Schedule 14A Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ] Definitive Additional Materials
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Municipal Premium Income Trust . . . . . . . . . . . . .
(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(j)(1), or
14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(j)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(j)(4) and 0-11.
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
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which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
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MUNICIPAL PREMIUM INCOME TRUST
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 22, 1994
The Annual Meeting of Shareholders of MUNICIPAL PREMIUM INCOME TRUST (the
"Trust"), an unincorporated business trust organized under the laws of the
Commonwealth of Massachusetts, will be held in the Conference Center,
Forty-Fourth Floor, 2 World Trade Center, New York, New York 10048, on
December 22, 1994 at 9:00 a.m., New York City time, for the following
purposes:
MATTERS TO BE VOTED ON BY ALL SHAREHOLDERS:
1. To elect five (5) Trustees, one (1) to serve until the 1995 Annual
Meeting, one (1) to serve until the 1996 Annual Meeting and three (3) to
serve until the 1997 Annual Meeting, or, in each case, until their
successors shall have been elected and qualified;
2. To approve or disapprove the continuance of the currently
effective Investment Advisory Agreement between the Trust and Dean Witter
InterCapital Inc.;
3. To ratify or reject the selection of Price Waterhouse LLP as the
Trust's independent accountants for the fiscal year ending May 31, 1995;
and
4. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Shareholders of record as of the close of business on October 20, 1994 are
entitled to notice of and to vote at the Meeting. If you cannot be present in
person, your management would greatly appreciate your filling in, signing and
returning the enclosed proxy promptly in the envelope provided for that
purpose.
In the event that the necessary quorum to transact business on the vote
required to approve or reject any proposal is not obtained at the Meeting,
the persons named as proxies may propose one or more adjournments of the
meeting for a total of not more than 60 days in the aggregate to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of the holders of a majority of the Trust's shares present
in person or by proxy at the Meeting. The persons named as proxies will vote
in favor of such adjournment those proxies which they are entitled to vote in
favor of Proposal 2 and will vote against any such adjournment those proxies
required to be voted against that proposal.
SHELDON CURTIS,
Secretary
November 1, 1994
New York, New York
IMPORTANT
YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU
ARE UNABLE TO BE PRESENT IN PERSON, PLEASE FILL IN, SIGN AND RETURN THE
ENCLOSED PROXY IN ORDER THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE
MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
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MUNICIPAL PREMIUM INCOME TRUST
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 22, 1994
This statement is furnished in connection with the solicitation of proxies
by the Trustees of MUNICIPAL PREMIUM INCOME TRUST (the "Trust") for use at
the Annual Meeting of Shareholders of the Trust to be held on December 22,
1994, and at any adjournments thereof.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon.
Unmarked proxies will be voted for each of the nominees for election as
Trustee to be elected by all Shareholders and in favor of Proposals 2 and 3
as set forth in the Notice of Annual Meeting of Shareholders. A proxy may be
revoked at any time prior to its exercise by any of the following: written
notice of revocation, execution and delivery of a later dated proxy to the
Secretary of the Trust, or attendance and voting at the Annual Meeting of
Shareholders.
Shareholders as of the close of business on October 20, 1994, the record
date for the determination of shareholders entitled to notice of and to vote
at the Meeting, are entitled to one vote for each share held and a fractional
vote for a fractional share. On October 20, 1994 there were outstanding
26,128,924 Common Shares of beneficial interest and 1,250 Preferred Shares of
beneficial interest of the Trust, all with $0.01 par value. No person was
known to own as much as 5% of the outstanding shares of the Trust on that
date. The Trustees and Officers of the Trust, together, owned less than 1% of
the Trust's outstanding shares on that date. The percentage ownership of
shares of the Trust changes from time to time depending on purchases and
sales by shareholders and the total number of shares outstanding.
The cost of soliciting proxies for the Meeting will be borne by the Trust.
The solicitation of proxies will be by mail, which may be supplemented by
solicitation by mail, telephone or otherwise through Trustees, officers and
regular employees of the Trust, or Dean Witter InterCapital Inc.
("InterCapital" or the "Investment Adviser") without special compensation
therefor. The first mailing of this proxy statement is expected to be made on
or about November 1, 1994.
(1) ELECTION OF TRUSTEES
The number of Trustees has been currently fixed by the Trustees, pursuant
to the Trust's Declaration of Trust, at twelve. At the Meeting, five Trustees
are to be elected to the Trust's Board of Trustees. There are currently
twelve Trustees, one of whom (Philip J. Purcell) is standing for election
until the 1995 Annual Meeting, one of whom (Michael Bozic) is standing for
election until the 1996 Annual Meeting and three of whom (Manuel H. Johnson,
Paul Kolton and John L. Schroeder) are standing for election until the 1997
Annual Meeting. At the meeting, pursuant to the Trust's Declaration of Trust,
five Trustees are to be elected to the Trust's Board of Trustees by the
holders of the Common Shares and the Preferred Shares voting together as a
single class.
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Nine of the current twelve Trustees (Jack F. Bennett, Michael Bozic, Edwin
J. Garn, John R. Haire, John E. Jeuck, Manuel H. Johnson, Paul Kolton,
Michael E. Nugent and John L. Schroeder) are "Independent Trustees," that is,
Trustees who are not "interested persons" of the Trust, as that term is
defined in the Investment Company Act of 1940 (the "Act"). Mr. Edward R.
Telling, whose term as Trustee ends at the Meeting and Mr. John E. Jeuck,
whose term extends until the 1996 Annual Meeting of Shareholders, have
informed the Trust of their intentions to retire as of the date of the
Meeting. The nominees for election as Trustees of the Trust have been
proposed by the Trustees now serving or, in the case of the nominees for
positions as Independent Trustees, by the Independent Trustees now serving.
Messrs. Bozic, Purcell and Schroeder were elected by the other Trustees on
April 8, 1994. All of the other Trustees have been elected by the
Shareholders of the Trust.
The Board of Trustees has two committees--an Audit Committee and a
Committee of the Independent Trustees--consisting, in both cases, of the
Independent Trustees of the Trust. Mr. Haire serves as the Chairman of both
Committees. There are no nominating or compensation committees of the
Trustees.
The functions of the Audit Committee are: recommendation to the Trustees
of the engagement or discharge of the independent accountants; direction and
supervision of investigations into matters within the scope of the
independent accountants' duties, including the power to retain outside
specialists; review with the independent accountants of the audit plan and
results of the auditing engagement; approval of each professional service
provided by the independent accountants prior to the performance of such
service; review of the independence of the independent accountants;
consideration of the range of audit and nonaudit fees; and review of the
adequacy of the Trust's system of internal accounting controls; advice to the
independent accountants and personnel of management that they have direct
access to the Committee at all times; and preparation and submission of
Committee meeting minutes to the full Board.
The functions of the Committee of the Independent Trustees are:
recommendation to the full Board of approval of any management, advisory
and/or administration agreements; recommendation to the full Board of any
underwriting and/or distribution agreements; review of the fidelity bond and
premium allocation; review of errors and omissions, uncollectible items of
deposit and any other joint insurance policies and premium allocation; review
of, and monitoring of compliance with, procedures adopted pursuant to certain
rules promulgated under the Act and such other duties as the Independent
Trustees shall, from time to time, conclude are necessary to carry out their
duties under the Act.
The nominees of the Board of Trustees for election as Trustees are listed
below. It is the intention of the persons named in the enclosed form of proxy
to vote the shares represented by them for the election of these nominees:
Michael Bozic, Manuel H. Johnson, Paul Kolton, Philip J. Purcell and John L.
