AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 23, 1996
REGISTRATION NO.: 33-41187
811-6330
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 6 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
AMENDMENT NO. 7 [X]
--------------------
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
(A MASSACHUSETTS BUSINESS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
SHELDON CURTIS, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
--------------------
COPY TO:
DAVID M. BUTOWSKY, ESQ.
GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
--------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Post-Effective Amendment becomes effective.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
X immediately upon filing pursuant to paragraph (b)
__ on (date) pursuant to paragraph (b)
__ 60 days after filing pursuant to paragraph (a)
__ on (date) pursuant to paragraph (a) of rule 485.
--------------------
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO SECTION (A)(1) OF RULE 24F-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940. PURSUANT TO SECTION (B)(2) OF RULE 24F-2, THE
REGISTRANT FILED A RULE 24F-2 NOTICE FOR ITS FISCAL YEAR ENDED MAY 31, 1996
WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 27, 1996.
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
==============================================================================
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
CROSS-REFERENCE SHEET
FORM N-1A
<TABLE>
<CAPTION>
ITEM CAPTION
---- -------
PART A PROSPECTUS
<S> <C>
1. ...........Cover Page
2. ...........Prospectus Summary; Summary of Fund Expenses
3. ...........Financial Highlights
4. ...........Investment Objective and Policies; The Fund and its
Management; Cover Page; Investment Restrictions; Financial
Highlights
5. ...........The Fund and its Management; Back Cover; Investment Objective
and Policies
6. ...........Dividends, Distributions and Taxes; Additional Information
7. ...........Purchase of Fund Shares; Shareholder Services
8. ...........Redemptions and Repurchases; Shareholder Services
9. ...........Not applicable
PART B STATEMENT OF ADDITIONAL INFORMATION
10. ...........Cover Page
11. ...........Table of Contents
12. ...........The Fund and its Management
13. ...........Investment Practices and Policies; Investment Restrictions;
Portfolio Transactions and Brokerage
14. ...........The Fund and its Management; Trustees and Officers
15. ...........The Fund and its Management; Trustees and Officers
16. ...........The Fund and its Management; The Distributor; Shareholder
Services; Custodian and Transfer Agent; Independent
Accountants
17. ...........Portfolio Transactions and Brokerage
18. ...........Description of Shares
19. ...........The Distributor; Redemptions and Repurchasers; Financial
Statements; Determination of Net Asset Value; Shareholder
Services
20. ...........Dividends, Distributions and Taxes
21. ...........Not applicable
22. ...........Performance Information
23. ...........Experts; Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
PROSPECTUS
JULY 23, 1996
Dean Witter Short-Term U.S. Treasury Trust (the "Fund") is an
open-end diversified management investment company whose investment objective
is current income, preservation of principal and liquidity. The Fund seeks to
achieve its objective by investing all of its assets in U.S. Treasury
securities backed by the full faith and credit of the U.S. Government. (See
"Investment Objective and Policies.") Shares of the Fund are not issued,
insured or guaranteed, as to value or yield, by the U.S. Government or its
agencies or instrumentalities.
Shares of the Fund are sold and redeemed at net asset value without
the imposition of a sales charge. The Fund is authorized to reimburse specific
expenses incurred in promoting the distribution of the Fund's shares,
including personal services to shareholders and maintenance of shareholder
accounts, in accordance with a Plan of Distribution pursuant to Rule 12b-1
under the Investment Company Act of 1940. Reimbursement may in no event exceed
an amount equal to payments at the annual rate of 0.35% of the average daily
net assets of the Fund.
This Prospectus sets forth concisely the information you should know
before investing in the Fund. It should be read and retained for future
reference. Additional information about the Fund is contained in the Statement
of Additional Information, dated July 23, 1996, which has been filed with the
Securities and Exchange Commission, and which is available at no charge upon
request of the Fund at the address or telephone numbers listed below. The
Statement of Additional Information is incorporated herein by reference.
Dean Witter
Short-Term U.S. Treasury Trust
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 869-NEWS (toll-free)
TABLE OF CONTENTS
Prospectus Summary/ 2
Summary of Fund Expenses/ 3
Financial Highlights/ 4
The Fund and its Management/ 5
Investment Objective and Policies/ 5
Purchase of Fund Shares/ 7
Shareholder Services/ 9
Redemptions and Repurchases/ 12
Dividends, Distributions and Taxes/ 14
Performance Information/ 16
Additional Information/ 16
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Dean Witter Distributors Inc.
Distributor
<PAGE>
PROSPECTUS SUMMARY
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
The The Fund is organized as a Trust, commonly known as a Massachusetts business trust, and is an open-end
Fund diversified management investment company investing in U.S. Treasury securities backed by the full faith
and credit of the U.S. Government.
- ----------------- ---------------------------------------------------------------------------------------------------------
Shares Shares of beneficial interest with $0.01 par value (see page 16).
Offered
- ----------------- ---------------------------------------------------------------------------------------------------------
Offering The price of the shares offered by this Prospectus is determined once daily as of 4:00 p.m., New York
Price time, on each day that the New York Stock Exchange is open, and is equal to the net asset value per share
without a sales charge (see page 7).
- ----------------- ---------------------------------------------------------------------------------------------------------
Minimum Minimum initial purchase through Distributor, $10,000 ($1,000 if the account is opened through
Purchase EasyInvest(SM) although the Fund and Distributor may, from time to time, accept initial purchases of
$5,000; minimum subsequent investment, $100 (see page 7).
- ----------------- ---------------------------------------------------------------------------------------------------------
Investment The investment objective of the Fund is to provide investors with current income, preservation of
Objective principal and liquidity.
- ----------------- ---------------------------------------------------------------------------------------------------------
Investment In order to maximize the amount of the Fund's dividends which are exempt from state and local income
Policies taxation, the Fund will invest all of its assets in U.S. Treasury securities which are direct obligations
of the U.S. Government (see page 5).
- ----------------- ---------------------------------------------------------------------------------------------------------
Investment Dean Witter InterCapital Inc. ("InterCapital"), the Investment Manager of the Fund, and its wholly-owned
Manager subsidiary, Dean Witter Services Company Inc. serve in various investment management, advisory,
management and administrative capacities to ninety-eight investment companies and other portfolios with
assets of approximately $84.6 billion at May 31, 1996 (see page 5).
- ----------------- ---------------------------------------------------------------------------------------------------------
Management The Investment Manager receives a monthly fee at the annual rate of 0.35% of daily net assets (see page
Fee 5).
- ----------------- ---------------------------------------------------------------------------------------------------------
Dividends and Dividends are declared daily and paid monthly. Capital gains distributions, if any, are paid at least
Capital Gains once a year or are retained for reinvestment by the Fund. Dividends and capital gains distributions are
Distributions automatically invested in additional shares at net asset value unless the shareholder elects to receive
cash (see page 14).
- ----------------- ---------------------------------------------------------------------------------------------------------
Distributor Dean Witter Distributors Inc. (the "Distributor") (see page 7). The Fund is authorized to reimburse
and Plan of specific expenses incurred in promoting the distribution of the Fund's shares, including personal
Distribution services to shareholders and maintenance of shareholders accounts, in accordance with a Plan of
Distribution with the Distributor pursuant to Rule 12b-1 under the Investment Company Act of 1940.
Reimbursement may in no event exceed an amount equal to payments at an annual rate of 0.35% of average
daily net assets of the Fund (see page 8).
- ----------------- ---------------------------------------------------------------------------------------------------------
Redemption At net asset value; account may be involuntarily redeemed if total value of the account is less than
$1,000 or, if the account was opened through EasyInvestSM, if after twelve months the shareholder has
invested less than $10,000 in the account (see pages 12-14).
- ----------------- ---------------------------------------------------------------------------------------------------------
Risks The Fund invests only in U.S. Treasury securities which are subject to minimal risk of loss of income and
principal. It may engage in the purchase of such securities on a when-issued basis. The value of the
Fund's portfolio securities, and therefore the Fund's net asset value per share, may increase or decrease
due to various factors, principally changes in prevailing interest rates. Generally, a rise in interest
rates will result in a decrease in the Fund's net asset value per share, while a drop in interest rates
will result in an increase in the Fund's net asset value per share. A portion of the U.S. Treasury
securities in which the Fund invests may be zero coupon Treasury securities. Such securities are subject
to greater market price fluctuations during periods of changing prevailing interest rates (see pages
5-6).
- ----------------- ---------------------------------------------------------------------------------------------------------
</TABLE>
The above is qualified in its entirety by the detailed information
appearing elsewhere in this Prospectus
and in the Statement of Additional Information.
2
<PAGE>
SUMMARY OF FUND EXPENSES
- -----------------------------------------------------------------------------
The following table illustrates all expenses and fees that a shareholder of
the Fund will incur. The expenses and fees set forth in the table are for the
fiscal year ended May 31, 1996
Shareholder Transaction Expenses
- -----------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases ............................. None
Maximum Sales Charge Imposed on Reinvested Dividends .................. None
Deferred Sales Charge ................................................. None
Redemption Fees ....................................................... None
Exchange Fee .......................................................... None
Annual Fund Operating Expenses (as a Percentage of Average Net Assets)
- -----------------------------------------------------------------------
Management Fees ....................................................... 0.35%
12b-1 Fees* ........................................................... 0.35%
Other Expenses ........................................................ 0.14%
Total Fund Operating Expenses ......................................... 0.84%
* A portion of the 12b-1 fee, which may not exceed 0.25% of the Fund's
average daily net assets, is characterized as a service fee within the
meaning of National Association of Securities Dealers ("NASD") guidelines.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------- -------- --------- --------- ----------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end
of each time period: ......................................... $9 $27 $47 $104
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES OF THE FUND MAY BE MORE OR
LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For a more complete description of these costs and expenses, see
"The Fund and its Management" and "Purchase of Fund Shares--Plan of
Distribution" in this Prospectus.
Long-term shareholders of the Fund may pay more in distribution fees than
the economic equivalent of the maximum front-end sales charges permitted by
the NASD.
3
<PAGE>
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------
The following ratios and per share data for a share of beneficial interest
outstanding throughout each period have been audited by Price Waterhouse LLP,
independent accountants. The financial highlights should be read in
conjunction with the financial statements, notes thereto and the unqualified
report of independent accountants which are contained in the Statement of
Additional Information. Further unaudited information about the performance
of the Fund is contained in the Fund's Annual Report to Shareholders, which
may be obtained without charge upon request to the Fund.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED MAY 31 AUGUST 13, 1991*
---------------------------------------------- THROUGH
1996 1995 1994 1993 MAY 31, 1992
- ---------------------------------------- ---------- ---------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ... $ 9.98 $ 9.88 $10.34 $10.21 $ 10.00
---------- ---------- ---------- ---------- ----------------
Net investment income ................... 0.54 0.49 0.49 0.54 0.44
Net realized and unrealized gain (loss) (0.14) 0.10 (0.45) 0.13 0.20
---------- ---------- ---------- ---------- ----------------
Total from investment operations ....... 0.40 0.59 0.04 0.67 0.64
---------- ---------- ---------- ---------- ----------------
Less dividends and distributions from:
Net investment income .................. (0.54) (0.49) (0.50) (0.53) (0.43)
Net realized gain ...................... -- -- -- (0.01) --
---------- ---------- ---------- ---------- ----------------
Total dividends and distributions ...... (0.54) (0.49) (0.50) (0.54) (0.43)
---------- ---------- ---------- ---------- ----------------
Net asset value, end of period .......... $ 9.84 $ 9.98 $ 9.88 $10.34 $ 10.21
========== ========== ========== ========== ================
TOTAL INVESTMENT RETURN+ ................ 4.09% 6.22% 0.25% 6.75% 6.55%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................ 0.84% 0.84% 0.79% 0.80% 0.79%(2)(3)
Net investment income ................... 5.33% 4.93% 4.74% 5.18% 5.49%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $258,637 $273,184 $516,017 $584,206 $523,555
Portfolio turnover rate ................. 63% 30% 49% 21% 12%(1)
</TABLE>
- ------------
* Commencement of operations.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all expenses that were assumed or waived by the
Investment Manager, the above annualized expense ratio would have been
0.81%.
4
<PAGE>
THE FUND AND ITS MANAGEMENT
- -----------------------------------------------------------------------------
Dean Witter Short-Term U.S. Treasury Trust (the "Fund") is an open-end
diversified management investment company. The Fund is a trust of the type
commonly known as a "Massachusetts business trust" and was organized under
the laws of The Commonwealth of Massachusetts on June 4, 1991.
Dean Witter InterCapital Inc. ("InterCapital" or the "Investment
Manager"), whose address is Two World Trade Center, New York, New York 10048,
is the Fund's Investment Manager. The Investment Manager, which was
incorporated in July, 1992, is a wholly-owned subsidiary of Dean Witter,
Discover & Co. ("DWDC"), a balanced financial services organization providing
a broad range of nationally marketed credit and investment products.
InterCapital and its wholly-owned subsidiary, Dean Witter Services
Company, serve in various investment management, advisory, management and
administrative capacities to a total of ninety-eight investment companies,
thirty of which are listed on the New York Stock Exchange, with combined
total assets of approximately $81.8 billion as of May 31, 1996. The
Investment Manager also manages portfolios of pension plans, other
institutions and individuals which aggregated approximately $2.8 billion at
such date.
The Fund has retained the Investment Manager to provide administrative
services, manage its business affairs and manage the investment of the Fund's
assets, including the placing of orders for the purchase and sale of
portfolio securities. InterCapital has retained Dean Witter Services Company
Inc. to perform the aforementioned administrative services for the Fund. The
Fund's Board of Trustees reviews the various services provided by or under
the direction of the Investment Manager to ensure that the Fund's general
investment policies and programs are being properly carried out and that
administrative services are being provided to the Fund in a satisfactory
manner.
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Investment Manager, the Fund pays
the Investment Manager monthly compensation calculated daily by applying an
annual rate of 0.35% to the Fund's net assets determined as of the close of
each business day. For the fiscal year ended May 31, 1996, the Fund accrued
total compensation to the Investment Manager amounting to 0.35% of the Fund's
average daily net assets and the Fund's total expenses amounted to 0.84% of
the Fund's average daily net assets.
INVESTMENT OBJECTIVE AND POLICIES
- -----------------------------------------------------------------------------
The investment objective of the Fund is current income, preservation of
principal and liquidity. The Fund will seek to achieve its investment
objective by investing all of its net assets in U.S. Treasury securities.
U.S. Treasury securities, which presently consist of U.S. Treasury bills,
U.S. Treasury notes and U.S. Treasury bonds, are direct obligations of the
U.S. Treasury and are backed by the "full faith and credit" of the U.S.
Government. The investment objective is a fundamental policy of the Fund and
may not be changed without the approval of the holders of a majority of the
Fund's shares. There is no assurance that the Fund's investment objective
will be achieved.
Neither the value nor the yield of the U.S. Treasury securities in which
the Fund invests (or the value or yield of shares of the Fund) are guaranteed
by the U.S. Government. The value of the Fund's portfolio securities and
therefore the net asset value of the Fund's shares may increase or decrease
due to changes in prevailing interest rates and other factors. Generally, as
prevailing interest rates rise, the value of the securities held by the Fund,
and concomitantly, the net asset value of the Fund's shares, will fall. Debt
securities with shorter maturities are generally subject to a lesser degree
of market fluctuation as a result of changes in interest rates than debt
securities with longer maturities. In an effort to minimize fluctuations in
market value of its portfolio securities the Fund is expected to maintain a
portfolio with a dollar-weighted average maturity of less than 3 years.
Zero Coupon Treasury Securities. A portion of the U.S. Treasury securities
purchased by the Fund may be "zero coupon" Treasury securities. These are
U.S. Treasury notes and bonds which have
5
<PAGE>
been stripped of their unmatured interest coupons and receipts or which are
certificates representing interests in such stripped debt obligations and
coupons. Such securities are purchased at a discount from their face amount,
giving the purchaser the right to receive their full value at maturity. A
zero coupon security pays no interest to its holder during its life. Its
value to an investor consists of the difference between its face value at the
time of maturity and the price for which it was acquired, which is generally
an amount significantly less than its face value (sometimes referred to as a
"deep discount" price).
The interest earned on such securities is, implicitly, automatically
compounded and paid out at maturity. While such compounding at a constant
rate eliminates the risk of receiving lower yields upon reinvestment of
interest if prevailing interest rates decline, the owner of a zero coupon
security will be unable to participate in higher yields upon reinvestment of
interest received if prevailing interest rates rise. For this reason, zero
coupon securities are subject to substantially greater market price
fluctuations during periods of changing prevailing interest rates than are
comparable debt securities which make current distributions of interest.
Current federal tax law requires that a holder (such as the Fund) of a zero
coupon security accrue a portion of the discount at which the security was
purchased as income each year even though the Fund receives no interest
payments in cash on the security during the year. See "Dividends,
Distributions and Taxes."
Certain banks and brokerage firms have separated ("stripped") the
principal portions ("corpus") from the coupon portions of the U.S. Treasury
bonds and notes and sell them separately in the form of receipts or
certificates representing undivided interests in these instruments (which
instruments are generally held by a bank in a custodial or trust account).
The Fund will not purchase any such receipts or certificates representing
stripped corpus or coupon interests in U.S. Treasury securities sold by banks
and brokerage firms. The Fund will only purchase zero coupon Treasury
securities which have been stripped by the Federal Reserve Bank.
When-Issued and Delayed Delivery Securities and Firm Commitments. From
time to time, in the ordinary course of business, the Fund may purchase U.S.
Treasury securities on a when-issued or delayed delivery basis or may
purchase or sell U.S. Treasury securities on a firm commitment basis. For
example, the Fund may wish to purchase U.S. Treasury notes and bonds sold at
periodic U.S. Treasury auctions prior to a month or more of their issuance
("when-issued"). When such transactions are negotiated, the price is fixed at
the time of the commitment, but delivery and payment can take place a month
or more after the date of the commitment. While the Fund will only purchase
securities on a when-issued, delayed delivery or firm commitment basis with
the intention of acquiring the securities, the Fund may sell the securities
before the settlement date, if it is deemed advisable. The securities so
purchased or sold are subject to market fluctuation and no interest accrues
to the purchaser during this period. At the time the Fund makes the
commitment to purchase or sell securities on a when-issued, delayed delivery
or firm commitment basis, it will record the transaction and thereafter
reflect the value, each day, of such security purchased or, if a sale, the
proceeds to be received, in determining its net asset value. At the time of
delivery of the securities, their value may be more or less than the purchase
or sale price. The Fund will also establish a segregated account with its
custodian bank in which it will continually maintain cash or cash equivalents
or other portfolio (U.S. Treasury) securities equal in value to commitments
to purchase securities on a when-issued, delayed delivery or firm commitment
basis.
PORTFOLIO MANAGEMENT
The Fund's portfolio is actively managed by its Investment Manager with a
view to achieving the Fund's investment objective. In determining which
securities to purchase for the Fund or hold in the Fund's portfolio, the
Investment Manager will rely on information from various sources, including
research, analysis and appraisals of brokers and dealers, including Dean
Witter Reynolds Inc. ("DWR"), a broker-dealer affiliate of the Investment
6
<PAGE>
Manager; the views of the Trustees of the Fund and others regarding economic
developments and interest rate trends; and the Investment Manager's own
analysis of factors it deems relevant. The Fund's portfolio is managed within
InterCapital's Taxable Income Group, which manages 25 funds and fund
portfolios, with approximately $13.5 billion in assets as of May 31, 1996.
Rajesh K. Gupta, Senior Vice President of InterCapital and Manager of
InterCapital's Government Fixed-Income Group, has been the primary portfolio
manager of the Fund since its inception and has been a portfolio manager at
InterCapital for over five years.
Brokerage commissions are not normally charged on the purchase or sale of
U.S. Government obligations, but such transactions may involve costs in the
form of spreads between bid and asked prices. Pursuant to an order of the
Securities and Exchange Commission, the Fund may effect principal
transactions in certain money market instruments with DWR. In addition, the
Fund may incur brokerage commissions on transactions conducted through DWR.
Although the Fund does not intend to engage in short-term trading of
portfolio securities as a means of achieving its investment objective, it may
sell portfolio securities without regard to the length of time they have been
held whenever such sale will, in the opinion of the Investment Manager,
strengthen the Fund's position and contribute to its investment objective. It
is not anticipated that the portfolio trading engaged in by the Fund will
result in its portfolio turnover rate exceeding 100%.
PURCHASE OF FUND SHARES
- -----------------------------------------------------------------------------
The Fund offers its shares for sale to the public on a continuous basis.
Pursuant to a Distribution Agreement between the Fund and Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Investment
Manager, shares of the Fund are distributed by the Distributor and offered by
DWR and others who have entered into Selected Dealer agreements with the
Distributor ("Selected Broker-Dealers"). The principal executive office of
the Distributor is located at Two World Trade Center, New York, New York
10048.
The minimum initial purchase is $10,000 (the Fund and the Distributor may,
from time to time accept initial purchases of $5,000). The minimum initial
purchase in the case of investments through EasyInvest (Service Mark), an
automatic purchase plan (see "Shareholder Services"), is $1,000, provided
that the schedule of automatic investments will result in investments
totalling at least $10,000 within the first twelve months. In the case of
investments pursuant to systematic payroll deduction plans (including
Individual Retirement Plans), the Fund, in its discretion, may accept
investments without regard to any minimum amounts which would otherwise be
required if the Fund has reason to believe that additional investments will
increase the investment in all accounts under such plans to at least $1,000.
Minimum subsequent purchases of $100 or more may be made by sending a check,
payable to Dean Witter Short-Term U.S. Treasury Trust, directly to Dean
Witter Trust Company (the "Transfer Agent") at P.O. Box 1040, Jersey City, NJ
07303 or by contacting an account executive of DWR or another Selected
Broker-Dealer. The offering price will be the net asset value per share next
determined (see "Determination of Net Asset Value" below) following receipt
and acceptance by the Transfer Agent of an order in proper form and
accompanied by payment in Federal funds (i.e., monies of member banks within
the Federal Reserve System held on deposit at a Federal Reserve Bank)
available to the Fund for investment. Orders for the purchase of Fund shares
placed by investors through DWR or another Selected Broker-Dealer will be
transmitted to the Transfer Agent for purchase on that date, with payment in
Federal funds transmitted to the Transfer Agent on the business day following
the day the order is placed. Shares commence earning income on the date
following the date of purchase. Certificates for shares purchased will not be
issued unless requested by the shareholder in writing to the Transfer Agent.
Sales personnel of a Selected Broker-Dealer are compensated for shares of
the Fund sold by
7
<PAGE>
them by the Distributor or any of its affiliates and/or by a Selected
Broker-Dealer. In addition, some sales personnel of the Selected
Broker-Dealer will receive various types of non-cash compensation as special
sales incentives, including trips to educational and/or business seminars and
merchandise. The Fund and the Distributor reserve the right to reject any
purchase orders.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined by taking the
value of all the assets of the Fund, subtracting all liabilities, dividing by
the number of shares outstanding and adjusting the result to the nearest
cent. The net asset value per share is determined by the Investment Manager
as of 4:00 P.M. New York time on each day that the New York Stock Exchange is
open (or on days when the New York Stock Exchange closes prior to 4:00 p.m.,
at such earlier time). The net asset value per share will not be determined
on Good Friday and on such other federal and non-federal holidays as are
observed by the New York Stock Exchange.
