on assets up to $1 billion, scaled down at various asset
levels to 0.30% on assets over $12.5 billion; (17) Dean Witter California
Tax-Free Income Fund, with assets of approximately $1.1 billion, for an
investment management fee at an annual rate of 0.55% on assets up to $500
million, scaled down at various asset
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levels to 0.475% on assets over $1 billion; (18) Dean Witter New York Tax-Free
Income Fund, with assets of approximately $229 million, for an investment
management fee at an annual rate of 0.55% on assets up to $500 million and
0.525% on assets over $500 million; (19) Dean Witter Convertible Securities
Trust, with assets of approximately $199 million, for an investment management
fee at an annual rate of 0.60% on assets up to $750 million, scaled down at
various asset levels to 0.425% on assets over $3 billion; (20) Dean Witter
Federal Securities Trust, with assets of approximately $969 million, for an
investment management fee at an annual rate of 0.55% on assets up to $1 billion,
scaled down at various asset levels to 0.35% on assets over $12.5 billion; (21)
InterCapital Income Securities Inc., with assets of approximately $216 million,
for an investment management fee at an annual rate of 0.50%; (22) Dean Witter
Value-Added Market Series, with assets of approximately $345 million, for an
investment management fee at an annual rate of 0.50% on assets up to $500
million and 0.45% on assets over $500 million; (23) Dean Witter Utilities Fund,
with assets of approximately $3.4 billion, for an investment management fee at
an annual rate of 0.65% on assets up to $500 million, scaled down at various
asset levels to 0.425% on assets over $5 billion; (24) Dean Witter California
Tax-Free Daily Income Trust, with assets of approximately $275 million, for an
investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3 billion;
(25) Dean Witter Managed Assets Trust, with assets of approximately $267
million, for an investment management fee at an annual rate of 0.60% on assets
up to $500 million and 0.55% on assets over $500 million; (26) High Income
Advantage Trust, with assets of approximately $181 million, for an investment
management fee at an annual rate of 0.75% on assets up to $250 million, scaled
down at various asset levels to 0.30% on assets over $1 billion; (27) High
Income Advantage Trust II, with assets of approximately $241 million, for an
investment management fee at an annual rate of 0.75% on assets up to $250
million, scaled down at various asset levels to 0.30% on assets over $1 billion;
(28) High Income Advantage Trust III, with assets of approximately $93 million,
for an investment management fee at an annual rate of 0.75% on assets up to $250
million, scaled down at various asset levels to 0.30% on assets over $1 billion;
(29) Dean Witter Strategist Fund, with assets of approximately $802 million, for
an investment management fee at an annual rate of 0.60% on assets up to $500
million, scaled down at various asset levels to 0.50% on assets over $1 billion;
(30) Dean Witter Intermediate Income Securities, with assets of approximately
$248 million, for an investment management fee at an annual rate of 0.60% on
assets up to $500 million, scaled down at various asset levels to 0.30% on
assets over $1 billion; (31) Dean Witter World Wide Income Trust, with assets of
approximately $220 million, for an investment management fee at an annual rate
of 0.75% on assets up to $250 million, scaled down at various asset levels to
0.30% on assets over $1 billion; (32) Dean Witter Government Income Trust, with
assets of approximately $512 million, for an investment management fee at an
annual rate of 0.60%; (33) Dean Witter New York Municipal Money Market Trust,
with assets of approximately $43 million, for an investment management fee at an
annual rate of 0.50% on assets up to $500 million, scaled down at various asset
levels to 0.25% on assets over $3 billion; (34) Dean Witter European Growth Fund
Inc., with assets of approximately $636 million, for an investment management
fee at an annual rate of 1.0% on assets up to $500 million and 0.95% on assets
over $500 million (of which 40% is paid to a Sub-Adviser); (35) Dean Witter
Capital Growth Securities, with assets of approximately $527 million, for an
investment management fee at an annual rate of 0.65% on assets up to $500
million, scaled down at various asset levels to 0.475% on assets over $1.5
billion; (36) Dean Witter Precious Metals and Minerals Trust, with assets of
approximately $70 million, for an investment management fee at an annual rate of
0.80%; (37) Dean Witter Global Short-Term Income Fund Inc., with assets of
approximately $237 million, for an investment management fee at an annual rate
of 0.55% on assets up to $500 million and 0.50% on assets over $500 million;
(38) Dean Witter Pacific Growth Fund Inc., with assets of approximately $1.2
