Schedule 14A Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Preliminary Additional Materials
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.149-11(c) or
Section 240.14a-12
Municipal Income Opportunities Trust III . . . . . . . . .
(Name of Registrant as Specified in its Charter)
Lou Anne D. McInnis . . . . . . . . . . . . . . . . . . . . . . .
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(j)(1), or
14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(j)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(j)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2) Aggregate number of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4) Proposed maximum aggregate value of transaction:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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MUNICIPAL INCOME OPPORTUNITIES TRUST III
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 25, 1994
The Annual Meeting of Shareholders of MUNICIPAL INCOME OPPORTUNITIES TRUST
III (the "Trust"), an unincorporated business trust organized under the laws
of the Commonwealth of Massachusetts, will be held in the Conference Center,
Sixty-First Floor, 2 World Trade Center, New York, New York 10048, on October
25, 1994 at 9:00 A.M., New York City time, for the following purposes:
1. To elect six (6) Trustees, one (1) to serve until the 1995 Annual
Meeting, (1) one to serve until the 1996 Annual Meeting, and four (4) 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 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 as the
Trust's independent accountants for the fiscal year ending March 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 July 29, 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 the proposal to continuance of the Investment Advisory Agreement and
will vote against any such adjournment those proxies required to be voted
against that proposal.
SHELDON CURTIS,
Secretary
August 5, 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 INCOME OPPORTUNITIES TRUST III
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 25, 1994
This statement is furnished in connection with the solicitation of proxies
by the Trustees of MUNICIPAL INCOME OPPORTUNITIES TRUST III (the "Trust") for
use at the Annual Meeting of Shareholders of the Trust to be held on October
25, 1994, and at any adjournments thereof. (The Trust was formerly named
Allstate Municipal Income Opportunities Trust III.)
If the enclosed form of proxy is properly executed and returned in time to
be voted at the meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon.
Unmarked proxies will be voted for each of the nominees for election as
Trustee and in favor of Proposals 2 and 3 as set forth in the Notice of
Annual Meeting of Shareholders. A proxy may be revoked at any time prior to
its exercise by any of the following: written notice of revocation, execution
and delivery of a later dated proxy to the Secretary of the Trust, or
attendance and voting at the Annual Meeting of Shareholders.
Shareholders as of the close of business on July 29, 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 July 29, 1994 there were 11,456,706 shares of
beneficial interest of the Trust outstanding, all with $0.01 par value. No
person was known to own as much as 5% of the outstanding shares of the Trust
on that date. The Trustees and Officers of the Trust, together, owned less
than 1% of the Trust's outstanding shares on that date. The percentage
ownership of shares of the Trust changes from time to time depending on
purchases and sales by shareholders and the total number of shares
outstanding.
The cost of soliciting proxies for this Annual Meeting of Shareholders,
consisting principally of printing and mailing expenses, will be borne by the
Trust. The solicitation of proxies will be by mail, which may be supplemented
by solicitation by mail, telephone or otherwise through Trustees, officers
and regular employees of the Trust, or Dean Witter InterCapital Inc.
("InterCapital" or the "Investment Adviser") without special compensation
therefor. The first mailing of this proxy statement is expected to be made on
or about August 5, 1994.
(1) ELECTION OF TRUSTEES
The number of Trustees has been fixed by the Trustees, pursuant to the
Trust's Declaration of Trust, at twelve. At the Meeting, six nominees are to
be elected to the Trust's Board of Trustees. There are presently twelve
Trustees, six of whom (Edwin J. Garn, John R. Haire, Michael E. Nugent and
Philip J. Purcell) are standing for election at this Meeting to serve until
the 1997 Annual Meeting, one of whom (Michael Bozic) is standing for election
at this Meeting to serve until the 1995 Annual Meeting, and one of whom (John
L. Schroeder) is standing for election at this Meeting to serve until the
1996 Annual Meeting in accordance with the Trust's Declaration of Trust, as
amended.
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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, as amended (the "Act"). 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 as Trustees of the Trust by the Trustees
on April 8, 1994. All of the other Trustees have been elected by the
shareholders of the Trust.