In the calculation of the Fund's net asset value: (1) all portfolio
securities for which over-the-counter market quotations are readily available
are valued at the bid price; (2) when market quotations are not readily
available, including circumstances under which it is determined by the
Investment Manager that sale or bid prices are not reflective of a security's
market value, portfolio securities are valued at their fair value as
determined in good faith under procedures established by and under the
general supervision of the Fund's Board of Trustees (valuation of securities
for which market quotations are not readily available may be based upon
current market prices of securities which are comparable in coupon, rating
and maturity or an appropriate matrix utilizing similar factors); and (3)
short-term debt instruments having a maturity date of more than 60 days are
valued on a "mark-to-market" basis, that is, at prices based on market
quotations for securities of similar type, yield, quality and maturity, until
60 days prior to maturity and thereafter at amortized cost. Short-term
instruments having a maturity date of 60 days or less at the time of purchase
are val-ued at amortized cost unless the Board of Trustees determines this
does not represent the securities' market value, in which case these
securities will be valued at their fair value as determined by the Trustees.
Certain of the Fund's portfolio securities may be valued by an outside
pricing service approved by the Fund's Trustees. The pricing service may
utilize a matrix system incorporating security quality, maturity and coupon
as the evaluation model parameters, and/or research and evaluations by its
staff, including review of broker-dealer market price quotations, in
determining what it believes is the fair valuation of the portfolio
securities valued by such pricing service.
PLAN OF DISTRIBUTION
The Fund has entered into a Plan of Distribution pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "Act"), with the
Distributor whereby the expenses of certain activities and services,
including personal services to shareholders and maintenance of shareholder
accounts, in connection with the distribution of the Fund's shares are
reimbursed. The principal activities and services which may be provided by
the Distributor and its affiliates, or any other Selected Broker-Dealer under
the Plan include: (1) compensation to, and expenses of, DWR account
executives and others, including overhead and telephone expenses; (2) sales
incentives and bonuses to sales representatives and to marketing personnel in
connection with promoting sales of the Fund's shares; (3) expenses incurred
in connection with promoting sales of the Fund's shares; (4) preparing and
distributing sales literature; and (5) providing advertising and promotional
activities, including direct mail solicitation and television, radio,
newspaper, magazine and other media advertisements. Reimbursements for these
services will be made in monthly payments by the Fund, which will in no event
exceed an amount equal to a payment at the annual rate of 0.35% of the Fund's
average daily net assets. A portion of the amount payable pursuant to the
Plan, which may not exceed 0.25% of the Fund's average daily net assets, is
characterized as a service fee within the meaning of the NASD guidelines.
Expenses incurred pursuant to the Plan in any fiscal year will not be
reimbursed by the Fund
8
<PAGE>
through payments accrued in any subsequent fiscal year. The Fund accrued
$959,304 to the Distributor pursuant to the Plan for the fiscal year ended
May 31, 1996. This is an accrual at the annual rate of 0.35% of the Fund's
average daily net assets.
SHAREHOLDER SERVICES
- -----------------------------------------------------------------------------
Automatic Investment of Dividends and Distribu-tions. All income dividends
and capital gains distributions are automatically paid in full and fractional
shares of the Fund, unless the shareholder requests that they be paid in
cash. Such dividends and distributions will be paid in shares of the Fund at
net asset value per share. At any time an investor may request the Transfer
Agent in writing to have subsequent dividends and/or capital gains
distributions paid to the investor in cash rather than shares. To assure
sufficient time to process the change, such request should be received by the
Transfer Agent at least five business days prior to the payment date for
which it commences to take effect. In the case of recently purchased shares
for which registration instructions have not been received on the record
date, cash payments will be made to DWR or other Selected Broker-Dealer
through whom shares were purchased.
Investment of Distributions Received in Cash. Any shareholder who
receives a cash payment representing a dividend or capital gains distribution
may invest such dividend or distribution at the net asset value next
determined after receipt by the Transfer Agent by returning the check or the
proceeds to the Transfer Agent within 30 days after the payment date.
Targeted Dividends (Service Mark). In states where it is legally
permissible, shareholders may also have all income dividends and capital
gains distributions automatically invested in shares of an open-end
investment company for which InterCapital serves as investment manager
(collectively, the "Dean Witter Funds"), other than Dean Witter Short-Term
U.S. Treasury Trust. Such investment will be made as described above for
automatic investment in shares of the Fund, at the net asset value per share
of the selected Dean Witter Fund as of the close of business on the payment
date and will begin to earn dividends, if any, in the selected Dean Witter
Fund the next business day. To participate in the Targeted Dividends program,
shareholders should contact their DWR or other Selected Broker-Dealer account
executive or the Transfer Agent. Shareholders of the Fund must be
shareholders of the Dean Witter Fund targeted to receive investments from
dividends at the time they enter the Targeted Dividends program. Investors
should review the prospectus of the targeted Dean Witter Fund before entering
the program.
EasyInvest (Service Mark). Shareholders may subscribe to EasyInvest, an
automatic purchase plan which provides for any amount from $100 to $5,000 to
be transferred automatically from a checking or savings account, on a
semi-monthly, monthly or quarterly basis, to the Fund's Transfer Agent for
investment in shares of the Fund (see "Purchase of Fund Shares" and
"Redemptions and Repurchases--Involuntary Redemption") . Shares purchased
through EasyInvest will be added to the shareholder's existing account at the
net asset value calculated the same business day the transfer of funds is
effected. For further information or to subscribe to EasyInvest, shareholders
should contact their DWR or other Selected Broker-Dealer account executive or
the Transfer Agent.
Systematic Withdrawal Plan. A systematic withdrawal plan (the "Withdrawal
Plan") is available for shareholders who own or purchase shares of the Fund
having a minimum value of $10,000 based upon the then current offering price.
The Withdrawal Plan provides for monthly or quarterly (March, June, September
and December) checks in any dollar amount, not less than $25, or in any whole
percentage of the account balance, on an annualized basis. The shares will be
redeemed at their net asset value determined, at the shareholder's option, on
the tenth or twenty-fifth day (or next following business day) of the
relevant month or quarter and normally a check for the proceeds will be
mailed by the Transfer Agent, or amounts credited to a shareholder's DWR or
other Selected Broker-Dealer brokerage account, within five business days
after the date of redemption. Only shareholders having accounts in which no
share certificates have been issued will be permitted to enroll in the
Withdrawal Plan.
9
<PAGE>
Withdrawal Plan payments should not be considered as dividends, yields or
income. If periodic withdrawal plan payments continuously exceed net
investment income and net capital gains, the shareholder's original
investment will be correspondingly reduced and ultimately exhausted.
Each withdrawal constitutes a redemption of shares and any gain or loss
realized must be recognized for federal income, and generally, state and
local tax purposes.
Shareholders wishing to enroll in the Withdrawal Plan should make this
election on the Investment Application or contact their DWR or other Selected
Broker-Dealer account executive or the Transfer Agent.
Tax Sheltered Retirement Plans. Retirement plans are available through the
Investment Manager for use by the self-employed, eligible Individual
Retirement Accounts and Custodial Accounts under Section 403(b)(7) of the
Internal Revenue Code. Adoption of such plans should be on advice of legal
counsel or tax adviser.
For further information regarding plan administration, custodial fees and
other details, investors should contact their account executive or the
Transfer Agent.
EXCHANGE PRIVILEGE
An "Exchange Privilege", that is, the privilege of exchanging shares of
certain Dean Witter Funds for shares of the Fund, exists whereby shares of
various Dean Witter Funds which are open-end investment companies sold with
either a front-end (at time of purchase) sales charge ("FESC funds") or a
contingent deferred (at time of redemption) sales charge ("CDSC funds"), may
be exchanged for shares of the Fund, Dean Witter Intermediate Term U.S.
Treasury Trust, Dean Witter Limited Term Municipal Trust, Dean Witter
Balanced Income Fund, Dean Witter Balanced Growth Fund and Dean Witter
Short-Term Bond Fund, and for shares of five Dean Witter Funds which are
money market funds: Dean Witter Liquid Asset Fund Inc., Dean Witter U.S.
Government Money Market Trust, Dean Witter Tax-Free Daily Income Trust, Dean
Witter California Tax Free Daily Income Trust and Dean Witter New York
Municipal Money Market Trust (which eleven funds, including the Fund, are
hereinafter collectively referred to as "Exchange Funds"). An exchange from
an FESC fund or a CDSC fund to an Exchange Fund that is not a money market
fund is on the basis of the next calculated net asset value per share of each
fund after the exchange order is received. When exchanging into a money
market fund from an FESC fund or a CDSC fund, shares of the FESC fund or the
CDSC fund are redeemed at their next calculated net asset value and exchanged
for shares of the money market fund at their net asset value determined the
following business day. Subsequently, shares of the Exchange Fund received in
an exchange for shares of an FESC fund (regardless of the type of fund
originally purchased) may be redeemed and exchanged for shares of Exchange
Funds, FESC funds or CDSC funds (however, shares of CDSC funds, including
shares acquired in exchange for (i) shares of FESC funds or (ii) shares of
Exchange Funds which were acquired in exchange for shares of FESC funds, may
not be exchanged for shares of FESC funds). Additionally, shares of Exchange
Funds received in an exchange for shares of a CDSC fund (regardless of the
type of fund originally purchased) may be redeemed and exchanged for shares
of Exchange Funds or CDSC funds. Ultimately, any applicable contingent
deferred sales charge ("CDSC") will have to be paid upon redemption of shares
originally purchased from a CDSC fund. (If shares of an Exchange Fund
received in exchange for shares originally purchased from a CDSC fund are
exchanged for shares of another CDSC fund having a different CDSC schedule
than that of the CDSC fund from which the Exchange Fund shares were acquired,
the shares will be subject to the higher CDSC schedule.) During the period of
time the shares originally purchased from a CDSC fund remain in the Exchange
Fund, the holding period (for the purpose of determining the rate of CDSC) is
frozen so that the charge is based upon the period of time the shareholder
actually held shares of a CDSC fund. However, in the case of shares exchanged
into an
10
<PAGE>
Exchange Fund on or after April 23, 1990, upon a redemption of shares which
results in a CDSC being imposed, a credit (not to exceed the amount of the
CDSC) will be given in an amount equal to the Exchange Fund 12b-1 fees, if
any, incurred on or after that date which are attributable to those shares
(see "Purchase of Fund Shares--Plan of Distribution" in the respective
Exchange Fund Prospectus for a description of Exchange Fund distribution
fees). Exchanges involving FESC funds or CDSC funds may be made after the
shares of the FESC fund or CDSC fund acquired by purchase (not by exchange or
dividend reinvestment) have been held for thirty days. There is no waiting
period for exchanges of shares acquired by exchange or dividend reinvestment.
Purchases and exchanges should be made for investment purposes only. A
pattern of frequent exchanges may be deemed by the Distributor to be abusive
and contrary to the best interests of the Fund's other shareholders and, at
the Distributor's discretion, may be limited by the Fund's refusal to accept
additional purchases and/or exchanges from the investor. Although the Fund
does not have any specific definition of what constitutes a pattern of
frequent exchanges, and will consider all relevant factors in determining
whether a particular situation is abusive and contrary to the best interests
of the Fund and its other shareholders, investors should be aware that the
Fund and each of the other Dean Witter Funds may in their discretion limit or
otherwise restrict the number of times this Exchange Privilege may be
exercised by any investor. Any such restriction will be made by the Fund on a
prospective basis only, upon notice to the shareholder not later than ten
days following such shareholder's most recent exchange.
The Exchange Privilege may be terminated or revised at any time by the
Fund and/or any of such Dean Witter Funds for which shares of the Fund may be
exchanged, upon such notice as may be required by applicable regulatory
agencies (presently sixty days prior written notice for termination or
material revision), provided that six months' prior written notice of
termination will be given to the shareholders who hold shares of the Exchange
Funds pursuant to this Exchange Privilege, and provided further that the
Exchange Privilege may be terminated or materially revised without notice
under certain unusual circumstances. Shareholders maintaining margin accounts
with DWR or another Selected Broker-Dealer are referred to their account
executive regarding restrictions on exchange of shares of the Fund pledged in
their margin account.
The current prospectus for each fund describes its investment objective(s)
and policies, and shareholders should obtain one and read it carefully before
investing. Exchanges are subject to the minimum investment requirement and
any other conditions imposed by each fund. In the case of any shareholder
holding a share certificate or certificates, no exchanges may be made until
all applicable share certificates have been received by the Transfer Agent
and deposited in the shareholder's account. An exchange will be treated for
federal income tax purposes the same as a repurchase or redemption of shares,
on which the shareholder may realize a capital gain or loss. However, the
ability to deduct capital losses on an exchange may be limited in situations
where there is an exchange of shares within ninety days after the shares are
purchased. The Exchange Privilege is only available in states where an
exchange may legally be made.
If DWR or another Selected Broker-Dealer is the current broker-dealer of
record and its account numbers are part of the account information,
shareholders may initiate an exchange of shares of the Fund for shares of any
of the above Dean Witter Funds pursuant to this Exchange Privilege by
contacting their DWR or other Selected Broker-Dealer account executive (no
Exchange Privilege Authorization Form is required). Other shareholders (and
those shareholders who are clients of DWR or another Selected Broker-Dealer
but who wish to make exchanges directly by writing or telephoning the
Transfer Agent) must complete and forward to the Transfer Agent an Exchange
Privilege Authorization Form, copies of which may be obtained from the
Transfer Agent, to initiate an exchange. If the Authorization Form is used,
exchanges may be
11
<PAGE>
made by contacting the Transfer Agent at (800) 869-NEWS (toll-free). The Fund
will employ reasonable procedures to confirm that exchange instructions
communicated over the telephone are genuine. Such procedures include
requiring various forms of personal identification such as name, mailing
address, social security or other tax identification number and DWR or other
Selected Broker-Dealer account number (if any). Telephone instructions will
also be recorded. If such procedures are not employed, the Fund may be liable
for any losses due to unauthorized or fraudulent instructions.
Telephone exchange instructions will be accepted if received by the
Transfer Agent between 9:00 a.m. and 4:00 p.m. New York time, on any day the
New York Stock Exchange is open. Any shareholder wishing to make an exchange
who has previously filed an Exchange Privilege Authorization Form and who is
unable to reach the Fund by telephone should contact his or her DWR or other
Selected Broker-Dealer account executive, if appropriate, or make a written
exchange request. Shareholders are advised that during periods of drastic
economic or market changes it is possible that the telephone exchange
procedures may be difficult to implement, although this has not been the
experience of the Dean Witter Funds in the past.
For further information regarding the Exchange Privilege, shareholders
should contact their DWR or other Selected Broker-Dealer account executive or
the Transfer Agent.
REDEMPTIONS AND REPURCHASES
- -----------------------------------------------------------------------------
REDEMPTIONS. Shares of the Fund may be redeemed through the Transfer Agent
(without redemption or other charge) on any day that the New York Stock
Exchange is open (see "Purchase of Fund Shares--Determination of Net Asset
Value"). Redemptions will be effected at the net asset value per share next
determined after the receipt of a redemption request meeting the applicable
requirements described below.
1. BY CHECK
The Transfer Agent will supply blank checks to any shareholder who has
requested them on an Investment Application. The shareholder may make checks
payable to the order of anyone in any amount not less than $500 (checks
written in amounts under $500 will not be honored by the Transfer Agent).
Shareholders must sign checks exactly as their shares are registered. If the
account is a joint account, the check may contain one signature unless the
joint owners have specifically specified on an Investment Application that
all owners are required to sign checks. Only shareholders having accounts in
which no share certificates have been issued will be permitted to redeem
shares by check or enroll in the Systematic Withdrawal Plan.
Shares will be redeemed at their net asset value next determined (see
"Purchase of Fund Shares--Determination of Net Asset Value") after receipt by
the Transfer Agent of a check which does not exceed the value of the account.
Payment of the proceeds of a check will normally be made on the next business
day after receipt by the Transfer Agent of the check in proper form. Shares
purchased by check (including a certified or bank cashier's check) are not
normally available to cover redemption checks until fifteen days after
receipt of the check used for investment by the Transfer Agent. The Transfer
Agent will not honor a check in an amount exceeding the value of the account
at the time the check is presented for payment. Since the dollar value of an
account is constantly changing, it is not possible for a shareholder to
determine in advance the total value of its account so as to write a check
for the redemption of the entire account. For the same reason, a shareholder
should not write a check for substantially all of the current value of the
shares in its account with the Fund.
2. BY TELEPHONE OR WIRE INSTRUCTIONS WITH PAYMENT TO PREDESIGNATED BANK
ACCOUNT
A shareholder may redeem shares by telephoning or sending wire
instructions to the Transfer
12
<PAGE>
Agent. Payment will be made by the Transfer Agent to the shareholder's bank
account at any commercial bank designated by the shareholder in an Investment
Application, by wire if the amount is $1,000 or more and the shareholder so
requests, and otherwise by mail. Normally, the Transfer Agent will transmit
payment the next business day following receipt of a request for redemption
in proper form. Only shareholders having accounts in which no share
certificates have been issued will be permitted to redeem shares by wire
instructions.
DWR and any other participating Selected Broker-Dealers have informed the
Distributor and the Fund that, on behalf of and as agent for their customers
who are shareholders of the Fund, they will transmit to the Fund requests for
redemption of shares owned by their customers. In such cases, the Transfer
Agent will wire proceeds of redemptions to DWR's or other Selected
Broker-Dealer's bank account for credit to the shareholders' accounts the
following business day. DWR and other participating Selected Broker-Dealers
have also informed the Distributor and the Fund that they do not charge for
this service.
Redemption instructions must include the shareholder's name and account
number and be wired or called to the Transfer Agent at 800-526-3143 (toll-
free).
3. BY MAIL
A shareholder may redeem shares by sending a letter to Dean Witter Trust
Company, P.O. Box 983, Jersey City, NJ 07303, requesting redemption and
surrendering share certificates if any have been issued.
Redemption proceeds will be mailed to the shareholder at his or her
registered address or mailed or wired to his or her predesignated bank
account, as he or she may request. Proceeds of redemption may also be sent to
some other person, as requested by the shareholder in accordance with the
general redemption requirements listed below.
GENERAL REDEMPTION REQUIREMENTS
Written requests for redemption must be signed by the registered
shareholder(s). If the proceeds are to be paid to anyone other than the
registered shareholder(s) or sent to any address other than the shareholder's
registered address or predesignated bank account, signatures must be
guaranteed by an eligible guarantor acceptable to the Transfer Agent,
(shareholders should contact the Transfer Agent for a determination as to
whether a particular institution is such an eligible guarantor), except in
the case of redemption by check. Additional documentation may be required
where shares are held by a corporation, partnership, trust or other
organization. With regard to shares of the Fund acquired pursuant to the
Exchange Privilege, any applicable contingent deferred sales charge will be
imposed upon the redemption of such shares (see "Purchase of Fund
Shares--Exchange Privilege").
If shares to be redeemed are represented by a share certificate, the
request for redemption must be accompanied by the share certificate and a
stock assignment form signed by the registered shareholder(s) exactly as the
account is registered. Signatures must be guaranteed by a commercial bank or
member firm of a domestic stock exchange. Additional documentation may be
required where shares are held by a corporation, partnership, trust or other
organization.
All requests for redemption should be sent to Dean Witter Trust Company,
P.O. Box 983, Jersey City, NJ 07303.
Generally, the Fund will attempt to make payment for all redemptions
within one business day, and in no event later than seven days after receipt
of such redemption request in proper form. However, if the shares being
redeemed were purchased by check (including a certified or bank cashier's
check), payment may be delayed for the minimum time needed to verify that the
check used for investment has been honored (not more than fifteen days from
the time of receipt of the check by the Transfer Agent). In addition, the
Fund may postpone redemptions at certain times when normal trading is not
taking place on the New York Stock Exchange.
Whether certificates are held by the shareholder or shares are held in a
shareholder's ac-
13
<PAGE>
count, if the proceeds are to be paid to any person other than the record
owner, or if the proceeds are to be paid to a corporation (other than DWR or
any other Selected Broker-Dealer for the account of the shareholder),
partnership, trust or fiduciary, or sent to the shareholder at an address
other than the registered address, signature(s) must be guaranteed by an
eligible guarantor acceptable to the Transfer Agent (shareholders should
contact the Transfer Agent for a determination as to whether a particular
institution is such an eligible guarantor). A stock power may be obtained
from any dealer or commercial bank.
Repurchase. DWR and other Selected Broker-Dealers are authorized to
repurchase shares represented by a share certificate which is delivered to
any of their offices. Shares held in a shareholder's account without a share
certificate may also be repurchased by DWR and other Selected Broker-Dealers
upon the telephonic request of the shareholder. The repurchase price is the
net asset value next determined (see "Purchase of Fund Shares--Determination
of Net Asset Value") after such repurchase order is received. Payment for
shares repurchased may be made by the Fund to DWR and other Selected
Broker-Dealers for the account of the shareholder. The offers by DWR and
other Selected Broker-Dealers to repurchase shares from shareholders may be
suspended by them at any time. In that event, shareholders may redeem their
shares through the Fund's Transfer Agent as set forth above under
"Redemption."
Payment for Shares Redeemed or Repurchased. Payment for shares presented
for repurchase or redemption will be made by check within seven days after
receipt by the Transfer Agent of the certificate and/or written request in
good order. Such payment may be postponed or the right of redemption
suspended under unusual circumstances. If the shares to be redeemed have
recently been purchased by check, payment of the redemption proceeds may be
delayed for the minimum time needed to verify that the check used for
investment has been honored (not more than fifteen days from the time of
receipt of the check by the Transfer Agent). Shareholders maintaining margin
accounts with DWR or other Selected Broker-Dealers are referred to their
account executive regarding restrictions on redemption of shares of the Fund
pledged in the margin account.
Reinstatement Privilege. A shareholder who has had his or her shares
redeemed or repurchased and has not previously exercised this reinstatement
privilege may, within 30 days after the date of the redemption or repurchase,
reinstate any portion or all of the proceeds of such redemption or repurchase
in shares of the Fund at net asset value next determined after a
reinstatement request, together with the proceeds, is received by the
Transfer Agent.
Involuntary Redemption. The Fund reserves the right to redeem, on 60 days'
notice and at net asset value, the shares of any shareholder whose shares
have a value of less than $1,000 as a result of redemptions or repurchases,
or such lesser amount as may be fixed by the Trustees or, in the case of an
account opened through EasyInvest (Service Mark), if after twelve months the
shareholder has invested less than $10,000 in the account. However, before
the Fund redeems such shares and sends the proceeds to the shareholder, it
will notify the shareholder that the value of the shares is less than the
applicable amount and allow him or her 60 days to make an additional
investment in an amount which will increase the value of his or her account
to at least the applicable amount or more before the redemption is processed.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- -----------------------------------------------------------------------------
Dividends and Distributions. The Fund declares dividends from net
investment income on each day the New York Stock Exchange is open for
business. Such dividends are payable monthly. The Fund may distribute
quarterly net realized short-term capital gains, if any, in excess of any net
realized long-term capital losses. The Fund intends to distribute dividends
from net long-term capital
14
<PAGE>
gains, if any, at least once each year. The Fund may, however, elect to
retain all or a portion of any such net long-term capital gains in any year.
All dividends and any capital gains distributions will be paid in
additional Fund shares and automatically credited to the shareholder's
account without issuance of a share certificate unless the shareholder
requests in writing that all dividends or all dividends and distributions be
paid in cash. (See "Shareholder Services--Automatic Investment of Dividends
and Distributions".)
