DEAN WITTER STRATEGIST FUND
485BPOS, 1995-08-24
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<PAGE>
    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 24, 1995

                                                    REGISTRATION NOS.:  33-23669
                                                                        811-5654

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       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. 8                      /X/
                                     AND/OR
              REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
                                  ACT OF 1940                                /X/
                                AMENDMENT NO. 9                              /X/
                               ------------------

                          DEAN WITTER STRATEGIST FUND
                        (A MASSACHUSETTS BUSINESS TRUST)

               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

                             TWO WORLD TRADE CENTER
                            NEW YORK, NEW YORK 10048

                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600

                              SHELDON CURTIS, ESQ.
                             TWO WORLD TRADE CENTER
                            NEW YORK, NEW YORK 10048

                    (NAME AND ADDRESS OF AGENT FOR SERVICE)
                            ------------------------

                                    COPY TO:
                            DAVID M. BUTOWSKY, ESQ.
                             GORDON ALTMAN BUTOWSKY
                             WEITZEN SHALOV & WEIN
                              114 WEST 47TH STREET
                            NEW YORK, NEW YORK 10036
                                ----------------

                 APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:

 As soon as practicable after this Post-Effective Amendment becomes effective.

 IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
        ___ immediately upon filing pursuant to paragraph (b)
        _X_ on August 28, 1995 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  FILED THE RULE 24F-2 NOTICE FOR
ITS FISCAL YEAR ENDING JULY 31, 1995 WITH THE SECURITIES AND EXCHANGE COMMISSION
ON AUGUST 17, 1995.

           AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS

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--------------------------------------------------------------------------------
<PAGE>
                          DEAN WITTER STRATEGIST FUND

                             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.  ..........................................  Prospectus Summary; Financial Highlights; Investment Objective and
                                                  Policies; The Fund and its Management; Cover Page; Investment
                                                  Restrictions
 5.  ..........................................  The Fund and Its Management; Back Cover; Investment Objective and
                                                  Policies
 6.  ..........................................  Dividends, Distributions and Taxes; Additional Information
 7.  ..........................................  Purchase of Fund Shares; Shareholder Services; Prospectus Summary
 8.  ..........................................  Redemptions and Repurchases; Shareholder Services;
 9.  ..........................................  Not Applicable

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; Custodian and Transfer
                                                  Agent; Independent Accountants; Shareholder Services
17.  ..........................................  Portfolio Transactions and Brokerage
18.  ..........................................  Description of Shares
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
AUGUST 28, 1995
    

              Dean Witter Strategist Fund (the "Fund") is an open-end,
non-diversified management investment company, the objective of which is to
maximize the total return on its investments. The Fund seeks to achieve its
investment objective by actively allocating its assets among the major asset
categories of equity securities, fixed-income securities and money market
instruments. See "Investment Objective and Policies."

               Shares of the Fund are continuously offered at net asset value.
However, redemptions and/or repurchases are subject, in most circumstances, 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 distribution fee pursuant to a Plan of Distribution at the annual
rate of (i) 1% of the lesser of the (a) average daily aggregate net sales since
implementation of the amended Plan of Distribution or (b) average daily net
assets of the Fund attributable to shares issued since implementation of the
amended Plan of Distribution plus (ii) 0.25% of average daily net assets of the
Fund attributable to shares issued prior to inception of the amended Plan of
Distribution. 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 August 28, 1995, 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/9
   
Investment Restrictions/13
Purchase of Fund Shares/13
Shareholder Services/16
Redemptions and Repurchases/18
Dividends, Distributions and Taxes/20
Performance Information/21
Additional Information/22
    

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
    Strategist Fund
    Two World Trade Center
    New York, New York 10048
    (212) 392-2550 or
    (800) 526-3143
<PAGE>
PROSPECTUS SUMMARY
--------------------------------------------------------------------------------

   
<TABLE>
<S>                 <C>
The                 The Fund is organized as a Trust, commonly known as a Massachusetts business trust, and is an open- end,
Fund                non-diversified management investment company. The Fund invests in equity securities, fixed-income securities
                    and money market instruments in portions determined by the Investment Manager to best enable the Fund to
                    maximize the total return on a shareholder's investment.
------------------------------------------------------------------------------------------------------------------------------------
Shares              Shares of beneficial interest with $0.01 par value (see page 22).
Offered
------------------------------------------------------------------------------------------------------------------------------------
Offering            At net asset value without sales charge (see page 13). Shares redeemed within six years of purchase are subject
Price               to a contingent deferred sales charge under most circumstances (see page 18).
------------------------------------------------------------------------------------------------------------------------------------
Minimum             Minimum initial investment, $1,000; minimum subsequent investments, $100 (see page 13).
Purchase
------------------------------------------------------------------------------------------------------------------------------------
Investment          The investment objective of the Fund is to maximize the total return on its investments.
Objective
------------------------------------------------------------------------------------------------------------------------------------
Investment          Dean Witter InterCapital Inc., the Investment Manager of the Fund, and its wholly-owned subsidiary, Dean Witter
Manager             Services Company Inc., serve in various investment management, advisory, management and administrative
                    capacities to ninety-four investment companies and other portfolios with assets of approximately $75.1 billion
                    at July 31, 1995 (see page 5).
------------------------------------------------------------------------------------------------------------------------------------
Management          The Investment Manager receives a monthly fee at the annual rate of 0.60% of daily net assets on assets not
Fee                 exceeding $500 million, scaled down at various asset levels to 0.50% on daily net assets exceeding $1 billion
                    (see page 5).
------------------------------------------------------------------------------------------------------------------------------------
Dividends           Dividends from net investment income are paid quarterly; distributions from net capital gains, if any, are paid
                    at least once each year. Dividends and capital gains distributions are automatically reinvested in additional
                    shares at net asset value unless the shareholder elects to receive cash (see page 20).
------------------------------------------------------------------------------------------------------------------------------------
Distributor and     Dean Witter Distributors Inc. (the "Distributor") is the distributor of the Fund's shares. The Distributor
Distribution Fee    receives from the Fund a distribution fee, accrued daily and payable monthly, at the rate of: (i) 1% per annum
                    of the lesser of (a) the Fund's average daily aggregate net sales since the implementation of an amended plan of
                    distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Plan"), or (b)
                    the Fund's average daily net assets attributable to shares issued since the implementation of the Plan plus (ii)
                    0.25% of the Fund's average daily net assets attributable to shares issued prior to implementation of the Plan.
                    This fee compensates the Distributor for the services provided in distributing shares of the Fund and for its
                    sales related expenses. The Distributor also receives the proceeds of any contingent deferred sales charges (see
                    pages 14 and 18).
------------------------------------------------------------------------------------------------------------------------------------
Redemption--        Shares are redeemable by the shareholder at net asset value. An account may be involuntarily redeemed if the
Contingent          total value of the account is less than $100. Although no commission or sales load is imposed upon the purchase
Deferred Sales      of shares, a contingent deferred sales charge (scaled down from 5% to 1%) is imposed on any redemption of shares
Charge              if after such redemption the aggregate current value of an account with the Fund falls below the aggregate
                    amount of the investor's purchase payments made during the six years preceding the redemption, but after the
                    implementation of the Plan on November 8, 1989. However, there is no charge imposed on redemption of shares
                    purchased through reinvestment of dividends or distributions (see pages 18 through 20).
------------------------------------------------------------------------------------------------------------------------------------
Special             The net asset value of the Fund's shares will fluctuate with changes in the market value of its portfolio
Risk                securities. The level of income payable to the investor will vary depending upon the market allocation
Considerations      determined by the Fund's Investment Manager and with various market determinants such as interest rates. The
                    Fund may make various investments and may engage in various investment strategies including option and futures
                    transactions, when-issued and delayed delivery securities and forward commitments, when, as and if issued
                    securities, foreign securities and repurchase agreements (pages 5-12). The Fund is a non-diversified investment
                    company and, as such, is not subject to the diversification requirements of the Investment Company Act of 1940,
                    as amended (see page 12).
------------------------------------------------------------------------------------------------------------------------------------
</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 July 31, 1995.
    

<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                                                                       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>

   
<TABLE>
<S>                                                                                     <C>
Redemption Fees.......................................................................       None
Exchange Fee..........................................................................       None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
--------------------------------------------------------------------------------------
Management Fees.......................................................................      0.58%
12b-1 Fees*...........................................................................      0.91%
Other Expenses........................................................................      0.14%
Total Fund Operating Expenses.........................................................      1.63%
<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:..............................................................   $      67    $      82    $     109    $     194
You would pay the following expenses on the same investment,  assuming
 no redemption:.......................................................   $      17    $      52    $      89    $     194
</TABLE>
    

    THE  ABOVE  EXAMPLE SHOULD  NOT BE  CONSIDERED A  REPRESENTATION OF  PAST OR
FUTURE EXPENSES OR PERFORMANCE.  ACTUAL EXPENSES OF THE  FUND MAY BE GREATER  OR
LESS THAN THOSE SHOWN.

    The  purpose of this  table is to  assist the investor  in understanding the
various costs and expenses that  an investor in the  Fund will bear directly  or
indirectly.  For a  more complete description  of these costs  and expenses, see
"The Fund  and its  Management,"  "Plan of  Distribution" and  "Redemptions  and
Repurchases."

    Long-term  shareholders  of  the Fund  may  pay  more in  sales  charges and
distribution fees than the  economic equivalent of  the maximum front-end  sales
charges permitted by the NASD.

                                       3
<PAGE>
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 PERIOD
                                                                                                                    OCTOBER 31,
                                                               FOR THE YEAR ENDED JULY 31                              1988*
                                          ---------------------------------------------------------------------       THROUGH
                                            1995        1994        1993        1992        1991        1990       JULY 31, 1989
                                          ---------   ---------   ---------   ---------   ---------   ---------   ---------------
<S>                                       <C>         <C>         <C>         <C>         <C>         <C>         <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....  $  14.43    $  14.59    $  14.39    $  13.09    $  11.65    $  11.37    $   9.45
                                          ---------   ---------   ---------   ---------   ---------   ---------    -------
Net investment income...................      0.34        0.30        0.26        0.27        0.27        0.23        0.38
Net realized and unrealized gain........      1.86        0.22        0.81        1.27        1.50        0.55        1.84
                                          ---------   ---------   ---------   ---------   ---------   ---------    -------
Total from investment operations........      2.20        0.52        1.07        1.54        1.77        0.78        2.22
                                          ---------   ---------   ---------   ---------   ---------   ---------    -------
Less dividends and distributions from:
  Net investment income.................     (0.29)      (0.26)      (0.31)      (0.24)      (0.26)      (0.29)      (0.30)
  Net realized gain.....................     (0.47)      (0.42)      (0.56)      --          (0.07)      (0.21)      --
                                          ---------   ---------   ---------   ---------   ---------   ---------    -------
Total dividends and distributions.......     (0.76)      (0.68)      (0.87)      (0.24)      (0.33)      (0.50)      (0.30)
                                          ---------   ---------   ---------   ---------   ---------   ---------    -------
Net asset value, end of period..........  $  15.87    $  14.43    $  14.59    $  14.39    $  13.09    $  11.65    $  11.37
                                          ---------   ---------   ---------   ---------   ---------   ---------    -------
                                          ---------   ---------   ---------   ---------   ---------   ---------    -------
TOTAL INVESTMENT RETURN+................     16.05%       3.53%       7.59%      11.88%      15.67%       7.21%      23.76%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................      1.63%       1.62%       1.62%       1.63%       1.59%       1.53%       0.97%(2)(3)
Net investment income...................      2.35%       2.03%       1.90%       2.19%       2.37%       2.39%       6.00%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
 thousands..............................   $877,595    $806,249    $782,833    $440,802    $238,432    $195,687           $47,921
Portfolio turnover rate.................       179%         90%         98%         79%        140%        101%         70%(1)
<FN>
------------------------------
*    Commencement of operations.

+    Does not reflect the deduction of sales charge.

(1)  Not annualized.

(2)  Annualized.

(3)  If the Fund had borne all its  expenses that were assumed or waived by  the
     Investment  Manager, the above annualized expense and net investment income
     ratios 'would have been 1.48% and 5.48%, respectively.
</TABLE>
    

                                       4
<PAGE>
THE FUND AND ITS MANAGEMENT
--------------------------------------------------------------------------------

    Dean Witter Strategist  Fund (the  "Fund") is  an open-end,  non-diversified
management investment company. The Fund is a trust of the type commonly known as
a   "Massachusetts  business  trust"  and  was   organized  under  the  laws  of
Massachusetts on August 5, 1988.

    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-four  investment companies, thirty of  which
are listed on the New York Stock Exchange, with combined assets of approximately
$72.8  billion as  of July  31, 1995.  The Investment  Manager also  manages and
advises portfolios of  pension plans, other  institutions and individuals  which
aggregated approximately $2.3 billion at such date.
    

    The  Fund  has retained  the  Investment Manager  to  provide administrative
services, manage  its business  affairs,  manage the  investment of  the  Fund's
assets and determine the allocations of the Fund's assets, including the placing
of  orders for the  purchase and sale of  portfolio securities. InterCapital has
retained Dean  Witter  Services  Company  Inc.  to  perform  the  aforementioned
administrative services for the Fund.

    The  Fund's Trustees  review the various  services provided by  or under the
direction of the Investment Manager to ensure that the Fund's general investment
policies and programs  are being  properly carried out  and that  administrative
services are being provided to the Fund in a satisfactory manner.

   
    As  full compensation for the services  and facilities furnished to the Fund
and for expenses of the  Fund assumed by the  Investment Manager, the Fund  pays
the  Investment Manager monthly compensation calculated daily at the annual rate
of 0.60% of the  portion of the  Fund's net assets  not exceeding $500  million,
scaled  down at various asset  levels to 0.50% on the  portion of the Fund's net
assets exceeding $1 billion. For the fiscal  year ended July 31, 1995, the  Fund
accrued  total compensation to the Investment  Manager amounting to 0.58% of the
Fund's average daily net assets and the Fund's total expenses amounted to  1.63%
of the Fund's average daily net assets.
    

INVESTMENT OBJECTIVE AND POLICIES
--------------------------------------------------------------------------------

    The  investment objective of the Fund is to maximize the total return on its
investments. This is  a fundamental  policy and  cannot be  changed without  the
approval  of the Fund's  shareholders. In seeking to  achieve its objective, the
Fund actively  allocates  assets among  the  major asset  categories  of  equity
securities,  fixed-income securities and money  market instruments. Total return
consists of current income  (including dividends, interest and,  in the case  of
discounted  instruments, discount accruals)  and capital appreciation (including
realized and unrealized  capital gains and  losses). There can  be no  assurance
that the investment objective of the Fund will be achieved.

    The  achievement of the Fund's investment objective depends upon the ability
of the Investment Manager to correctly assess the effects of economic and market
trends on different sectors of the market. The Investment Manager believes  that
superior  investment returns at lower risk are achievable by actively allocating
resources to the equity, debt and

                                       5
<PAGE>
money market sectors  of the market  as opposed  to relying solely  on just  one
market.  At times, the equity market may hold a higher potential return than the
debt market and would  warrant a higher asset  allocation. The reverse would  be
true  when the bond market potential return  is higher. Short duration bonds and
money market instruments can be used  to soften market declines when both  bonds
and  equities are fully priced. Conserving  capital during declining markets can
contribute to maximizing total return over a longer period of time. In addition,
the securities of companies within various  economic sectors may at times  offer
higher  returns than other sectors and  can thus contribute to superior returns.
Finally, the Investment Manager believes that superior stock selection can  also
contribute to superior total return.

    To  facilitate  reallocation of  the Fund's  assets  in accordance  with the
Investment Manager's  views as  to  shifts in  the marketplace,  the  Investment
Manager  employs  transactions in  futures  contracts and  options  thereon. For
example, if the Investment Manager believes that a ten percent increase in  that
portion  of  the  Fund's  assets  invested  in  fixed-income  securities  and  a
concomitant decrease in  that portion of  the Fund's assets  invested in  equity
securities  is timely,  the Fund might  purchase interest rate  futures, such as
Treasury bond futures,  and sell  stock index futures,  such as  the Standard  &
Poor's  Corporation ("S&P") 500 Stock Index  futures, in equivalent amounts. The
utilization of futures transactions, rather than the purchase and sale of equity
and fixed-income  securities, increases  the speed  and efficacy  of the  Fund's
asset reallocations. See below for a discussion of futures transactions.

    Within the equity sector, the Investment Manager actively allocates funds to
those  economic sectors expected to benefit  from major trends and to individual
stocks which are  deemed to  have superior  investment potential.  The Fund  may
purchase   equity  securities   (including  convertible   debt  obligations  and
convertible preferred stock)  sold on  the New  York, American  and other  stock
exchanges and in the over-the-counter market. In addition, the Fund may purchase
and  sell warrants and purchase and write listed and over-the-counter options on
individual stocks and stock indexes to hedge against adverse price movements  in
its  equity portfolio and  to increase its  total return through  the receipt of
premium income. The  Fund may  also purchase and  sell stock  index futures  and
options thereon to hedge against adverse price movements in its equity portfolio
and to facilitate asset reallocations into and out of the equity area.

    Within  the fixed-income sector of the  market, the Investment Manager seeks
to maximize the  return on its  investments by adjusting  maturities and  coupon
rates  as well  as by  exploiting yield  differentials among  different types of
investment grade bonds. Fixed-income securities in which the Fund may invest are
short-term to intermediate  (one to  five year maturities)  and intermediate  to
long-term  (greater  than five  year maturities)  debt securities  and preferred
stocks, including U.S. Government securities (securities issued or guaranteed as
to  principal  and  interest   by  the  United  States   or  its  agencies   and
instrumentalities)  and  corporate securities  which are  rated  at the  time of
purchase Baa or  better by  Moody's Investors Service,  Inc. ("Moody's")  (while
bonds   rated  Baa  by  Moody's  are  considered  investment  grade,  they  have
speculative characteristics  as well)  or BBB  or better  by S&P,  or which,  if
unrated,  are  deemed to  be of  comparable  quality by  the Fund's  Trustees (a
description of  corporate bond  ratings  is contained  in  the Appendix  to  the
Statement  of Additional Information).  U.S. Government securities  which may be
purchased include zero coupon securities. In addition, the Fund may purchase and
write listed and  over-the-counter options on  fixed-income securities to  hedge
against  adverse price movements  in its fixed-income  portfolio and to increase
its total  return through  the receipt  of  premium income.  The Fund  may  also
purchase  and sell  interest rate futures  and options thereon  to hedge against
adverse price movements in  its fixed-income portfolio  and to facilitate  asset
reallocations into and out of the fixed-income area.

                                       6
<PAGE>
    Within  the money market sector of  the market, the Investment Manager seeks
to maximize  returns by  exploiting spreads  among short-term  instruments.  The
money market portion of the Fund's portfolio will contain short-term (maturities
of  up  to  thirteen  months) fixed-income  securities,  issued  by  private and
governmental  institutions.  Such  securities   may  include:  U.S.   Government
securities;  bank  obligations;  Eurodollar certificates  of  deposit  issued by
foreign branches of domestic banks;  obligations of savings institutions;  fully
insured  certificates  of deposit;  and commercial  paper  rated within  the two
highest grades by S&P or the highest  grade by Moody's or, if not rated,  issued
by  a company having an outstanding debt issue rated at least AA by S&P or Aa by
Moody's. For a discussion of the  risks of investing in Eurodollar  certificates
of deposit, see "Risk Considerations--Foreign Securities" below.

    FOREIGN  SECURITIES.  The Fund  may invest up to 20%  of its total assets in
securities issued  by  foreign governments  and  other foreign  issuers  and  in
foreign  currency issues of domestic issuers, but not more than 10% of its total
assets in such securities, whether issued by a foreign or domestic issuer, which
are denominated  in  foreign  currency.  With  regard  to  foreign  fixed-income
securities,  the  Investment  Manager  believes  that  in  many  instances  such
securities may  provide  higher  yields  than  similar  securities  of  domestic
issuers.  For a discussion of the risks  of investing in foreign securities, see
"Risk Considerations" below.

    REPURCHASE AGREEMENTS.  The Fund may enter into repurchase agreements, which
may be viewed  as a type  of secured lending  by the Fund,  and which  typically
involve  the acquisition by the Fund of debt securities from a selling financial
institution such as a bank, savings  and loan association or broker-dealer.  The
agreement provides that the Fund will sell back to the institution, and that the
institution will repurchase, the underlying security at a specified price and at
a  fixed time in the future,  usually not more than seven  days from the date of
purchase. For a discussion of the  risks of investing in repurchase  agreements,
see "Risk Considerations" below.

   
    PRIVATE  PLACEMENTS.  The Fund may invest 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. For a discussion of the risks of
investing in private placements, see "Risk Considerations" below.
    

   
    INVESTMENT  IN REAL  ESTATE INVESTMENT TRUSTS.  The Fund may  invest in real
estate investment trusts, which pool investors' funds for investments  primarily
in  commercial  real estate  properties.  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 a real estate  investment trust, the Fund  would
bear its ratable share of the real estate investment trust'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 real estate investment trusts.
    

    OPTIONS.   The Fund also may purchase  and sell (write) call and put options
on debt and equity securities  which are listed on  Exchanges or are written  in

                                       7
<PAGE>
over-the-counter   transactions  ("OTC  options").  Listed  options,  which  are
currently listed  on several  different  Exchanges, are  issued by  the  Options
Clearing  Corporation ("OCC"). Ownership of a  listed call option gives the Fund
the right to buy from the OCC  the underlying security covered by the option  at
the  stated exercise price  (the price per  unit of the  underlying security) 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  the
underlying  security 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 to the OCC
at the stated exercise price.

    OTC OPTIONS.  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. The Fund  will engage in OTC
option  transactions  only  with  primary  U.S.  Government  securities  dealers
recognized by the Federal Reserve Bank of New York.

    COVERED  CALL WRITING.  The Fund is  permitted to write covered call options
on portfolio securities,  without limit,  in order to  aid it  in achieving  its
investment objective. As a writer of a call option, the Fund has the obligation,
upon  notice of exercise of  the option, to deliver  the security underlying the
option (certain listed call options written  by the Fund will be exercisable  by
the  purchaser only on a specific date). See "Options and Futures Transactions--
Covered Call Writing" in the Statement of Additional Information.

    COVERED PUT WRITING.  As a writer of covered put options, 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. The
Fund will write put options for two  purposes: (1) to receive the premiums  paid
by  purchasers;  and (2)  when  the Investment  Manager  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. See "Options and Futures Transactions--Covered  Put
Writing" in the Statement of Additional Information.

    PURCHASING  CALL AND PUT OPTIONS.  The Fund may invest up to 5% of its total
assets in the purchase of put and call options on securities and stock  indexes.
The  Fund may purchase  call options only in  order to close  out a covered call
position. The Fund may purchase put options on securities which it holds (or has
the right to acquire) in its portfolio only to protect itself against a  decline
in  the value of the  security. The Fund may also  purchase put options to close
out written put positions  in a manner similar  to call option closing  purchase
transactions.  There are no other limits on  the Fund's ability to purchase call
and put options.

    STOCK INDEX  OPTIONS.   The Fund  may purchase  and write  options on  stock
indexes.  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. See "Stock Index Options" and
"Risks of Options on Indexes" in the Statement of Additional Information.

   
    FUTURES CONTRACTS.  The Fund may  purchase and sell interest rate and  stock
index  futures contracts ("futures contracts") that are traded on U.S. commodity
exchanges on such underlying securities as U.S. Treasury bonds, notes, and bills
and GNMA Certificates ("interest rate futures") and such indexes as the S&P  500
Index  and the New  York Stock Exchange Composite  Index ("stock index futures")
and the Moody's Investment-Grade Corporate Bond Index ("bond index futures"). As
a futures contract pur-
    

                                       8
<PAGE>
chaser, 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  its  fixed-income  portfolio  (or  anticipated  portfolio)
securities  against changes in prevailing interest rates. The Fund will purchase
or sell stock  index futures  contracts for the  purpose of  hedging its  equity
portfolio (or anticipated portfolio) securities against changes in their prices.
As  noted above, the Fund may also  engage in futures transactions to facilitate
reallocation of the Fund's assets. The Fund also may purchase and write call and
put options  on  futures contracts  and  enter into  closing  transactions  with
respect  to such  options to  terminate an  existing position.  See "Options and
Futures Transactions--Futures Contracts" and  "Options on Futures Contracts"  in
the Statement of Additional Information.

    For a discussion of the risks of options and futures transactions, see "Risk
Considerations" below and "Options and Futures Transactions" in the Statement of
Additional Information.
                            ------------------------

    The Fund may purchase securities on a when-issued or delayed delivery basis,
may  purchase or  sell securities  on a  forward commitment  basis, may purchase
securities on  a  "when,  as  and  if issued"  basis,  may  lend  its  portfolio
securities, and may enter into reverse repurchase agreements, as discussed under
"Risk Considerations" below.

RISK CONSIDERATIONS

    The  net asset value of the Fund's shares will fluctuate with changes in the
market value  of  its portfolio  securities.  The  market value  of  the  Fund's
portfolio  securities will  increase or decrease  due to a  variety of economic,
market or  political factors  which cannot  be predicted.  The level  of  income
payable  to  the  investor  will  vary  depending  upon  the  market  allocation
determined by  the Investment  Manager  and with  various determinants  such  as
interest rates.

    FOREIGN  SECURITIES.   Foreign  securities  investments may  be  affected by
changes  in  currency  rates  or   exchange  control  regulations,  changes   in
governmental administration or economic or monetary policy (in the United States
and  abroad) or changed circumstances  in dealings between nations. Fluctuations
in the relative rates  of exchange between the  currencies of different  nations
will affect the value of the Fund's investments denominated in foreign currency.
Changes  in foreign  currency exchange  rates relative  to the  U.S. dollar will
affect the U.S. dollar value of  the Fund's assets denominated in that  currency
and thereby impact upon the Fund's total return on such assets.

    Foreign  currency  exchange rates  are determined  by  forces of  supply and
demand on the foreign exchange markets. These forces are themselves affected  by
the   international  balance  of  payments  and  other  economic  and  financial
conditions, government intervention,  speculation and  other factors.  Moreover,
foreign currency exchange rates may be affected by the regulatory control of the
exchanges on which the currencies trade. The Fund will incur costs in connection
with conversions between various currencies.

    Investments  in  foreign securities  will  also occasion  risks  relating to
political  and  economic  developments  abroad,  including  the  possibility  of
expropriations  or confiscatory taxation, limitations on  the use or transfer of
Fund  assets  and  any  effects   of  foreign  social,  economic  or   political
instability. Foreign companies are not subject to the regulatory requirements of
U.S.  companies and, as  such, there may be  less publicly available information
about such companies.  Moreover, foreign  companies are not  subject to  uniform
accounting,   auditing  and  financial   reporting  standards  and  requirements
comparable to those  applicable to U.S.  companies. Finally, in  the event of  a
default  of any foreign debt obligations, it  may be more difficult for the Fund
to

                                       9
<PAGE>
obtain or enforce a judgment against the issuers of such securities.

    Securities of foreign issuers may be less liquid than comparable  securities
of  U.S.  issuers  and, as  such,  their  price changes  may  be  more volatile.
Furthermore, foreign exchanges and broker-dealers are generally subject to  less
government   and   exchange  scrutiny   and   regulation  than   their  American
counterparts. Brokerage commissions,  dealer concessions  and other  transaction
costs may be higher on foreign markets than in the U.S. In addition, differences
in clearance and settlement procedures on foreign markets may occasion delays in
settlements  of  the  Fund's  trades  effected in  such  markets.  As  such, the
inability to  dispose of  portfolio securities  due to  settlement delays  could
result  in  losses to  the  Fund due  to subsequent  declines  in value  of such
securities and the inability of the Fund to make intended security purchases due
to settlement problems could result in a failure of the Fund to make potentially
advantageous  investments.  To   the  extent  the   Fund  purchases   Eurodollar
certificates  of deposit  issued by foreign  branches of  domestic United States
banks, consideration will be  given to their  domestic marketability, the  lower
reserve  requirements  normally mandated  for  overseas banking  operations, the
possible  impact  of  interruptions  in  the  flow  of  international   currency
transactions  and future international political and economic developments which
might adversely affect the payment of principal or interest.

    REPURCHASE AGREEMENTS.   While repurchase agreements  involve certain  risks
not  associated with  direct investments  in debt  securities, the  Fund follows
procedures designed to minimize those risks. These procedures include  effecting
repurchase  transactions only with  large, well-capitalized and well-established
financial institutions whose financial  condition will be continually  monitored
by  the Investment  Manager subject  to procedures  established by  the Board of
Trustees of the Fund.  In addition, the value  of the collateral underlying  the
repurchase  agreement will be at least  equal to the repurchase price, including
any accrued  interest earned  on the  repurchase agreement.  In the  event of  a
default  or bankruptcy by a selling financial institution, the Fund will seek to
liquidate such  collateral.  However, the  exercising  of the  Fund's  right  to
liquidate  such collateral  could involve  certain costs  or delays  and, to the
extent that  proceeds  from  any  sale  upon a  default  of  the  obligation  to
repurchase  were less than the  repurchase price, the Fund  could suffer a loss.
The Fund may not invest in repurchase agreements that do not mature within seven
days if any such investment, together with any other illiquid assets held by the
Fund, amounts to more than 10% of its total assets.

    PRIVATE PLACEMENTS.   Limitations on  the resale of  private placements  may
have  an adverse effect  on their marketability,  and may prevent  the Fund from
disposing of them promptly at reasonable prices.  The Fund may have to bear  the
expense  of registering such  securities for resale and  the risk of substantial
delays in  effecting such  registration. In  the case  of restricted  securities
determined  to be "liquid" pursuant  to Rule 144A under  the Securities Act, the
Fund's illiquidity  could  increase  if qualified  institutional  buyers  become
unavailable.

    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

                                       10
<PAGE>
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 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 will 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 many 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.

    The  extent to which the Fund  may enter into transactions involving options
and futures contracts 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."

    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  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 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. See the  Statement of Additional  Information for further
discussion of such risks.

    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.

    REVERSE  REPURCHASE AGREEMENTS.  The Fund  may enter into reverse repurchase
agreements, which involve  sales by  the Fund of  portfolio assets  concurrently
with an agreement by the Fund to repurchase the same assets at a later date at a
fixed price.

    Reverse  repurchase agreements involve the risk that the market value of the
securities the Fund is obligated to  repurchase under the agreement may  decline
below the repurchase price. In the event the buyer of securities under a reverse
repurchase  agreement files for bankruptcy or  becomes insolvent, the Fund's use
of the proceeds of  the agreement may be  restricted pending a determination  by
the  other party,  or its  trustee or  receiver, whether  to enforce  the Fund's
obligation to  repurchase  the  securities. Reverse  repurchase  agreements  are
considered   borrowings  by  the  Fund  and  for  purposes  other  than  meeting
redemptions may not exceed 5% of the Fund's total assets.

    LENDING OF  PORTFOLIO SECURITIES.    Consistent with  applicable  regulatory
requirements,  the Fund  may lend its  portfolio securities  to brokers, dealers

                                       11
<PAGE>
and other financial institutions, provided that  such loans are callable at  any
time  by  the  Fund  (subject  to certain  notice  provisions  described  in the
Statement of Additional Information),  and are at all  times secured by cash  or
money  market instruments, which are maintained in a segregated account pursuant
to applicable  regulations and  that are  equal to  at least  the market  value,
determined  daily, of the  loaned securities. As with  any extensions of credit,
there are risks of delay  in recovery and in some  cases even loss of rights  in
the  collateral should the borrower of the securities fail financially. However,
loans of  portfolio  securities  will  only  be made  to  firms  deemed  by  the
Investment  Manager to be creditworthy  and when the income  which can be earned
from such loans justifies the attendant risks.

    NON-DIVERSIFIED STATUS.   The Fund is  a non-diversified investment  company
and,  as  such,  is  not  subject to  the  diversification  requirements  of the
Investment Company  Act of  1940 (the  "Act"). As  a non-diversified  investment
company,  the Fund may invest a greater  portion of its assets in the securities
of a single issuer and  thus is subject to greater  exposure to risks such as  a
decline  in the credit rating of that issuer. However, the Fund anticipates that
it will qualify as a regulated  investment company under the federal income  tax
laws  and, if  so qualified, will  be subject to  the applicable diversification
requirements  of  the  Internal  Revenue  Code  (the  "Code").  As  a  regulated
investment company under the Code, the Fund may not, as of the end of any of its
fiscal  quarters,  have  invested more  than  25%  of its  total  assets  in the
securities of any one issuer (including a  foreign government), or as to 50%  of
its  total  assets,  have invested  more  than 5%  of  its total  assets  in the
securities of a single issuer.

    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 with  a
view  to  achieving  the  Fund's  investment  objective.  In  determining  which
securities to  purchase  for the  Fund  or hold  in  the Fund's  portfolio,  the
Investment  Manager  will rely  on information  from various  sources, including
research, analysis and appraisals of brokers and dealers, including Dean  Witter
Reynolds  Inc. ("DWR"), a broker-dealer affiliate  of InterCapital, the views of
Trustees of the  Fund and  others regarding economic  developments and  interest
rate  trends,  and the  Investment Manager's  own analysis  of factors  it deems
relevant.  The  Fund's   portfolio  is  managed   within  InterCapital's   Large
Capitalization   Equity  Group,   which  manages  thirty-five   funds  and  fund
portfolios, with approximately $21.7 billion in assets as of July 31, 1995. Mark
Bavoso, Senior Vice  President of  InterCapital and a  member of  InterCapital's
Large Capitalization Equity Group, has been the primary portfolio manager of the
Fund  since January, 1994, and has been  a portfolio manager at InterCapital for
over five years.
    

    Orders for transactions  in other portfolio  securities and commodities  are
placed  for  the Fund  with  a number  of  brokers and  dealers,  including DWR.
Pursuant to an  order of the  Securities and Exchange  Commission, the Fund  may
effect  principal transactions in certain money  market instruments with DWR. In
addition, the Fund  may incur  brokerage commissions  on transactions  conducted
through DWR.

    It is not anticipated that the portfolio trading engaged in by the Fund will
result  in its portfolio turnover rate exceeding  150% in any one year. The Fund
will  incur  underwriting  discount  costs  (on  underwritten  securities)   and
brokerage costs commensurate with its portfolio turnover rate, and thus a higher
level  (over 100%)  of portfolio transactions  will increase  the Fund's overall
brokerage expenses. See "Dividends, Distributions and Taxes" for a discussion of
the tax implications of the Fund's transactions. A more extensive discussion  of
the  Fund's  portfolio  brokerage policies  is  set  forth in  the  Statement of
Additional Information.

                                       12
<PAGE>
    Except as  specifically  noted,  all  investment  objectives,  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  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 limitations: (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 25% or more of the value of its total
assets  in securities of issuers in any  one industry. This restriction does not
apply to obligations issued or guaranteed by the United States Government or its
agencies or instrumentalities.

    2. 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.

    3. Purchase or sell commodities or
commodities  contracts except that the Fund  may purchase or write interest rate
and stock and bond index futures contracts and related options thereon.

    4. Pledge its assets or assign or otherwise
encumber them except to  secure permitted borrowings. (For  the purpose of  this
restriction,  collateral arrangements with respect to the writing of options and
collateral arrangements with respect to initial or variation margin for  futures
are not deemed to be pledges of assets.)

    5. Purchase securities on margin (but the
Fund  may  obtain  short-term  loans  as  are  necessary  for  the  clearance of
transactions). The deposit or payment by the Fund of initial or variation margin
in  connection  with  futures  contracts  or  related  options  thereon  is  not
considered the purchase of a security on margin.

PURCHASE OF FUND SHARES
--------------------------------------------------------------------------------

    The  Fund offers its  shares for sale  to the public  on a continuous basis.
Pursuant  to  a  Distribution  Agreement  between  the  Fund  and  Dean   Witter
Distributors  Inc. (the "Distributor"), an  affiliate of the Investment Manager,
shares of the Fund  are distributed by  the Distributor and  offered by DWR  and
other  dealers  who  have  entered  into  selected  dealer  agreements  with the
Distributor ("Selected Broker-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 Strategist Fund, directly
to  Dean Witter Trust  Company (the "Transfer  Agent") at P.O.  Box 1040, Jersey
City, NJ 07303 or by  contacting an account executive  of DWR or other  Selected
Broker-Dealer.  In  the  case  of  investments  pursuant  to  Systematic Payroll
Deduction Plans  (including  Individual  Retirement Plans),  the  Fund,  in  its
discretion,  may accept investments without regard  to any minimum amounts which

                                       13
<PAGE>
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. 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).

   
    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 with the Transfer Agent must be
accompanied by payment. Investors will  be entitled to receive income  dividends
and  capital gains  distributions if  their order  is received  by the  close of
business  on  the  day  prior  to  the  record  date  for  such  dividends   and
distributions.  While  no  sales  charge  is  imposed  at  the  time  shares are
purchased, a contingent  deferred sales  charge may be  imposed at  the time  of
redemption  (see "Redemptions and Repurchases"). Sales personnel are compensated
for selling shares  of the Fund  at the time  of their sale  by the  Distributor
and/or Selected Broker-Dealer. In addition, some sales personnel of the Selected
Broker-Dealer  will receive  various types  of non-cash  compensation as special
sales incentives,  including trips,  educational  and/or business  seminars  and
merchandise.  The  Fund and  the  Distributor reserve  the  right to  reject any
purchase orders.
    

PLAN OF DISTRIBUTION

   
    The Fund has adopted an amended Plan of Distribution pursuant to Rule  12b-1
of  the Act (the "Plan"),  under which the Fund will  pay the Distributor a fee,
which is accrued daily and payable monthly, at an annual rate of: (i) 1% of  the
lesser of (a) the average daily aggregate gross sales of the Fund's shares since
the  implementation of the Plan on November 8, 1989 (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 Plan's implementation
upon which a contingent deferred sales charge has been imposed or waived; or (b)
the average daily net assets of the  Fund attributable to shares issued, net  of
related  shares redeemed, since  implementation of the Plan;  plus (ii) 0.25% of
the Fund's  average daily  net  assets attributable  to  shares issued,  net  of
related  shares  redeemed, prior  to  implementation of  the  Plan. 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
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 July 31, 1995, the Fund accrued payments under the
Plan  amounting to  $7,304,905, which  amount is  equal to  0.91% of  the Fund's
average daily net  assets for the  fiscal year. The  payments accrued under  the
Plan were
    

                                       14
<PAGE>
calculated pursuant to clauses (i)(a) and (ii) 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  amounts,  including  the
carrying  charge described above,  totalled $24,218,844 at  July 31, 1995, which
was equal to 2.76% 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 assets of the Fund, subtracting  all
its  liabilities, dividing by the number  of shares outstanding and adjusting to
the nearest cent. The net asset value  per share will not be determined on  Good
Friday and on such other federal and non-federal holidays as are observed by the
New York Stock Exchange.
    

   
    In  the calculation of the  Fund's net asset value:  (1) an equity portfolio
security listed or traded on the New  York or American Stock Exchange or  quoted
by  NASDAQ is  valued at  its latest  sale price  on that  exchange or quotation
service prior to the time  assets are valued; if there  were no sales that  day,
the  security is valued  at the latest bid  price (in cases  where a security is
traded on  more  than one  exchange,  the security  is  valued on  the  exchange
designated  as  the  primary  market  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 bid price. When
market quotations are not readily available, including circumstances under which
it  is determined  by the  Investment Manager  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.
    

    Certain  of  the Fund's  portfolio securities  may be  valued by  an outside
pricing service approved by the Fund's Trustees. The pricing service utilizes  a
matrix  system  incorporating  security  quality,  maturity  and  coupon  as the
evaluation model parameters, and/or research evaluations by its staff, including
review of broker-dealer market price quotations, in determining what the pricing
service believes is the fair valuation of such portfolio securities.

    Short-term debt securities with remaining  maturities of sixty days or  less
at  the  time of  purchase are  valued  at amortized  cost, unless  the Trustees
determine such does not reflect the securities' fair value, in which case  these
securities will be valued at their fair value as determined by the Trust
ees.

                                       15
<PAGE>
SHAREHOLDER SERVICES
--------------------------------------------------------------------------------

    AUTOMATIC  INVESTMENT OF DIVIDENDS AND  DISTRIBUTIONS.  All income dividends
and capital gains distributions  are automatically paid  in full and  fractional
shares  of the  Fund (or,  if specified by  the shareholder,  any other open-end
investment  company  for  which   InterCapital  serves  as  investment   manager
(collectively,  with the Fund, the "Dean Witter Funds")), unless the shareholder
requests that they be paid  in cash. Shares so acquired  are not subject to  the
imposition  of a  contingent deferred  sales charge  upon their  redemption (see
"Redemptions and Repurchases").

    INVESTMENT OF DIVIDENDS AND DISTRIBUTIONS RECEIVED IN CASH.  Any shareholder
who  receives  a  cash  payment   representing  a  dividend  or  capital   gains
distribution may invest such dividend or distribution at the net asset value per
share  next determined  after receipt  by the  Transfer Agent,  by returning the
check or the proceeds to the Transfer Agent within thirty days after the payment
date. Shares  so acquired  are not  subject to  the imposition  of a  contingent
deferred sales charge upon their redemption (see "Redemptions and Repurchases.")

    EASYINVEST-SM-.    Shareholders may  subscribe  to EasyInvest,  an automatic
purchase plan  which  provides  for  any  amount  from  $100  to  $5,000  to  be
transferred automatically from a checking or savings account, on a semi-monthly,
monthly  or quarterly basis, to  the Transfer Agent for  investment in shares of
the Fund.

    SYSTEMATIC WITHDRAWAL PLAN.  A  systematic withdrawal plan (the  "Withdrawal
Plan")  is available  for shareholders  who own or  purchase shares  of the Fund
having a minimum value of $10,000 based  upon the then current net asset  value.
The  Withdrawal Plan provides for monthly  or quarterly (March, June, September,
and December) checks in any  dollar amount, not less than  $25, or in any  whole
percentage  of  the  account balance,  on  an annualized  basis.  Any applicable
contingent deferred sales charge  will be imposed on  shares redeemed under  the
Withdrawal  Plan  (See "Redemptions  and Repurchases--Contingent  Deferred Sales
Charge"). Therefore, any shareholder participating  in the Withdrawal Plan  will
have  sufficient shares redeemed  from his or  her account so  that the proceeds
(net of any applicable contingent deferred sales charge) to the shareholder will
be the designated monthly or quarterly amount.

    Shareholders should  contact  their  DWR  or  other  Selected  Broker-Dealer
account executive or the Transfer Agent for further information about any of the
above services.

    TAX-SHELTERED  RETIREMENT PLANS.  Retirement plans  are available for use by
corporations, the  self-employed, eligible  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 and five  Dean Witter  Funds which are
money market funds (the foregoing ten 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.
    

                                       16
<PAGE>
    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 re-exchanged for
shares of the  CDSC fund  originally purchased. During  the period  of time  the
shareholder  remains in the Exchange  Fund (calculated from the  last day of the
month in which the Exchange Fund shares were acquired), the holding period  (for
the  purpose of determining the rate of the CDSC) is frozen. If those shares are
subsequently  reexchanged  for  shares  of  a  CDSC  fund,  the  holding  period
previously  frozen when the first  exchange was made resumes  on the last day of
the month in which shares of a CDSC fund are reacquired. Thus, the CDSC is based
upon the time (calculated as described above) the shareholder was invested in  a
CDSC fund (see "Redemptions and Repurchases--Contingent Deferred Sales Charge").
However, in the case of shares exchanged into an Exchange Fund on or after April
23,  1990, upon a redemption of shares which  results in a CDSC being imposed, a
credit (not to exceed the amount of the  CDSC) will be given in an amount  equal
to  the Exchange Fund 12b-1 distribution fees, if any, incurred on or after that
date which are attributable to  those shares. (Exchange Fund 12b-1  distribution
fees are described in the prospectus for those funds.)

    In  addition, shares of the  Fund may be acquired  in exchange for shares of
Dean Witter Funds sold  with a front-end sales  charge ("front-end sales  charge
funds"),  but shares  of the  Fund, however acquired,  may not  be exchanged for
shares of  front-end sales  charge funds.  Shares  of a  CDSC fund  acquired  in
exchange  for shares of a front-end sales charge fund (or in exchange for shares
of other Dean Witter  Funds for which  shares of a  front-end sales charge  fund
have been exchanged) are not subject to any CDSC upon their redemption.

    Purchases  and  exchanges should  be made  for  investment purposes  only. A
pattern of frequent  exchanges may  be deemed by  the Investment  Manager to  be
abusive and contrary to the best interests of the Fund's other shareholders and,
at  the Investment Manager's discretion, may be limited by the Fund's refusal to
accept additional purchases and/  or exchanges from  the investor. Although  the
Fund  does not  have any  specific definition of  what constitutes  a pattern of
frequent exchanges,  and  will  consider all  relevant  factors  in  determining
whether  a particular situation is abusive and contrary to the best interests of
the Fund and its other shareholders, investors should be aware that the Fund and
each of the other Dean Witter Funds  may in their discretion limit or  otherwise
restrict  the number of  times this Exchange  Privilege may be  exercised by any
investor. Any such restriction will be made  by the Fund on a prospective  basis
only,  upon notice  to the  shareholder not later  than ten  days following such
shareholder's  most  recent  exchange.  Also,  the  Exchange  Privilege  may  be
terminated  or revised at  any time by the  Fund and/or any  of such Dean Witter
Funds for which shares of the Fund have been exchanged, upon such notice as  may
be  required by applicable regulatory  agencies. Shareholders maintaining margin
accounts with  DWR  or another  Selected  Broker-Dealer are  referred  to  their
account  executive  regarding restrictions  on exchange  of  shares of  the Fund
pledged in the margin account.

    The current prospectus for each  fund describes its investment  objective(s)
and   policies,  and   shareholders  should  obtain   a  copy   and  examine  it
care-

                                       17
<PAGE>
fully  before  investing.  Exchanges  are  subject  to  the  minimum  investment
requirement  and any other conditions imposed by  each fund. An exchange will be
treated for federal income tax purposes  the same as a repurchase or  redemption
of shares, on which the shareholder may realize a capital gain or loss. However,
the ability to deduct capital losses on an exchange may be limited in situations
where  there is an  exchange of shares  within ninety days  after the shares are
purchased. The Exchange Privilege is only available in states where an  exchange
may legally be made.

   
    If DWR or another Selected Broker-Dealer is the current dealer of record and
its  account  numbers  are part  of  the account  information,  shareholders may
initiate an exchange of shares of the Fund for shares of any of the Dean  Witter
Funds  (for which the Exchange Privilege is available) pursuant to this Exchange
Privilege  by  contacting  their   account  executive  (no  Exchange   Privilege
Authorization  Form is required). Other shareholders (and those shareholders who
are clients  of DWR  or another  Selected  Broker-Dealer but  who wish  to  make
exchanges  directly by writing or telephoning  the Transfer Agent) must complete
and forward  to the  Transfer Agent  an Exchange  Privilege Authorization  Form,
copies  of  which  may be  obtained  from  the Transfer  Agent,  to  initiate an
exchange. If the Authorization Form is used, exchanges may be made in writing or
by contacting the Transfer Agent at (800) 526-3143 (toll-free).
    

    The  Fund  will  employ  reasonable  procedures  to  confirm  that  exchange
instructions  communicated over the  telephone are genuine.  Such procedures may
include requiring various forms of personal identification such as name, mailing
address, social security  or other tax  identification number and  DWR or  other
Selected  Broker-Dealer account number (if any). Telephone instructions may also
be recorded. If such procedures are not employed, the Fund may be liable for any
losses due to unauthorized or fraudulent instructions.

    Telephone exchange instructions will be accepted if received by the Transfer
Agent between 9:00 a.m.  and 4:00 p.m. New  York time, on any  day the New  York
Stock  Exchange is  open. Any  shareholder wishing to  make an  exchange who has
previously filed an Exchange Privilege Authorization  Form and who is unable  to
reach  the Fund  by telephone should  contact his  or her DWR  or other Selected
Broker-Dealer account  executive, if  appropriate, or  make a  written  exchange
request.  Shareholders are  advised that during  periods of  drastic economic or
market changes, it  is possible that  the telephone exchange  procedures may  be
difficult to implement, although this has not been the case with the Dean Witter
Funds in the past.