The Board of Trustees has two committees--an Audit Committee and a
Committee of the Independent Trustees--consisting, in both cases, of the
Independent Trustees of the Trust. Mr. Haire serves as the Chairman of both
Committees. There are no nominating or compensation committees of the
Trustees.
The functions of the Audit Committee are: recommendation to the 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.
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, Edwin J. Garn, John R. Haire, Michael E. Nugent, 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 (Section
2.2, as amended), the nominees for election as Trustees are divided into
three separate classes, each class having a term of three years. The term of
office of one of 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, Fiumefreddo
and Jeuck; Class II-Messrs. Johnson, Kolton, Schroeder and Telling; and Class
III-Messrs. Garn, Haire, Nugent and Purcell. Each nominee will, if elected,
serve a term of up to approximately three years running for the period
assigned to that class and terminating at the date of the Annual Meeting of
Shareholders so designated by the Board of Trustees, or any adjournment
thereof. As a consequence of
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this method of election, the replacement of a majority of the Board of
Trustees could be delayed for up to two years. As stated above, one Trustee
in Class I 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, one Trustee in Class II 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, and four Trustees
in Class III 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.
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 July 29, 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, 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, Dean Witter Intermediate Income Securities, High Income Advantage
Trust III, Dean Witter World Wide 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, 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, Municipal Income Trust,
Municipal Income Trust II, Municipal Income Trust III, Municipal Premium
Income Trust, Municipal Income Opportunities Trust, Municipal Income
Opportunities Trust II, Prime Income Trust, Active Assets Money Trust, Active
Assets California Tax-Free Trust, Active Assets Tax-Free Trust and Active
Assets Government Securities Trust (said investment companies, together with
the Trust, are referred to herein collectively as the "Dean Witter Funds"),
and TCW/DW Balanced Fund, 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 North American Intermediate
Income Trust, TCW/DW Emerging Markets Opportunities Trust, TCW/DW Term Trust
2000, TCW/DW Term Trust 2002 and TCW/DW Term Trust 2003 (the "TCW/DW Funds").
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The nominees for Trustee to be elected at this Meeting are:
MICHAEL BOZIC, Trustee since April, 1994; age 53; President and Chief
Executive Officer of Hills Department Stores (since May, 1991); formerly
Chairman and Chief Executive Officer (January, 1987-August, 1990) and
President and Chief Operating Officer (August, 1990-February, 1991) of the
Sears Merchandise Group of Sears, Roebuck and Co. ("Sears"); Director or
Trustee of the Dean Witter Funds; Director of Harley Davidson Credit Inc.,
the United Negro College Fund and Domain Inc., (home decor retailer).
EDWIN JACOB (JAKE) GARN, Trustee since January, 1993; age 61; Director or
Trustee of the Dean Witter Funds; formerly United States Senator (R-Utah)
(1974-1992) and Chairman, Senate Banking Committee (1980-1986); formerly
Mayor of Salt Lake City, Utah (1971-1974); formerly Astronaut, Space Shuttle
Discovery (April 12-19, 1985); Vice Chairman, Huntsman Chemical Corporation
(since January, 1993); Member of the board of various civic and charitable
organizations.
JOHN R. HAIRE, Trustee since 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.
PHILIP J. PURCELL,* Trustee since April, 1994, age 50; Chairman of the
Board of Directors and Chief Executive Officer of Dean Witter, Discover & Co.
("DWDC"), Dean Witter Reynolds Inc. ("DWR") and Novus Credit Services Inc.;
Director of InterCapital, 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 this 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-January, 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 Company;
director or trustee of various not-for-profit and business organizations.
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).
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DR. JOHN E. JEUCK, Trustee since March, 1990; age 77; Retired; Director or
Trustee of the Dean Witter Funds; formerly Robert Law Professor of Business
Administration, Graduate School of Business, University of Chicago (until
July, 1989); Business consultant.
DR. 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); Director
or Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds; Co-Chairman
and a founder of the Group of Seven Council (G7C), an international economic
commission (since September, 1990); 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 Financial Accounting Standards Advisory Council;
formerly Chairman and Chief Executive Officer of the American Stock Exchange;
Director of UCC Investors Holding Inc. (Uniroyal Chemical Company, Inc.);
director or trustee of various not-for-profit organizations.