TAXATION
Federal Taxes. Because the Fund intends to distribute subtantially all of
its net investment income and net short-term capital gains to shareholders
and otherwise remain qualified as a regulated investment company under
Subchapter M of the Internal Revenue Code, it is not expected that the Fund
will be required to pay any federal income tax on such income and capital
gains. Shareholders will normally have to pay federal income taxes on the
dividends and capital gains distributions they receive from the Fund.
Distributions of net investment income and net short-term capital gains are
taxable to the shareholder as ordinary dividend income regardless of whether
the shareholder receives such distributions in additional shares or in cash.
Any dividends declared in the last quarter of any calendar year which are
paid in the following year prior to February 1 will be deemed received by the
shareholder in the prior year.
Long-term and short-term capital gains may be generated by the sale of
portfolio securities by the Fund. Distributions of long-term capital gains,
if any, are taxable to shareholders as long-term capital gains regardless of
how long a shareholder has held the Fund's shares and regardless of whether
the distribution is received in additional shares or in cash.
No portion of such distributions will be eligible for the dividends
received deduction for corporations. To avoid being subject to a 31% federal
backup withholding tax on taxable dividends, capital gains distributions and
the proceeds of redemptions and repurchases, shareholders' taxpayer
identification numbers must be furnished and certified as to accuracy.
Current federal law requires that a holder (such as the Fund) of a zero
coupon security accrue a portion of the discount at which the security was
purchased as income each year even though the Fund receives no interest
payments in cash on the security during the year. Accordingly, the Fund may
be required to pay out as an income distribution each year an amount which is
greater than the total amount of cash receipts of interest the Fund actually
received. Such distributions will be made from the available cash of the Fund
or by liquidation of portfolio securities, if necessary.
After the end of the year, shareholders will receive full information on
their dividends and capital gains distributions for tax purposes, including
information as to the Federal tax status of dividends and distributions paid
or retained by the Fund.
The foregoing discussion relates solely to the Federal income tax
consequences of an investment in the Fund and dividends (where applicable)
and distributions may also be subject to state and local taxes (see "State
and Local Taxes" below); therefore, each shareholder is advised to consult
his or her own tax adviser.
State and Local Taxes. The Fund intends to invest only in U.S. Treasury
obligations that provide interest income exempt from state and local taxes.
Because all States presently allow the pass-through of federal obligation
interest derived from specific federal obligations, it is anticipated that
substantially all of the interest income generated by the Fund and paid out
to shareholders as net investment income will be exempt from state and local
taxation. Such investment income, however, will not be exempt from federal
tax. Furthermore, any capital gains realized by the Fund will not be exempt
from federal, and generally, state and local taxes. It should be noted that
although the Fund intends to invest only in securities the pass-through
income from which is
15
<PAGE>
believed exempt from state and local income taxes, it is possible that a
state or local taxing authority may seek to tax an investor on a portion of
the interest income of a particular government obligation held by the Fund.
Shareholders are urged to consult their tax advisers regarding specific
questions regarding federal, state and local taxes.
PERFORMANCE INFORMATION
- -----------------------------------------------------------------------------
From time to time the Fund may quote its "yield" and/or its "total return"
in advertisements and sales literature. Both the yield and the total return
of the Fund are based on historical earnings and are not intended to indicate
future performance. The yield of the Fund is computed by dividing the net
investment income of the Fund over a 30-day period by an average value (using
the average number of shares entitled to receive dividends and the net asset
value per share at the end of the period), all in accordance with applicable
regulatory requirements. Such amount is compounded for six months and then
annualized for a twelve-month period to derive the yield of the Fund. The
Fund may also quote its tax-equivalent yield, which is calculated by
determining the pre-tax yield which after being taxed at a stated rate, would
be equivalent to the yield determined as described above.
The "average annual total return" of the Fund refers to a figure
reflecting the average annualized percentage increase (or decrease) in the
value of an initial investment in the Fund of $1,000 over periods of one,
five and ten years or over the life of the Fund, if less than any of the
foregoing. Average annual total return reflects all income earned by the
Fund, any appreciation or depreciation of the assets of the Fund, and all
expenses incurred by the Fund, for the stated periods. It also assumes
reinvestment of all dividends and distributions paid by the Fund.
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or
other types of total return figures. The Fund may also advertise the growth
of hypothetical investments of $10,000, $50,000 and $100,000 in shares of the
Fund.
The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by independent
organizations (such as Lipper Analytical Services Inc.).
ADDITIONAL INFORMATION
- -----------------------------------------------------------------------------
Voting Rights. All shares of beneficial interest of the Fund are of $0.01
par value and are equal as to earnings, assets and voting privileges. There
are no conversion, pre-emptive or other subscription rights. In the event of
liquidation, each share of beneficial interest of the Fund is entitled to its
portion of all of the Fund's assets after all debts and expenses have been
paid. The shares do not have cumulative voting rights.
The Fund is not required to hold Annual Meetings of Shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call Special Meetings of Shareholders for action by shareholder
vote as may be required by the Act or the Declaration of Trust. The Trustees
themselves have the power to alter the number and the terms of office of the
Trustees and they may at any time lengthen their own terms or make their
terms of unlimited duration and appoint their own successors, provided that
always at least a majority of the Trustees has been elected by the
shareholders of the Fund. Under certain circumstances the Trustees may be
removed by action of the Trustees. The shareholders also have the right under
certain circumstances to remove the Trustees.
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable as partners for the
obligations of the Fund. The Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Fund and
requires that notice of such disclaimer be given in each instrument entered
16
<PAGE>
into or executed by the Fund. Under the Declaration of Trust, indemnification
shall be made out of the Fund's property for any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations. Given the above limitations on shareholder personal liability
and the nature of the Fund's assets and operations, the possibility of the
Fund being unable to meet its obligations is remote and thus, in the opinion
of Massachusetts counsel to the Fund, the risk to Fund shareholders is
remote.
Code of Ethics. Directors, officers and employees of InterCapital, Dean
Witter Services Company Inc. and the Distributor are subject to a strict Code
of Ethics adopted by those companies. The Code of Ethics is intended to
ensure that the interests of shareholders and other clients are placed ahead
of any personal interest, that no undue personal benefit is obtained from a
person's employment activities and that actual and potential conflicts of
interest are avoided. To achieve these goals and comply with regulatory
requirements, the Code of Ethics requires, among other things, that personal
securities transactions by employees of the companies be subject to an
advance clearance process to monitor that no Dean Witter Fund is engaged at
the same time in a purchase or sale of the same security. The Code of Ethics
bans the purchase of securities in an initial public offering, and also
prohibits engaging in futures and options transactions and profiting on
short-term trading (that is, a purchase within sixty days of a sale or a sale
within sixty days of a purchase) of a security. In addition, investment
personnel may not purchase or sell a security for their personal account
within thirty days before or after any transaction in any Dean Witter Fund
managed by them. Any violations of the Code of Ethics are subject to
sanctions, including reprimand, demotion or suspension or termination of
employment. The Code of Ethics comports with regulatory requirements and the
recommendations in the 1994 report by the Investment Company Institute
Advisory Group on Personal Investing.
Shareholder Inquiries. All inquiries regarding the Fund should be
directed to the Fund at the telephone numbers or address set forth on the
front cover of this Prospectus.
17
<PAGE>
Dean Witter
Short-Term U.S. Treasury Trust
Two World Trade Center
New York, New York 10048
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Michael E. Nugent
Philip Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Rajesh K. Gupta
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Bank of New York
90 Washington Street
New York, New York 10286
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
DEAN WITTER
SHORT-TERM
U.S. TREASURY
TRUST
PROSPECTUS--JULY 23, 1996
<PAGE>
DEAN WITTER
SHORT-TERM
U.S. TREASURY
TRUST
STATEMENT OF ADDITIONAL INFORMATION
JULY 23, 1996
- -----------------------------------------------------------------------------
Dean Witter Short-Term U.S. Treasury Trust (the "Fund") is an open-end,
diversified management investment company whose investment objective is
current income, preservation of principal and liquidity. The Fund seeks to
achieve its investment objective by investing in U.S. Treasury securities
backed by the full faith and credit of the U.S. Government.
Shares of the Fund are sold and redeemed at net asset value without the
imposition of a sales charge. The Fund is authorized to reimburse specific
expenses incurred in promoting the distribution of the Fund's shares,
including personal services to shareholders and maintenance of shareholder
accounts, in accordance with a Plan of Distribution pursuant to Rule 12b-1
under the Investment Company Act of 1940. Reimbursement may in no event
exceed an amount equal to payments at the annual rate of 0.35% of the average
daily net assets of the Fund.
A Prospectus for the Fund dated July 23, 1996, which provides the basic
information you should know before investing in the Fund, may be obtained
without charge from the Fund at the address or telephone number listed below
or from the Fund's Distributor, Dean Witter Distributors Inc., or from Dean
Witter Reynolds Inc., at any of its branch offices. This Statement of
Additional Information is not a Prospectus. It contains information in
addition to and more detailed than that set forth in the Prospectus. It is
intended to provide additional information regarding the activities and
operations of the Fund, and should be read in conjunction with the
Prospectus.
Dean Witter
Short-Term U.S. Treasury Trust
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 869-NEWS (toll-free)
<PAGE>
TABLE OF CONTENTS
- -------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
The Fund and its Management ......... 3
Trustees and Officers ............... 6
Investment Practices and Policies .. 12
Investment Restrictions ............. 13
Portfolio Transactions and Brokerage 13
The Distributor ..................... 15
Shareholder Services ................ 17
Redemptions and Repurchases ......... 21
Dividends, Distributions and Taxes . 22
Performance Information ............. 23
Description of Shares of the Fund .. 24
Custodian and Transfer Agent ....... 24
Independent Accountants ............. 25
Reports to Shareholders ............. 25
Legal Counsel ....................... 25
Experts ............................. 25
Registration Statement .............. 25
Financial Statements--May 31, 1996 . 26
Report of Independent Accountants .. 34
</TABLE>
2
<PAGE>
THE FUND AND ITS MANAGEMENT
- -----------------------------------------------------------------------------
THE FUND
The Fund is a trust of the type commonly known as a "Massachusetts
business trust" and was organized under the laws of the Commonwealth of
Massachusetts on June 4, 1991.
THE INVESTMENT MANAGER
Dean Witter InterCapital Inc. (the "Investment Manager" or
"InterCapital"), a Delaware corporation, whose address is Two World Trade
Center, New York, New York 10048, is the Fund's Investment Manager.
InterCapital is a wholly-owned subsidiary of Dean Witter, Discover & Co.
("DWDC"), a Delaware corporation. The daily management of the Fund and
research relating to the Fund's portfolio is conducted by or under the
direction of officers of the Fund and of the Investment Manager, subject to
review of investments by the Fund's Board of Trustees. In addition, Trustees
of the Fund provide guidance on economic factors and interest rate trends.
Information as to these Trustees and Officers is contained under the caption
"Trustees and Officers".
InterCapital is also the investment manager (or investment adviser and
administrator) of the following investment companies: Dean Witter Liquid
Asset Fund Inc., InterCapital Income Securities Inc., InterCapital Insured
Municipal Bond Trust, InterCapital Insured Municipal Trust, Dean Witter High
Yield Securities Inc., Dean Witter Tax-Free Daily Income Trust, Dean Witter
Developing Growth Securities Trust, Dean Witter Tax-Exempt Securities Trust,
Dean Witter Natural Resource Development Securities Inc., Dean Witter
Dividend Growth Securities Inc., Dean Witter American Value Fund, Dean Witter
U.S. Government Money Market Trust, Dean Witter Variable Investment Series,
Dean Witter World Wide Investment Trust, Dean Witter Select Municipal
Reinvestment Fund, Dean Witter U.S. Government Securities Trust, Dean Witter
California Tax-Free Income Fund, Dean Witter New York Tax-Free Income Fund,
Dean Witter Convertible Securities Trust, Dean Witter Federal Securities
Trust, Dean Witter Value-Added Market Series, High Income Advantage Trust,
High Income Advantage Trust II, High Income Advantage Trust III, Dean Witter
Government Income Trust, Dean Witter Utilities Fund, Dean Witter California
Tax-Free Daily Income Trust, Dean Witter Strategist Fund, Dean Witter World
Wide Income Trust, Dean Witter Intermediate Income Securities, Dean Witter
New York Municipal Money Market Trust, Dean Witter Capital Growth Securities,
Dean Witter European Growth Fund Inc., Dean Witter Precious Metals and
Minerals Trust, Dean Witter Global Short-Term Income Fund Inc., Dean Witter
Pacific Growth Fund Inc., Dean Witter Multi-State Municipal Series Trust,
Dean Witter Diversified Income Trust, Dean Witter Premier Income Trust,
InterCapital Quality Municipal Investment Trust, InterCapital Quality
Municipal Income Trust, InterCapital Quality Municipal Securities,
InterCapital California Quality Municipal Securities, InterCapital New York
Quality Municipal Securities, Dean Witter Retirement Series, Dean Witter
Health Sciences Trust, InterCapital Insured Municipal Income Trust,
InterCapital California Insured Municipal Income Trust, InterCapital Insured
Municipal Securities, InterCapital Insured California Municipal Securities,
Dean Witter Global Dividend Growth Securities, Dean Witter Limited Term
Municipal Trust, Dean Witter Short-Term Bond Fund, Dean Witter Global
Utilities Fund, Dean Witter National Municipal Trust, Dean Witter High Income
Securities, Dean Witter International Small Cap Fund, Dean Witter Mid-Cap
Growth Fund, Dean Witter Select Dimensions Investment Series, Dean Witter
Global Asset Allocation Fund, Dean Witter Balanced Income Fund, Dean Witter
Balanced Growth Fund, Dean Witter Hawaii Municipal Trust, Dean Witter Capital
Appreciation Fund, Dean Witter Intermediate Term U.S. Treasury Trust, Dean
Witter Information Fund, Dean Witter Japan Fund, Dean Witter Income Builder
Fund, Active Assets Money Trust, Active Assets Tax-Free Trust, Active Assets
California Tax-Free Trust and Active Assets Government Securities Trust.
Also, the Investment Manager serves as investment adviser and administrator
to Municipal Income Trust, Municipal Income Trust II, Municipal Income Trust
III, Municipal Income Opportunities Trust, Municipal Income Opportunities
Trust II, Municipal Income Opportunities Trust III, Prime Income Trust and
Municipal Premium Income Trust. The foregoing investment companies, together
with the Fund, are collectively referred to as the Dean Witter Funds. In
addition, Dean Witter Services Company Inc., ("DWSC"), a wholly-owned
subsidiary of InterCapital, serves as manager for the following investment
companies, for which TCW Funds Management, Inc. is the investment adviser:
TCW/DW Core Equity
3
<PAGE>
Trust, TCW/DW North American Government Income Trust, TCW/DW Latin American
Growth Fund, TCW/DW Income and Growth Fund, TCW/DW Small Cap Growth Fund,
TCW/DW Balanced Fund, TCW/DW Total Return Trust, TCW/DW Mid-Cap Equity Trust,
TCW/DW Global Telecom Fund, TCW/DW Term Trust 2000, TCW/DW Term Trust 2002,
TCW/DW Term Trust 2003 and TCW/DW Emerging Markets Opportunities Trust (the
"TCW/DW Funds"). InterCapital also serves as: (i) sub-adviser to Templeton
Global Opportunities Trust, an open-end investment company; (ii)
administrator of The BlackRock Strategic Term Trust Inc., a closed-end
investment company; and (iii) sub-administrator of MassMutual Participation
Investors and Templeton Global Governments Income Trust, closed-end
investment companies.
Pursuant to an Investment Management Agreement (the "Agreement") with the
Investment Manager, the Fund has retained the Investment Manager to manage
the investment of the Fund's assets, including the placing of orders for the
purchase and sale of portfolio securities. The Investment Manager obtains and
evaluates such information and advice relating to the economy, securities
markets and specific securities as it considers necessary or useful to
continuously manage the assets of the Fund in a manner consistent with its
investment objective.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, such office space, facilities,
equipment, clerical help, bookkeeping and certain legal services as the Fund
may reasonably require in the conduct of its business, including the
preparation of prospectuses, proxy statements and reports required to be
filed with Federal and state securities commissions (except insofar as the
participation or assistance of independent accountants and attorneys is, in
the opinion of the Investment Manager, necessary or desirable). In addition,
the Investment Manager pays the salaries of all personnel, including officers
of the Fund, who are employees of the Investment Manager. The Investment
Manager also bears the cost of telephone service, heat, light, power and
other utilities provided to the Fund.
Effective December 31, 1993, pursuant to a Services Agreement between
InterCapital and DWSC, DWSC began to provide the administrative services to
the Fund which were previously performed directly by InterCapital. On April
17, 1995, DWSC was reorganized in the State of Delaware necessitating the
entry into a new Services Agreement by InterCapital and DWSC on such date.
The foregoing internal reorganizations did not result in any change in the
nature or scope of the administrative services being provided to the Fund or
any of the fees being paid by the Fund for the overall services being
performed under the terms of the existing Management Agreement.
Expenses not expressly assumed by the Investment Manager under the
Agreement or by Dean Witter Distributors Inc. ("Distributors" or the
"Distributor"), the Distributor of the Fund's shares (see "The Distributor"),
will be paid by the Fund. The expenses borne by the Fund include, but are not
limited to: fees pursuant to the Fund's Plan of Distribution; charges and
expenses of any registrar, custodian, stock transfer and dividend disbursing
agent; brokerage commissions; taxes; engraving and printing share
certificates; registration costs of the Fund and its shares under federal and
state securities laws; the cost and expense of printing, including
typesetting, and distributing Prospectuses and Statements of Additional
Information of the Fund and supplements thereto to the Fund's shareholders;
all expenses of shareholders' and Trustees' meetings and of preparing,
printing and mailing of proxy statements and reports to shareholders; fees
and travel expenses of Trustees or members of any advisory board or committee
who are not employees of the Investment Manager or any corporate affiliate of
the Investment Manager; all expenses incident to any dividend, withdrawal or
redemption options; charges and expenses of any outside service used for
pricing of the Fund's shares; fees and expenses of legal counsel, including
counsel to the Trustees who are not interested persons of the Fund or of the
Investment Manager (not including compensation or expenses of attorneys who
are employees of the Investment Manager) and independent accountants;
membership dues of industry associations; interest on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
Trustees) of the Fund which inure to its benefit; extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification relating thereto); and all other costs of the
Fund's operation.
4
<PAGE>
As full compensation for the services and facilities furnished to the Fund
and expenses of the Fund assumed by the Investment Manager, the Fund pays the
Investment Manager monthly compensation calculated daily by applying the
annual rate of 0.35% to the net assets of the Fund, determined as of the
close of each business day. For the fiscal years ended May 31, 1994, May 31,
1995 and May 31, 1996, the Fund accrued to the Investment Manager total
compensation under the Agreement in the amounts of $2,249,631, $1,303,748 and
$970,394, respectively.
Total operating expenses of the Fund are subject to applicable limitations
under rules and regulations of states where the Fund is authorized to sell
its shares. Therefore, operating expenses are effectively subject to the most
restrictive applicable limitations as the same may be amended from time to
time. Presently, the most restrictive limitation to which the Fund is subject
is as follows: if, in any fiscal year, the Fund's total operating expenses,
exclusive of taxes, interest, brokerage fees, distribution fees and
extraordinary expenses (to the extent permitted by applicable state
securities laws and regulations), exceed 2 1/2% of the first $30,000,000 of
average daily net assets, 2% of the next $70,000,000 and 1 1/2% of any excess
over $100,000,000, the Investment Manager will reimburse the Fund for the
amount of such excess. Such amount, if any, will be calculated daily and
credited on a monthly basis. The Fund's expenses did not exceed the
limitation set forth above for the fiscal years ended May 31, 1994, May 31,
1995 and May 31, 1996.
The Agreement provides that in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations thereunder,
the Investment Manager is not liable to the Fund or any of its investors for
any act or omission by the Investment Manager or for any losses sustained by
the Fund or its investors. The Agreement in no way restricts the Investment
Manager from acting as investment manager or adviser to others.
The Investment Manager has paid the organizational expenses of the Fund in
the amount of approximately $135,000 incurred prior to the offering of the
Fund's shares. The Fund has reimbursed the Investment Manager for such
expenses. The Fund has deferred and is amortizing the reimbursed expenses on
the straight line method over a period not to exceed five years from the date
of commencement of the Fund's operations.
The Agreement was initially approved by the Board of Trustees on October
30, 1992, and by the shareholders of the Fund at a Special Meeting of
Shareholders held on January 12, 1993. The Agreement is substantially
identical to a prior investment management agreement which was initially
approved by the Board of Trustees on July 18, 1991 and by DWR, the then sole
shareholder of the Fund, on July 19, 1991, and by the Fund's shareholders at
a Special Meeting of Shareholders on October 14, 1992. The Agreement took
effect on June 30, 1993 upon the spin-off by Sears, Roebuck and Co. of its
remaining shares of DWDC. The Agreement may be terminated at any time,
without penalty, on thirty days' notice by the Board of Trustees of the Fund,
by the holders of a majority, as defined in the Investment Company Act of
1940, as amended (the "Act"), of the outstanding shares of the Fund, or by
the Investment Manager. The Agreement will automatically terminate in the
event of its assignment (as defined in the Act). Under its terms, the
Agreement had an initial term ending April 30, 1994 and will continue from
year to year thereafter, provided such continuance of the Agreement is
approved at least annually by the vote of the holders of a majority, as
defined in the Act, of the outstanding shares of the Fund, or by the Board of
Trustees of the Fund; provided that in either event such continuance is
approved annually by the vote of a majority of the Trustees of the Fund who
are not parties to the Agreement or "interested persons" (as defined in the
Act) of any such party, which vote must be cast in person at a meeting called
for the purpose of voting on such approval. At their Meeting held on April
17, 1996, the Trustees approved the continuance of the Agreement until April
30, 1997.
The Fund has acknowledged that the name "Dean Witter" is a property right
of DWR. The Fund has agreed that DWR or its parent company may use or, at any
time, permit others to use, the name "Dean Witter". The Fund has also agreed
that in the event the investment management contract between InterCapital and
the Fund is terminated, or if the affiliation between InterCapital and its
parent is terminated, the Fund will eliminate the name "Dean Witter" from its
name if DWR or its parent company shall so request.
5
<PAGE>
TRUSTEES AND OFFICERS
- -----------------------------------------------------------------------------
The Trustees and Executive Officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with
the 81 Dean Witter Funds and the 13 TCW/DW Funds are shown below:
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- -------------------------------------------- --------------------------------------------------------
<S> <C>
Michael Bozic (55) Chairman and Chief Executive Officer of Levitz Furniture
Trustee Corporation (since November, 1995); Director or Trustee of
c/o Levitz Furniture Corporation the Dean Witter Funds; formerly President and Chief Executive
6111 Broken Sound Parkway, N.W. Officer of Hills Department Stores (May, 1991-July, 1995);
Boca Raton, Florida formerly variously Chairman and Chief Executive Officer,
President and Chief Operating Officer (1987-1991) of the Sears
Merchandise Group of Sears, Roebuck and Co.; Director of
Eaglemark Financial Services, Inc., the United Negro College
Fund and Weirton Steel Corporation.