    Shareholders  should  contact  their  DWR  or  other  Selected Broker-Dealer
account executive  or  the Transfer  Agent  for further  information  about  the
Exchange Privilege.

REDEMPTIONS AND REPURCHASES
--------------------------------------------------------------------------------

    REDEMPTION.   Shares of the Fund can be redeemed for cash at any time at the
net asset value  per share  next determined; however,  such redemption  proceeds
will  be  reduced by  the  amount of  any  applicable contingent  deferred sales
charges (see below).  If shares are  held in a  shareholder's account without  a
share certificate, a written request for redemption to the Fund's Transfer Agent
at P. O. Box 983, Jersey City, NJ 07303 is required. If certificates are held by
the  shareholder, the  shares may be  redeemed by  surrendering the certificates
with a written request for  redemption, along with any additional  documentation
required by the Transfer Agent.

    CONTINGENT  DEFERRED  SALES  CHARGE.   Shares  of the  Fund  purchased after
implementation  of  the  Plan  on  November  8,  1989  (see  "Purchase  of  Fund
Shares--Plan  of  Distribution") 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

                                       18
<PAGE>
   
redemption. Shares purchased after implementation to the Plan which are 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 or prior  to implementation of  the Plan; and  (iii) the current  net
asset   value  of  shares   purchased  through  reinvestment   of  dividends  or
distributions and/or shares acquired in exchange for shares of Dean Witter Funds
sold with a front-end  sales charge or  of other Dean  Witter Funds acquired  in
exchange  for such shares. Moreover, in determining whether a CDSC is applicable
it will be assumed that amounts described in (i), (ii) and (iii) above (in  that
order)  are redeemed first. In addition, no  CDSC will be imposed on redemptions
of shares which 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:  (i) redemptions of  shares held at  the time a  shareholder dies or becomes
disabled, only  if the  shares  are (a)  registered either  in  the name  of  an
individual  shareholder (not a trust),  or in the names  of such shareholder and
his or her spouse as joint tenants with  right of survivorship or (b) held in  a
qualified  corporate  or  self-employed retirement  plan,  Individual Retirement
Account or Custodial  Account under  Section 403(b)(7) of  the Internal  Revenue
Code,  provided in either case that the  redemption is requested within one year
of the death  or initial determination  of disability, and  (ii) redemptions  in
connection  with the  following retirement  plan distributions:  (a) lump-sum or
other distributions from a qualified corporate or self-employed retirement  plan
following  retirement (or in the case of a "key employee" of a "top heavy" plan,
following attainment  of  age 59  1/2);  (b) distributions  from  an  Individual
Retirement  Account or Custodial Account under Section 403(b)(7) of the Internal
Revenue Code following attainment of age 59 1/2; or (c) a tax-free return of  an
excess  contribution to an  IRA. For the purpose  of determining disability, the
Distributor utilizes the definition of disability contained in Section  72(m)(7)
of  the  Internal Revenue  Code, which  relates  to the  inability to  engage in
gainful employment. All waivers  will be granted only  following receipt by  the
Distributor of confirmation of the 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 the Fund, the Distributor,
DWR  or   other  Selected   Broker-Dealers.   The  offer   by  DWR   and   other

                                       19
<PAGE>
Selected  Broker-Dealers to repurchase shares may be suspended without notice by
them at any time.  In that event, shareholders  may redeem their shares  through
the Fund's Transfer Agent as set forth above under "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  circumstances, 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  investment of  the check  by the  Transfer
Agent).  Shareholders maintaining margin  accounts with DWR  or another Selected
Broker-Dealer are referred to their account executive regarding restrictions  on
redemption of shares of the Fund pledged in the margin account.
    

    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  have a value  of
less  than $100, or such lesser amount as  may be fixed by the Trustees. 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 on a  quarterly basis. The Fund  may distribute quarterly net
realized short-term  capital  gains, if  there  are  any. The  Fund  intends  to
distribute  net long-term capital  gains, if any,  at least once  each year. The
Fund may, however, determine either  to distribute or to  retain all or part  of
any long-term capital gains in any year for reinvestment.

    All dividends and any capital gains distributions will be paid in additional
Fund  shares  and automatically  credited to  the shareholder's  account without
issuance of a share certificate unless the shareholder requests in writing  that
all   dividends  and/or  distributions  be   paid  in  cash.  (See  "Shareholder
Services--Automatic Investment of Dividends and Distributions".)

    TAXES.  Because  the Fund intends  to distribute all  of its net  investment
income  and net capital gains to  shareholders and otherwise continue to qualify
as a regulated  investment company under  Subchapter M of  the Internal  Revenue
Code,  it is  not expected  that the Fund  will be  required to  pay any federal
income tax. Shareholders  who are  required to pay  taxes on  their income  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
net  short-term capital gains, are taxable to the shareholder as ordinary income
regardless of

                                       20
<PAGE>
whether the shareholder receives such payments in additional shares or in cash.

    Gains or losses  on the  Fund's transactions in  listed non-equity  options,
futures  and options on futures  generally are treated as  60% long-term and 40%
short-term. 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 gains being available for annual distribution.

    One  of the  requirements for  the Fund to  remain qualified  as a regulated
investment company is that less than 30%  of the Fund's gross income be  derived
from  gains from the sale or other  disposition of securities held for less than
three months. Accordingly, the Fund may be restricted in the writing of  options
on  securities held for less than three  months, in the writing of options which
expire in less  than three months,  and in effecting  closing transactions  with
respect  to call or put  options which have been  written or purchased less than
three months prior to such transactions. The Fund may also be restricted in  its
ability to engage in transactions involving futures contracts.

    Distributions  of  net  long-term  capital gains,  if  any,  are  taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash. Capital  gains distributions are not eligible  for
the corporate dividends received deduction.

    After  the  end  of  the  calendar  year,  shareholders  will  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.

    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 and five  years, as well as over the life of
the Fund. 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
(e.g., mutual fund performance rankings of Lipper Analytical Services, Inc.; S&P
500 stock index; Dow Jones and Company, Inc. Industrial Average).

                                       21
<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.

    Under Massachusetts law, shareholders of a business trust may, under certain
limited  circumstances, be held personally liable as partners for 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, in the opinion of  Massachusetts
counsel to the Fund, the risk to 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 option  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  recent  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.

                                       22
<PAGE>
                        THE DEAN WITTER FAMILY OF FUNDS

   
MONEY MARKET FUNDS                       DEAN WITTER RETIREMENT SERIES
Dean Witter Liquid Asset Fund Inc.       Liquid Asset Series
Dean Witter U.S. Government Money        U.S. Government Money Market Series
Market Trust                             U.S. Government Securities Series
Dean Witter Tax-Free Daily Income Trust  Intermediate Income Securities Series
Dean Witter California Tax-Free Daily    American Value Series
Income Trust                             Capital Growth Series
Dean Witter New York Municipal Money     Dividend Growth Series
Market Trust                             Strategist Series
EQUITY FUNDS                             Utilities Series
Dean Witter American Value Fund          Value-Added Market Series
Dean Witter Natural Resource             Global Equity Series
Development Securities Inc.              ASSET ALLOCATION FUNDS
Dean Witter Dividend Growth Securities   Dean Witter Managed Assets Trust
Inc.                                     Dean Witter Strategist Fund
Dean Witter Developing Growth            Dean Witter Global Asset Allocation
Securities Trust                         Fund
Dean Witter World Wide Investment Trust  ACTIVE ASSETS ACCOUNT PROGRAM
Dean Witter Value-Added Market Series    Active Assets Money Trust
Dean Witter Utilities Fund               Active Assets Tax-Free Trust
Dean Witter Capital Growth Securities    Active Assets California Tax-Free Trust
Dean Witter European Growth Fund Inc.    Active Assets Government Securities
Dean Witter Precious Metals and          Trust
Minerals Trust
Dean Witter Pacific Growth Fund Inc.
Dean Witter Health Sciences Trust
Dean Witter Global Dividend Growth
Securities
Dean Witter Global Utilities Fund
Dean Witter International SmallCap Fund
Dean Witter Mid-Cap Growth Fund
Dean Witter Balanced Growth Fund
FIXED INCOME FUNDS
Dean Witter High Yield Securities Inc.
Dean Witter Tax-Exempt Securities Trust
Dean Witter U.S. Government Securities
Trust
Dean Witter Federal Securities Trust
Dean Witter Convertible Securities
Trust
Dean Witter California Tax-Free Income
Fund
Dean Witter New York Tax-Free Income
Fund
Dean Witter World Wide Income Trust
Dean Witter Intermediate Income
Securities
Dean Witter Global Short-Term Income
Fund Inc.
Dean Witter Multi-State Municipal
Series Trust
Dean Witter Premier Income Trust
Dean Witter Short-Term U.S. Treasury
Trust
Dean Witter Diversified Income Trust
Dean Witter Limited Term Municipal
Trust
Dean Witter Short-Term Bond Fund
Dean Witter National Municipal Trust
Dean Witter High Income Securities
Dean Witter Balanced Income Fund
Dean Witter Hawaii Municipal Trust
    
<PAGE>

   
                                    DEAN WITTER
Dean Witter
Strategist Fund                     STRATEGIST
Two World Trade Center              FUND
New York, New York 10048
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
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 Bank of New York
90 Washington Street
New York, New York 10286
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
                                          PROSPECTUS -- AUGUST 28, 1995

    
<PAGE>

   
STATEMENT OF ADDITIONAL INFORMATION                                  DEAN WITTER
AUGUST 28, 1995                                                  STRATEGIST FUND

--------------------------------------------------------------------------------
    

    Dean  Witter Strategist  Fund (the  "Fund") is  an open-end, non-diversified
management investment company, the investment objective of which is to  maximize
the  total return on its investments. The Fund seeks to achieve its objective by
actively allocating  its  assets among  the  major asset  categories  of  equity
securities,   fixed-income   securities  and   money  market   instruments.  See
"Investment Practices and Policies."

   
    A Prospectus for the  Fund dated August 28,  1995, 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 number listed below  or
from  the Fund's Distributor, Dean Witter Distributors Inc., or from Dean Witter
Reynolds Inc.  at  any of  its  branch  offices. This  Statement  of  Additional
Information is not a Prospectus. It contains information in addition to and more
detailed  than  that set  forth in  the  Prospectus. It  is intended  to provide
additional information regarding the activities and operations of the Fund,  and
should be read in conjunction with the Prospectus.
    

Dean Witter
Strategist Fund
Two World Trade Center
New York, New York 10048
(212) 392-2550
<PAGE>
TABLE OF CONTENTS
--------------------------------------------------------------------------------

   
The Fund and its Management ...............................................    3
Trustees and Officers .....................................................    6
Investment Practices and Policies .........................................   12
Investment Restrictions ...................................................   26
Portfolio Transactions and Brokerage ......................................   27
The Distributor ...........................................................   28
Shareholder Services ......................................................   32
Redemptions and Repurchases ...............................................   36
Dividends, Distributions and Taxes ........................................   39
Performance Information ...................................................   41
Description of Shares .....................................................   41
Custodian and Transfer Agent ..............................................   42
Independent Accountants ...................................................   43
Reports to Shareholders ...................................................   43
Legal Counsel .............................................................   43
Experts ...................................................................   43
Registration Statement ....................................................   43
Financial Statements - July 31, 1995 ......................................   48
Report of Independent Accountants .........................................   55
Appendix ..................................................................   56
    

                                       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
August 5, 1988.

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.,  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 to
Dean Witter InterCapital Inc. thereafter.) The daily management of the Fund  and
research  relating  to  the  Fund's  portfolio are  conducted  by  or  under the
direction of officers  of the  Fund and of  the Investment  Manager, subject  to
review  by  the Fund's  Board of  Trustees.  In addition,  Trustees of  the Fund
provide guidance on economic factors and interest rate trends. Information as to
these Trustees  and  officers  is  contained under  the  caption  "Trustees  and
Officers".

   
    InterCapital  is also  the investment manager  or investment  adviser of the
following management  investment companies:  Active Assets  Money Trust,  Active
Assets  Tax-Free Trust, Active  Assets California Tax-Free  Trust, Active Assets
Government Securities Trust,  Dean Witter Liquid  Asset Fund Inc.,  InterCapital
Income  Securities Inc., InterCapital Insured Municipal Bond Trust, InterCapital
Insured  Municipal   Trust,  InterCapital   Insured  Municipal   Income   Trust,
InterCapital  California  Insured Municipal  Income Trust,  InterCapital Insured
Municipal Securities,  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
Developing  Growth Securities  Trust, Dean  Witter Tax-Exempt  Securities Trust,
Dean Witter Natural Resource Development  Securities Inc., Dean Witter  Dividend
Growth  Securities  Inc.,  Dean Witter  American  Value Fund,  Dean  Witter U.S.
Government Money  Market Trust,  Dean Witter  Variable Investment  Series,  Dean
Witter  World Wide Investment  Trust, Dean Witter  Select Municipal Reinvestment
Fund, Dean  Witter  U.S. Government  Securities  Trust, Dean  Witter  California
Tax-Free  Income Fund,  Dean Witter New  York Tax-Free Income  Fund, Dean Witter
Convertible Securities Trust, Dean Witter Federal Securities Trust, Dean  Witter
Value-Added  Market  Series, Dean  Witter  Utilities Fund,  Dean  Witter Managed
Assets Trust, Dean Witter  California Tax-Free Daily  Income Trust, Dean  Witter
World Wide Income Trust, Dean Witter Intermediate Income Securities, Dean Witter
Capital  Growth Securities, Dean  Witter European Growth  Fund Inc., Dean Witter
Precious Metals and Minerals Trust, Dean Witter New York Municipal Money  Market
Trust,  Dean Witter  Global Short-Term  Income Fund,  Inc., Dean  Witter Pacific
Growth Fund Inc., Dean  Witter Multi-State Municipal  Series Trust, Dean  Witter
Premier  Income Trust, Dean  Witter Short-Term U.S.  Treasury Trust, 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 National Municipal  Trust, Dean Witter High
Income Securities, Dean Witter International SmallCap Fund, Dean Witter  Mid-Cap
Growth  Fund,  Dean  Witter  Select Dimensions  Investment  Series,  Dean Witter
Balanced Growth  Fund, Dean  Witter  Balanced Income  Fund, Dean  Witter  Hawaii
Municipal  Trust, Municipal Income  Trust, Municipal Income  Trust II, Municipal
Income  Trust  III,  Municipal  Income  Opportunities  Trust,  Municipal  Income
Opportunities
    

                                       3
<PAGE>
Trust  II,  Municipal Income  Opportunities Trust  III,  Prime Income  Trust and
Municipal Premium  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  North American  Intermediate Income Trust,
TCW/DW Global Convertible  Trust, TCW/DW Emerging  Markets Opportunities  Trust,
TCW/DW  Term Trust 2000, TCW/DW Term Trust  2002 and TCW/DW Term Trust 2003 (the
"TCW/DW Funds").  InterCapital  also serves  as:  (i) sub-adviser  to  Templeton
Global  Opportunities Trust, an open-end  investment company; (ii) administrator
of The BlackRock Strategic Term Trust Inc., a closed-end investment company; and
(iii) sub-administrator  of  MassMutual Participation  Investors  and  Templeton
Global Governments Income Trust, closed-end investment companies.

    The  Investment Manager also serves as an investment adviser for Dean Witter
World Wide Investment Fund,  an investment company organized  under the laws  of
Luxembourg, shares of which companies may not be offered in the United States or
purchased by American citizens outside of the United States.

    Pursuant  to an Investment  Management Agreement (the  "Agreement") with the
Investment Manager, the Fund has retained  the Investment Manager to manage  the
investment  of  the  Fund's assets,  including  the  placing of  orders  for the
purchase and sale of  portfolio securities. The  Investment Manager obtains  and
evaluates  such  information  and  advice relating  to  the  economy, securities
markets, and  specific  securities  as  it  considers  necessary  or  useful  to
continuously  manage the  assets of  the Fund  in a  manner consistent  with its
investment objective. Under the terms of the Agreement, in addition to  managing
the  Fund's investments, the Investment Manager  maintains certain of the Fund's
books and  records  and  furnishes,  at its  own  expense,  such  office  space,
facilities,  equipment, clerical help and bookkeeping  and 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.

   
    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 existing Agreement.
    

    Expenses not expressly assumed by the Investment Manager under the Agreement
or  by  the Distributor  of  the Fund's  shares,  Dean Witter  Distributors Inc.
("Distributors" or the "Distributor") (see  "The Distributor"), will be paid  by
the  Fund.  The expenses  borne by  the Fund  include, but  are not  limited to:
expenses  of  the  Plan  of  Distribution  pursuant  to  Rule  12b-1  (see  "The
Distributor");  charges and expenses of any registrar; custodian, 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

                                       4
<PAGE>
preparing, printing and mailing of proxy statements and reports to shareholders;
fees and  travel  expenses of  Trustees  or members  of  any advisory  board  or
committee  who  are not  employees of  the Investment  Manager or  any corporate
affiliate of  the Investment  Manager; all  expenses incident  to any  dividend,
withdrawal  or redemption options;  charges and expenses  of any outside service
used for  pricing of  the Fund's  shares; fees  and expenses  of legal  counsel,
including  counsel to the Trustees who are not interested persons of the Fund or
of the Investment Manager (not  including compensation or expenses of  attorneys
who  are  employees  of  the Investment  Manager)  and  independent accountants;
membership dues of industry associations; interest on Fund borrowings;  postage;
insurance premiums on property or personnel (including officers and Trustees) of
the  Fund which inure to its benefit; extraordinary expenses (including, but not
limited  to,  legal  claims  and  liabilities  and  litigation  costs  and   any
indemnification relating thereto); and all other costs of the Fund's operation.

   
    As  full compensation for the services  and facilities furnished to the Fund
and expenses of the Fund  assumed by the Investment  Manager, the Fund pays  the
Investment  Manager  monthly  compensation  calculated  daily  by  applying  the
following annual rates to the Fund's daily  net assets: 0.60% of the portion  of
the daily net assets not exceeding $500 million; 0.55% of the next $500 million;
and  0.50% of the portion of the daily  net assets exceeding $1 billion. For the
fiscal years  ended July  31,  1993, 1994  and 1995,  the  Fund accrued  to  the
Investment  Manager total compensation of $3,541,615, $4,711,608 and $4,679,443,
respectively.
    

   
    Pursuant to the 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. Such amount, if any, will
be  calculated daily and  credited on a  monthly basis. The  Fund did not exceed
such limitation during the fiscal years ended July 31, 1993, 1994 and 1995.
    

    The Agreement  provides that  in  the absence  of willful  misfeasance,  bad
faith, gross negligence or reckless disregard of its obligations thereunder, the
Investment Manager is not liable to the Fund or any of its investors for any act
or omission by the Investment Manager or for any losses sustained by the Fund or
its  investors. The  Agreement in no  way restricts the  Investment Manager from
acting as investment manager or adviser to others.

   
    The Agreement was initially approved by the Board of Trustees on October 30,
1992, and by the shareholders of the  Fund at a Meeting of Shareholders held  on
January 12, 1993. The Agreement is substantially identical to a prior investment
management  agreement which was initially approved by the Trustees on August 23,
1988, by DWR as the then sole shareholder  on August 26, 1988 and by the  Fund's
shareholders  at a  Meeting of  Shareholders held on  November 8,  1989, as such
prior agreement had been amended by the Trustees, including all of the  Trustees
who  are not parties to the Agreement or "interested persons," as defined in the
Investment Company Act of 1940, as amended  (the "Act"), of any such party  (the
"Independent  Trustees"), at their  meeting held on  July 27, 1989  to lower the
management fees charged on the Fund's daily net assets in excess of $500 million
and at their meeting held on April 28, 1993 to lower the management fees charged
on the Fund's daily net  assets in excess of $1  billion. At the April 28,  1993
meeting,  the Trustees, including all of the Independent Trustees, also approved
an amendment to the Agreement to lower the management fees charged on the Fund's
daily net assets in excess of $1 billion. The Agreement took effect on June  30,
1993  upon the  spin-off by Sears,  Roebuck and  Co. of its  remaining shares of
DWDC. The Agreement may  be terminated at any  time, without penalty, on  thirty
days'  notice by  the Trustees  of the Fund,  by the  holders of  a majority, as
defined in the Act, of the outstanding shares of the Fund, or by the  Investment
Manager.  The  Agreement  will  automatically  terminate  in  the  event  of its
assignment (as defined in the Act).
    

                                       5
<PAGE>
   
    Under its terms, the Agreement had an initial term ending April 30, 1994 and
will continue in effect  from year to year  thereafter, provided continuance  of
the  Agreement is  approved at least  annually by the  vote of the  holders of a
majority, as defined in the  Act, of the outstanding shares  of the Fund, or  by
the  Trustees of  the Fund;  provided that in  either event  such continuance is
approved annually by the vote of  a majority of the Independent Trustees,  which
vote  must be cast  in person at a  meeting called for the  purpose of voting on
such approval. At  their meeting held  on April  20, 1995, the  Fund's Board  of
Trustees,  including all of  the Independent Trustees,  approved continuation of
the Agreement until April 30, 1996.
    

    The Fund has acknowledged that the name "Dean Witter" is a property right of
DWR. The Fund has agreed that DWR or its parent company may use, or at any  time
permit  others to use, the name "Dean Witter".  The Fund has also agreed that in
the  event  the  Agreement  is   terminated,  or  if  the  affiliation   between
InterCapital  and its parent company is  terminated, the Fund will eliminate the
name "Dean Witter" from its name if DWR or its parent company shall so request.

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 77 Dean Witter Funds and the 13 TCW/DW Funds are shown
below.
    

   
<TABLE>
<CAPTION>
      NAME, AGE, POSITION WITH FUND
               AND ADDRESS                              PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
-----------------------------------------  -----------------------------------------------------------------------
<S>                                        <C>
Jack F. Bennett (71)                       Retired; Director or Trustee of the Dean Witter Funds; formerly  Senior
Trustee                                    Vice  President and Director of  Exxon Corporation (1975-January, 1989)
c/o Gordon Altman Butowsky Weitzen Shalov  and  Under  Secretary  of  the  U.S.  Treasury  for  Monetary   Affairs
& Wein                                     (1974-1975);  Director  of Philips  Electronics N.V.,  Tandem Computers
Counsel to the Independent Trustees        Inc. and Massachusetts  Mutual Insurance  Co.; director  or trustee  of
114 West 47th Street                       various other not-for-profit and business organizations.
New York, New York

Michael Bozic (54)                         Private  investor;  Director  or  Trustee  of  the  Dean  Witter Funds;
Trustee                                    formerly President  and Chief  Executive  Officer of  Hills  Department
c/o Gordon Altman Butowsky Weitzen Shalov  Stores  (May, 1991-July,  1995); formerly Chairman  and Chief Executive
& Wein                                     Officer (January, 1987-August, 1990) and President and Chief  Operating
Counsel to the Independent Trustees        Officer (August, 1990-February, 1991) of the Sears Merchandise Group of
114 West 47th Street                       Sears, Roebuck and Co.; Director of Eaglemark Financial Services, Inc.,
New York, New York                         the  United Negro  College Fund,  Weirton Steel  Corporation and Domain
                                           Inc. (home decor retailer).

Charles A. Fiumefreddo* (62)               Chairman and Chief Executive Officer and Director of InterCapital, DWSC
Chairman of the Board,                     and  Distributors;  Executive  Vice  President  and  Director  of  DWR;
President and Chief Executive              Chairman, Director or Trustee, President and Chief Executive Officer of
Officer and Trustee                        the Dean Witter Funds; Chairman, Chief Executive Officer and Trustee of
Two World Trade Center                     the  TCW/DW Funds;  formerly Executive  Vice President  and Director of
New York, New York                         DWDC (until February, 1993); Chairman and Director of Dean Witter Trust
                                           Company ("DWTC"); Director and/or officer of various DWDC subsidiaries.
</TABLE>
    

                                       6
<PAGE>
   
<TABLE>
<CAPTION>
      NAME, AGE, POSITION WITH FUND
               AND ADDRESS                              PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
-----------------------------------------  -----------------------------------------------------------------------
<S>                                        <C>
Edwin J. Garn (62)                         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 Corporation          (1980-1986); formerly  Mayor  of  Salt  Lake  City,  Utah  (1972-1974);
2000 Eagle Gate Tower                      formerly  Astronaut, Space Shuttle Discovery  (April 12-19, 1985); Vice
Salt Lake City, Utah                       Chairman, Huntsman Chemical Corporation  (since January, 1993);  Member
                                           of the board of various civic and charitable organizations.

John R. Haire (70)                         Chairman  of the Audit  Committee and Chairman of  the Committee of the
Trustee                                    Independent Directors or Trustees and  Director or Trustee of the  Dean
Two World Trade Center                     Witter  Funds; Trustee of the TCW/DW Funds; formerly President, Council
New York, New York                         for Aid  to  Education  (1978-October, 1989)  and  Chairman  and  Chief
                                           Executive   Officer  of  Anchor   Corporation,  an  Investment  Adviser
                                           (1964-1978); Director of Washington National Corporation (insurance).

Dr. Manuel H. Johnson (46)                 Senior Partner, Johnson  Smick International, Inc.,  a consulting  firm
Trustee                                    (since  June,  1985);  Koch Professor  of  International  Economics and
c/o Johnson Smick International, Inc.      Director of  the  Center for  Global  Market Studies  at  George  Mason
1133 Connecticut Avenue, N.W.              University  (since September, 1990); Co- Chairman  and a founder of the
Washington, DC                             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 NASDAQ  (since June,  1995);
                                           Director  of Greenwich Capital  Markets, Inc. (broker-dealer); formerly
                                           Vice Chairman of the Board of  Governors of the Federal Reserve  System
                                           (February,  1986-August,  1990)  and Assistant  Secretary  of  the U.S.
                                           Treasury (1982-1986).

Paul Kolton (72)                           Director or Trustee  of the Dean  Witter Funds; Chairman  of the  Audit
Trustee                                    Committee and Chairman of the Committee of the Independent Trustees and
c/o Gordon Altman Butowsky Weitzen Shalov  Trustee  of  the  TCW/DW  Funds;  formerly  Chairman  of  the Financial
& Wein                                     Accounting Standards Advisory Council and Chairman and Chief  Executive
Counsel to the Independent Trustees        Officer  of  the American  Stock  Exchange; Director  of  UCC Investors
114 West 47th Street                       Holding Inc. (Uniroyal Chemical Company  Inc.); director or trustee  of
New York, New York                         various not-for-profit organizations.

Michael E. Nugent (59)                     General   Partner,   Triumph  Capital,   L.P.,  a   private  investment
Trustee                                    partnership (since 1988); Director or Trustee of the Dean Witter Funds;
c/o Triumph Capital, L.P.                  Trustee of the  TCW/DW Funds;  formerly Vice  President, Bankers  Trust
237 Park Avenue                            Company  and  BT  Capital  Corporation;  Director  of  various business
New York, New York                         organizations.

Philip J. Purcell* (51)                    Chairman of the Board of Directors and Chief Executive Officer of DWDC,
Trustee                                    DWR and Novus Credit Services Inc.; Director of InterCapital, DWSC  and
Two World Trade Center                     Distributors;  Director or Trustee  of the Dean  Witter Funds; Director
New York, New York                         and/or officer of various DWDC subsidiaries.
</TABLE>
    

                                       7
<PAGE>
   
<TABLE>
<CAPTION>
      NAME, AGE, POSITION WITH FUND
               AND ADDRESS                              PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
-----------------------------------------  -----------------------------------------------------------------------
<S>                                        <C>
John L. Schroeder (64)                     Executive Vice  President  and Chief  Investment  Officer of  the  Home
Trustee                                    Insurance Company (since August, 1991); Director or Trustee of the Dean
c/o The Home Insurance Company             Witter  Funds;  Trustee  of  the  TCW/DW  Funds;  Director  of Citizens
59 Maiden Lane                             Utilities Company; formerly  Chairman and Chief  Investment Officer  of
New York, New York                         Axe-Houghton  Management and the  Axe-Houghton Funds (April, 1983-June,
                                           1991) and President of USF&G Financial Services, Inc. (June, 1990-June,
                                           1991).

Sheldon Curtis (63)                        Senior Vice President,  Secretary and General  Counsel of  InterCapital
Vice President, Secretary                  and  DWSC; Senior  Vice President  and Secretary  of DWTC;  Senior Vice
and General Counsel                        President,  Assistant  Secretary  and  Assistant  General  Counsel   of
Two World Trade Center                     Distributors;  Assistant Secretary of DWR and Vice President, Secretary
New York, New York                         and General Counsel of the Dean Witter Funds and the TCW/DW Funds.

Mark Bavoso (34)                           Senior Vice President of InterCapital (since June, 1993); formerly Vice
Vice President                             President of InterCapital.
Two World Trade Center
New York, New York

Thomas F. Caloia (49)                      First Vice President (since May,  1991) and Assistant Treasurer  (since
Treasurer                                  January,  1993)  of InterCapital;  First  Vice President  and Assistant
Two World Trade Center                     Treasurer of DWSC; Treasurer  of the Dean Witter  Funds and the  TCW/DW
New York, New York                         Funds; previously Vice President of InterCapital.
<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, Edmund C. Puckhaber,  Executive Vice President of InterCapital,  Robert
S.  Giambrone,  Senior Vice  President of  InterCapital, DWSC,  Distributors and
DWTC, and Joseph J. McAlinden, Senior  Vice President of InterCapital, are  Vice
Presidents  of  the Fund,  and Marilyn  K.  Cranney and  Barry Fink,  First Vice
Presidents and Assistant General Counsels of InterCapital and DWSC, and Lou Anne
McInnis and  Ruth  Rossi, Vice  Presidents  and Assistant  General  Counsels  of
InterCapital and DWSC, are Assistant Secretaries of the Fund.
    

   
BOARD OF TRUSTEES; RESPONSIBILITIES AND COMPENSATION OF INDEPENDENT TRUSTEES
    

   
    As mentioned above under the caption "The Fund and its Management," the Fund
is  one of  the Dean Witter  Funds, a  group of investment  companies managed by
InterCapital. As of the date of this Statement of Additional Information,  there
are a total of 77 Dean Witter Funds, comprised of 117 portfolios. As of July 31,
1995, the Dean Witter Funds had total net assets of approximately $67.25 billion
and more than five million shareholders.
    

   
    The  Board of  Directors or  Trustees, consisting  of ten  (10) directors or
trustees, is the same for each of the  Dean Witter Funds. Some of the Funds  are
organized  as business  trusts, others  as corporations,  but the  functions and
duties of  directors  and trustees  are  the same.  Accordingly,  directors  and
trustees of the Dean Witter Funds are referred to in this section as Trustees.
    

   
    Eight  Trustees, that is,  80% 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.  Five   of
    

                                       8
<PAGE>
   
the  eight  Independent Trustees  are also  Independent  Trustees of  the TCW/DW
Funds. As of the date of this  Statement of Additional Information, there are  a
total  of 13 TCW/DW Funds.  Two of the Funds'  Trustees, that is, the management
Trustees, are affiliated with InterCapital.
    

   
    As noted in a federal court ruling,  "[T]he independent directors . . .  are
expected  to  look  after  the  interests  of  shareholders  by  'furnishing  an
independent check upon management,' especially with respect to fees paid to  the
investment  company's sponsor." In addition  to their general "watchdog" duties,
the Independent Trustees  are charged  with a wide  variety of  responsibilities
under  the Act.  In order to  perform their duties  effectively, the Independent
Trustees are required to review and understand large amounts of material,  often
of a highly technical and legal nature.
    

   
    The   Dean  Witter  Funds  seek   as  Independent  Trustees  individuals  of
distinction and  experience  in  business and  finance,  government  service  or
academia; that is, people whose advice and counsel are valuable and 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
of  the demands made on their time by  the Funds. Indeed, to serve on the Funds'
Boards, certain Trustees who would be qualified  and in demand to serve on  bank
boards would be prohibited by law from serving at the same time as a director of
a national bank and as a Trustee of a Fund.
    

   
    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. Since most  of the  Dean Witter Funds  have such a
plan, and since all of the Funds' Boards have the same members, the  Independent
Trustees  effectively control the selection of other Independent Trustees of all
the Dean Witter Funds.
    

   
GOVERNANCE STRUCTURE OF THE DEAN WITTER FUNDS
    

   
    While the regulatory system establishes both general guidelines and specific
duties for  the  Independent  Trustees, the  governance  arrangements  from  one
investment  company  group to  another vary  significantly.  In some  groups the
Independent Trustees perform their  role by attendance  at periodic meetings  of
the  board  of  directors with  study  of  materials furnished  to  them between
meetings. At  the other  extreme, an  investment company  complex may  employ  a
full-time  staff to assist the Independent  Trustees in the performance of their
duties.
    

   
    The governance structure  of the Dean  Witter Funds lies  between these  two
extremes.  The  Independent Trustees  and  the Funds'  Investment  Manager alike
believe that these  arrangements are effective  and serve the  interests of  the
Funds'  shareholders. 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.
    

   
    The  Committee of the  Independent Trustees is  charged with recommending to
the full Board  approval of management,  advisory and administration  contracts,
Rule  12b-1  plans  and distribution  and  underwriting  agreements, continually
reviewing Fund performance,  checking on  the pricing  of portfolio  securities,
brokerage  commissions, transfer agent costs  and performance, and trading among
Funds in the  same complex, and  approving fidelity bond  and related  insurance
coverage and allocations, as well as other matters that arise from time to time.
    

   
    The  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; advising  the independent  accountants and  management personnel  that
they  have  direct access  to  the Committee  at  all times;  and  preparing and
submitting Committee meeting minutes to the full Board.
    

                                       9
<PAGE>
   
    Finally, the Board of each Fund  has established 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.
    

   
    During the calendar year ended December 31, 1994, the three Committees  held
a  combined total of eleven meetings.  The Committee meetings are sometimes held
away from  the  offices of  InterCapital  and sometimes  in  the Board  room  of
InterCapital.  These meetings are held  without management directors or officers
being present, unless and until they may be invited to the meeting for  purposes
of  furnishing information or  making a report.  These separate meetings provide
the Independent  Trustees an  opportunity to  explore in  depth with  their  own
independent   legal   counsel,  independent   auditors  and   other  independent
consultants, as needed, the issues they believe should be addressed and resolved
in the interests of the Funds' shareholders.
    

   
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 the issues,  and arranges to have the information  furnished.
He  also arranges for the services of  independent experts to be provided to the
Committees 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  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.
    

   
VALUE 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 is  in the best
interests  of  all  the  Funds'   shareholders.  This  arrangement  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. It is  believed 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 likelihood 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, it is believed that  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.
    

   
COMPENSATION OF INDEPENDENT TRUSTEES
    

   
    The  Fund pays each Independent  Trustee an annual fee  of $1,200 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 $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
    

                                       10
<PAGE>
   
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 Fund has adopted a retirement program under which an Independent Trustee
who  retires after serving for at least five years (or such lesser period as may
be determined by the Board)  as an Independent Director  or Trustee of any  Dean
Witter  Fund that has adopted the retirement program (each such Fund referred to
as an  "Adopting  Fund"  and each  such  Trustee  referred to  as  an  "Eligible
Trustee")  is  entitled  to  retirement  payments  upon  reaching  the  eligible
retirement age (normally,  after attaining  age 72). Annual  payments are  based
upon  length of  service. Currently, upon  retirement, each  Eligible Trustee is
entitled to receive from the Fund, commencing  as of his or her retirement  date
and  continuing  for the  remainder of  his  or her  life, an  annual retirement
benefit (the  "Regular  Benefit")  equal  to  28.75%  of  his  or  her  Eligible
Compensation  plus 0.4791666% 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  57.50% after  ten  years of  service. The
foregoing percentages may be changed by the Board.(1) "Eligible Compensation" is
one-fifth of the total compensation earned by such Eligible Trustee for  service
to  the Fund in the five year period prior to the date of the Eligible Trustee's
retirement. Benefits under the retirement program  are not secured or funded  by
the  Fund. As of the  date of this Statement  of Additional Information, 58 Dean
Witter Funds have adopted the retirement program.
    

   
    The following table  illustrates the  compensation paid  and the  retirement
benefits  accrued to the Fund's Independent Trustees  by the Fund for the fiscal
year ended July 31,  1995 and the estimated  retirement benefits for the  Fund's
Independent Trustees as of July 31, 1995.
    

   
<TABLE>
<CAPTION>
                             FUND COMPENSATION                             ESTIMATED RETIREMENT BENEFITS
                      -------------------------------   -------------------------------------------------------------------

                                                           ESTIMATED                                            ESTIMATED
                                         RETIREMENT       CREDIT YEARS       ESTIMATED                           ANNUAL
                        AGGREGATE         BENEFITS       OF SERVICE AT     PERCENTAGE OF       ESTIMATED        BENEFITS
NAME OF INDEPENDENT    COMPENSATION      ACCRUED AS        RETIREMENT         ELIGIBLE         ELIGIBLE           UPON
TRUSTEE               FROM THE FUND    FUND EXPENSES      (MAXIMUM 10)      COMPENSATION    COMPENSATION(2)   RETIREMENT(3)
--------------------  --------------   --------------   ----------------   --------------   ---------------   -------------
<S>                   <C>              <C>              <C>                <C>              <C>               <C>
Jack F. Bennett.....     $ 1,900          $ 1,188                 8            46.0%            $2,229           1$,025
Michael Bozic.......       1,850              265                10            57.5              1,950           1,121
Edwin J. Garn.......       2,000              594                10            57.5              1,950           1,121
John R. Haire.......       4,900(4)         2,786                10            57.5              5,162           2,968
Dr. Manuel H.
 Johnson............       1,950              243                10            57.5              1,950           1,121
Paul Kolton.........       2,000            1,226                10            57.0              2,435           1,388
Michael E. Nugent...       1,900              423                10            57.5              1,950           1,121
John L. Schroeder...       1,850              521                 8            47.9              1,950             934
<FN>
---------------
(1)  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.

(2)  Based on current levels of compensation.

(3)  Based on current  levels of  compensation. Amount of  annual benefits  also
     varies  depending  on the  Trustee's  elections described  in  Footnote (1)
     above.

(4)  Of Mr.  Haire's  compensation from  the  Fund, $3,400  is  paid to  him  as
     Chairman  of  the Committee  of the  Independent  Trustees ($2,400)  and as
     Chairman of the Audit Committee ($1,000).
</TABLE>
    

                                       11
<PAGE>
   
    The  following  table  illustrates  the  compensation  paid  to  the  Fund's
Independent  Trustees for the calendar year ended December 31, 1994 for services
to the 73 Dean Witter Funds and,  in the case of Messrs. Haire, Johnson,  Kolton
and  Nugent, the 13  TCW/DW Funds that  were in operation  at December 31, 1994.
With respect to Messrs. Haire, Johnson, Kolton and Nugent, 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.
    

   
           CASH COMPENSATION FROM DEAN WITTER FUNDS AND TCW/DW FUNDS
    

   
<TABLE>
<CAPTION>
                                                                   FOR SERVICE AS    TOTAL CASH
                               FOR SERVICE                          CHAIRMAN OF     COMPENSATION
                              AS DIRECTOR OR                       COMMITTEES OF    FOR SERVICES
                               TRUSTEE AND       FOR SERVICE AS     INDEPENDENT          TO
                             COMMITTEE MEMBER     TRUSTEE AND        DIRECTORS/        73 DEAN
                                OF 73 DEAN      COMMITTEE MEMBER    TRUSTEES AND       WITTER
                                  WITTER          OF 13 TCW/DW         AUDIT        FUNDS AND 13
NAME OF INDEPENDENT TRUSTEE       FUNDS              FUNDS           COMMITTEES     TCW/DW FUNDS
---------------------------  ----------------   ----------------   --------------   -------------
<S>                          <C>                <C>                <C>              <C>
Jack F. Bennett............      $125,761           --                 --             $125,761
Michael Bozic..............        82,637           --                 --               82,637
Edwin J. Garn..............       125,711           --                 --              125,711
John R. Haire..............       101,061           $66,950           $225,563(5)      393,574
Dr. Manuel H. Johnson......       122,461            60,750            --              183,211
Paul Kolton................       128,961            51,850             34,200(6)      215,011
Michael E. Nugent..........       115,761            52,650            --              168,411
John L. Schroeder..........        85,938           --                 --               85,938
<FN>
------------
(5)  For the 73 Dean Witter Funds.

(6)  For the 13 TCW/DW Funds.
</TABLE>
    

   
    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
--------------------------------------------------------------------------------

    U.S.  GOVERNMENT  SECURITIES.   As stated  in the  Prospectus, the  Fund may
invest  in  short-term  to  intermediate  (one  to  five  year  maturities)  and
intermediate  to  long term  (greater  than five  year  maturities) fixed-income
securities which are issued or guaranteed, as to principal and interest, by  the
United States or its agencies and instrumentalities.

    Such U.S. Government securities include:

        (1)  U.S. Treasury bills (maturities of one year or less), U.S. Treasury
    notes (maturities of one  to ten years) and  U.S. Treasury bonds  (generally
    maturities  of greater than ten years),  all of which are direct obligations
    of the U.S.  Government and,  as such,  are backed  by the  "full faith  and
    credit" of the United States.

        (2)  Securities  issued by  agencies and  instrumentalities of  the U.S.
    Government which  are backed  by the  full faith  and credit  of the  United
    States.  Among the  agencies and instrumentalities  issuing such obligations
    are the  Federal Housing  Administration, the  Government National  Mortgage
    Association  ("GNMA"), the Department of  Housing and Urban Development, the
    Export-Import Bank, the  Farmers Home Administration,  the General  Services
    Administration,   the  Maritime   Administration  and   the  Small  Business
    Administration. The maturities of such  obligations range from three  months
    to thirty years.

        (3)  Securities issued by  agencies and instrumentalities  which are not
    backed by the full faith and credit of the United States, but whose  issuing
    agency or instrumentality has the right to borrow,

                                       12
<PAGE>
    to  meet its  obligations, from  an existing  line of  credit with  the U.S.
    Treasury. Among the agencies and instrumentalities issuing such  obligations
    are   the  Tennessee   Valley  Authority,  the   Federal  National  Mortgage
    Association ("FNMA"), the Federal  Home Loan Mortgage Corporation  ("FHLMC")
    and the U.S. Postal Service.

        (4)  Securities issued by  agencies and instrumentalities  which are not
    backed by the  full faith and  credit of  the United States,  but which  are
    backed  by the  credit of the  issuing agency or  instrumentality. Among the
    agencies and instrumentalities issuing such obligations are the Federal Farm
    Credit System and the Federal Home Loan Banks.

    ZERO COUPON  SECURITIES.    A  portion of  the  U.S.  Government  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  if prevailing interest  rates rise. For this
reason, zero  coupon  securities  are subject  to  substantially  greater  price
fluctuations  during  periods of  changing  prevailing interest  rates  than are
comparable securities which pay interest currently.

    MONEY MARKET INSTRUMENTS.   As stated  in the Prospectus,  the money  market
instruments which the Fund may purchase include U.S. Government securities, bank
obligations,   Eurodollar  certificates  of   deposit,  obligations  of  savings
institutions, fully insured certificates of  deposit and commercial paper.  Such
securities are limited to:

        U.S.  GOVERNMENT  SECURITIES.   Obligations issued  or guaranteed  as to
    principal and interest  by the United  States or its  agencies (such as  the
    Export-Import  Bank of the United States, Federal Housing Administration and
    Government National Mortgage Association) or its instrumentalities (such  as
    the Federal Home Loan Bank), including Treasury bills, notes and bonds;

        BANK  OBLIGATIONS.   Obligations (including certificates  of deposit and
    bankers' acceptances) of banks subject to regulation by the U.S.  Government
    and  having total assets of  $1 billion or more,  and instruments secured by
    such obligations, not including obligations of foreign branches of  domestic
    banks except to the extent below;

        EURODOLLAR  CERTIFICATES OF DEPOSIT.  Eurodollar certificates of deposit
    issued by  foreign branches  of domestic  banks having  total assets  of  $1
    billion or more;

        OBLIGATIONS OF SAVINGS INSTITUTIONS.  Certificates of deposit of savings
    banks  and savings and loan associations,  having total assets of $1 billion
    or more;

        FULLY INSURED CERTIFICATES OF DEPOSIT.  Certificates of deposit of banks
    and savings institutions, having  total assets of less  than $1 billion,  if
    the  principal amount  of the obligation  is insured by  the Federal Deposit
    Insurance Corporation, limited to $100,000 principal amount per  certificate
    and to 10% or less of the Fund's total assets in all such obligations and in
    all illiquid assets, in the aggregate;

        COMMERCIAL  PAPER.  Commercial paper rated within the two highest grades
    by Standard &  Poor's Corporation ("S&P")  or the highest  grade by  Moody's
    Investors  Service, Inc. ("Moody's")  or, if not rated,  issued by a company
    having an outstanding debt issue rated at least AA by S&P or Aa by Moody's.

    LENDING OF  PORTFOLIO SECURITIES.    Consistent with  applicable  regulatory
requirements, the Fund may lend its portfolio securities to brokers, dealers and
other  financial institutions, provided that such loans are callable at any time
by the Fund (subject to notice provisions described below), and are at all times
secured by  cash or  cash  equivalents, which  are  maintained in  a  segregated
account  pursuant to applicable regulations  and that are equal  to at least the
market value, determined daily, of the loaned

                                       13
<PAGE>
securities. The advantage of  such loans is that  the Fund continues to  receive
the  income on the loaned securities while  at the same time earning interest on
the cash amounts deposited as collateral,  which will be invested in  short-term
obligations.  The Fund will not lend its  portfolio securities if such loans are
not permitted by the laws  or regulations of any state  in which its shares  are
qualified  for sale and  will not lend more  than 25% of the  value of its total
assets. A loan may be terminated by  the borrower on one business days'  notice,
or  by the Fund on  two business days' notice. If  the borrower fails to deliver
the loaned securities within  two 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
creditworthiness of firms to which the Fund lends its portfolio securities  will
be  monitored  on  an  ongoing  basis  by  the  Investment  Manager  pursuant to
procedures adopted and reviewed, on an  ongoing basis, by the Board of  Trustees
of the Fund.

   
    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  pay reasonable finder's,  administrative
and custodial fees in connection with a loan of its securities. The Fund did not
lend any of its portfolio securities during the fiscal year ended July 31, 1995.
    

    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
from  a  selling  financial  institution  such  as  a  bank,  savings  and  loan
association  or broker-dealer.  The agreement provides  that the  Fund will sell
back  to  the  institution,  and  that  the  institution  will  repurchase.  the
underlying  security ("collateral") at a specified price  and at a fixed time in
the future, usually  not more than  seven days  from the date  of purchase.  The
collateral  will be  maintained in  a segregated account  and will  be marked to
market daily to determine that the full value of the collateral, as specified in
the agreement,  does  not  decrease  below the  repurchase  price  plus  accrued
interest.  If such decrease  occurs, additional collateral will  be added to the
account to maintain full collateralization.  The Fund will accrue interest  from
the  institution until the time  when the repurchase is  to occur. Although such
date is deemed by the  Fund to be the maturity  date of a repurchase  agreement,
the maturities of securities subject to repurchase agreements are not subject to
any limits 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  financial institutions  whose  financial
condition  will be continuously  monitored by the  Investment Manager subject to
procedures established by  the Trustees.  In addition, as  described above,  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 the sale upon a
default of the obligation to repurchase were less than the repurchase price, the
Fund could suffer a loss. The Fund has not to date and does not presently intend
to enter into  repurchase agreements  so that  more than  5% of  the Fund's  net
assets are subject to such agreements.

    REVERSE  REPURCHASE AGREEMENTS.   The Fund  may also  use reverse repurchase
agreements as part  of its  investment strategy.  Reverse repurchase  agreements
involve  sales by the Fund of portfolio assets concurrently with an agreement by
the  Fund  to  repurchase  the  same  assets   at  a  later  date  at  a   fixed

                                       14
<PAGE>
price.  Generally, the effect of such a transaction is that the Fund can recover
all or most of the cash invested in the portfolio securities involved during the
term of the  reverse repurchase agreement,  while it  will be able  to keep  the
interest  income associated  with those portfolio  securities. Such transactions
are only advantageous if the interest cost to the Fund of the reverse repurchase
transaction is less than the cost of otherwise obtaining the cash. Opportunities
to achieve this advantage may not always be available. The Fund will establish a
segregated account with its custodian bank in which it will maintain cash,  U.S.
Government  securities or other high grade debt securities equal in value to its
obligations in  respect of  reverse  repurchase agreements.  Reverse  repurchase
agreements  are considered  borrowings by the  Fund and for  purposes other than
meeting redemptions may not exceed 5% of the Fund's total assets.