EDWARD R. TELLING,* Trustee since March, 1990; age 75; retired;
Director or Trustee of the Dean Witter Funds; formerly Chairman of the Board
of Directors and Chief Executive Officer (1978-1985) and President (from
January, 1981-March, 1982 and from February, 1984-August, 1984) of Sears;
formerly Director of Sears.
The 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. He has been an
employee of InterCapital or DWR, the corporate parent of InterCapital, for
over five years. Mr. Scanlan is 58 years old and is currently President and
Chief Operating Officer of InterCapital (since March, 1993) and DWSC; he is
also Executive Vice President of Distributors and Executive Vice President
and Director of DWTC. He was previously Executive Vice President of
InterCapital (November, 1990-March, 1993) and prior thereto was Chairman of
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). He has been an employee of
InterCapital or DWR for over five years. Mr. Puckhaber is 54 years old and is
currently Executive Vice President of InterCapital (since January, 1991). He
has been an employee of InterCapital or DWR for over five years. Mr. Willison
is 50 years old and is currently Senior
- - ---------------
* Messrs. Fiumefreddo, Purcell and Telling may be deemed "interested
persons" of the Trust and its Investment Adviser as defined in Section
2(a)(19) of the Act, due to their affiliation with the Investment Adviser
and/or its affiliated companies.
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Vice President of InterCapital. He has been an employee of InterCapital or
DWR for over five years. Mr. Caloia is 48 years old and is currently First
Vice President and Assistant Treasurer of InterCapital and DWSC. He has been
an employee of InterCapital or DWR for over five years. 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 46 years old and is currently
Vice President of InterCapital. He has been an employee of InterCapital or
DWR 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, the Audit
Committee or the Committee of the Independent Trustees attended by the
Trustee in person (the Trust pays the Chairman of the Audit Committee an
additional annual fee of $1,000 and pays the Chairman of the Committee of the
Independent Trustees an additional annual fee of $2,400, in each case
inclusive of the Committee meeting fees), together with any out-of-pocket
expenses incurred 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. No Independent Trustee has retired since the adoption
of the program and no payments by the Trust have been made under it to any
Trustee. For the fiscal year ended March 31, 1994, the Trust accrued a total
of $32,457 in Trustees' fees and expenses and benefits under the retirement
program. 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 March 31, 1994, the Board held two meetings, and the Audit Committee
and the Committee of the Independent Trustees, which are both presently
comprised of the nine Independent Trustees, held three meetings and thirteen
meetings, respectively. During the fiscal year ended March 31, 1994, no
Trustee attended fewer than 75% of the meetings of the Board of Trustees, the
Audit Committee and the Committee of the Independent Trustees held while he
served in such positions.
(2) APPROVAL OR DISAPPROVAL OF CURRENTLY
EFFECTIVE INVESTMENT ADVISORY AGREEMENT
The Trust's investments are managed by Dean Witter InterCapital Inc.
(referred to herein as the "Investment Adviser" or "InterCapital"), pursuant
to an Investment Advisory Agreement dated June 30, 1993 (referred to herein
as the "Advisory Agreement"). 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 Advisory
Agreement was approved for an initial term ending April 30, 1994. 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
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continuance of the Advisory Agreement by the required majority vote at the
forthcoming meeting or any adjournment thereof, the Board of Trustees of the
Trust will take such action as it deems to be in the best interest of the
Trust and its shareholders, which may include calling a special meeting of
shareholders to vote on a new investment advisory agreement.
In considering whether or not to approve the Advisory Agreement, the Board
of Trustees reviewed the terms of the agreement and considered all materials
and information deemed relevant to its determination. Among other things, the
Board considered the nature and scope of services to be rendered, the quality
of the Adviser's services and personnel, and the appropriateness of the fees
that are paid under the Advisory Agreement. Based upon its review, the Board
of Trustees, including all of the Independent Trustees, determined that the
approval of the Advisory Agreement was in the best interests of the Trust and
its shareholders.