Schroeder. Should any of the nominees become unable or unwilling to accept
nomination or election, the persons named in the proxy will exercise their
voting power in favor of such person or persons as the Board of Trustees may
recommend. All of the nominees have consented to being named in this proxy
statement and to serve if elected. The Trust knows no reason why said
nominees would be unable or unwilling to accept nomination or election.
Trustees will be elected by a plurality of the votes cast at the meeting.
Abstentions and broker "non-votes" will have the same effect as a vote
against the proposal.
Pursuant to the provisions of the Trust's Declaration of Trust, the
nominees for election as Trustees are divided into three separate classes,
each class having a term of three years. The term of office of one of each of
the three classes will expire each year.
The Board of Trustees has determined that the nominees for election as
Trustee shall be standing for election as Trustee in each of the three
classes of Trustee as follows: Class I --Messrs. Bennett, Bozic and
Fiumefreddo; Class II --Messrs. Johnson, Kolton and Schroeder; and Class III
- - --Messrs. Garn, Haire, Nugent
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and Purcell. Each nominee will, if elected, serve a term of up to
approximately three years running for the period assigned to that class and
terminating at the date of the annual meeting of Shareholders so designated
by the Board of Trustees, or any adjournment thereof. As a consequence of
this method of election, the replacement of a majority of the Board of
Trustees could be delayed for up to two years. In addition, the Board has
further determined that one each of the Class I Trustees and the Class III
Trustees will be designated to be elected by the Preferred Shareholders
voting separately. In this regard, Charles A. Fiumefreddo and John R. Haire
have been designated as the nominees to be elected to the Trust's Board of
Trustees by the Preferred Shareholders the term of each to expire with his
designated Class. In accordance with the above, one Trustee in Class I is
standing for election at this Meeting and, if elected, will serve until the
1996 Annual Meeting or until his successor shall have been elected and
qualified, three Trustees in Class II are standing for election at this
Meeting and, if elected, will serve until the 1997 Annual Meeting or until
their successors shall have been elected and qualified, and one Trustee in
Class III is standing for election at this Meeting and, if elected, will
serve until the 1995 Annual Meeting or until his successor shall have been
elected and qualified.
The following information regarding each of the nominees for election as
Trustee, and each of the other members of the Board, includes his principal
occupations and employment for at least the last five years, his age, shares
of the Trust owned, if any, as of October 20, 1994 (shown in parentheses),
positions with the Trust, and directorships (or trusteeships) in other
companies which file periodic reports with the Securities and Exchange
Commission, including other investment companies for which InterCapital
serves as investment manager or investment adviser, namely, InterCapital
Income Securities Inc., Dean Witter High Yield Securities Inc., Dean Witter
American Value Fund, Dean Witter Tax-Exempt Securities Trust, Dean Witter
Tax-Free Daily Income Trust, Dean Witter Natural Resource Development
Securities Inc., Dean Witter Dividend Growth Securities Inc., Dean Witter
Liquid Asset Fund Inc., Dean Witter Variable Investment Series, Dean Witter
Select Municipal Reinvestment Fund, Dean Witter U.S. Government Money Market
Trust, Dean Witter U.S. Government Securities Trust, Dean Witter World Wide
Investment Trust, Dean Witter Developing Growth Securities Trust, Dean Witter
California Tax-Free Income Fund, Dean Witter New York Tax-Free Income Fund,
Dean Witter Government Income Trust, Dean Witter Federal Securities Trust,
High Income Advantage Trust, Dean Witter Value-Added Market Series, Dean
Witter Utilities Fund, Municipal Income Trust, Municipal Income Trust II,
Dean Witter California Tax-Free Daily Income Trust, Dean Witter Managed
Assets Trust, Dean Witter Strategist Fund, Dean Witter Capital Growth
Securities, Dean Witter Precious Metals and Minerals Trust, Dean Witter New
York Municipal Money Market Trust, Dean Witter European Growth Fund Inc.,
Dean Witter Pacific Growth Fund Inc., Dean Witter Multi-State Municipal
Series Trust, Dean Witter Global Short-Term Income Fund Inc., InterCapital
Insured Municipal Bond Trust, Dean Witter Premier Income Trust, High Income
Advantage Trust II, Dean Witter Convertible Securities Trust, Municipal
Premium Income Trust, Dean Witter Intermediate Income Securities, High Income
Advantage Trust III, Dean Witter World Wide Income Trust, Municipal Income
Opportunities Trust, Municipal Income Opportunities Trust II, Municipal
Income Trust III, Prime 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, InterCapital Quality Municipal Investment Trust,
InterCapital Insured Municipal Trust, InterCapital Quality Municipal Income
Trust, InterCapital Insured Municipal Income Trust, InterCapital California
Insured Municipal Income Trust, InterCapital Quality Municipal Securities,
InterCapital California Quality Municipal Securities, InterCapital New York
Quality Municipal Securities, InterCapital Insured Municipal Securities,
InterCapital Insured California Municipal Securities, Active Assets Money
Trust, Active Assets California Tax-Free Trust, Active Assets Tax-Free Trust
and Active Assets
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Government Securities Trust (said investment companies, together with the
Trust, are referred to herein collectively as the "Dean Witter Funds"), and
investment companies for which Dean Witter Services Company Inc. ("DWSC"), a
wholly-owned subsidiary of InterCapital, serves as manager and TCW Funds
Management, Inc., serves as investment adviser, namely, TCW/DW Core Equity
Trust, TCW/DW North American Government Income Trust, TCW/DW Latin 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 Total Return Trust, TCW/DW Emerging Markets
Opportunities Trust, TCW/DW Term Trust 2000, TCW/DW Term Trust 2002 and
TCW/DW Term Trust 2003 (the "TCW/DW Funds").
The nominees for Trustee to be elected at this Meeting by Shareholders
are:
MICHAEL BOZIC, Trustee since April, 1994; age 53; President and Chief
Executive Officer of Hills Department Stores (since May, 1991); formerly
Chairman and Chief Executive Officer (January, 1987-August, 1990) and
President and Chief Operating Officer (August, 1990-February, 1991) of the
Sears Merchandise Group of Sears, Roebuck and Co. ("Sears"); Director or
Trustee of the Dean Witter Funds; Director of Harley Davidson Credit Inc.,
the United Negro College Fund and Domain Inc. (home decor retailer).
MANUEL H. JOHNSON, Trustee since July, 1991; age 45; Senior Partner,
Johnson Smick International, Inc., a consulting firm (since June, 1985); Koch
Professor of International Economics and Director of the Center for Global
Market Studies at George Mason University (since September, 1990);
Co-Chairman and a founder of the Group of Seven Council (G7C), an
international economic commission (since September, 1990); Director or
Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds; Director of
Greenwich Capital Markets, Inc. (broker-dealer); formerly Vice Chairman of
the Board of Governors of the Federal Reserve System (February, 1986-August,
1990) and Assistant Secretary of the U.S. Treasury (1982-1986).
PAUL KOLTON, Trustee since March, 1990; age 71; Director or Trustee of the
Dean Witter Funds; Chairman of the Audit Committee and Chairman of the
Committee of the Independent Trustees and Trustee of the TCW/DW Funds;
formerly Chairman of the Financial Accounting Standards Advisory Council and
Chairman and Chief Executive Officer of the American Stock Exchange; Director
of UCC Investors Holding Inc. (Uniroyal Chemical Company, Inc.); director or
trustee of various not-for-profit organizations.
PHILIP J. PURCELL,* Trustee since April, 1994, age 51; Chairman of the
Board of Directors and Chief Executive Officer of Dean Witter, Discover & Co.
("DWDC"), Dean Witter Reynolds Inc. ("DWR") and Novus Credit Services Inc.;
Director of Dean Witter InterCapital Inc. ("InterCapital"), Dean Witter
Services Company Inc. ("DWSC") and Dean Witter Distributors Inc.