Charles A. Fiumefreddo* (63) Chairman, Chief Executive Officer and Director of InterCapital,
Chairman, Trustee, Distributors and DWSC; Executive Vice President and Director
President and Chief of DWR; Chairman, Trustee or Director, President and Chief
Executive Officer Executive Officer of the Dean Witter Funds; Chairman, Chief
Two World Trade Center Executive Officer and Trustee of the TCW/DW Funds; formerly
New York, New York Executive Vice President and Director of DWDC; Chairman and
Director of Dean Witter Trust Company ("DWTC"); Director of
various DWDC subsidiaries and affiliates; formerly Executive
Vice President and Director of DWDC (until February 1993).
Edwin J. Garn (63) Director or Trustee of the Dean Witter Funds; formerly United
Trustee States Senator (R-Utah) (1974-1992) and Chairman, Senate
c/o Huntsman Chemical Corporation Banking Committee (1980-1986); formerly Mayor of Salt Lake
500 Huntsman Way City, Utah (1971-1974); formerly Astronaut, Space Shuttle
Salt Lake City, Utah Discovery (April 12-19, 1985); Vice Chairman, Huntsman Chemical
Corporation (since January, 1993); Director of Franklin Quest
(time management systems) and John Alden Financial Corp.;
Member of the board of various civic and charitable
organizations.
John R. Haire (71) Chairman of the Audit Committee and Chairman of the Committee
Trustee of the Independent Directors or Trustees and Director or Trustee
Two World Trade Center of each of the Dean Witter Funds; Chairman of the Audit Committee
New York, New York and Chairman of the Committee of the Independent Trustees
and Trustee of the TCW/DW Funds; formerly President, Council
for Aid to Education (1978-1989), and Chairman and Chief
Executive Officer of Anchor Corporation, an Investment Adviser
(1964-1978); Director of Washington National Corporation
(insurance).
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- -------------------------------------------- --------------------------------------------------------
<S> <C>
Dr. Manuel H. Johnson (47) Senior Partner, Johnson Smick International, Inc., a consulting
Trustee firm; Koch Professor of International Economics and Director
c/o Johnson Smick International, Inc. of the Center for Global Market Studies at George Mason
1133 Connecticut Avenue, N.W. University; Co-Chairman and a founder Washington, D.C. of
the Group of Seven Council (G7C), an international economic
commission; Director or Trustee of the Dean Witter Funds;
Trustee of the TCW/DW Funds; Director of NASDAQ (since June,
1995); Director of Greenwich Capital Markets Inc.
(broker-dealer); formerly Vice Chairman of the Board of
Governors of the Federal Reserve System (1986-1990) and
Assistant Secretary of the U.S. Treasury (1982-1986).
Michael E. Nugent (60) General Partner, Triumph Capital, L.P., a private partnership
Trustee (since April, 1988); Director or Trustee of the Dean Witter
c/o Triumph Capital, L.P. Funds; Trustee of the TCW/DW Funds; formerly Vice President,
237 Park Avenue Bankers Trust Company and BT Capital Corporation (1984-1988);
New York, New York Director of various business organizations.
Philip J. Purcell* (52) Chairman of the Board of Directors and Chief Executive Officer
Trustee of DWDC, DWR and Novus Credit Services Inc.; Director of
Two World Trade Center InterCapital, DWSC and Distributors; Director or Trustee of
New York, New York the Dean Witter Funds; Director and/or officer of various
DWDC subsidiaries.
John L. Schroeder (65) Retired; Director or Trustee of the Dean Witter Funds; Trustee
Trustee of the TCW/DW Funds; Director of Citizens Utilities Company;
c/o Gordon Altman Butowsky formerly Executive Vice President and Chief Investment Officer
Weitzen Shalov & Wein of the Home Insurance Company (August, 1991-September, 1995);
Counsel to the Independent Trustees Director or Trustee of the Dean Witter Funds; formerly Chairman
114 West 47th Street and Chief Investment Officer of Axe-Houghton Management and
New York, New York the Axe-Houghton Funds (April, 1983-June, 1991) and President
of USF&G Financial Services, Inc. (June 1990-June, 1991).
Sheldon Curtis (64) Senior Vice President, Secretary and General Counsel of
Vice President, Secretary InterCapital and DWSC; Senior Vice President and Secretary
and General Counsel of DWTC; Senior Vice President, Assistant Secretary and
Two World Trade Center Assistant General Counsel of Dean Witter Distributors Inc.;
New York, New York Assistant Secretary of DWR; Vice President, Secretary and
General Counsel of the Dean Witter Funds and the TCW/DW Funds.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- -------------------------------------------- --------------------------------------------------------
<S> <C>
Rajesh K. Gupta (36) Senior Vice President of InterCapital (since April, 1991);
Vice President Vice President of various Dean Witter Funds.
Two World Trade Center
New York, New York
Thomas F. Caloia (50) First Vice President (since May, 1991) and Assistant Treasurer
Treasurer (since January, 1993) of InterCapital; First Vice President
Two World Trade Center and Assistant Treasurer of DWSC; Treasurer of the Dean Witter
New York, New York Funds and the TCW/DW Funds; previously Vice President of
InterCapital.
</TABLE>
- ------------
* Denotes Trustees who are "interested persons" of the Fund, as defined in the
Act.
In addition, Robert M. Scanlan, President and Chief Operating Officer of
InterCapital and DWSC, Executive Vice President of Distributors and DWTC and
Director of DWTC, David A. Hughey, Executive Vice President and Chief
Administrative Officer of InterCapital, DWSC and Distributors and President
and Director of DWTC, Joseph J. McAlinden, Executive Vice President and Chief
Investment Officer of InterCapital and Director of DWTC, Robert S. Giambrone,
Senior Vice President of InterCapital, DWSC, Distributors, DWTC and a
Director of DWTC, and Peter Avelar and Jonathan R. Page, Senior Vice
Presidents of InterCapital, are Vice Presidents of the Fund and Marilyn K.
Cranney and Barry Fink, First Vice Presidents and Assistant General Counsels
of InterCapital and DWSC, and Lou Anne D. McInnis and Ruth Rossi, Vice
Presidents and Assistant General Counsels of InterCapital and DWSC, and
Carsten Otto, a Staff Attorney with InterCapital, are Assistant Secretaries
of the Fund.
THE BOARD OF TRUSTEES, THE INDEPENDENT TRUSTEES, AND THE COMMITTEES
The Board of Trustees consists of eight (8) trustees. These same
individuals also serve as directors or trustees for all of the Dean Witter
Funds, and are referred to in this section as Trustees. As of the date of
this Statement of Additional Information, there are a total of 81 Dean Witter
Funds, comprised of 121 portfolios. As of May 31, 1996, the Dean Witter Funds
had total net assets of approximately $76.2 billion and more than five
million shareholders.
Six Trustees (75% of the total number) have no affiliation or business
connection with InterCapital or any of its affiliated persons and do not own
any stock or other securities issued by InterCapital's parent company, DWDC.
These are the "disinterested" or "independent" Trustees. The other two
Trustees (the "management Trustees") are affiliated with InterCapital. Four
of the six independent Trustees are also Independent Trustees of the TCW/DW
Funds.
Law and regulation establish both general guidelines and specific duties
for the Independent Trustees. The Dean Witter Funds seek as Independent
Trustees individuals of distinction and experience in business and finance,
government service or academia; these are people whose advice and counsel are
in demand by others and for whom there is often competition. To accept a
position on the Funds' Boards, such individuals may reject other attractive
assignments because the Funds make substantial demands on their time. Indeed,
by serving on the Funds' Boards, certain Trustees who would otherwise be
qualified and in demand to serve on bank boards would be prohibited by law
from doing so.
All of the Independent Trustees serve as members of the Audit Committee
and the Committee of the Independent Trustees. Three of them also serve as
members of the Derivatives Committee. During the calendar year ended December
31, 1995, the three Committees held a combined total of fifteen meetings. The
Committees hold some meetings at InterCapital's offices and some outside
InterCapital. Management Trustees or officers do not attend these meetings
unless they are invited for purposes of furnishing information or making a
report.
The Committee of the Independent Trustees is charged with recommending to
the full Board approval of management, advisory and administration contracts,
Rule 12b-1 plans and distribution and
8
<PAGE>
underwriting agreements; continually reviewing Fund performance; checking on
the pricing of portfolio securities, brokerage commissions, transfer agent
costs and performance, and trading among Funds in the same complex; and
approving fidelity bond and related insurance coverage and allocations, as
well as other matters that arise from time to time. The Independent Trustees
are required to select and nominate individuals to fill any Independent
Trustee vacancy on the Board of any Fund that has a Rule 12b-1 plan of
distribution. Most of the Dean Witter Funds have such a plan.
The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing
engagement; approving professional services provided by the independent
accountants and other accounting firms prior to the performance of such
services; reviewing the independence of the independent accountants;
considering the range of audit and non-audit fees; reviewing the adequacy of
the Fund's system of internal controls; and preparing and submitting
Committee meeting minutes to the full Board.
Finally, the Board of each Fund has formed a Derivatives Committee to
establish parameters for and oversee the activities of the Fund with respect
to derivative investments, if any, made by the Fund.
DUTIES OF CHAIRMAN OF COMMITTEE OF THE INDEPENDENT TRUSTEES AND AUDIT
COMMITTEE
The Chairman of the Committee of the Independent Trustees and the Audit
Committee maintains an office at the Funds' headquarters in New York. He is
responsible for keeping abreast of regulatory and industry developments and
the Funds' operations and management. He screens and/or prepares written
materials and identifies critical issues for the Independent Trustees to
consider, develops agendas for Committee meetings, determines the type and
amount of information that the Committees will need to form a judgment on
various issues, and arranges to have that information furnished to Committee
members. He also arranges for the services of independent experts and
consults with them in advance of meetings to help refine reports and to focus
on critical issues. Members of the Committees believe that the person who
serves as Chairman of both Committees and guides their efforts is pivotal to
the effective functioning of the Committees.
The Chairman of the Committees also maintains continuous contact with the
Funds' management, with independent counsel to the Independent Trustees and
with the Funds' independent auditors. He arranges for a series of special
meetings involving the annual review of investment advisory, management and
other operating contracts of the Funds and, on behalf of the Committees,
conducts negotiations with the Investment Manager and other service
providers. In effect, the Chairman of the Committees serves as a combination
of chief executive and support staff of the Independent Trustees.
The Chairman of the Committee of the Independent Trustees and the Audit
Committee is not employed by any other organization and devotes his time
primarily to the services he performs as Committee Chairman and Independent
Trustee of the Dean Witter Funds and as an Independent Trustee and, since
July 1, 1996, as Chairman of the Committee of the Independent Trustees and
the Audit Committee of the TCW/DW Funds. The current Committee Chairman has
had more than 35 years experience as a senior executive in the investment
company industry.
ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL DEAN
WITTER FUNDS
The Independent Trustees and the Funds' management believe that having the
same Independent Trustees for each of the Dean Witter Funds avoids the
duplication of effort that would arise from having different groups of
individuals serving as Independent Trustees for each of the Funds or even of
sub-groups of Funds. They believe that having the same individuals serve as
Independent Trustees of all the Funds tends to increase their knowledge and
expertise regarding matters which affect the Fund complex generally and
enhances their ability to negotiate on behalf of each Fund with the Fund's
service providers. This arrangement also precludes the possibility of
separate groups of Independent Trustees arriving at conflicting decisions
regarding operations and management of the Funds and avoids the cost and
confusion that would likely ensue. Finally, having the same Independent
Trustees serve on all Fund
9
<PAGE>
Boards enhances the ability of each Fund to obtain, at modest cost to each
separate Fund, the services of Independent Trustees, and a Chairman of their
Committees, of the caliber, experience and business acumen of the individuals
who serve as Independent Trustees of the Dean Witter Funds.
COMPENSATION OF INDEPENDENT TRUSTEES
The Fund pays each Independent Trustee an annual fee of $1,000 plus a per
meeting fee of $50 for meetings of the Board of Trustees or committees of the
Board of Trustees attended by the Trustee (the Fund pays the Chairman of the
Audit Committee an annual fee of $750 and pays the Chairman of the Committee
of the Independent Trustees an additional annual fee of $1,200). The Fund
also reimburses such Trustees for travel and other out-of-pocket expenses
incurred by them in connection with attending such meetings. Trustees and
officers of the Fund who are or have been employed by the Investment Manager
or an affiliated company receive no compensation or expense reimbursement
from the Fund.
The following table illustrates the compensation paid to the Fund's
Independent Trustees by the Fund for the fiscal year ended May 31, 1996.
FUND COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME OF INDEPENDENT COMPENSATION
TRUSTEE FROM THE FUND
- -------------------------- ---------------
<S> <C>
Michael Bozic ............. $1,800
Edwin J. Garn ............. 1,900
John R. Haire ............. 4,375(1)
Dr. Manuel H. Johnson .... 1,850
Michael E. Nugent ......... 1,700
John L. Schroeder ......... 1,850
</TABLE>
(1) Of Mr. Haire's compensation from the Fund, $3,150 was paid to him as
Chairman of the Committee of the Independent Trustees ($2,400) and as
Chairman of the Audit Committee ($750).
The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1995 for
services to the 79 Dean Witter Funds and, in the case of Messrs. Haire,
Johnson, Nugent and Schroeder, the 11 TCW/DW Funds that were in operation at
December 31, 1995. With respect to Messrs. Haire, Johnson, Nugent and
Schroeder, the TCW/DW Funds are included solely because of a limited exchange
privilege between those Funds and five Dean Witter Money Market Funds. Mr.
Schroeder was elected as a Trustee of the TCW/DW Funds on April 20, 1995.
COMPENSATION FROM DEAN WITTER FUNDS AND TCW/DW FUNDS
<TABLE>
<CAPTION>
FOR SERVICE AS
CHAIRMAN OF TOTAL
FOR SERVICE AS COMMITTEES OF COMPENSATION
DIRECTOR OR FOR SERVICE AS INDEPENDENT PAID FOR
TRUSTEE AND TRUSTEE AND DIRECTORS/ SERVICES TO 79
COMMITTEE MEMBER COMMITTEE MEMBER TRUSTEES AND DEAN WITTER
NAME OF INDEPENDENT OF 79 DEAN WITTER OF 11 TCW/DW AUDIT FUNDS AND 11
TRUSTEE FUNDS FUNDS COMMITTEES TCW/DW FUNDS
- -------------------------- ----------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
Michael Bozic ............. $126,050 -- -- $126,050
Edwin J. Garn ............. 136,450 -- -- 136,450
John R. Haire ............. 98,450 $82,038 $217,350(2) 397,838
Dr. Manuel H. Johnson .... 136,450 82,038 -- 218,488
Michael E. Nugent ......... 124,200 75,038 -- 199,238
John L. Schroeder ......... 136,450 46,964 -- 183,414
</TABLE>
(2) For the 79 Dean Witter Funds in operation at December 31, 1995. As
noted above, on July 1, 1996, Mr. Haire became Chairman of the
Committee of the Independent Trustees and the Audit Committee of the
TCW/DW Funds in addition to continuing to serve in such positions for
the Dean Witter Funds.
10
<PAGE>
As of the date of this Statement of Additional Information, 57 of the Dean
Witter Funds, including the Fund, have adopted a retirement program under
which an Independent Trustee who retires after serving for at least five
years (or such lesser period as may be determined by the Board) as an
Independent Director or Trustee of any Dean Witter Fund that has adopted the
retirement program (each such Fund referred to as an "Adopting Fund" and each
such Trustee referred to as an "Eligible Trustee") is entitled to retirement
payments upon reaching the eligible retirement age (normally, after attaining
age 72). Annual payments are based upon length of service. Currently, upon
retirement, each Eligible Trustee is entitled to receive from the Adopting
Fund, commencing as of his or her retirement date and continuing for the
remainder of his or her life, an annual retirement benefit (the "Regular
Benefit") equal to 25.0% of his or her Eligible Compensation plus 0.4166666%
of such Eligible Compensation for each full month of service as an
Independent Director or Trustee of any Adopting Fund in excess of five years
up to a maximum of 50.0% after ten years of service. The foregoing
percentages may be changed by the Board.(3) "Eligible Compensation" is
one-fifth of the total compensation earned by such Eligible Trustee for
service to the Adopting Fund in the five year period prior to the date of the
Eligible Trustee's retirement. Benefits under the retirement program are not
secured or funded by the Adopting Funds.
The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees by the Fund for the fiscal year ended May 31,
1996 and by the 57 Dean Witter Funds (including the Fund) as of December 31,
1995, and the estimated retirement benefits for the Fund's Independent
Trustees from the Fund as of May 31, 1996 and from the 57 Dean Witter Funds
as of December 31, 1995.
RETIREMENT BENEFITS FROM THE FUND AND ALL DEAN WITTER FUNDS
<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS
--------------------------------
ESTIMATED ANNUAL
RETIREMENT BENEFITS BENEFITS UPON
ACCRUED AS EXPENSES RETIREMENT(4)
-------------------- -------------------
ESTIMATED
CREDITED YEARS ESTIMATED
OF SERVICE AT PERCENTAGE OF BY ALL FROM FROM ALL
NAME OF INDEPENDENT RETIREMENT ELIGIBLE BY THE ADOPTING THE ADOPTING
TRUSTEE (MAXIMUM 10) COMPENSATION FUND FUNDS FUND FUNDS
- -------------------------- --------------- --------------- -------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael Bozic ............. 10 50.0% $ 424 $ 26,359 $ 950 $ 51,550
Edwin J. Garn ............. 10 50.0 722 41,901 950 51,550
John R. Haire ............. 10 50.0 5,936 261,763 2,363 130,404
Dr. Manuel H. Johnson .... 10 50.0 285 16,748 950 51,550
Michael E. Nugent ......... 10 50.0 540 30,370 950 51,550
John L. Schroeder ......... 8 41.7 828 51,812 792 42,958
</TABLE>
(3) An Eligible Trustee may elect alternate payments of his or her
retirement benefits based upon the combined life expectancy of such
Eligible Trustee and his or her spouse on the date of such Eligible
Trustee's retirement. The amount estimated to be payable under this
method, through the remainder of the later of the lives of such
Eligible Trustee and spouse, will be the actuarial equivalent of the
Regular Benefit. In addition, the Eligible Trustee may elect that the
surviving spouse's periodic payment of benefits will be equal to either
50% or 100% of the previous periodic amount, an election that,
respectively, increases or decreases the previous periodic amount so
that the resulting payments will be the actuarial equivalent of the
Regular Benefit.
(4) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in Footnote (3)
above.
As of the date of this Statement of Additional Information, the aggregate
number of shares of beneficial interest of the Fund owned by the Fund's
officers and Trustees as a group was less than 1 percent of the Fund's shares
of beneficial interest outstanding.
11
<PAGE>
INVESTMENT PRACTICES AND POLICIES
- -----------------------------------------------------------------------------
As stated in the Prospectus, the Fund will invest all of its assets in
U.S. Treasury securities backed by the full faith and credit of the U.S.
Government.
U.S. Treasury securities presently consist of U.S. Treasury bills
(maturities of one year or less), U.S. Treasury notes (maturities of one to
ten years) and U.S. Treasury bonds (generally maturities of greater than ten
years), all of which are direct obligations of the U.S. Government and, as
such, are backed by the "full faith and credit" of the United States.
Zero Coupon Treasury Securities. A portion of the U.S. Treasury securities
purchased by the Fund may be "zero coupon" Treasury securities. These are
U.S. Treasury notes and bonds which have been stripped of their unmatured
interest coupons and receipts or which are certificates representing
interests in such stripped debt obligations and coupons. Such securities are
purchased at a discount from their face amount, giving the purchaser the
right to receive their full value at maturity. A zero coupon security pays no
interest to its holder during its life. Its value to an investor consists of
the difference between its face value at the time of maturity and the price
for which it was acquired, which is generally an amount significantly less
than its face value (sometimes referred to as a "deep discount" price).
The interest earned on such securities is, implicitly, automatically
compounded and paid out at maturity. While such compounding at a constant
rate eliminates the risk of receiving lower yields upon reinvestment of
interest if prevailing interest rates decline, the owner of a zero coupon
security will be unable to participate in higher yields upon reinvestment of
interest received if prevailing interest rates rise. For this reason, zero
coupon securities are subject to substantially greater market price
fluctuations during periods of changing prevailing interest rates than are
comparable debt securities which make current distributions of interest.
Current federal tax law requires that a holder (such as the Fund) of a zero
coupon security accrue a portion of the discount at which the security was
purchased as income each year even though the Fund receives no interest
payments in cash on the security during the year. For a discussion of the tax
treatment of zero coupon Treasury securities. See "Dividends, Distributions
and Taxes."
In the last few years a number of banks and brokerage firms have separated
("stripped") the principal portions ("corpus") from the coupon portions of
the U.S. Treasury bonds and notes and sold them separately in the form of
receipts or certificates representing undivided interests in these
instruments (which instruments are generally held by a bank in a custodial or
trust account). The Fund will not purchase any such receipts or certificates
representing stripped corpus interests in U.S. Treasury securities sold by
banks and brokerage firms. The Fund will only purchase zero coupon Treasury
Securities which have been stripped by the Federal Reserve Bank.
When-Issued and Delayed Delivery Securities and Firm Commitments. From
time to time, in the ordinary course of business, the Fund may purchase U.S.
Treasury securities on a when-issued or delayed delivery basis or may
purchase or sell U.S. Treasury securities on a firm commitment basis. For
example, the Fund may wish to purchase U.S. Treasury notes and bonds sold at
periodic U.S. Treasury auctions prior to their issuance ("when-issued"). When
such transactions are negotiated, the price is fixed at the time of the
commitment, but delivery and payment can take place a month or more after the
date of the commitment. While the Fund will only purchase securities on a
when-issued, delayed delivery or firm commitment basis with the intention of
acquiring the securities, the Fund may sell the securities before the
settlement date, if it is deemed advisable. The securities so purchased or
sold are subject to market fluctuation and no interest accrues to the
purchaser during this period. At the time the Fund makes the commitment to
purchase or sell securities on a when-issued, delayed delivery or firm
commitment basis, it will record the transaction and thereafter reflect the
value, each day, of such security purchased or, if a sale, the proceeds to be
received, in determining its net asset value. At the time of delivery of the
securities, their value may be more or less than the purchase or sale price.
The Fund will also establish a segregated account with its custodian bank in
which it will continually maintain cash or cash equivalents or other
portfolio (U.S. Treasury) securities equal in value to commitments to
purchase securities on a when-issued, delayed delivery or firm commitment
basis.
12
<PAGE>
INVESTMENT RESTRICTIONS
- -----------------------------------------------------------------------------
The Fund has adopted certain investment restrictions as fundamental
policies which cannot be changed without the approval of the holders of a
"majority" of the outstanding shares of the Fund, as defined in the Act.
Majority is defined in the Act as the lesser of (a) 67% or more of the shares
present at a meeting of shareholders, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (b)
more than 50% of the outstanding shares.
These restrictions provide that the Fund may not:
1. Invest more than 5% of the value of its total assets in the
securities of any one issuer (other than obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities).