    WARRANTS.  The Fund may acquire  warrants attached to other securities  and,
in  addition may invest up to  5% of the value of  its total assets in warrants,
including up to 2% of such assets in warrants not listed on either the New  York
or  American  Stock Exchange.  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 corporation issuing them.

    WHEN-ISSUED  AND  DELAYED  DELIVERY  SECURITIES.     As  discussed  in   the
Prospectus,  from time to time, in the ordinary course of business, the Fund may
purchase securities on a when-issued  or delayed delivery basis, i.e.,  delivery
and  payment can take place a month or  more after the date of the transactions.
The securities so purchased  are subject to market  fluctuation and no  interest
accrues  to the purchaser during this period.  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. At the  time the  Fund
makes the commitment to purchase securities on a when-issued or delayed delivery
basis,  the Fund will  record the transaction and  thereafter reflect the value,
each day, of such security  in determining the net asset  value of the Fund.  At
the  time of delivery of the securities, the  value may be more or less than the
purchase price.  The Fund  will also  establish a  segregated account  with  the
Fund's  custodian  bank in  which  it will  continuously  maintain cash  or U.S.
Government Securities or  other high  grade debt portfolio  securities equal  in
value  to  commitments  for  such when-issued  or  delayed  delivery securities;
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 Investment Manager
and the Board  of 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.  As discussed in the Prospectus, the Fund
may  purchase securities  on a "when,  as and  if issued" basis  under which the
issuance of the security depends upon the occurrence of a subsequent event, such
as approval  of a  merger, corporate  reorganization, leveraged  buyout or  debt
restructuring.  The commitment for the purchase of any such security will not be
recognized in the portfolio of the Fund until the Investment Manager  determines
that  issuance of the security  is probable. At such  time, the Fund will record
the transaction and, in determining its net asset value, will reflect the  value
of  the security daily. At such time,  the Fund will also establish a segregated
account with its custodian bank in  which it will continuously maintain cash  or
U.S.  Government securities or other high  grade debt portfolio securities equal
in value to recognized commitments for such securities. Settlement of the  trade
will  occur within five business days of the occurrence of the subsequent event.
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  restrictions, 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 Investment
Manager  and the Trustees  do not believe that  the net asset  value of the Fund
will be adversely affected by its purchase of securities on such basis.

                                       15
<PAGE>
OPTIONS AND FUTURES TRANSACTIONS

    The Fund  may write  covered call  options against  securities held  in  its
portfolio  and covered  put options on  eligible portfolio  securities and stock
indexes and purchase options of the same series to effect closing  transactions,
and  may hedge against potential changes in  the market value of investments (or
anticipated investments) and  facilitate the reallocation  of the Fund's  assets
into  and out of equities and fixed-income securities by purchasing put and call
options  on  portfolio  (or  eligible  portfolio)  securities  and  engaging  in
transactions involving futures contracts and options on such contracts.

    Call  and put  options on  U.S. Treasury notes,  bonds and  bills and equity
securities  are  listed  on  Exchanges  (currently  the  Chicago  Board  Options
Exchange,  American  Stock  Exchange,  New York  Stock  Exchange,  Pacific Stock
Exchange and Philadelphia  Stock Exchange) and  are written in  over-the-counter
transactions  ("OTC Options"). Listed options are issued by the Options Clearing
Corporation ("OCC"). Ownership of a listed call option gives the Fund the  right
to  buy from the OCC the underlying security covered by the option at the stated
exercise price (the  price per  unit of the  underlying security)  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 the  underlying
security  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 to the OCC at the
stated exercise price. Upon notice of exercise of the put option, the writer  of
the  put would have the obligation to  purchase the underlying security from the
OCC at the exercise price.

    OPTIONS ON TREASURY BONDS  AND NOTES.  Because  trading interest 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 GNMA CERTIFICATES.  Currently,  options on GNMA Certificates are
only traded  over-the-counter. Since  the remaining  principal balance  of  GNMA
Certificates  declines each month as a result of mortgage payments, the Fund, as
a writer of  a GNMA call  holding GNMA  Certificates as "cover"  to satisfy  its
delivery   obligation  in  the  event  of  exercise,  may  find  that  the  GNMA
Certificates it holds no  longer have a  sufficient remaining principal  balance
for  this purpose.  Should this  occur, the  Fund will  purchase additional GNMA
Certificates from the same pool (if obtainable) or replacement GNMA Certificates
in the cash market in  order to maintain its cover.  A GNMA Certificate held  by
the Fund to cover an option position in any but the nearest expiration month may
cease  to represent cover for the  option in the event of  a decline in the GNMA
coupon rate at which new pools are  originated under the FHA/VA loan ceiling  in
effect  at any given time, as such  decline may increase the prepayments made on
other mortgage pools. If this should occur, the Fund will no longer be  covered,
and  the Fund will either  enter into a closing  purchase transaction or replace
such Certificate with a Certificate which represents cover. When the Fund closes
out its position or replaces such Certificate,  it may realize a loss and  incur
transaction costs.

    OTC  OPTIONS.  Exchange-listed  options are issued by  the OCC which assures
that all transactions  in such options  are properly executed.  OTC options  are
purchased from or sold (written) to dealers or

                                       16
<PAGE>
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 underlying an option it has  written,
in  accordance with the  terms of that  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 primary U.S. Government
securities dealers recognized by the Federal Reserve Bank of New York.

   
    COVERED CALL WRITING.  The Fund  is permitted to write covered call  options
on  portfolio securities and on stock index  options, without limit, in order to
aid in achieving its investment objective. 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 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 securities 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 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 achieve  a greater  total return  than would  be
realized  from holding  the underlying  securities alone.  Moreover, the premium
received will offset a portion of the potential loss incurred by the Fund if the
securities underlying the option are ultimately sold by the Fund at a loss.  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
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 from being called,
to permit the  sale of an  underlying security or  to enable the  Fund to  write
another  call option on the underlying security with either a different exercise
price or expiration date or both. Also, effecting a closing purchase transaction
will permit the  cash or  proceeds from the  concurrent sale  of any  securities
subject to the option to be used for other investments by the Fund. 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.
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.

    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 during
the option period. If a  call option is exercised, the  Fund realizes a gain  or
loss  from the sale of  the underlying security equal  to the difference between
the purchase price of the  underlying security and the  proceeds of the sale  of
the  security plus the  premium received for  on the option  less the commission
paid.

                                       17
<PAGE>
    Options written by a Fund normally have expiration dates of from up to  nine
months (equity securities) to eighteen months (fixed-income securities) 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.

   
    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 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. If a  put option purchased by  the
Fund expired without being sold or exercised, the premium would be lost.
    

   
    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 written 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 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).

    PURCHASING CALL AND PUT OPTIONS.  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  in order  to  close out  a  covered call  position  (see
"Covered  Call Writing" above) and, as to  2% of its total assets, purchase call
options on securities it intends to purchase. If, in the latter case, the  price
of  the security underlying the option fails to rise above the exercise price by
an amount exceeding the  price of the  option premium, the  Fund will sustain  a
loss  equal to some or all of the premium price. A call purchased to close out a
position is likely to be on the same  securities and have the same terms as  the
written  option.  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 which it holds (or has  the
right  to acquire) in its portfolio only  to protect itself against a decline in
the value of the security. If the value of the underlying security 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. 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  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

                                       18
<PAGE>
the  put option when it was purchased. Any  such gain or loss could be offset in
whole or in part by a change in the market value of the underlying security.  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  to forecast  correctly interest  rates  and
market  movements. If  the market value  of the portfolio  securities 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 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 increase,  but has retained  the risk of  loss
should the price of the underlying security decline. The secured put writer also
retains  the risk  of loss  should the market  value of  the underlying security
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.
    

   
    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 an underlying security  at a time when it  might
otherwise be advantageous to do so. A covered put option writer who is unable to
effect  a closing  purchase transaction or  to purchase  an offsetting over-the-
counter option would continue to bear the risk of decline in the market price of
the underlying security 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 cover for the put
option for other  investment purposes until  the exercise or  expiration of  the
option.
    

    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  Options Clearing Corporation  ("OCC") to handle  current trading volume; or
(vi) a decision by one or more  exchanges to discontinue the trading of  options
(or  a particular  class or  series of  options), in  which event  the secondary
market on that exchange (or in that  class or series of options) would cease  to
exist, although outstanding options on that exchange that had been issued by the
OCC  as  a result  of trades  on that  exchange would  generally continue  to be
exercisable in accordance with their terms.
    

    In the event of the bankruptcy of a broker through which the 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

                                       19
<PAGE>
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.

   
    Each of  the exchanges  has established  limitations governing  the  maximum
number  of  call or  put  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, among other  indexes, 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." The Fund will invest  only
in  broadly based indexes. Options on broad-based stock indexes provide the Fund
with a  means of  protecting the  Fund  against the  risk of  market-wide  price
movements.  If the  Investment Manager  anticipates a  market decline,  the Fund
could 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 anticipates  a market  rise, the  Fund may  purchase a stock
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 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, or by a  put
option  on the  same stock index  with a strike  price no lower  than the strike
    

                                       20
<PAGE>
price of the put option sold by the Fund, 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 OPTIONS ON INDEXES.   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 their 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.  As stated in the  Prospectus, the Fund may purchase and
sell interest rate and stock index futures contracts ("futures contracts")  that
are  traded on  U.S. commodity exchanges  on such underlying  securities as U.S.
Treasury bonds, notes, bills and GNMA Certificates ("interest rate futures") and
such indexes as the S&P 500  Index, the Moody's Investment-Grade Corporate  Bond
Index and the New York Stock Exchange Composite Index ("index futures").
    

    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 its fixed-income  portfolio
(or  anticipated portfolio) against changes in  prevailing interest rates and to
alter the Fund's asset allocation in fixed-income securities. If the  Investment

                                       21
<PAGE>
Manager  anticipates that interest rates may  rise and, concomitantly, the price
of fixed-income  securities  fall,  or  wishes  to  decrease  the  Fund's  asset
allocation  in  fixed-income  securities, the  Fund  may sell  an  interest rate
futures contract or a bond index  futures contract. If declining interest  rates
are anticipated or if the Investment Manager wishes to increase the Fund's asset
allocation  of fixed-income securities,  the Fund may  purchase an interest rate
futures contract to protect  against a potential increase  in the price of  U.S.
Government  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 its equity  portfolio (or anticipated  portfolio) against changes in
their prices. If  the Investment Manager  anticipates that the  prices of  stock
held  by the Fund may fall or wishes  to decrease the Fund's asset allocation in
equity securities, the Fund may sell a stock index futures contract. Conversely,
if the  Investment  Manager wishes  to  increase  the Fund's  assets  which  are
invested in stocks or as a hedge against anticipated price rises in those stocks
which  the Fund intends to  purchase, the Fund may  purchase stock index futures
contracts. This allows  the Fund to  purchase equities, in  accordance with  the
Investment Manager's asset allocations, in an orderly and efficacious manner. In
addition, interest rate and stock index futures contracts will be bought or sold
in  order  to close  out a  short or  long position  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. Stock index  futures
contracts  provide for the  delivery of an  amount of cash  equal to a specified
dollar amount times the difference between the stock index value at the open  or
close  of the last trading day of the contract and the futures contract price. A
futures contract sale is closed out by effecting a futures contract purchase for
the same aggregate amount of the specific  type of equity security 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 equity security 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 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.
    

   
    INDEX FUTURES.  As discussed in the Prospectus, the Fund may invest in index
futures contracts. An index futures contract  sale creates an obligation by  the
Fund,  as seller, to deliver  cash at a specified  future time. An index futures
contract purchase  would create  an obligation  by the  Fund, as  purchaser,  to
    

                                       22
<PAGE>
take  delivery of cash at a specified  future time. 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 a 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 Value Line Stock Index on the
Kansas City Board of Trade and the Moody's Investment-Grade Corporate Bond Index
on the Chicago 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 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 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  Investment
Manager  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,  it might write a  call option on an  interest rate futures contract,
the underlying security of  which correlates with the  portion of the  portfolio
the  Investment Manager seeks to hedge. Any  premiums received in the writing of
options on futures  contracts may, of  course, augment the  total return of  the
Fund  and thereby  provide a further  hedge against losses  resulting from price
declines in portions of the Fund's portfolio.

    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.

   
    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 it has entered into, provided, however, that
in the case of an  option that is in-the-money (the  exercise price of the  call
(put) option is less (more) than the market price of the underlying security) at
the time of purchase, the in-the-money amount may be excluded in calculating the
5%. However, there is no
    

                                       23
<PAGE>
overall  limitation on the percentage of the  Fund's assets which may be subject
to a hedge  position. In  addition, in accordance  with the  regulations of  the
Commodity  Futures Trading Commission ("CFTC") under  which the Fund is exempted
from registration as  a commodity pool  operator, the Fund  may only enter  into
futures  contracts and options on futures contracts transactions for purposes of
hedging a part or all of its  portfolio. If the CFTC changes its regulations  so
that  the Fund  would be  permitted 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 to accurately predict market and interest rate movements.  As
stated  in  the prospectus,  the Fund  may  sell a  futures contract  to protect
against the decline in the value of securities held by the Fund. However, it  is
possible that the futures market may advance and the value of securities 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,  and  the value  of  such  securities
decreases,  then  the Investment  Manager  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.
    

    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 a 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  the
short position was established.

    In  addition, if the Fund holds a long position in a futures contract or has
sold a put  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.

    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.

    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

                                       24
<PAGE>
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 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. 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
by the fact that the futures  market is dominated by short-term traders  seeking
to profit from the difference between a contract or security price objective and
their  cost of  borrowed funds. Such  distortions are generally  minor and would
diminish as the contract approached maturity.

    There may  exist an  imperfect correlation  between the  price movements  of
futures  contracts purchased by the Fund and  the movements in the prices of the
securities which are the  subject of the hedge.  If participants in the  futures
market elect to close out their contracts through offsetting transactions rather
than  meet margin deposit  requirements, distortions in  the normal relationship
between the debt securities and futures markets could result. Price  distortions
could also result if investors in futures contracts opt to make or take delivery
of  underlying securities rather than engage  in closing transactions due to the
resultant reduction in the liquidity of the futures market. In addition, due  to
the  fact that, from the point of  view of speculators, the deposit requirements
in the futures  markets are less  onerous than margin  requirements in the  cash
market, increased participation by speculators in the futures market could cause
temporary  price distortions. 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 by the Investment Manager may still not  result
in a successful hedging transaction.

    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 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.

    The  Investment  Manager  has  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.

                                       25
<PAGE>
INVESTMENT RESTRICTIONS
--------------------------------------------------------------------------------

    In addition to the investment restrictions enumerated in the Prospectus, the
investment   restrictions  listed  below  have  been  adopted  by  the  Fund  as
fundamental  policies,  except  as  otherwise   indicated.  Under  the  Act,   a
fundamental  policy may  not be changed  without the  vote of a  majority of the
outstanding voting  securities  of the  Fund,  as defined  in  the Act.  Such  a
majority  is defined as the lesser of (a) 67% or more of the shares present at a
meeting of shareholders, if the holders of 50% of the outstanding shares of  the
Fund are present or represented by proxy or (b) more than 50% of the outstanding
shares of the Fund.

    The Fund may not:

         1.     Invest in  securities of any issuer if,  to the knowledge of the
    Fund, any officer  or trustee/  director of the  Fund or  of the  Investment
    Manager  owns more  than 1/2  of 1%  of the  outstanding securities  of such
    issuer, and such officers and trustees/directors who own more than 1/2 of 1%
    own in the  aggregate more  than 5% of  the outstanding  securities of  such
    issuers.

         2.     Purchase or sell  real estate or interests therein, although the
    Fund may  purchase  securities  of  issuers  which  engage  in  real  estate
    operations and securities secured by real estate or interests therein.

         3.    Invest more than 10% of its total assets in "illiquid securities"
    (securities  for  which market  quotations  are not  readily  available) and
    repurchase agreements which have a maturity  of longer than seven days.  The
    staff  of  the  Securities and  Exchange  Commission ("SEC")  has  taken the
    position that  purchased OTC  options and  the assets  used as  "cover"  for
    written  OTC options are  illiquid securities and the  Fund will treat these
    assets as such.

         4.     Purchase oil,  gas or  other mineral leases,  rights or  royalty
    contracts  or exploration or development programs,  except that the Fund may
    invest in the securities of companies  which operate, invest in, or  sponsor
    such programs.

         5.      Purchase  securities of  other investment  companies, except in
    connection with a  merger, consolidation, reorganization  or acquisition  of
    assets.

         6.    Borrow money (except insofar as to the Fund may be deemed to have
    borrowed  by entrance into a reverse  repurchase agreement), except that the
    Fund may, but  not to leverage  the Fund's  assets, borrow from  a bank  for
    temporary  or emergency purposes  in amounts not exceeding  5% (taken at the
    lower of  cost or  current value)  of its  total assets  (not including  the
    amount borrowed).

         7.     Pledge its assets or assign or otherwise encumber them except to
    secure borrowings effected within the  limitations set forth in  restriction
    (6).  For  the purpose  of  this restriction,  collateral  arrangements with
    respect to the writing of  options and collateral arrangements with  respect
    to  initial or variation margin for futures  are not deemed to be pledges of
    assets.

         8.    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
    borrowing money in accordance with restrictions described above.

         9.    Make loans of money or securities, except: (a) by the purchase of
    publicly  distributed  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.

        10.   Make short sales of securities.

        11.   Purchase securities on margin, except for such short-term loans as
    are necessary  for the  clearance of  portfolio securities.  The deposit  or
    payment  by  the Fund  of  initial or  variation  margin in  connection with
    futures contracts or related options thereon is not considered the  purchase
    of a security on margin.

                                       26
<PAGE>
        12.    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.

        13.    Invest for the purpose of exercising control or management of any
    other issuer.

    If a percentage restriction is adhered to at the time of investment, a later
increase or  decrease  in  percentage  resulting from  a  change  in  values  of
portfolio  securities or amount of total or  net assets will not be considered a
violation of any of the foregoing restrictions.

PORTFOLIO TRANSACTIONS AND BROKERAGE
--------------------------------------------------------------------------------

   
    Subject to the general supervision of the Board of Trustees, the  Investment
Manager  is responsible for decisions  to buy and sell  securities for the Fund,
the selection  of  brokers and  dealers  to  effect the  transactions,  and  the
negotiation  of brokerage commissions, if any. Purchases and sales of securities
on a stock  exchange are effected  through brokers who  charge a commission  for
their  services. In the over-the-counter market, securities are generally traded
on a "net" basis with dealers acting as principal for their own accounts without
a stated  commission, although  the price  of the  security usually  includes  a
profit  to the  dealer. The  Fund 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.
Options and futures transactions will usually be effected through a broker and a
commission  will be  charged. On  occasion, the  Fund may  also purchase certain
money market instruments directly from an  issuer, in which case no  commissions
or  discounts are paid.  During the fiscal  years ended July  31, 1993, 1994 and
1995, the Fund paid a total of $957,175, $627,783 and $845,540, respectively, in
brokerage commissions.
    

    The Investment Manager currently serves as investment manager to a number of
clients, including other  investment companies,  and may  in the  future act  as
investment  manager or adviser to  others. It is the  practice of the Investment
Manager to cause purchase and sale  transactions to be allocated among the  Fund
and  others whose  assets it manages  in such  manner as it  deems equitable. In
making such  allocations among  the Fund  and other  client accounts,  the  main
factors  considered are the respective  investment objectives, the relative size
of portfolio holdings of the same or comparable securities, the availability  of
cash  for investment, the size of  investment commitments generally held and the
opinions of the persons responsible for managing the portfolios of the Fund  and
other client accounts.

    The  policy of the Fund regarding purchases  and sales of securities for its
portfolio is that  primary consideration  will be  given to  obtaining the  most
favorable  prices and efficient 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  possible commission cost could impede effective portfolio management and
preclude the Fund and  the Investment Manager from  obtaining a high quality  of
brokerage  and research services. In seeking  to determine the reasonableness of
brokerage commissions paid  in any  transaction, the  Investment Manager  relies
upon  its experience  and knowledge  regarding commissions  generally charged by
various brokers and  on its judgment  in evaluating the  brokerage and  research
services received from the broker effecting the transaction. Such determinations
are necessarily subjective and imprecise, as in most cases an exact dollar value
for those services is not ascertainable.

    In  seeking to implement the Fund's policies, the Investment Manager effects
transactions with those brokers and dealers who the Investment Manager  believes
provide  the  most  favorable  prices and  are  capable  of  providing efficient
executions. If the Investment  Manager believes such  prices and executions  are
obtainable  from more than  one broker or  dealer, it may  give consideration to
placing portfolio transactions with those  brokers and dealers who also  furnish
research and other services to the Fund or the Investment Manager. Such services
may  include,  but  are  not limited  to,  any  one or  more  of  the following:
information  as  to  the  availability  of  securities  for  purchase  or  sale;
statistical or factual

                                       27
<PAGE>
   
information  or opinions pertaining to investment; wire services; and appraisals
or evaluations of portfolio  securities. During the fiscal  year ended July  31,
1995,  the Fund  directed the  payment of  $725,760 in  brokerage commissions in
connection with transactions in the aggregate amount of $462,024,477 to  brokers
because of research services provided.
    

    The information and services received by the Investment Manager from brokers
and  dealers may be  of benefit to  the Investment Manager  in the management of
accounts of some of its other clients and may not in all cases benefit the  Fund
directly.  While  the receipt  of  such information  and  services is  useful in
varying degrees and would  generally reduce the amount  of research or  services
otherwise  performed by the Investment Manager  and thereby reduce its expenses,
it is of  indeterminable value  and the management  fee paid  to the  Investment
Manager  is not reduced by  any amount that may be  attributable to the value of
such services.

    Pursuant to an order of the Securities and Exchange Commission, the Fund may
effect principal transactions in certain money market instruments with DWR.  The
Fund  will limit  such 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.

   
    Consistent  with  the  policy  described  above,  brokerage  transactions in
securities listed on exchanges or admitted to unlisted trading privileges may be
effected through DWR. In order for DWR to effect any portfolio transactions  for
the  Fund, the commissions, fees  or other remuneration received  by DWR must be
reasonable and fair compared to the commissions, fees or other remuneration paid
to other brokers  in connection with  comparable transactions involving  similar
securities  being purchased or sold on an exchange during a comparable period of
time. This standard  would allow DWR  to receive no  more than the  remuneration
which  would  be  expected  to  be  received  by  an  unaffiliated  broker  in a
commensurate arm's-length transaction. Furthermore, the Board of Trustees of the
Fund, including a majority of the  Trustees who are not "interested" persons  of
the  Fund, as defined in  the Act, have adopted  procedures which are reasonably
designed to provide that any commissions, fees or other remuneration paid to DWR
are consistent with the foregoing standard.  During the fiscal years ended  July
31, 1993, 1994 and 1995, the Fund paid a total of $194,939, $22,810 and $84,770,
respectively, in brokerage commissions to DWR. The brokerage commissions paid to
DWR  represented approximately 10.03% of the total brokerage commissions paid by
the Fund for the  fiscal year ended July  31, 1995 and were  paid on account  of
transactions  having an aggregate dollar value  equal to approximately 12.34% of
the aggregate dollar value of all portfolio transactions of the Fund during  the
period for which commissions were paid.
    

   
    At  July 31, 1995, the  Fund held bonds issued by  Merrill Lynch & Co., Inc.
and Morgan Stanley Group, Inc. with market values of $5,550,000, and $5,017,500,
respectively. These 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 fiscal year ended July 31, 1995.
    

THE DISTRIBUTOR
--------------------------------------------------------------------------------

    As discussed in the Prospectus, shares  of the Fund are distributed by  Dean
Witter Distributors Inc. (the "Distributor"). The Distributor has entered into a
selected  dealer agreement  with DWR, which  through its  own sales organization
sells shares of the Fund. In  addition, the Distributor may enter into  selected
dealer  agreements  with  other  selected  broker-dealers.  The  Distributor,  a
Delaware corporation, is a wholly-owned subsidiary of DWDC. The Trustees of  the
Fund, including a majority of the Trustees who are not, and were not at the time
they  voted,  interested  persons  of  the Fund,  as  defined  in  the  Act (the
"Independent Trustees"), approved, at  their meeting held  on October 30,  1992,
the   current  Distribution  Agreement   appointing  the  Distributor  exclusive
distributor of  the Fund's  shares and  providing for  the Distributor  to  bear
distribution  expenses not borne by the Fund. The present Distribution Agreement
is substantively identical to the  Fund's previous distribution agreements.  The
Distribution  Agreement took effect on June 30, 1993 upon the spin-off by Sears,
Roebuck and Co. of its remaining shares of DWDC.

                                       28
<PAGE>
   
By its terms, the  Distribution Agreement had an  initial term ending April  30,
1994, and provides that it will remain in effect from year to year thereafter if
approved by the Trustees. At their meeting held on April 20, 1995, the Trustees,
including  all of  the Independent  Trustees, approved  the continuation  of the
Agreement until April 30, 1996.
    

    The Distributor bears all expenses it may incur in providing services  under
the Distribution Agreement. Such expenses include the payment of commissions for
sales of the Fund's shares and incentive compensation to account executives. The
Distributor  also pays certain  expenses in connection  with the distribution of
the Fund's shares, including the  costs of preparing, printing and  distributing
advertising or promotional materials, and the costs of printing and distributing
prospectuses  and supplements thereto  used in connection  with the offering and
sale of the  Fund's shares.  The Fund bears  the costs  of initial  typesetting,
printing   and  distribution   of  prospectuses   and  supplements   thereto  to
shareholders. The Fund  also bears  the costs of  registering the  Fund and  its
shares  under federal  and state securities  laws. The Fund  and the Distributor
have agreed  to  indemnify each  other  against certain  liabilities,  including
liabilities under the Securities Act of 1933, as amended. Under the Distribution
Agreement,  the Distributor uses  its best efforts in  rendering services to the
Fund, but in the absence of willful misfeasance, bad faith, gross negligence  or
reckless disregard of its obligations, the Distributor is not liable to the Fund
or  any of its shareholders for any error  of judgement 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 it  provides and  for  the
expenses  it bears 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 (i) 1.0%  of the lesser of: (a) the average  daily
aggregate  gross sales of the Fund's shares since the implementation of the Plan
on November 8, 1989 (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 Plan's implementation 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 attributable to shares issued, net of
related shares redeemed, since the implementation  of the Plan; plus (ii)  0.25%
of  the Fund's average  daily net assets  attributable to shares  issued, net of
related shares redeemed, prior  to implementation of  the Plan. The  Distributor
also  receives  the proceeds  of contingent  deferred  sales charges  imposed on
certain redemptions of shares, which are  separate and apart from payments  made
pursuant  to  the Plan  (see  "Redemptions and  Repurchases--Contingent Deferred
Sales Charge" in the Prospectus). The Distributor has informed the Fund that  it
and/or  DWR  received  approximately  $836,000,  $1,294,000  and  $1,775,000  in
contingent deferred sales charges for the fiscal years ended July 31, 1993, 1994
and 1995, respectively, none of which was retained by the Distributor.
    

    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 adopted by  a majority vote of  the Trustees, including all of
the Trustees who are  not "interested persons"  of the Fund  (as defined in  the
Act)  and  who had  or  have no  direct or  indirect  financial interest  in the
operation of the Plan  (the "Independent 12b-1 Trustees"),  cast in person at  a
meeting  called for the purpose of voting on  the Plan, on July 27, 1989, and by
the shareholders holding a majority, as  defined in the Act, of the  outstanding
shares  of  the Fund,  at the  Fund's  Special Meeting  of Shareholders  held on
November 8,  1989. The  Plan amended  and restated  the Fund's  initial Plan  of
Distribution  which had been in effect from  August 26, 1988 through November 7,
1989.

                                       29
<PAGE>
    At their  meeting  held on  October  30, 1992,  the  Trustees of  the  Fund,
including  all of the Independent 12b-1 Trustees, approved certain amendments to
the Plan which took  effect in January,  1993 and were  designed to reflect  the
fact  that  upon  the  reorganization  described  above  the  share distribution
activities theretofore  performed  for the  Fund  by  DWR were  assumed  by  the
Distributor  and DWR's sales activities are  now being performed pursuant to the
terms of  a selected  dealer  agreement between  the  Distributor and  DWR.  The
amendments  provide that payments under the Plan will be made to the Distributor
rather than to DWR as before the amendment, and that the Distributor in turn  is
authorized   to  make  payments  to  DWR,   its  affiliates  or  other  selected
broker-dealers (or  direct  that  the  Fund pay  such  entities  directly).  The
Distributor  is also authorized to  retain part of such  fee as compensation for
its own distribution-related expenses. At their meeting held on April 28,  1993,
the  Trustees,  including a  majority of  the  Independent 12b-1  Trustees, also
approved certain technical amendments to the Plan in connection with  amendments
adopted  by the National Association of Securities Dealers, Inc. to its Rules of
Fair Practice.

   
    Under the  Plan and  as required  by Rule  12b-1, the  Trustees receive  and
review  promptly after the end of each  fiscal 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 July 31,
1995,  of $7,304,905. This amount is equal  to 0.91% of the Fund's average daily
net assets for the fiscal year and was calculated pursuant to clauses (i)(a) and
(ii) of the compensation formula under the  Plan. This amount is treated by  the
Fund as an expense in the year it is accrued.
    

    The  Plan was adopted  in order to  permit the implementation  of the Fund's
method of distribution. Under this distribution  method, shares of the Fund  are
sold  without a sales load  being deducted at the time  of purchase, so that the
full amount of an investor's purchase payment will be invested in shares without
any deduction  for  sales charges.  Shares  of the  Fund  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  or distributions)  of the  amount  sold. The  gross sales
credit is  a  charge which  reflects  commissions paid  by  DWR to  its  account
executives  and DWR's  Fund associated  distribution-related expenses, including
sales compensation, and  overhead and other  branch office  distribution-related
expenses  including:  (a)  the expenses  of  operating DWR's  branch  offices in
connection with the sale of Fund shares, including lease costs, the salaries and
employee benefits  of operations  and sales  support personnel,  utility  costs,
communications  costs and the costs of stationery and supplies, (b) the costs of
client sales seminars, (c) travel expenses of mutual fund sales coordinators  to
promote  the  sale of  Fund shares  and  (d) other  expenses relating  to branch
promotion of  Fund  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 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 $7,304,905  accrued under the Plan for the  fiscal
year  ended July 31, 1995  to the Distributor. The  Distributor and DWR estimate
that they have spent, pursuant  to the Plan, $53,419,682  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)  3.72%  ($1,986,097)--advertising  and
promotional  expenses;  (ii)  0.41%  ($218,259)  printing  of  prospectuses  for
distribution  to   other   than   current   shareholders;   and   (iii)   95.87%
($51,215,326)--other expenses, including the gross sales credit and the carrying
    

                                       30
<PAGE>
   
charge,   of  which  6.55%  ($3,356,967)  represents  carrying  charges,  37.26%
($19,081,128) represents commission credits to  DWR branch offices for  payments
of  commissions  to  account  executives  and  56.19%  ($28,777,231)  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  $24,218,844 as of  July 31, 1995.  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  distribution expenses 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  or 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
Distributor,  InterCapital, DWR or  certain of their 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 April 30, 1990 and will
continue  from year  to year thereafter,  provided such  continuance is approved
annually by a vote of  the Trustees in the  manner described above. Most  recent
continuance  of the Plan for one year, until April 30, 1996, was approved by the
Trustees of the Fund, including a majority of the Independent 12b-1 Trustees, at
a meeting  of the  Trustees  held on  April 20,  1995.  Prior to  approving  the
continuation  of  the  Plan,  the  Trustees  requested  and  received  from  the
Distributor and reviewed all information  which they deemed necessary to  arrive
at  an informed  determination. In  making their  determination to  continue the
Plan, the Trustees  considered: (1)  the Fund's  experience under  the Plan  and
whether such experience indicates that the Plan is operating as anticipated; (2)
the  benefits the Fund had obtained, was obtaining and would be likely to obtain
under the Plan; and (3) what services  had been provided and were continuing  to
be  provided under the Plan  to the Fund and  its shareholders. Based upon their
review, the  Trustees of  the  Fund, including  each  of the  Independent  12b-1
Trustees, determined that continuation of the Plan would be in the best interest
of  the Fund and would have a reasonable likelihood of continuing to benefit the
Fund and its shareholders. In the  Trustees' quarterly review of the Plan,  they
will  consider  its  continued  appropriateness and  the  level  of compensation
provided therein.
    

    The Plan may not be  amended to increase materially  the amount to be  spent
for  the services described therein without  approval 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 Trustees who  are
not  interested persons of the Fund and who have no direct or indirect financial
interest in  the operation  of the  Plan, 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. The Plan  will
automatically  terminate in the event of its assignment (as defined in the Act).
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 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

                                       31
<PAGE>
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. Listed options on debt
securities are valued at the latest sale price on the exchange on which they are
listed  unless no sales of such options have taken place that day, in which case
they will be  valued at  the mean  between their  latest bid  and asked  prices.
Unlisted  options on  debt securities and  all options on  equity securities are
valued at the mean between their latest bid and asked prices. Futures are valued
at the latest sale price on the commodities exchange on which they trade  unless
the  Trustees determine such price does not reflect their market value, in which
case they will be valued at their fair value as determined by the Trustees.  All
other  securities and other assets are valued  at their fair value as determined
in good faith under procedures established  by and under the supervision of  the
Trustees.

   
    The  net asset value per share of the  Fund is determined once daily 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  assets of  the  Fund,  subtracting its
liabilities, dividing by the number of  shares outstanding and adjusting to  the
nearest  cent.  The New  York Stock  Exchange  currently observes  the following
holidays:  New  Year's  Day,  Presidents'   Day,  Good  Friday,  Memorial   Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
    

SHAREHOLDER SERVICES
--------------------------------------------------------------------------------

    Upon the purchase of shares of the Fund, a Shareholder Investment Account is
opened  for the investor on the books of  the Fund and maintained by Dean Witter
Trust Company (the "Transfer  Agent"). This is an  open account in which  shares
owned  by the investor are credited by the Transfer Agent in lieu of issuance of
a share certificate. If a share certificate is desired, it must be requested  in
writing  for each transaction. Certificates are  issued only for full shares and
may be  redeposited in  the account  at  any time.  There is  no charge  to  the
investor  for  issuance  of  a  certificate.  Whenever  a shareholder-instituted
transaction takes place in the  Shareholder Investment Account, the  shareholder
will  be mailed a confirmation  of the transaction from the  Fund or from DWR or
other selected broker-dealer.

    AUTOMATIC INVESTMENT  OF DIVIDENDS  AND  DISTRIBUTIONS.   As stated  in  the
Prospectus,   all  income   dividends  and   capital  gains   distributions  are
automatically paid  in  full and  fractional  shares  of the  Fund,  unless  the
shareholder  requests that they be paid in  cash. Each purchase of shares of the
Fund is made upon the condition that the Transfer Agent is thereby automatically
appointed as agent of  the investor to receive  all dividends and capital  gains
distributions  on shares owned by the investor. Such dividends and distributions
will be paid, at  the net asset value  per share, in shares  of the Fund (or  in
cash  if the shareholder so requests) as of  the close of business on the record
date. At any time  an investor may  request the Transfer  Agent, in writing,  to
have  subsequent dividends and/or capital gains distributions paid to him or her
in cash rather  than shares. To  assure sufficient time  to process the  change,
such  request should be  received by the  Transfer Agent at  least five business
days prior to the record  date of the dividend or  distribution. In the case  of
recently  purchased  shares for  which registration  instructions have  not been
received on the  record date, cash  payments will be  made to DWR  or the  other
selected  broker-dealer,  and will  be forwarded  to  the shareholder,  upon the
receipt of proper instructions.

    TARGETED  DIVIDENDS.-SM-    In  states  where  it  is  legally  permissible,
shareholders  may also have all income dividends and capital gains distributions
automatically invested in shares  of a Dean Witter  Fund other than Dean  Witter
Strategist  Fund. 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

                                       32
<PAGE>
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   DWR  or   other   selected
broker-dealer account executive or the Transfer Agent.

    INVESTMENT  OF DIVIDENDS OR DISTRIBUTIONS RECEIVED IN CASH.  As discussed in
the Prospectus,  any shareholder  who  receives a  cash payment  representing  a
dividend  or capital gains distribution may invest such dividend or distribution
at net asset value, without the imposition of a contingent deferred sales charge
upon redemption, by returning  the check or the  proceeds to the Transfer  Agent
within  thirty  days after  the  payment date.  If  the shareholder  returns the
proceeds of a  dividend or  distribution, such funds  must be  accompanied by  a
signed   statement  indicating  that  the  proceeds  constitute  a  dividend  or
distribution to be invested. Such investment will be made at the net asset value
per share next  determined after receipt  of the  check or the  proceeds by  the
Transfer Agent.

    SYSTEMATIC  WITHDRAWAL PLAN.   As discussed in  the Prospectus, a systematic
withdrawal plan (the "Withdrawal Plan") is available for shareholders who own or
purchase shares of the  Fund having a  minimum value of  $10,000 based upon  the
then  current  net asset  value.  The Withdrawal  Plan  provides for  monthly or
quarterly (March, June, September and December) checks in any dollar amount, not
less than  $25,  or in  any  whole percentage  of  the account  balance,  on  an
annualized  basis.  Any  applicable  contingent deferred  sales  charge  will be
imposed on  shares redeemed  under  the Withdrawal  Plan (see  "Redemptions  and
Repurchases--Contingent  Deferred Sales  Charge" 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

                                       33
<PAGE>
guarantor).  A shareholder may, at  any time, change the  amount and interval of
withdrawal  payments  through  his  or  her  account  executive  or  by  written
notification to the Transfer Agent. In addition, the party and/or the address to
which  checks are mailed may be changed  by written notification to the Transfer
Agent, with signature  guarantees required  in the manner  described above.  The
shareholder may also terminate the Withdrawal Plan at any time by written notice
to  the Transfer Agent.  In the event  of such termination,  the account will be
continued as a regular shareholder investment account. The shareholder may  also
redeem  all  or part  of the  shares held  in the  Withdrawal Plan  account (see
"Redemptions and  Repurchases"  in the  Prospectus)  at any  time.  Shareholders
wishing  to enroll in the Withdrawal Plan should contact their account executive
or the Transfer Agent.

    DIRECT INVESTMENT 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
Strategist Fund, 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.

    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  regrading 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

   
    As discussed in the Prospectus, the Fund makes available to its shareholders
an Exchange Privilege whereby shareholders of the Fund may exchange their shares
for shares of  other Dean  Witter Funds sold  with a  contingent deferred  sales
charge  ("CDSC funds"), and  for shares of Dean  Witter Short-Term U.S. Treasury
Trust, Dean Witter  Limited Term  Municipal Trust, Dean  Witter Short-Term  Bond
Fund,  Dean Witter  Balanced Growth Fund,  Dean Witter Balanced  Income Fund and
five Dean Witter Funds which are money market funds (the foregoing ten  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

                                       34
<PAGE>
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, if any, incurred  on or after that date which are
attributable to those shares. Shareholders acquiring shares of an Exchange  Fund
pursuant  to this exchange privilege may exchange  those shares back into a CDSC
fund from the Exchange Fund,  with no CDSC being  imposed on such exchange.  The
holding  period previously frozen when shares were first exchanged for shares of
the Exchange Fund resumes on the last day of the month in which shares of a CDSC
fund are reacquired. A CDSC is  imposed only upon an ultimate redemption,  based
upon  the time (calculated as described above) the shareholder was invested in a
CDSC fund.

    In addition, shares of the  Fund may be acquired  in exchange for shares  of
Dean  Witter Funds sold  with a front-end sales  charge ("front-end sales charge
funds"), but shares  of the  Fund, however acquired,  may not  be exchanged  for
shares  of  front-end sales  charge funds.  Shares  of a  CDSC fund  acquired in
exchange for shares of a front-end sales charge fund (or in exchange for  shares
of  other Dean Witter  Funds for which  shares of a  front-end sales charge fund
have been exchanged) are not subject to any CDSC upon their redemption.

    When shares initially purchased in a  CDSC fund are exchanged for shares  of
another  CDSC fund, or for  shares of an Exchange Fund,  the date of purchase of
the shares of the fund exchanged into, for purposes of the CDSC upon redemption,
will be the  last day  of the  month in which  the shares  being exchanged  were
originally  purchased.  In allocating  the purchase  payments between  funds for
purposes of the CDSC, the amount which represents the current net asset value of
shares at the time of the exchange  which were (i) purchased more than three  or
six years (depending on the CDSC schedule applicable to the shares) prior to the
exchange,   (ii)  originally  acquired  through  reinvestment  of  dividends  or
distributions and  (iii) acquired  in  exchange for  shares of  front-end  sales
charge  funds, or  for shares  of other  Dean Witter  Funds for  which shares of
front-end sales charge funds have been  exchanged (all such shares called  "Free
Shares"), will be exchanged first. Shares of the Fund acquired prior to November
8,  1989, shares of Dean Witter American  Value Fund acquired prior to April 30,
1984, and shares of Dean Witter Dividend Growth Securities Inc. and Dean  Witter
Natural Resource Development Securities Inc. acquired prior to July 2, 1984, are
also  considered Free Shares and will be  the first Free Shares to be exchanged.
After an exchange, all dividends  earned on shares in  an Exchange Fund will  be
considered  Free Shares. If the exchanged amount  exceeds the value of such Free
Shares, an exchange is made, on a block-by-block basis, of non-Free Shares  held
for the longest period of time (except that if shares held for identical periods
of  time but subject to  different CDSC schedules are  held in the same Exchange
Privilege account, the shares  of that block  that are subject  to a lower  CDSC
rate  will be exchanged prior to the shares  of that block that are subject to a
higher CDSC rate).  Shares equal to  any appreciation in  the value of  non-Free
Shares  exchanged will be treated as Free Shares, and the amount of the purchase
payments for the non-Free Shares of the fund exchanged into will be equal to the
lesser of (a) the purchase payments for, or (b) the current net asset value  of,
the  exchanged non-Free  Shares. If  an exchange  between funds  would result in
exchange of only  part of  a particular block  of non-Free  Shares, then  shares
equal  to any appreciation  in the value of  the block (up to  the amount of the
exchange) will be treated as Free  Shares and exchanged first, and the  purchase
payment  for  that block  will  be allocated  on a  pro  rata basis  between the
non-Free Shares of  that block  to be  retained and  the non-Free  Shares to  be
exchanged.  The prorated  amount of  such purchase  payment attributable  to the
retained non-Free Shares will  remain as the purchase  payment for such  shares,
and  the amount of  purchase payment for  the exchanged non-Free  Shares will be
equal to the lesser of (a) the  prorated amount of the purchase payment for,  or
(b)  the current net asset value of, those exchanged non-Free Shares. Based upon
the procedures  described  in  the  Prospectus  under  the  caption  "Contingent
Deferred  Sales Charge", any  applicable CDSC will be  imposed upon the ultimate
redemption of shares of  any fund, regardless of  the number of exchanges  since
those shares were originally purchased.

    The  Transfer Agent acts as agent for  shareholders of the Fund in effecting
redemptions of Fund shares and in applying the proceeds to the purchase of other
fund shares. In  the absence  of negligence on  its part,  neither the  Transfer
Agent  nor  the  Fund  shall  be  liable  for  any  redemption  of  Fund  shares

                                       35
<PAGE>
caused by unauthorized telephone instructions. Accordingly, in such an event the
investor shall bear the risk of loss.  The staff of the Securities and  Exchange
Commission is currently considering the propriety of such a policy.

    With  respect to  the redemption  or repurchase of  shares of  the Fund, the
application of proceeds to the purchase of  new shares in the Fund or any  other
of  the  funds and  the general  administration of  the Exchange  Privilege, the
Transfer Agent  acts as  agent for  the Distributor  and for  the  shareholder's
selected  broker-dealer,  if any,  in the  performance  of such  functions. With
respect to exchanges, redemptions  or repurchases, the  Transfer Agent shall  be
liable  for its  own negligence  and not  for the  default or  negligence of its
correspondents or for losses in  transit. The Fund shall  not be liable for  any
default  or negligence  of the Transfer  Agent, the Distributor  or any selected
broker-dealer.

    The Distributor and any selected broker-dealer have authorized and appointed
the Transfer Agent to act as their  agent in connection with the application  of
proceeds of any redemption of Fund shares to the purchase of shares of any other
fund  and the general administration of the Exchange Privilege. No commission or
discounts will be paid to the Distributor or any selected broker-dealer for  any
transactions pursuant to this Exchange Privilege.

    Exchanges  are subject to  the minimum investment  requirement and any other
conditions imposed by each fund. (The  minimum initial investment is $5,000  for
Dean  Witter Liquid  Asset Fund Inc.,  Dean Witter Tax-Free  Daily Income Trust,
Dean Witter New  York Municipal Money  Market Trust and  Dean Witter  California
Tax-Free  Daily Income  Trust, although  those funds  may, at  their discretion,
accept initial investments of as low  as $1,000. The minimum initial  investment
is  $10,000 for  Dean Witter Short-Term  U.S. Treasury Trust  although that fund
may, in its discretion, accept initial investments as low as $5,000. The minimum
initial investment  for all  other  Dean Witter  Funds  for which  the  Exchange
Privilege  is available  is $1,000.)  Upon exchange  into an  Exchange Fund, the
shares of  that  fund will  be  held in  a  special Exchange  Privilege  Account
separately  from accounts of  those shareholders who  have acquired their shares
directly from that  fund. As a  result, certain services  normally available  to
shareholders  of those funds,  including the check writing  feature, will not be
available for funds held in that account.

    The Fund and each  of the other  Dean Witter Funds may  limit the number  of
times  this  Exchange  Privilege  may  be exercised  by  any  investor  within a
specified period of  time. Also,  the Exchange  Privilege may  be terminated  or
revised  at any time by the  Fund and/or any of the  Dean Witter Funds for which
shares of the Fund have been exchanged,  upon such notice as may be required  by
applicable  regulatory agencies (presently sixty  days' prior written notice for
termination or  material  revision), provided  that  six months'  prior  written
notice  of termination  will be  given to  the shareholders  who hold  shares of
Exchange Funds pursuant to the Exchange Privilege, and provided further that the
Exchange Privilege may  be terminated  or materially revised  without notice  at
times  (a) when the New  York Stock Exchange is  closed for other than customary
weekends and holidays, (b) when trading on that Exchange is restricted, (c) when
an emergency exists  as a result  of which  disposal by the  Fund of  securities
owned  by it is not  reasonably practicable or it  is not reasonably practicable
for the Fund fairly  to determine the  value of its net  assets, (d) during  any
other  period when  the Securities and  Exchange Commission by  order so permits
(provided that applicable rules and  regulations of the Securities and  Exchange
Commission  shall govern as to  whether the conditions prescribed  in (b) or (c)
exist) or (e)  if the  Fund would  be unable  to invest  amounts effectively  in
accordance with its investment objective(s), policies and restrictions.

    For  further  information  regarding  the  Exchange  Privilege, shareholders
should contact their DWR  or other selected  broker-dealer account executive  or
the Transfer Agent.

REDEMPTIONS AND REPURCHASES
--------------------------------------------------------------------------------

    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

                                       36
<PAGE>
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")
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 account of the shareholder),
partnership, trust or fiduciary, or sent to the shareholder at an address  other
than  the  registered  address, signatures  must  be guaranteed  by  an eligible
guarantor. A stock power may be obtained from any dealer or commercial bank. The
Fund may change  the signature  guarantee requirements  from time  to time  upon
notice to shareholders, which may be by means of a new prospectus.

    CONTINGENT DEFERRED SALES CHARGE.  As stated in the Prospectus, a contingent
deferred  sales charge ("CDSC") will be imposed on any redemption by an investor
if after such redemption the current value of the investor's shares of the  Fund
is  less  than the  dollar amount  of all  payments by  the shareholder  for the
purchase  of  Fund  shares  during  the  preceding  six  years,  but  after  the
implementation  of the Plan  on November 8, 1989  (see "The Distributor--Plan of
Distribution"). 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 or  prior
to  the implementation  of the  Plan, 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 year. The
CDSC will be paid to  the Distributor. In addition, no  CDSC will be imposed  on
redemptions  of  shares  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  determining the  applicability of  CDSC to  each redemption,  the amount
which represent 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 after the implementation of  the Plan 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
or  before  the  implementation  of the  Plan  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 or at any time before the implementation
of the  Plan  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.