The favorable vote of a majority of the outstanding voting securities of
the Trust is required for the approval of the Advisory Agreement. Such a
majority is defined in the Act as the lesser of: (a) 67% or more of the
shares present at the Meeting, if the holders of more than 50% of the
outstanding shares of the Trust are present or represented by proxy, or (b)
more than 50% of the outstanding shares.
THE 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 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 $550,986 during the
fiscal year ended March 31, 1994. The net assets of the Trust totalled
$106,915,588 at March 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;
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fees and travel expenses of Trustees or members of any advisory board or
committee who are not employees of the Trust's Administrator or Investment
Adviser or any of their corporate affiliates; all expenses incident to the
payment of any dividend or distribution program; charges and expenses of any
outside pricing services; charges and expenses of legal counsel, including
counsel to the Independent Trustees of the Trust, and independent accountants
in connection with any matter relating to the Trust (not including
compensation or expenses of attorneys employed by the Trust's Administrator
or Investment Adviser); membership dues of industry associations; interest
payable on Trust borrowings; fees and expenses incident to the listing of the
Trust's shares on any stock exchange; postage; insurance premiums on property
or personnel (including officers and Trustees) of the Trust which inure to
its benefit; extraordinary expenses (including, but not limited to, legal
claims, liabilities, litigation costs and any indemnification related
thereto); and all other charges and costs of the Trust's operations unless
otherwise explicitly provided in the Advisory Agreement.
The Advisory Agreement also provides that it may be terminated at any time
by the Investment Adviser, the Trustees of the Trust or by a vote of a
majority of the outstanding voting securities of the Trust, in each instance
without the payment of any penalty, on thirty days' notice and will
automatically terminate upon any assignment.
INVESTMENT ADVISER
Dean Witter InterCapital Inc. is the Trust's investment adviser.
InterCapital maintains its offices at Two World Trade Center, New York, New
York 10048. InterCapital, which was incorporated in July, 1992, is a
wholly-owned subsidiary of Dean Witter, Discover & Co. ("DWDC"), a balanced
financial services organization providing a broad range of nationally
marketed credit and investment products. In an internal reorganization which
took place in January, 1993, InterCapital assumed the investment advisory,
management and administrative activities previously performed by the
InterCapital Division of DWR.
InterCapital's wholly-owned subsidiary, DWSC serves as the Administrator
of the Trust and receives from the Trust compensation which is computed
weekly and payable monthly and which is determined by applying the annual
rate of 0.30% to the Trust's weekly net assets. Prior to December 31, 1993
InterCapital served as Administrator of the Trust and received compensation
at the same annual rate. For the fiscal year ended March 31, 1994, the Trust
accrued to InterCapital and to DWSC, pursuant to an Administration Agreement,
total compensation of $330,592.
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, Chief Operating Officer of Dean Witter
Capital and Director of DWR, Distributors, InterCapital and DWSC; James F.
Higgins, President, Chief Operating Officer of Dean Witter Financial and
Director of DWR, Distributors, InterCapital and DWSC; Charles A. Fiumefreddo,
Executive Vice President and Director of DWR and Chairman of the Board of
Directors and Chief Executive Officer and Director of InterCapital, DWSC and
Distributors; Christine A. Edwards, Executive Vice President, Secretary,
General Counsel and Director of DWR and Distributors, and Director of
InterCapital and DWSC; and Thomas C. Schneider, Executive Vice President,
Chief Financial Officer and Director of DWR, Distributors, InterCapital and
DWSC.
The business address of the foregoing Directors and Executive Officers is
Two World Trade Center, New York, New York 10048.
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InterCapital and DWSC serve in various investment management, advisory,
management and administrative capacities to investment companies and pension
plans and other institutional and individual investors. The Appendix lists
the investment companies for which InterCapital provides investment
management or investment advisory services and sets forth the net assets of
and the fees payable by such companies.
DWDC has its offices at Two World Trade Center, New York, New York 10048.
There are various lawsuits pending against DWR and DWDC involving material
amounts which, in the opinion of their management, will be resolved with no
material effect on the consolidated financial position of the company.
During the fiscal year ended March 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 $61,242.