("Distributors"); Director or Trustee of the Dean Witter Funds; Director
and/or officer of various DWDC Subsidiaries.
JOHN L. SCHROEDER, Trustee since April, 1994; age 64; Executive Vice
President and Chief Investment Officer of The Home Insurance Company (since
August, 1991); Director or Trustee of the Dean Witter Funds; Director of
Citizens Utilities Company; formerly Chairman and Chief Investment Officer of
Axe-Houghton Management and the Axe-Houghton Funds (April, 1983-June, 1991)
and President of USF&G Financial Services, Inc. (June, 1990-June, 1991).
The Trustees who are not standing for reelection at the Meeting are:
JACK F. BENNETT, Trustee since March, 1990; age 70; Retired; Director or
Trustee of the Dean Witter Funds; formerly Senior Vice President and Director
of Exxon Corporation (1975-1989) and Under Secretary of the U.S. Treasury for
Monetary Affairs (1974-1975); Director of Philips Electronics N.V., Tandem
Computers Inc. and Massachusetts Mutual Insurance Co.; Director or Trustee of
various other not-for-profit and business organizations.
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CHARLES A. FIUMEFREDDO,* Trustee since July, 1991; age 61; Chairman, Chief
Executive Officer and Director of InterCapital, DWSC and Distributors;
Executive Vice President and Director of DWR; Chairman, Director or Trustee,
President and Chief Executive Officer of the Dean Witter Funds; Chairman, Chief
Executive Officer and Trustee of the TCW/DW Funds; Chairman and Director of
Dean Witter Trust Company ("DWTC"); Director and/or officer of various DWDC
subsidiaries; formerly Executive Vice President and Director of DWDC (until
February, 1993).
EDWIN JACOB (JAKE) GARN, Trustee since January, 1993; age 62; Director or
Trustee of the Dean Witter Funds; formerly United States Senator (R-Utah)
(1974-1992) and Chairman, Senate Banking Committee (1980-1986); formerly
Mayor of Salt Lake City, Utah (1971-1974); formerly Astronaut, Space Shuttle
Discovery (April 12-19, 1985); Vice Chairman, Huntsman Chemical Corporation
(since January, 1993); Member of the board of various civic and charitable
organizations.
JOHN R. HAIRE, Trustee since March, 1990; age 69; Chairman of the Audit
Committee and Chairman of the Committee of the Independent Directors or
Trustees and Director or Trustee of the Dean Witter Funds; Trustee of the
TCW/DW Funds; formerly President, Council for Aid to Education (1978-October,
1989) and Chairman and Chief Executive Officer of Anchor Corporation, an
investment adviser (1964-1978); Director of Washington National Corporation
(insurance) and Bowne & Co., Inc. (printing).
MICHAEL E. NUGENT, Trustee since July, 1991; age 58; General Partner,
Triumph Capital, L.P., a private investment partnership (since April, 1988);
Director or Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds;
formerly Vice President, Bankers Trust Company and BT Capital Corporation
(September, 1984-March, 1988); Director of various business organizations.
The executive officers of the Trust are: Sheldon Curtis, Vice President,
Secretary and General Counsel; Robert M. Scanlan, Vice President; David A.
Hughey, Vice President; Edmund C. Puckhaber, Vice President; James F.
Willison, Vice President; and Thomas F. Caloia, Treasurer. In addition,
Katherine H. Stromberg and Joseph Arcieri are Vice Presidents of the Trust
and Marilyn K. Cranney, Barry Fink, Lawrence S. Lafer, Lou Anne D. McInnis
and Ruth Rossi serve as Assistant Secretaries. Mr. Curtis is 62 years old and
is currently Senior Vice President, Secretary and General Counsel of
InterCapital and DWSC and Assistant Secretary of DWR and DWDC; he is also
Senior Vice President, Assistant Secretary and Assistant General Counsel of
Distributors and Senior Vice President and Secretary of DWTC. Mr. Scanlan is
58 years old and is currently President and Chief Operating Officer of
InterCapital (since March, 1993) and DWSC; he is also Executive Vice
President of Distributors and Executive Vice President and Director of DWTC.
He was previously Executive Vice President of InterCapital (July, 1992-March,
1993) and prior thereto was Chairman of Harborview Group, Inc. Mr. Hughey is
62 years old and is currently Executive Vice President and Chief
Administrative Officer of InterCapital and DWSC; he is also Executive Vice
President and Chief Administrative Officer of Distributors and DWTC as well
as a Director of DWTC. He was previously President of DWTC (October,
1989-March, 1993). Mr. Puckhaber is 55 years old and is currently Executive
Vice President of InterCapital (since January, 1991) and Director of DWTC.
Mr. Willison is 51 years old and is currently Senior Vice President of
InterCapital. Mr. Caloia is 48 years old and is currently First Vice
President and Assistant Treasurer of InterCapital and DWSC. Ms. Stromberg is
46 years old and is currently Vice President of InterCapital (since April,
1992). She was formerly a portfolio manager with InterCapital (October,
1991-April, 1992) and Vice President of Kidder Peabody Asset Management
(October, 1985-October, 1991). Mr. Arcieri is
- - ----------
*Messrs. Fiumefreddo and Purcell may be deemed "interested persons" of the
Trust and its Investment Adviser, as defined in Section 2(a)(19) of the Act,
due to their affiliation with the Investment Adviser and/or its affiliated
companies.
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46 years old and is currently Vice President of InterCapital. Other than Mr.
Scanlan and Ms. Stromberg, each of the above officers has been an employee of
InterCapital or DWR (formerly the corporate parent of InterCapital) for over
five years.
Messrs. Fiumefreddo, Purcell and Telling, Trustees of the Trust, and other
officers of the Trust own securities of DWDC which in the aggregate,
constitute less than 1% of the securities of each class outstanding.
Each of the Independent Trustees is paid by the Trust an annual retainer
fee of $1,200 plus $50 for each meeting of the Board of Trustees or any
committee of the Board of Trustees attended by the Trustee in person (the
Trust pays the Chairman of the Audit Committee an additional annual fee of
$1,000 and pays the Chairman of the Committee of the Independent Trustees an
additional annual fee of $2,400, in each case inclusive of the Committee
meeting fees), together with any out-of-pocket expenses incurred by them in
connection with attendance at any such meetings. The Trust has adopted a
retirement program under which an Independent Trustee who retires after a
minimum required period of service would be entitled to retirement payments
upon reaching the eligible retirement date (normally, after attaining age 72)
based upon length of service and computed as a percentage of one-fifth of the
total compensation earned by such Trustee for service to the Trust in the
five-year period prior to the date of the Trustee's retirement. For the
fiscal year ended May 31, 1994, the Trust accrued a total of $30,568 in
Trustees' fees and expenses, including benefits under the retirement plan.
The Trust pays no remuneration to any Trustee who is not an Independent
Trustee or to any of the Trust's officers. During the fiscal year ended May
31, 1994, the Board held six meetings, and the Audit Committee and the
Committee of the Independent Trustees, which are both presently comprised of
the nine Independent Trustees, held two meetings and ten meetings,
respectively. During the fiscal year ended May 31, 1994, no Trustee attended
fewer than 75% of the meetings of the Board, the Audit Committee and the
Committee of the Independent Trustees held while he served in such positions.
(2) APPROVAL OR DISAPPROVAL OF CURRENTLY EFFECTIVE
INVESTMENT ADVISORY AGREEMENT
The Trust's investments are managed by Dean Witter InterCapital Inc.