                                       37
<PAGE>
    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
                     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>

    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 after the
implementation of the  Plan, 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 after  the implementation of the  Plan,
and  amounts equal to the current value  of shares purchased more than six years
prior to the redemption and  shares purchased through reinvestment of  dividends
or  distributions or  acquired in exchange  for shares of  Dean Witter front-end
sales charge funds, or for shares of other Dean Witter Funds for which shares of
front-end sales charge funds have been  exchanged. The CDSC will be imposed,  in
accordance  with the table shown  above, on any redemptions  within six years of
purchase after  the implementation  of the  Plan 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 above.

    PAYMENT FOR SHARES REDEEMED OR REPURCHASED.  As discussed in the Prospectus,
payment for shares presented for repurchase or redemption will be made by  check
within  seven days after receipt by the Transfer Agent of the certificate and/or
written request  in  good  order. The  term  good  order means  that  the  share
certificate, if any, and request for redemption are properly signed, accompanied
by  any  documentation  required  by  the  Transfer  Agent,  and  bear signature
guarantees when required by the Fund or the Transfer Agent. Such payment may  be
postponed  or the right of  redemption suspended at times  (a) when the New York
Stock Exchange is  closed for other  than customary weekends  and holidays,  (b)
when  trading on that Exchange is restricted,  (c) when an emergency exists as a
result of which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or (d) during any other period when the  Securities
and  Exchange Commission by order so permits; provided that applicable rules and
regulations of the Securities and Exchange Commission shall govern as to whether
the conditions prescribed in (b) or (c) exist. If the shares to be redeemed have
recently been purchased  by check,  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.

    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

                                       38
<PAGE>
involving  less than  all the shares  in an account  will be made  on a pro-rata
basis (that  is,  by  transferring  shares  in  the  same  proportion  that  the
transferred  shares bear to the total shares in the account immediately prior to
the transfer).  The  transferred shares  will  continue  to be  subject  to  any
applicable  contingent  deferred  sales  charge  as  if  they  had  not  been so
transferred.

    REINSTATEMENT PRIVILEGE.  As discussed in the Prospectus, a shareholder  who
has  had  his or  her  shares redeemed  or  repurchased and  has  not previously
exercised this reinstatement privilege may, within thirty days after the date of
the redemption or repurchase,  reinstate any portion or  all of the proceeds  of
such  redemption or repurchase in shares of the Fund at the net asset value next
determined after  a  reinstatement  request,  together  with  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, the Fund will determine either to distribute
or to retain  all or part  of any net  long-term capital gains  in any year  for
reinvestment.  If any such gains are retained,  the Fund will pay federal income
tax thereon, and  will notify shareholders  that, following an  election by  the
Fund,  the shareholders will be required  to include such undistributed gains in
determining their taxable income and  may claim their share  of the tax paid  by
the Fund as a credit against their individual federal income tax.

   
    Because  the Fund intends to distribute all of its net investment income and
capital gains to shareholders and otherwise  continue to qualify as a  regulated
investment  company under Subchapter M  of the Internal Revenue  Code, it is not
expected that  the  Fund  will  be  required to  pay  any  federal  income  tax.
Shareholders  will  normally have  to pay  federal income  taxes, and  any state
income taxes, on  the dividends and  distributions they receive  from the  Fund.
Such  dividends and distributions, to the extent  that they are derived from net
investment income or short-term capital gains, are taxable to the shareholder as
ordinary income regardless of whether the shareholder receives such payments  in
additional  shares or in cash. Any dividends declared in the last quarter of any
calendar year which are paid in the  following year prior to February 1 will  be
deemed received by the shareholder in the prior calendar year.
    

    Gains or losses on sales of securities by the Fund will be long-term capital
gains  or losses  if the  securities have been  held by  the Fund  for more than
twelve months. Gains or losses on the sale of securities held for twelve  months
or less will be short-term gains or losses.

   
    Gains  or  losses  on  the  Fund's  transactions,  if  any,  in  futures and
non-equity options generally are  treated as 60%  long-term and 40%  short-term.
When   the  Fund  engages  in  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.
    

    One of the  requirements for  the Fund to  remain qualified  as a  regulated
investment  company is that  less than 30%  of its gross  income be derived from
gains from the sale or other disposition of securities held for less than  three
months.  Accordingly, the Fund  may be restricted  in the writing  of options on
securities held for  less than  three months, in  the writing  of options  which
expire  in less  than three months,  and in effecting  closing transactions with
respect to call or put  options which have been  written or purchased less  than
three  months prior to such transactions. The Fund may also be restricted in its
ability to engage in transactions involving futures contracts.

                                       39
<PAGE>
    Distributions of  net  long-term  capital  gains, if  any,  are  taxable  to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional  shares or in cash. Capital  gains distributions are not eligible for
the dividends received deduction.

    Under current federal law,  the Fund will receive  net investment income  in
the  form of interest by virtue of  holding Treasury bills, notes and bonds, and
will recognize  income attributable  to  it from  holding zero  coupon  Treasury
securities. 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
payment  in cash on the security during  the year. As an investment company, the
Fund must pay  out substantially  all of its  net investment  income each  year.
Accordingly,  the  Fund,  to  the  extent it  invests  in  zero  coupon Treasury
securities, may be required to  pay out as an  income distribution each year  an
amount  which is greater than the total  amount of cash receipts of interest the
Fund actually received. Such distributions will be made from the available  cash
of  the  Fund or  by  liquidation of  portfolio  securities if  necessary.  If a
distribution or cash necessitates the  liquidation of portfolio securities,  the
Investment  Manager will select which securities to sell. The Fund may realize a
gain or loss from such sales. In  the event the Fund realizes net capital  gains
from  such  transactions, its  shareholders may  receive  a larger  capital gain
distribution, if any, than they would in the absence of such transactions.

    In computing net investment income, the  Fund will not amortize premiums  or
accrue  discounts  on fixed-income  securities  in the  portfolio,  except those
original issue discounts for which  amortization is required for federal  income
tax purposes. Additionally, with respect to market discounts on bonds, a portion
of  any capital gain  realized upon disposition may  be characterized as taxable
ordinary income in accordance with the provisions of the Internal Revenue  Code.
Realized  gains  and  losses  on security  transactions  are  determined  on the
identified cost method.

    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
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 net 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.

    Dividend  payments  will  be  eligible for  the  federal  dividends received
deduction available to the Fund's corporate shareholders only to the extent  the
aggregate  dividends received by the Fund would be eligible for the deduction if
the Fund were  the shareholder  claiming the dividends  received deduction.  The
amount  of  dividends paid  by  the Fund  which  may qualify  for  the dividends
received deduction is limited  to the aggregate  amount of qualifying  dividends
which  the Fund derives from  its portfolio investments which  the Fund has held
for a minimum period, usually 46 days.  Any distributions made by the Fund  will
not  be eligible  for the  dividends received  deduction with  respect to shares
which are held by  the shareholder for  45 days or  less. Any long-term  capital
gain  distributions  will  also  not  be  eligible  for  the  dividends received
deduction. The ability  to take the  dividends received deduction  will also  be
limited in the case of a Fund shareholder which incurs or continues indebtedness
which is directly attributable to its investment in the Fund.

    After  the end of  the year, shareholders  will be sent  full information on
their dividends  and capital  gains distributions  for tax  purposes,  including
information as to the portion taxable as ordinary income, the portion taxable as
long-term  capital gains  and the  portion eligible  for the  dividends received
deduction. To avoid  being subject to  a 31% federal  backup withholding tax  on
taxable  dividends, capital gains distributions  and the proceeds of redemptions
and repurchases, shareholders' taxpayer identification numbers must be furnished
and certified as to their accuracy.

                                       40
<PAGE>
    Shareholders are urged to consult their attorneys or tax advisers  regarding
specific questions as to federal, state or local taxes.

PERFORMANCE INFORMATION
--------------------------------------------------------------------------------

    As  discussed in the  Prospectus, from time  to time the  Fund may quote its
"total return" in advertisements and sales literature.

   
    The Fund's "average annual total return" represents an annualization of  the
Fund's  total return  over a  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  the  Fund's
operations, if shorter than any of the foregoing. The ending redeemable value is
reduced  by any contingent deferred sales charge at  the end of the one, five or
ten year or other  period. For the  purpose of this  calculation, it is  assumed
that  all dividends and distributions are  reinvested. The formula for computing
the average annual total return involves  a percentage obtained by dividing  the
ending  redeemable value by the amount of  the initial investment, taking a root
of the quotient  (where the root  is equivalent to  the number of  years in  the
period)  and subtracting 1 from the result.  The average annual total returns of
the Fund for the fiscal year ended July 31, 1995, for the five year period ended
July 31,  1995  and  for the  period  from  October 31,  1988  (commencement  of
operations) through July 31, 1995 were 11.05%, 10.57% and 12.55%, respectively.
    

   
    In  addition to the foregoing, the Fund  may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or  other
types  of total  return figures.  Such calculations may  or may  not reflect the
deduction of the  contingent deferred  sales charge which,  if reflected,  would
reduce  the performance quoted. For example,  the average annual total return of
the Fund may be calculated in the manner described above, but without  deduction
for  any applicable contingent deferred sales charge. Based on this calculation,
the average annual total returns of the Fund for the fiscal year ended July  31,
1995,  for the five year  period ended July 31, 1995  and for the period October
31, 1988 through July 31, 1995 were 16.05%, 10.84% and 12.55%, 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 the
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 returns for the fiscal year ending July 31,  1995,
for the five year period ended July 31, 1995 and for the period October 31, 1988
through July 31, 1995 were 16.05%, 67.29% and 121.95%, respectively.
    

   
    The  Fund  may  also advertise  the  growth of  hypothetical  investments of
$10,000, $50,000 and $100,000 in  shares of the Fund by  adding 1 to the  Fund's
aggregate  total return to date (expressed as  a decimal and without taking into
account the  effect of  any  applicable contingent  deferred sales  charge)  and
multiplying  by $10,000, $50,000 or $100,000, as the case may be. Investments of
$10,000, $50,000  and $100,000  in the  Fund at  inception would  have grown  to
$22,195, $110,975 and $221,950, respectively, at July 31, 1995.
    

    The  Fund from time to  time may also advertise  its performance relative to
certain performance rankings and indexes compiled by independent organizations.

DESCRIPTION OF SHARES
--------------------------------------------------------------------------------

    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 at

                                       41
<PAGE>
   
Special Meetings of Shareholders held on November 8, 1989 and January 12,  1993.
Messrs.  Bozic, Purcell and Schroeder were elected  by the other Trustees of the
Fund on April  8, 1994.  The Trustees  themselves have  the power  to alter  the
number  and  the terms  of office  of the  Trustees,  and they  may at  any time
lengthen their own terms or make  their terms of unlimited duration and  appoint
their  own successors, provided that always at  least a majority of the Trustees
has been elected by  the shareholders of the  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 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.

    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.

    Under Massachusetts law, shareholders of a business trust may, under certain
limited  circumstances, be held personally liable as partners for 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, in the opinion of  Massachusetts
counsel to the Fund, the risk to shareholders of personal liability is remote.

    The  Declaration of  Trust provides  that no  Trustee, officer,  employee or
agent of the Fund is liable to the Fund or to a shareholder, nor is any Trustee,
officer, employee or agent  liable to any third  persons in connection with  the
affairs  of the Fund, except as such liability may arise from his/her or its own
bad faith, willful misfeasance, gross  negligence, or reckless disregard of  his
his/her or its 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 liabilities in connection with the affairs of the Fund.

    The  Fund is authorized to issue an unlimited number of shares of beneficial
interest. The Fund shall be of  unlimited duration subject to the provisions  in
the Declaration of Trust concerning termination by action of the shareholders.

CUSTODIAN AND TRANSFER AGENT
--------------------------------------------------------------------------------

   
    The Bank of New York, 90 Washington Street, New York, New York, 10286 is the
Custodian  of  the Fund's  assets.  Any of  the  Fund's cash  balances  with the
Custodian in excess of  $100,000 are unprotected  by Federal deposit  insurance.
Such balances may, at times, be substantial.
    

    Dean  Witter Trust Company,  Harborside Financial Center,  Plaza Two, Jersey
City, New Jersey 07311 is the Transfer  Agent of the Fund's shares and  Dividend
Disbursing  Agent for payment of dividends  and distributions on Fund shares and
Agent for shareholders  under various  investment plans  described herein.  Dean
Witter  Trust  Company is  an affiliate  of Dean  Witter InterCapital  Inc., the
Fund's Investment  Manager, and  of Dean  Witter Distributors  Inc., the  Fund's
Distributor. As Transfer Agent and Dividend

                                       42
<PAGE>
   
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 propectuses 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.
    

INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------

    Price Waterhouse LLP serves as the independent accountants of the Fund.  The
independent  accountants  are  responsible  for  auditing  the  annual financial
statements of the Fund.

REPORTS TO SHAREHOLDERS
--------------------------------------------------------------------------------

    The Fund will send to shareholders, at least semi-annually, a report 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 July 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 the
Investment Manager, is an officer and the General Counsel of the Fund.

EXPERTS
--------------------------------------------------------------------------------

   
    The annual financial statements of the Fund for the year ended July 31, 1995
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.

                                       43
<PAGE>
   
DEAN WITTER STRATEGIST FUND
    
   
PORTFOLIO OF INVESTMENTS JULY 31, 1995
    
   
<TABLE>
<CAPTION>
 NUMBER OF
  SHARES                                               VALUE
-----------------------------------------------------------------
<C>          <S>                                  <C>

             COMMON STOCKS (55.0%)
             AEROSPACE & DEFENSE (0.5%)
    92,000   Rockwell International Corp........  $     4,197,500
                                                  ---------------
             AIRCRAFT & AEROSPACE (1.5%)
    74,000   Boeing Company.....................        4,958,000
   200,000   Honeywell, Inc.....................        8,575,000
                                                       13,533,000
                                                  ---------------
             ALUMINUM (1.6%)
   231,200   Reynolds Metals Co.................       14,450,000
                                                  ---------------
             AUTOMOTIVE (1.1%)
   148,000   Ford Motor Co......................        4,273,500
   150,000   Superior Industries International,
             Inc................................        5,250,000
                                                        9,523,500
                                                  ---------------
             BANKS - MONEY CENTER (1.5%)
   120,000   Chemical Banking Corp..............        6,195,000
   110,000   Citicorp...........................        6,861,250
                                                       13,056,250
                                                  ---------------
             BANKS - REGIONAL (3.0%)
   155,000   Bank of Boston Corp................        6,723,125
    50,000   Baybanks, Inc......................        4,075,000
    73,000   Integra Financial Corp.............        3,878,125
   200,000   Norwest Corp.......................        5,650,000
    31,500   Wells Fargo & Co...................        5,744,812
                                                       26,071,062
                                                  ---------------
             BEVERAGES - SOFT DRINKS (0.8%)
   154,000   PepsiCo Inc........................        7,218,750
                                                  ---------------
             BROKERAGE (1.2%)
   100,000   Merrill Lynch & Co., Inc...........        5,550,000
    60,000   Morgan Stanley Group, Inc..........        5,017,500
                                                       10,567,500
                                                  ---------------
             CABLE/CELLULAR (0.5%)
   153,000   Airtouch Communications, Inc.*.....        4,819,500
                                                  ---------------
             CHEMICALS (0.7%)
    70,000   Monsanto Co........................        6,518,750
                                                  ---------------
             CHEMICALS - SPECIALTY (0.4%)
   100,000   Georgia Gulf Corp..................        3,362,500
                                                  ---------------
             COMMUNICATIONS - EQUIPMENT & SOFTWARE (0.8%)
   126,000   Cisco Systems, Inc.*...............        7,008,750
                                                  ---------------
             COMPUTER SERVICES (1.4%)
   140,000   Diebold, Inc.......................  $     6,475,000
   140,000   General Motors Corp. (Class E).....        6,160,000
                                                       12,635,000
                                                  ---------------

<CAPTION>
 NUMBER OF
  SHARES                                               VALUE
-----------------------------------------------------------------
<C>          <S>                                  <C>
             COMPUTER SOFTWARE (1.3%)
    67,000   Microsoft Corp.*...................        6,055,125
   120,000   Oracle Systems Corp.*..............        5,010,000
                                                       11,065,125
                                                  ---------------
             COMPUTERS - SYSTEMS (2.9%)
   150,000   Apple Computer, Inc................        6,712,500
    60,000   Hewlett-Packard Co.................        4,672,500
    61,000   International Business Machines
             Corp...............................        6,641,375
   260,000   Novell, Inc.*......................        4,680,000
    60,000   Sun Microsystems, Inc.*............        2,880,000
                                                       25,586,375
                                                  ---------------
             CONSUMER PRODUCTS (0.8%)
   256,000   RJR Nabisco Holdings Corp..........        7,072,000
                                                  ---------------
             DRUGS & HEALTHCARE (1.8%)
   190,000   Abbott Laboratories................        7,600,000
   112,000   Johnson & Johnson..................        8,036,000
                                                       15,636,000
                                                  ---------------
             ELECTRICAL EQUIPMENT (1.0%)
    61,000   Emerson Electric Co................        4,315,750
    73,000   General Electric Co................        4,307,000
                                                        8,622,750
                                                  ---------------
             ELECTRICAL HOUSEHOLD APPLIANCES (0.5%)
   270,000   Maytag Corp........................        4,421,250
                                                  ---------------
             ELECTRONICS - DEFENSE (0.6%)
    87,000   Loral Corp.........................        4,872,000
                                                  ---------------
             ELECTRONICS - SEMICONDUCTORS/COMPONENTS (1.7%)
    40,000   Applied Materials, Inc.*...........        4,140,000
    65,000   Intel Corp.........................        4,216,875
    40,000   Texas Instruments Inc..............        6,250,000
                                                       14,606,875
                                                  ---------------
             ENTERTAINMENT (0.4%)
   130,000   Circus Circus Enterprises, Inc.*...        3,867,500
                                                  ---------------
             FINANCIAL SERVICES (1.3%)
   120,000   Beneficial Corp....................        5,685,000
   130,000   Travelers, Inc.....................        6,158,750
                                                       11,843,750
                                                  ---------------
             FOODS (0.8%)
   153,000   Campbell Soup Co...................        7,152,750
                                                  ---------------
             HEALTH CARE - MISCELLANEOUS (1.6%)
   250,000   Coventry Corp.*....................  $     4,000,000
   350,000   Humana, Inc.*......................        6,781,250
   170,000   Mid Atlantic Medical Services,
             Inc.*..............................        3,336,250
                                                       14,117,500
                                                  ---------------
</TABLE>
    

   
                       SEE NOTES TO FINANCIAL STATEMENTS
                                       44
    
<PAGE>
   
DEAN WITTER STRATEGIST FUND
    
   
PORTFOLIO OF INVESTMENTS JULY 31, 1995, CONTINUED
    
   
<TABLE>
<CAPTION>
 NUMBER OF
  SHARES                                               VALUE
-----------------------------------------------------------------
<C>          <S>                                  <C>
             HOSPITAL MANAGEMENT (1.0%)
   173,000   Columbia/HCA Healthcare Corp.......        8,477,000
                                                  ---------------
             HOUSEHOLD PRODUCTS (1.6%)
    98,000   Colgate-Palmolive Co...............        6,860,000
   150,000   Tambrands, Inc.....................        7,068,750
                                                       13,928,750
                                                  ---------------
             LIFE INSURANCE (0.6%)
   140,000   Providian Corp.....................        5,022,500
                                                  ---------------
             MACHINERY - CONSTRUCTION & MATERIALS (1.1%)
   111,000   Ingersoll-Rand Co..................        4,634,250
   120,000   Parker-Hannifin Corp...............        4,890,000
                                                        9,524,250
                                                  ---------------
             METALS (0.8%)
   112,000   Phelps Dodge Corp..................        7,196,000
                                                  ---------------
             OFFICE EQUIPMENT & SUPPLIES (0.4%)
    38,000   Alco Standard Corp.................        3,092,250
                                                  ---------------
             OIL DRILLING & SERVICES (1.8%)
   310,000   Dresser Industries, Inc............        7,130,000
   130,000   Schlumberger Ltd...................        8,710,000
                                                       15,840,000
                                                  ---------------
             OIL INTEGRATED - INTERNATIONAL (3.9%)
   175,000   Chevron Corp.......................        8,640,625
   120,000   Exxon Corp.........................        8,700,000
    86,000   Mobil Corp.........................        8,406,500
   125,000   Texaco, Inc........................        8,312,500
                                                       34,059,625
                                                  ---------------
             PHARMACEUTICALS (2.8%)
    95,000   American Home Products Corp........        7,505,000
   165,000   Merck & Co., Inc...................        8,518,125
   170,000   Pfizer, Inc........................        8,585,000
                                                       24,608,125
                                                  ---------------
             RAILROAD EQUIPMENT (0.4%)
   116,500   Trinity Industries, Inc............        3,902,750
                                                  ---------------
             RESTAURANTS (0.5%)
   115,000   McDonald's Corp....................  $     4,441,875
                                                  ---------------

<CAPTION>
 NUMBER OF
  SHARES                                               VALUE
-----------------------------------------------------------------
<C>          <S>                                  <C>
             RETAIL (0.5%)
   171,000   Wal-Mart Stores, Inc...............        4,552,875
                                                  ---------------
             RETAIL - SPECIALTY (2.8%)
   300,000   Bed, Bath & Beyond, Inc.*..........        9,300,000
   100,000   Home Depot, Inc....................        4,387,500
   600,000   Pier 1 Imports, Inc................        5,850,000
   305,000   Price/Costco, Inc.*................        5,451,875
                                                       24,989,375
                                                  ---------------
             RETAIL - SPECIALTY APPAREL (0.5%)
   123,000   Gap, Inc...........................        4,289,625
                                                  ---------------
             SAVINGS & LOAN ASSOCIATIONS (1.7%)
   270,000   California Federal Bank*...........        3,746,250
   115,000   Golden West Financial Corp.........        5,376,250
   350,000   Roosevelt Financial Group, Inc.....        5,381,250
                                                       14,503,750
                                                  ---------------
             SHIPPING (0.7%)
   225,800   American President Companies,
             Ltd................................        6,350,625
                                                  ---------------
             SHOES (1.1%)
    54,000   Nike, Inc. (Class B)...............        4,880,250
   125,000   Reebok International Ltd...........        4,484,375
                                                        9,364,625
                                                  ---------------
             STEEL & IRON (0.8%)
   420,000   Bethlehem Steel Corp.*.............        6,615,000
                                                  ---------------
             TELEPHONE - LONG DISTANCE (0.9%)
   315,000   MCI Communications Corp............        7,520,625
                                                  ---------------
             TEXTILES - APPAREL MANUFACTURERS (0.3%)
   100,000   Liz Claiborne, Inc.................        2,287,500
                                                  ---------------
             TRANSPORTATION (0.5%)
    78,000   Conrail, Inc.......................        4,816,500
                                                  ---------------
             U.S. GOVERNMENT AGENCY (0.6%)
    60,000   Federal National Mortgage
             Association........................        5,617,500
                                                  ---------------

             TOTAL COMMON STOCKS
             (IDENTIFIED COST $401,825,390).....      482,827,062
                                                  ---------------
</TABLE>
    

   
                       SEE NOTES TO FINANCIAL STATEMENTS
                                       45
    
<PAGE>
   
DEAN WITTER STRATEGIST FUND
    
   
PORTFOLIO OF INVESTMENTS JULY 31, 1995, CONTINUED
    
   
<TABLE>
<CAPTION>
 PRINCIPAL
 AMOUNT IN
 THOUSANDS                                             VALUE
-----------------------------------------------------------------
<C>          <S>                                  <C>

             CORPORATE BONDS (19.7%)
             AUTOMOTIVE FINANCE (0.6%)
 $   5,000   General Motors Acceptance Corp.
             % due 7.2505/15/03.................  $     5,006,250
                                                  ---------------
             BANKS (6.6%)
     9,850   Banco Central Hispano (Cayman
             Islands)
             % due 7.5006/15/05.................        9,667,184
     5,220   Bank of Boston Corp.
             % due 6.87507/15/03................        5,127,554
     4,900   BCO Commercio Exterior (Columbia) -
             144A**
             % due 8.62506/02/00................        4,973,500
     5,000   Central Fidelity Banks, Inc.
             % due 8.1511/15/02.................        5,267,750
     5,000   Household Bank F.S.B.
             % due 6.5007/15/03.................        4,790,600
     5,900   Midland Bank PLC (United Kingdom)
             % due 7.6505/01/25.................        6,218,836
     5,000   NationsBank Corp.
             % due 7.62504/15/05................        5,132,900
     6,000   Shawmut Bank
             % due 8.62502/15/05................        6,544,920
     5,000   Susquehanna Bancshares
             % due 9.0002/01/05.................        5,461,350
     5,000   Swiss Bank Corp.
             % due 7.5007/15/25.................        5,097,250
                                                       58,281,844
                                                  ---------------
             BROKERAGE (0.5%)
     5,000   Paine Webber Group, Inc.
             % due 7.62502/15/14................        4,626,050
                                                  ---------------
             FINANCIAL (2.2%)
     4,950   BHP Finance Ltd. (Australia)
             % due 5.62511/01/00................        4,712,103
     4,900   Commercial Credit Group, Inc.
             % due 7.7503/01/05.................        5,120,500
     2,500   Meditrust
             % due 7.6007/15/01.................        2,499,750
     4,900   Salomon, Inc.
             % due 6.7508/15/03.................        4,532,941
     2,000   United Companies Financial
             % due 7.0007/15/98.................        1,999,280
                                                       18,864,574
                                                  ---------------

<CAPTION>
 PRINCIPAL
 AMOUNT IN
 THOUSANDS                                             VALUE
-----------------------------------------------------------------
<C>          <S>                                  <C>
             FOREIGN GOVERNMENT AGENCY (1.5%)
 $   9,850   Italy (Republic of)
             % due 6.87509/27/23................  $     8,616,780
     4,950   Province of Ontario (Canada)
             % due 7.0008/04/05.................        4,956,187
                                                       13,572,967
                                                  ---------------
             INDUSTRIALS (5.5%)
     4,900   Aramark Services Co.
             % due 8.1505/01/05.................        5,052,635
     3,000   Joy Technologies Inc.
             % due 10.2509/01/03................        3,315,000
     4,920   News American Holdings, Inc.
             % due 8.2508/10/18.................        4,986,518
     5,000   Placer Dome, Inc. (Canada)
             % due 7.7506/15/15.................        4,823,650
     4,900   Repsol International Finance
             % due 7.0008/01/05.................        4,900,980
     9,950   RJR Nabisco, Inc.
             % due 8.7508/15/05.................        9,957,861
     4,950   TCI Communications, Inc.
             % due 8.7508/01/15.................        4,936,487
     4,900   Time Warner Entertainment Co.
             % due 8.37507/15/33................        4,787,888
     5,000   Time Warner, Inc.
             % due 9.1502/01/23.................        5,138,500
                                                       47,899,519
                                                  ---------------
             RETAIL (0.5%)
     5,000   K Mart Corp.
             % due 7.9502/01/23.................        4,596,300
                                                  ---------------
             TRANSPORTATION (1.0%)
     6,900   United Air Lines, Inc.
             % due 11.2105/01/14................        8,463,678
                                                  ---------------
             UTILITIES - ELECTRIC (1.3%)
     5,000   Big Rivers Electric
             % due 9.5002/15/17.................        5,536,450
     6,000   Pacific Gas Transmission Co.
             % due 6.9608/05/03.................        5,940,000
                                                       11,476,450
                                                  ---------------

             TOTAL CORPORATE BONDS
             (IDENTIFIED COST $171,546,076)           172,787,632
                                                  ---------------
</TABLE>
    

   
<TABLE>
<CAPTION>
 NUMBER OF
  SHARES                                               VALUE
-----------------------------------------------------------------
<C>          <S>                                  <C>

             RIGHTS (0.0%)
             SAVINGS & LOAN ASSOCIATIONS
    27,000   California Federal Bank (Identified
             Cost $0)*..........................          135,000
                                                  ---------------
</TABLE>
    

                       SEE NOTES TO FINANCIAL STATEMENTS
                                       46
<PAGE>
   
DEAN WITTER STRATEGIST FUND
    
   
PORTFOLIO OF INVESTMENTS JULY 31, 1995, CONTINUED
    
   
<TABLE>
<CAPTION>
 PRINCIPAL
 AMOUNT IN
 THOUSANDS                                             VALUE
-----------------------------------------------------------------
<C>          <S>                                  <C>

             U.S. GOVERNMENT & AGENCIES OBLIGATIONS (20.6%)
 $   5,000   Federal Home Loan Banks
             % due 7.7801/30/97.................  $     5,050,000
       695   Federal Home Loan Mortgage Corp.
             % due 8.5007/01/02.................          711,041
       276   Federal Home Loan Mortgage Corp.
             % due 9.0008/01/02.................          284,830
     5,000   Federal National Mortgage
             Association
             % due 5.2207/10/98.................        4,850,000
     3,000   Federal National Mortgage
             Association
             % due 6.4001/13/04.................        2,853,750
    10,000   Private Export Funding Corp.
             % due 7.9511/01/06.................       10,886,700
    10,900   U.S. Treasury Bond
             % due 7.5011/15/24.................       11,765,188
     1,000   U.S. Treasury Note
             % due 7.2511/15/96.................        1,017,656
    20,000   U.S. Treasury Note
             % due 6.5005/15/97.................       20,206,250
    25,000   U.S. Treasury Note
             % due 5.2507/31/98.................       24,468,750
     8,000   U.S. Treasury Note
             % due 5.12511/30/98................        7,770,000
    30,000   U.S. Treasury Note
             % due 6.5004/30/99.................       30,365,625
    26,000   U.S. Treasury Note
             % due 6.87508/31/99................       26,662,188
     6,500   U.S. Treasury Note
             % due 7.87511/15/99................        6,911,328
     3,000   U.S. Treasury Note
             % due 7.7511/30/99.................        3,175,781
    15,050   U.S. Treasury Note
             % due 6.7504/30/00.................       15,386,273
     3,500   U.S. Treasury Note
             % due 7.5011/15/01.................        3,716,016
     5,000   U.S. Treasury Note
             % due 5.7508/15/03.................        4,791,406
                                                  ---------------

             TOTAL U.S. GOVERNMENT & AGENCIES
             OBLIGATIONS
             (IDENTIFIED COST $179,887,230).....      180,872,782
                                                  ---------------

<CAPTION>
 PRINCIPAL
 AMOUNT IN
 THOUSANDS                                             VALUE
-----------------------------------------------------------------
<C>          <S>                                  <C>

             SHORT-TERM INVESTMENTS (3.9%)
             U.S. GOVERNMENT AGENCIES (a) (3.5%)
 $   9,000   Federal Home Loan Banks 5.65% due
             08/02/95...........................  $     8,998,588
    21,400   Federal National Mortgage
             Association 5.70% due 08/09/95.....       21,372,893
                                                  ---------------
             TOTAL U.S. GOVERNMENT AGENCIES
             (AMORTIZED COST $30,371,481).......       30,371,481
                                                  ---------------
             REPURCHASE AGREEMENT (0.4%)
     3,202   The Bank of New York 5.8125% due
             08/01/95 (dated 07/31/95; proceeds
             $3,202,650; collateralized by
             $3,232,343 U.S. Treasury Note 6.50%
             due 09/30/96 valued at $3,328,570)
             (Identified Cost $3,202,088).......        3,202,088
                                                  ---------------
             TOTAL SHORT-TERM INVESTMENTS
             (IDENTIFIED COST $33,573,569)......       33,573,569
                                                  ---------------

TOTAL INVESTMENTS
(IDENTIFIED COST
$786,832,265) (B)...........       99.2%   870,196,045
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES.......        0.8      7,399,281
                                  -----   ------------
NET ASSETS..................      100.0%  $877,595,326
                                  -----   ------------
                                  -----   ------------

<FN>
---------------------
 *   Non-income producing security.
**   Resale is restricted to qualified institutional investors.
(a)  Securities were purchased on a discount basis. The rates shown reflect a
     money market equivalent yield.
(b)  The aggregate cost for federal income tax purposes is $787,894,760; the
     aggregate gross unrealized appreciation is $89,658,581 and the aggregate
     gross unrealized depreciation is $7,357,296, resulting in net unrealized
     appreciation of $82,301,285.
</TABLE>
    

                       SEE NOTES TO FINANCIAL STATEMENTS
                                       47
<PAGE>

   
DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995

<TABLE>
<S>                                                           <C>
ASSETS:
Investments in securities, at value
  (identified cost $786,832,265)............................  $870,196,045
Cash........................................................        75,388
Receivable for:
    Investments sold........................................    13,007,590
    Interest................................................     6,205,761
    Shares of beneficial interest sold......................     2,757,767
    Dividends...............................................       422,055
    Principal paydowns......................................        43,507
Prepaid expenses and other assets...........................        17,198
                                                              ------------

     TOTAL ASSETS...........................................   892,725,311
                                                              ------------

LIABILITIES:
Payable for:
    Investments purchased...................................    13,140,192
    Shares of beneficial interest repurchased...............       727,207
    Plan of distribution fee................................       630,975
    Investment management fee...............................       426,740
Accrued expenses and other payables.........................       204,871
                                                              ------------
     TOTAL LIABILITIES......................................    15,129,985
                                                              ------------

NET ASSETS:
Paid-in-capital.............................................   736,601,490
Net unrealized appreciation.................................    83,363,780
Accumulated undistributed net investment income.............     3,987,969
Accumulated undistributed net realized gain.................    53,642,087
                                                              ------------

     NET ASSETS.............................................  $877,595,326
                                                              ------------
                                                              ------------

NET ASSET VALUE PER SHARE,
  55,289,486 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
  OF $.01 PAR VALUE)........................................
                                                                    $15.87
                                                              ------------
                                                              ------------
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1995

<TABLE>
<S>                                                           <C>
NET INVESTMENT INCOME:

INCOME
Interest....................................................  $ 22,087,220
Dividends (net of $5,650 foreign withholding tax)...........    10,048,666
                                                              ------------
     TOTAL INCOME...........................................    32,135,886
                                                              ------------

EXPENSES
Plan of distribution fee....................................     7,304,905
Investment management fee...................................     4,679,443
Transfer agent fees and expenses............................       859,726
Shareholder reports and notices.............................        88,308
Custodian fees..............................................        74,297
Professional fees...........................................        47,227
Registration fees...........................................        46,478
Trustees' fees and expenses.................................        28,170
Other.......................................................        25,159
                                                              ------------

     TOTAL EXPENSES.........................................    13,153,713
                                                              ------------

     NET INVESTMENT INCOME..................................    18,982,173
                                                              ------------

NET REALIZED AND UNREALIZED GAIN:
Net realized gain...........................................    56,953,694
Net change in unrealized appreciation.......................    45,494,865
                                                              ------------

     NET GAIN...............................................   102,448,559
                                                              ------------

NET INCREASE................................................  $121,430,732
                                                              ------------
                                                              ------------
</TABLE>
    

                       SEE NOTES TO FINANCIAL STATEMENTS
                                       48
<PAGE>

   
DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                              FOR THE YEAR   FOR THE YEAR
                                                                 ENDED          ENDED
                                                                JULY 31,       JULY 31,
                                                                  1995           1994
-----------------------------------------------------------------------------------------
<S>                                                           <C>            <C>

INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment income.......................................  $ 18,982,173   $ 16,501,766
Net realized gain...........................................    56,953,694     26,073,475
Net change in unrealized appreciation.......................    45,494,865    (15,330,968)
                                                              ------------   ------------

     NET INCREASE...........................................   121,430,732     27,244,273
                                                              ------------   ------------

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.......................................   (15,997,877)   (14,241,827)
Net realized gain...........................................   (25,273,043)   (22,860,148)
                                                              ------------   ------------

     TOTAL..................................................   (41,270,920)   (37,101,975)
                                                              ------------   ------------
Net increase (decrease) from transactions in shares of
  beneficial interest.......................................    (8,813,901)    33,273,643
                                                              ------------   ------------

     TOTAL INCREASE.........................................    71,345,911     23,415,941

NET ASSETS:
Beginning of period.........................................   806,249,415    782,833,474
                                                              ------------   ------------

     END OF PERIOD
    (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
    $3,987,969 AND $1,003,673, RESPECTIVELY)................  $877,595,326   $806,249,415
                                                              ------------   ------------
                                                              ------------   ------------
</TABLE>

    
                       SEE NOTES TO FINANCIAL STATEMENTS
                                       49
<PAGE>
   
DEAN WITTER STRATEGIST FUND
    
   
NOTES TO FINANCIAL STATEMENTS JULY 31, 1995
    

   
1. ORGANIZATION AND ACCOUNTING POLICIES
    

   
Dean Witter Strategist Fund (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end
management investment company. The Fund was organized as a Massachusetts
business trust on August 5, 1988 and commenced operations on October 31, 1988.
    

   
The following is a summary of significant accounting policies:
    

   
A. VALUATION OF INVESTMENTS --  (1) an equity security listed or traded on the
New York or American Stock Exchange is valued at its latest sale price on that
exchange prior to the time when assets are valued; if there were no sales that
day, the security is valued at the latest bid price; (2) all other portfolio
securities for which over-the-counter market quotations are readily available
are valued at the latest available bid price prior to the time of valuation; (3)
when market quotations are not readily available, portfolio securities are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trustees; (4) certain of
the Fund's portfolio securities may be valued by an outside pricing service
approved by the Trustees. The pricing service utilizes 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, if available, in determining what it
believes is the fair valuation of the portfolio securities valued by such
pricing service; and (5) 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.
Discounts on securities purchased are accreted over the life of the respective
securities. Dividend income is recorded on the ex-dividend date. Interest income
is accrued daily.
    

   
C. 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.
    

                                       50
<PAGE>
   
DEAN WITTER STRATEGIST FUND
    
   
NOTES TO FINANCIAL STATEMENTS JULY 31, 1995, CONTINUED
    

   
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record date. The amount of dividends
and distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent 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 AGREEMENT
    

   
Pursuant to an Investment Management Agreement with Dean Witter InterCapital
Inc. (the "Investment Manager"), the Fund pays its Investment Manager a
management fee, accrued daily and payable monthly, by applying the following
annual rates to the net assets of the Fund determined at the close of each
business day: 0.60% to the portion of daily net assets not exceeding $500
million; 0.55% to the portion of daily net assets exceeding $500 million but not
exceeding $1 billion; 0.50% to the portion of daily net assets exceeding $1
billion.
    

   
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
    

   
3. PLAN OF DISTRIBUTION
    

   
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted a
Plan of Distribution (the "Plan"), pursuant to Rule 12b-1 under the Act pursuant
to which the Fund pays the Distributor compensation, accrued daily and payable
monthly, at an annual rate of 1.0% of the lesser of: (a) the average daily
aggregate gross sales of the Fund's shares since the implementation of the Plan
on November 8, 1989 (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net
    

                                       51
<PAGE>
   
DEAN WITTER STRATEGIST FUND
    
   
NOTES TO FINANCIAL STATEMENTS JULY 31, 1995, CONTINUED
    

   
asset value of the Fund's shares redeemed since the Fund's implementation of the
Plan 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
attributable to shares issued, net of related shares redeemed, since
implementation of the Plan. 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 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, 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 July 31, 1995, it
received approximately $1,775,000 in contingent deferred sales charges from
certain redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
    

   
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
    

   
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended July 31, 1995 aggregated
$1,278,393,842 and $1,277,865,740, respectively. Included in the aforementioned
are purchases and sales of U.S. Government securities of $336,249,589 and
$245,143,949, respectively. For the same period, the Fund paid brokerage
commissions of approximately $85,000 to DWR for transactions executed on behalf
of the Fund.
    

   
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At July 31, 1995, the Fund had
transfer agent fees and expenses payable of approximately $72,000.
    

                                       52
<PAGE>
   
DEAN WITTER STRATEGIST FUND
    
   
NOTES TO FINANCIAL STATEMENTS JULY 31, 1995, CONTINUED
    

   
The Fund established 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 July 31, 1995
included in Trustees' fees and expenses in the Statement of Operations amounted
to $7,970. At July 31, 1995, the Fund had an accrued pension liability of
$50,526 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
                                                           JULY 31, 1995                  JULY 31, 1994
                                                    ----------------------------   ----------------------------
                                                       SHARES         AMOUNT          SHARES         AMOUNT
                                                    ------------   -------------   ------------   -------------
<S>                                                 <C>            <C>             <C>            <C>
Sold..............................................     9,276,510   $ 137,319,676     12,833,544   $ 190,736,225
Reinvestment of dividends and distributions.......     2,728,962      38,146,103      2,333,508      34,489,407
                                                    ------------   -------------   ------------   -------------
                                                      12,005,472     175,465,779     15,167,052     225,225,632
Repurchased.......................................   (12,582,171)   (184,279,680)   (12,951,477)   (191,951,989)
                                                    ------------   -------------   ------------   -------------
Net increase (decrease)...........................      (576,699)  $  (8,813,901)     2,215,575   $  33,273,643
                                                    ------------   -------------   ------------   -------------
                                                    ------------   -------------   ------------   -------------
</TABLE>
    

   
6. FEDERAL INCOME TAX STATUS
    

   
At July 31, 1995, the Fund had temporary book/tax differences which were
primarily attributable to capital loss deferrals on wash sales and permanent
book/tax differences attributable to dividend redesignations.
    

                                       53
<PAGE>
   
DEAN WITTER STRATEGIST FUND
    
   
FINANCIAL HIGHLIGHTS
    

   
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
    

   
<TABLE>
<CAPTION>
                                                                                                        FOR THE PERIOD
                                                                                                         OCTOBER 31,
                                                     FOR THE YEAR ENDED JULY 31                             1988*
                                ---------------------------------------------------------------------      THROUGH
                                  1995        1994        1993        1992        1991        1990      JULY 31, 1989
----------------------------------------------------------------------------------------------------------------------

<S>                             <C>         <C>         <C>         <C>         <C>         <C>         <C>
PER SHARE OPERATING PERFORMANCE:

Net asset value, beginning of
 period.......................  $  14.43    $  14.59    $  14.39    $  13.09    $  11.65    $  11.37    $        9.45
                                ---------   ---------   ---------   ---------   ---------   ---------          ------

Net investment income.........      0.34        0.30        0.26        0.27        0.27        0.23             0.38

Net realized and unrealized
 gain.........................      1.86        0.22        0.81        1.27        1.50        0.55             1.84
                                ---------   ---------   ---------   ---------   ---------   ---------          ------

Total from investment
 operations...................      2.20        0.52        1.07        1.54        1.77        0.78             2.22
                                ---------   ---------   ---------   ---------   ---------   ---------          ------

Less dividends and
 distributions from:
   Net investment income......     (0.29)      (0.26)      (0.31)      (0.24)      (0.26)      (0.29)           (0.30)
   Net realized gain..........     (0.47)      (0.42)      (0.56)      --          (0.07)      (0.21)        --
                                ---------   ---------   ---------   ---------   ---------   ---------          ------

Total dividends and
 distributions................     (0.76)      (0.68)      (0.87)      (0.24)      (0.33)      (0.50)           (0.30)
                                ---------   ---------   ---------   ---------   ---------   ---------          ------

Net asset value, end of
 period.......................  $  15.87    $  14.43    $  14.59    $  14.39    $  13.09    $  11.65    $       11.37
                                ---------   ---------   ---------   ---------   ---------   ---------          ------
                                ---------   ---------   ---------   ---------   ---------   ---------          ------

TOTAL INVESTMENT RETURN+......     16.05%       3.53%       7.59%      11.88%      15.67%       7.21%           23.76%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses......................      1.63%       1.62%       1.62%       1.63%       1.59%       1.53%            0.97%(2)(3)
Net investment income.........      2.35%       2.03%       1.90%       2.19%       2.37%       2.39%            6.00%(2)(3)

SUPPLEMENTAL DATA:
Net assets, end of period, in
 thousands....................   $877,595    $806,249    $782,833    $440,802    $238,432    $195,687          $47,921

Portfolio turnover rate.......       179%         90%         98%         79%        140%        101%              70%(1)
<FN>

---------------------
 *   Commencement of operations.
 +   Does not reflect the deduction of sales charge.
(1)  Not annualized.
(2)  Annualized.
(3)  If the Fund had borne all its expenses that were assumed or waived by the
     Investment Manager, the above annualized expense and net investment income
     ratios would have been 1.48% and 5.48%, respectively.
</TABLE>
    

   
                       SEE NOTES TO FINANCIAL STATEMENTS
    

                                       54
<PAGE>
   
DEAN WITTER STRATEGIST FUND
    
   
REPORT OF INDEPENDENT ACCOUNTANTS
    

   
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER STRATEGIST FUND
    

   
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 Strategist Fund (the
"Fund") at July 31, 1995, 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 six years in the period then ended
and for the period October 31, 1988 (commencement of operations) through July
31, 1989, 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 July
31, 1995 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
    

   
PRICE WATERHOUSE LLP
    
   
1177 AVENUE OF THE AMERICAS
    
   
NEW YORK, NEW YORK 10036
AUGUST 17, 1995
    

--------------------------------------------------------------------------------
   
                      1995 FEDERAL TAX NOTICE (UNAUDITED)
    

   
       During  the  year  ended  July  31, 1995,  the  Fund  paid  to its
       shareholders $0.47  per share  from long-term  capital gains.  For
       such  period  26.22%  of  the income  dividend  qualified  for the
       dividends received deduction available to corporations.
    

                                       55
<PAGE>
APPENDIX
--------------------------------------------------------------------------------

RATINGS

MOODY'S INVESTORS SERVICE INC. ("MOODY'S")

                                  BOND RATINGS

Aaa    Bonds  which are  rated Aaa are  judged to  be of the  best quality. They
       carry the smallest degree of  investment risk and are generally  referred
       to  as "gilt edge." Interest  payments are protected by  a large or by an
       exceptionally stable margin  and principal is  secure. While the  various
       protective  elements  are  likely  to  change,  such  changes  as  can be
       visualized are most unlikely to impair the fundamentally strong  position
       of such issues.
Aa     Bonds  which  are  rated Aa  are  judged to  be  of high  quality  by all
       standards. Together with the Aaa  group they comprise what are  generally
       known  as high  grade bonds.  They are  rated lower  than the  best bonds
       because margins of protection may not be as large as in Aaa securities or
       fluctuation of protective elements may  be of greater amplitude or  there
       may  be  other elements  present which  make  the long-term  risks appear
       somewhat larger than in Aaa securities.
A      Bonds which are rated A possess many favorable investment attributes  and
       are  to be considered  as upper medium  grade obligations. Factors giving
       security to principal and interest are considered adequate, but  elements
       may  be present which suggest a  susceptibility to impairment sometime in
       the future.
Baa    Bonds which are  rated Baa  are considered as  medium grade  obligations;
       i.e.,  they  are neither  highly protected  nor poorly  secured. Interest
       payments and  principal  security appear  adequate  for the  present  but
       certain  protective elements may be  lacking or may be characteristically
       unreliable over any  great length  of time. Such  bonds lack  outstanding
       investment  characteristics and in  fact have speculative characteristics
       as well.
       Bonds rated Aaa, Aa, A and Baa are considered investment grade bonds.

    RATING REFINEMENTS: Moody's may  apply numerical modifiers, 1,  2, and 3  in
each  generic  rating classification  from  Aa through  B  in its  corporate and
municipal bond rating system. The modifier  1 indicates that the security  ranks
in  the higher end  of its generic  rating category; the  modifier 2 indicates a
mid-range ranking; and a modifier 3 indicates that the issue ranks in the  lower
end of its generic rating category.

                            COMMERCIAL PAPER RATINGS

    Moody's  Commercial  Paper  ratings are  opinions  of the  ability  to repay
punctually promissory obligations not having  an original maturity in excess  of
nine  months. Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment capacity of rated  issuers:
Prime-1, Prime-2, Prime-3.

    Issuers  rated Prime-1 have a superior  capacity for repayment of short-term
promissory obligations.  Issuers  rated  Prime-2  have  a  strong  capacity  for
repayment  of short-term promissory obligations;  and Issuers rated Prime-3 have
an acceptable  capacity  for  repayment of  short-term  promissory  obligations.
Issuers rated Not Prime do not fall within any of the Prime rating categories.