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 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 advisory fee
it pays to the Investment Adviser by any amount that may be attributable to
the value
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of such services. During the fiscal year ended March 31, 1994, the Trust paid
no brokerage commissions. During the same period, the portfolio turnover rate
of the Trust was 12%.
Consistent with the policies described above, brokerage transactions in
securities listed on exchanges or admitted to unlisted trading privileges may
be effected through DWR. In order for DWR to effect any portfolio
transactions for the Trust, the commissions, fees or other remuneration
received by DWR must be reasonable and fair compared to the commissions, fees
or other remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on an
exchange during a comparable period of time. This standard would allow DWR to
receive no more than the remuneration which would be expected to be received
by an unaffiliated broker in a commensurate arm's-length transaction.
Furthermore, the Trustees of the Trust, including a majority of the
Independent Trustees, have adopted procedures which are reasonably designed
to provide that any commissions, fees or other remuneration paid to DWR are
consistent with the foregoing standard. During the fiscal year ended March
31, 1994, the Trust did not pay any brokerage commissions to DWR.
(2) RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Trustees have unanimously selected the firm of Price Waterhouse as the
Trust's independent accountants for the fiscal year ending March 31, 1995.
Price Waterhouse 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 is expected to be present at the
Annual Meeting of Shareholders and will be available to make a statement, if
he or she so desires, and to respond to appropriate questions of
shareholders.
The affirmative vote of the holders of a majority of the shares
represented and entitled to vote at the Annual Meeting is required for
ratification of the selection of Price Waterhouse as the independent
accountants for the Trust. Abstentions and broker "non-votes" will have the
same effect as a vote against the proposal.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS RATIFY THE
SELECTION OF PRICE WATERHOUSE AS THE INDEPENDENT ACCOUNTANTS FOR THE TRUST.
ADDITIONAL INFORMATION
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Meeting,
the persons named as proxies may propose one or more adjournments of the
Meeting for a total of not more than 60 days in the aggregate to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of the holders of a majority of the Trust's shares present
in person or by proxy at the Meeting. The persons named as proxies will vote
in favor of such adjournment those proxies which they are entitled to vote in
favor of Proposal Two and will vote against any such adjournment those
proxies required to be voted against that proposal.
SHAREHOLDER PROPOSALS
Proposals of security holders intended to be presented at the next Annual
Meeting of Shareholders must be received no later than June 15, 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 March 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 July 29,
1994:
(1) Dean Witter High Yield Securities Inc., with assets of approximately
$500 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 $8.6 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 0.248% 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 $1.4 billion, for an investment management
fee at an annual rate of 0.625% on assets up to $250 million and 0.50% on
assets over $250 million; (6) Dean Witter Dividend Growth Securities Inc.,
with assets of approximately $6.8 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 $2.7 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 $93 million, for an
investment management fee at an annual rate of 0.50%; (9) Active Assets Money
Trust, with assets of approximately $4.4 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 $282 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 $512 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 $147 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 $769 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 $307 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 $10.1 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 $231
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 $190 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 $927 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 $212 million, for an investment management
fee at an annual rate of 0.50%; (22) Dean Witter Value-Added Market Series,
with assets of approximately $475 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 $3.3 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 $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; (25) Dean Witter Managed Assets Trust, with assets of approximately
$305 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 $504 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
$225 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 $86 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 $806 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 $246 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 $201 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 $504 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 $44 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 $693 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 $485 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 $68 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 $198 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 $1.4 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 $119 million, for an investment
management fee at an annual rate of 0.35%; (40) InterCapital Quality
Municipal Investment Trust, with assets of approximately $418 million, for an
investment management fee at an annual rate of 0.35%; (41) InterCapital