2. Purchase common stocks, preferred stocks, warrants, other equity
securities, corporate bonds, municipal bonds or industrial revenue bonds;
3. Borrow money, except from banks for temporary or emergency
purposes, including the meeting of redemption requests which might
otherwise require the untimely disposition of securities. Borrowing in
the aggregate may not exceed 20%, and borrowing for purposes other than
meeting redemptions may not exceed 5% of the value of the Fund's total
assets (including the amount borrowed), less liabilities (not including
the amount borrowed) at the time the borrowing is made. Borrowings in
excess of 5% will be repaid before additional investments are made;
4. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except in an amount up to 10% of the value of its net assets, but only to
secure borrowings for temporary or emergency purposes;
5. Sell securities short or purchase securities on margin;
6. Write or purchase put or call options;
7. Underwrite the securities of other issuers or purchase restricted
securities;
8. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts or oil and gas interests;
9. Make loans to others except through the purchase of qualified debt
obligations in accordance with the Fund's investment objectives and
policies;
10. Issue senior securities as defined in the Act except insofar as
the Fund may be deemed to have issued a senior security by reason of: (a)
borrowing money in accordance with restrictions described above or (b) by
purchasing securities on a when-issued or delayed delivery basis or
purchasing or selling securities on a forward commitment basis;
11. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation, acquisition of
assets or plan of reorganization.
If a percentage restriction is adhered to at the time of an investment, a
later increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of total or net assets will not constitute a
violation of any of the foregoing restrictions.
PORTFOLIO TRANSACTIONS AND BROKERAGE
- -----------------------------------------------------------------------------
Subject to the general supervision by the Trustees of the Fund, the
Investment Manager is responsible for decisions to buy and sell securities
for the Fund, the selection of brokers and dealers to effect the
transactions, and the negotiation of brokerage commissions, if any. Purchases
and sales of portfolio securities are normally transacted through issuers,
underwriters or major dealers in U.S. Government securities acting as
principals. Such transactions are made on a net basis and do not involve
payment of brokerage commissions. The cost of securities purchased from an
underwriter usually includes a commission paid by the issuer to the
underwriters; transactions with dealers normally
13
<PAGE>
reflect the spread between bid and asked prices. During the fiscal years
ended May 31, 1994, May 31, 1995 and May 31, 1996, the Fund did not pay any
brokerage commissions.
The Investment Manager currently serves as investment manager to a number
of clients, including other investment companies, and may in the future act
as investment manager or adviser to others. It is the practice of the
Investment Manager to cause purchase and sale transactions to be allocated
among the Fund and others whose assets it manages in such a manner as it
deems equitable. In making such allocations among the Fund and other client
accounts, various factors may be considered including the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held and the opinions of the persons
responsible for managing the portfolios of the Fund and other client
accounts. In the case of certain initial and secondary offerings, the
Investment Manager may utilize a pro-rata allocation process based on the
size of the Dean Witter Funds involved and the number of shares available
from the public offering.
The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. In seeking to
implement the Fund's policies, the Investment Manager effects transactions
with those brokers and dealers who the Investment Manager believes provide
the most favorable prices and are capable of providing efficient executions.
If the Investment Manager believes such prices and executions are obtainable
from more than one broker or dealer, it may give consideration to placing
portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or the Investment Manager. Such
services may include, but are not limited to, any one or more of the
following: information as to the availability of securities for purchase or
sale; statistical or factual information or opinions pertaining to
investment; wire services; and appraisals or evaluations of portfolio
securities.
During the fiscal year ended May 31, 1996, the Fund paid no brokerage
commissions in connection with transactions to brokers because of research
services provided.
The information and services received by the Investment Manager from
brokers and dealers may be of benefit to the Investment Manager in the
management of accounts of some of its other clients and may not in all cases
benefit the Fund directly. While the receipt of such information and services
is useful in varying degrees and would generally reduce the amount of
research or services otherwise performed by the Investment Manager and
thereby reduce its expenses, it is of indeterminable value and the management
fee paid to the Investment Manager is not reduced by any amount that may be
attributable to the value of such services.
Pursuant to an order of the Securities and Exchange Commission, the Fund
may effect principal transactions in certain money market instruments with
DWR. The Fund will limit its transactions with DWR to U.S. Treasury
securities. Such transactions will be effected with DWR only when the price
available from DWR is better than that available from other dealers.
Consistent with the policy described above, brokerage transactions in
securities listed on exchanges or admitted to unlisted trading privileges may
be effected through DWR. In order for DWR to effect any portfolio
transactions for the Fund, the commissions, fees or other remuneration
received by DWR must be reasonable and fair compared to the commissions, fees
or other remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on an
exchange during a comparable period of time. This standard would allow DWR to
receive no more than the remuneration which would be expected to be received
by an unaffiliated broker in a commensurate arm's length transaction.
Furthermore, the Trustees of the Fund, including a majority of the Trustees
who are not "interested" 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 years ended May 31, 1994, May 31, 1995 and May 31, 1996, the Fund
did not pay any brokerage commissions to DWR.
Portfolio turnover rate is defined as the lesser of the value of the
securities purchased or securities sold, excluding all securities whose
maturities at time of acquisition were one year or less, divided by the
14
<PAGE>
average monthly value of such securities owned during the year. However,
because of the short-term nature of the Fund's portfolio securities, it is
anticipated that the number of purchases and sales or maturities of such
securities will be substantial. Nevertheless, as brokerage commissions are
not normally charged on purchases and sales of such securities, the large
number of these transactions does not have an adverse effect upon the net
yield and net asset value of the shares of the Fund.
THE DISTRIBUTOR
- -----------------------------------------------------------------------------
As discussed in the Prospectus, shares of the Fund are distributed by Dean
Witter Distributors Inc. (the "Distributor") and are offered for sale to the
public on a continuous basis at an offering price equal to the net asset
value per share next determined following a receipt of an order. The
Distributor has entered into a Selected Dealer Agreement with DWR, which
through its own sales organization sells shares of the Fund, and may enter
into selected dealer agreements with others. The Distributor is an indirect
wholly-owned subsidiary of DWDC. As part of an internal reorganization that
took place in December, 1992, the Distributor assumed the investment company
share distribution activities previously performed by DWR. The current
Distribution Agreement appointing the Distributor exclusive distributor of
the Fund's shares and providing for the Distributor to bear distribution
expenses not borne by the Fund was initially approved by the Board of
Trustees, including a majority of the Independent Trustees, on October 30,
1992. The Agreement is substantially identical to a prior Agreement which was
initially approved by the Board of Trustees on July 8, 1991. The Agreement
took effect on June 30, 1993 upon the spin-off by Sears, Roebuck and Co. of
its remaining shares of DWDC. Under its terms, the Distribution Agreement had
an initial term ending April 30, 1994, and will remain in effect from year to
year thereafter if approved by the Trustees. At a meeting held on April 17,
1996, the Trustees, including all of the Independent Trustees, voted to
approve the continuance of the Distribution Agreement until April 30, 1997.
The Distributor has agreed to pay certain expenses of the offering of the
Fund's shares, including the costs of printing and distributing prospectuses
and supplements thereto used in connection with the offering and sale of the
Fund's shares. The Fund will bear the costs of initial typesetting, printing
and distribution to shareholders. The Fund and the Distributor have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
PLAN OF DISTRIBUTION
As discussed in the Prospectus, the Fund has entered into a Plan of
Distribution pursuant to Rule 12b-1 under the Act with the Distributor
whereby the expenses of certain activities in connection with the
distribution of shares of the Fund are reimbursed. The Plan was initially
approved by the Trustees of the Fund on July 18, 1991, by DWR, the then sole
shareholder of the Fund on July 19, 1991, and by the Fund's shareholders at a
Special Meeting of Shareholders on October 14, 1992. The vote of the Trustees
included a majority of the Trustees who are not and were not at the time of
their votes interested persons of the Fund and who have and had at the time
of their votes no direct or indirect financial interest in the operation of
the Plan (the "Independent Trustees"), cast in person at a meeting called for
the purpose of voting on such Plan. In determining to approve the Plan, the
Trustees, including the Independent Trustees, concluded that, in their
judgment, there is a reasonable likelihood that the Plan will benefit the
Fund and its shareholders.
The Plan provides that the Distributor will bear the expense of all
promotional and distribution related activities on behalf of the Fund,
including personal services to shareholders and maintenance of shareholder
accounts, except for expenses that the Trustees determine to reimburse, as
described below. The Distributor, DWR, its affiliates and any other selected
broker-dealer may be reimbursed for the following expenses and services under
the Plan: (1) compensation to and expenses of account executives and other
employees of DWR, its affiliates and other selected broker-dealers, including
overhead and telephone expenses; (2) sales incentives and bonuses to sales
representatives and to marketing personnel in connection with promoting sales
of the Fund's shares; (3) expenses incurred in connection with promoting
sales of the Fund's shares; (4) preparing and distributing sales literature;
and (5) providing advertising and promotional activities, including direct
mail solicitation and television, radio, newspaper, magazine and other media
advertisements.
15
<PAGE>
The Fund is authorized to reimburse specific expenses incurred or to be
incurred in promoting the distribution of the Fund's shares and in servicing
shareholder accounts. Reimbursement is made through monthly payments in
amounts determined in advance of each fiscal quarter by the Trustees,
including a majority of the Independent Trustees. The amount of each monthly
payment may in no event exceed an amount equal to a payment at the annual
rate of 0.35 of 1% of the Fund's average daily net assets during the month.
No interest or other financing charges, if any, incurred on any distribution
expenses will be reimbursable under the Plan. In making quarterly
determinations of the amounts that may be expended by the Fund, the
Distributor will provide and the Trustees will review a quarterly budget of
projected distribution expenses to be incurred on behalf of the Fund,
together with a report explaining the purposes and anticipated benefits of
incurring such expenses. The Trustees will determine which particular
expenses, and the portions thereof, that may be borne by the Fund, and in
making such a determination shall consider the scope of the Distributor's
commitment to promoting the distribution of the Fund's shares.
The Distributor has informed the Fund that a portion of the fees payable
by the Fund each year pursuant to the Plan equal to 0.25% of the Fund's
average daily net assets is characterized as a "service fee" under the Rules
of Fair Practice of the National Association of Securities Dealers (of which
the Distributor is a member). Such portion of the fee is a payment made for
personal service and/or maintenance of shareholder accounts. The remaining
portion of the Plan fees payable by the Fund is characterized as an
"asset-based sales charge" as defined by the aforementioned Rules of Fair
Practice.
At their meeting held on October 30, 1992, the Trustees of the Fund,
including all of the Independent 12b-1 Trustees, approved certain amendments
to the Plan which took effect in January, 1993 and were designed to reflect
the fact that upon the reorganization described above, the share distribution
and shareholder service activities theretofore performed for the Fund by DWR
were assumed by the Distributor and DWR's sales activities are now being
performed pursuant to the terms of a selected dealer agreement between the
Distributor and DWR. The amendments provide that payments under the Plan will
be made to the Distributor rather than to DWR as before the amendment, and
that the Distributor in turn is authorized to make payments to DWR, its
affiliates or other selected broker-dealers (or direct that the Fund pay such
entities directly). The Distributor is also authorized to retain part of such
fee as compensation for its own distribution-related expenses, including
personal services to shareholders and maintenance of shareholder accounts.
DWR's account executives are credited with an annual gross residual
commission, currently a gross residual of up to 0.35% of the current value of
the respective accounts for which they are the account executives of record.
The "gross residual" is a charge which reflects residual commissions paid by
DWR to its account executives and expenses of DWR associated with the sale
and promotion of Fund shares and the servicing of shareholders' accounts,
including the expenses of operating branch offices in connection with the
servicing of shareholders' accounts, which expenses include lease costs, the
salaries and employee benefits of operations and sales support personnel,
utility costs, communications costs and the costs of stationery and supplies
and other expenses relating to branch office servicing of shareholder
accounts. The portion of the annual gross residual commission allocated to
servicing of shareholders' accounts does not exceed 0.25% of the average
annual net asset value of shares sold by the account executive.
Under the Plan, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment
or mistake of law or for any act or omission or for any losses sustained by
the Fund or its shareholders.
The Fund accrued $959,304 to DWR and the Distributor pursuant to the Plan
for the fiscal year ended May 31, 1996, amounting to an annual rate of 0.35
of 1% of the Fund's average daily net assets for the fiscal year. Based upon
the total amounts spent by the Distributor during the period, it is estimated
that the amount paid by the Fund to the Distributor for distribution was
spent in approximately the following ways: (i) advertising--$-0-; (ii)
printing and mailing prospectuses to other than current
16
<PAGE>
shareholders--$-0-; (iii) compensation to underwriters--$-0-; (iv)
compensation to dealers--$-0-; (v) compensation to sales personnel--$-0-; and
(vi) other, which includes payments to DWR for expenses substantially all of
which relate to compensation of sales personnel (including compensation for
servicing shareholder accounts) and associated overhead expenses--$959,304.
The Plan had an initial term ending April 30, 1993, and provides that it
will continue from year to year thereafter, provided such continuance is
approved annually by a vote of the Trustees, including a majority of the
Independent 12b-1 Trustees. At their meeting held on April 17, 1996, the
Trustees, including a majority of the Independent 12b-1 Trustees, approved
the continuance of the Plan until April 30, 1997. At that meeting, the
Trustees of the Fund, including a majority of the Independent 12b-1 Trustees,
also approved certain technical amendments to the Plan in connection with
recent amendments adopted by the National Association of Securities Dealers
to its Rules of Fair Practice. Any amendment to increase materially the
maximum amount authorized to be spent under the Plan must be approved by the
shareholders of the Fund, and all material amendments to the Plan must be
approved by the Trustees in the manner described above. The Plan may be
terminated at any time, without payment of any penalty, by vote of a majority
of the Independent Trustees or by a vote of the holders of a majority of the
outstanding voting securities of the Trust (as defined in the Act) on not
more than 30 days written notice to any other party to the Plan. So long as
the Plan is in effect, the selection or nomination of the Independent
Trustees is committed to the discretion of the Independent Trustees.
Under the Plan the Distributor provides the Fund, for review by the
Trustees, and the Trustees review, promptly after the end of each calendar
quarter, a written report regarding the distribution expenses incurred on
behalf of the Fund during such calendar quarter, which report includes (1) an
itemization of the types of expenses and the purposes therefor; (2) the
amounts of such expenses; and (3) a description of the benefits derived by
the Fund. In the Trustees' quarterly review of the Plan they consider its
continued appropriateness and the level of compensation provided therein.
No interested person of the Fund nor any Trustee of the Fund who is not an
interested person of the Fund, as defined in the Act, has any direct or
indirect financial interest in the operation of the Plan except to the extent
that the Distributor, InterCapital, DWSC, DWR or certain of its employees may
be deemed to have such an interest as a result of benefits derived from the
successful operation of the Plan or as a result of receiving a portion of the
amounts expended thereunder by the Fund.
DETERMINATION OF NET ASSET VALUE
As discussed in the Prospectus, the net asset value per share of the Fund
is determined at 4:00 p.m., New York time, on each day the New York Stock
Exchange is open (or, on days when the New York Stock Exchange closes prior
to 4:00 p.m., at such earlier time), by taking the value of all the assets of
the Fund, subtracting all liabilities, dividing by the number of shares
outstanding and adjusting the result to the nearest cent. The New York Stock
Exchange currently observes the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
SHAREHOLDER SERVICES
- -----------------------------------------------------------------------------
Shareholder Investment Account. Upon purchase of shares of the Fund, a
Shareholder Investment Account is opened for the investor on the books of the
Fund, maintained by Dean Witter Trust Company (the "Transfer Agent"), in full
and fractional shares of the Fund (rounded to the nearest 1/100 of a share).
This is an open account in which shares owned by the investor are credited by
the Transfer Agent in lieu of issuance of a share certificate. If a share
certificate is desired, it must be requested in writing for each transaction.
Certificates are issued only for full shares and may be redeposited in the
account at any time. There is no charge to the investor for issuance of a
certificate. No certificates will be issued for fractional shares or to
shareholders who have elected the pre-designated bank account method,
Systematic Withdrawal Plan or check writing privilege of withdrawing cash
from their accounts. Whenever a shareholder instituted transaction takes
place in the Shareholder Investment Account, the shareholder will be mailed a
written confirmation of the transaction from the Fund or from DWR or other
selected broker-dealer.
17
<PAGE>
Automatic Investment of Dividends and Distributions. All dividends and
capital gains distributions are automatically paid in full and fractional
shares of the Fund, unless the shareholder requests that they be paid in
cash. Each purchase of shares of the Fund is made upon the condition that the
Transfer Agent is thereby automatically appointed as agent of the investor to
receive all dividends and capital gains distributions on shares owned by the
investor. Such dividends and distributions will be paid in shares of the Fund
at the net asset value per share as of the close of business on the record
date. An investor may terminate such agency at any time and may request the
Transfer Agent in writing to have subsequent dividends and/or capital gains
distributions paid in cash rather than shares. Such request must be received
by the Transfer Agent at least five (5) business days prior to the record
date for which it commences to take effect. In case of recently purchased
shares for which registration instructions have not been received on the
record date, cash payments will be made to DWR or other selected
broker-dealer.
Investment of Distributions Received in Cash. As discussed in the
Prospectus, any shareholder who receives a cash payment representing a
dividend or capital gains distribution may invest such dividend or
distribution at net asset value (without sales charge) by returning the check
or the proceeds to the Transfer Agent within 30 days after the payment date.
If the shareholder returns the proceeds of a dividend or distribution, such
funds must be accompanied by a signed statement indicating that the proceeds
constitute a dividend or distribution to be invested. Such investment will be
made at the net asset value per share next determined after receipt of the
check or the proceeds by the Transfer Agent.
Direct Investments through Transfer Agent. As discussed in the Prospectus,
a shareholder may make additional investments in Fund shares at any time by
sending a check in any amount, not less than $100, payable to Dean Witter
Short-Term U.S. Treasury Trust, directly to the Transfer Agent. Such amounts
will be applied to the purchase of Fund shares at the net asset value per
share next computed after receipt of the check or purchase payment by the
Transfer Agent. The shares so purchased will be credited to the investor's
account.
Systematic Withdrawal Plan. As discussed in the Prospectus, a withdrawal
plan is available for shareholders who own or purchase shares of the Fund
having a minimum value of $10,000 based upon the then current offering price.
The plan provides for monthly or quarterly (March, June, September and
December) checks in any dollar amount, not less than $25, or in any whole
percentage of the account balance, on an annualized basis.
Dividends and capital gains distributions on shares held under the
Systematic Withdrawal Plan will be invested in additional full and fractional
shares at net asset value (without a sales charge). Shares will be credited
to an open account for the investor by the Transfer Agent; no share
certificates will be issued. A shareholder is entitled to a share certificate
upon written request to the Transfer Agent, although in that event the
shareholder's Systematic Withdrawal Plan will be terminated.
The Transfer Agent acts as agent for the shareholder in tendering to the
Fund for redemption sufficient full and fractional shares to provide the
amount of the periodic withdrawal payment designated in the application. The
shares will be redeemed at their net asset value determined, at the
shareholder's option, on the tenth or twenty-fifth day (or next following
business day) of the relevant month or quarter and normally a check for the
proceeds will be mailed by the Transfer Agent within five business days after
the date of redemption. The Withdrawal Plan may be terminated at any time by
the Fund.
Any shareholder who wishes to have payments under the Withdrawal Plan made
to a third party or sent to an address other than the one listed on the
account must send complete written instructions to the Transfer Agent to
enroll in the Withdrawal Plan. The shareholder's signature on such
instructions must be guaranteed by an eligible guarantor acceptable to the
Transfer Agent (shareholders should contact the Transfer Agent for a
determination as to whether a particular institution is such an eligible
guarantor). A shareholder may, at any time, change the amount and interval of
withdrawal payments and the address to which checks are mailed by written
notification to the Transfer Agent. The shareholder's signature on such
notification must be guaranteed in the manner described above. The
shareholder may also terminate the Systematic Withdrawal Plan at any time by
written notice to the Transfer Agent. In the event of such termination, the
account will be continued as a Shareholder Investment Account. The
18
<PAGE>
shareholder may also redeem all or part of the shares held in the Systematic
Withdrawal Plan account (see "Redemptions and Repurchases" in the Prospectus)
at any time. The Systematic Withdrawal Plan is not available for shares held
in an Exchange Privilege Account.
EXCHANGE PRIVILEGE
As discussed in the Prospectus under the caption "Exchange Privilege," an
Exchange Privilege exists whereby investors who have purchased shares of any
of the Dean Witter Funds sold with either a front-end sales charge ("FESC
funds") or a contingent deferred sales charge ("CDSC funds") will be
permitted, after the shares of the fund acquired by purchase (not by exchange
or dividend reinvestment) have been held for thirty days, to redeem all or
part of their shares in that fund, have the proceeds invested in shares of
the Fund, Dean Witter Intermediate Term U.S. Treasury Trust, Dean Witter
Limited Term Municipal Trust, Dean Witter Balanced Income Fund, Dean Witter
Balanced Growth Fund, and Dean Witter Short-Term Bond Fund, and in shares of
five money market funds: Dean Witter Liquid Asset Fund Inc., Dean Witter
Tax-Free Daily Income Trust, Dean Witter California Tax-Free Daily Income
Trust, Dean Witter New York Municipal Money Market Trust, or Dean Witter U.S.
Government Money Market Trust (these eleven funds, including the Fund, are
hereinafter collectively referred to as "Exchange Funds"). There is no
waiting period for exchanges of shares acquired by exchange or dividend
reinvestment. Subsequently, shares of Exchange Funds received in an exchange
for shares of an FESC fund (regardless of the type of fund originally
purchased) may be redeemed and exchanged for shares of other Exchange Funds,
FESC funds or CDSC funds (however, shares of CDSC funds, including shares
acquired in exchange of (i) shares of FESC funds or (ii) shares of Exchange
Funds which were acquired in exchange for shares of FESC funds, may not be
exchanged for shares of FESC funds). Additionally, shares of Exchange Funds
received in an exchange for shares of a CDSC fund (regardless of the type of
fund originally purchased) may be redeemed and exchanged for shares of
Exchange Funds or CDSC funds. Ultimately, any applicable contingent deferred
sales charge ("CDSC") will have to be paid upon redemption of shares
originally purchased from a CDSC fund. An exchange will be treated for
federal income tax purposes the same as a repurchase or redemption of shares,
on which the shareholder may realize a capital gain or loss.
Any new account established through the Exchange Privilege will have the
same registration and cash dividend or dividend reinvestment plan as the
present account, unless the Transfer Agent receives written notification to
the contrary. For telephone exchanges, the exact registration of the existing
account and the account number must be provided.
Any shares held in certificate form cannot be exchanged but must be
forwarded to the Transfer Agent and deposited into the shareholder's account
before being eligible for exchange. (Certificates mailed in for deposit
should not be endorsed.)
When shares of any CDSC fund are exchanged for shares of any Exchange
Fund, the exchange is executed at no charge to the shareholder, without the
imposition of the CDSC at the time of the exchange. During the period of time
the shareholder remains in the Exchange Fund (calculated from the last day of
the month in which the Exchange Fund shares were acquired), the holding
period or "year since purchase payment made" is frozen. When shares are
redeemed out of the Exchange Fund, they will be subject to a CDSC which would
be based upon the period of time the shareholder held shares in a CDSC fund.
However, in the case of shares of a CDSC fund exchanged into the Exchange
Fund on or after April 23, 1990, upon redemption of shares which results in a
CDSC being imposed, a credit (not to exceed the amount of the CDSC) will be
given in an amount equal to the Exchange Fund 12b-1 distribution fees, if
any, incurred on or after that date which are attributable to those shares.