(referred to herein as the "Investment Adviser" or "InterCapital"), pursuant
to an Investment Advisory Agreement dated June 30, 1993 (referred to herein
as the "Advisory Agreement"). The Trust's Advisory Agreement, which took
effect upon the distribution by Sears, Roebuck and Co. ("Sears") to its
shareholders of all the common shares of DWDC (the parent company of
InterCapital and DWR) then owned by Sears, was approved by the Board of
Trustees on October 30, 1992 and by the shareholders of the Trust at a
Special Meeting of Shareholders held on February 25, 1993. The present
Advisory Agreement supersedes an earlier advisory agreement also approved by
shareholders on February 25, 1993 in connection with the assumption by
InterCapital of the investment advisory activities previously performed by
another investment adviser and which took effect on March 1, 1993.
The terms of the Advisory Agreement are described below. The Agreement's
continuation until April 30, 1995 was approved by the Trustees, including a
majority of the Independent Trustees, at a meeting of the Board held on April
8, 1994. In the event shareholders do not approve continuance of the Advisory
Agreement by the required majority vote at the forthcoming meeting or an
adjournment thereof, the Board of Trustees of the Trust will take such action
as it deems to be in the best interest of the Trust and its shareholders,
which may include calling a special meeting of shareholders to vote on a new
investment advisory agreement.
In considering whether or not to approve the Advisory Agreement, the Board
of Trustees reviewed the terms of the agreement and considered all materials
and information deemed relevant to its determination. Among other things, the
Board considered the nature and scope of services to be rendered, the quality
of
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the Adviser's services and personnel, and the appropriateness of the fees
that are paid under the Advisory Agreement. Based upon its review, the Board
of Trustees, including all of the Independent Trustees, determined that the
approval of the Advisory Agreement was in the best interest of the Trust and
its shareholders.
The favorable vote of a majority of the outstanding voting securities of
the Trust is required for the approval of the Advisory Agreement. Such a
majority is defined in the Act as the lesser of: (a) 67% or more of the
shares present at the Meeting, if the holders of more than 50% of the
outstanding shares of the Trust are present or represented by proxy, or (b)
more than 50% of the outstanding shares. Abstentions and broker "non-votes"
will have the same effect as a vote against the proposal.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS APPROVE THE ADVISORY
AGREEMENT.
THE ADVISORY AGREEMENT
The Advisory Agreement provides that the Investment Adviser shall
continously manage the assets of the Trust in a manner consistent with the
Trust's investment objectives. The Investment Adviser obtains and evaluates
such information and advice relating to the economy, securities markets and
specific securities as it considers necessary or useful to continuously
manage the assets of the Trust in a manner consistent with its investment
objectives and policies. In addition, the Investment Adviser pays the
compensation of all personnel, including officers of the Trust, who are its
employees. The Investment Adviser has authority to place orders for the
purchase and sale of portfolio securities on behalf of the Trust without
prior approval of its Trustees. The Trustees review the investment portfolio
at their regular meetings.
In return for its investment services and the expenses which the
Investment Adviser assumes under the Advisory Agreement, the Trust pays the
Investment Adviser compensation which is computed and accrued weekly and
payable monthly and which is determined by applying the annual rate of 0.50%
to the Trust's average weekly net assets. Pursuant to the Advisory Agreement,
the Trust accrued to the Investment Adviser total compensation of $1,636,875
during the fiscal year ended May 31, 1994. The net assets of the Trust
totalled $393,531,979 at May 31, 1994.
Under the Advisory Agreement, the Trust is obligated to bear all of the
costs and expenses of its operation, except those specifically assumed by the
Investment Adviser, including, without limitation: charges and expenses of
any registrar, custodian or depository appointed by the Trust for the
safekeeping of its cash, portfolio securities or commodities and other
property, and any stock transfer or dividend agent or agents appointed by the
Trust; brokers' commissions chargeable to the Trust in connection with
portfolio securities transactions to which the Trust is a party; all taxes,
including securities or commodities issuance and transfer taxes, and fees
payable by the Trust to Federal, state or other governmental agencies; costs
and expenses of engraving or printing of certificates representing shares of
the Trust; all costs and expenses in connection with registration and
maintenance of registration of the Trust and of its shares with the
Securities and Exchange Commission and various states and other jurisdictions
(including filing fees and legal fees and disbursements of counsel); the
costs and expense of preparation, printing, including typesetting, and
distributing prospectuses for such purposes; all expenses of shareholders'
and Trustees' meetings and of preparing, printing and mailing proxy
statements and reports to shareholders; fees and travel expenses of Trustees
or members of any advisory board or committee who are not employees of the
Trust's Administrator or Investment Adviser or any of their corporate
affiliates; all expenses incident to the payment of any dividend or
distribution program; charges and expenses of any outside pricing services;
charges and expenses of legal counsel, including counsel to the Independent
Trustees of the Trust, and independent accountants in connection with any
matter relating to the Trust (not including compensation or expenses of
attorneys employed by the Trust's Administrator or Investment Adviser);
membership dues of industry associations; interest payable on Trust
borrowings; fees and
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expenses incident to the listing of the Trust's shares on any stock exchange;
postage; insurance premiums on property or personnel (including officers and
Trustees) of the Trust which inure to its benefit; extraordinary expenses
(including, but not limited to, legal claims, liabilities, litigation costs
and any indemnification related thereto); and all other charges and costs of
the Trust's operations unless otherwise explicitly provided in the Advisory
Agreement.
The Advisory Agreement had an initial term ending April 30, 1994 and
provides that, after the initial period of effectiveness, it will continue in
effect from year to year thereafter provided such continuance is approved at
least annually by vote of a majority, as defined in the act, of the
outstanding voting securities of the Trust or by the Trustees of the Trust,
and, in either event, by the vote cast in person by a majority of the
Trustees who are not parties to the Advisory Agreement or "interested
persons" of any such party (as defined in the Act) at a meeting called for
the purpose of voting on such approval. The Advisory Agreement's continuation
until April 30, 1995 was approved by the Trustees, including a majority of
the Independent Trustees, at a Meeting of the Trustees held on April 8, 1994,
called for the purpose of approving the Advisory Agreement.
The Advisory Agreement also provides that it may be terminated at any time
by the Investment Adviser, the Trustees of the Trust or by a vote of a
majority of the outstanding voting securities of the Trust, in each instance
without the payment of any penalty, on thirty days' notice and will
automatically terminate upon any assignment.
INVESTMENT ADVISER
Dean Witter InterCapital Inc. is the Trust's investment adviser.
InterCapital maintains its offices at Two World Trade Center, New York, New
York 10048. InterCapital, which was incorporated in July, 1992, is a
wholly-owned subsidiary of DWDC, a balanced financial services organization
providing a broad range of nationally marketed credit and investment
products. In an internal reorganization which took place in January, 1993,
InterCapital assumed the investment advisory, management and administrative
activities previously performed by the InterCapital Division of DWR.
InterCapital also manages and advises or administers portfolios of other
investment companies and pension plans and other institutional and individual
investors.
InterCapital's wholly-owned subsidiary, DWSC, serves as the Administrator
of the Trust and receives from the Trust compensation which is computed
weekly and payable monthly and which is determined by applying the annual
rate of 0.40% to the Trust's weekly net assets. Prior to December 31, 1993,
InterCapital served as Administrator to the Trust and received compensation
at the same annual rate. For the fiscal year ended May 31, 1994, the Trust
accrued to InterCapital and to DWSC, pursuant to Administration Agreements,
total compensation of $1,023,047.