Insured Municipal Trust, with assets of approximately $540 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 $847 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 $466 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 $51 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 $463 million, for an
investment management fee at an annual rate of 0.35%; (46) Dean Witter
Diversified Income Trust, with assets of approximately $392 million, for an
investment management fee at an annual rate of 0.40%; (47) Dean Witter Health
Sciences Trust, with assets of approximately $229 million, for an investment
management fee at an annual rate of 1.0%; (48) Dean Witter Retirement Series,
with assets of approximately $38 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 $540 million, for an investment management fee at an annual
rate of 0.35%; (50) InterCapital California Insured Municipal Income Trust,
with assets of approximately $273 million, for an investment management fee
at an annual rate of 0.35%; (51) Dean Witter Global Dividend Growth
Securities, with assets of approximately $1.4 billion, for an investment
management fee at an annual rate of 0.75%; (52) InterCapital Quality
Municipal Securities, with assets of approximately $441 million, for an
investment management fee at an annual rate of 0.35%; (53) InterCapital
California Quality Municipal Securities, with assets of approximately $229
million, for an investment management fee at an annual rate of 0.35%; (54)
InterCapital New York Quality Municipal Securities, with assets of
approximately $104 million, for an investment management fee at an annual
rate of 0.35%; (55) Dean Witter Limited Term Municipal Trust, with assets of
approximately $135 million, for an investment management fee at an annual
rate of 0.50%; (56) Dean Witter Short-Term Bond Fund, with assets of
approximately $45 million, for an investment management fee at an annual rate
of 0.70%; (57) InterCapital Insured Municipal Securities, with assets of
approximately $146 million, for an investment management fee at an annual
rate of 0.35%; (58) InterCapital Insured California Municipal Securities,
with assets of approximately $64 million, for an investment management fee at
an annual rate of 0.35%; (59) Municipal Income Trust, with assets of
approximately $333 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 $288 million,
for an investment advisory fee at an annual rate of 0.40% on assets up to
$250 million and 0.30% on assets over $250 million; (61) Municipal Income
Trust III, with assets of approximately $64 million, for an investment
advisory fee at an annual rate of 0.40% on assets up to $250 million and
0.30% on assets over $250 million; (62) Municipal Income Opportunities Trust,
with assets of approximately $181 million, for an investment advisory fee at
an annual rate of 0.50%; (63) Municipal Income Opportunities Trust II, with
assets of approximately $177 million, for an investment advisory fee at an
annual rate of 0.50%; (64) Municipal Income Opportunities Trust III, with
assets of approximately $108 million, for an investment advisory fee at an
annual rate of 0.50%; (65) Municipal Premium Income Trust, with assets of
approximately $394 million, for an investment advisory fee at an annual rate
of 0.40%; (66) Prime Income Trust, with assets of approximately $283 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 $252 million, for an investment
management fee at an annual rate of 0.65%; (68) Dean Witter National
Municipal Securities, with assets of approximately $19 million, for an
investment advisory fee at an annual rate of 0.35%; (69) Dean Witter High
Income Securities, with assets of approximately $48 million, for an
investment advisory fee at an annual rate of 0.50%; and (70) Dean Witter
International SmallCap Fund, with assets of approximately $77 million, for an
investment advisory fee at an annual rate of
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1.25%. 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 $570 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 $487 million, for which it receives a fee of 0.25%
per annum.
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EXHIBIT
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders of
Dean Witter InterCapital Inc.:
We have audited the accompanying balance sheet of Dean Witter InterCapital
Inc. (the "Company") (a wholly-owned subsidiary of Dean Witter, Discover &
Co.) as of December 31, 1993. This financial statement is the responsibility
of the Company's management. Our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such balance sheet presents fairly, in all material
respects, the financial position of Dean Witter InterCapital at December 31,
1993 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
February 28, 1994
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DEAN WITTER INTERCAPITAL INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993
(IN THOUSANDS)
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<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
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$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
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<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.
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<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
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<PAGE>
MUNICIPAL INCOME OPPORTUNITIES TRUST III
ANNUAL MEETING OF SHAREHOLDERS--OCTOBER 25, 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 Income Opportunities Trust III on October 25, 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 August 5, 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>
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
Michael Bozic, Edwin J. Garn, John R. Haire, Michael E. Nugent, 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.)
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2. APPROVAL OF INVESTMENT ADVISORY AGREEMENT:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. RATIFICATION OF APPOINTMENT OF PRICE WATERHOUSE AS INDEPENDENT
ACCOUNTANTS:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
119
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.