STANDARD & POOR'S CORPORATION ("STANDARD & POOR'S")

                                    BOND RATINGS

    A   Standard  &  Poor's   bond  rating  is  a   current  assessment  of  the
creditworthiness of  an obligor  with  respect to  a specific  obligation.  This
assessment may take into consideration obligors such as guarantors, insurers, or
lessees.

    The  ratings are  based on  current information  furnished by  the issuer or
obtained by Standard  & Poor's  from other  sources it  considers reliable.  The
ratings are based, in varying degrees, on the

                                       56
<PAGE>
following  considerations: (1) likelihood of default-capacity and willingness of
the obligor as to the timely payment  of interest and repayment of principal  in
accordance with the terms of the obligation; (2) nature of and provisions of the
obligation;  and  (3)  protection afforded  by,  and relative  position  of, the
obligation in the event of bankruptcy, reorganization or other arrangement under
the laws of bankruptcy and other laws affecting creditors' rights.

    Standard & Poor's does  not perform an audit  in connection with any  rating
and  may, on occasion, rely on  unaudited financial information. The ratings may
be changed, suspended or withdrawn as a result of changes in, or  unavailability
of, such information, or for other reasons.

AAA    Debt  rated AAA  has the  highest rating  assigned by  Standard & Poor's.
       Capacity to pay interest and repay principal is extremely strong.
AA     Debt rated  AA has  a very  strong  capacity to  pay interest  and  repay
       principal and differs from the highest-rated issues only in small degree.
A      Debt  rated A has a  strong capacity to pay  interest and repay principal
       although they are  somewhat more  susceptible to the  adverse effects  of
       changes   in  circumstances   and  economic   conditions  than   debt  in
       higher-rated categories.
BBB    Debt rated BBB is regarded as having an adequate capacity to pay interest
       and repay  principal. Whereas  it normally  exhibits adequate  protection
       parameters,  adverse  economic conditions  or changing  circumstances are
       more likely to  lead to  a weakened capacity  to pay  interest and  repay
       principal  for  debt  in  this category  than  for  debt  in higher-rated
       categories.
       Bonds rated AAA, AA, A and BBB are considered investment grade bonds.
NR     Indicates that no rating has  been requested, that there is  insufficient
       information  on which to base a rating or that Standard & Poor's does not
       rate a particular type of obligation as a matter of policy.

                            COMMERCIAL PAPER RATINGS

    Standard and Poor's commercial paper rating  is a current assessment of  the
likelihood of timely payment of debt having an original maturity of no more than
365  days. The commercial  paper rating is  not a recommendation  to purchase or
sell a security. The ratings are based upon current information furnished by the
issuer or obtained by S&P from other sources it considers reliable. The  ratings
may  be  changed,  suspended,  or  withdrawn  as  a  result  of  changes  in  or
unavailability of such  information. Ratings are  graded into group  categories,
ranging  from "A" for the highest quality obligations to "D" for the lowest. The
categories are as follows:

    Issues assigned A ratings are regarded  as having the greatest capacity  for
timely payment. Issues in this category are further refined with the designation
1, 2 and 3 to indicate the relative degree of safety.

A-1 indicates that the degree of safety regarding timely payment is very strong.

A-2  indicates capacity  for timely payment  on issues with  this designation is
strong. However, the  relative degree of  safety is not  as overwhelming as  for
issues designated "A-1".

A-3  indicates a satisfactory capacity  for timely payment. Obligations carrying
this designation are, however, somewhat  more vulnerable to the adverse  effects
of changes in circumstances than obligations carrying the higher designations.

                                       57
<PAGE>

                           DEAN WITTER STRATEGIST FUND

                            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 period October 31, 1988
          through July 31, 1989 and for the fiscal years ended
          July 31, 1990, 1991, 1992, 1993, 1994 and 1995 ..................4



          (2)  Financial statements included in the Statement of
          Additional Information (Part B):

                                                                         Page in
                                                                           SAI
                                                                           ---


          Portfolio of Investments at July 31, 1995.............            44

          Statement of assets and liabilities at July 31, 1995..            48

          Statement of operations for the year ended July 31,
          1995 .................................................            48

          Statement of changes in net assets for the years
          ended July 31, 1994 and July 31, 1995 ................            49

          Notes to Financial Statements.........................            50

          Financial highlights for the period October 31,
          1988 through July 31, 1989 and for the years ended
          1990, 1991, 1992, 1993, 1994 and 1995 ................            54

          (3) Financial statements included in Part C:

          None

   (b)    EXHIBITS:

              1.    --   Declaration of Trust of the Registrant

              2.    --   Amended and Restated By-Laws of the Registrant

              6.    --   Form of Selected Dealer Agreement
<PAGE>

              8.    --   Form of Custodian Agreement between Registrant
                         and The Bank of New York

             11.    --   Consent of Independent Accountants

             16.    --   Schedule for Computation of Performance Quotation

             27.    --   Financial Data Schedule

        --------------------------------
        All other exhibits previously filed and incorporated
        by reference.


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 July, 31 1995
          --------------                      ------------------------

     Shares of Beneficial Interest                   75,866


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


                                        2

<PAGE>

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 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.


                                        3

<PAGE>

 (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
(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 Managed Assets Trust
(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.


                                        4

<PAGE>

(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
(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 Global Asset Allocation Fund
(51) Dean Witter Balanced Growth Fund
(52) Dean Witter Balanced Income Fund
(53) Dean Witter Hawaii Municipal Trust

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 North American Intermediate Income Trust
 (8) TCW/DW Global Convertible Trust
 (9) TCW/DW Total Return 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



                                        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
-----------------             -----------------------------------------------

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.

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.

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.


                                        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
-----------------             ------------------------------------------------

Edmund C. Puckhaber           Director of DWTC; Vice President of the Dean
Executive Vice                Witter Funds.
President

John Van Heuvelen             President, Chief Operating Officer and Director
Executive Vice                of DWTC.
President

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         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.


                                        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
-----------------             -------------------------------------------------

Joseph McAlinden
Senior Vice President         Vice President of the Dean Witter Funds

Jonathan R. Page
Senior Vice President         Vice President of various Dean Witter Funds.

Ira 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.

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 of the Dean Witter Funds and the TCW/DW
Treasurer                     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.


                                        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
-----------------             ------------------------------------------------

Douglas Brown
Vice President

Thomas Chronert
Vice President

Rosalie Clough
Vice President

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

Russell Harper
Vice President

John Hechtlinger
Vice President

Peter Hermann
Vice President                Vice President of Dean Witter Mid-Cap Growth Fund.


                                        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
-----------------             ------------------------------------------------

David Hoffman
Vice President

David Johnson
Vice President

Christopher Jones
Vice President

Stanley Kapica
Vice President

Michael Knox                  Vice President of Dean Witter Convertible
Vice President                Securities Trust.

Konrad J. Krill
Vice President                Vice President of various Dean Witter Funds.

Paul 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.

Lou Anne 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

Hugh Rose
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
-----------------             -----------------------------------------------

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

Rafael Scolari
Vice President                Vice President of Prime 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


                                       11

<PAGE>

(19)           Dean Witter Tax-Exempt Securities Trust
(20)           Dean Witter California Tax-Free Income Fund
(21)           Dean Witter Managed Assets 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
(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 Premium 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 Global Asset Allocation Fund
(52)           Dean Witter Variable Investment Investment Series
 (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 North American Intermediate Income Trust
 (8)           TCW/DW Global Convertible Trust
 (9)           TCW/DW Total Return 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.


                                       12

<PAGE>

                                   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.


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 23rd day of August, 1995.

                                        DEAN WITTER STRATEGIST FUND

                                     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. 8 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
   --------------------------                                      08/23/95
     Charles A. Fiumefreddo

(2) Principal Financial Officer            Treasurer and Principal
                                           Accounting Officer

By /s/ Thomas F. Caloia
   ---------------------                                           08/23/95
     Thomas F. Caloia

(3) Majority of the Trustees

    Charles A. Fiumefreddo (Chairman)
    Philip J. Purcell

By /s/ Sheldon Curtis
   ----------------------                                          08/23/95
      Sheldon Curtis
     Attorney-in-Fact

   Jack F. Bennett                 Manuel H. Johnson
   Michael Bozic                   Paul Kolton
   Edwin J. Garn                   Michael E. Nugent
   John R. Haire                   John L. Schroeder

By /s/ David M. Butowsky
   ---------------------                                           08/23/95
     David M. Butowsky
     Attorney-in-Fact


<PAGE>

                              EXHIBIT INDEX
                              -------------

1.   - -   Declaration of Trust of the Registrant

2.   - -   Amended and Restated By-Laws of the Registrant

6.   - -   Form of Selected Dealer Agreement

8.   - -   Form of Custodian Agreement between Registrant and
           the Bank of New York

11.  - -   Consent of Independent Accountants

16.  - -   Schedule for Computation of Performance Quotation

27.  - -   Financial Data Schedule




<PAGE>


                           DEAN WITTER STRATEGIST FUND

                              DECLARATION OF TRUST

                              Dated: August 4, 1988

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

ARTICLE I     --  NAME AND DEFINITIONS                                        2

Section 1.1       Name                                                        2
Section 1.2       Definitions                                                 2


ARTICLE II    --  TRUSTEES                                                    4

Section 2.1       Number of Trustees                                          4
Section 2.2       Election and Term                                           4
Section 2.3       Resignation and Removal                                     4
Section 2.4       Vacancies                                                   5
Section 2.5       Delegation of Power to Other Trustees                       5


ARTICLE III   --  POWERS OF TRUSTEES                                          6

Section 3.1       General                                                     6
Section 3.2       Investments                                                 6
Section 3.3       Legal Title                                                 7
Section 3.4       Issuance and Repurchase of Securities                       7
Section 3.5       Borrowing Money; Lending Trust Assets                       8
Section 3.6       Delegation; Committees                                      8
Section 3.7       Collection and Payment                                      8
Section 3.8       Expenses                                                    8
Section 3.9       Manner of Acting; By-Laws                                   8
Section 3.10      Miscellaneous Powers                                        9
Section 3.11      Principal Transactions                                      9
Section 3.12      Litigation                                                 10


ARTICLE IV    --  INVESTMENT ADVISER, DISTRIBUTOR, CUSTODIAN AND
                  TRANSFER AGENT                                             11

Section 4.1       Investment Adviser                                         11
Section 4.2       Administrative Services                                    11
Section 4.3       Distributor                                                11
Section 4.4       Transfer Agent                                             12
Section 4.5       Custodian                                                  12
Section 4.6       Parties to Contract                                        12


                                       -i-

<PAGE>

                                                                           PAGE
                                                                           ----
ARTICLE V     --  LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES
                  AND OTHERS                                                 13

Section 5.1       No Personal Liability of Shareholders, Trustees, etc.      13
Section 5.2       Non-Liability of Trustees, etc.                            13
Section 5.3       Indemnification                                            14
Section 5.4       No Bond Required of Trustees                               14
Section 5.5       No Duty of Investigation; Notice in Trust
                  Instruments, etc.                                          14
Section 5.6       Reliance on Experts, etc.                                  15


ARTICLE VI    --  SHARES OF BENEFICIAL INTEREST                              16

Section 6.1       Beneficial Interest                                        16
Section 6.2       Rights of Shareholders                                     16
Section 6.3       Trust Only                                                 16
Section 6.4       Issuance of Shares                                         17
Section 6.5       Register of Shares                                         17
Section 6.6       Transfer of Shares                                         17
Section 6.7       Notices                                                    18
Section 6.8       Voting Powers                                              18
Section 6.9       Series or Classes of Shares                                19


ARTICLE VII   --  REDEMPTIONS                                                23

Section 7.1       Redemptions                                                23
Section 7.2       Redemption at the Option of the Trust                      23
Section 7.3       Effect of Suspension of Determination of Net
                  Asset Value                                                23
Section 7.4       Suspension of Right of Redemption                          24


                                      -ii-

<PAGE>
                                                                           PAGE
                                                                           ----
ARTICLE VIII  --  DETERMINATION OF THE NET ASSET VALUE, NET INCOME
                  AND DISTRIBUTIONS                                          25

Section 8.1       Net Asset Value                                            25
Section 8.2       Distributions to Shareholders                              25
Section 8.3       Determination of Net Income                                26
Section 8.4       Power to Modify Foregoing Procedures                       26


ARTICLE IX    --  DURATION; TERMINATION OF TRUST; AMENDMENT;
                  MERGERS, ETC.                                              27

Section 9.1       Duration                                                   27
Section 9.2       Termination of Trust or a Series                           27
Section 9.3       Amendment Procedure                                        28
Section 9.4       Merger, Consolidation and Sale of Assets                   29
Section 9.5       Incorporation                                              29


ARTICLE X     --  REPORTS TO SHAREHOLDERS                                    31


ARTICLE XI    --  MISCELLANEOUS                                              32

Section 11.1      Filing                                                     32
Section 11.2      Resident Agent                                             32
Section 11.3      Governing Law                                              32
Section 11.4      Counterparts                                               32
Section 11.5      Reliance by Third Parties                                  32
Section 11.6      Provisions in Conflict with Law or Regulations             33
Section 11.7      Use of the Name "Dean Witter"                              33


SIGNATURE PAGE                                                               34


                                      -iii-

<PAGE>

                              DECLARATION OF TRUST
                                       OF
                           DEAN WITTER STRATEGIST FUND

                              Dated: August 4, 1988

     THE DECLARATION OF TRUST of Dean Witter Strategist Fund is made the 4th day
of August, 1988 by the parties signatory hereto, as trustees (such persons, so
long as they shall continue in office in accordance with the terms of this
Declaration of Trust, and all other persons who at the time in question have
been duly elected or appointed as trustees in accordance with the provisions of
this Declaration of Trust and are then in office, being hereinafter called the
"Trustees").

                              W I T N E S S E T H:

     WHEREAS, the Trustees desire to form a trust fund under the laws of
Massachusetts for the investment and reinvestment of funds contributed thereto;
and

     WHEREAS, it is provided that the beneficial interest in the trust assets be
divided into transferable shares of beneficial interest as hereinafter provided;

     NOW, THEREFORE, the Trustees hereby declare that they will hold in trust,
all money and property contributed to the trust fund to manage and dispose of
the same for the benefit of the holders from time to time of the shares of
beneficial interest issued hereunder and subject to the provisions hereof, to
wit:
<PAGE>

                                    ARTICLE I

                              NAME AND DEFINITIONS

     SECTION 1.1 NAME. The name of the trust created hereby is the "Dean Witter
Strategist Fund," and so far as may be practicable the Trustees shall conduct
the Trust's activities, execute all documents and sue or be sued under that
name, which name (and the word "Trust" wherever herein used) shall refer to
the Trustees as Trustees, and not as individuals, or personally, and shall
not refer to the officers, agents, employees or Shareholders of the Trust.
Should the Trustees determine that the use of such name is not advisable, they
may use such other name for the Trust as they deem proper and the Trust may
hold its property and conduct its activities under such other name.

     SECTION 1.2 DEFINITIONS. Wherever they are used herein, the following terms
have the following respective meanings:

     (a)  "BY-LAWS" means the By-Laws referred to in Section 3.9 hereof, as from
time to time amended.

     (b)  The terms "COMMISSION", "AFFILIATED PERSON" and "INTERESTED PERSON",
have the meanings given them in the 1940 Act.

     (c)  "DECLARATION" means this Declaration of Trust as amended from time to
time. Reference in this Declaration of Trust to "DECLARATION", "HEREOF",
"HEREIN" and "HEREUNDER" shall be deemed to refer to this Declaration rather
than the article or section in which such words appear.

     (d)  "DISTRIBUTOR" means the party, other than the Trust, to a contract
described in Section 4.3 hereof.

     (e)  "FUNDAMENTAL POLICIES" shall mean the investment policies and
restrictions set forth in the Prospectus and Statement of Additional Information
and designated as fundamental policies therein.

     (f)  "INVESTMENT ADVISER" means any party, other than the Trust, to a
contract described in Section 4.1 hereof.

     (g)  "MAJORITY SHAREHOLDER VOTE" means the vote of the holders of a
majority of Shares, which shall consist of: (i) a majority of Shares represented
in person or by proxy and entitled to vote at a meeting of Shareholders at which
a quorum, as determined in accordance with the By-Laws, is present; (ii) a
majority of Shares issued and outstanding and entitled to vote when action is
taken by written consent of Shareholders; and (iii) a "majority of the
outstanding voting securities," as the phrase is defined in the 1940 Act, when
any


                                       -2-

<PAGE>

action is required by the 1940 Act by such majority as so defined.

     (h)  "1940 ACT" means the Investment Company Act of 1940 and the rules and
regulations thereunder as amended from time to time.

     (i)  "PERSON" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.

     (j)  "PROSPECTUS" means the Prospectus and Statement of Additional
Information constituting parts of the Registration Statement of the Trust under
the Securities Act of 1933 as such Prospectus and Statement of Additional
Information may be amended or supplemented and filed with the Commission from
time to time.

     (k)  "SERIES" means one of the separately managed components of the Trust
(or, if the Trust shall have only one such component, then that one) as set
forth in Section 6.1 hereof or as may be established and designated from time to
time by the Trustees pursuant to that section.

     (l)  "SHAREHOLDER" means a record owner of outstanding Shares.

     (m)  "SHARES" means the units of interest into which the beneficial
interest in the Trust shall be divided from time to time, including the shares
of any and all series or classes which may be established by the Trustees, and
includes fractions of Shares as well as whole Shares.

     (n)  "TRANSFER AGENT" means the party, other than the Trust, to the
contract described in Section 4.4 hereof.

     (o)  "TRUST" means the Dean Witter Strategist Fund.

     (p)  "TRUST PROPERTY" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees.

     (q)  "TRUSTEES" means the persons who have signed the Declaration, so long
as they shall continue in office in accordance with the terms hereof, and all
other persons who may from time to time be duly elected or appointed, qualified
and serving as Trustees in accordance with the provisions hereof, and reference
herein to a Trustee or the Trustees shall refer to such person or persons in
their capacity as trustees hereunder.


                                       -3-

<PAGE>

                                   ARTICLE II

                                    TRUSTEES

     SECTION 2.1. NUMBER OF TRUSTEES. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees shall
in no event be less than three (3) nor more than fifteen (15).

     SECTION 2.2. ELECTION AND TERM. The Trustees shall be elected by a Majority
Shareholder Vote at the first meeting of Shareholders following the public
offering of Shares of the Trust. The Trustees shall have the power to set and
alter the terms of office of the Trustees, and they may at any time lengthen or
lessen their own terms or make their terms of unlimited duration, subject to the
resignation and removal provisions of Section 2.3 hereof. Subject to Section
16(a) of the 1940 Act, the Trustees may elect their own successors and may,
pursuant to Section 2.4 hereof, appoint Trustees to fill vacancies. The Trustees
shall adopt By-Laws not inconsistent with this Declaration or any provision of
law to provide for election of Trustees by Shareholders at such time or times as
the Trustees shall determine to be necessary or advisable.

     SECTION 2.3. RESIGNATION AND REMOVAL. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the other Trustees and such resignation shall be
effective upon such delivery, or at a later date according to the terms of the
instrument. Any of the Trustees may be removed (provided the aggregate number of
Trustees after such removal shall not be less than the number required by
Section 2.1 hereof) by the action of two-thirds of the remaining Trustees or by
the action of the Shareholders of record of not less than two-thirds of the
Shares outstanding (for purposes of determining the circumstances and
procedures under which such removal by the Shareholders may take place, the
provisions of Section 16(c) of the 1940 Act shall be applicable to the same
extent as if the Trust were subject to the provisions of that Section). Upon the
resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee,
he shall execute and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the remaining Trustees any
Trust Property held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his legal representative shall execute and
deliver on his behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence.


                                       -4-

<PAGE>

     SECTION 2.4. VACANCIES. The term of office of a Trustee shall terminate and
a vacancy shall occur in the event of the death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties
of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy existing by reason of an
increase in the number of Trustees, subject to the provisions of Section 16(a)
of the 1940 Act, the remaining Trustees or, prior to the public offering of
Shares of the Trust, if only one Trustee shall then remain in office, the
remaining Trustee, shall fill such vacancy by the appointment of such other
person as they or he, in their or his discretion, shall see fit, made by a
written instrument signed by a majority of the remaining Trustees or by the
remaining Trustee, as the case may be. Any such appointment shall not become
effective, however, until the person named in the written instrument of
appointment shall have accepted in writing such appointment and agreed in
writing to be bound by the terms of the Declaration. An appointment of a Trustee
may be made in anticipation of a vacancy to occur at a later date by reason of
retirement, resignation or increase in the number of Trustees, provided that
such appointment shall not become effective prior to such retirement,
resignation or increase in the number of Trustees. Whenever a vacancy in the
number of Trustees shall occur, until such vacancy is filled as provided in this
Section 2.4, the Trustees in office, regardless of their number, shall have all
the powers granted to the Trustees and shall discharge all the duties imposed
upon the Trustees by the Declaration. A written instrument certifying the
existence of such vacancy signed by a majority of the Trustees shall be
conclusive evidence of the existence of such vacancy.

     SECTION 2.5. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
less than two (2) Trustees personally exercise the powers granted to the
Trustees under the Declaration except as herein otherwise expressly provided.


                                       -5-

<PAGE>

                                   ARTICLE III

                               POWERS OF TRUSTEES

     SECTION 3.1. GENERAL. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities wheresoever in the world they may be
located as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
the Declaration, the presumption shall be in favor of a grant of power to the
Trustees.

     The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.

     SECTION 3.2. INVESTMENTS. The Trustees shall have the power to:

     (a)  conduct, operate and carry on the business of an investment company;

     (b)  subscribe for, invest in, reinvest in, purchase or otherwise acquire,
     hold, pledge, sell, assign, transfer, exchange, distribute, lend or
     otherwise deal in or dispose of negotiable or nonnegotiable instruments,
     obligations, evidences of indebtedness, certificates of deposit or
     indebtedness, commercial paper, repurchase agreements, reverse repurchase
     agreements, options, commodities, commodity futures contracts and related
     options, currencies, currency futures and forward contracts, and other
     securities, investment contracts and other instruments of any kind,
     including, without limitation, those issued, guaranteed or sponsored by
     any


                                       -6-

<PAGE>

     and all Persons including, without limitation, states, territories and
     possessions of the United States, the District of Columbia and any of the
     political subdivisions, agencies or instrumentalities thereof, and by the
     United States Government or its agencies or instrumentalities, foreign or
     international instrumentalities, or by any bank or savings institution, or
     by any corporation or organization organized under the laws of the United
     States or of any state, territory or possession thereof, and of
     corporations or organizations organized under foreign laws, or in "when
     issued" contracts for any such securities, or retain Trust assets in cash
     and from time to time change the investments of the assets of the Trust;
     and to exercise any and all rights, powers and privileges of ownership or
     interest in respect of any and all such investments of every kind and
     description, including, without limitation, the right to consent and
     otherwise act with respect thereto, with power to designate one or more
     persons, firms, associations or corporations to exercise any of said
     rights, powers and privileges in respect of any of said instruments; and
     the Trustees shall be deemed to have the foregoing powers with respect to
     any additional securities in which the Trust may invest should the
     Fundamental Policies be amended.

     The Trustees shall not be limited to investing in obligations maturing
     before the possible termination of the Trust, nor shall the Trustees be
     limited by any law limiting the investments which may be made by
     fiduciaries.

     SECTION 3.3. LEGAL TITLE. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person as nominee, on such terms as the Trustees may determine, provided
that the interest of the Trust therein is appropriately protected. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee he shall automatically cease to have
any right, title or interest in any of the Trust Property, and the right, title
and interest of such Trustee in the Trust Property shall vest automatically
in the remaining Trustees. Such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered.

     SECTION 3.4. ISSUANCE AND REPURCHASE OF SECURITIES. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares and, subject
to the provisions set forth in Articles VII, VIII and IX and Section


                                       -7-

<PAGE>

6.9 hereof, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the Trust,
whether capital or surplus or otherwise, to the full extent now or hereafter
permitted by the laws of the Commonwealth of Massachusetts governing business
corporations.

     SECTION 3.5. BORROWING MONEY; LENDING TRUST ASSETS. Subject to the
Fundamental Policies, the Trustees shall have power to borrow money or otherwise
obtain credit and to secure the same by mortgaging, pledging or otherwise
subjecting as security the assets of the Trust, to endorse, guarantee, or
undertake the performance of any obligation, contract or engagement of any other
Person and to lend Trust assets.

     SECTION 3.6. DELEGATION; COMMITTEES. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from time to time to such of their
number or to officers, employees or agents of the Trust the doing of such things
and the execution of such instruments either in the name of the Trust or the
names of the Trustees or otherwise as the Trustees may deem expedient.

     SECTION 3.7. COLLECTION AND PAYMENT. Subject to Section 6.9 hereof, the
Trustees shall have power to collect all property due to the Trust; to pay all
claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to foreclose
any security interest securing any obligations, by virtue of which any property
is owed to the Trust; and to enter into releases, agreements and other
instruments.

     SECTION 3.8. EXPENSES. Subject to Section 6.9 hereof, the Trustees shall
have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of the
Declaration, and to pay reasonable compensation from the funds of the Trust to
themselves as Trustees. The Trustees shall fix the compensation of all officers,
employees and Trustees.

     SECTION 3.9. MANNER OF ACTING; BY-LAWS. Except as otherwise provided herein
or in the By-Laws or by any provision of law, any action to be taken by the
Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees (a quorum being present), including any meeting held by means of a
conference telephone circuit or similar communications equipment by means of
which all persons participating in the meeting can hear each other, or by
written consents of all the Trustees. The Trustees may adopt By-Laws not
inconsistent with this Declaration to provide for the conduct of the business of
the Trust and may amend or repeal such By-Laws to the extent such power is not
reserved to the Shareholders.


                                       -8-

<PAGE>

     SECTION 3.10. MISCELLANEOUS POWERS. The Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem desirable for
the transaction of the business of the Trust or any Series thereof; (b) enter
into joint ventures, partnerships and any other combinations or associations;
(c) remove Trustees or fill vacancies in or add to their number, elect and
remove such officers and appoint and terminate such agents or employees as they
consider appropriate, and appoint from their own number, and terminate, any
one or more committees which may exercise some or all of the power and
authority of the Trustees as the Trustees may determine; (d) purchase, and
pay for out of Trust Property or the property of the appropriate Series of
the Trust, insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers, distributors, selected dealers or
independent contractors of the Trust against all claims arising by reason of
holding any such position or by reason of any action taken or omitted to be
taken by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such liability; (e) establish pension, profit-sharing, Share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (f) to the extent permitted by law,
indemnify any person with whom the Trust or any Series thereof has dealings,
including any Investment Adviser, Distributor, Transfer Agent and selected
dealers, to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
fiscal year of the Trust or any Series thereof and the method by which its
accounts shall be kept; and (i) adopt a seal for the Trust but the absence of
such seal shall not impair the validity of any instrument executed on behalf of
the Trust.

     SECTION 3.11. PRINCIPAL TRANSACTIONS. Except in transactions permitted by
the 1940 Act or any rule or regulation thereunder, or any order of exemption
issued by the Commission, or effected to implement the provisions of any
agreement to which the Trust is a party, the Trustees shall not, on behalf of
the Trust, buy any securities (other than Shares) from or sell any securities
(other than Shares) to, or lend any assets of the Trust or any Series thereof
to, any Trustee or officer of the Trust or any firm of which any such Trustee
or officer is a member acting as principal, or have any such dealings with any
Investment Adviser, Distributor or Transfer Agent or with any Affiliated
Person of such Person; but the Trust or any Series thereof may employ any such
Person, or firm or company in which such Person is an Interested Person, as
broker, legal counsel, registrar, transfer agent, dividend disbursing agent or
custodian upon customary terms.


                                       -9-

<PAGE>

     SECTION 3.12. LITIGATION. The Trustees shall have the power to engage in
and to prosecute, defend, compromise, abandon, or adjust, by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust, and out of the assets of the Trust or any Series thereof
to pay or to satisfy any debts, claims or expenses incurred in connection
therewith, including those of litigation, and such power shall include without
limitation the power of the Trustees or any appropriate committee thereof, in
the exercise of their or its good faith business judgment, to dismiss any
action, suit, proceeding, dispute, claim, or demand, derivative or otherwise,
brought by any person, including a Shareholder in its own name or the name of
the Trust, whether or not the Trust or any of the Trustees may be named
individually therein or the subject matter arises by reason of business for or
on behalf of the Trust.


                                      -10-

<PAGE>

                                   ARTICLE IV

          INVESTMENT ADVISER, DISTRIBUTOR, CUSTODIAN AND TRANSFER AGENT

     SECTION 4.1. INVESTMENT ADVISER. Subject to approval by a Majority
Shareholder Vote, the Trustees may in their discretion from time to time enter
into one or more investment advisory or management contracts or, if the Trustees
establish multiple Series, separate investment advisory or management contracts
with respect to one or more Series whereby the other party or parties to any
such contracts shall undertake to furnish the Trust or such Series such
management, investment advisory, administration, accounting, legal, statistical
and research facilities and services, promotional or marketing activities, and
such other facilities and services, if any, as the Trustees shall from time to
time consider desirable and all upon such terms and conditions as the Trustees
may in their discretion determine. Notwithstanding any provisions of the
Declaration, the Trustees may authorize the Investment Advisers, or any of them,
under any such contracts (subject to such general or specific instructions as
the Trustees may from time to time adopt) to effect purchases, sales, loans or
exchanges of portfolio securities and other investments of the Trust on behalf
of the Trustees or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of such
Investment Advisers, or any of them (and all without further action by the
Trustees). Any such purchases, sales, loans and exchanges shall be deemed to
have been authorized by all of the Trustees. The Trustees may, in their sole
discretion, call a meeting of Shareholders in order to submit to a vote of
Shareholders at such meeting the approval or continuance of any such investment
advisory or management contract. If the Shareholders of any one or more of the
Series of the Trust should fail to approve any such investment advisory or
management contract, the Investment Adviser may nonetheless serve as Investment
Adviser with respect to any Series whose Shareholders approve such contract.

     SECTION 4.2. ADMINISTRATIVE SERVICES. The Trustees in their
discretion from time to time contract for administrative personnel and services
whereby the other party shall agree to provide the Trustees or the Trust
administrative personnel and services to operate the Trust on a daily or other
basis, on such terms and conditions as the Trustees may in their discretion
determine. Such services may be provided by one or more persons or entities.

     SECTION 4.3. DISTRIBUTOR. The Trustees may in their discretion from time to
time enter into one or more contracts,


                                      -11-

<PAGE>

providing for the sale of Shares to net the Trust or the applicable Series of
the Trust not less than the net asset value per Share (as described in Article
VIII hereof) and pursuant to which the Trust may either agree to sell the
Shares to the other parties to the contracts, or any of them, or appoint any
such other party its sales agent for such Shares. In either case, any such
contract shall be on such terms and conditions as the Trustees may in their
discretion determine not inconsistent with the provisions of this Article IV,
including, without limitation, the provision for the repurchase or sale of
shares of the Trust by such other party as principal or as agent of the Trust.

     SECTION 4.4. TRANSFER AGENT. The Trustees may in their discretion from time
to time enter into a transfer agency and shareholder service contract whereby
the other party to such contract shall undertake to furnish transfer agency and
shareholder services to the Trust. The contract shall have such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the Declaration. Such services may be provided by one or more Persons.

     SECTION 4.5. CUSTODIAN. The Trustees may appoint or otherwise engage one or
more banks or trust companies, each having an aggregate capital, surplus and
undivided profits (as shown in its last published report) of at least five
million dollars ($5,000,000) to serve as Custodian with authority as its agent,
but subject to such restrictions, limitations and other requirements, if any, as
may be contained in the By-Laws of the Trust.

     SECTION 4.6. PARTIES TO CONTRACT. Any contract of the character described
in Sections 4.1, 4.2, 4.3, 4.4 or 4.5 of this Article IV and any other contract
may be entered into with any Person, although one or more of the Trustees or
officers of the Trust may be an officer, director, trustee, shareholder, or
member of such other party to the contract, and no such contract shall be
invalidated or rendered voidable by reason of the existence of any such
relationship; nor shall any Person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article IV. The same Person may be the
other party to any contracts entered into pursuant to Sections 4.1, 4.2, 4.3,
4.4 or 4.5 above or otherwise, and any individual may be financially interested
or otherwise affiliated with Persons who are parties to any or all of the
contracts mentioned in this Section 4.6.


                                      -12-

<PAGE>

                                    ARTICLE V

          LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND OTHERS

     SECTION 5.1. NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with the Trust Property or the affairs of the Trust,
save only that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard for his duty to such Person; and all such Persons shall look
solely to the Trust Property, or to the Property of one or more specific Series
of the Trust if the claim arises from the conduct of such Trustee, officer,
employee or agent with respect to only such Series, for satisfaction of claims
of any nature arising in connection with the affairs of the Trust. If any
Shareholder, Trustee, officer, employee or agent, as such, of the Trust is made
a party to any suit or proceeding to enforce any such liability, he shall not,
on account thereof, be held to any personal liability. The Trust shall indemnify
and hold each Shareholder harmless from and against all claims and liabilities,
to which such Shareholder may become subject by reason of his being or having
been a Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability; provided that, in the event the Trust shall consist of more than one
Series, Shareholders of a particular Series who are faced with claims or
liabilities solely by reason of their status as Shareholders of that Series
shall be limited to the assets of that Series for recovery of such loss and
related expenses. The rights accruing to a Shareholder under this Section 5.1
shall not exclude any other right to which such Shareholder may be lawfully
entitled, nor shall anything herein contained restrict the right of the Trust to
indemnify or reimburse a Shareholder in any appropriate situation even though
not specifically provided herein.

     SECTION 5.2. NON-LIABILITY OF TRUSTEES, ETC. No Trustee, officer, employee
or agent of the Trust shall be liable to the Trust, its Shareholders, or to any
Shareholder, Trustee, officer, employee, or agent thereof for any action or
failure to act (including without limitation the failure to compel in any way
any former or acting Trustee to redress any breach of trust) except for his own
bad faith, willful misfeasance, gross negligence or reckless disregard of his
duties.


                                      -13-

<PAGE>

     SECTION 5.3. INDEMNIFICATION. (a) The Trustees shall provide for
indemnification by the Trust, or by one or more Series thereof if the claim
arises from his or her conduct with respect to only such Series, of any person
who is, or has been, a Trustee, officer, employee or agent of the Trust against
all liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a
Trustee, officer, employee or agent and against amounts paid or incurred by him
in the settlement thereof, in such manner as the Trustees may provide from time
to time in the By-Laws.

     (b)  The words "claim", "action", "suit", or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal, or other, including
appeals), actual or threatened; and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.

     SECTION 5.4. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.

     SECTION 5.5. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC. No
purchaser, lender, transfer agent or other Person dealing with the Trustees or
any officer, employee or agent of the Trust or a Series thereof shall be bound
to make any inquiry concerning the validity of any transaction purporting to be
made by the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or a
Series thereof or undertaking, and every other act or thing whatsoever executed
in connection with the Trust shall be conclusively presumed to have been
executed or done by the executors thereof only in their capacity as officers,
employees or agents of the Trust or a Series thereof. Every written obligation,
contract, instrument, certificate, Share, other security of the Trust or
undertaking made or issued by the Trustees shall recite that the same is
executed or made by them not individually, but as Trustees under the
Declaration, and that the obligations of the Trust or a Series thereof under
any such instrument are not binding upon any of the Trustees or Shareholders,
individually, but bind only the Trust Estate (or, in the event the Trust shall
consist of more than one Series, in the case of any such obligation

                                      -14-

<PAGE>

which relates to a specific Series, only the Series which is a party thereto),
and may contain any further recital which they or he may deem appropriate, but
the omission of such recital shall not affect the validity of such obligation,
contract instrument, certificate, Share, security or undertaking and shall not
operate to bind the Trustees or Shareholders individually. The Trustees shall at
all times maintain insurance for the protection of the Trust Property, its
Shareholders, Trustees, officers, employees and agents in such amount as the
Trustees shall deem adequate to cover possible tort liability, and such other
insurance as the Trustees in their sole judgment shall deem advisable.

     SECTION 5.6. RELIANCE ON EXPERTS, ETC. Each Trustee and officer or employee
of the Trust shall, in the performance of his duties, be fully and completely
justified and protected with regard to any act or any failure to act resulting
from reliance in good faith upon the books of account or other records of the
Trust, upon an opinion of counsel, or upon reports made to the Trust by any of
its officers or employees or by any Investment Adviser, Distributor, Transfer
Agent, selected dealers, accountants, appraisers or other experts or consultants
selected with reasonable care by the Trustees, officers or employees of the
Trust, regardless of whether such counsel or expert may also be a Trustee.


                                      -15-

<PAGE>

                                   ARTICLE VI

                          SHARES OF BENEFICIAL INTEREST

     SECTION 6.1. BENEFICIAL INTEREST. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest of
$.01 par value. The number of such shares of beneficial interest authorized
hereunder is unlimited. The Trustees shall have the authority to establish and
designate one or more Series or classes of shares. Each share of any Series
shall represent an equal proportionate share in the assets of that Series with
each other Share in that Series. The Trustees may divide or combine the shares
of any Series into a greater or lesser number of shares in that Series without
thereby changing the proportionate interests in the assets of that Series.
Subject to the provisions of Section 6.9 hereof, the Trustees
may also authorize the creation of additional series of shares (the proceeds of
which may be invested in separate, independently managed portfolios) and
additional classes of shares within any series. All Shares issued hereunder
including, without limitation, Shares issued in connection with a dividend in
Shares or a split in Shares, shall be fully paid and nonassessable.

     SECTION 6.2. RIGHTS OF SHAREHOLDERS. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore described
are vested exclusively in the Trustees, and the Shareholders shall have no
interest therein other than the beneficial interest conferred by their Shares,
and they shall have no right to call for any partition or division of any
property, profits, rights or interests of the Trust nor can they be called upon
to assume any losses of the Trust or suffer an assessment of any kind by virtue
of their ownership of Shares. The Shares shall be personal property giving
only the rights in the Declaration specifically set forth. The Shares shall
not entitle the holder to preference, preemptive, appraisal, conversion or
exchange rights, except as the Trustees may determine with respect to any
series of Shares.

     SECTION 6.3. TRUST ONLY. It is the intention of the Trustees to create only
the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in the Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.


                                      -16-

<PAGE>

     SECTION 6.4. ISSUANCE OF SHARES. The Trustees, in their discretion may,
from time to time without vote of the Shareholders, issue Shares of any Series,
in addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times and on such
terms as the Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of liabilities) and businesses. In connection with any issuance of
Shares, the Trustees may issue fractional Shares. The Trustees may from time to
time divide or combine the Shares of any Series into a greater or lesser number
without thereby changing the proportionate beneficial interests in that Series.
Contributions to the Trust may be accepted for, and Shares shall be redeemed
as, whole Shares and/or fractions of a Share as described in the Prospectus.

     SECTION 6.5. REGISTER OF SHARES. A register shall be kept in respect of
each Series at the principal office of the Trust or at an office of the Transfer
Agent which shall contain the names and addresses of the Shareholders and the
number of Shares of each Series held by them respectively and a record of all
transfers thereof. Such register may be in written form or any other form
capable of being converted into written form within a reasonable time for visual
inspection. Such register shall be conclusive as to who are the holders of the
Shares and who shall be entitled to receive dividends or distributions or
otherwise to exercise or enjoy the rights of Shareholders. No Shareholder shall
be entitled to receive payment of any dividend or distribution, nor to have
notice given to him as herein or in the By-Laws provided, until he has given his
address to the Transfer Agent or such other officer or agent of the Trustees as
shall keep the said register for entry thereon. It is not contemplated that
certificates will be issued for the Shares; however, the Trustees, in their
discretion, may authorize the issuance of Share certificates and promulgate
appropriate rules and regulations as to their use.

     SECTION 6.6. TRANSFER OF SHARES. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the Transfer Agent
of a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such


                                      -17-

<PAGE>

Shares for all purposes hereunder and neither the Trustee nor any Transfer Agent
or registrar nor any officer, employee or agent of the Trust shall be affected
by any notice of the proposed transfer.

     Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law, except as may otherwise be provided by the laws of
the Commonwealth of Massachusetts.

     SECTION 6.7. NOTICES. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given if
mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust. Annual reports and proxy
statements need not be sent to a shareholder if: (i) an annual report and proxy
statement for two consecutive annual meetings, or (ii) all, and at least two,
checks (if sent by first class mail) in payment of dividends or interest and
shares during a twelve month period have been mailed to such shareholder's
address and have been returned undelivered. However, delivery of such annual
reports and proxy statements shall resume once a Shareholder's current address
is determined.

     SECTION 6.8. VOTING POWERS. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Section 2.2 hereof, (ii) for the
removal of Trustees as provided in Section 2.3 hereof, (iii) with respect to any
investment advisory or management contract as provided in Section 4.1, (iv) with
respect to termination of the Trust as provided in Section 9.2, (v) with respect
to any amendment of the Declaration to the extent and as provided in Section
9.3, (vi) with respect to any merger, consolidation or sale of assets as
provided in Section 9.4, (vii) with respect to incorporation of the Trust to the
extent and as provided in Section 9.5, (viii) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders
(provided that Shareholders of a


                                      -18-

<PAGE>

Series are not entitled to vote in connection with the bringing of a derivative
or class action with respect to any matter which only affects another other
Series or its Shareholders), (ix) with respect to any plan adopted pursuant to
Rule 12b-1 (or any successor rule) under the 1940 Act) and (x) with respect to
such additional matters relating to the Trust as may be required by law, the
Declaration, the By-Laws or any registration of the Trust with the Commission
(or any successor agency) or any state, or as and when the Trustees may consider
necessary or desirable. Each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote, except that Shares held in the
treasury of the Trust as of the record date, as determined in accordance with
the By-Laws, shall not be voted. On any matter submitted to a vote of
Shareholders, all Shares shall be voted by individual Series except (1) when
required by the 1940 Act, Shares shall be voted in the aggregate and not by
individual Series; and (2) when the Trustees have determined that the matter
affects only the interests of one or more Series, then only the Shareholders of
such Series shall be entitled to vote thereon. The Trustees may, in conjunction
with the establishment of any further Series or any classes of Shares, establish
conditions under which the several series or classes of Shares shall have
separate voting rights or no voting rights. There shall be no cumulative voting
in the election of Trustees. Until Shares are issued, the Trustees may exercise
all rights of Shareholders and may take any action required by law, the
Declaration or the By-Laws to be taken by Shareholders. The By-Laws may include
further provisions for Shareholders' votes and meetings and related matters.

     SECTION 6.9. SERIES OR CLASSES OF SHARES. The following provisions are
applicable regarding the Series of Shares of the Trust established in Section
6.1 hereof and shall be applicable if the Trustees shall establish additional
Series or shall divide the shares of any Series into two or more classes, also
as provided in Section 6.1 hereof, and all provisions relating to the Trust
shall apply equally to each Series thereof except as the context requires:

     (a)  The number of authorized shares and the number of shares of each
Series or of each class that may be issued shall be unlimited. The Trustees may
classify or reclassify any unissued shares or any shares previously issued and
reacquired of any Series or class into one or more Series or one or more classes
that may be established and designated from time to time. The Trustees may hold
as treasury shares (of the same or some other Series or class), reissue for such
consideration and on such terms as they may determine, or cancel any shares of
any Series or any class reacquired by the Trust at their discretion from time to
time.


                                      -19-

<PAGE>

     (b)  The power of the Trustees to invest and reinvest the Trust Property
shall be governed by Section 3.2 of this Declaration with respect to any one or
more Series which represents the interests in the assets of the Trust
immediately prior to the establishment of any additional Series and the power of
the Trustees to invest and reinvest assets applicable to any other Series shall
be as set forth in the instrument of the Trustees establishing such series which
is hereinafter described.

     (c)  All consideration received by the Trust for the issue or sale of
shares of a particular Series or class together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series or class for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Trust. In the event that there are any assets, income, earnings, profits, and
proceeds thereof, funds, or payments which are not readily identifiable as
belonging to any particular Series or class, the Trustees shall allocate them
among any one or more of the Series or classes established and designated from
time to time in such manner and on such basis as they, in their sole discretion,
deem fair and equitable. Each such allocation by the Trustees shall be
conclusive and binding upon the shareholders of all Series or classes for all
purposes. No holder of Shares of any Series shall have any claim on or right to
any assets allocated or belonging to any other Series.

     (d)  The assets belonging to each particular Series shall be charged with
the liabilities of the Trust in respect of that Series and all expenses, costs,
charges and reserves attributable to that Series. All expenses and liabilities
incurred or arising in connection with a particular Series, or in connection
with the management thereof, shall be payable solely out of the assets of that
Series and creditors of a particular Series shall be entitled to look solely to
the property of such Series for satisfaction of their claims. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees to and among any one or more of the series
established and designated from time to time in such manner and on such basis as
the Trustees in their sole discretion deem fair and equitable. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and


                                      -20-

<PAGE>

binding upon the holders of all Series for all purposes. The Trustees shall have
full discretion, to the extent not inconsistent with the 1940 Act, to determine
which items shall be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
shareholders.

     (e)  The power of the Trustees to pay dividends and make distributions
shall be governed by Section 8.2 of this Declaration with respect to any one or
more Series or classes which represents the interests in the assets of the Trust
immediately prior to the establishment of any additional Series or classes. With
respect to any other Series or class, dividends and distributions on shares of a
particular Series or class may be paid with such frequency as the Trustee may
determine, which may be daily or otherwise, pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine, to the holders of shares of that Series or class, from such of the
income and capital gains, accrued or realized, from the assets belonging to that
Series or class, as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that Series or class. All dividends and
distributions on shares of a particular Series or class shall be distributed pro
rata to the holders of that Series or class in proportion to the number of
shares of that Series or class held by such holders at the date and time of
record established for the payment of such dividends or distributions.

     (f)  The Trustees shall have the power to determine the designations,
preferences, privileges, limitations and rights, including voting and dividend
rights, of each class and Series of Shares.

     (g)  Subject to compliance with the requirements of the 1940 Act, the
Trustees shall have the authority to provide that the holders of Shares of any
Series or class shall have the right to convert or exchange said Shares into
Shares of one or more Series of Shares in accordance with such requirements and
procedures as may be established by the Trustees.

     (h)  The establishment and designation of any Series or class of shares in
addition to those established in Section 6.1 hereof shall be effective upon the
execution by a majority of the then Trustees of an instrument setting forth such
establishment and designation and the relative rights, preferences, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of such Series or class, or as otherwise provided in
such instrument. At any time that there are no shares outstanding of any
particular Series or class previously


                                      -21-

<PAGE>

established and designated, the Trustees may be an instrument executed by a
majority of their number abolish that Series or class and the establishment
and designation thereof. Each instrument referred to in this paragraph shall
have the status of an amendment to this Declaration.

     (i)  Shareholders of a Series shall not be entitled to participate in a
derivative or class action with respect to any matter which only affects another
Series or its Shareholders.

     (j)  Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of distributions of income and
capital gains made with respect to such Series. In the event of the liquidation
of a particular Series, the Shareholders of that Series which has been
established and designated and which is being liquidated shall be entitled to
receive, when and as declared by the Trustees, the excess of the assets
belonging to that Series over the liabilities belonging to that Series. The
holders of Shares of any Series shall not be entitled hereby to any distribution
upon liquidation of any other Series. The assets so distributable to the
Shareholders of any Series shall be distributed among such Shareholders in
proportion to the number of Shares of that Series held by them and recorded on
the books of the Trust. The liquidation of any particular Series in which there
are Shares then outstanding may be authorized by an instrument in writing,
without a meeting, signed by a majority of the Trustees then in office, subject
to the approval of a majority of the outstanding voting securities of that
Series, as that phrase is defined in the 1940 Act.