The Principal Executive Officers and Directors of InterCapital, and their
principal occupations, are:
Philip J. Purcell, Chairman of the Board of Directors and Chief Executive
Officer of DWDC and DWR and Director of InterCapital, DWSC and Distributors;
Richard M. DeMartini, President and Chief Operating Officer of Dean Witter
Capital, Executive Vice President of DWDC and Director of DWTC, DWSC, DWR,
Distributors and InterCapital; James F. Higgins, President and Chief
Operating Officer of Dean Witter Financial, Executive Vice President of DWDC
and Director of DWTC, DWSC, DWR, Distributors and InterCapital; Charles A.
Fiumefreddo, Executive Vice President and Director of DWR, Chairman of the
Board of Directors, Chief Executive Officer and Director of InterCapital,
DWSC and Distributors and Chairman of the Board of Directors and Director of
DWTC; Christine A. Edwards, Executive Vice President, Secretary and General
Counsel of DWDC, Executive Vice President, Secretary, General Counsel and
Director of DWR, Executive Vice President, Secretary, Chief Legal Officer and
Director of Distributors and Director of DWSC
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and InterCapital; and Thomas C. Schneider, Executive Vice President and Chief
Financial Officer of DWDC and Executive Vice President, Chief Financial
Officer and Director of DWR, Distributors, DWSC and InterCapital.
The business address of the foregoing Directors and Executive Officers is
Two World Trade Center, New York, New York 10048.
InterCapital and its wholly-owned subsidiary, DWSC, serve in various
investment management, advisory, management and administrative capacities to
investment companies and pension plans and other institutional and individual
investors. The Appendix lists the investment companies for which InterCapital
provides investment management or investment advisory services and sets forth
the net assets and fees payable by such companies.
DWDC has its offices at Two World Trade Center, New York, New York 10048.
There are various lawsuits pending against DWDC involving material amounts
which, in the opinion of management, will be resolved with no material effect
on the consolidated financial position of the company.
During the fiscal year ended May 31, 1994, the Trust accrued to Dean
Witter Trust Company, the Trust's Transfer Agent and an affiliate of the
Investment Adviser, transfer agency fees of $122,178.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Trustees, the
Investment Adviser is responsible for decisions to buy and sell securities
and futures contracts for the Trust, the selection of brokers and dealers to
effect the transactions, and the negotiation of brokerage commissions, if
any. Purchases of portfolio securities are made from dealers, underwriters
and issuers; sales, if any, prior to maturity, are made to dealers and
issuers. The Trust does not normally incur brokerage commission expenses on
such transactions. In accordance with its investment policies, the Trust's
principal investments are in debt securities which are generally traded in
the over-the-counter market on a "net" basis with dealers acting as principal
for their own accounts without a stated commission, although the price of the
security usually includes a profit to the dealer. Securities purchased in
underwritten offerings include a fixed amount of compensation to the
underwriter, generally referred to as the underwriter's concession or
discount. Options and futures transactions will usually be effected through a
broker and a commission will be charged. On occasion, the Trust may also
purchase certain money market instruments directly from an issuer, in which
case no commissions or discounts are paid.
The policy of the Trust regarding purchases and sales of securities and
commodities for its portfolio is that primary consideration will be given to
obtaining the most favorable price and efficient execution of transactions.
In seeking to implement the Trust's policy, the Investment Adviser will
effect transactions with those dealers who the Investment Adviser believes
provide the most favorable prices and are capable of providing efficient
executions. If the Investment Adviser believes such price and execution can
be obtained from more than one dealer, it may give consideration to placing
portfolio transactions with those dealers who also furnish research and other
services to the Trust or the Investment Adviser. Such services may include,
but are not limited to, any one or more of the following: information as to
the availability of securities for purchase or sale; statistical or factual
information or opinions pertaining to investments; wire services; and
appraisals or evaluations of portfolio securities. In transactions effected
with a dealer, acting as principal, who furnishes research services to the
Trust, the Trust will not purchase securities at a higher price or sell
securities at a lower price than would be the case if the dealer had not
furnished such services.
The information and services received by the Investment Adviser and its
affiliates from dealers may be of benefit to the Investment Adviser in the
management of accounts of some or all of its other clients and may not in all
cases benefit the Trust directly. While such services are useful and
important in supplementing its own
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research and facilities, the Investment Adviser believes the value of such
services is not determinable and does not significantly reduce its expenses.
The Trust does not reduce the management fee it pays to the Investment
Adviser by any amount that may be attributable to the value of such services.
During the fiscal year ended May 31, 1994, the Trust paid no brokerage
commissions. During the same period, the portfolio turnover rate of the Trust
was 23%.
Consistent with the policies described above, brokerage transactions in
securities listed on exchanges or admitted to unlisted trading privileges may
be effected through DWR. In order for DWR to effect any portfolio
transactions for the Trust, the commissions, fees or other remuneration
received by DWR must be reasonable and fair compared to the commissions, fees
or other remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on an
exchange during a comparable period of time. This standard would allow DWR to
receive no more than the remuneration which would be expected to be received
by an unaffiliated broker in a commensurate arm's-length transaction.
Furthermore, the Trustees of the Trust, including a majority of the
Independent Trustees, have adopted procedures which are reasonably designed
to provide that any commissions, fees or other remuneration paid to DWR are
consistent with the foregoing standard. During the fiscal year ended May 31,
1994, the Trust did not pay any brokerage commissions to DWR.
(3) RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Trustees have unanimously selected the firm of Price Waterhouse LLP as
the Trust's independent accountants for the fiscal year ending May 31, 1995.
Price Waterhouse LLP has been the independent accountants for the Trust since
its inception, and has no direct or indirect financial interest in the Trust.
A representative of Price Waterhouse LLP is expected to be present at the
Annual Meeting of Shareholders and will be available to make a statement, if
he or she so desires, and to respond to appropriate questions of
shareholders.
The affirmative vote of the holders of a majority of the shares
represented and entitled to vote at the Annual Meeting is required for
ratification of the selection of Price Waterhouse LLP as the independent
accountants for the Trust. Abstentions and broker "non-votes" will have the
same effect as a vote against the proposal.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS RATIFY THE
SELECTION OF PRICE WATERHOUSE LLP AS THE INDEPENDENT ACCOUNTANTS FOR THE
TRUST.
ADDITIONAL INFORMATION
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Meeting,
the persons named as proxies may propose one or more adjournments of the
Meeting for a total of not more than 60 days in the aggregate to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of the holders of a majority of the Trust's shares present
in person or by proxy at the Meeting. The persons named as proxies will vote
in favor of such adjournment those proxies which they are entitled to vote in
favor of Proposal Two and will vote against any such adjournment those
proxies required to be voted against that Proposal.
SHAREHOLDER PROPOSALS
Proposals of security holders intended to be presented at the next Annual
Meeting of Shareholders must be received no later than July 17, 1995 for
inclusion in the proxy statement and proxy for that meeting.
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OTHER BUSINESS
The management knows of no other matters which may be presented at the
Meeting. However, if any matters not now known properly come before the
Meeting, it is intended that the persons named in the attached form of proxy,
or their substitutes, will vote such proxy in accordance with their judgment
on such matters.
FINANCIAL STATEMENT OF INVESTMENT ADVISER
The balance sheet of the Investment Adviser, as of December 31, 1993,
annexed thereto as an Exhibit, is required by Rule 20a-2 under the Investment
Company Act of 1940. THIS IS NOT A FINANCIAL STATEMENT OF THE TRUST. The
Trust's financial statements are set forth in its Annual Report for the
fiscal year ended May 31, 1994, copies of which were previously sent to
shareholders.