billion, for an investment management fee at an annual rate of 1.0% on assets up
to $1 billion and 0.95% on assets over $1 billion (of which 40% is paid to a
Sub-Adviser); (39) InterCapital Insured Municipal Bond Trust, with assets of
approximately $118 million, for an investment management fee at an annual
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rate of 0.35%; (40) InterCapital Quality Municipal Investment Trust, with assets
of approximately $415 million, for an investment management fee at an annual
rate of 0.35%; (41) InterCapital Insured Municipal Trust, with assets of
approximately $534 million, for an investment management fee at an annual rate
of 0.35%; (42) InterCapital Quality Municipal Income Trust, with assets of
approximately $842 million, for an investment management fee at an annual rate
of 0.35%; (43) Dean Witter Multi-State Municipal Series Trust, with assets of
approximately $462 million, for an investment management fee at an annual rate
of 0.35% of the net assets of each Series; (44) Dean Witter Premier Income
Trust, with assets of approximately $59 million, for an investment management
fee at an annual rate of 0.50% (of which 40% is paid to a Sub-Adviser); (45)
Dean Witter Short-Term U.S. Treasury Trust, with assets of approximately $572
million, for an investment management fee at an annual rate of 0.35%; (46) Dean
Witter Diversified Income Trust, with assets of approximately $323 million, for
an investment management fee at an annual rate of 0.40%; (47) Dean Witter Health
Sciences Trust, with assets of approximately $262 million, for an investment
management fee at an annual rate of 1.0%; (48) Dean Witter Retirement Series,
with assets of approximately $29 million, for an investment management fee at an
annual rate of 1.0% of the net assets of the Global Equity Series, 0.85% of the
net assets of each of the American Value Series, the Capital Growth Series and
the Strategist Series, 0.75% of the net assets of each of the Dividend Growth
Series and the Utilities Series, 0.65% of the net assets of each of the U.S.
Government Securities Series and the Intermediate Income Securities Series, and
0.50% of the net assets of each of the Liquid Asset Series, the U.S. Government
Money Market Series and the Value-Added Market Series; (49) InterCapital Insured
Municipal Income Trust, with assets of approximately $697 million, for an
investment management fee at an annual rate of 0.35%; (50) InterCapital
California Insured Municipal Income Trust, with assets of approximately $274
million, for an investment management fee at an annual rate of 0.35%; (51) Dean
Witter Global Dividend Growth Securities, with assets of approximately $1.2
billion, for an investment management fee at an annual rate of 0.75%; (52)
InterCapital Quality Municipal Securities, with assets of approximately $454
million, for an investment management fee at an annual rate of 0.35%; (53)
InterCapital California Quality Municipal Securities, with assets of
approximately $236 million, for an investment management fee at an annual rate
of 0.35%; (54) InterCapital New York Quality Municipal Securities, with assets
of approximately $107 million, for an investment management fee at an annual
rate of 0.35%; (55) Dean Witter Limited Term Municipal Trust, with assets of
approximately $159 million, for an investment management fee at an annual rate
of 0.50%; (56) Dean Witter Short-Term Bond Fund, with assets of approximately
$43 million, for an investment management fee at an annual rate of 0.70%; (57)
InterCapital Insured Municipal Securities, with assets of approximately $143
million, for an investment management fee at an annual rate of 0.35%; (58)
InterCapital Insured California Municipal Securities, with assets of
approximately $63 million, for an investment management fee at an annual rate of
0.35%; (59) Municipal Income Trust, with assets of approximately $334 million,
for an investment advisory fee at an annual rate of 0.35% on assets up to $250
million and 0.25% on assets over $250 million; (60) Municipal Income Trust II,
with assets of approximately $291 million, for an investment advisory fee at an
annual rate of 0.40% on assets up to $250 million and 0.30% on assets over $250
million; (61) Municipal Income Trust III, with assets of approximately $64
million, for an investment advisory fee at an annual rate of 0.40% on assets up
to $250 million and 0.30% on assets over $250 million; (62) Municipal Income
Opportunities Trust, with assets of approximately $180 million, for an
investment advisory fee at an annual rate of 0.50%; (63) Municipal Income
Opportunities Trust II, with assets of approximately $177 million, for an
investment advisory fee at an annual rate of 0.50%; (64) Municipal Income
Opportunities Trust III, with assets of approximately $107 million, for an
investment advisory fee at an annual rate of 0.50%; (65) Municipal Premium