Shareholders acquiring shares of an Exchange Fund pursuant to this exchange
privilege may exchange those shares back into a CDSC fund from the Exchange
Fund, with no CDSC being imposed on such exchange. The holding period
previously frozen when shares were first exchanged for shares of the Exchange
Fund resumes on the last day of the month in which shares of a CDSC fund are
reacquired. Thus, a CDSC is imposed only upon an ultimate redemption, based
upon the time (calculated as described above) the
19
<PAGE>
shareholder was invested in a CDSC fund. Shares of a CDSC fund acquired in
exchange for shares of an FESC fund (or in exchange for shares of other Dean
Witter Funds for which shares of an FESC fund have been exchanged) are not
subject to any CDSC upon their redemption.
When shares initially purchased in a CDSC fund are exchanged for shares of
another CDSC fund or for shares of an Exchange Fund, the date of purchase of
the shares of the fund exchanged into, for purposes of the CDSC upon
redemption, will be the last day of the month in which the shares being
exchanged were originally purchased. In allocating the purchase payments
between funds for purposes of the CDSC, the amount which represents the
current net asset value of shares at the time of the exchange which were (i)
purchased more than three or six years (depending on the CDSC schedule
applicable to the shares) prior to the exchange, (ii) originally acquired
through reinvestment of dividends or distributions and (iii) acquired in
exchange for shares of FESC funds, or for shares of other Dean Witter Funds
for which shares of FESC funds have been exchanged (all such shares called
"Free Shares"), will be exchanged first. Shares of Dean Witter American Value
Fund acquired prior to April 30, 1984, shares of Dean Witter Dividend Growth
Securities Inc. and Dean Witter Natural Resource Development Securities Inc.
acquired prior to July 2, 1984, and shares of Dean Witter Strategist Fund
acquired prior to November 8, 1989 are also considered Free Shares and will
be the first Free Shares to be exchanged. After an exchange, all dividends
earned on shares in the Exchange Fund will be considered Free Shares. If the
exchanged amount exceeds the value of such Free Shares, an exchange is made,
on a block-by-block basis, of non-Free Shares held for the longest period of
time (except that if shares held for identical periods of time but subject to
different CDSC schedules are held in the same Exchange Privilege Account, the
shares of that block that are subject to a lower CDSC rate will be exchanged
prior to the shares of that block that are subject to a higher CDSC rate).
Shares equal to any appreciation in the value of non-Free Shares exchanged
will be treated as Free Shares, and the amount of the purchase payments for
the non-Free Shares of the fund exchanged into will be equal to the lesser of
(a) the purchase payments for, or (b) the current net asset value of, the
exchanged non-Free Shares. If an exchange between funds would result in
exchange of only part of a particular block of non-Free Shares, then shares
equal to any appreciation in the value of the block (up to the amount of the
exchange) will be treated as Free Shares and exchanged first, and the
purchase payment for that block will be allocated on a pro rata basis between
the non-Free Shares of that block to be retained and the non-Free Shares to
be exchanged. The prorated amount of such purchase payment attributable to
the retained non-Free Shares will remain as the purchase payment for such
shares, and the amount of purchase payment for the exchanged non-Free Shares
will be equal to the lesser of (a) the prorated amount of the purchase
payment for, or (b) the current net asset value of, those exchanged non-Free
Shares. Based upon the procedures described in the CDSC fund Prospectus under
the caption "Contingent Deferred Sales Charge", any applicable CDSC will be
imposed upon the ultimate redemption of shares of any fund, regardless of the
number of exchanges since those shares were originally purchased.
With respect to the redemption or repurchase of shares of the Fund, the
application of proceeds to the purchase of new shares in the Fund or any
other of the funds and the general administration of the Exchange Privilege,
the Transfer Agent acts as agent for the Distributor and any selected
broker-dealer in the performance of such functions.
With respect to exchanges, redemptions or repurchases, the Transfer Agent
shall be liable for its own negligence and not for the default or negligence
of its correspondents or for losses in transit. The Fund shall not be liable
for any default or negligence of the Transfer Agent, the Distributor or any
selected broker-dealer.
The Distributor and any selected broker-dealer have authorized and
appointed the Transfer Agent to act as their agent in connection with the
application of proceeds of any redemption of Fund shares to the purchase of
the shares of any other fund and the general administration of the Exchange
Privilege. No commission or discounts will be paid to the Distributor or any
selected broker-dealer for any transactions pursuant to this Exchange
Privilege.
Shares of the Fund acquired from a CDSC Fund or an FESC Fund pursuant to
the Exchange Privilege will be held by the Fund's Transfer Agent in an
Exchange Privilege Account distinct from any
20
<PAGE>
account of the same shareholder who may have acquired shares of the Fund
directly. A shareholder of the Fund will not be permitted to make additional
investments in such Exchange Privilege Account, except through the exchange
of additional shares of the fund in which the shareholder had initially
invested, and the proceeds of any shares redeemed from such Account may not
thereafter be placed back into that Account. If such a shareholder desires to
make any additional investments in the Fund, a separate account will be
maintained for receipt of such investments. The Fund will have additional
costs for account maintenance if a shareholder has more than one account with
the Fund.
Exchanges are subject to the minimum investment requirement and any other
conditions imposed by each fund. (The minimum initial investment is $10,000
for the Fund (although the Fund, in its discretion, may accept initial
investments of as low as $5,000) and $5,000 for Dean Witter Liquid Asset Fund
Inc., Dean Witter Tax-Free Daily Income Trust, Dean Witter California
Tax-Free Daily Income Trust, and Dean Witter New York Municipal Money Market
Trust, although those funds may, at their discretion, accept initial
investments of as low as $1,000. The minimum initial investment for all other
Dean Witter Funds for which the Exchange Privilege is available is $1,000.)
Upon exchange into an Exchange Fund, the shares of that fund will be held in
a special Exchange Privilege Account separately from accounts of those
shareholders who have acquired their shares directly from that fund. As a
result, certain services normally available to shareholders of the Fund or of
money market funds, including the check writing feature, will not be
available for funds held in that account.
The Fund and each of the other Dean Witter Funds may limit the number of
times this Exchange Privilege may be exercised by any investor within a
specified period of time. Also, the Exchange Privilege may be terminated or
revised at any time by any of the Dean Witter Funds, upon such notice as may
be required by applicable regulatory agencies (presently sixty days prior
written notice for termination or material revision), provided that six
months' prior written notice of termination will be given to the shareholders
who hold shares of Exchange Funds, pursuant to this Exchange Privilege, and
provided further that the Exchange Privilege may be terminated or materially
revised at times (a) when the New York Stock Exchange is closed for other
than customary weekends and holidays, (b) when trading on that Exchange is
restricted, (c) when an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets, (d) during any other period when the Securities and Exchange
Commission by order so permits (provided that applicable rules and
regulations of the Securities and Exchange Commission shall govern as to
whether the conditions prescribed in (b) or (c) exist), or (e), if the Fund
would be unable to invest amounts effectively in accordance with its
investment objective(s), policies and restrictions.
For further information regarding the Exchange Privilege, shareholders
should contact their DWR or other selected broker-dealer account executive or
the Transfer Agent.
REDEMPTIONS AND REPURCHASES
- -----------------------------------------------------------------------------
As discussed in the Prospectus, shares of the Fund may be redeemed at net
asset value on any day the New York Stock Exchange is open (see
"Determination of Net Asset Value"). Redemptions will be effected at the net
asset value per share next determined after the receipt of a redemption
request meeting the applicable requirements discussed in the Prospectus. When
a redemption is made by check and a check is presented to the Transfer Agent
for payment, the Transfer Agent will redeem a sufficient number of full and
fractional shares in the shareholder's account to cover the amount of the
check. This enables the shareholder to continue earning daily income
dividends until the check has cleared.
A check drawn by a shareholder against his or her other account in the
Fund constitutes a request for redemption of a number of shares sufficient to
provide proceeds equal to the amount of the check. Payment of the proceeds of
a check will normally be made on the next business day after receipt by the
Transfer Agent of the check in proper form. If a check is presented for
payment to the Transfer Agent by a shareholder or payee in person, the
Transfer Agent will make payment by means of a check drawn on the Fund's
account or, in the case of a shareholder payee, to the shareholder's
predesignated bank account, but will not make payment in cash.
21
<PAGE>
The Prospectus describes redemption procedures by check, telephone or wire
instructions with payment to a predesignated bank account, or by mail.
Payment for Shares Redeemed or Repurchased. As discussed in the
Prospectus, payment for shares presented for repurchase or redemption will be
ordinarily made by check within seven days after receipt by the Transfer
Agent of the certificate and/or written request in good order. Such payment
may be postponed or the right of redemption suspended at times (a) when the
New York Stock Exchange is closed for other than customary weekends and
holidays, (b) when trading on that Exchange is restricted, (c) when an
emergency exists as a result of which disposal by the Fund of securities
owned by it is not reasonably practicable or it is not reasonably practicable
for the Fund to fairly determine the value of its net assets, or (d) during
any other period when the Securities and Exchange Commission by order so
permits; provided that applicable rules and regulations of the Securities and
Exchange Commission shall govern as to whether the conditions prescribed in
(b) or (c) exist. If the shares to be redeemed have recently been purchased
by check (including a certified or bank cashier's check), payment of
redemption proceeds may be delayed for the minimum time needed to verify that
the check used for investment has been honored (not more than fifteen days
from the time of receipt of the check by the Transfer Agent).
Involuntary Redemption. As discussed in the Prospectus, due to the
relatively high cost of handling small investments, the Fund reserves the
right to redeem, at net asset value, the shares of any shareholders whose
shares have a value of less than $1,000 or such lesser amounts as may be
fixed by the Trustees. However, before the Trust redeems such shares and
sends the proceeds to the shareholder, it will notify the shareholder that
the value of its shares is less than $1,000 and allow the shareholder 60 days
to make an additional investment in an amount which will increase the value
of the account to $1,000 or more before the redemption is processed.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- -----------------------------------------------------------------------------
Because the Fund intends to distribute all of its net investment income
and capital gains to shareholders and intends to otherwise comply with all
the provisions of Subchapter M of the Internal Revenue Code of 1986, it is
not expected that the Fund will be required to pay any federal income tax on
such income and capital gains. If however, any such capital gains are
retained, the Fund will pay federal income tax thereon. In such a case,
shareholders will have to include such retained gains in their income but
will be able to claim their share of the tax paid by the Fund as a credit
against their individual federal income tax.
Shareholders will normally have to pay federal income taxes on the
dividends and capital gains distributions they receive from the Fund. Such
dividends and distributions derived from net investment income or short-term
capital gains are taxable to the shareholder as ordinary dividend income
regardless of how long a shareholder has held the Fund's shares and whether
the shareholder receives such dividends or distributions in additional shares
or in cash. Distributions of long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder
has held the Fund's shares and regardless of whether the distribution is
received in additional shares or in cash.
Any dividend or capital gains distribution received by a shareholder from
any investment company will have the effect of reducing the net asset value
of the shareholder's stock in that company by the exact amount of the
dividend or capital gains distribution. Furthermore, capital gains
distributions and dividends are subject to federal income taxes. If the net
asset value of the shares should be reduced below a shareholder's cost as a
result of the payment of dividends or the distribution of realized long-term
capital gains, such payment or distribution would be in part a return of the
shareholder's investment to the extent of such reduction below the
shareholder's cost, but nonetheless would be fully taxable at either ordinary
or capital gain rates. Therefore, an investor should consider the tax
implications of purchasing Fund shares immediately prior to a dividend or
distribution record date.
Under current federal tax law, the Fund will receive net investment income
in the form of interest by virtue of holding Treasury bills, notes and bonds,
and will recognize income attributable to it from holding zero coupon
Treasury securities. Current federal tax law requires that a holder (such as
the Fund) of a zero coupon security accrue a portion of the discount at which
the security was purchased as income
22
<PAGE>
each year even though the Fund receives no interest payment in cash on the
security during the year. As an investment company, the Fund must pay out
substantially all of its net investment income each year. Accordingly, the
Fund may be required to pay out as an income distribution each year an amount
which is greater than the total amount of cash receipts of interest the Fund
actually received. Such distributions will be made from the available cash of
the Fund or by liquidation of portfolio securities, if necessary. If a
distribution of cash necessitates the liquidation of portfolio securities,
the Investment Manager will select which securities to sell. The Fund may
realize a gain or loss from such sales. In the event the Trust realizes net
capital gains from such transactions, its shareholders may receive a larger
capital gain distribution, if any, than they would in the absence of such
transactions.
State and Local Taxes. The Fund intends to invest only in the obligations
of the U.S. Government that provide interest income exempt from most state
and local taxes. Because all States presently allow the pass-through of
federal obligation interest derived from specific federal obligations, it is
anticipated that substantially all of the interest income generated by the
Fund and paid out to shareholders as net investment income will be exempt
from the taxation of most state and local jurisdictions. Such investment
income, however, will not be exempt from federal tax. Furthermore, any
capital gains realized by the Fund will not be exempt from federal, and
generally, state and local taxes. It should be noted that although the Fund
intends to invest only in securities the pass-through income from which is
believed exempt from state and local income taxes, except as noted above, it
is possible that a state or local taxing authority may seek to tax an
investor on a portion of the interest income of a particular government
obligation held by the Fund.
Shareholders are urged to consult their own tax advisers regarding
specific questions as to federal, state or local taxes.
PERFORMANCE INFORMATION
- -----------------------------------------------------------------------------
As discussed in the Prospectus, from time to time the Fund may quote its
"yield" and/or its "total return" in advertisements and sales literature.
Yield is calculated for any 30-day period as follows: the amount of interest
and/or dividend income for each security in the Fund's portfolio is
determined in accordance with regulatory requirements; the total for the
entire portfolio constitutes the Fund's gross income for the period. Expenses
accrued during the period are subtracted to arrive at "net investment
income". The resulting amount is divided by the product of the net asset
value per share on the last day of the period multiplied by the average
number of Fund shares outstanding during the period that were entitled to
dividends. This amount is added to 1 and raised to the sixth power. 1 is then
subtracted from the result and the difference is multiplied by 2 to arrive at
the annualized yield. The Fund's yield for the 30-day period ended May 31,
1996 was 5.14%.
The Fund's "average annual total return" represents an annualization of
the Fund's total return over a particular period and is computed by finding
the annual percentage rate which will result in the ending redeemable value
of a hypothetical $1,000 investment made at the beginning of a one, five or
ten year period, or for the period from the date of commencement of the
Fund's operations, if shorter than any of the foregoing. For the purpose of
this calculation, it is assumed that all dividends and distributions are
reinvested. The formula for computing the average annual total return
involves a percentage obtained by dividing the ending redeemable value by the
amount of the initial investment, taking a root of the quotient (where the
root is equivalent to the number of years in the period) and subtracting 1
from the result. The average annual total returns for the Fund for the fiscal
year ended May 31, 1996, and for the period August 13, 1991 (commencement of
operations) through May 31, 1996 were 4.09%, and 4.94%, respectively.
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or
other types of total return figures. The Fund may compute its aggregate total
return for specified periods by determining the aggregate percentage rate
which will result in the ending value of a hypothetical $1,000 investment
made at the beginning of the period. For the purpose of this calculation, it
is assumed that all dividends and distributions are reinvested. The formula
for computing aggregate total return involves a percentage obtained by
dividing the ending value
23
<PAGE>
by the initial $1,000 investment and subtracting 1 from the result. The
Fund's total returns for the year ended May 31, 1996 and for the period
August 13, 1991 (commencement of operations) through May 31, 1996 were 4.09%
and 26.06% respectively.
The Fund may also advertise the growth of a hypothetical investment of
$10,000, $50,000 or $100,000 in shares of the Fund by adding 1 to the Fund's
aggregate total return and multiplying by $10,000, $50,000 or $100,000, as
the case may be. Investments of $10,000, $50,000 and $100,000 in the Fund at
inception would have grown to $12,606, $63,030 and $126,060, respectively, at
May 31, 1996.
The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by independent
organizations.
DESCRIPTION OF SHARES OF THE FUND
- -----------------------------------------------------------------------------
The shareholders of the Fund are entitled to a full vote for each full
share held. The Trustees were elected by the shareholders at a Special
Meeting of Shareholders of the Fund held on January 12, 1993. Messrs. Bozic,
Purcell and Schroeder were elected by the existing Trustees. The Trustees
themselves have the power to alter the number and the terms of office of the
Trustees, and they may at any time lengthen their own terms or make their
terms of unlimited duration and appoint their own successors, provided that
always at least a majority of the Trustees has been elected by the
shareholders of the Fund. Under certain circumstances the Trustees may be
removed by action of the Trustees. The shareholders also have the right under
certain circumstances to remove the Trustees. The voting rights of
shareholders are not cumulative, so that holders of more than 50 percent of
the shares voting can, if they choose, elect all Trustees being selected,
while the holders of the remaining shares would be unable to elect any
Trustees.
The Declaration of Trust permits the Trustees to authorize the creation of
additional series of shares (the proceeds of which would be invested in
separate, independently managed portfolios) and additional classes of shares
within any series (which would be used to distinguish among the rights of
different categories of shareholders, as might be required by future
regulations or other unforeseen circumstances). However, the Trustees have
not authorized any such additional series or classes of shares.
The Declaration of Trust further provides that no Trustee, officer,
employee or agent of the Fund is liable to the Fund or to a shareholder, nor
is any Trustee, officer, employee or agent liable to any third persons in
connection with the affairs of the Fund, except as such liability may arise
from his or its own bad faith, willful misfeasance, gross negligence, or
reckless disregard of his duties. It also provides that all third persons
shall look solely to the Fund's property for satisfaction of claims arising
in connection with the affairs of the Fund. With the exceptions stated, the
Declaration of Trust provides that a Trustee, officer, employee or agent is
entitled to be indemnified against all liability in connection with the
affairs of the Fund.
The Fund is authorized to issue an unlimited number of shares of
beneficial interest. The Fund shall be of unlimited duration, subject to the
provisions in the Declaration of Trust concerning termination by action of
the shareholders.
CUSTODIAN AND TRANSFER AGENT
- -----------------------------------------------------------------------------
The Bank of New York, 90 Washington Street, New York, New York 10286 is
the Custodian of the Fund's assets. Any Fund cash balances with the Custodian
in excess of $100,000 are unprotected by Federal deposit insurance. Such
amounts may, at times, be substantial.
Dean Witter Trust Company, Harborside Financial Center, Plaza Two, Jersey
City, New Jersey 07311 is the Transfer Agent of the Trust's shares and
Dividend Disbursing Agent for payment of dividends and distributions on Trust
shares and Agent for shareholders under various investment plans described
herein. Dean Witter Trust Company is an affiliate of Dean Witter InterCapital
Inc., the Fund's Investment Manager, and of Dean Witter Distributors Inc.,
the Fund's Distributor. As Transfer Agent and Dividend Disbursing Agent, Dean
Witter Trust Company's responsibilities include maintaining shareholder
24
<PAGE>
accounts including providing subaccounting and recordkeeping services for
certain retirement accounts; disbursing cash dividends and reinvesting
dividends; processing account registration changes; handling purchase and
redemption transactions; mailing prospectuses and reports; mailing and
tabulating proxies; processing share certificate transactions; and
maintaining shareholder records and lists. For these services Dean Witter
Trust Company receives a per shareholder account fee from the Fund.
INDEPENDENT ACCOUNTANTS
- -----------------------------------------------------------------------------
Price Waterhouse LLP serves as the independent accountants of the Fund.
The independent accountants are responsible for auditing the annual financial
statements of the Fund.
REPORTS TO SHAREHOLDERS
- -----------------------------------------------------------------------------
The Fund will send to shareholders, at least semi-annually, reports
showing the Fund's portfolio and other information. An annual report,
containing financial statements audited by independent account-ants, will be
sent to shareholders each year.
The Fund's fiscal year ends on May 31. The financial statements of the
Fund must be audited at least once a year by independent accountants whose
selection is made annually by the Fund's Board of Trustees.
LEGAL COUNSEL
- -----------------------------------------------------------------------------
Sheldon Curtis, Esq., who is an officer and the General Counsel of the
Investment Manager, is an officer and the General Counsel of the Fund.
EXPERTS
- -----------------------------------------------------------------------------
The financial statements of the Fund included in this Statement of
Additional Information and incorporated by reference in the Prospectus have
been so included and incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
REGISTRATION STATEMENT
- -----------------------------------------------------------------------------
This Statement of Additional Information and the Prospectus do not contain
all of the Information set forth in the Registration Statement the Fund has
filed with the Securities and Exchange Commission. The complete Registration
Statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the rules and regulations of the Commission.
25
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
PORTFOLIO OF INVESTMENTS May 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON
THOUSANDS DESCRIPTION AND MATURITY DATE RATE VALUE
- ----------- ---------------------------------------------------------------- -------- --------------
<C> <S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (99.0%)
U.S. Treasury Notes (88.3%)
$10,300 01/31/98 ....................................................... 5.00 % $10,108,484
2,000 02/15/99 ....................................................... 5.00 1,931,250
2,600 11/15/98 ....................................................... 5.50 2,549,219
5,000 12/31/00 ....................................................... 5.50 4,779,688
2,500 01/31/98 ....................................................... 5.625 2,477,734
1,000 09/30/97 ....................................................... 5.75 996,406
5,000 10/31/97 ....................................................... 5.75 4,978,125
6,500 10/31/00 ....................................................... 5.75 6,283,672
5,000 06/30/00 ....................................................... 5.875 4,873,438
2,500 10/15/99 ....................................................... 6.00 2,466,016
40,000 12/31/96 ....................................................... 6.125 40,131,250
3,000 05/31/00 ....................................................... 6.25 2,964,844
10,000 06/30/97 ....................................................... 6.375 10,048,437
20,000 01/15/00 ....................................................... 6.375 19,890,625
25,000 11/30/96 ....................................................... 6.50 25,113,281
8,000 04/30/00 ....................................................... 6.75 8,046,250
15,000 10/31/96 ....................................................... 6.875 15,082,031
40,000 09/30/96 ....................................................... 7.00 40,200,000
20,000 02/29/00 ....................................................... 7.125 20,356,250
5,000 02/15/98 ....................................................... 7.25 5,081,250
--------------
228,358,250
--------------
U.S. Treasury Strips (10.7%)
22,500 05/15/99 (Coupon) .............................................. 0.00 18,639,020
12,000 08/15/00 (Principal) ........................................... 0.00 9,097,006
--------------
27,736,026
--------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Identified Cost $256,999,063) (a) ............................. 99.0% 256,094,276
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ................. 1.0 2,542,992
------- --------------
NET ASSETS ..................................................... 100.0% $258,637,268
======= ==============
</TABLE>
- ------------
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation was $1,366,432
and the aggregate gross unrealized depreciation was $2,271,219, resulting in
net unrealized depreciation of $904,787.