By Order of the Trustees
SHELDON CURTIS
Secretary
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APPENDIX
InterCapital serves as investment manager or investment adviser to the
following investment companies, with the net assets shown as of October 20,
1994:
(1) Dean Witter High Yield Securities Inc., with assets of approximately
$460 million, for an investment management fee at an annual rate of 0.50% on
assets up to $500 million, scaled down at various asset levels to 0.30% on
assets over $3 billion; (2) Dean Witter Liquid Asset Fund Inc., with assets
of approximately $8.8 billion, for an investment management fee at an annual
rate of 0.50% on assets up to $500 million, scaled down at various asset
levels to 0.248% on assets over $17.5 billion; (3) Dean Witter Tax-Exempt
Securities Trust, with assets of approximately $1.4 billion, for an
investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various assets levels to 0.325% on assets over $1.25
billion; (4) Dean Witter Tax-Free Daily Income Trust, with assets of
approximately $604 million, for an investment management fee at an annual
rate of 0.50% on assets up to $500 million, scaled down at various asset
levels to 0.25% on assets over $3 billion; (5) Dean Witter American Value
Fund, with assets of approximately $1.5 billion, for an investment management
fee at an annual rate of 0.625% on assets up to $250 million and 0.50% on
assets over $250 million; (6) Dean Witter Dividend Growth Securities Inc.,
with assets of approximately $6.9 billion, for an investment management fee
at an annual rate of 0.625% on assets up to $250 million, scaled down at
various asset levels to 0.325% on assets over $8 billion; (7) Dean Witter
Variable Investment Series, with assets of approximately $2.6 billion, for an
investment management fee at an annual rate of 1.0% (of which 40% is paid to
a Sub-Adviser) of the net assets of each of the European Growth Portfolio and
the Pacific Growth Portfolio, 0.75% of the net assets of the Global Dividend
Growth Portfolio, 0.65% of the net assets of the Capital Growth Portfolio,
0.65% of the net assets of the Utilities Portfolio up to $500 million and
0.55% of the net assets of the Portfolio over $500 million, 0.625% of the net
assets of the Dividend Growth Portfolio up to $500 million and 0.50% of the
net assets of the Portfolio over $500 million, and 0.50% of the net assets of
each of the other five Portfolios; (8) Dean Witter Select Municipal
Reinvestment Fund, with assets of approximately $90 million, for an
investment management fee at an annual rate of 0.50%; (9) Active Assets Money
Trust, with assets of approximately $4.6 billion, for an investment
management fee at an annual rate of 0.50% on assets up to $500 million,
scaled down at various asset levels to 0.25% on assets over $3 billion; (10)
Active Assets Tax-Free Trust, with assets of approximately $1.5 billion, for
an investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3
billion; (11) Active Assets California Tax-Free Trust, with assets of
approximately $300 million, for an investment management fee of 0.50% on
assets up to $500 million, scaled down at various levels to 0.25% on assets
over $3 billion; (12) Active Assets Government Securities Trust, with assets
of approximately $505 million, for an investment management fee at an annual
rate of 0.50% on assets up to $500 million, scaled down at various asset
levels to 0.25% on assets over $3 billion; (13) Dean Witter Natural Resource
Development Securities Inc., with assets of approximately $148 million, for
an investment management fee at an annual rate of 0.625% on assets up to $250
million and 0.50% on assets over $250 million; (14) Dean Witter U.S.
Government Money Market Trust, with assets of approximately $755 million, for
an investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3
billion; (15) Dean Witter Developing Growth Securities Trust, with assets of
approximately $338 million, for an investment management fee at an annual
rate of 0.50% on assets up to $500 million and 0.475% on assets over $500
million; (16) Dean Witter U.S. Government Securities Trust, with assets of
approximately $9.0 billion, for an investment management fee at an annual
rate of 0.50% on assets up to $1 billion, scaled down at various asset levels
to 0.30% on assets over $12.5 billion; (17) Dean Witter California Tax-Free
Income Fund, with assets of approximately $1.1 billion, for an investment
management fee at an annual rate of 0.55% on assets up to $500 million,
scaled down at various asset levels to 0.475% on assets over $1 billion; (18)
Dean Witter New York Tax-Free Income Fund, with assets of approximately $221
million, for an investment management fee at an annual rate of 0.55% on
assets up to
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$500 million and 0.525% on assets over $500 million; (19) Dean Witter
Convertible Securities Trust, with assets of approximately $189 million, for
an investment management fee at an annual rate of 0.60% on assets up to $750
million, scaled down at various asset levels to 0.425% on assets over $3
billion; (20) Dean Witter Federal Securities Trust, with assets of
approximately $846 million, for an investment management fee at an annual
rate of 0.55% on assets up to $1 billion, scaled down at various asset levels
to 0.35% on assets over $12.5 billion; (21) InterCapital Income Securities
Inc., with assets of approximately $206 million, for an investment management
fee at an annual rate of 0.50%; (22) Dean Witter Value-Added Market Series,
with assets of approximately $496 million, for an investment management fee
at an annual rate of 0.50% on assets up to $500 million and 0.45% on assets
over $500 million; (23) Dean Witter Utilities Fund, with assets of
approximately $3.0 billion, for an investment management fee at an annual
rate of 0.65% on assets up to $500 million, scaled down at various asset
levels to 0.425% on assets over $5 billion; (24) Dean Witter California
Tax-Free Daily Income Trust, with assets of approximately $250 million, for
an investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3
billion; (25) Dean Witter Managed Assets Trust, with assets of approximately
$361 million, for an investment management fee at an annual rate of 0.60% on
assets up to $500 million and 0.55% on assets over $500 million; (26) High
Income Advantage Trust, with assets of approximately $158 million, for an
investment management fee at an annual rate of 0.75% on assets up to $250
million, scaled down at various asset levels to 0.30% on assets over $1
billion; (27) High Income Advantage Trust II, with assets of approximately
$213 million, for an investment management fee at an annual rate of 0.75% on
assets up to $250 million, scaled down at various asset levels to 0.30% on
assets over $1 billion; (28) High Income Advantage Trust III, with assets of
approximately $82 million, for an investment management fee at an annual rate
of 0.75% on assets up to $250 million, scaled down at various asset levels to
0.30% on assets over $1 billion; (29) Dean Witter Strategist Fund, with
assets of approximately $794 million, for an investment management fee at an
annual rate of 0.60% on assets up to $500 million, scaled down at various
asset levels to 0.50% on assets over $1 billion; (30) Dean Witter
Intermediate Income Securities, with assets of approximately $235 million,
for an investment management fee at an annual rate of 0.60% on assets up to
$500 million, scaled down at various asset levels to 0.30% on assets over $1
billion; (31) Dean Witter World Wide Income Trust, with assets of
approximately $182 million, for an investment management fee at an annual
rate of 0.75% on assets up to $250 million, scaled down at various asset
levels to 0.30% on assets over $1 billion; (32) Dean Witter Government Income
Trust, with assets of approximately $480 million, for an investment
management fee at an annual rate of 0.60%; (33) Dean Witter New York
Municipal Money Market Trust, with assets of approximately $42 million, for
an investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3
billion; (34) Dean Witter European Growth Fund Inc., with assets of
approximately $756 million, for an investment management fee at an annual
rate of 1.0% on assets up to $500 million and 0.95% on assets over $500
million (of which 40% is paid to a Sub-Adviser); (35) Dean Witter Capital