                                      -22-

<PAGE>

                                   ARTICLE VII

                                   REDEMPTIONS

     SECTION 7.1. REDEMPTIONS. Each Shareholder of a particular Series shall
have the right at such times as may be permitted by the Trust to require the
Trust to redeem all or any part of his Shares of that Series, upon and subject
to the terms and conditions provided in this Article VII. The Trust shall, upon
application of any Shareholder or pursuant to authorization from any
Shareholder, redeem or repurchase from such Shareholder outstanding shares for
an amount per share determined by the Trustees in accordance with any applicable
laws and regulations; provided that (a) such amount per share shall not exceed
the cash equivalent of the proportionate interest of each share or of any class
or Series of shares in the assets of the Trust at the time of the redemption or
repurchase and (b) if so authorized by the Trustees, the Trust may, at any time
and from time to time charge fees for effecting such redemption or repurchase,
at such rates as the Trustees may establish, as and to the extent permitted
under the 1940 Act and the rules and regulations promulgated thereunder, and
may, at any time and from time to time, pursuant to such Act and such rules and
regulations, suspend such right of redemption. The procedures for effecting and
suspending redemption shall be as set forth in the Prospectus from time to time.
Payment will be made in such manner as described in the Prospectus.

     SECTION 7.2. REDEMPTION AT THE OPTION OF THE TRUST. Each Share of the Trust
or any Series of the Trust shall be subject to redemption at the option of
the Trust at the redemption price which would be applicable if such Share were
then being redeemed by the Shareholder pursuant to Section 7.1: (i) at any
time, if the Trustees determine in their sole discretion that failure to so
redeem may have materially adverse consequences to the holders of the Shares of
the Trust or of any Series, or (ii) upon such other conditions with respect to
maintenance of Shareholder accounts of a minimum amount as may from time to
time be determined by the Trustees and set forth in the then current Prospectus
of the Trust. Upon such redemption the holders of the Shares so redeemed
shall have no further right with respect thereto other than to receive payment
of such redemption price.

     SECTION 7.3 EFFECT OF SUSPENSION OF DETERMINATION OF NET ASSET VALUE. If,
pursuant to Section 7.4 hereof, the Trustees shall declare a suspension of the
determination of net asset value with respect to Shares of the Trust or of any
Series thereof,


                                      -23-

<PAGE>

the rights of Shareholders (including those who shall have applied for
redemption pursuant to Section 7.1 hereof but who shall not yet have received
payment) to have Shares redeemed and paid for by the Trust or a Series thereof
shall be suspended until the termination of such suspension is declared. Any
record holder who shall have his redemption right so suspended may, during the
period of such suspension, by appropriate written notice of revocation at the
office or agency where application was made, revoke any application for
redemption not honored and withdraw any certificates on deposit. The redemption
price of Shares for which redemption applications have not been revoked shall be
the net asset value of such Shares next determined as set forth in Section 8.1
after the termination of such suspension, and payment shall be made within seven
(7) days after the date upon which the application was made plus the period
after such application during which the determination of net asset value was
suspended.

     SECTION 7.4. SUSPENSION OF RIGHT OF REDEMPTION. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary weekend and holiday closings, (ii)
during which trading on the New York Stock Exchange is restricted, (iii) during
which an emergency exists as a result of which disposal by the Trust or a
Series thereof of securities owned by it is not reasonably practicable or it is
not reasonably practicable for the Trust or a Series thereof fairly to determine
the value of its net assets, or (iv) during any other period when the
Commission may for the protection of security holders of the Trust by order
permit suspension of the rights of redemption or postponement of the date of
payment or redemption; provided that applicable rules and regulations of the
Commission shall govern as to whether the conditions prescribed in (ii), (iii)
or (iv) exist. Such suspension shall take effect at such time as the Trust
shall specify but not later than the close of business on the business day
next following the declaration of suspension, and thereafter there shall be no
right of redemption or payment on redemption until the Trust shall declare the
suspension at an end, except that the suspension shall terminate in any event
on the first day on which said stock exchange shall have reopened or the period
specified in (ii) or (iii) shall have expired (as to which in the absence of an
official ruling by the Commission, the determination of the Trust shall be
conclusive). In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the net asset value existing after the termination of the suspension.


                                      -24-

<PAGE>

                                  ARTICLE VIII

         DETERMINATION OF NET ASSET VALUE, NET INCOME AND DISTRIBUTIONS

     SECTION 8.1. NET ASSET VALUE. The net asset value of each outstanding Share
of each Series of the Trust shall be determined on such days and at such time or
times as the Trustees may determine. The method of determination of net asset
value shall be determined by the Trustees and shall be as set forth in the
Prospectus and Statement of Additional Information. The power and duty to make
the daily calculations may be delegated by the Trustees to any Investment
Adviser, the Custodian, the Transfer Agent or such other person as the Trustees
by resolution may determine. The Trustees may suspend the daily determination of
net asset value to the extent permitted by the 1940 Act.

     SECTION 8.2. DISTRIBUTIONS TO SHAREHOLDERS. The Trustees shall from time to
time distribute ratably among the Shareholders of the Trust or of any Series
such proportion of the net income, earnings, profits, gains, surplus (including
paid-in surplus), capital, or assets of the Trust or of such Series held by the
Trustees as they may deem proper. Such distribution may be made in cash or
property (including without limitation any type of obligations of the Trust or
of such Series or any assets thereof), and the Trustees may distribute ratably
among the Shareholders of the Trust or of that Series additional Shares issuable
hereunder in such manner, at such times, and on such terms as the Trustees may
deem proper. Such distributions may be among the Shareholders of record
(determined in accordance with the Prospectus and Statement of Additional
Information) of the Trust or of such Series at the time of declaring a
distribution or among the Shareholders of record of the Trust or of such Series
at such later date as the Trustees shall determine. The Trustees may always
retain from the net income, earnings, profits or gains of the Trust or of such
Series such amount as they may deem necessary to pay the debts or expenses of
the Trust or of such Series or to meet obligations of the Trust or of such
Series, or as they may deem desirable to use in the conduct of its affairs or to
retain for future requirements or extensions of the business. The Trustees may
adopt and offer to Shareholders of the Trust or of any Series such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
deem appropriate.

     Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted


                                      -25-

<PAGE>

to give the Trustees the power in their discretion to distribute for any fiscal
year as ordinary dividends and as capital gains distributions, respectively,
additional amounts sufficient to enable the Trust to avoid or reduce liability
for taxes.

     SECTION 8.3. DETERMINATION OF NET INCOME. The Trustees shall have the power
to determine the net income of any Series of the Trust and from time to time to
distribute such net income ratably among the Shareholders as dividends in cash
or additional Shares of such Series issuable hereunder. The determination of net
income and the resultant declaration of dividends shall be as set forth in the
Prospectus and Statement of Additional Information. The Trustees shall have full
discretion to determine whether any cash or property received by any Series of
the Trust shall be treated as income or as principal and whether any item of
expense shall be charged to the income or the principal account, and their
determination made in good faith shall be conclusive upon the Shareholders. In
the case of stock dividends received, the Trustees shall have full discretion to
determine, in the light of the particular circumstances, how much, if any, of
the value thereof shall be treated as income, the balance, if any, to be treated
as principal.

     SECTION 8.4. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any of
the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value of the Shares or net income, or the declaration and
payment of dividends and distributions, as they may deem necessary or desirable
to enable the Trust to comply with any provision of the 1940 Act, or any rule
or regulation thereunder, including any rule or regulation adopted pursuant to
Section 22 of the 1940 Act by the Commission or any securities association
registered under the Securities Exchange Act of 1934, or any order of exemption
issued by said Commission, all as in effect now or hereafter amended or
modified. Without limiting the generality of the foregoing, the Trustees may
establish classes or additional Series of Shares in accordance with
Section 6.9.


                                      -26-

<PAGE>

                                   ARTICLE IX

            DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.

     SECTION 9.1. DURATION. The Trust shall continue without limitation of time
but subject to the provisions of this Article IX.

     SECTION 9.2. TERMINATION OF TRUST. (a) The Trust or any Series may be
terminated (i) by the affirmative vote of the holders of not less than
two-thirds of the Shares outstanding and entitled to vote at any meeting of
Shareholders of the Trust or the appropriate Series thereof, (ii) by an
instrument in writing, without a meeting, signed by a majority of the Trustees
and consented to by the holders of not less than two-thirds of such Shares of
the Trust or the appropriate Series thereof, or by such other vote as may be
established by the Trustees with respect to any class or Series of Shares, or
(iii) with respect to a Series as provided in Section 6.9(h). Upon the
termination of the Trust or the Series:

     (i)    The Trust or the Series shall carry on no business except for the
     purpose of winding up its affairs.

     (ii)   The Trustees shall proceed to wind up the affairs of the Trust or
     the Series and all of the powers of the Trustees under this Declaration
     shall continue until the affairs of the Trust shall have been wound up,
     including the power to fulfill or discharge the contracts of the Trust or
     the Series, collect its assets, sell, convey, assign, exchange, transfer or
     otherwise dispose of all or any part of the remaining Trust Property or
     Trust Property allocated or belonging to such Series to one or more
     persons at public or private sale for consideration which may consist in
     whole or in part of cash, securities or other property of any kind,
     discharge or pay its liabilities, and to do all other acts appropriate to
     liquidate its business; provided that any sale, conveyance, assignment,
     exchange, transfer or other disposition of all or substantially all the
     Trust Property or Trust Property allocated or belonging to such Series
     shall require Shareholder approval in accordance with Section 9.4 hereof.

     (iii)  After paying or adequately providing for the payment of all
     liabilities, and upon receipt of such releases, indemnities and refunding
     agreements, as they deem necessary for their protection, the Trustees may
     distribute the remaining Trust Property or Trust Property


                                      -27-


<PAGE>


     allocated or belonging to such Series, in cash or in kind or partly each,
     among the Shareholders of the Trust according to their respective rights.

          2.   The Trustees of the Trust hereby reaffirm the Declaration, as
     amended, in all respects.

          3.   This Amendment may be executed in more than one counterpart, each
     of which shall be deemed an original, but all of which together shall
     constitute one and the same document.

     SECTION 9.3. AMENDMENT PROCEDURE. (a) This Declaration may be amended by a
Majority Shareholder Vote, at a meeting of Shareholders, or by written consent
without a meeting. The Trustees may also amend this Declaration without the vote
or consent of Shareholders (i) to change the name of the Trust or any Series or
classes of Shares, (ii) to supply any omission, or cure, correct or supplement
any ambiguous, defective or inconsistent provision hereof, (iii) if they deem it
necessary to conform this Declaration to the requirements of applicable federal
or state laws or regulations or the requirements of the Internal Revenue Code,
or to eliminate or reduce any federal, state or local taxes which are or may be
payable by the Trust or the Shareholders, but the Trustees shall not be liable
for failing to do so, or (iv) for any other purpose which does not adversely
affect the rights of any Shareholder with respect to which the amendment is or
purports to be applicable.

     (b)  No amendment may be made under this Section 9.3 which would change any
rights with respect to any Shares of the Trust or of any Series of the Trust by
reducing the amount payable thereon upon liquidation of the Trust or of such
Series of the Trust or by diminishing or eliminating any voting rights
pertaining thereto, except with the vote or consent of the holders of two-thirds
of the Shares of the Trust or of such Series outstanding and entitled to vote,
or by such other vote as may be established by the Trustees with respect to any
series or class of Shares. Nothing contained in this Declaration shall permit
the amendment of this Declaration to impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and agents of the
Trust or to permit assessments upon Shareholders.

     (c)  A certificate signed by a majority of the Trustees or by the Secretary
or any Assistant Secretary of the Trust, setting forth an amendment and reciting
that it was duly


                                      -28-

<PAGE>

adopted by the Shareholders or by the Trustees as aforesaid or a copy of the
Declaration, as amended, and executed by a majority of the Trustees or certified
by the Secretary or any Assistant Secretary of the Trust, shall be conclusive
evidence of such amendment when lodged among the records of the Trust. Unless
such amendment or such certificate sets forth some later time for the
effectiveness of such amendment, such amendment shall be effective when lodged
among the records of the Trust.

     Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by the
affirmative vote of a majority of the Trustees or by an instrument signed by a
majority of the Trustees.

     SECTION 9.4. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust or any
Series thereof may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or substantially
all of the Trust Property or Trust Property allocated or belonging to such
Series, including its good will, upon such terms and conditions and for such
consideration when and as authorized, at any meeting of Shareholders called for
the purpose, by the affirmative vote of the holders of not less than two-thirds
of the Shares of the Trust or such Series outstanding and entitled to vote, or
by an instrument or instruments in writing without a meeting, consented to by
the holders of not less than two-thirds of such Shares, or by such other vote as
may be established by the Trustees with respect to any series or class of
Shares; provided, however, that, if such merger, consolidation, sale, lease or
exchange is recommended by the Trustees, a Majority Shareholder Vote shall be
sufficient authorization; and any such merger, consolidation, sale, lease or
exchange shall be deemed for all purposes to have been accomplished under and
pursuant to the laws of the Commonwealth of Massachusetts.

     SECTION 9.5. INCORPORATION. With approval of a Majority Shareholder Vote,
or by such other vote as may be established by the Trustees with respect to any
Series or class of Shares, the Trustees may cause to be organized or assist in
organizing a corporation or corporations under the laws of any jurisdiction or
any other trust, partnership, association or other organization to take over all
of the Trust Property or the Trust Property allocated or belonging to such
Series or to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer the Trust
Property or the Trust Property allocated or belonging to such Series to any such
corporation, trust, partnership, association or organization in exchange for the
shares or


                                      -29-

<PAGE>

securities thereof or otherwise, and to lend money to, subscribe for the shares
or securities of, and enter into any contracts with any such corporation, trust,
partnership, association or organization in which the Trust or such Series holds
or is about to acquire shares or any other interest. The Trustees may also cause
a merger or consolidation between the Trust or any successor thereto and any
such corporation, trust, partnership, association or other organization if and
to the extent permitted by law, as provided under the law then in effect.
Nothing contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to such
organization or entities.


                                      -30-

<PAGE>

                                    ARTICLE X

                             REPORTS TO SHAREHOLDERS

     The Trustees shall at least semi-annually submit or cause the officers of
the Trust to submit to the Shareholders a written financial report of each
Series of the Trust, including financial statements which shall at least
annually be certified by independent public accountants.


                                      -31-

<PAGE>

                                   ARTICLE XI

                                  MISCELLANEOUS

     SECTION 11.1. FILING. This Declaration and any amendment hereto shall be
filed in the office of the Secretary of the Commonwealth of Massachusetts and in
such other places as may be required under the laws of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Each amendment so filed shall be accompanied by a certificate signed and
acknowledged by a Trustee or by the Secretary or any Assistant Secretary of the
Trust stating that such action was duly taken in a manner provided herein. A
restated Declaration, integrating into a single instrument all of the provisions
of the Declaration which are then in effect and operative, may be executed from
time to time by a majority of the Trustees and shall, upon filing with the
Secretary of the Commonwealth of Massachusetts, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in lieu of the
original Declaration and the various amendments thereto.

     SECTION 11.2. RESIDENT AGENT. The Prentice-Hall Corporation System, Inc.,
84 State Street, Boston, Massachusetts 02109 is the resident agent of the Trust
in the Commonwealth of Massachusetts.

     SECTION 11.3. GOVERNING LAW. This Declaration is executed by the Trustees
and delivered in the Commonwealth of Massachusetts and with reference to the
laws thereof and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the laws
of said State.

     SECTION 11.4. COUNTERPARTS. The Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.

     SECTION 11.5. RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records of the Trust, appears to be a Trustee
hereunder, or Secretary or Assistant Secretary of the Trust, certifying to: (a)
the number or identity of Trustees or Shareholders, (b) the due authorization of
the execution of any instrument or writing, (c) the form of any vote passed at a
meeting of Trustees or Shareholders, (d) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (e) the form of any By-Laws
adopted by or the




                                       -32-

<PAGE>

identity of any officers elected by the Trustees, or (f) the existence of any
fact or facts which in any manner relate to the affairs of the Trust, shall be
conclusive evidence as to the matters so certified in favor of any Person
dealing with the Trustees and their successors.

     SECTION 11.6. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS. (a) The
provisions of the Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provisions shall be deemed superseded by such law or regulation to
the extent necessary to eliminate such conflict; provided, however, that such
determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior to
such determination.

     (b)  If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
pertain only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.

     SECTION 11.7. USE OF THE NAME "DEAN WITTER". Dean Witter Reynolds Inc.
("DWR") has consented to the use by the Trust of the identifying name "Dean
Witter," which is a property right of DWR. The Trust will only use the name
"Dean Witter" as a component of its name and for no other purpose, and will not
purport to grant to any third party the right to use the name "Dean Witter" for
any purpose. DWR, or any corporate affiliate of the parent of DWR, may use or
grant to others the right to use the name "Dean Witter," or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or for
any commercial purpose, including a grant of such right to any other investment
company. At the request of DWR or its parent, the Trust will take such action
as may be required to provide its consent to the use by DWR or its parent, or
any corporate affiliate of DWR's parent, or by any person to whom DWR or its
parent or an affiliate of DWR's parent shall have granted the right to the use,
of the name "Dean Witter," or any combination or abbreviation thereof. Upon the
termination of any investment advisory agreement into which DWR and the Trust
may enter, the Trust shall, upon request by DWR or its parent, cease to use
the name "Dean Witter" as a component of its name, and shall not use
the name, or any combination or abbreviation thereof, as a part of its name or
for any other commercial purpose, and shall cause its officers, trustees and
shareholders to take any and all actions which DWR or its parent may request to
effect the foregoing and to reconvey to DWR and its parent any and all rights to
such name.


                                      -33-

<PAGE>

   IN WITNESS WHEREOF, the undersigned have executed this Declaration of Trust
this 4th day of August, 1988.



/s/ Charles A. Fiumefreddo              /s/ Andrew J. Melton, Jr.
-----------------------------------     ------------------------------
Charles A. Fiumefreddo, as              Andrew J. Melton, Jr., as
Trustee and not individually            Trustee and not individually
One World Trade Center                  Five World Trade Center
New York, New York 10048                New York, New York 10048



/s/ Sheldon Curtis
-----------------------------------
Sheldon Curtis, as Trustee
not individually
One World Trade Center
New York, New York 10048


                                      -34-

<PAGE>


STATE OF NEW YORK )
                   :ss.:
COUNTY OF NEW YORK)

     On this 4th day of August, 1988, ANDREW J. MELTON, JR., CHARLES A.
FIUMEFREDDO and SHELDON CURTIS, known to me and known to be the individuals
described in and who executed the foregoing instrument, personally appeared
before me and they severally acknowledged the foregoing instrument to be their
free act and deed.


                                        /s/ Barry Fink
                                        ------------------------------
                                        Notary Public

My commission expires:

                                   BARRY FINK
                        Notary Public, State of New York
                                 No. 41-4711980
                           Qualified in Sulfolk County
                      Certificate filed in New York County
                        Commission Expires Dec. 31, 1988

                                     -35-

<PAGE>

     IN WITNESS WHEREOF, the undersigned has executed this instrument this 5th
day of August, 1988.

                                        /s/ David M. Elwood,
                                        --------------------------
                                                        as Trustee
                                        and not individually
                                        One Federal Street
                                        Boston, MA 02110

                          COMMONWEALTH OF MASSACHUSETTS

     Suffolk, SS.                                           Boston, MA
                                                            August 5, 1988

     Then personally appeared the above-named David M. Elwood who acknowledged
the foregoing instrument to be his free act and deed.

                                        before me.


                                        /s/ Renee J. Sucharne
                                        --------------------------

                                        Notary Public


          My commission expires: August 6, 1993


                                      -36-



<PAGE>


                                     BY-LAWS

                                       OF

                           DEAN WITTER STRATEGIST FUND

                  (AMENDED AND RESTATED AS OF JANUARY 25, 1995)

                                    ARTICLE I

                                   DEFINITIONS

     The terms "COMMISSION", "DECLARATION", "DISTRIBUTOR", "INVESTMENT ADVISER",
"MAJORITY SHAREHOLDER VOTE", "1940 ACT", "SHAREHOLDER", "SHARES", "TRANSFER
AGENT", "TRUST", "TRUST PROPERTY", and "TRUSTEES" have the respective meanings
given them in the Declaration of Trust of Dean Witter Strategist Fund dated
August 4, 1988.

                                   ARTICLE II

                                     OFFICES

     SECTION 2.1. PRINCIPAL OFFICE. Until changed by the Trustees, the principal
office of the Trust in the Commonwealth of Massachusetts shall be in the City of
Boston, County of Suffolk.

     SECTION 2.2. OTHER OFFICES. In addition to its principal office in the
Commonwealth of Massachusetts, the Trust may have an office or offices in the
City of New York, State of New York, and at such other places within and without
the Commonwealth as the Trustees may from time to time designate or the business
of the Trust may require.

                                   ARTICLE III

                              SHAREHOLDERS' MEETING

     SECTION 3.1. PLACE OF MEETINGS. Meetings of Shareholders shall be held at
such place, within or without the Commonwealth of Massachusetts, as may be
designated from time to time by the Trustees.

     SECTION 3.2. MEETINGS. Meetings of Shareholders of the Trust shall be held
whenever called by the Trustees or the President of the Trust and whenever
election of a Trustee or Trustees by Shareholders is required by the provisions
of Section 16(a) of the 1940 Act, for that purpose. Meetings of Shareholders
shall also be called by the Secretary upon the written request of the holders of
Shares entitled to vote not less than twenty-five percent (25%) of all the votes
entitled to be cast at such meeting, except to the extent otherwise required by
Section 16(c) of the 1940 Act, as made applicable to the Trust by the provisions
of Section 2.3 of the Declaration. Such request shall state the purpose or
purposes of such meeting and the matters proposed to be acted on thereat. Except
to the extent otherwise required by Section 16(c) of the 1940 Act, as made
applicable to the Trust by the provisions of Section 2.3 of the Declaration,
the Secretary shall inform such Shareholders of the reasonable estimated cost of
preparing and mailing such notice of the meeting, and upon payment to the Trust
of such costs, the Secretary shall give notice stating the purpose or purposes
of the meeting to all entitled to vote at such meeting. No meeting need be
called upon the request of the holders of Shares entitled to cast less than a
majority of all votes entitled to be cast at such meeting, to consider any
matter which is substantially the same as a matter voted upon at any meeting of
Shareholders held during the preceding twelve months.

     SECTION 3.3. NOTICE OF MEETINGS. Written or printed notice of every
Shareholders' meeting stating the place, date, and purpose or purposes thereof,
shall be given by the Secretary not less than ten (10) nor more than ninety (90)
days before such meeting to each Shareholder entitled to vote at such meeting.
Such notice shall be deemed to be given when deposited in the United States
mail, postage prepaid, directed to the Shareholder at his address as it appears
on the records of the Trust.

<PAGE>

     SECTION 3.4. QUORUM AND ADJOURNMENT OF MEETINGS. Except as otherwise
provided by law, by the Declaration or by these By-Laws, at all meetings of
Shareholders the holders of a majority of the Shares issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum for the transaction of business. In the
absence of a quorum, the Shareholders present or represented by proxy and
entitled to vote thereat shall have power to adjourn the meeting from time to
time. Any adjourned meeting may be held as adjourned without further notice. At
any adjourned meeting at which a quorum shall be present, any business may be
transacted as if the meeting had been held as originally called.

     SECTION 3.5. VOTING RIGHTS, PROXIES. At each meeting of Shareholders, each
holder of record of Shares entitled to vote thereat shall be entitled to one
vote in person or by proxy, executed in writing by the Shareholder or his duly
authorized attorney-in-fact, for each Share of beneficial interest of the Trust
and for the fractional portion of one vote for each fractional Share entitled to
vote so registered in his name on the records of the Trust on the date fixed as
the record date for the determination of Shareholders entitled to vote at such
meeting. No proxy shall be valid after eleven months from its date, unless
otherwise provided in the proxy. At all meetings of Shareholders, unless the
voting is conducted by inspectors, all questions relating to the qualifications
of voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting. Pursuant to a resolution of a
majority of the Trustees, proxies may be solicited in the name of one or more
Trustees or Officers of the Trust.

     SECTION 3.6. VOTE REQUIRED. Except as otherwise provided by law, by the
Declaration of Trust, or by these By-Laws, at each meeting of Shareholders at
which a quorum is present, all matters shall be decided by Majority Shareholder
Vote.

     SECTION 3. 7. INSPECTORS OF ELECTION. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman of any meeting of Shareholders may, and on the request
of any Shareholder or his proxy shall, appoint Inspectors of Election at the
meeting. In case any person appointed as Inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the Trustees in
advance of the convening of the meeting or at the meeting by the person acting
as chairman. The Inspectors of Election shall determine the number of Shares
outstanding, the Shares represented at the meeting, the existence of a quorum,
the authenticity, validity and effect of proxies, shall receive votes, ballots
or consents, shall hear and determine all challenges and questions in any way
arising in connection with the right to vote, shall count and tabulate all votes
or consents, determine the results, and do such other acts as may be proper to
conduct the election or vote with fairness to all Shareholders. On request of
the chairman of the meeting, or of any Shareholder or his proxy, the Inspectors
of Election shall make a report in writing of any challenge or question or
matter determined by them and shall execute a certificate of any facts found by
them.

     SECTION 3.8. INSPECTION OF BOOKS AND RECORDS. Shareholders shall have such
rights and procedures of inspection of the books and records of the Trust as are
granted to Shareholders under the Corporations and Associations Law of the State
of Maryland.

     SECTION 3. 9.ACTION BY SHAREHOLDERS WITHOUT MEETING. Except as otherwise
provided by law, the provisions of these By-Laws relating to notices and
meetings to the contrary notwithstanding, any action required or permitted to be
taken at any meeting of Shareholders may be taken without a meeting if a
majority of the Shareholders entitled to vote upon the action consent to the
action in writing and such consents are filed with the records of the Trust.
Such consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.

                                   ARTICLE IV

                                    TRUSTEES

     SECTION 4.1. MEETINGS OF THE TRUSTEES. The Trustees may in their discretion
provide for regular or special meetings of the Trustees. Regular meetings of the
Trustees may be held at such time and place as shall be determined from time to
time by the Trustees without further notice. Special meetings of the Trustees
may be called at any time by the President and shall be called by the President
or the Secretary upon the written request of any two (2) Trustees.


                                        2

<PAGE>

     SECTION 4.2. NOTICE OF SPECIAL MEETINGS. Written notice of special meetings
of the Trustees, stating the place, date and time thereof, shall be given not
less than two (2) days before such meeting to each Trustee, personally, by
telegram, by mail, or by leaving such notice at his place of residence or usual
place of business. If mailed, such notice shall be deemed to be given when
deposited in the United States mail, postage prepaid, directed to the Trustee at
his address as it appears on the records of the Trust. Subject to the provisions
of the 1940 Act, notice or waiver of notice need not specify the purpose of any
special meeting.

     SECTION 4.3. TELEPHONE MEETINGS. Subject to the provisions of the 1940 Act,
any Trustee, or any member or members of any committee designated by the
Trustees, may participate in a meeting of the Trustees, or any such committee,
as the case may be, by means of a conference telephone or similar communications
equipment if all persons participating in the meeting can hear each other at the
same time. Participation in a meeting by these means constitutes presence in
person at the meeting.

     SECTION 4.4. QUORUM, VOTING AND ADJOURNMENT OF MEETINGS. At all meetings of
the Trustees, a majority of the Trustees shall be requisite to and shall
constitute a quorum for the transaction of business. If a quorum is present, the
affirmative vote of a majority of the Trustees present shall be the act of the
Trustees, unless the concurrence of a greater proportion is expressly required
for such action by law, the Declaration or these By-Laws. If at any meeting of
the Trustees there be less than a quorum present, the Trustees present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall have been obtained.

     SECTION 4.5. ACTION BY TRUSTEES WITHOUT MEETING. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of the Trustees may be taken without a meeting if a consent in writing
setting forth the action shall be signed by all of the Trustees entitled to vote
upon the action and such written consent is filed with the minutes of
proceedings of the Trustees.

     SECTION 4.6. EXPENSES AND FEES. Each Trustee may be allowed expenses, if
any, for attendance at each regular or special meeting of the Trustees, and each
Trustee who is not an officer or employee of the Trust or of its investment
manager or underwriter or of any corporate affiliate of any of said persons
shall receive for services rendered as a Trustee of the Trust such compensation
as may be fixed by the Trustees. Nothing herein contained shall be construed to
preclude any Trustee from serving the Trust in any other capacity and receiving
compensation therefor.

     SECTION 4.7. EXECUTION OF INSTRUMENTS AND DOCUMENTS AND SIGNING OF CHECKS
AND OTHER OBLIGATIONS AND TRANSFERS. All instruments, documents and other papers
shall be executed in the name of and on behalf of the Trust and all checks,
notes, drafts and other obligations for the payment of money by the Trust shall
be signed, and all transfer of securities standing in the name of the Trust
shall be executed, by the President, any Vice President or the Treasurer or by
any one or more officers or agents of the Trust as shall be designated for that
purpose by vote of the Trustees; notwithstanding the above, nothing in this
Section 4.7 shall be deemed to preclude the electronic authorization, by
designated persons, of the Trust's Custodian (as described herein in
Section 9.1) to transfer assets of the Trust, as provided for herein in
Section 9.1.

     SECTION 4.8. INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS.
(a)The Trust shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Trust) by reason of the fact that he is or
was a Trustee, officer, employee, or agent of the Trust. The indemnification
shall be against expenses, including attorneys' fees, judgments, fines, and
amounts paid in settlement, actually and reasonably incurred by him in
connection with the action, suit, or proceeding, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Trust, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.


                                        3

<PAGE>

     (b)  The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or on behalf of the Trust to obtain a judgment or decree in its favor by
reason of the fact that he is or was a Trustee, officer, employee, or agent of
the Trust. The indemnification shall be against expenses, including attorneys'
fees actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust;
except that no indemnification shall be made in respect of any claim, issue, or
matter as to which the person has been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Trust, except to the extent
that the court in which the action or suit was brought, or a court of equity in
the county in which the Trust has its principal office, determines upon
application that, despite the adjudication of liability but in view of all
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for those expenses which the court shall deem proper, provided such
Trustee, officer, employee or agent is not adjudged to be liable by reason of
his willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.

     (c)  To the extent that a Trustee, officer, employee, or agent of the Trust
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsection (a) or (b) or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses, including
attorneys' fees, actually and reasonably incurred by him in connection
therewith.

     (d)  (1) Unless a court orders otherwise, any indemnification under
subsections (a) or (b) of this section may be made by the Trust only as
authorized in the specific case after a determination that indemnification of
the Trustee, officer, employee, or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in subsections (a) or
(b).

          (2)  The determination shall be made:

               (i)    By the Trustees, by a majority vote of a quorum which
     consists of Trustees who were not parties to the action, suit or
     proceeding; or

               (ii)   If the required quorum is not obtainable, or if a quorum
          of disinterested Trustees so directs, by independent legal counsel in
          a written opinion; or

               (iii)  By the Shareholders.

          (3)  Notwithstanding any provision of this Section 4.8, no person
     shall be entitled to indemnification for any liability, whether or not
     there is an adjudication of liability, arising by reason of willful
     misfeasance, bad faith, gross negligence, or reckless disregard of duties
     as described in Section 17(h) and (i) of the Investment Company Act of 1940
     ("disabling conduct"). A person shall be deemed not liable by reason of
     disabling conduct if, either:

               (i)    a final decision on the merits is made by a court or other
          body before whom the proceeding was brought that the person to be
          indemnified ("indemnitee") was not liable by reason of disabling
          conduct; or

               (ii)   in the absence of such a decision, a reasonable
          determination, based upon a review of the facts, that the indemnitee
          was not liable by reason of disabling conduct, is made by either--

                    (A)  a majority of a quorum of Trustees who are neither
               "interested persons" of the Trust, as defined in Section
               2(a)(19) of the Investment Company Act of 1940, nor parties to
               the action, suit or proceeding, or

                    (B)  an independent legal counsel in a written opinion.

     (e)  Expenses, including attorneys' fees, incurred by a Trustee, officer,
employee or agent of the Trust in defending a civil or criminal action, suit or
proceeding may be paid by the Trust in advance of the final disposition thereof
if:

          (1)  authorized in the specific case by the Trustees; and

          (2)  the Trust receives an undertaking by or on behalf of the
     Trustee, officer, employee or agent of the Trust to repay the advance
     if it is not ultimately determined that such person is entitled to be
     indemnified by the Trust; and


                                        4

<PAGE>

          (3)  either, (i) such person provides a security for his
     undertaking, or

               (ii)   the Trust is insured against losses by reason of any
          lawful advances, or

               (iii)  a determination, based on a review of readily available
          facts, that there is reason to believe that such person ultimately
          will be found entitled to indemnification, is made by either--

                    (A)  a majority of a quorum which consists of Trustees who
               are either "interested persons" of the Trust, as defined in
               Section 2(a)(19) of the 1940 Act, nor parties to the action, suit
               or proceeding, or

                    (B)  an independent legal counsel in a written opinion.

     (f)  The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which a person may be entitled under any
by-law, agreement, vote of Shareholders or disinterested Trustees or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding the office, and shall continue as to a person who has ceased to be
a Trustee, officer, employee, or agent and inure to the benefit of the heirs,
executors and administrators of such person; provided that no person may satisfy
any right of indemnity or reimbursement granted herein or to which he may be
otherwise entitled except out of the property of the Trust, and no Shareholder
shall be personally liable with respect to any claim for indemnity or
reimbursement or otherwise.

     (g)  The Trust may purchase and maintain insurance on behalf of any person
who is or was a Trustee, officer, employee, or agent of the Trust, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such. However, in no event will the Trust purchase
insurance to indemnify any officer or Trustee against liability for any act for
which the Trust itself is not permitted to indemnify him.

     (h)  Nothing contained in this Section shall be construed to protect any
Trustee or officer of the Trust against any liability to the Trust or to its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.

                                    ARTICLE V

                                   COMMITTEES

     SECTION 5.1. EXECUTIVE AND OTHER COMMITTEES. The Trustees, by resolution
adopted by a majority of the Trustees, may designate an Executive Committee
and/or committees, each committee to consist of two (2) or more of the Trustees
of the Trust and may delegate to such committees, in the intervals between
meetings of the Trustees, any or all of the powers of the Trustees in the
management of the business and affairs of the Trust. In the absence of any
member of any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a Trustee to act in place
of such absent member. Each such committee shall keep a record of its
proceedings.

     The Executive Committee and any other committee shall fix its own rules or
procedure, but the presence of at least fifty percent (50%) of the members of
the whole committee shall in each case be necessary to constitute a quorum of
the committee and the affirmative vote of the majority of the members of the
committee present at the meeting shall be necessary to take action.

     All actions of the Executive Committee shall be reported to the Trustees at
the meeting thereof next succeeding to the taking of such action.

     SECTION 5.2. ADVISORY COMMITTEE. The Trustees may appoint an advisory
committee which shall be composed of persons who do not serve the Trust in any
other capacity and which shall have advisory functions with respect to the
investments of the Trust but which shall have no power to determine that any
security or other investment shall be purchased, sold or otherwise disposed of
by the Trust. The number of persons constituting any such advisory committee
shall be determined from time to time by the Trustees. The members of any such
advisory committee may receive compensation for their services and may be
allowed such fees and expenses for the attendance at meetings as the Trustees
may from time to time determine to be appropriate.


                                        5

<PAGE>

     SECTION 5.3. COMMITTEE ACTION WITHOUT MEETING. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of any Committee of the Trustees appointed pursuant to Section 5.1 of
these By-Laws may be taken without a meeting if a consent in writing setting
forth the action shall be signed by all members of the Committee entitled to
vote upon the action and such written consent is filed with the records of the
proceedings of the Committee.

                                   ARTICLE VI

                                    OFFICERS

     SECTION 6.1. EXECUTIVE OFFICERS. The executive officers of the Trust shall
be a Chairman, a President, one or more Vice Presidents, a Secretary and a
Treasurer. The Chairman shall be selected from among the Trustees but none of
the other executive officers need be a Trustee. Two or more offices, except
those of President and any Vice President, may be held by the same person, but
no officer shall execute, acknowledge or verify any instrument in more than one
capacity. The executive officers of the Trust shall be elected annually by the
Trustees and each executive officer so elected shall hold office until his
successor is elected and has qualified.

     SECTION 6.2. OTHER OFFICERS AND AGENTS. The Trustees may also elect one or
more Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers
and may elect, or may delegate to the President the power to appoint, such other
officers and agents as the Trustees shall at any time or from time to time deem
advisable.

     SECTION 6.3. TERMS AND REMOVAL AND VACANCIES. Each officer of the Trust
shall hold office until his successor is elected and has qualified. Any officer
or agent of the Trust may be removed by the Trustees whenever, in their
judgment, the best interests of the Trust will be served thereby, but such
removal shall be without prejudice to the contractual rights, if any, of the
person so removed.

     SECTION 6.4. COMPENSATION OF OFFICERS. The compensation of officers and
agents of the Trust shall be fixed by the Trustees, or by the Chairman to the
extent provided by the Trustees with respect to officers appointed by the
President.

     SECTION 6.5. POWER AND DUTIES. All officers and agents of the Trust, as
between themselves and the Trust, shall have such authority and perform such
duties in the management of the Trust as may be provided in or pursuant to these
By-Laws, or to the extent not so provided, as may be prescribed by the Trustees;
provided, that no rights of any third party shall be affected or impaired by any
such By-Law or resolution of the Trustees unless he has knowledge thereof.

     SECTION 6.6. THE CHAIRMAN. The Chairman shall preside at all meetings of
the Shareholders and of the Trustees, he shall be a signatory on all Annual and
Semi-Annual Reports as may be sent to shareholders, and he shall perform such
other duties as the Trustees may from time to time prescribe.

     SECTION 6.7. THE PRESIDENT. (a) The President shall be the chief executive
officer of the Trust; he shall have general and active management of the
business of the Trust, shall see that all orders and resolutions of the Board of
Trustees are carried into effect, and, in connection therewith, shall be
authorized to delegate to one or more Vice Presidents such of his powers and
duties at such times and in such manner as he may deem advisable.

     (b)  In the absence of the Chairman, the President shall preside at all
meetings of the shareholders and the Board of Trustees; and he shall perform
such other duties as the Board of Trustees may from time to time prescribe.

     SECTION 6.8. THE VICE PRESIDENTS. The Vice Presidents shall be of such
number and shall have such titles as may be determined from time to time by the
Trustees. The Vice President, or, if there be more than one, the Vice Presidents
in the order of their seniority as may be determined from time to time by the
Trustees or the President, shall, in the absence or disability of the President,
exercise the powers and perform the duties of the President, and he or they
shall perform such other duties as the Trustees or the President may from time
to time prescribe.


                                        6

<PAGE>

     SECTION 6.9. THE ASSISTANT VICE PRESIDENTS. The Assistant Vice President,
or, if there be more than one, the Assistant Vice Presidents, shall perform such
duties and have such powers as may be assigned them from time to time by the
Trustees or the President.

     SECTION 6.10. THE SECRETARY. The Secretary shall attend all meetings of the
Trustees and all meetings of the Shareholders and record all the proceedings of
the meetings of the Shareholders and of the Trustees in a book to be kept for
that purpose, and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
Shareholders and special meetings of the Trustees, and shall perform such other
duties and have such powers as the Trustees, or the President, may from time to
time prescribe. He shall keep in safe custody the seal of the Trust and affix or
cause the same to be affixed to any instrument requiring it, and, when so
affixed, it shall be attested by his signature or by the signature of an
Assistant Secretary.

     SECTION 6.11. THE ASSISTANT SECRETARIES. The Assistant Secretary, or, if
there be more than one, the Assistant Secretaries in the order determined by the
Trustees or the President, shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary and shall
perform such duties and have such other powers as the Trustees or the President
may from time to time prescribe.

     SECTION 6.12. THE TREASURER. The Treasurer shall be the chief financial
officer of the Trust. He shall keep or cause to be kept full and accurate
accounts of receipts and disbursements in books belonging to the Trust, and he
shall render to the Trustees and the President, whenever any of them require it,
an account of his transactions as Treasurer and of the financial condition of
the Trust; and he shall perform such other duties as the Trustees, or the
President, may from time to time prescribe.

     SECTION 6.13. THE ASSISTANT TREASURERS. The Assistant Treasurer, or, if
there shall be more than one, the Assistant Treasurers in the order determined
by the Trustees or the President, shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Trustees, or the
President, may from time to time prescribe.

     SECTION 6.14. DELEGATION OF DUTIES. Whenever an officer is absent or
disabled, or whenever for any reason the Trustees may deem it desirable, the
Trustees may delegate the powers and duties of an officer or officers to any
other officer or officers or to any Trustee or Trustees.

                                   ARTICLE VII

                           DIVIDENDS AND DISTRIBUTIONS

     Subject to any applicable provisions of law and the Declaration, dividends
and distributions upon the Shares may be declared at such intervals as the
Trustees may determine, in cash, in securities or other property, or in Shares,
from any sources permitted by law, all as the Trustees shall from time to time
determine.

     Inasmuch as the computation of net income and net profits from the sales of
securities or other properties for federal income tax purposes may vary from the
computation thereof on the records of the Trust, the Trustees shall have power,
in their discretion, to distribute as income dividends and as capital gain
distributions, respectively, amounts sufficient to enable the Trust to avoid or
reduce liability for federal income taxes.

                                  ARTICLE VIII

                             CERTIFICATES OF SHARES

     SECTION 8.1. CERTIFICATES OF SHARES. Certificates for Shares of each series
or class of Shares shall be in such form and of such design as the Trustees
shall approve, subject to the right of the Trustees to change such form and
design at any time or from time to time, and shall be entered in the records of
the Trust as they are issued. Each such certificate shall bear a distinguishing
number; shall exhibit the holder's name and certify the number of full Shares
owned by such holder; shall be signed by or in the name of


                                        7

<PAGE>

the Trust by the President, or a Vice President, and countersigned by the
Secretary or an Assistant Secretary or the Treasurer and an Assistant Treasurer
of the Trust; shall be sealed with the seal; and shall contain such recitals as
may be required by law. Where any certificate is signed by a Transfer Agent or
by a Registrar, the signature of such officers and the seal may be facsimile,
printed or engraved. The Trust may, at its option, determine not to issue a
certificate or certificates to evidence Shares owned of record by any
Shareholder.

     In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall appear on, any such certificate or certificates
shall cease to be such officer or officers of the Trust, whether because of
death, resignation or otherwise, before such certificate or certificates shall
have been delivered by the Trust, such certificate or certificates shall,
nevertheless, be adopted by the Trust and be issued and delivered as though the
person or persons who signed such certificate or certificates or whose facsimile
signature or signatures shall appear therein had not ceased to be such officer
or officers of the Trust.

     No certificate shall be issued for any share until such share is fully
paid.

     SECTION 8.2. LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES. The
Trustees may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Trust alleged to
have been lost, stolen or destroyed, upon satisfactory proof of such loss,
theft, or destruction; and the Trustees may, in their discretion, require the
owner of the lost, stolen or destroyed certificate, or his legal representative,
to give to the Trust and to such Registrar, Transfer Agent and/or Transfer Clerk
as may be authorized or required to countersign such new certificate or
certificates, a bond in such sum and of such type as they may direct, and with
such surety or sureties, as they may direct, as indemnity against any claim that
may be against them or any of them on account of or in connection with the
alleged loss, theft or destruction of any such certificate.

                                   ARTICLE IX

                                    CUSTODIAN

     SECTION 9.1. APPOINTMENT AND DUTIES. The Trust shall at times employ a bank
or trust company having capital, surplus and undivided profits of at least five
million dollars ($5,000,000) as custodian with authority as its agent, but
subject to such restrictions, limitations and other requirements, if any, as may
be contained in these By-Laws and the 1940 Act:

          (1)  to receive and hold the securities owned by the Trust and deliver
     the same upon written or electronically transmitted order;

          (2)  to receive and receipt for any moneys due to the Trustee and
     deposit the same in its own banking department or elsewhere as the Trustees
     may direct;

          (3)  to disburse such funds upon orders or vouchers;

all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian. If so directed by a Majority Shareholder Vote, the custodian
shall deliver and pay over all property of the Trust held by it as specified in
such vote.

     The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees.

     SECTION 9.2. CENTRAL CERTIFICATE SYSTEM. Subject to such rules, regulations
and orders as the Commission may adopt, the Trustees may direct the custodian
to deposit all or any part of the securities owned by the Trust in a system for
the central handling of securities established by a national securities exchange
or a national securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act, pursuant to which
system all securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
Trust.


                                        8

<PAGE>

                                    ARTICLE X

                                WAIVER OF NOTICE

     Whenever any notice of the time, place or purpose of any meeting of
Shareholders, Trustees, or of any committee is required to be given in
accordance with law or under the provisions of the Declaration or these By-Laws,
a waiver thereof in writing, signed by the person or persons entitled to such
notice and filed with the records of the meeting, whether before or after the
holding thereof, or actual attendance at the meeting of shareholders, Trustees
or committee, as the case may be, in person, shall be deemed equivalent to the
giving of such notice to such person.

                                   ARTICLE XI

                                  MISCELLANEOUS

     SECTION 11.1. LOCATION OF BOOKS AND RECORDS. The books and records of the
Trust may be kept outside the Commonwealth of Massachusetts at such place or
places as the Trustees may from time to time determine, except as otherwise
required by law.

     SECTION 11.2. RECORD DATE. The Trustees may fix in advance a date as the
record date for the purpose of determining Shareholders entitled to notice of,
or to vote at, any meeting of Shareholders, or Shareholders entitled to receive
payment of any dividend or the allotment of any rights, or in order to make a
determination of Shareholders for any other proper purpose. Such date, in any
case, shall not be more than ninety (90) days, and in case of a meeting of
Shareholders not less than ten (10) days, prior to the date on which particular
action requiring such determination of Shareholders is to be taken. In lieu of
fixing a record date the Trustees may provide that the transfer books shall be
closed for a stated period but not to exceed, in any case, twenty (20) days. If
the transfer books are closed for the purpose of determining Shareholders
entitled to notice of a vote at a meeting of Shareholders, such books shall be
closed for at least ten (10) days immediately preceding such meeting.

     SECTION 11.3. SEAL. The Trustees shall adopt a seal, which shall be in such
form and shall have such inscription thereon as the Trustees may from time to
time provide. The seal of the Trust may be affixed to any document, and the seal
and its attestation may be lithographed, engraved or otherwise printed on any
document with the same force and effect as if it had been printed and attested
manually in the same manner and with the same effect as if done by a
Massachusetts business corporation under Massachusetts law.

     SECTION 11.4. FISCAL YEAR. The fiscal year of the Trust shall end on such
date as the Trustees may by resolution specify, and the Trustees may by
resolution change such date for future fiscal years at any time and from
time to time.

     SECTION 11.5. ORDERS FOR PAYMENT OF MONEY. All orders or instructions for
the payment of money of the Trust, and all notes or other evidences of
indebtedness issued in the name of the Trust, shall be signed by such officer or
officers or such other person or persons as the Trustees may from time to time
designate, or as may be specified in or pursuant to the agreement between the
Trust and the bank or trust company appointed as Custodian of the securities and
funds of the Trust.

                                   ARTICLE XII

                       COMPLIANCE WITH FEDERAL REGULATIONS

     The Trustees are hereby empowered to take such action as they may deem to
be necessary, desirable or appropriate so that the Trust is or shall be in
compliance with any federal or state statute, rule or regulation with which
compliance by the Trust is required.



                                        9

<PAGE>

                                  ARTICLE XIII

                                   AMENDMENTS

     These By-Laws may be amended, altered, or repealed, or new By-Laws may be
adopted, (a) by a Majority Shareholder Vote, or (b) by the Trustees; provided,
however, that no By-Law may be amended, adopted or repealed by the Trustees if
such amendment, adoption or repeal requires, pursuant to law, the Declaration,
or these By-Laws, a vote of the Shareholders. The Trustees shall in no event
adopt By-Laws which are in conflict with the Declaration, and any apparent
inconsistency shall be construed in favor of the related provisions in the
Declaration.

                                   ARTICLE XIV

                              DECLARATION OF TRUST

     The Declaration of Trust establishing Dean Witter Strategist Fund, dated
August 4, 1988, a copy of which is on file in the office of the Secretary of the
Commonwealth of Massachusetts, provides that the name Dean Witter Strategist
Fund refers to the Trustees under the Declaration collectively as Trustees, but
not as individuals or personality; and no Trustee, Shareholder, officer,
employee or agent of Dean Witter Strategist Fund shall be held to any personal
liability, nor shall resort be had to their private property for the
satisfaction of any obligations or claim or otherwise, in connection with the
affairs of said Dean Witter Strategist Fund, but the Trust Estate only shall be
liable.