Income Trust, with assets of approximately $391 million, for an investment
advisory fee at an annual rate of 0.40%; (66) Prime Income Trust, with assets of
approximately $268 million, for an investment advisory fee at an annual rate of
0.90% on assets up to $500 million and 0.85% on assets over $500 million; and
(67) Dean Witter Global Utilities Fund, a new investment company, for an
investment manage-
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ment fee at an annual rate of 0.65%. InterCapital also serves as Investment
Adviser of Dean Witter World Wide Investment Trust and Dean Witter World Wide
Investment Fund, along with Daiwa International Capital Management Corp. and
NatWest Investment Management Limited. Dean Witter World Wide Investment Trust
had assets of approximately $502 million and InterCapital receives an Investment
Adviser's fee at an annual rate of 0.55% of the Trust's daily net assets up to
$500 million and 0.5225% of the Trust's daily net assets over $500 million.
Shares of Dean Witter World Wide Investment Fund, an investment company
organized under the laws of Luxembourg, are not offered for purchase in the
United States or to American citizens outside of the United States. InterCapital
also serves as sub-adviser to Templeton Global Opportunities Trust, with assets
of approximately $441 million, for which it receives a fee of 0.25% per annum.
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EXHIBIT
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders of
Dean Witter InterCapital Inc.:
We have audited the accompanying balance sheet of Dean Witter InterCapital Inc.
(the "Company") (a wholly-owned subsidiary of Dean Witter, Discover & Co.) as of
December 31, 1993. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such balance sheet presents fairly, in all material respects,
the financial position of Dean Witter InterCapital Inc. at December 31, 1993 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
February 28, 1994
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DEAN WITTER INTERCAPITAL INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and cash equivalents.............................................................. $ 57,810
Management and administration fees receivable.......................................... 27,010
Investments............................................................................ 7,644
Office facilities, at cost (less accumulated depreciation and amortization of
$5,122)............................................................................... 3,892
Other assets........................................................................... $ 18,176
---------
$ 114,532
---------
---------
LIABILITIES AND
STOCKHOLDER'S EQUITY
Income taxes payable (Note 3).......................................................... $ 45,545
Dividends payable...................................................................... 12,662
Accrued compensation and employee benefits............................................. 12,337
Payable to affiliate................................................................... 4,000
Other liabilities...................................................................... 14,988
---------
Total liabilities.............................................................. 89,532
---------
---------
Stockholder's equity:
Common stock, $.01 par value; 1,000 shares authorized and outstanding................ --
Additional paid-in capital........................................................... 10,000
Retained earnings.................................................................... 15,000
---------
Total stockholder's equity..................................................... 25,000
---------
$ 114,532
---------
---------
</TABLE>
See notes to consolidated balance sheet.
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DEAN WITTER INTERCAPITAL INC.
NOTES TO CONSOLIDATED BALANCE SHEET
1. INTRODUCTION AND BASIS OF PRESENTATION
The consolidated balance sheet includes the accounts of Dean Witter
InterCapital Inc. and its wholly-owned subsidiaries (the "Company"). The Company
is wholly-owned by Dean Witter, Discover & Co. ("DWDC"), which was formerly a
subsidiary of Sears, Roebuck and Co. ("Sears"). All material intercompany
balances and transactions with its subsidiaries have been eliminated.
On March 1, 1993, DWDC completed an initial public offering of 33.8 million
shares of its common stock at $27 per share. This transaction had the effect of
reducing Sears ownership in DWDC to 80.1 percent. On June 30, 1993, Sears
divested its remaining ownership of DWDC's common stock by means of a special
dividend to Sears shareholders.
On December 22, 1993, Dean Witter Reynolds Inc. ("DWR") transferred the net
assets of the Company in the form of a dividend to DWDC. Prior to December 22,
1993, the Company was wholly-owned by DWR, a wholly-owned subsidiary of DWDC.