Growth Securities, with assets of approximately $460 million, for an
investment management fee at an annual rate of 0.65% on assets up to $500
million, scaled down at various asset levels to 0.475% on assets over $1.5
billion; (36) Dean Witter Precious Metals and Minerals Trust, with assets of
approximately $79 million, for an investment management fee at an annual rate
of 0.80%; (37) Dean Witter Global Short-Term Income Fund Inc., with assets of
approximately $173 million, for an investment management fee at an annual
rate of 0.55% on assets up to $500 million and 0.50% on assets over $500
million; (38) Dean Witter Pacific Growth Fund Inc., with assets of
approximately $1.5 billion, for an investment management fee at an annual
rate of 1.0% on assets up to $1 billion and 0.95% on assets over $1 billion
(of which 40% is paid to a Sub-Adviser); (39) InterCapital Insured Municipal
Bond Trust, with assets of approximately $116 million, for an investment
management fee at an annual rate of 0.35%; (40) InterCapital Quality
Municipal Investment Trust, with assets of approximately $405 million, for an
investment management fee at an annual rate of 0.35%; (41) InterCapital
Insured Municipal Trust, with assets of approximately $519 million, for an
investment management fee at an annual rate of 0.35%; (42) InterCapital
Quality Municipal
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Income Trust, with assets of approximately $807 million, for an investment
management fee at an annual rate of 0.35%; (43) Dean Witter Multi-State
Municipal Series Trust, with assets of approximately $436 million, for an
investment management fee at an annual rate of 0.35% of the net assets of
each Series; (44) Dean Witter Premier Income Trust, with assets of
approximately $45 million, for an investment management fee at an annual rate
of 0.50% (of which 40% is paid to a Sub-Adviser); (45) Dean Witter Short-Term
U.S. Treasury Trust, with assets of approximately $401 million, for an
investment management fee at an annual rate of 0.35%; (46) Dean Witter
Diversified Income Trust, with assets of approximately $405 million, for an
investment management fee at an annual rate of 0.40%; (47) Dean Witter Health
Sciences Trust, with assets of approximately $249 million, for an investment
management fee at an annual rate of 1.0%; (48) Dean Witter Retirement Series,
with assets of approximately $56 million, for an investment management fee at
an annual rate of 1.0% of the net assets of the Global Equity Series, 0.85%
of the net assets of each of the American Value Series, the Capital Growth
Series and the Strategist Series, 0.75% of the net assets of each of the
Dividend Growth Series and the Utilities Series, 0.65% of the net assets of
each of the U.S. Government Securities Series and the Intermediate Income
Securities Series, and 0.50% of the net assets of each of the Liquid Asset
Series, the U.S. Government Money Market Series and the Value-Added Market
Series; (49) InterCapital Insured Municipal Income Trust, with assets of
approximately $652 million, for an investment management fee at an annual
rate of 0.35%; (50) InterCapital California Insured Municipal Income Trust,
with assets of approximately $259 million, for an investment management fee
at an annual rate of 0.35%; (51) Dean Witter Global Dividend Growth
Securities, with assets of approximately $1.7 billion, for an investment
management fee at an annual rate of 0.75%; (52) InterCapital Quality
Municipal Securities, with assets of approximately $408 million, for an
investment management fee at an annual rate of 0.35%; (53) InterCapital
California Quality Municipal Securities, with assets of approximately $215
million, for an investment management fee at an annual rate of 0.35%; (54)
InterCapital New York Quality Municipal Securities, with assets of
approximately $98 million, for an investment management fee at an annual rate
of 0.35%; (55) Dean Witter Limited Term Municipal Trust, with assets of
approximately $114 million, for an investment management fee at an annual
rate of 0.50%; (56) Dean Witter Short-Term Bond Fund, with assets of
approximately $43 million, for an investment management fee at an annual rate
of 0.70%; (57) InterCapital Insured Municipal Securities, with assets of
approximately $135 million, for an investment management fee at an annual
rate of 0.35%; (58) InterCapital Insured California Municipal Securities,
with assets of approximately $60 million, for an investment management fee at
an annual rate of 0.35%; (59) Municipal Income Trust, with assets of
approximately $323 million, for an investment advisory fee at an annual rate
of 0.35% on assets up to $250 million and 0.25% on assets over $250 million;
(60) Municipal Income Trust II, with assets of approximately $279 million,
for an investment advisory fee at an annual rate of 0.40% on assets up to
$250 million and 0.30% on assets over $250 million; (61) Municipal Income
Trust III, with assets of approximately $62 million, for an investment
advisory fee at an annual rate of 0.40% on assets up to $250 million and
0.30% on assets over $250 million; (62) Municipal Income Opportunities Trust,
with assets of approximately $178 million, for an investment advisory fee at
an annual rate of 0.50%; (63) Municipal Income Opportunities Trust II, with
assets of approximately $173 million, for an investment advisory fee at an
annual rate of 0.50%; (64) Municipal Income Opportunities Trust III, with
assets of approximately $104 million, for an investment advisory fee at an
annual rate of 0.50%; (65) Municipal Premium Income Trust, with assets of
approximately $382 million, for an investment advisory fee at an annual rate
of 0.40%; (66) Prime Income Trust, with assets of approximately $316 million,
for an investment advisory fee at an annual rate of 0.90% on assets up to
$500 million and 0.85% on assets over $500 million; (67) Dean Witter Global
Utilities Fund, with assets of approximately $326 million, for an investment
management fee at an annual rate of 0.65%; (68) Dean Witter National
Municipal Securities, with assets of approximately $32 million, for an
investment management fee at an annual rate of 0.35%; (69) Dean Witter High
Income Securities, with assets of approximately $93 million, for an
investment management fee at an annual rate of 0.50%; (70) Dean Witter
International SmallCap Fund, with assets of approximately $99 million, for an
investment management fee at
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an annual rate of 1.25%; (71) Dean Witter Mid-Cap Growth Fund, with assets of
approximately $78 million, for an investment management fee at an annual rate
of 0.75% and (72) Dean Witter Select Dimensions Investment Series, a new
investment company, for an investment management fee at an annual rate of
0.625% of the net assets of each of the Dividend Growth Portfolio and the
American Value Portfolio, 0.40% of the net assets of the Diversified Income
Portfolio, 0.50% of the net assets of each of the Money Market Portfolio, the
Value-Added Market Series Portfolio and the Developing Growth Portfolio,
0.65% of the net assets of each of the North American Government Securities
Portfolio and the Utilities Portfolio, 0.75% of the net assets of the
Balanced Portfolio, 0.85% of the net assets of Core Equity Portfolio, 1.00%
of the net assets of the Global Equity Portfolio and 1.25% of the net assets
of the Emerging Markets Portfolio. InterCapital also serves as Investment
Adviser of Dean Witter World Wide Investment Trust and Dean Witter World Wide
Investment Fund, along with Daiwa International Capital Management Corp. and
NatWest Investment Management Limited. Dean Witter World Wide Investment
Trust had assets of approximately $624 million and InterCapital receives an
Investment Adviser's fee at an annual rate of 0.55% of the Trust's daily net
assets up to $500 million and 0.5225% of the Trust's daily net assets over
$500 million. Shares of Dean Witter World Wide Investment Fund, an investment
company organized under the laws of Luxembourg, are not offered for purchase
in the United States or to American citizens outside of the United States.
InterCapital also serves as sub-adviser to Templeton Global Opportunities
Trust, with assets of approximately $517 million, for which it receives a fee
of 0.25% per annum.