SEE NOTES TO FINANCIAL STATEMENTS
26
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $256,999,063) ......... $256,094,276
Cash .................................... 72,291
Receivable for:
Interest .............................. 3,443,526
Shares of beneficial interest sold ... 416,241
Deferred organizational expenses ....... 6,611
Prepaid expenses ........................ 71,251
--------------
TOTAL ASSETS .......................... 260,104,196
--------------
LIABILITIES:
Payable for:
Shares of beneficial interest
repurchased ............................ 1,142,770
Dividends to shareholders ............. 77,974
Investment management fee ............. 77,697
Plan of distribution fee .............. 77,697
Accrued expenses ........................ 90,790
--------------
TOTAL LIABILITIES ..................... 1,466,928
--------------
NET ASSETS:
Paid-in-capital ......................... 277,185,866
Net unrealized depreciation ............. (904,787)
Accumulated undistributed net investment
income ................................. 276,397
Accumulated net realized loss ........... (17,920,208)
--------------
NET ASSETS ............................ $258,637,268
==============
NET ASSET VALUE PER SHARE,
26,278,463 shares outstanding
(unlimited shares authorized of $.01
par value) ............................. $ 9.84
==============
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1996
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ................. $17,101,746
-------------
EXPENSES
Investment management fee ...... 970,394
Plan of distribution fee ........ 959,304
Transfer agent fees and expenses 145,517
Registration fees ............... 57,961
Professional fees ............... 54,545
Trustees' fees and expenses .... 42,915
Shareholder reports and notices 33,196
Organizational expenses ......... 27,011
Custodian fees .................. 18,141
Other ........................... 13,901
-------------
TOTAL EXPENSES ................ 2,322,885
-------------
NET INVESTMENT INCOME ......... 14,778,861
-------------
NET REALIZED AND UNREALIZED
LOSS:
Net realized loss ............... (87,549)
Net change in unrealized
appreciation/depreciation ..... (3,742,190)
-------------
NET LOSS ...................... (3,829,739)
-------------
NET INCREASE .................... $10,949,122
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
27
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED MAY 31, ENDED
1996 MAY 31, 1995
- ----------------------------------------------------- -------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................ $ 14,778,861 $ 18,848,815
Net realized loss .................................... (87,549) (15,967,802)
Net change in unrealized appreciation/depreciation .. (3,742,190) 16,077,178
-------------- ---------------
NET INCREASE ....................................... 10,949,122 18,958,191
Dividends from net investment income ................. (14,943,028) (18,580,804)
Net decrease from transactions in shares of
beneficial interest ................................. (10,553,025) (243,210,264)
-------------- ---------------
TOTAL DECREASE ..................................... (14,546,931) (242,832,877)
NET ASSETS:
Beginning of period .................................. 273,184,199 516,017,076
-------------- ---------------
END OF PERIOD ......................................
(Including undistributed net investment income of
$276,397 and $440,564, respectively) ............... $258,637,268 $ 273,184,199
============== ===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
28
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1996
1. Organization and Accounting Policies
Dean Witter Short-Term U.S. Treasury Trust (the "Fund") is registered under
the Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund's investment objective is
current income, preservation of principal and liquidity. The Fund seeks to
achieve its objective by investing its assets in U.S. Treasury securities
backed by the full faith and credit of the U.S. Government. The Fund was
organized as a Massachusetts business trust on June 4, 1991 and commenced
operations on August 13, 1991.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies:
A. VALUATION OF INVESTMENTS -- (1) portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (2) when market
quotations are not readily available, portfolio securities are valued at
their fair value as determined in good faith under procedures established by
and under the general supervision of the Trustees (valuation of debt
securities for which market quotations are not readily available may be based
upon current market prices of securities which are comparable in coupon,
rating and maturity or an appropriate matrix utilizing similar factors); and
(3) short-term debt securities having a maturity date of more than sixty days
at time of purchase are valued on a mark-to-market basis until sixty days
prior to maturity and thereafter at amortized cost based on their value on
the 61st day. Short-term debt securities having a maturity date of sixty days
or less at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined by the identified cost
method. Discounts are accreted over the life of the respective securities.
Interest income is accrued daily.
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations
29
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1996, continued
which may differ from generally accepted accounting principles. These
"book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends
and distributions which exceed net investment income and net realized capital
gains for financial reporting purposes but not for tax purposes are reported
as dividends in excess of net investment income or distributions in excess of
net realized capital gains. To the extent they exceed net investment income
and net realized capital gains for tax purposes, they are reported as
distributions of paid-in-capital.
E. ORGANIZATIONAL EXPENSES -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Fund in the amount of
approximately $135,000 which have been reimbursed for the full amount
thereof. Such expenses have been deferred and are being amortized on the
straight-line method over a period not to exceed five years from the
commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with the Investment Manager,
the Fund pays the Investment Manager a management fee, accrued daily and
payable monthly, by applying the annual rate of 0.35% to the net assets of
the Fund determined as of the close of each business day.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities,
equipment, clerical, bookkeeping and certain legal services and pays the
salaries of all personnel, including officers of the Fund who are employees
of the Manager. The Investment Manager also bears the cost of telephone
services, heat, light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION
Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the
Investment Manager, is the distributor of the Fund's shares and, in
accordance with a Plan of Distribution (the "Plan") pursuant to Rule 12b-1
under the Act, finances certain expenses in connection with the distribution
of shares of the Fund.
Under the Plan, the Distributor bears the expense of all promotional and
distribution related activities on behalf of the Fund, except for expenses
that the Trustees determine to reimburse, as described below. The following
activities and services may be provided by the Distributor under the Plan:
(1) compensation to, and expenses of, account executives of Dean Witter
Reynolds Inc., an affiliate of the Investment Manager and Distributor, other
employees and selected broker-dealers; (2) sales incentives and bonuses to
sales representatives and to marketing personnel in connection with promoting
sales of the Fund's shares;
30
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1996, continued
(3) expenses incurred in connection with promoting sales of the Fund's
shares; (4) preparing and distributing sales literature; and (5) providing
advertising and promotional activities, including direct mail solicitation
and television, radio, newspaper, magazine and other media advertisements.
The Fund is authorized to reimburse the Distributor for specific expenses the
Distributor incurs or plans to incur in promoting the distribution of the
Fund's shares. The amount of each monthly reimbursement payment may in no
event exceed an amount equal to a payment at the annual rate of 0.35% of the
Fund's average daily net assets during the month. For the year ended May 31,
1996, the distribution fee was accrued at the annual rate of 0.35%.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales/maturities of portfolio
securities for the year ended May 31, 1996 aggregated $170,238,532 and
$181,222,211, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At May 31, 1996, the Fund had
transfer agent fees and expenses payable of approximately $12,900.
The Fund has an unfunded noncontributory defined benefit pension plan
covering all independent Trustees of the Fund who will have served as
independent Trustees for at least five years at the time of retirement.
Benefits under this plan are based on years of service and compensation
during the last five years of service. Aggregate pension costs for the year
ended May 31, 1996 included in Trustees' fees and expenses in the Statement
of Operations amounted to $24,133. At May 31, 1996, the Fund had an
accrued pension liability of $34,659 which is included in accrued expenses in
the Statement of Assets and Liabilities.
5. FEDERAL INCOME TAX STATUS
At May 31, 1996, the Fund had a net capital loss carryover of approximately
$17,778,000 of which $11,507,000 will be available through May 31, 2003 and
$6,271,000 will be available through May 31, 2004 to offset future capital
gains to the extent provided by regulations. To the extent that this
carryover loss is used to offset future capital gains, it is probable that
the gains to offset will not be distributed to shareholders.
Capital losses incurred after October 31 ("post-October losses") within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $142,000 during fiscal 1996. As of May 31, 1996, the Fund had
temporary book/tax differences primarily attributable to post-October losses.
31
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1996, continued
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
MAY 31, 1996 MAY 31, 1995
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Shares sold ................................ 34,443,060 $ 344,385,684 13,555,042 $ 133,430,704
Shares issued in reinvestment of dividends . 1,214,559 12,124,758 1,536,708 15,079,568
-------------- --------------- -------------- ---------------
35,657,619 356,510,442 15,091,750 148,510,272
Shares repurchased ......................... (36,751,484) (367,063,467) (39,933,119) (391,720,536)
-------------- --------------- -------------- ---------------
Net decrease ............................... (1,093,865) $ (10,553,025) (24,841,369) $(243,210,264)
============== =============== ============== ===============
</TABLE>
32
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED MAY 31 AUGUST 13, 1991*
---------------------------------------------- THROUGH
1996 1995 1994 1993 MAY 31, 1992
- --------------------------------------- ---------- ---------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period .................. $ 9.98 $ 9.88 $10.34 $10.21 $ 10.00
---------- ---------- ---------- ---------- ----------------
Net investment income .................. 0.54 0.49 0.49 0.54 0.44
Net realized and unrealized gain (loss) (0.14) 0.10 (0.45) 0.13 0.20
---------- ---------- ---------- ---------- ----------------
Total from investment operations ...... 0.40 0.59 0.04 0.67 0.64
---------- ---------- ---------- ---------- ----------------
Less dividends and distributions from:
Net investment income ................. (0.54) (0.49) (0.50) (0.53) (0.43)
Net realized gain ..................... -- -- -- (0.01) --
---------- ---------- ---------- ---------- ----------------
Total dividends and distributions ..... (0.54) (0.49) (0.50) (0.54) (0.43)
---------- ---------- ---------- ---------- ----------------
Net asset value, end of period ......... $ 9.84 $ 9.98 $ 9.88 $10.34 $ 10.21
========== ========== ========== ========== ================
TOTAL INVESTMENT RETURN+ ............... 4.09% 6.22% 0.25% 6.75% 6.55%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................... 0.84% 0.84% 0.79% 0.80% 0.79%(2)(3)
Net investment income .................. 5.33% 4.93% 4.74% 5.18% 5.49%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $258,637 $273,184 $516,017 $584,206 $523,555
Portfolio turnover rate ................ 63% 30% 49% 21% 12%(1)
</TABLE>
- ------------
* Commencement of operations.
+ Calculated based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all expenses that were assumed or waived by the
Investment Manager, the above annualized expense ratio would have been
0.81%.
SEE NOTES TO FINANCIAL STATEMENTS
33
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Dean Witter
Short-Term U.S. Treasury Trust (the "Fund") at May 31, 1996, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights
for each of the four years in the period then ended and for the period August
13, 1991 (commencement of operations) through May 31, 1992, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at May 31,
1996 by correspondence with the custodian, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
July 10, 1996
34
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial statements and schedules, included in Prospectus
(Part A): Page in
Prospectus
Financial highlights for the period August 13, 1991 through May 31,
1992 and for the fiscal years ended May 31, 1993, 1994, 1995 and
1996........................................................ 4
(2) Financial statements included in the Statement of Additional
Information (Part B): Page in
SAI
Portfolio of Investments at May 31, 1996.................... 26
Statement of assets and liabilities at May 31, 1996......... 27
Statement of operations for the year ended May 31, 1996..... 27
Statement of changes in net assets for the fiscal years ended May 31,
1995 and 1996............................................... 28
Notes to Financial Statements............................... 29
Financial highlights for the period August 13, 1991 through May 31,
1992 and for the fiscal years ended May 31, 1993, 1994, 1995 and
1996........................................................ 33
(3) Financial statements included in Part C:
None
<PAGE>
(b) Exhibits:
1. -- Form of Declaration of Trust of Registrant*
5. -- Form of Investment Management Agreement between Registrant
and Dean Witter InterCapital Inc.*
6. -- Form of Distribution Agreement between Registrant and Dean Witter
Distributors Inc.*
8.(a) -- Form of Custodian Agreement between Registrant and The
Bank of New York*
(b) -- Form of Amendment to the Custodian Agreement
11. -- Consent of Independent Accountants
15. -- Form of Amended and Restated Plan of Distribution between Registrant
and Dean Witter Distributors Inc.*
16. -- Schedules for Computation of Performance Quotations
27. -- Financial Data Schedule
- -----------------
* Previouly filed; re-filed via EDGAR with this Amendment to the Registration
Statement.
Item 25. Persons Controlled by or Under Common Control With Registrant.
None
Item 26. Number of Holders of Securities.
(1) (2)
Number of Record Holders
Title of Class at June 30, 1996
- -------------- ------------------------
Shares of Beneficial Interest 8,612
Item 27. Indemnification.
Pursuant to Section 5.3 of the Registrant's Declaration of Trust and
under Section 4.8 of the Registrant's By-Laws, the indemnification of the
Registrant's trustees, officers, employees and agents is permitted if it is
determined that they acted under the belief that their actions were in or not
opposed to the best interest of the Registrant, and, with respect to any
criminal proceeding, they had reasonable cause to believe their conduct was
not unlawful. In addition, indemnification is permitted only if it is
determined that the actions in question did not render them liable by reason
of willful misfeasance, bad faith or gross negligence in the performance of
their duties or by reason
2
<PAGE>
of reckless disregard of their obligations and duties to the Registrant.
Trustees, officers, employees and agents will be indemnified for the expense
of litigation if it is determined that they are entitled to indemnification
against any liability established in such litigation. The Registrant may also
advance money for these expenses provided that they give their undertakings to
repay the Registrant unless their conduct is later determined to permit
indemnification.
Pursuant to Section 5.2 of the Registrant's Declaration of Trust and
paragraph 8 of the Registrant's Investment Management Agreement, neither the
Investment Manager nor any trustee, officer, employee or agent of the
Registrant shall be liable for any action or failure to act, except in the
case of bad faith, willful misfeasance, gross negligence or reckless disregard
of duties to the Registrant.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such
trustee, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act, and will be governed by the
final adjudication of such issue.
The Registrant hereby undertakes that it will apply the indemnification
provision of its by-laws in a manner consistent with Release 11330 of the
Securities and Exchange Commission under the Investment Company Act of 1940,
so long as the interpretation of Sections 17(h) and 17(i) of such Act remains
in effect.
Registrant, in conjunction with the Investment Manager, Registrant's
Trustees, and other registered investment management companies managed by the
Investment Manager, maintains insurance on behalf of any person who is or was
a Trustee, officer, employee, or agent of Registrant, or who is or was serving
at the request of Registrant as a trustee, director, officer, employee or
agent of another trust or corporation, against any liability asserted against
him and incurred by him or arising out of his position. However, in no event
will Registrant maintain insurance to indemnify any such person for any act
for which Registrant itself is not permitted to indemnify him.
Item 28. Business and Other Connections of Investment Adviser.
See "The Fund and Its Management" in the Prospectus regarding the business
3
<PAGE>
of the investment adviser. The following information is given regarding
officers of Dean Witter InterCapital Inc. InterCapital is a wholly-owned
subsidiary of Dean Witter, Discover & Co. The principal address of the Dean
Witter Funds is Two World Trade Center, New York, New York 10048.
The term "Dean Witter Funds" used below refers to the following registered
investment companies:
Closed-End Investment Companies
- -------------------------------
(1) InterCapital Income Securities Inc.
(2) High Income Advantage Trust
(3) High Income Advantage Trust II
(4) High Income Advantage Trust III
(5) Municipal Income Trust
(6) Municipal Income Trust II
(7) Municipal Income Trust III
(8) Dean Witter Government Income Trust
(9) Municipal Premium Income Trust
(10) Municipal Income Opportunities Trust
(11) Municipal Income Opportunities Trust II
(12) Municipal Income Opportunities Trust III
(13) Prime Income Trust
(14) InterCapital Insured Municipal Bond Trust
(15) InterCapital Quality Municipal Income Trust
(16) InterCapital Quality Municipal Investment Trust
(17) InterCapital Insured Municipal Income Trust
(18) InterCapital California Insured Municipal Income Trust
(19) InterCapital Insured Municipal Trust
(20) InterCapital Quality Municipal Securities
(21) InterCapital New York Quality Municipal Securities
(22) InterCapital California Quality Municipal Securities
(23) InterCapital Insured California Municipal Securities
(24) InterCapital Insured Municipal Securities
Open-end Investment Companies:
- -----------------------------
(1) Dean Witter Short-Term Bond Fund
(2) Dean Witter Tax-Exempt Securities Trust
(3) Dean Witter Tax-Free Daily Income Trust
(4) Dean Witter Dividend Growth Securities Inc.
(5) Dean Witter Convertible Securities Trust
(6) Dean Witter Liquid Asset Fund Inc.
(7) Dean Witter Developing Growth Securities Trust
(8) Dean Witter Retirement Series
(9) Dean Witter Federal Securities Trust
(10) Dean Witter World Wide Investment Trust
(11) Dean Witter U.S. Government Securities Trust
(12) Dean Witter Select Municipal Reinvestment Fund
(13) Dean Witter High Yield Securities Inc.
(14) Dean Witter Intermediate Income Securities
(15) Dean Witter New York Tax-Free Income Fund
(16) Dean Witter California Tax-Free Income Fund
(17) Dean Witter Health Sciences Trust
4
<PAGE>
(18) Dean Witter California Tax-Free Daily Income Trust
(19) Dean Witter Global Asset Allocation Fund
(20) Dean Witter American Value Fund
(21) Dean Witter Strategist Fund
(22) Dean Witter Utilities Fund
(23) Dean Witter World Wide Income Trust
(24) Dean Witter New York Municipal Money Market Trust
(25) Dean Witter Capital Growth Securities
(26) Dean Witter Precious Metals and Minerals Trust
(27) Dean Witter European Growth Fund Inc.
(28) Dean Witter Global Short-Term Income Fund Inc.
(29) Dean Witter Pacific Growth Fund Inc.
(30) Dean Witter Multi-State Municipal Series Trust
(31) Dean Witter Premier Income Trust
(32) Dean Witter Short-Term U.S. Treasury Trust
(33) Dean Witter Diversified Income Trust
(34) Dean Witter U.S. Government Money Market Trust
(35) Dean Witter Global Dividend Growth Securities
(36) Active Assets California Tax-Free Trust
(37) Dean Witter Natural Resource Development Securities Inc.
(38) Active Assets Government Securities Trust
(39) Active Assets Money Trust
(40) Active Assets Tax-Free Trust
(41) Dean Witter Limited Term Municipal Trust
(42) Dean Witter Variable Investment Series
(43) Dean Witter Value-Added Market Series
(44) Dean Witter Global Utilities Fund
(45) Dean Witter High Income Securities
(46) Dean Witter National Municipal Trust
(47) Dean Witter International SmallCap Fund
(48) Dean Witter Mid-Cap Growth Fund
(49) Dean Witter Select Dimensions Investment Series
(50) Dean Witter Balanced Growth Fund
(51) Dean Witter Balanced Income Fund
(52) Dean Witter Hawaii Municipal Trust
(53) Dean Witter Capital Appreciation Fund
(54) Dean Witter Intermediate Term U.S. Treasury Trust
(55) Dean Witter Information Fund
(56) Dean Witter Japan Fund
(57) Dean Witter Income Builder Fund
The term "TCW/DW Funds" refers to the following registered investment
companies:
Open-End Investment Companies
- -----------------------------
(1) TCW/DW Core Equity Trust
(2) TCW/DW North American Government Income Trust
(3) TCW/DW Latin American Growth Fund
(4) TCW/DW Income and Growth Fund
(5) TCW/DW Small Cap Growth Fund
(6) TCW/DW Balanced Fund
(7) TCW/DW Total Return Trust
(8) TCW/DW Mid-Cap Equity Trust
(9) TCW/DW Global Telecom Trust
5
<PAGE>
Closed-End Investment Companies
- -------------------------------
(1) TCW/DW Term Trust 2000
(2) TCW/DW Term Trust 2002
(3) TCW/DW Term Trust 2003
(4) TCW/DW Emerging Markets Opportunities Trust
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
- ----------------- ------------------------------------------------
Charles A. Fiumefreddo Executive Vice President and Director of Dean
Chairman, Chief Witter Reynolds Inc. ("DWR"); Chairman, Chief
Executive Officer and Executive Officer and Director of Dean Witter
Director Distributors Inc. ("Distributors") and Dean
Witter Services Company Inc. ("DWSC"); Chairman
and Director of Dean Witter Trust Company
("DWTC"); Chairman, Director or Trustee,
President and Chief Executive Officer of the
Dean Witter Funds and Chairman, Chief Executive
Officer and Trustee of the TCW/DW Funds;
Formerly Executive Vice President and Director
of Dean Witter, Discover & Co. ("DWDC");
Director and/or officer of various DWDC
subsidiaries.
Philip J. Purcell Chairman, Chief Executive Officer and Director of
Director of DWDC and DWR; Director of DWSC and
Distributors; Director or Trustee of the Dean
Witter Funds; Director and/or officer of various
DWDC subsidiaries.
Richard M. DeMartini Executive Vice President of DWDC; President and
Director Chief Operating Officer of Dean Witter Capital;
Director of DWR, DWSC, Distributors and DWTC;
Trustee of the TCW/DW Funds; Member (since
January, 1993) and Chairman (since January,
1995) of the Board of Directors of NASDAQ.
James F. Higgins Executive Vice President of DWDC; President and
Director Chief Operating Officer of Dean Witter
Financial; Director of DWR, DWSC, Distributors
and DWTC.
Thomas C. Schneider Executive Vice President and Chief Financial
Executive Vice Officer of DWDC, DWR, DWSC and Distributors;
President, Chief Director of DWR, DWSC and Distributors.
Financial Officer and
Director
Christine A. Edwards Executive Vice President, Secretary and General
Director Counsel of DWDC and DWR; Executive Vice President,
Secretary and Chief Legal Officer of Distributors;
Director of DWR, DWSC and Distributors.
6
<PAGE>
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
- ----------------- ------------------------------------------------
Robert M. Scanlan President and Chief Operating Officer of DWSC,
President and Chief Executive Vice President of Distributors;
Operating Officer Executive Vice President and Director of DWTC;
Vice President of the Dean Witter Funds and the
TCW/DW Funds.
David A. Hughey Executive Vice President and Chief Administrative
Executive Vice Officer of DWSC, Distributors and DWTC; Director
President and Chief of DWTC; Vice President of the Dean Witter Funds
Administrative Officer and the TCW/DW Funds.
John Van Heuvelen President, Chief Operating Officer and Director
Executive Vice of DWTC.
President
Joseph J. McAlinden
Executive Vice President
and Chief Investment Vice President of the Dean Witter Funds and
Officer Director of DWTC.
Sheldon Curtis Assistant Secretary of DWR; Senior Vice President,
Senior Vice President, Secretary and General Counsel of DWSC; Senior Vice
General Counsel and President, Assistant General Counsel and Assistant
Secretary Secretary of Distributors; Senior Vice President
and Secretary of DWTC; Vice President, Secretary
and General Counsel of the Dean Witter Funds and
the TCW/DW Funds.
Peter M. Avelar
Senior Vice President Vice President of various Dean Witter Funds.
Mark Bavoso
Senior Vice President Vice President of various Dean Witter Funds.
Richard Felegy
Senior Vice President
Edward Gaylor
Senior Vice President Vice President of various Dean Witter Funds.
Robert S. Giambrone
Senior Vice President Senior Vice President of DWSC, Distributors and
DWTC and Director of DWTC; Vice President of
the Dean Witter Funds and the TCW/DW Funds.
Rajesh K. Gupta
Senior Vice President Vice President of various Dean Witter Funds.
7
<PAGE>
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
- ----------------- ------------------------------------------------
Kenton J. Hinchcliffe
Senior Vice President Vice President of various Dean Witter Funds.
Kevin Hurley
Senior Vice President Vice President of various Dean Witter Funds.
John B. Kemp, III Director of the Provident Savings Bank, Jersey
Senior Vice President City, New Jersey.
Anita Kolleeny
Senior Vice President Vice President of various Dean Witter Funds.
Jonathan R. Page
Senior Vice President Vice President of various Dean Witter Funds.
Ira N. Ross
Senior Vice President Vice President of various Dean Witter Funds.