The Company is a registered investment adviser under the Investment Advisers
Act of 1940. The Company sponsors and performs management and administrative
services for mutual funds, principally those sold by DWR ("DWR funds"). The
Company also performs such services for individual, institutional, trust and
estate accounts.
The Company commenced operations in January 1993 and assumed the advisory
business of DWR.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash equivalents consist of highly liquid investments not held for resale
with maturities, when purchased, of three months or less.
Fixed assets are generally depreciated utilizing accelerated methods over
useful lives of five to eight years. Leasehold improvements are amortized over
the lesser of the lease term or useful life.
3. INCOME TAXES
The Company provides deferred income taxes which result from recording
certain transactions in different years for tax and financial reporting
purposes.
Payments for income taxes are limited to those which would result from the
Company filing a separate federal income tax return.
The Company has available net operating loss carryforwards at December 31,
1993 in the amount of $112,200,000 which begin to expire in 2002.
4. RELATED PARTY TRANSACTIONS
Certain administrative services are provided by DWR which are reimbursed by
the Company.
5. EMPLOYEE BENEFIT PLANS
Substantially all employees are covered by a non-contributory defined
benefit pension plan sponsored by DWR. Pension benefits are based on length of
service and average annual compensation.
Certain employees are covered by postretirement plans sponsored by DWR that
provide medical and life insurance for retirees and eligible dependents.
Eligibility for retiree medical and life benefits is generally based on a
combination of age and years of service at retirement.
The Company reimburses DWR for pension and other postretirement benefit
expenses.
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6. LITIGATION
The Company has been named as a defendant in various lawsuits. It is the
opinion of management, after consultation with outside counsel, that the
resolution of such suits will not have a material adverse effect on the
consolidated financial condition of the Company.
7. FINANCIAL INSTRUMENTS FAIR VALUE INFORMATION
The estimated fair value amounts of financial instruments have been
determined by the Company using available market information and appropriate
valuation methodologies. Considerable judgment is required to develop estimates
of fair value.
Substantially all financial instruments on the Company's consolidated
balance sheet are carried at fair value or at amounts which approximate fair
value.
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MUNICIPAL INCOME TRUST II
ANNUAL MEETING OF SHAREHOLDERS -- JUNE 15, 1994
PROXY
The undersigned hereby appoints ROBERT M. SCANLAN, EDMUND C. PUCKHABER,
SHELDON CURTIS, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Annual Meeting of Shareholders of
Municipal Income Trust II on June 15, 1994 at 9:00 a.m., New York City time, and
at any adjournment thereof, on the proposals set forth in the Notice of Meeting
dated April 21, 1994 as follows:
THIS PROXY IS SOLICITED BY THE TRUSTEES. IF NO SPECIFICATION IS MADE ON
REVERSE SIDE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR TRUSTEE AND FOR THE
PROPOSALS.
(Continued, and to be dated and signed on reverse side.)
<PAGE>
PLEASE MARK BOXES / / OR /X/ IN BLUE OR BLACK INK.
<TABLE>
<S> <C> <C>
1 ELECTION OF TRUSTEES: / / FOR ALL NOMINEES / / WITHHOLD AUTHORITY
(except as marked to the contrary below) (to vote for all nominees listed below)
Manuel H. Johnson, Paul Kolton, John L. Schroeder, Edward R. Telling, Michael Bozic, Philip J. Purcell
(INSTRUCTION: To withhold authority to vote for any individual nominee write that nominee's name on the space provided below.)
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</TABLE>
<TABLE>
<S> <C>
2 APPROVAL OF INVESTMENT ADVISORY AGREEMENT: 3 RATIFICATION OF APPOINTMENT OF PRICE WATERHOUSE
AS INDEPENDENT ACCOUNTANTS:
/ / FOR / / AGAINST / / ABSTAIN / / FOR / / AGAINST / / ABSTAIN
and in their discretion in the transaction of any other business which may properly come before the meeting.
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</TABLE>
Please sign personally. If the
share is registered in more than
one name, each joint owner or
each fiduciary should sign
personally. Only authorized
officers should sign for
Incorporations.
Dated
---------------------------------
---------------------------------
Signature
---------------------------------
Signature
IMPORTANT: PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE.