I-4
<PAGE>
<PAGE>
EXHIBIT
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders of
Dean Witter InterCapital Inc.:
We have audited the accompanying balance sheet of Dean Witter InterCapital
Inc. (the "Company") (a wholly-owned subsidiary of Dean Witter, Discover &
Co. ) as of December 31, 1993. This financial statement is the responsibility
of the Company's management. Our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such balance sheet presents fairly, in all material
respects, the financial position of Dean Witter InterCapital at December 31,
1993 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
February 28, 1994
A-1
<PAGE>
<PAGE>
DEAN WITTER INTERCAPITAL INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
ASSET
Cash and cash equivalents ........................................................... $ 57,810
Management and administration fees receivable ....................................... 27,010
Investments ......................................................................... 7,644
Office facilities, at cost (less accumulated depreciation and amortization of
$5,122) ............................................................................ 3,892
Other assets ........................................................................ 18,176
----------
$114,532
==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Income taxes payable (Note 3) ....................................................... $ 45,545
Dividends payable ................................................................... 12,662
Accrued compensation and employee benefits .......................................... 12,337
Payable to affiliate ................................................................ 4,000
Other liabilities ................................................................... 14,998
----------
Total liabilities ............................................................... 89,532
----------
Stockholder's equity:
Common stock, $.01 par value; 1,000 shares authorized and outstanding ............. --
Additional paid-in capital ......................................................... 10,000
Retained earnings .................................................................. 15,000
----------
Total stockholder's equity ...................................................... 25,000
----------
$114,532
==========
</TABLE>
See notes to consolidated balance sheet.
A-2
<PAGE>
<PAGE>
DEAN WITTER INTERCAPITAL INC.
NOTES TO CONSOLIDATED BALANCE SHEET
1. INTRODUCTION AND BASIS OF PRESENTATION
The consolidated balance sheet includes the accounts of Dean Witter
InterCapital Inc. and its wholly-owned subsidiaries (the "Company"). The
Company is wholly-owned by Dean Witter, Discover & Co. ("DWDC"), which was
formerly a subsidiary of Sears, Roebuck and Co. ("Sears"). All material
intercompany balances and transactions with its subsidiaries have been
eliminated.
On March 1, 1993, DWDC completed an initial public offering of 33.8
million shares of its common stock at $27 per share. This transaction had the
effect of reducing Sears ownership in DWDC to 80.1 percent. On June 30, 1993,
Sears divested its remaining ownership of DWDC's common stock by means of a
special dividend to Sears shareholders.
On December 22, 1993, Dean Witter Reynolds Inc. ("DWR") transferred the
net assets of the Company in the form of a dividend to DWDC. Prior to
December 22, 1993, the Company was wholly-owned by DWR, a wholly-owned
subsidiary of DWDC.
The Company is a registered investment adviser under the Investment
Advisers Act of 1940. The Company sponsors and performs management and
administrative services for mutual funds, principally those sold by DWR ("DWR
funds"). The Company also performs such services for individual,
institutional, trust and estate accounts.
The Company commenced operations in January 1993 and assumed the advisory
business of DWR.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash equivalents consist of highly liquid investments not held for resale
with maturities, when purchased, of three months or less.
Fixed assets are generally depreciated utilizing accelerated methods over
useful lives of five to eight years. Leasehold improvements are amortized
over the lesser of the lease term or useful life.
3. INCOME TAXES
The Company provides deferred income taxes which result from recording
certain transactions in different years for tax and financial reporting
purposes.
Payments for income taxes are limited to those which would result from the
Company filing a separate federal income tax return.
The Company has available net operating loss carryforwards at December 31,
1993 in the amount of $112,200,000 which begin to expire in 2002.
4. RELATED PARTY TRANSACTIONS
Certain administrative services are provided by DWR which are reimbursed
by the Company.
5. EMPLOYEE BENEFIT PLANS
Substantially all employees are covered by a non-contributory defined
benefit pension plan sponsored by DWR. Pension benefits are based on length
of service and average annual compensation.
A-3
<PAGE>
<PAGE>
Certain employees are covered by postretirement plans sponsored by DWR
that provide medical and life insurance for retirees and eligible dependents.
Eligibility for retiree medical and life benefits is generally based on a
combination of age and years of service at retirement.
The Company reimburses DWR for pension and other postretirement benefit
expenses.
6. LITIGATION
The Company has been named as a defendant in various lawsuits. It is the
opinion of management, after consultation with outside counsel, that the
resolution of such suits will not have a material adverse effect on the
consolidated financial condition of the Company.
7. FINANCIAL INSTRUMENTS FAIR VALUE INFORMATION
The estimated fair value amounts of financial instruments have been
determined by the Company using available market information and appropriate
valuation methodologies. Considerable judgment is required to develop
estimates of fair value.
Substantially all financial instruments on the Company's consolidated
balance sheet are carried at fair value or at amounts which approximate fair
value.
A-4
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
ANNUAL MEETING OF SHAREHOLDERS--DECEMBER 22, 1994
PROXY
The undersigned hereby appoints EDMUND C. PUCKHABER, SHELDON CURTIS,
ROBERT M. SCANLAN, or any of them, proxies, each with the power of
substitution, to vote on behalf of the undersigned at the Annual Meeting of
Shareholders of Municipal Premium Income Trust on December 22, 1994 at 9:00
A.M., New York City time, and at any adjournment thereof, on the proposals
set forth in the Notice of Meeting dated November 1, 1994 as follows:
THIS PROXY IS SOLICITED BY THE TRUSTEES. IF NO SPECIFICATION IS MADE ON
THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR TRUSTEE.
(Continued, and to be dated and signed on reverse side.)
<PAGE>
PREFERRED SHARES
PLEASE MARK BOXES [//] OR [X] IN BLUE OR BLACK INK.
1. ELECTION OF TRUSTEES:
[ ] FOR THE NOMINEES
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
(to vote for all nominees listed below)
Michael Bozic, Manuel H. Johnson, Paul Kolton, Philip J. Purcell, John J.
Schroeder
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
- - -----------------------------------------------------------------------------
2. APPROVAL OF INVESTMENT ADVISORY AGREEMENT:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. RATIFICATION OF APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
097
and in their discretion in the transaction of any other business which may
properly come before the meeting.
Please sign personally. If the share is registered in more than one name,
each joint owner or each fiduciary should sign personally. Only authorized
officers should sign for corporations.
Dated
- - -----------------------------------------------------------------------------
- - -----------------------------------------------------------------------------
Signature
- - -----------------------------------------------------------------------------
Signature
IMPORTANT: PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE.
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
ANNUAL MEETING OF SHAREHOLDERS--DECEMBER 22, 1994
PROXY
The undersigned hereby appoints EDMUND C. PUCKHABER, SHELDON CURTIS,
ROBERT M. SCANLAN, or any of them, proxies, each with the power of
substitution, to vote on behalf of the undersigned at the Annual Meeting of
Shareholders of Municipal Premium Income Trust on December 22, 1994 at 9:00
a.m., New York City time, and at any adjournment thereof, on the proposals
set forth in the Notice of Meeting dated November 1, 1994 as follows:
THIS PROXY IS SOLICITED BY THE TRUSTEES. IF NO SPECIFICATION IS MADE ON
THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR TRUSTEE AND
FOR THE PROPOSALS.
(Continued, and to be dated and signed on reverse side.)
<PAGE>
<PAGE>
COMMON SHARES
PLEASE MARK BOXES [//] OR [X] IN BLUE OR BLACK INK.
1. ELECTION OF TRUSTEES:
[ ] FOR ALL NOMINEES
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
(to vote for all nominees listed below)
Michael Bozic, Manuel H. Johnson, Paul Kolton, Philip J. Purcell, John L.
Schroeder
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
- - -----------------------------------------------------------------------------
2. APPROVAL OF INVESTMENT ADVISORY AGREEMENT:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. RATIFICATION OF APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
097
and in their discretion in the transaction of any other business which may
properly come before the meeting.
Please sign personally. If the share is registered in more than one name,
each joint owner or each fiduciary should sign personally. Only authorized
officers should sign for corporations.
Dated
- - -----------------------------------------------------------------------------
- - -----------------------------------------------------------------------------
Signature
- - -----------------------------------------------------------------------------
Signature
IMPORTANT: PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE.