                                       10

<PAGE>

                          DEAN WITTER DISTRIBUTORS INC.


Gentlemen:

     Dean Witter Distributors Inc. (the "Distributor") has a distribution
agreement (the "Distribution Agreement") with Dean Witter Strategist Fund,
a Massachusetts business trust (the "Fund"), pursuant to which it acts as
the Distributor for the sale of the Fund's shares of beneficial interest, par
value $0.01 per share (the "Shares"). Under the Distribution Agreement, the
Distributor has the right to distribute Shares for resale.

     The Fund is an open-end management investment company registered under the
Investment Company Act of 1940, as amended, and the Shares being offered to the
public are registered under the Securities Act of 1933, as amended. You have
received a copy of the Distribution Agreement between us and the Fund and
reference is made herein to certain provisions of such Distribution Agreement.
The terms used herein, including "Prospectus" and "Registration Statement" of
the Fund and "Selected Dealer" shall have the same meaning in this Agreement as
in the Distribution Agreement. As principal, we offer to sell shares to your
customers, upon the following terms and conditions:

     1. In all sales of Shares to the public you shall act on behalf of your
customers, and in no transaction shall you have any authority to act as agent
for the Fund, for us or for any Selected Dealer.

     2. Orders received from you will be accepted through us or on our behalf
only at the net asset value applicable to each order, as set forth in the
current Prospectus. The procedure relating to the handling of orders shall be
subject to instructions which we or the Fund shall forward from time to time to
you. All orders are subject to acceptance or rejection by the Distributor or the
Fund in the sole discretion of either.

     3. You shall not place orders for any Shares unless you have already
received purchase orders for such Shares at the applicable net asset values and
subject to the terms hereof and of the Distribution Agreement and the
Prospectus. You agree that you will not offer or sell any of the Shares except
under circumstances that will result in compliance with the applicable Federal
and state securities laws and that in connection with sales and offers to sell
Shares you will furnish to each person to whom any such sale or offer is made a
copy of the Prospectus (as then amended or supplemented) and will not furnish to
any person any information relating to the Shares, which is inconsistent in any
respect with the information contained in the Prospectus (as then amended or
supplemented) or cause any advertisement to be published by radio or television
or in any newspaper or posted in any public place or use any sales promotional
material without our consent and the consent of the Fund.

     4. The Distributor will compensate you for sales of shares of the Fund and
personal services to Fund shareholders by paying you a sales charge and/or other
commission (which may be in the form of a gross sales credit and/or an annual
residual commission) and/or a service fee, under the terms as are set forth in
the Fund's Prospectus.

     5. If any Shares sold to your customers under the terms of this Agreement
are repurchased by us for the account of the Fund or are tendered for redemption
within seven business days after the date of the confirmation of the original
purchase by you, it is agreed that you shall forfeit your right to, and refund
to us, any commission received by you with respect to such Shares.

     6. No person is authorized to make any representations concerning the
Shares or the Fund except those contained in the current Prospectus and in such
printed information subsequently issued by us or the Fund as information
supplemental to such Prospectus. In selling Shares, you shall rely solely on the
representations contained in the Prospectus and supplemental information
mentioned above. Any printed information which we furnish you other than the
Prospectus and the Fund's periodic reports and proxy solicitation material are
our sole responsibility and not the responsibility of the Fund, and you agree
that the Fund shall have no liability or responsibility to you in these respects
unless expressly assumed in connection therewith.

                                        1

<PAGE>

     7. You agree to deliver to each of the purchasers making purchases a copy
of the then current Prospectus at or prior to the time of offering or sale, and
you agree thereafter to deliver to such purchasers copies of the annual and
interim reports and proxy solicitation materials of the Fund. You further agree
to endeavor to obtain proxies from such purchasers. Additional copies of the
Prospectus, annual or interim reports and proxy solicitation materials of the
Fund will be supplied to you in reasonable quantities upon request.

     8. You are hereby authorized (i) to place orders directly with the Fund or
its agent for shares of the Fund to be sold by us subject to the applicable
terms and conditions governing the placement of orders for the purchase of Fund
shares, as set forth in the Distribution Agreement, and (ii) to tender shares
directly to the Fund or its agent for redemption subject to the applicable terms
and conditions set forth in the Distribution Agreement.

     9. We reserve the right in our discretion, without notice, to suspend sales
or withdraw the offering of Shares entirely. Each party hereto has the right to
cancel this agreement upon notice to the other party.

     10. I. You shall indemnify and hold harmless the Distributor, from and
against any claims, damages and liabilities which arise as a result of action
taken pursuant to instructions from you, or on your behalf to: a)(i) place
orders for Shares of the Fund with the Fund's transfer agent or direct the
transfer agent to receive instructions for the order of Shares, and (ii) accept
monies or direct that the transfer agent accept monies as payment for the order
of such Shares, all as contemplated by and in accordance with Section 3 of the
Distribution Agreement; b)(i) place orders for the redemption of Shares of the
Fund with the Fund's transfer agent or direct the transfer agent to receive
instruction for the redemption of Shares and (ii) to pay redemption proceeds or
to direct that the transfer agent pay redemption proceeds in connection with
orders for the redemption of Shares, all as contemplated by and in accordance
with Section 4 of the Distribution Agreement; provided, however, that in no
case, (i) is this indemnity in favor of the Distributor and any such controlling
persons to be deemed to protect the Distributor or any such controlling persons
thereof against any liability to which the Distributor or any such controlling
persons would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason of reckless
disregard of its obligations and duties under this Agreement or the Distribution
Agreement; or (ii) are you to be liable under the indemnity agreement contained
in this paragraph with respect to any claim made against the Distributor or any
such controlling persons, unless the Distributor or any such controlling
persons, as the case may be, shall have notified you in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
Distributor or such controlling persons (or after the Distributor or such
controlling persons shall have received notice of such service on any designated
agent), but failure to notify you of any such claim shall not relieve you from
any liability which you may have to the person against whom such action is
brought otherwise than on account of the indemnity agreement contained in this
paragraph. You will be entitled to participate at your own expense in the
defense, or, if you so elect, to assume the defense, of any suit brought to
enforce any such liability, but if you elect to assume the defense, such defense
shall be conducted by counsel chosen by you and satisfactory to the Distributor
or such controlling person or persons, defendant or defendants in the suit. In
the event you elect to assume the defense of any such suit and retain such
counsel, the Distributor or such controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them, but, in case you do not elect to assume the defense of
any such suit, you will reimburse the Distributor or such controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. You shall promptly notify the
Distributor of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of the
Shares.

     II. If the indemnification provided for in this Section 10 is unavailable
or insufficient to hold harmless the Distributor, as provided above in respect
of any losses, claims, damages, liabilities or expenses (or actions in respect
thereof) referred to herein, then you shall contribute to the amount paid or
payable by the Distributor as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by you on the one
hand and the

                                        2

<PAGE>

Distributor on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then you shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also your relative fault on the one hand and the relative
fault of the Distributor on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses (or actions in respect thereof), as well as any other relevant
equitable considerations. You and the Distributor agree that it would not be
just and equitable if contribution were determined by pro rata allocation or by
any other method of allocation which does not take into account the equitable
considerations referred to above. The amount paid or payable by the Distributor
as a result of the losses, claims, damages, liabilities or expenses (or actions
in respect thereof) referred to above shall be deemed to include any legal or
other expenses reasonably incurred by the Distributor in connection with
investigating or defending such claim. Notwithstanding the provisions of this
subsection (II), you shall not be required to contribute any amount in excess of
the amount by which the total price at which the Shares distributed by it to the
public were offered to the public exceeds the amount of any damages which it has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act of
1933 Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.

     11. We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the distribution and
redemption of Fund shares. We shall be under no liability to you except for lack
of good faith and for obligations expressly assumed by us herein. Nothing
contained in this paragraph is intended to operate as, and the provisions of
this paragraph shall not in any way whatsoever constitute, a waiver by you of
compliance with any provision of the Securities Act of 1933, as amended, or of
the rules and regulations of the Securities and Exchange Commission issued
thereunder.

     12. You represent that you are a member of the National Association of
Securities Dealers, Inc. and, with respect to any sales in the United States, we
both hereby agree to abide by the Rules of Fair Practice of such Association.

     13. Upon application to us, we will inform you as to the states in which we
believe the Shares have been qualified for sale under, or are exempt from the
requirements of, the respective securities laws of such states, but we assume no
responsibility or obligation as to your right to sell Shares in any
jurisdiction.

     14. All communications to us should be sent to the address shown below. Any
notice to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.


                                        3

<PAGE>

     15. This Agreement shall become effective as of the date of your acceptance
hereof, provided that you return to us promptly a signed and dated copy.

                                             DEAN WITTER DISTRIBUTORS, INC.

                                             By /s/ illegible
                                               ---------------------------------
                                                       (Authorized Signature)


Please return one signed copy
    of this agreement to:
Dean Witter Distributors Inc.
Two World Trade Center
New York, New York 10048
Accepted:

Firm Name: Nations Securities
          ----------------------------
By: /s/illegible
   -----------------------------------
Address: 4201 Congress St. Suite 245
        ------------------------------
         Charlotte NC 28209
        ------------------------------
Date:     6/7/93
     ---------------------------------



                                        4


<PAGE>


                                CUSTODY AGREEMENT



     Agreement made as of this 20th day of September, 1991, between DEAN WITTER
STRATEGIST FUND, a Massachusetts business trust organized and existing under the
laws of the Commonwealth of Massachusetts, having its principal office and place
of business at 2 World Trade Center, New York, New York 10048 (hereinafter
called the "Fund"), and THE BANK OF NEW YORK, a New York corporation authorized
to do a banking business, having its principal office and place of business at
48 Wall Street, New York, New York 10286 (hereinafter called the "Custodian").


                              W I T N E S S E T H :


that for and in consideration of the mutual promises hereinafter set forth, the
Fund and the Custodian agree as follows:



                                    ARTICLE I

                                   DEFINITIONS


     Whenever used in this Agreement, the following words and phrases, shall
have the following meanings:

     1.   "Agreement" shall mean this Custody Agreement and all Appendices and
Certifications described in the Exhibits delivered in connection herewith.

     2.   "Authorized Person" shall mean any person, whether or not such person
is an Officer or employee of the Fund, duly authorized by the Board of Trustees
of the Fund to give Oral Instructions and Written Instructions on behalf of the
Fund and listed in the Certificate annexed hereto as Appendix A or such other
Certificate as may be received by the Custodian from time to time, provided that
each person who is designated in any such Certificate as an "Officer of DWTC"
shall be an Authorized Person only for purposes of Articles XII and XIII hereof.

     3.   "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees.
<PAGE>

     4.   "Call Option" shall mean an exchange traded option with respect to
Securities other than Index, Futures Contracts, and Futures Contract Options
entitling the holder, upon timely exercise and payment of the exercise price, as
specified therein, to purchase from the writer thereof the specified underlying
instruments, currency, or Securities.

     5.   "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian which is actually received (irrespective of constructive receipt) by
the Custodian and signed on behalf of the Fund by any two Officers. The term
Certificate shall also include instructions by the Fund to the Custodian
communicated by a Terminal Link.

     6.   "Clearing Member" shall mean a registered broker-dealer which is a
clearing member under the rules of O.C.C. and a member of a national securities
exchange qualified to act as a custodian for an investment company, or any
broker-dealer reasonably believed by the Custodian to be such a clearing member.


     7.   "Collateral Account" shall mean a segregated account so denominated
which is specifically allocated to a Series and pledged to the Custodian as
security for, and in consideration of, the Custodian's issuance of any Put
Option guarantee letter or similar document described in paragraph 8 of Article
V herein.

     8.   "Covered Call Option" shall mean an exchange traded option entitling
the holder, upon timely exercise and payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified underlying
instruments, currency, or Securities (excluding Futures Contracts) which are
owned by the writer thereof.

     9.   "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term "Depository" shall
further mean and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Fund's Board of Trustees specifically approving deposits therein by the
Custodian.

     10.  "Financial Futures Contract" shall mean the firm commitment to buy or
sell financial instruments on a U.S. commodities exchange or board of trade at a
specified future time at an agreed upon price.

     11.  "Futures Contract" shall mean a Financial Futures Contract and/or
Index Futures Contracts.


                                      - 2 -
<PAGE>

     12.  "Futures Contract Option" shall mean an option with respect to a
Futures Contract.

     13.  "Investment Company Act of 1940" shall mean the Investment Company Act
of 1940, as amended, and the rules and regulations thereunder.

     14.  "Index Futures Contract" shall mean a bilateral agreement pursuant to
which the parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the value of a particular
index at the close of the last business day of the contract and the price at
which the futures contract is originally struck.

     15.  "Index Option" shall mean an exchange traded option entitling the
holder, upon timely exercise, to receive an amount of cash determined by
reference to the difference between the exercise price and the value of the
index on the date of exercise.

     16.  "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant, or a Clearing Member, or in the
name of the Fund for the benefit of a broker, dealer, futures commission
merchant, or Clearing Member, or otherwise, in accordance with an agreement
between the Fund, the Custodian and a broker, dealer, futures commission
merchant or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or a Depository shall be deemed to have been deposited
in, or withdrawn from, a Margin Account upon the Custodian's effecting an
appropriate entry in its books and records.

     17.  "Money Market Security" shall mean all instruments and obligations
commonly known as a money market instruments, where the purchase and sale of
such securities normally requires settlement in federal funds on the same day as
such purchase or sale, including, without limitation, certain Reverse Repurchase
Agreements, debt obligations issued or guaranteed as to interest and/or
principal by the government of the United States or agencies or
instrumentalities thereof, any tax, bond or revenue anticipation note issued by
any state or municipal government or public authority, commercial paper,
certificates of deposit and bankers' acceptances, repurchase agreements with
respect to Securities and bank time deposits.

     18.  "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the


                                      - 3 -
<PAGE>
Securities Exchange Act of 1934, its successor or successors, and its nominee or
nominees.

     19.  "Officers" shall mean the President, any Vice President, the
Secretary, the Clerk, the Treasurer, the Controller, any Assistant Secretary,
any Assistant Clerk, any Assistant Treasurer, and any other person or persons,
whether or not any such other person is an officer or employee of the Fund, but
in each case only if duly authorized by the Board of Trustees of the Fund to
execute any Certificate, instruction, notice or other instrument on behalf of
the Fund and listed in the Certificate annexed hereto as Appendix B or such
other Certificate as may be received by the Custodian from time to time;
provided that each person who is designated in any such Certificate as holding
the position of "Officer of DWTC" shall be an Officer only for purposes of
Articles XII and XIII hereof.

     20.  "Option" shall mean a Call Option, Covered Call Option, Index Option
and/or a Put Option.

     21.  "Oral Instructions" shall mean verbal instructions actually received
(irrespective of constructive receipt) by the Custodian from an Authorized
Person or from a person reasonably believed by the Custodian to be an Authorized
Person.

     22.  "Put Option" shall mean an exchange traded option with respect to
instruments, currency, or Securities other than Index Options, Futures
Contracts, and Futures Contract Options entitling the holder, upon timely
exercise and tender of the specified underlying instruments, currency, or
Securities, to sell such instruments, currency, or Securities to the writer
thereof for the exercise price.

     23.  "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.

     24.  "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Index Options, Index Futures
Contracts, Index Futures Contract Options, Financial Futures Contracts,
Financial Futures Contract Options, Reverse Repurchase Agreements, over the
counter options on Securities, common stocks and other securities having
characteristics similar to common stocks, preferred stocks, debt obligations
issued by state or municipal governments and by public authorities, (including,
without limitation, general obligation bonds, revenue bonds, industrial bonds
and industrial development bonds), bonds, debentures, notes, mortgages or other
obligations, and any certificates, receipts, warrants or other instruments
representing rights to receive, purchase, sell or subscribe


                                      - 4 -
<PAGE>

for the same, or evidencing or representing any other rights or interest
therein, or rights to any property or assets.

     25.  "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the custody account in
which certain Securities and/or other assets of the Fund specifically allocated
to such Series shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such transactions
as the Fund may from time to time determine.

     26.  "Series" shall mean the various portfolios, if any, of the Fund as
described from time to time in the current and effective prospectus for the
Fund, except that if the Fund does not have more than one portfolio, "Series"
shall mean the Fund or be ignored where a requirement would be imposed on the
Fund or the Custodian which is unnecessary if there is only one portfolio.

     27.  "Shares" shall mean the shares of beneficial interest of the Fund and
its Series.

     28.  "Terminal Link" shall mean an electronic data transmission link
between the Fund and the Custodian requiring in connection with each use of the
Terminal Link the use of an authorization code provided by the Custodian and at
least two access codes established by the Fund, provided, that the Fund shall
have delivered to the Custodian a Certificate substantially in the form of
Appendix C.

     29.  "Transfer Agent" shall mean Dean Witter Trust Company, a New Jersey
limited purpose trust company, its successors and assigns.

     30.  "Transfer Agent Account" shall mean any account in the name of the
Transfer Agent maintained with The Bank of New York pursuant to a Cash
Management and Related Services Agreement between The Bank of New York and the
Transfer Agent.

     31.  "Written Instructions" shall mean written communications actually
received (irrespective of constructive receipt) by the Custodian from an
Authorized Person or from a person reasonably believed by the Custodian to be an
Authorized Person by telex or any other such system whereby the receiver of such
communications is able to verify by codes or otherwise with a reasonable degree
of certainty the identity of the sender of such communication.


                                      - 5 -
<PAGE>

                                   ARTICLE II

                            APPOINTMENT OF CUSTODIAN

     1.   The Fund hereby constitutes and appoints the Custodian as custodian of
the Securities and moneys at any time owned by the Fund during the period of
this Agreement.

     2.   The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.



                                   ARTICLE III

                         CUSTODY OF CASH AND SECURITIES


     1.   Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, the Fund will deliver or cause to be delivered to the Custodian
all Securities and all moneys owned by it, at any time during the period of this
Agreement, and shall specify with respect to such Securities and money the
Series to which the same are specifically allocated, and the Custodian shall not
be responsible for any Securities or money not so delivered. The Custodian shall
physically segregate, keep and maintain the Securities of the Series separate
and apart from each other Series and from other assets held by the Custodian.
Except as otherwise expressly provided in this Agreement, the Custodian will not
be responsible for any Securities and moneys not actually received by it, unless
the Custodian has been negligent or has engaged in willful misconduct with
respect thereto. The Custodian will be entitled to reverse any credits of money
made on the Fund's behalf where such credits have been previously made and
moneys are not finally collected, unless the Custodian has been negligent or has
engaged in willful misconduct with respect thereto. The Fund shall deliver to
the Custodian a certified resolution of the Board of Trustees of the Fund,
substantially in the form of Exhibit A hereto, approving, authorizing and
instructing the Custodian on a continuous and on-going basis to deposit in the
Book-Entry System all Securities eligible for deposit therein, regardless of the
Series to which the same are specifically allocated and to utilize the
Book-Entry System to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities and deliveries and
returns of Securities collateral. Prior to a deposit of Securities specifically
allocated to a Series in any Depository, the Fund shall deliver to the Custodian
a certified resolution of the Board of Trustees of the Fund,


                                      - 6 -
<PAGE>

substantially in the form of Exhibit B hereto, approving, authorizing and
instructing the Custodian on a continuous and ongoing basis until instructed to
the contrary by a Certificate to deposit in such Depository all Securities
specifically allocated to such Series eligible for deposit therein, and to
utilize such Depository to the extent possible with respect to such Securities
in connection with its performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of Securities collateral. Securities and
moneys deposited in either the Book-Entry System or a Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including, but not limited to, accounts in which the Custodian acts
in a fiduciary or representative capacity and will be specifically allocated on
the Custodian's books to the separate account for the applicable Series. Prior
to the Custodian's accepting, utilizing and acting with respect to Clearing
Member confirmations for Options and transactions in Options for a Series as
provided in this Agreement, the Custodian shall have received a certified
resolution of the Fund's Board of Trustees, substantially in the form of Exhibit
C hereto, approving, authorizing and instructing the Custodian on a continuous
and on-going basis, until instructed to the contrary by a Certificate, to
accept, utilize and act in accordance with such confirmations as provided in
this Agreement with respect to such Series. All securities are to be held or
disposed of by the Custodian for, and subject at all times to the instructions
of, the Fund pursuant to the terms of this Agreement. The Custodian shall have
no power or authority to assign, hypothecate, pledge or otherwise dispose of any
Securities except as provided by the terms of this Agreement, and shall have the
sole power to release and deliver Securities held pursuant to this Agreement.

     2.   The Custodian shall establish and maintain separate accounts, in the
name of each Series, and shall credit to the separate account for each Series
all moneys received by it for the account of the Fund with respect to such
Series. Such moneys will be held in such manner and account as the Fund and the
Custodian shall agree upon in writing from time to time. Money credited to a
separate account for a Series shall be subject only to drafts, orders, or
charges of the Custodian pursuant to this Agreement and shall be disbursed by
the Custodian only:

          (a)  As hereinafter provided;

          (b)  Pursuant to Resolutions of the Fund's Board of Trustees certified
by an Officer and by the Secretary or Assistant Secretary of the Fund setting
forth the name and address of the person to whom the payment is to be made, the
Series account from which payment is to be made, the purpose for which payment
is to be made, and declaring such purpose to


                                      - 7 -
<PAGE>

be a proper corporate purpose; provided, however, that amounts representing
dividends, distributions, or redemptions proceeds with respect to Shares shall
be paid only to the Transfer Agent Account;

          (c)  In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to such Series and authorized by this
Agreement; or

          (d)  Pursuant to Certificates to pay interest, taxes, management fees
or operating expenses (including, without limitation thereto, Board of Trustees'
fees and expenses, and fees for legal accounting and auditing services), which
Certificates set forth the name and address of the person to whom payment is to
be made, state the purpose of such payment and designate the Series for whose
account the payment is to be made.

     3.   Promptly after the close of business on each day, the Custodian shall
furnish the Fund with confirmations and a summary, on a per Series basis, of all
transfers to or from the account of the Fund for a Series, either hereunder or
with any co-custodian or sub-custodian appointed in accordance with this
Agreement during said day. Where Securities are transferred to the account of
the Fund for a Series but held in a Depository, the Custodian shall upon such
transfer also by book-entry or otherwise identify such Securities as belonging
to such Series in a fungible bulk of Securities registered in the name of the
Custodian (or its nominee) or shown on the Custodian's account on the books of
the Book-Entry System or the Depository. At least monthly and from time to time,
the Custodian shall furnish the Fund with a detailed statement, on a per Series
basis, of the Securities and moneys held under this Agreement for the Fund.

     4.   Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, all Securities held by the Custodian hereunder, which are issued
or issuable only in bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that form; all other
Securities held hereunder may be registered in the name of the Fund, in the name
of any duly appointed registered nominee of the Custodian as the Custodian may
from time to time determine, or in the name of the Book-Entry System or a
Depository or their successor or successors, or their nominee or nominees. The
Fund agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-Entry System or a
Depository any Securities which it may hold hereunder and which may from time to
time be registered in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not held in the
Book-Entry System or in a Depository in a separate


                                      - 8 -
<PAGE>

account in the name of such Series physically segregated at all times from those
of any other person or persons.

     5.   Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or a Depository with respect to Securities held
hereunder and therein deposited, shall with respect to all Securities held for
the Fund hereunder in accordance with preceding paragraph 4:

          (a)  Promptly collect all income and dividends due or payable;

          (b)  Promptly give notice to the Fund and promptly present for payment
and collect the amount of money or other consideration payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix D annexed hereto, which may be amended at
any time by the Custodian without the prior consent of the Fund, provided the
Custodian gives prior notice of such amendment to the Fund;

          (c)  Promptly present for payment and collect for the Fund's account
the amount payable upon all Securities which mature;

          (d)  Promptly surrender Securities in temporary form in exchange for
definitive Securities;

          (e)  Promptly execute, as custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect;

          (f)  Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of a Series, all
rights and similar securities issued with respect to any Securities held by the
Custodian for such Series hereunder; and

          (g)  Promptly deliver to the Fund all notices, proxies, proxy
soliciting materials, consents and other written information (including, without
limitation, notices of tender offers and exchange offers, pendency of calls,
maturities of Securities and expiration of rights) relating to Securities held
pursuant to this Agreement which are actually received by the Custodian, such
proxies and other similar materials to be executed by the registered holder (if
Securities are registered otherwise than in the name of the Fund), but without
indicating the manner in which proxies or consents are to be voted.


                                      - 9 -
<PAGE>

     6.   Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:

          (a)  Promptly execute and deliver to such persons as may be designated
in such Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities held hereunder for
the Series specified in such Certificate may be exercised;

          (b)  Promptly deliver any Securities held hereunder for the Series
specified in such Certificate in exchange for other Securities or cash issued or
paid in connection with the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the exercise of any
right, warrant or conversion privilege and receive and hold hereunder
specifically allocated to such Series any cash or other Securities received in
exchange;

          (c)  Promptly deliver any Securities held hereunder for the Series
specified in such Certificate to any protective committee, reorganization
committee or other person in connection with the reorganization, refinancing,
merger, consolidation, recapitalization or sale of assets of any corporation,
and receive and hold hereunder specifically allocated to such Series in exchange
therefor such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery or such Securities as
may be issued upon such delivery; and

          (d)  Promptly present for payment and collect the amount payable upon
Securities which may be called as specified in the Certificate.

     7.   Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments or certificates are
available. The Fund shall deliver to the Custodian such a Certificate no later
than the business day preceding the availability of any such instrument or
certificate. Prior to such availability, the Custodian shall comply with Section
17(f) of the Investment Company Act of 1940 in connection with the purchase,
sale, settlement, closing out or writing of Futures Contracts, Options, or
Futures Contract Options by making payments or deliveries specified in
Certificates in connection with any such purchase, sale, writing, settlement or
closing out upon its receipt from a broker, dealer, or futures commission
merchant of a statement or confirmation reasonably believed by the Custodian to
be in the form customarily used by brokers, dealers, or future


                                     - 10 -
<PAGE>

commission merchants with respect to such Futures Contracts, Options, or Futures
Contract Options, as the case may be, confirming that such Security is held by
such broker, dealer or futures commission merchant, in book-entry form or
otherwise, in the name of the Custodian (or any nominee of the Custodian) as
custodian for the Fund, provided, however, that notwithstanding the foregoing,
payments to or deliveries from the Margin Account and payments with respect to
Securities to which a Margin Account relates, shall be made in accordance with
the terms and conditions of the Margin Account Agreement. Whenever any such
instruments or certificates are available, the Custodian shall, notwithstanding
any provision in this Agreement to the contrary, make payment for any Futures
Contract, Option, or Futures Contract Option for which such instruments or such
certificates are available only against the delivery to the Custodian of such
instrument or such certificate, and deliver any Futures Contract, Option or
Futures Contract Option for which such instruments or such certificates are
available only against receipt by the Custodian of payment therefor. Any such
instrument or certificate delivered to the Custodian shall be held by the
Custodian hereunder in accordance with, and subject to, the provisions of this
Agreement.



                                   ARTICLE IV

                  PURCHASE AND SALE OF INVESTMENTS OF THE FUND

                    OTHER THAN OPTIONS, FUTURES CONTRACTS AND

                            FUTURES CONTRACT OPTIONS


     1.   Promptly after each execution of a purchase of Securities by the Fund,
other than a purchase of an Option, a Futures Contract, or a Futures Contract
Option, the Fund shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, a Certificate, and
(ii) with respect to each purchase of Money Market Securities, a Certificate,
Oral Instructions or Written Instructions, specifying with respect to each such
purchase: (a) the Series to which such Securities are to be specifically
allocated; (b) the name of the issuer and the title of the Securities; (c) the
number of shares or the principal amount purchased and accrued interest, if any;
(d) the date of purchase and settlement; (e) the purchase price per unit; (f)
the total amount payable upon such purchase; (g) the name of the person from
whom or the broker through whom the purchase was made, and the name of the
clearing broker, if any; and (h) the name of the broker to whom payment is to be
made. The Custodian shall, upon receipt of such Securities purchased by or for
the Fund, pay to the broker specified in


                                     - 11 -
<PAGE>

the Certificate out of the moneys held for the account of such Series the total
amount payable upon such purchase, provided that the same conforms to the total
amount payable as set forth in such Certificate, Oral Instructions or Written
Instructions.

     2.   Promptly after each execution of a sale of Securities by the Fund,
other than a sale of any Option, Futures Contract, Futures Contract Option, or
any Reverse Repurchase Agreement, the Fund shall deliver such to the Custodian
(i) with respect to each sale of Securities which are not Money Market
Securities, a Certificate, and (ii) with respect to each sale of Money Market
Securities, a Certificate, Oral Instructions or Written Instructions, specifying
with respect to each such sale: (a) the Series to which such Securities were
specifically allocated; (b) the name of the issuer and the title of the
Security; (c) the number of shares or principal amount sold, and accrued
interest, if any; (d) the date of sale and settlement; (e) the sale price per
unit; (f) the total amount payable to the Fund upon such sale; (g) the name of
the broker through whom or the person to whom the sale was made, and the name of
the clearing broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. On the settlement date, the Custodian shall
deliver the Securities specifically allocated to such Series to the broker in
accordance with generally accepted street practices and as specified in the
Certificate upon receipt of the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions.

                                    ARTICLE V

                                     OPTIONS


     1.   Promptly after each execution of a purchase of any Option by the Fund
other than a closing purchase transaction the Fund shall deliver to the
Custodian a Certificate specifying with respect to each Option purchased: (a)
the Series to which such Option is specifically allocated; (b) the type of
Option (put or call); (c) the instrument, currency, or Security underlying such
Option and the number of Options, or the name of the in the case of an Index
Option, the index to which such Option relates and the number of Index Options
purchased; (d) the expiration date; (e) the exercise price; (f) the dates of
purchase and settlement; (g) the total amount payable by the Fund in connection
with such purchase; and (h) the name of the Clearing Member through whom such
Option was purchased. The Custodian shall pay, upon receipt of a Clearing
Member's statement confirming the purchase of such Option held by such Clearing
Member for the account of the Custodian (or any duly appointed and registered
nominee of the


                                     - 12 -
<PAGE>

Custodian) as custodian for the Fund, out of moneys held for the account of the
Series to which such Option is to be specifically allocated, the total amount
payable upon such purchase to the Clearing Member through whom the purchase was
made, provided that the same conforms to the total amount payable as set forth
in such Certificate.

     2.   Promptly after the execution of a sale of any Option purchased by the
Fund, other than a closing sale transaction, pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying with respect to
each such sale: (a) the Series to which such Option was specifically allocated;
(b) the type of Option (put or call); (c) the instrument, currency, or Security
underlying such Option and the number of Options, or the name of the issuer and
the title and number of shares subject to such Option or, in the case of a Index
Option, the index to which such Option relates and the number of Index Options
sold; (d) the date of sale; (e) the sale price; (f) the date of settlement; (g)
the total amount payable to the Fund upon such sale; and (h) the name of the
Clearing Member through whom the sale was made. The Custodian shall consent to
the delivery of the Option sold by the Clearing Member which previously supplied
the confirmation described in preceding paragraph 1 of this Article with respect
to such Option against payment to the Custodian of the total amount payable to
the Fund, provided that the same conforms to the total amount payable as set
forth in such Certificate.

     3.   Promptly after the exercise by the Fund of any Call Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Call Option: (a) the
Series to which such Call Option was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Call Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise price
per share; (f) the total amount to be paid by the Fund upon such exercise; and
(g) the name of the Clearing Member through whom such Call Option was exercised.
The Custodian shall, upon receipt of the Securities underlying the Call Option
which was exercised, pay out of the moneys held for the account of the Series to
which such Call Option was specifically allocated the total amount payable to
the Clearing Member through whom the Call Option was exercised, provided that
the same conforms to the total amount payable as set forth in such Certificate.

     4.   Promptly after the exercise by the Fund of any Put Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian
a Certificate specifying with respect to such Put Option: (a) the Series to
which such Put Option was specifically allocated; (b) the name of the issuer and
the title and number of shares subject to the Put Option; (c) the expiration
date; (d) the date of exercise


                                     - 13 -
<PAGE>

and settlement; (e) the exercise price per share; (f) the total amount to be
paid to the Fund upon such exercise; and (g) the name of the Clearing Member
through whom such Put Option was exercised. The Custodian shall, upon receipt of
the amount payable upon the exercise of the Put Option, deliver or direct a
Depository to deliver the Securities specifically allocated to such Series,
provided the same conforms to the amount payable to the Fund as set forth in
such Certificate.

     5.   Promptly after the exercise by the Fund of any Index Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Index Option: (a) the
Series to which such Index Option was specifically allocated; (b) the type of
Index Option (put or call); (c) the number of Options being exercised; (d) the
index to which such Option relates; (e) the expiration date; (f) the exercise
price; (g) the total amount to be received by the Fund in connection with such
exercise; and (h) the Clearing Member from whom such payment is to be received.

     6.   Whenever the Fund writes a Covered Call Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Covered Call Option: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of shares for which
the Covered Call Option was written and which underlie the same; (c) the
expiration date; (d) the exercise price; (e) the premium to be received by the
Fund; (f) the date such Covered Call Option was written; and (g) the name of the
Clearing Member through whom the premium is to be received. The Custodian shall
deliver or cause to be delivered, in exchange for receipt of the premium
specified in the Certificate with respect to such Covered Call Option, such
receipts as are required in accordance with the customs prevailing among
Clearing Members dealing in Covered Call Options and shall impose, or direct a
Depository to impose, upon the underlying Securities specified in the
Certificate specifically allocated to such Series such restrictions as may be
required by such receipts. Notwithstanding the foregoing, the Custodian has the
right, upon prior written notification to the Fund, at any time to refuse to
issue any receipts for Securities in the possession of the Custodian and not
deposited with a Depository underlying a Covered Call Option.

     7.   Whenever a Covered Call Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate instructing the Custodian to deliver, or
to direct the Depository to deliver, the Securities subject to such Covered Call
Option and specifying: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of shares subject
to the Covered Call Option; (c) the Clearing Member to whom the underlying


                                     - 14 -
<PAGE>

Securities are to be delivered; and (d) the total amount payable to the Fund
upon such delivery. Upon the return and/or cancellation of any receipts
delivered pursuant to paragraph 6 of this Article, the Custodian shall deliver,
or direct a Depository to deliver, the underlying Securities as specified in the
Certificate against payment of the amount to be received as set forth in such
Certificate.

     8.   Whenever the Fund writes a Put Option, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to such Put Option: (a)
the Series for which such Put Option was written; (b) the name of the issuer and
the title and number of shares for which the Put Option is written and which
underlie the same; (c) the expiration date; (d) the exercise price; (e) the
premium to be received by the Fund; (f) the date such Put Option is written; (g)
the name of the Clearing Member through whom the premium is to be received and
to whom a Put Option guarantee letter is to be delivered; (h) the amount of
cash, and/or the amount and kind of Securities, if any, specifically allocated
to such Series to be deposited in the Senior Security Account for such Series;
and (i) the amount of cash and/or the amount and kind of Securities specifically
allocated to such Series to be deposited into the Collateral Account for such
Series. The Custodian shall, after making the deposits into the Collateral
Account specified in the Certificate, issue a Put Option guarantee letter
substantially in the form utilized by the Custodian on the date hereof, and
deliver the same to the Clearing Member specified in the Certificate against
receipt of the premium specified in said Certificate. Notwithstanding the
foregoing, the Custodian shall be under no obligation to issue any Put Option
guarantee letter or similar document if it is unable to make any of the
representations contained therein.

     9.   Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Put Option was
written; (b) the name of the issuer and title and number of shares subject to
the Put Option; (c) the Clearing Member from whom the underlying Securities are
to be received; (d) the total amount payable by the Fund upon such delivery; (e)
the amount of cash and/or the amount and kind of Securities specifically
allocated to such Series to be withdrawn from the Collateral Account for such
Series and (f) the amount of cash and/or the amount and kind of Securities,
specifically allocated to such Series, if any, to be withdrawn from the Senior
Security Account. Upon the return and/or cancellation of any Put Option
guarantee letter or similar document issued by the Custodian in connection with
such Put Option, the Custodian shall pay out of the moneys held for the account
of the Series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set forth
in such Certificate, against delivery of such


                                     - 15 -
<PAGE>

Securities, and shall make the withdrawals specified in such Certificate.

     10.  Whenever the Fund writes an Index Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Index
Option: (a) the Series for which such Index Option was written; (b) whether such
Index Option is a put or a call; (c) the number of options written; (d) the
index to which such Option relates; (e) the expiration date; (f) the exercise
price; (g) the Clearing Member through whom such Option was written; (h) the
premium to be received by the Fund; (i) the amount of cash and/or the amount and
kind of Securities, if any, specifically allocated to such Series to be
deposited in the Senior Security Account for such Series; (j) the amount of cash
and/or the amount and kind of Securities, if any, specifically allocated to such
Series to be deposited in the Collateral Account for such Series; and (k) the
amount of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Margin Account, and the name in
which such account is to be or has been established. The Custodian shall, upon
receipt of the premium specified in the Certificate, make the deposits, if any,
into the Senior Security Account specified in the Certificate, and either (1)
deliver such receipts, if any, which the Custodian has specifically agreed to
issue, which are in accordance with the customs prevailing among Clearing
Members in Index Options and make the deposits into the Collateral Account
specified in the Certificate, or (2) make the deposits into the Margin Account
specified in the Certificate.

     11.  Whenever an Index Option written by the Fund and described in the
preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Index
Option: (a) the Series for which such Index Option was written; (b) such
information as may be necessary to identify the Index Option being exercised;
(c) the Clearing Member through whom such Index Option is being exercised; (d)
the total amount payable upon such exercise, and whether such amount is to be
paid by or to the Fund; (e) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Margin Account; and (f) the amount
of cash and/or amount and kind of Securities, if any, to be withdrawn from the
Senior Security Account for such Series; and the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from the Collateral
Account for such Series. Upon the return and/or cancellation of the receipt, if
any, delivered pursuant to the preceding paragraph of this Article, the
Custodian shall pay out of the moneys held for the account of the Series to
which such Stock Index Option was specifically allocated to the Clearing Member
specified in the Certificate the total amount payable, if any, as specified
therein.


                                     - 16 -
<PAGE>

     12.  Promptly after the execution of a purchase or sale by the Fund of any
Option identical to a previously written Option described in paragraphs, 6, 8 or
10 of this Article in a transaction expressly designated as a "Closing Purchase
Transaction" or a "Closing Sale Transaction", the Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to the Option being
purchased: (a) that the transaction is a Closing Purchase Transaction or a
Closing Sale Transaction; (b) the Series for which the Option was written; (c)
the instrument, currency, or Security subject to the Option, or, in the case of
an Index Option, the index to which such Option relates and the number of
Options held; (d) the exercise price; (e) the premium to be paid by or the
amount to be paid to the Fund; (f) the expiration date; (g) the type of Option
(put or call); (h) the date of such purchase or sale; (i) the name of the
Clearing Member to whom the premium is to be paid or from whom the amount is to
be received; and (j) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account, a specified
Margin Account, or the Senior Security Account for such Series. Upon the
Custodian's payment of the premium or receipt of the amount, as the case may be,
specified in the Certificate and the return and/or cancellation of any receipt
issued pursuant to paragraphs 6, 8 or 10 of this Article with respect to the
Option being liquidated through the Closing Purchase Transaction or the Closing
Sale Transaction, the Custodian shall remove, or direct a Depository to remove,
the previously imposed restrictions on the Securities underlying the Call
Option.

     13.  Upon the expiration, exercise or consummation of a Closing Purchase
Transaction with respect to any Option purchased or written by the Fund and
described in this Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3 Article III herein, and
upon the return and/or cancellation of any receipts issued by the Custodian,
shall make such withdrawals from the Collateral Account, and the Margin Account
and/or the Senior Security Account as may be specified in a Certificate received
in connection with such expiration, exercise, or consummation.

     14.  Securities acquired by the Fund through the exercise of an Option
described in this Article shall be subject to Article IV hereof.


                                     - 17 -
<PAGE>

                                   ARTICLE VI

                                FUTURES CONTRACTS


     1.   Whenever the Fund shall enter into a Futures Contract, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Futures
Contract, (or with respect to any number of identical Futures Contract(s)): (a)
the Series for which the Futures Contract is being entered; (b) the category of
Futures Contract (the name of the underlying index or financial instrument); (c)
the number of identical Futures Contracts entered into; (d) the delivery or
settlement date of the Futures Contract(s); (e) the date the Futures Contract(s)
was (were) entered into and the maturity date; (f) whether the Fund is buying
(going long) or selling (going short) such Futures Contract(s); (g) the amount
of cash and/or the amount and kind of Securities, if any, to be deposited in the
Senior Security Account for such Series; (h) the name of the broker, dealer, or
futures commission merchant through whom the Futures Contract was entered into;
and (i) the amount of fee or commission, if any, to be paid and the name of the
broker, dealer, or futures commission merchant to whom such amount is to be
paid. The Custodian shall make the deposits, if any, to the Margin Account in
accordance with the terms and conditions of the Margin Account Agreement. The
Custodian shall make payment out of the moneys specifically allocated to such
Series of the fee or commission, if any, specified in the Certificate and
deposit in the Senior Security Account for such Series the amount of cash and/or
the amount and kind of Securities specified in said Certificate.

     2.   (a) Any variation margin payment or similar payment required to be
made by the Fund to a broker, dealer, or futures commission merchant with
respect to an outstanding Futures Contract shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.

          (b) Any variation margin payment or similar payment from a broker,
dealer, or futures commission merchant to the Fund with respect to an
outstanding Futures Contract shall be received and dealt with by the Custodian
in accordance with the terms and conditions of the Margin Account Agreement.

     3.   Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian prior to the delivery or
settlement date a Certificate specifying: (a) the Futures Contract and the
Series to which the same relates; (b) with respect to an Index Futures Contract,
the total cash settlement amount to be paid


                                     - 18 -
<PAGE>

or received, and with respect to a Financial Futures Contract, the Securities
and/or amount of cash to be delivered or received; (c) the broker, dealer, or
futures commission merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be withdrawn from the
Senior Security Account for such Series. The Custodian shall make the payment or
delivery specified in the Certificate, and delete such Futures Contract from the
statements delivered to the Fund pursuant to paragraph 3 of Article III herein.

     4.   Whenever the Fund shall enter into a Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the items of information required in a
Certificate described in paragraph 1 of this Article, and (b) the Futures
Contract being offset. The Custodian shall make payment out of the money
specifically allocated to such Series of the fee or commission, if any,
specified in the Certificate and delete the Futures Contract being offset from
the statements delivered to the Fund pursuant to paragraph 3 of Article III
herein, and make such withdrawals from the Senior Security Account for such
Series as may be specified in such Certificate. The withdrawals, if any, to be
made from the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.



                                   ARTICLE VII

                            FUTURES CONTRACT OPTIONS


     1.   Promptly after the execution of a purchase of any Futures Contract
Option by the Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a) the Series to which
such Option is specifically allocated; (b) the type of Futures Contract Option
(put or call); (c) the type of Futures Contract and such other information as
may be necessary to identify the Futures Contract underlying the Futures
Contract Option purchased; (d) the expiration date; (e) the exercise price; (f)
the dates of purchase and settlement; (g) the amount of premium to be paid by
the Fund upon such purchase; (h) the name of the broker or futures commission
merchant through whom such option was purchased; and (i) the name of the broker,
or futures commission merchant, to whom payment is to be made. The Custodian
shall pay out of the moneys specifically allocated to such Series the total
amount to be paid upon such purchase to the broker or futures commissions
merchant through whom the purchase was made, provided that the same conforms to
the amount set forth in such Certificate.


                                     - 19 -
<PAGE>

     2.   Promptly after the execution of a sale of any Futures Contract Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to
the Custodian a Certificate specifying with respect to each such sale: (a)
Series to which such Futures Contract Option was specifically allocated; (b) the
type of Future Contract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the broker of futures commission merchant through
whom the sale was made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the Custodian of the
total amount payable to the Fund, provided the same conforms to the total amount
payable as set forth in such Certificate.

     3.   Whenever a Futures Contract Option purchased by the Fund pursuant to
paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Futures
Contract Option was specifically allocated; (b) the particular Futures Contract
Option (put or call) being exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the date of exercise; (e) the name
of the broker or futures commission merchant through whom the Futures Contract
Option is exercised; (f) the net total amount, if any, payable by the Fund; (g)
the amount, if any, to be received by the Fund; and (h) the amount of cash
and/or the amount and kind of Securities to be deposited in the Senior Security
Account for such Series. The Custodian shall make, out of the moneys and
Securities specifically allocated to such Series, the payments of money, if any,
and the deposits of Securities, if any, into the Senior Security Account as
specified in the Certificate. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.

     4.   Whenever the Fund writes a Futures Contract Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the Series for which such Futures Contract Option
was written; (b) the type of Futures Contract Option (put or call); (c) the type
of Futures Contract and such other information as may be necessary to identify
the Futures Contract underlying the Futures Contract Option; (d) the expiration
date; (e) the exercise price; (f) the premium to be received by the Fund; (g)
the name of the broker or futures commission merchant through whom the premium
is to be received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account for such
Series. The Custodian shall, upon receipt of the premium specified in


                                     - 20 -
<PAGE>

the Certificate, make out of the moneys and Securities specifically allocated to
such Series the deposits into the Senior Security Account, if any, as specified
in the Certificate. The deposits, if any, to be made to the Margin Account shall
be made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.

     5.   Whenever a Futures Contract Option written by the Fund which is a call
is exercised, the Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the Series to which such Futures Contract Option was
specifically allocated; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying the Futures Contract Option; (d) the
name of the broker or futures commission merchant through whom such Futures
Contract Option was exercised; (e) the net total amount, if any, payable to the
Fund upon such exercise; (f) the net total amount, if any, payable by the Fund
upon such exercise; and (g) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account for such Series. The
Custodian shall, upon its receipt of the net total amount payable to the Fund,
if any, specified in such Certificate make the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.

     6.   Whenever a Futures Contract Option which is written by the Fund and
which is a put is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Option was specifically
allocated; (b) the particular Futures Contract Option exercised; (c) the type of
Futures Contract underlying such Futures Contract Option; (d) the name of the
broker or futures commission merchant through whom such Futures Contract Option
is exercised; (e) the net total amount, if any, payable to the Fund upon such
exercise; (f) the net total amount, if any, payable by the Fund upon such
exercise; and (g) the amount and kind of Securities and/or cash to be withdrawn
from or deposited in, the Senior Security Account for such Series, if any. The
Custodian shall, upon its receipt of the net total amount payable to the Fund,
if any, specified in the Certificate, make out of the moneys and Securities
specifically allocated to such Series, the payments, if any, and the deposits,
if any, into the Senior Security Account as specified in the Certificate. The
deposits to and/or withdrawals from the Margin Account, if any, shall be made by
the Custodian in accordance with the terms and conditions of the Margin Account
Agreement.


                                     - 21 -
<PAGE>

     7.   Promptly after the execution by the Fund of a purchase of any Futures
Contract Option identical to a previously written Futures Contract Option
described in this Article in order to liquidate its position as a writer of such
Futures Contract Option, the Fund shall deliver to the Custodian a Certificate
specifying with respect to the Futures Contract Option being purchased: (a) the
Series to which such Option is specifically allocated; (b) that the transaction
is a closing transaction; (c) the type of Future Contract and such other
information as may be necessary to identify the Futures Contract underlying the
Futures Option Contract; (d) the exercise price; (e) the premium to be paid by
the Fund; (f) the expiration date; (g) the name of the broker or futures
commission merchant to whom the premium is to be paid; and (h) the amount of
cash and/or the amount and kind of Securities, if any, to be withdrawn from the
Senior Security Account for such Series. The Custodian shall effect the
withdrawals from the Senior Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.

     8.   Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or purchased by
the Fund and described in this Article, the Custodian shall (a) delete such
Futures Contract Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein and, (b) make such withdrawals from and/or in
the case of an exercise such deposits into the Senior Security Account as may be
specified in a Certificate. The deposits to and/or withdrawals from the Margin
Account, if any, shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.

     9.   Futures Contracts acquired by the Fund through the exercise of a
Futures Contract Option described in this Article shall be subject to Article VI
hereof.



                                  ARTICLE VIII

                                   SHORT SALES


     1.   Promptly after the execution of any short sales of Securities by any
Series of the Fund, the Fund shall deliver to the Custodian a Certificate
specifying: (a) the Series for which such short sale was made; (b) the name of
the issuer and the title of the Security; (c) the number of shares or principal
amount sold, and accrued interest or dividends, if any; (d) the dates of the
sale and settlement; (e) the sale


                                     - 22 -
<PAGE>

price per unit; (f) the total amount credited to the Fund upon such sale, if
any, (g) the amount of cash and/or the amount and kind of Securities, if any,
which are to be deposited in a Margin Account and the name in which such Margin
Account has been or is to be established; (h) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in a Senior Security
Account, and (i) the name of the broker through whom such short sale was made.
The Custodian shall upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to the Fund upon such sale, if any,
as specified in the Certificate is held by such broker for the account of the
Custodian (or any nominee of the Custodian) as custodian of the Fund, issue a
receipt or make the deposits into the Margin Account and the Senior Security
Account specified in the Certificate.

     2.   Promptly after the execution of a purchase to close-out any short sale
of Securities, the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such closing out: (a) the Series for which such
transaction is being made; (b) the name of the issuer and the title of the
Security; (c) the number of shares or the principal amount, and accrued interest
or dividends, if any, required to effect such closing-out to be delivered to the
broker; (d) the dates of closing-out and settlement; (e) the purchase price per
unit; (f) the net total amount payable to the Fund upon such closing-out; (g)
the net total amount payable to the broker upon such closing-out; (h) the amount
of cash and the amount and kind of Securities to be withdrawn, if any, from the
Margin Account; (i) the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the Senior Security Account; and (j) the name of
the broker through whom the Fund is effecting such closing-out. The Custodian
shall, upon receipt of the net total amount payable to the Fund upon such
closing-out, and the return and/ or cancellation of the receipts, if any, issued
by the Custodian with respect to the short sale being closed-out, pay out of the
moneys held for the account of the Fund to the broker the net total amount
payable to the broker, and make the withdrawals from the Margin Account and the
Senior Security Account, as the same are specified in the Certificate.


                                     - 23 -
<PAGE>

                                   ARTICLE IX

                          REVERSE REPURCHASE AGREEMENTS

     1.   Promptly after the Fund enters a Reverse Repurchase Agreement with
respect to Securities and money held by the Custodian hereunder, the Fund shall
deliver to the Custodian a Certificate, or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions, or
Written Instructions specifying: (a) the Series for which the Reverse Repurchase
Agreement is entered; (b) the total amount payable to the Fund in connection
with such Reverse Repurchase Agreement and specifically allocated to such
Series; (c) the broker, dealer, or financial institution with whom the Reverse
Repurchase Agreement is entered; (d) the amount and kind of Securities to be
delivered by the Fund to such broker, dealer, or financial institution; (e) the
date of such Reverse Repurchase Agreement; and (f) the amount of cash and/or the
amount and kind of Securities, if any, specifically allocated to such Series to
be deposited in a Senior Security Account for such Series in connection with
such Reverse Repurchase Agreement. The Custodian shall, upon receipt of the
total amount payable to the Fund specified in the Certificate, Oral
Instructions, or Written Instructions make the delivery to the broker, dealer,
or financial institution and the deposits, if any, to the Senior Security
Account, specified in such Certificate, Oral Instructions, or Written
Instructions.

     2.   Upon the termination of a Reverse Repurchase Agreement described in
preceding paragraph 1 of this Article, the Fund shall promptly deliver a
Certificate or, in the event such Reverse Repurchase Agreement is a Money Market
Security, a Certificate, Oral Instructions, or Written Instructions to the
Custodian specifying: (a) the Reverse Repurchase Agreement being terminated and
the Series for which same was entered; (b) the total amount payable by the Fund
in connection with such termination; (c) the amount and kind of Securities to be
received by the Fund and specifically allocated to such Series in connection
with such termination; (d) the date of termination; (e) the name of the broker,
dealer, or financial institution with whom the Reverse Repurchase Agreement is
to be terminated; and (f) the amount of cash and/or the amount and kind of
Securities to be withdrawn from the Senior Securities Account for such Series.
The Custodian shall, upon receipt of the amount and kind of Securities to be
received by the Fund specified in the Certificate, Oral Instructions, or Written
Instructions, make the payment to the broker, dealer, or financial institution
and the withdrawals, if any, from the Senior Security Account, specified in such
Certificate, Oral Instructions, or Written Instructions.


                                     - 24 -
<PAGE>

     3.   The Certificates, Oral Instructions, or Written Instructions described
in paragraphs 1 and 2 of this Article may with respect to any particular Reverse
Repurchase Agreement be combined and delivered to the Custodian at the time of
entering into such Reverse Repurchase Agreement.


                                    ARTICLE X

                    LOANS OF PORTFOLIO SECURITIES OF THE FUND


     1.   Promptly after each loan of portfolio Securities specifically
allocated to a Series held by the Custodian hereunder, the Fund shall deliver or
cause to be delivered to the Custodian a Certificate specifying with respect to
each such loan: (a) the Series to which the loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the Securities, (c) the
number of shares or the principal amount loaned, (d) the date of loan and
delivery, (e) the total amount to be delivered to the Custodian against the loan
of the Securities, including the amount of cash collateral and the premium, if
any, separately identified, and (f) the name of the broker, dealer, or financial
institution to which the loan was made. The Custodian shall deliver the
Securities thus designated to the broker, dealer or financial institution to
which the loan was made upon receipt of the total amount designated in the
Certificate as to be delivered against the loan of Securities. The Custodian may
accept payment in connection with a delivery otherwise than through the
Book-Entry System or a Depository only in the form of a certified or bank
cashier's check payable to the order of the Fund or the Custodian drawn on New
York Clearing House funds.

     2.   In connection with each termination of a loan of Securities by the
Fund, the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan termination and return of
Securities: (a) the Series to which the loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the Securities to be
returned, (c) the number of shares or the principal amount to be returned, (d)
the date of termination, (e) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting credits
as described in said Certificate), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the Certificate.


                                     - 25 -
<PAGE>

                                   ARTICLE XI

                   CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY

                        ACCOUNTS, AND COLLATERAL ACCOUNTS


     1.   The Custodian shall establish a Senior Security Account and from time
to time make such deposits thereto, or withdrawals therefrom, as specified in a
Certificate. Such Certificate shall specify the Series for which such deposit or
withdrawal is to be made and the amount of cash and/or the amount and kind of
Securities specifically allocated to such Series to be deposited in, or
withdrawn from, such Senior Security Account for such Series. In the event that
the Fund fails to specify in a Certificate the Series, the name of the issuer,
the title and the number of shares or the principal amount of any particular
Securities to be deposited by the Custodian into, or withdrawn from, a Senior
Securities Account, the Custodian shall be under no obligation to make any such
deposit or withdrawal and shall promptly notify the Fund that no such deposit
has been made.

     2.   The Custodian shall make deliveries or payments from a Margin Account
to the broker, dealer, futures commission merchant or Clearing Member in whose
name, or for whose benefit, the account was established as specified in the
Margin Account Agreement.

     3.   Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.

     4.   The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law the Custodian may enforce
its lien and realize on any such property whenever the Custodian has made
payment or delivery pursuant to any Put Option guarantee letter or similar
document or any receipt issued hereunder by the Custodian. In the event the
Custodian should realize on any such property net proceeds which are less than
the Custodian's obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed the Custodian by
the Fund within the scope of Article XIV herein.

     5.   On each business day the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the


                                     - 26 -
<PAGE>

Margin Account; (b) the amount and kind of Securities held therein; and (c) the
amount of money held therein. The Custodian shall make available upon request to
any broker, dealer, or futures commission merchant specified in the name of a
Margin Account a copy of the statement furnished the Fund with respect to such
Margin Account.

     6.   The Custodian shall establish a Collateral Account and from time to
time shall make such deposits thereto as may be specified in a Certificate.
Promptly after the close of business on each business day in which cash and/or
Securities are maintained in a Collateral Account for any Series, the Custodian
shall furnish the Fund with a statement with respect to such Collateral Account
specifying the amount of cash and/or the amount and kind of Securities held
therein. No later than the close of business next succeeding the delivery to the
Fund of such statement, the Fund shall furnish to the Custodian a Certificate or
Written Instructions specifying the then market value of the Securities
described in such statement. In the event such then market value is indicated to
be less than the Custodian's obligation with respect to any outstanding Put
Option guarantee letter or similar document, the Fund shall promptly specify in
a Certificate the additional cash and/or Securities to be deposited in such
Collateral Account to eliminate such deficiency.



                                   ARTICLE XII

                      PAYMENT OF DIVIDENDS OR DISTRIBUTIONS


     1.   The Fund shall furnish to the Custodian a copy of the resolution of
the Board of Trustees of the Fund, certified by the Secretary, the Clerk, any
Assistant Secretary or any Assistant Clerk, either (i) setting forth with
respect to the Series specified therein the date of the declaration of a
dividend or distribution, the date of payment thereof, the record date as of
which shareholders entitled to payment shall be determined, the amount payable
per Share of such Series to the shareholders of record as of that date and the
total amount payable to the Dividend Agent and any sub-dividend agent or
co-dividend agent of the Fund on the payment date, or (ii) authorizing with
respect to the Series specified therein and the declaration of dividends and
distributions thereon the Custodian to rely on Oral Instructions, Written
Instructions, or a Certificate setting forth the date of the declaration of such
dividend or distribution, the date of payment thereof, the record date as of
which shareholders entitled to payment shall be determined, the amount payable
per Share of such Series to the shareholders of record as of that date and the
total amount payable to the Dividend Agent on the payment date.


                                     - 27 -
<PAGE>

     2.   Upon the payment date specified in such resolution, Oral Instructions,
Written Instructions, or Certificate, as the case may be, the Custodian shall
pay to the Transfer Agent Account out of the moneys held for the account of the
Series specified therein the total amount payable to the Dividend Agent and any
sub-dividend agent or co-dividend agent of the Fund with respect to such Series.




                                  ARTICLE XIII

                          SALE AND REDEMPTION OF SHARES


     1.   Whenever the Fund shall sell any Shares, it shall deliver or cause to
be delivered, to the Custodian a Certificate duly specifying:

          (a)  The Series, the number of Shares sold, trade date, and price; and

          (b)  The amount of money to be received by the Custodian for the sale
of such Shares and specifically allocated to the separate account in the name of
such Series.

     2.   Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account in the name of the Series for
which such money was received.

     3.   Upon issuance of any Shares of any Series the Custodian shall pay, out
of the money held for the account of such Series, all original issue or other
taxes required to be paid by the Fund in connection with such issuance upon the
receipt of a Certificate specifying the amount to be paid.

     4.   Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder in
connection with a redemption of any Shares, it shall furnish, or cause to be
furnished, to the Custodian a Certificate specifying:

          (a)  The number and Series of Shares redeemed; and

          (b)  The amount to be paid for such Shares.

     5.   Upon receipt of an advice from an Authorized Person setting forth the
Series and number of Shares received by the Transfer Agent for redemption and
that such Shares are in good form for redemption, the Custodian shall make
payment to the Transfer Agent Account out of the moneys held in the separate
account in the name of the Series the total amount


                                     - 28 -
<PAGE>

specified in the Certificate issued pursuant to the foregoing paragraph 4 of
this Article.

                                   ARTICLE XIV

                           OVERDRAFTS OR INDEBTEDNESS


     1.   If the Custodian, should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the moneys held by
the Custodian in the separate account for such Series shall be insufficient to
pay the total amount payable upon a purchase of Securities specifically
allocated to such Series, as set forth in a Certificate, Oral Instructions, or
Written Instructions or which results in an overdraft in the separate account of
such Series for some other reason, or if the Fund is for any other reason
indebted to the Custodian with respect to a Series, (except a borrowing for
investment or for temporary or emergency purposes using Securities as collateral
pursuant to a separate agreement and subject to the provisions of paragraph 2 of
this Article), such overdraft or indebtedness shall be deemed to be a loan made
by the Custodian to the Fund for such Series payable on demand and shall bear
interest from the date incurred at a rate per annum (based on a 360-day year for
the actual number of days involved) equal to the Federal Funds Rate plus 1/2%,
such rate to be adjusted on the effective date of any change in such Federal
Funds Rate but in no event to be less than 6% per annum. In addition, the Fund
hereby agrees that the Custodian shall have a continuing lien and security
interest in the aggregate amount of such overdrafts and indebtedness as may from
time to time exist in and to any property specifically allocated to such Series
at any time held by it for the benefit of such Series or in which the Fund may
have an interest which is then in the Custodian's possession or control or in
possession or control of any third party acting in the Custodian's behalf. The
Fund authorizes the Custodian, in its sole discretion, at any time to charge any
such overdraft or indebtedness together with interest due thereon against any
money balance of account standing to such Series' credit on the Custodian's
books. In addition, the Fund hereby covenants that on each Business Day on which
either it intends to enter a Reverse Repurchase Agreement and/ or otherwise
borrow from a third party, or which next succeeds a Business Day on which at the
close of business the Fund had outstanding a Reverse Repurchase Agreement or
such a borrowing, it shall prior to 9 a.m., New York City time, advise the
Custodian, in writing, of each such borrowing, shall specify the Series to which
the same relates, and shall not incur any indebtedness, including pursuant to
any Reverse Repurchase Agreement, not so specified other than from the
Custodian.

     2.   The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a


                                     - 29 -
<PAGE>

separate agreement, the Custodian) from which it borrows money for investment or
for temporary or emergency purposes using Securities held by the Custodian
hereunder as collateral for such borrowings, a notice or undertaking in the form
currently employed by any such bank setting forth the amount which such bank
will loan to the Fund against delivery of a stated amount of collateral. The
Fund shall promptly deliver to the Custodian a Certificate specifying with
respect to each such borrowing: (a) the Series to which such borrowing relates;
(b) the name of the bank, (c) the amount and terms of the borrowing, which may
be set forth by incorporating by reference an attached promissory note, duly
endorsed by the Fund, or other loan agreement, (d) the time and date, if known,
on which the loan is to be entered into, (e) the date on which the loan becomes
due and payable, (f) the total amount payable to the Fund on the borrowing date,
(g) the market value of Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of shares or the
principal amount of any particular Securities, and (h) a statement specifying
whether such loan is for investment purposes or for temporary or emergency
purposes and that such loan is in conformance with the Investment Company Act of
1940 and the Fund's prospectus. The Custodian shall deliver on the borrowing
date specified in a Certificate the specified collateral and the executed
promissory note, if any, against delivery by the lending bank of the total
amount of the loan payable, provided that the same conforms to the total amount
payable as set forth in the Certificate. The Custodian may, at the option of the
lending bank, keep such collateral in its possession, but such collateral shall
be subject to all rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall deliver such Securities
as additional collateral as may be specified in a Certificate to collateralize
further any transaction described in this paragraph. The Fund shall cause all
Securities released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails to specify
in a Certificate the Series, the name of the issuer, the title and number of
shares or the principal amount of any particular Securities to be delivered as
collateral by the Custodian, to any such bank, the Custodian shall not be under
any obligation to deliver any Securities.


                                     - 30 -
<PAGE>

                                   ARTICLE XV

                            CONCERNING THE CUSTODIAN


     1.   The Custodian shall use reasonable care in the performance of its
duties hereunder, and, except as hereinafter provided, neither the Custodian nor
its nominee shall be liable for any loss or damage, including counsel fees,
resulting from its action or omission to act or otherwise, either hereunder or
under any Margin Account Agreement, except for any such loss or damage arising
out of its own negligence, bad faith, or willful misconduct or that of its
officers, employees, or agents. The Custodian may, with respect to questions of
law arising hereunder or under any Margin Account Agreement, apply for and
obtain the advice and opinion of counsel to the Fund, at the expense of the
Fund, or of its own counsel, at its own expense, and shall be fully protected
with respect to anything done or omitted by it in good faith in conformity with
such advice or opinion. The Custodian shall be liable to the Fund for any loss
or damage resulting from the use of the Book-Entry System or any Depository
arising by reason of any negligence or willful misconduct on the part of the
Custodian or any of its employees or agents.

     2.   Notwithstanding the foregoing, the Custodian shall be under no
obligation to inquire into, and shall not be liable for:

          (a)  The validity (but not the authenticity) of the issue of any
Securities purchased, sold, or written by or for the Fund, the legality of the
purchase, sale or writing thereof, or the propriety of the amount paid or
received therefor, as specified in a Certificate, Oral Instructions, or Written
Instructions;

          (b)  The legality of the sale or redemption of any Shares, or the
propriety of the amount to be received or paid therefor, as specified in a
Certificate;

          (c)  The legality of the declaration or payment of any dividend by the
Fund, as specified in a resolution, Certificate, Oral Instructions, or Written
Instructions;

          (d)  The legality of any borrowing by the Fund using Securities as
collateral;

          (e)  The legality of any loan of portfolio Securities, nor shall the
Custodian be under any duty or obligation to see to it that the cash collateral
delivered to it by a broker, dealer, or financial institution or held by it at
any time as a result of such loan of portfolio Securities of the


                                     - 31 -
<PAGE>

Fund is adequate collateral for the Fund against any loss it might sustain as a
result of such loan, except that this subparagraph shall not excuse any
liability the Custodian may have for failing to act in accordance with Article X
hereof or any Certificate, Oral Instructions, or Written Instructions given in
accordance with this Agreement. The Custodian specifically, but not by way of
limitation, shall not be under any duty or obligation periodically to check or
notify the Fund that the amount of such cash collateral held by it for the Fund
is sufficient collateral for the Fund, but such duty or obligation shall be the
sole responsibility of the Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial institution to
which portfolio Securities of the Fund are lent pursuant to Article X of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify the Fund in the event that such dividends or interest are not paid and
received when due; or

          (f)  The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account or Collateral
Account in connection with transactions by the Fund, except that this
sub-paragraph shall not excuse any liability the Custodian may have for failing
to establish, maintain, make deposits to or withdrawals from such accounts in
accordance with this Agreement. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer, futures commission merchant
or Clearing Member makes payment to the Fund of any variation margin payment or
similar payment which the Fund may be entitled to receive from such broker,
dealer, futures commission merchant or Clearing Member, to see that any payment
received by the Custodian from any broker, dealer, futures commission merchant
or Clearing Member is the amount the Fund is entitled to receive, or to notify
the Fund of the Custodian's receipt or non-receipt of any such payment.

     3.   The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives such money directly or by the final
crediting of the account representing the Fund's interest at the Book-Entry
System or the Depository.

     4.   With respect to Securities held in a Depository, except as otherwise
provided in paragraph 5(b) of Article III hereof, the Custodian shall have no
responsibility and shall not be liable for ascertaining or acting upon any
calls, conversions, exchange offers, tenders, interest rate changes or similar
matters relating to such Securities, unless the Custodian shall have actually
received timely notice from the


                                     - 32 -
<PAGE>

Depository in which such Securities are held. In no event shall the Custodian
have any responsibility or liability for the failure of a Depository to collect,
or for the late collection or late crediting by a Depository of any amount
payable upon Securities deposited in a Depository which may mature or be
redeemed, retired, called or otherwise become payable. However, upon receipt of
a Certificate from the Fund of an overdue amount on Securities held in a
Depository the Custodian shall make a claim against the Depository on behalf of
the Fund, except that the Custodian shall not be under any obligation to appear
in, prosecute or defend any action suit or proceeding in respect to any
Securities held by a Depository which in its opinion may involve it in expense
or liability, unless indemnity satisfactory to it against all expense and
liability be furnished as often as may be required, or alternatively, the Fund
shall be subrogated to the rights of the Custodian with respect to such claim
against the Depository should it so request in a Certificate. This paragraph
shall not, however, excuse any failure by the Custodian to act in accordance
with a Certificate, Oral Instructions, or Written Instructions given in
accordance with this Agreement.

     5.   The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Fund from the Transfer Agent of
the Fund nor to take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.

     6.   The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount if the Securities upon which such amount is
payable are in default, or if payment is refused after the Custodian has timely
and properly, in accordance with this Agreement, made due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action, but the Custodian
shall have such a duty if the Securities were not in default on the payable date
and the Custodian failed to timely and properly make such demand for payment and
such failure is the reason for the non-receipt of payment.

     7.   The Custodian may appoint one or more banking institutions as
Sub-Custodian or Sub-Custodians, or as Co-Custodian or Co-Custodians including,
but not limited to, banking institutions located in foreign countries, of
Securities and moneys at any time owned by the Fund, upon such terms and
conditions as may be approved in a Certificate or contained in an agreement
executed by the Custodian, the Fund and the appointed institution.


                                     - 33 -
<PAGE>

     8.   The Custodian agrees to indemnify the Fund against and save the Fund
harmless from all liability, claims, losses and demands whatsoever, including
attorney's fees, howsoever arising or incurred because of the negligence, bad
faith or willful misconduct of any Sub-Custodian of the Securities and moneys
owned by the Fund, provided such Sub-Custodian is a banking institution located
in a foreign country and appointed by the Custodian pursuant to paragraph 7 of
this Article.

     9.   The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it, for
the account of the Fund and specifically allocated to a Series are such as
properly may be held by the Fund or such Series under the provisions of its then
current prospectus, or (b) to ascertain whether any transactions by the Fund,
whether or not involving the Custodian, are such transactions as may properly be
engaged in by the Fund.

     10.  The Custodian shall be entitled to receive and the Fund agrees to pay
to the Custodian all reasonable out-of-pocket expenses and such compensation as
may be agreed upon from time to time between the Custodian and the Fund. The
Custodian may charge such compensation, and any such expenses with respect to a
Series incurred by the Custodian in the performance of its duties under this
Agreement against any money specifically allocated to such Series. The Custodian
shall also be entitled to charge against any money held by it for the account of
a Series the amount of any loss, damage, liability or expense, including counsel
fees, for which it shall be entitled to reimbursement under the provisions of
this Agreement attributable to, or arising out of, its serving as Custodian for
such Series. The expenses for which the Custodian shall be entitled to
reimbursement hereunder shall include, but are not limited to, the expenses of
sub-custodians and foreign branches of the Custodian incurred in settling
outside of New York City transactions involving the purchase and sale of
Securities of the Fund. Notwithstanding the foregoing or anything else contained
in this Agreement to the contrary, the Custodian shall, prior to effecting any
charge for compensation, expenses, or any overdraft or indebtedness or interest
thereon, submit an invoice therefor to the Fund.

     11.  The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing, Oral Instructions, or Written Instructions
received by the Custodian and reasonably believed by the Custodian to be
genuine. The Fund agrees to forward to the Custodian a Certificate or facsimile
thereof confirming Oral Instructions or Written Instructions in such manner so
that such Certificate or facsimile thereof is received by the Custodian, whether
by hand delivery, telecopier or other similar device,


                                     - 34 -
<PAGE>

or otherwise, by the close of business of the same day that such Oral
Instructions or Written Instructions are given to the Custodian. The Fund agrees
that the fact that such confirming instructions are not received by the
Custodian shall in no way affect the validity of the transactions or
enforceability of the transactions thereby authorized by the Fund. The Fund
agrees that the Custodian shall incur no liability to the Fund in acting upon
Oral Instructions or Written Instructions given to the Custodian hereunder
concerning such transactions provided such instructions reasonably appear to
have been received from an Authorized Person.

     12.  The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member. This paragraph shall not excuse any failure by the Custodian to
have acted in accordance with any Margin Agreement it has executed or any
Certificate, Oral Instructions, or Written Instructions given in accordance with
this Agreement.

     13.  The books and records pertaining to the Fund, as described in Appendix
E hereto, which are in the possession of the Custodian shall be the property of
the Fund. Such books and records shall be prepared and maintained by the
Custodian as required by the Investment Company Act of 1940, as amended, and
other applicable securities laws and rules and regulations. The Fund, or the
Fund's authorized representatives, shall have access to such books and records
during the Custodian's normal business hours. Upon the reasonable request of the
Fund, copies of any such books and records shall be provided by the Custodian to
the Fund or the Fund's authorized representative, and the Fund shall reimburse
the Custodian its expenses of providing such copies. Upon reasonable request of
the Fund, the Custodian shall provide in hard copy or on micro-film, whichever
the Custodian elects, any records included in any such delivery which are
maintained by the Custodian on a computer disc, or are similarly maintained, and
the Fund shall reimburse the Custodian for its expenses of  providing such hard
copy or micro-film.

     14.  The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry System,
each Depository or O.C.C., and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.


                                     - 35 -
<PAGE>

     15.  The Custodian shall furnish upon request annually to the Fund a letter
prepared by the Custodian's accountants with respect to the Custodian's internal
systems and controls in the form generally provided by the Custodian to other
investment companies for which the Custodian acts as custodian.

     16.  The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising out of, or related to, the
Custodian's performance of its obligations under this Agreement, except for any
such liability, claim, loss and demand arising out of the Custodian's own
negligence, bad faith, or willful misconduct or that of its officers, employees,
or agents.

     17.  Subject to the foregoing provisions of this Agreement, the Custodian
shall deliver and receive Securities, and receipts with respect to such
Securities, and shall make and receive payments only in accordance with the
customs prevailing from time to time among brokers or dealers in such Securities
and, except as may otherwise be provided by this Agreement or as may be in
accordance with such customs, shall make payment for Securities only against
delivery thereof and deliveries of Securities only against payment therefor.

     18.  The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.


                                     ARTICLE XVI

                                     TERMINATION

     1.   Except as provided in paragraph 3 of this Article, this Agreement
shall continue until terminated by either the Custodian giving to the Fund, or
the Fund giving to the Custodian, a notice in writing specifying the date of
such termination, which date shall be not less than 60 days after the date of
the giving of such notice. In the event such notice or a notice pursuant to
paragraph 3 of this Article is given by the Fund, it shall be accompanied by a
copy of a resolution of the Board of Trustees of the Fund, certified by an
Officer and the Secretary or an Assistant Secretary of the Fund, electing to
terminate this Agreement and designating a successor custodian or custodians,
each of which shall be eligible to serve as a custodian for the securities of a
management investment company under the Investment Company Act of 1940. In the
event such notice is given by the Custodian, the Fund shall, on or before the
termination date, deliver to the Custodian a copy of a resolution of the Board
of Trustees


                                     - 36 -
<PAGE>

of the Fund, certified by the Secretary, the Clerk, any Assistant Secretary or
any Assistant Clerk, designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may designate a successor
custodian which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the date set forth in
such notice this Agreement shall terminate, and the Custodian shall upon receipt
of a notice of acceptance by the successor custodian on that date deliver
directly to the successor custodian all Securities and moneys then owned by the
Fund and held by it as Custodian, after deducting all fees, expenses and other
amounts for the payment or reimbursement of which it shall then be entitled.

     2.   If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon the
date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and moneys then owned
by the Fund be deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book Entry System which
cannot be delivered to the Fund to hold such Securities hereunder in accordance
with this Agreement.

     3.   Notwithstanding the foregoing, the Fund may terminate this Agreement
upon the date specified in a written notice in the event of the "Bankruptcy" of
The Bank of New York. As used in this sub-paragraph, the term "Bankruptcy" shall
mean The Bank of New York's making a general assignment, arrangement or
composition with or for the benefit of its creditors, or instituting or having
instituted against it a proceeding seeking a judgment of insolvency or
bankruptcy or the entry of a order for relief under any applicable bankruptcy
law or any other relief under any bankruptcy or insolvency law or other similar
law affecting creditors' rights, or if a petition is presented for the winding
up or liquidation of the party or a resolution is passed for its winding up or
liquidation, or it seeks, or becomes subject to, the appointment of an
administrator, receiver, trustee, custodian or other similar official for it or
for all or substantially all of its assets or its taking any action in
furtherance or, or indicating its consent to approval of, or acquiescence in,
any of the foregoing.


                                     - 37 -
<PAGE>

                                  ARTICLE XVII

                                  TERMINAL LINK


     1.   At no time and under no circumstances shall the Fund be obligated to
have or utilize the Terminal Link, and the provisions of this Article shall
apply if, but only if, the Fund in its sole and absolute discretion elects to
utilize the Terminal Link to transmit Certificates to and to receive notices
from the Custodian.

     2.   The parties hereto shall utilize the Terminal Link only for the
purpose of the Fund providing Certificates to the Custodian and the Custodian
providing notices to the Fund and only after the Fund and the Custodian shall
have established access codes and internal safekeeping procedures to safeguard
and protect the confidentiality and availability of such access codes. Each use
of the Terminal Link by the Fund shall constitute a representation and warranty
that at least two such access codes have been utilized and that such procedures
have been established.

     3.   Each party shall obtain and maintain at its own cost and expense all
equipment and services, including, but not limited to communications services,
necessary for it to utilize the Terminal Link, and the other party shall not be
responsible for the reliability or availability of any such equipment or
services, except that the Custodian shall not pay any communications costs of
any line leased by the Fund, even if such line is also used by the Custodian.

     4.   The Fund acknowledges that any data bases made available as part of,
or through the Terminal and any proprietary data, software, processes,
information and documentation (other than any such which are or become part of
the public domain or are legally required to be made available to the public)
(collectively, the "Information"), are the exclusive and confidential property
of the Custodian. The Fund shall, and shall cause others to which it discloses
the Information, to keep the Information confidential by using the same care and
discretion it uses with respect to its own confidential property and trade
secrets, and shall neither make nor permit any disclosure without the express
prior written consent of the Custodian.

     5.   Upon termination of this Agreement for any reason, each Fund shall
return to the Custodian any and all copies of the Information which are in the
Fund's possession or under its control, or which the Fund distributed to third
parties. The provisions of this Article shall not affect the copyright status of
any of the Information which may be copyrighted and shall apply to all
Information whether or not copyrighted.


                                     - 38 -
<PAGE>

     6.   The Custodian reserves the right to modify the Terminal Link from time
to time without notice to the Fund, except that the Custodian shall give the
Fund notice not less than 75 days in advance of any modification which would
materially adversely affect the Fund's operation, and the Fund agrees not to
modify or attempt to modify the Terminal Link without the Bank's prior written
consent. The Fund acknowledges that the Terminal Link is the property of the
Custodian and, accordingly, the Fund agrees that any modifications to the
Terminal Link, whether by the Fund or the Custodian and whether with or without
the Custodian's consent, shall become the property of the Custodian.

     7.   Neither the Custodian nor any manufacturers and suppliers it utilizes
or the Fund utilizes in connection with the Terminal Link makes any warranties
or representations, express or implied, in fact or in law, including but not
limited to warranties of merchantability and fitness for a particular purpose.

     8.   Each party will, and will cause its officers and employees to, treat
the user and authorization codes, passwords and authentication keys applicable
to Terminal Link with extreme care. Each party hereby irrevocably authorizes the
other to act in accordance with and rely on Certificates and notices received by
it through the Terminal Link. Each party acknowledges that it is its
responsibility to assure that only its authorized persons use the Terminal Link
on its behalf, and that a party shall not be responsible nor liable for use of
the Terminal Link on its behalf of the other party by unauthorized persons
except that the other party shall be liable for such use thereof by unauthorized
persons who have obtained access thereto as a result of the bad faith or willful
misconduct of such party or any of its officers or employees.

     9.   Notwithstanding anything else in this Agreement to the contrary,
neither party shall have any liability to the other for any losses, damages,
injuries, claims, costs or expenses arising as a result of a delay, omission or
error in the transmission of a Certificate or notice by use of the Terminal Link
except for money damages for those suffered as the result of the negligence, bad
faith or willfull misconduct of such party or its officers, employees or agents
in an amount not exceeding for any incident $100,000, provided, however, that a
party shall have no liability under this Section 9 if the other party fails to
comply with the provisions of Section 11.

     10.  Without limiting the generality of the foregoing, it is hereby agreed
that in no event shall either party or any manufacturer or supplier of its
computer equipment, software or services relating to the Terminal Link be
responsible for


                                     - 39 -
<PAGE>

any special, indirect, incidental or consequential damages which the other party
may incur or experience by reason of its use of the Terminal Link even if such
party, manufacturer or supplier has been advised of the possibility of such
damages, nor with respect to the use of the Terminal Link shall either party or
any such manufacturer or supplier be liable for acts of God, or with respect to
the following to the extent beyond such person's reasonable control: machine or
computer breakdown or malfunction, interruption or malfunction of communication
facilities, labor difficulties or any other similar or dissimilar cause.

     11.  The Fund shall notify the Custodian of any errors, omissions or
interruptions in, or delay or unavailability of, the Terminal Link as promptly
as practicable, and in any event within 24 hours after the earliest of (i)
discovery thereof, (ii) the business day on which discovery should have occurred
through the exercise of reasonable care and (iii) in the case of any error, the
date of actual receipt of the earliest notice which reflects such error, it
being agreed that discovery and receipt of notice may only occur on a business
day. The Custodian shall promptly advise the Fund whenever the Custodian learns
of any errors, omissions or interruption in, or delay or unavailability of, the
Terminal Link.

     12.  Each party shall, as soon as practicable after its receipt of a
Certificate or of any notice transmitted by the Terminal Link, verify to the
other party by use of the Terminal Link its receipt of such Certificate or
notice, and in the absence of such verification a party to whom a Certificate or
notice is sent shall not be liable for any failure to act in accordance with
such Certificate or notice, and the sending party may not claim that such
Certificate or notice was received by the other.


                                  ARTICLE XVIII

                                  MISCELLANEOUS


     1.   Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Fund under its seal, setting forth the names and the
signatures of the present Authorized Persons. The Fund agrees to furnish to the
Custodian a new Certificate in similar form in the event that any such present
Authorized Person ceases to be an Authorized Person or in the event that other
or additional Authorized Persons are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be entitled to rely and to
act upon Oral Instructions, Written Instructions, or signatures of the present
Authorized Persons as set forth in the last delivered Certificate to the extent
provided by this Agreement.


                                     - 40 -
<PAGE>

     2.   Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Fund under its seal, setting forth the names and the
signatures of the present Officers of the Fund. The Fund agrees to furnish to
the Custodian a new Certificate in similar form in the event any such present
Officer ceases to be an Officer of the Fund, or in the event that other or
additional Officers are elected or appointed. Until such new Certificate shall
be received, the Custodian shall be entitled to rely and to act upon the
signatures of the Officers as set forth in the last delivered Certificate to the
extent provided by this Agreement.

     3.   Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, other than any Certificate or
Written Instructions, shall be sufficiently given if addressed to the Custodian
and mailed or delivered to it at its offices at 90 Washington Street, New York,
New York 10286, or at such other place as the Custodian may from time to time
designate in writing.

     4.   Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at the address for the
Fund first above written, or at such other place as the Fund may from time to
time designate in writing.

     5.   This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the same formality as this
Agreement and approved by a resolution of the Board of Trustees of the Fund,
except that Appendices A and B may be amended unilaterally by the Fund without
such an approving resolution.

     6.   This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian, or by the Custodian or The Bank of New York without the
written consent of the Fund, authorized or approved by a resolution of the
Fund's Board of Trustees. For purposes of this paragraph, no merger,
consolidation, or amalgamation of the Custodian, The Bank of New York, or the
Fund shall be deemed to constitute an assignment of this Agreement.

     7.   This Agreement shall be construed in accordance with the laws of the
State of New York without giving effect to conflict of laws principles thereof.
Each party hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder and hereby waives its right to trial by jury.


                                     - 41 -
<PAGE>

     8.   This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.

     9.   A copy of the Declaration of Trust of the Fund is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Board of Trustees of the Fund as
Trustees and not individually and that the obligations of this instrument are
not binding upon any of the Trustees or shareholders individually but are
binding only upon the assets and property of the Fund; provided, however, that
the Declaration of Trust of the Fund provides that the assets of a particular
Series of the Fund shall under no circumstances be charged with liabilities
attributable to any other Series of the Fund and that all persons extending
credit to, or contracting with or having any claim against a particular Series
of the Fund shall look only to the assets of that particular Series for payment
of such credit, contract or claim.


                                     - 42 -
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.


                                               DEAN WITTER




           [SEAL]                              By:_______________________


           Attest:


           _______________________


                                               THE BANK OF NEW YORK


           [SEAL]                              By:_______________________


           Attest:


           _______________________


                                     - 43 -
<PAGE>

                                     APPENDIX A



     I,                  , President and I,             ,
of                , a Massachusetts business trust (the "Fund"), do hereby
certify that:

     The following individuals have been duly authorized by the Board of
Trustees of the Fund in conformity with the Fund's Declaration of Trust and
By-Laws to give Oral Instructions and Written Instructions on behalf of the
Fund, except that those persons designated as being an "Officer of DWTC" shall
be an Authorized Person only for purposes of Articles XII and XIII. The
signatures set forth opposite their respective names are their true and correct
signatures:


                Name              Position            Signature

           _________________   ________________    _________________

<PAGE>

                                     APPENDIX B



     I,                  , President and I,             ,
of                , a Massachusetts business trust (the "Fund"), do hereby
certify that:

     The following individuals for whom a position other than "Officer of DWTC"
is specified serve in the following positions with the Fund and each has been
duly elected or appointed by the Board of Trustees of the Fund to each such
position and qualified therefor in conformity with the Fund's Declaration of
Trust and By-Laws. With respect to the following individuals for whom a position
of "Officer of DWTC" is specified, each such individual has been designated by a
resolution of the Board of Trustees of the Fund to be an Officer for purposes of
the Fund's Custody Agreement with The Bank of New York, but only for purposes of
Articles XII and XIII thereof and a certified copy of such resolution is
attached hereto. The signatures of each individual below set forth opposite
their respective names are their true and correct signatures:


                Name                 Position             Signature

           ____________________   ___________________   _________________
<PAGE>

                                   APPENDIX C


     The undersigned,                                  hereby certifies that he
or she is the duly elected and acting                         of         (the
"Fund"), further certifies that the following resolutions were adopted by the
Board of Trustees of the Fund at a meeting duly held on       ,1991, at which a
quorum at all times present and that such resolutions have not been modified or
rescinded and are in full force an effect as of the date hereof.

     RESOLVED, that The Bank New York, as Custodian pursuant to a Custody
Agreement between The Bank of New York and the Fund dated as of                ,
1991 (the "Custody Agreement") is authorized and instructed on a continuous and
ongoing basis to act in accordance with, and to rely on instructions by the Fund
to the Custodian communicated by a Terminal Link as defined in the Custody
Agreement.

     RESOLVED, that the Fund shall establish access codes and grant use of such
access codes only to officers of the Fund as defined in the Custody Agreement,
and shall establish internal safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes.

     RESOLVED, that Officers of the Fund as defined in the Custody Agreement
shall, following the establishment of such access codes and such internal
safekeeping procedures, advise the Custodian that the same have been established
by delivering a Certificate, as defined in the Custody Agreement, and the
Custodian shall be entitled to rely upon such advice.


     IN WITNESS WHEREOF, I hereunto set my hand in the seal of                 ,
as of the    day of               , 1991.


                           --------------------------
<PAGE>

                                   APPENDIX D



     I, Richard P. Lando, an Assistant Vice President with THE
BANK OF NEW YORK do hereby designate the following publications:



The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
<PAGE>

                                     APPENDIX E

     The following books and records pertaining to Fund shall be prepared and
maintained by the Custodian and shall be the property of the Fund:

<PAGE>

                                    EXHIBIT A

                                  CERTIFICATION


     The undersigned,                       , hereby certifies that he or she is
the duly elected and acting           of                 , a Massachusetts
business trust (the "Fund"), and further certifies that the following resolution
was adopted by the Board of Trustees of the Fund at a meeting duly held on     ,
199 , at which a quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and effect as of the date
hereof.

          RESOLVED, that The Bank of New York, as Custodian pursuant to a
          Custody Agreement between The Bank of New York and the Fund dated as
          of       , 199 , (the "Custody Agreement") is authorized and
          instructed on a continuous and ongoing basis to deposit in the
          Book-Entry System, as defined in the Custody Agreement, all securities
          eligible for deposit therein, regardless of the Series to which the
          same are specifically allocated, and to utilize the Book-Entry System
          to the extent possible in connection with its performance thereunder,
          including, without limitation, in connection with settlements of
          purchases and sales of securities, loans of securities, and deliveries
          and returns of securities collateral.


IN WITNESS WHEREOF, I have hereunto set my hand and the seal of         , as of
the    day of           , 199 .


[SEAL]
<PAGE>

                                    EXHIBIT B

                                 CERTIFICATION


     The undersigned,                            , hereby certifies that he or
she is the duly elected and acting          of                   , a
Massachusetts business Trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of the Fund at a
meeting duly held on          , 199 , at which a quorum was at all times present
and that such resolution has not been modified or rescinded and is in full force
and effect as of the date hereof.

          RESOLVED, that The Bank of New York, as Custodian pursuant to a
          Custody Agreement between The Bank of New York and the Fund dated as
          of          , 199 , (the "Custody Agreement") is authorized and
          instructed on a continuous and ongoing basis until such time as it
          receives a Certificate, as defined in the Custody Agreement, to the
          contrary to deposit in The Depository Trust Company ("DTC"), as a
          "Depository" as defined in the Custody Agreement, all securities
          eligible for deposit therein, regardless of the Series to which the
          same are specifically allocated, and to utilize DTC to the extent
          possible in connection with its performance thereunder, including,
          without limitation, in connection with settlements of purchases and
          sales of securities, loans of securities, and deliveries and returns
          of securities collateral.

     IN WITNESS WHEREOF, I have hereunto set my hand and the seal of           ,
as of the day of          , 199 .


[SEAL]
<PAGE>

                                   EXHIBIT B-1

                                  CERTIFICATION


     The undersigned,                            , hereby certifies that he or
she is the duly elected and acting           of                    , a
Massachusetts business Trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of the Fund at a
meeting duly held on         , 199 , at which a quorum was at all times present
and that such resolution has not been modified or rescinded and is in full force
and effect as of the date hereof.

          RESOLVED, that The Bank of New York, as Custodian pursuant to a
          Custody Agreement between The Bank of New York and the Fund dated as
          of          , 199  (the "Custody Agreement") is authorized and
          instructed on a continuous and ongoing basis until such time as it
          receives a Certificate, as defined in the Custody Agreement, to the
          contrary to deposit in the Participants Trust Company as a Depository,
          as defined in the Custody Agreement, all securities eligible for
          deposit therein, regardless of the Series to which the same are
          specifically allocated, and to utilize the Participants Trust Company
          to the extent possible in connection with its performance thereunder,
          including, without limitation, in connection with settlements of
          purchases and sales of securities, loans of securities, and deliveries
          and returns of securities collateral.

     IN WITNESS WHEREOF, I have hereunto set my hand and the seal of           ,
as of the day of         , 199 .


[SEAL]
<PAGE>

                                    EXHIBIT C

                                  CERTIFICATION


     The undersigned,                              , hereby certifies that he or
she is the duly elected and acting             of                    , a
Massachusetts business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of the Fund at a
meeting duly held on       , 199 , at which a quorum was at all times present
and that such resolution has not been modified or rescinded and is in full force
and effect as of the date hereof.

          RESOLVED, that The Bank of New York, as Custodian pursuant to a
          Custody Agreement between The Bank of New York and the Fund dated as
          of         , 199 , (the "Custody Agreement") is authorized and
          instructed on a continuous and ongoing basis until such time as it
          receives a Certificate, as defined in the Custody Agreement, to the
          contrary, to accept, utilize and act with respect to Clearing Member
          confirmations for Options and transaction in Options, regardless of
          the Series to which the same are specifically allocated, as such terms
          are defined in the Custody Agreement, as provided in the Custody
          Agreement.

     IN WITNESS WHEREOF, I have hereunto set my hand and the seal of          ,
as of the day of       , 199 .


[SEAL]


<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. 8 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
August 17, 1995, relating to the financial statements and financial highlights
of Dean Witter Strategist Fund, 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
August 17, 1995



<PAGE>


          SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
                        THE STRATEGIST FUND

(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)

                           _
                          |     ---------------------   |
                          |     |           |
                          |/\n  |          ERV       |
FORMULA:         T =      |  \  |        --------------------  | - 1
                          |   \ |           P       |
                          |    \|           |
                          |                _|
                          |_

                 T = AVERAGE ANNUAL COMPOUND RETURN
                 n = NUMBER OF YEARS
               ERV = ENDING REDEEMABLE VALUE
                 P = INITIAL INVESTMENT


                                                          (A)
 $1,000           ERV AS OF         NUMBER OF         AVERAGE ANNUAL
INVESTED - P      31-Jul-95         YEARS - n         TOTAL RETURN - T
-------------   -----------        -----------       ------------------
  31-Jul-94       $1,110.50            1.00                 11.05%

  31-Jul-90       $1,652.90            5.00                 10.57%

  31-Oct-88       $2,219.50            6.75                 12.55%

(D) 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)

                           _
                          |     ---------------------   |
                          |     |           |
                          |/\n  |          EV        |
FORMULA:         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>
<S>             <C>         <C>            <C>          <C>     <C>
                                (C)                                      (B)
 $1,000           EV AS OF     TOTAL        NUMBER OF             AVERAGE ANNUAL
INVESTED - P      31-Jul-95  RETURN - TR     YEARS - n             TOTAL RETURN - t
-------------   ----------- -------------  ------------  ------  -------------------
  31-Jul-94       $1,160.50     16.05%         1.00                     16.05%

  31-Jul-90       $1,672.90     67.29%         5.00                     10.84%

  31-Oct-88       $2,219.50    121.95%         6.75                     12.55%
</TABLE>


(D) GROWTH OF $10,000

(E) GROWTH OF $50,000

(F) GROWTH OF $100,000


FORMULA:   G = (TR+1)*P
           G = GROWTH OF INITIAL INVESTMENT
           P = INITIAL INVESTMENT
           TR = TOTAL RETURN


<TABLE>
<S>             <C>           <C>                       <C>                      <C>
  $10,000           TOTAL         GROWTH OF (D)              GROWTH OF (E)              GROWTH OF (F)
 INVESTED - P    RETURN - TR   $10,000 INVESTMENT - G    $50,000 INVESTMENT - G    $100,000 INVESTMENT - G
--------------  ------------- ------------------------  ------------------------  -------------------------

31-Oct-88          121.95           $22.195                  $110.975                  $221,950
</TABLE>


<TABLE> <S> <C>

<PAGE>
<ARTICLE> 6
<LEGEND>
Dean Witter Strategist
</LEGEND>
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          JUL-31-1995
<PERIOD-END>                               JUL-31-1995
<INVESTMENTS-AT-COST>                      786,832,265
<INVESTMENTS-AT-VALUE>                     870,196,045
<RECEIVABLES>                               22,436,680
<ASSETS-OTHER>                                  92,586
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                             892,725,311
<PAYABLE-FOR-SECURITIES>                    13,140,192
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                    1,989,793
<TOTAL-LIABILITIES>                         15,129,985
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                   736,601,490
<SHARES-COMMON-STOCK>                       55,289,486
<SHARES-COMMON-PRIOR>                       55,866,185
<ACCUMULATED-NII-CURRENT>                    3,987,969
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                     53,642,087
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                    83,363,780
<NET-ASSETS>                               877,595,326
<DIVIDEND-INCOME>                           10,048,666
<INTEREST-INCOME>                           22,087,220
<OTHER-INCOME>                                       0
<EXPENSES-NET>                              13,153,713
<NET-INVESTMENT-INCOME>                     18,982,173
<REALIZED-GAINS-CURRENT>                    56,953,694
<APPREC-INCREASE-CURRENT>                   45,494,865
<NET-CHANGE-FROM-OPS>                      121,430,732
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                 (15,997,877)
<DISTRIBUTIONS-OF-GAINS>                  (25,273,043)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                      9,276,510
<NUMBER-OF-SHARES-REDEEMED>               (12,582,171)
<SHARES-REINVESTED>                          2,728,962
<NET-CHANGE-IN-ASSETS>                      71,345,911
<ACCUMULATED-NII-PRIOR>                      1,003,673
<ACCUMULATED-GAINS-PRIOR>                   21,961,436
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                        4,679,443
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                             13,153,713
<AVERAGE-NET-ASSETS>                       805,353,172
<PER-SHARE-NAV-BEGIN>                            14.43
<PER-SHARE-NII>                                    .34
<PER-SHARE-GAIN-APPREC>                           1.86
<PER-SHARE-DIVIDEND>                             (.29)
<PER-SHARE-DISTRIBUTIONS>                        (.47)
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              15.87
<EXPENSE-RATIO>                                   1.63
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>


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