Rochelle G. Siegel
Senior Vice President Vice President of various Dean Witter Funds.
Paul D. Vance
Senior Vice President Vice President of various Dean Witter Funds.
Elizabeth A. Vetell
Senior Vice President
James F. Willison
Senior Vice President Vice President of various Dean Witter Funds.
Ronald J. Worobel
Senior Vice President Vice President of various Dean Witter Funds.
Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President DWSC, Assistant Treasurer of Distributors;
and Assistant Treasurer and Chief Financial Officer of the
Treasurer Dean Witter Funds and the TCW/DW Funds.
Marilyn K. Cranney Assistant Secretary of DWR; First Vice President
First Vice President and Assistant Secretary of DWSC; Assistant
and Assistant Secretary Secretary of the Dean Witter Funds and the TCW/DW
Funds.
Barry Fink First Vice President and Assistant Secretary of
First Vice President DWSC; Assistant Secretary of the Dean Witter
and Assistant Secretary Funds and the TCW/DW Funds.
8
<PAGE>
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
- ----------------- ------------------------------------------------
Michael Interrante First Vice President and Controller of DWSC;
First Vice President Assistant Treasurer of Distributors;First Vice
and Controller President and Treasurer of DWTC.
Robert Zimmerman
First Vice President
Joan Allman
Vice President
Joseph Arcieri
Vice President Vice President of various Dean Witter Funds.
Kirk Balzer
Vice President Vice President of Dean Witter Mid-Cap Growth Fund
Douglas Brown
Vice President
Philip Casparius
Vice President
Thomas Chronert
Vice President
Rosalie Clough
Vice President
Patricia A. Cuddy
Vice President Vice President of various Dean Witter Funds.
B. Catherine Connelly
Vice President
Salvatore DeSteno
Vice President Vice President of DWSC.
Frank J. DeVito
Vice President Vice President of DWSC.
Dwight Doolan
Vice President
Bruce Dunn
Vice President
Jeffrey D. Geffen
Vice President
Deborah Genovese
Vice President
9
<PAGE>
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
- ----------------- ------------------------------------------------
Peter W. Gurman
Vice President
John Hechtlinger
Vice President
Peter Hermann
Vice President Vice President of various Dean Witter Funds
Elizabeth Hinchman
Vice President
David Hoffman
Vice President
David Johnson
Vice President
Christopher Jones
Vice President
James Kastberg
Vice President
Stanley Kapica
Vice President
Michael Knox
Vice President Vice President of various Dean Witter Funds
Konrad J. Krill
Vice President Vice President of various Dean Witter Funds.
Paula LaCosta
Vice President Vice President of various Dean Witter Funds.
Thomas Lawlor
Vice President
Gerard Lian
Vice President Vice President of various Dean Witter Funds.
LouAnne D. McInnis Vice President and Assistant Secretary of DWSC;
Vice President and Assistant Secretary of the Dean Witter Funds and
Assistant Secretary the TCW/DW Funds.
Sharon K. Milligan
Vice President
Julie Morrone
Vice President
10
<PAGE>
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
- ----------------- ------------------------------------------------
David Myers
Vice President
James Nash
Vice President
Richard Norris
Vice President
Anne Pickrell
Vice President Vice President of Dean Witter Global Short-Term
Income Fund Inc.
Hugh Rose
Vice President
Robert Rossetti
Vice President
Ruth Rossi Vice President and Assistant Secretary of DWSC;
Vice President and Assistant Secretary of the Dean Witter Funds and
Assistant Secretary the TCW/DW Funds.
Carl F. Sadler
Vice President
Rafael Scolari
Vice President Vice President of Prime Income Trust
Peter Seeley Vice President of Dean Witter World Wide Income
Vice President Trust
Jayne M. Stevlingson
Vice President Vice President of various Dean Witter Funds.
Kathleen Stromberg
Vice President Vice President of various Dean Witter Funds.
Vinh Q. Tran
Vice President Vice President of various Dean Witter Funds.
Alice Weiss
Vice President Vice President of various Dean Witter Funds.
11
<PAGE>
Item 29. Principal Underwriters
(a) Dean Witter Distributors Inc. ("Distributors"), a Delaware
corporation, is the principal underwriter of the Registrant.
Distributors is also the principal underwriter of the following
investment companies:
(1) Dean Witter Liquid Asset Fund Inc.
(2) Dean Witter Tax-Free Daily Income Trust
(3) Dean Witter California Tax-Free Daily Income Trust
(4) Dean Witter Retirement Series
(5) Dean Witter Dividend Growth Securities Inc.
(6) Dean Witter Global Asset Allocation
(7) Dean Witter World Wide Investment Trust
(8) Dean Witter Capital Growth Securities
(9) Dean Witter Convertible Securities Trust
(10) Active Assets Tax-Free Trust
(11) Active Assets Money Trust
(12) Active Assets California Tax-Free Trust
(13) Active Assets Government Securities Trust
(14) Dean Witter Short-Term Bond Fund
(15) Dean Witter Mid-Cap Growth Fund
(16) Dean Witter U.S. Government Securities Trust
(17) Dean Witter High Yield Securities Inc.
(18) Dean Witter New York Tax-Free Income Fund
(19) Dean Witter Tax-Exempt Securities Trust
(20) Dean Witter California Tax-Free Income Fund
(21) Dean Witter Limited Term Municipal Trust
(22) Dean Witter Natural Resource Development Securities Inc.
(23) Dean Witter World Wide Income Trust
(24) Dean Witter Utilities Fund
(25) Dean Witter Strategist Fund
(26) Dean Witter New York Municipal Money Market Trust
(27) Dean Witter Intermediate Income Securities
(28) Prime Income Trust
(29) Dean Witter European Growth Fund Inc.
(30) Dean Witter Developing Growth Securities Trust
(31) Dean Witter Precious Metals and Minerals Trust
(32) Dean Witter Pacific Growth Fund Inc.
(33) Dean Witter Multi-State Municipal Series Trust
(34) Dean Witter Federal Securities Trust
(35) Dean Witter Short-Term U.S. Treasury Trust
(36) Dean Witter Diversified Income Trust
(37) Dean Witter Health Sciences Trust
(38) Dean Witter Global Dividend Growth Securities
(39) Dean Witter American Value Fund
(40) Dean Witter U.S. Government Money Market Trust
(41) Dean Witter Global Short-Term Income Fund Inc.
(42) Dean Witter Premier Income Trust
(43) Dean Witter Value-Added Market Series
(44) Dean Witter Global Utilities Fund
(45) Dean Witter High Income Securities
(46) Dean Witter National Municipal Trust
(47) Dean Witter International SmallCap Fund
(48) Dean Witter Balanced Growth Fund
(49) Dean Witter Balanced Income Fund
12
<PAGE>
(50) Dean Witter Hawaii Municipal Trust
(51) Dean Witter Variable Investment Series
(52) Dean Witter Capital Appreciation Fund
(53) Dean Witter Intermediate Term U.S. Treasury Trust
(54) Dean Witter Information Fund
(55) Dean Witter Japan Fund
(56) Dean Witter Income Builder Fund
(1) TCW/DW Core Equity Trust
(2) TCW/DW North American Government Income Trust
(3) TCW/DW Latin American Growth Fund
(4) TCW/DW Income and Growth Fund
(5) TCW/DW Small Cap Growth Fund
(6) TCW/DW Balanced Fund
(7) TCW/DW Total Return Trust
(8) TCW/DW Mid-Cap Equity Trust
(9) TCW/DW Global Telecom Trust
(b) The following information is given regarding directors and officers of
Distributors not listed in Item 28 above. The principal address of
Distributors is Two World Trade Center, New York, New York 10048. None of
the following persons has any position or office with the Registrant.
Positions and
Office with
Name Distributors
- ---- ------------
Fredrick K. Kubler Senior Vice President, Assistant
Secretary and Chief Compliance
Officer.
Michael T. Gregg Vice President and Assistant
Secretary.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder
are maintained by the Investment Manager at its offices, except records
relating to holders of shares issued by the Registrant, which are maintained
by the Registrant's Transfer Agent, at its place of business as shown in the
prospectus.
Item 31. Management Services
Registrant is not a party to any such management-related service
contract.
Item 32. Undertakings
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report
to shareholders, upon request and without charge.
13
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York and
State of New York on the 23rd day of July, 1996.
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
By /s/ Sheldon Curtis
----------------------------
Sheldon Curtis
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post- Effective Amendment No. 6 has been signed below by the following persons
in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
(1) Principal Executive Officer President, Chief
Executive Officer,
Trustee and Chairman
By /s/ Charles A. Fiumefreddo 07/23/96
----------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By /s/ Thomas F. Caloia 07/23/96
----------------------------
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman)
Philip J. Purcell
By /s/ Sheldon Curtis 07/23/96
----------------------------
Sheldon Curtis
Attorney-in-Fact
Michael Bozic Manuel H. Johnson
Edwin J. Garn Michael E. Nugent
John R. Haire John L. Schroeder
By /s/ David M. Butowsky 07/23/96
----------------------------
David M. Butowsky
Attorney-in-Fact
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
EXHIBIT INDEX
-------------
1. -- Form of Declaration of Trust of Registrant*
5. -- Form of Investment Management Agreement between Registrant and
Dean Witter InterCapital Inc.*
6. -- Form of Distribution Agreement between Registrant and Dean
Witter Distributors Inc.*
8.(a) -- Form of Custodian Agreement between Registrant and The Bank of
New York*
(b) -- Form of Amendment to the Custodian Agreement
11. -- Consent of Independent Accountants
15. -- Form of Amended and Restated Plan of Distribution between
Registrant and Dean Witter Distributors Inc.*
16. -- Schedule for Computation of Performance Quotations
27. -- Financial Data Schedule
- -----------------
* Previouly filed; re-filed via EDGAR with this Amendment to the Registration
Statement.
DEAN WITTER
SHORT-TERM U.S. TREASURY TRUST
TWO WORLD TRADE CENTER
NEW YORK, NY 10048
DECLARATION OF TRUST
DATED: JUNE 3, 1991
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I--Name and Definitions .................................................. 2
Section 1.1 Name ........................................................... 2
Section 1.2 Definitions .................................................... 2
ARTICLE II--Trustees ............................................................. 3
Section 2.1 Number of Trustees ............................................. 3
Section 2.2 Election and Term .............................................. 3
Section 2.3 Resignation and Removal ........................................ 3
Section 2.4 Vacancies ...................................................... 3
Section 2.5 Delegation of Power to Other Trustees .......................... 4
ARTICLE III--Powers of Trustees .................................................. 4
Section 3.1 General ........................................................ 4
Section 3.2 Investments .................................................... 4
Section 3.3 Legal Title .................................................... 5
Section 3.4 Issuance and Repurchase of Securities .......................... 5
Section 3.5 Borrowing Money; Lending Trust Assets .......................... 5
Section 3.6 Delegation; Committees ......................................... 5
Section 3.7 Collection and Payment ......................................... 5
Section 3.8 Expenses ....................................................... 5
Section 3.9 Manner of Acting; By-Laws ...................................... 5
Section 3.10 Miscellaneous Powers ........................................... 6
Section 3.11 Principal Transactions ......................................... 6
Section 3.12 Litigation ..................................................... 6
ARTICLE IV--Investment Adviser, Distributor, Custodian and Transfer Agent ........ 6
Section 4.1 Investment Adviser ............................................. 6
Section 4.2 Administrative Services ........................................ 7
Section 4.3 Distributor .................................................... 7
Section 4.4 Transfer Agent ................................................. 7
Section 4.5 Custodian ...................................................... 7
Section 4.6 Parties to Contract ............................................ 7
ARTICLE V--Limitations of Liability of Shareholders, Trustees and Others ......... 8
Section 5.1 No Personal Liability of Shareholders, Trustees, etc. ......... 8
Section 5.2 Non-Liability of Trustees, etc. ................................ 8
Section 5.3 Indemnification ................................................ 8
Section 5.4 No Bond Required of Trustees ................................... 8
Section 5.5 No Duty of Investigation; Notice in Trust Instruments, etc. ... 8
Section 5.6 Reliance on Experts, etc. ...................................... 9
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VI--Shares of Beneficial Interest......................................... 9
Section 6.1 Beneficial Interest ............................................ 9
Section 6.2 Rights of Shareholders ......................................... 9
Section 6.3 Trust Only ..................................................... 9
Section 6.4 Issuance of Shares ............................................. 9
Section 6.5 Register of Shares ............................................. 10
Section 6.6 Transfer of Shares ............................................. 10
Section 6.7 Notices ........................................................ 10
Section 6.8 Voting Powers .................................................. 10
Section 6.9 Series or Classes of Shares .................................... 11
ARTICLE VII--Redemptions ......................................................... 13
Section 7.1 Redemptions .................................................... 13
Section 7.2 Redemption at the Option of the Trust .......................... 13
Section 7.3 Effect of Suspension of Determination of Net Asset Value ...... 13
Section 7.4 Suspension of Right of Redemption .............................. 13
ARTICLE VIII--Determination of Net Asset Value, Net Income and Distributions...... 14
Section 8.1 Net Asset Value ................................................ 14
Section 8.2 Distributions to Shareholders .................................. 14
Section 8.3 Determination of Net Income .................................... 14
Section 8.4 Power to Modify Foregoing Procedures ........................... 15
ARTICLE IX--Duration; Termination of Trust; Amendment; Mergers, etc. ............ 15
Section 9.1 Duration ....................................................... 15
Section 9.2 Termination of Trust or a Series ............................... 15
Section 9.3 Amendment Procedure ............................................ 15
Section 9.4 Merger, Consolidation and Sale of Assets ....................... 16
Section 9.5 Incorporation .................................................. 16
ARTICLE X--Reports to Shareholders ............................................... 17
ARTICLE XI--Miscellaneous ........................................................ 17
Section 11.1 Filing ......................................................... 17
Section 11.2 Resident Agent ................................................. 17
Section 11.3 Governing Law .................................................. 17
Section 11.4 Counterparts ................................................... 17
Section 11.5 Reliance by Third Parties ...................................... 17
Section 11.6 Provisions in Conflict with Law or Regulations ................. 17
Section 11.7 Use of the Name "Dean Witter" .................................. 18
SIGNATURE PAGE ................................................................... 19
</TABLE>
ii
<PAGE>
DECLARATION OF TRUST
OF
DEAN WITTER SHORT TERM U.S. TREASURY TRUST
Dated: June 3, 1991
THE DECLARATION OF TRUST of Dean Witter Short Term U.S. Treasury Trust is
made the 3rd day of June, 1991 by the parties signatory hereto, as trustees
(such persons, so long as they shall continue in office in accordance with the
terms of this Declaration of Trust, and all other persons who at the time in
question have been duly elected or appointed as trustees in accordance with
the provisions of this Declaration of Trust and are then in office, being
hereinafter called the "Trustees").
W I T N E S S E T H:
WHEREAS, the Trustees desire to form a trust fund under the laws of
Massachusetts for the investment and reinvestment of funds contributed
thereto; and
WHEREAS, it is provided that the beneficial interest in the trust assets be
divided into transferable shares of beneficial interest as hereinafter
provided;
NOW, THEREFORE, the Trustees hereby declare that they will hold in trust,
all money and property contributed to the trust fund to manage and dispose of
the same for the benefit of the holders from time to time of the shares of
beneficial interest issued hereunder and subject to the provisions hereof, to
wit:
1
<PAGE>
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is the "Dean Witter
Short-Term U.S. Treasury Trust," and so far as may be practicable the Trustees
shall conduct the Trust's activities, execute all documents and sue or be sued
under that name, which name (and the word "Trust" wherever herein used) shall
refer to the Trustees as Trustees, and not as individuals, or personally, and
shall not refer to the officers, agents, employees or Shareholders of the
Trust. Should the Trustees determine that the use of such name is not
advisable, they may use such other name for the Trust as they deem proper and
the Trust may hold its property and conduct its activities under such other
name.
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "By-Laws" means the By-Laws referred to in Section 3.9 hereof, as
from time to time amended.
(b) the terms "Commission," "Affiliated Person" and "Interested
Person," have the meanings given them in the 1940 Act.
(c) "Declaration" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "Declaration,"
"hereof," "herein" and "hereunder" shall be deemed to refer to this
Declaration rather than the article or section in which such words appear.
(d) "Distributor" means the party, other than the Trust, to a contract
described in Section 4.3 hereof.
(e) "Fundamental Policies" shall mean the investment policies and
restrictions set forth in the Prospectus and Statement of Additional
Information and designated as fundamental policies therein.
(f) "Investment Adviser" means any party, other than the Trust, to a
contract described in Section 4.1 hereof.
(g) "Majority Shareholder Vote" means the vote of the holders of a
majority of Shares, which shall consist of: (i) a majority of Shares
represented in person or by proxy and entitled to vote at a meeting of
Shareholders at which a quorum, as determined in accordance with the
By-Laws, is present; (ii) a majority of Shares issued and outstanding and
entitled to vote when action is taken by written consent of Shareholders;
and (iii) a "majority of the outstanding voting securities," as the phrase
is defined in the 1940 Act, when any action is required by the 1940 Act by
such majority as so defined.
(h) "1940 Act" means the Investment Company Act of 1940 and the rules
and regulations thereunder as amended from time to time.
(i) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
(j) "Prospectus" means the Prospectus and Statement of Additional
Information constituting parts of the Registration Statement of the Trust
under the Securities Act of 1933 as such Prospectus and Statement of
Additional Information may be amended or supplemented and filed with the
Commission from time to time.
(k) "Series" means one of the separately managed components of the
Trust (or, if the Trust shall have only one such component, then that one)
as set forth in Section 6.1 hereof or as may be established and designated
from time to time by the Trustees pursuant to that section.
(l) "Shareholder" means a record owner of outstanding Shares.
2
<PAGE>
(m) "Shares" means the units of interest into which the beneficial
interest in the Trust shall be divided from time to time, including the
shares of any and all series or classes which may be established by the
Trustees, and includes fractions of Shares as well as whole Shares.
(n) "Transfer Agent" means the party, other than the Trust, to the
contract described in Section 4.4 hereof.
(o) "Trust" means the Dean Witter Short-Term U.S. Treasury Trust.
(p) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of
the Trust or the Trustees.
(q) "Trustees" means the persons who have signed the Declaration, so
long as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly elected or
appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and reference herein to a Trustee or the Trustees shall
refer to such person or persons in their capacity as trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees shall
in no event be less than three (3) nor more than fifteen (15).
Section 2.2. Election and Term. The Trustees shall be elected by a Majority
Shareholder Vote at the first meeting of Shareholders following the public
offering of Shares of the Trust. The Trustees shall have the power to set and
alter the terms of office of the Trustees, and they may at any time lengthen
or lessen their own terms or make their terms of unlimited duration, subject
to the resignation and removal provisions of Section 2.3 hereof. Subject to
Section 16(a) of the 1940 Act, the Trustees may elect their own successors and
may, pursuant to Section 2.4 hereof, appoint Trustees to fill vacancies. The
Trustees shall adopt By-Laws not inconsistent with this Declaration or any
provision of law to provide for election of Trustees by Shareholders at such
time or times as the Trustees shall determine to be necessary or advisable.
Section 2.3. Resignation and Removal. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the other Trustees and such resignation shall
be effective upon such delivery, or at a later date according to the terms of
the instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than the number
required by Section 2.1 hereof) by the action of two-thirds of the remaining
Trustees or by the action of the Shareholders of record of not less than
two-thirds of the Shares outstanding (for purposes of determining the
circumstances and procedures under which such removal by the Shareholders may
take place, the provisions of Section 16(c) of the 1940 Act shall be
applicable to the same extent as if the Trust were subject to the provisions
of that Section). Upon the resignation or removal of a Trustee, or his
otherwise ceasing to be a Trustee, he shall execute and deliver such documents
as the remaining Trustees shall require for the purpose of conveying to the
Trust or the remaining Trustees any Trust Property held in the name of the
resigning or removed Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall execute and deliver on his behalf such documents as
the remaining Trustees shall require as provided in the preceding sentence.
Section 2.4. Vacancies. The term of office of a Trustee shall terminate and
a vacancy shall occur in the event of the death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties
of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy existing by reason of an
increase in the number of Trustees, subject to the provisions of Section 16(a)
of the 1940 Act, the remaining Trustees or, prior to the public offering of
Shares of the
3
<PAGE>
Trust, if only one Trustee shall then remain in office, the remaining Trustee,
shall fill such vacancy by the appointment of such other person as they or he,
in their or his discretion, shall see fit, made by a written instrument signed
by a majority of the remaining Trustees or by the remaining Trustee, as the
case may be. Any such appointment shall not become effective, however, until
the person named in the written instrument of appointment shall have accepted
in writing such appointment and agreed in writing to be bound by the terms of
the Declaration. An appointment of a Trustee may be made in anticipation of a
vacancy to occur at a later date by reason of retirement, resignation or
increase in the number of Trustees, provided that such appointment shall not
become effective prior to such retirement, resignation or increase in the
number of Trustees. Whenever a vacancy in the number of Trustees shall occur,
until such vacancy is filled as provided in this Section 2.4, the Trustees in
office, regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by the
Declaration. A written instrument certifying the existence of such vacancy
signed by a majority of the Trustees shall be conclusive evidence of the
existence of such vacancy.
Section 2.5. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; provided that in no
case shall less than two (2) Trustees personally exercise the powers granted
to the Trustees under the Declaration except as herein otherwise expressly
provided.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its
branches and maintain offices both within and without the Commonwealth of
Massachusetts, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities wheresoever
in the world they may be located as they deem necessary, proper or desirable
in order to promote the interests of the Trust although such things are not
herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of the Declaration, the presumption shall be in
favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 3.2. Investments. The Trustees shall have the power to:
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute, lend
or otherwise deal in or dispose of negotiable or nonnegotiable
instruments, obligations, evidences of indebtedness, certificates of
deposit or indebtedness, commercial paper, repurchase agreements, reverse
repurchase agreements, options, commodities, commodity futures contracts
and related options, currencies, currency futures and forward contracts,
and other securities, investment contracts and other instruments of any
kind, including, without limitation, those issued, guaranteed or sponsored
by any and all Persons including, without limitation, states, territories
and possessions of the United States, the District of Columbia and any of
the political subdivisions, agencies or instrumentalities thereof, and by
the United States Government or its agencies or instrumentalities, foreign
or international instrumentalities, or by any bank or savings institution,
or by any corporation or organization organized under the laws of the
United States or of any state, territory or possession thereof, and of
corporations or organizations organized under foreign laws, or in "when
issued" contracts for any such securities, or retain Trust assets in cash
and from time to time change the investments of the assets of the Trust;
and to exercise any and all rights, powers and privileges of ownership or
interest in respect of any and all
4
<PAGE>
such investments of every kind and description, including, without
limitation, the right to consent and otherwise act with respect thereto,
with power to designate one or more persons, firms, associations or
corporations to exercise any of said rights, powers and privileges in
respect of any of said instruments; and the Trustees shall be deemed to
have the foregoing powers with respect to any additional securities in
which the Trust may invest should the Fundamental Policies be amended.
The Trustees shall not be limited to investing in obligations maturing before
the possible termination of the Trust, nor shall the Trustees be limited by
any law limiting the investments which may be made by fiduciaries.
Section 3.3. Legal Title. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name
of one or more of the Trustees, or in the name of the Trust, or in the name of
any other Person as nominee, on such terms as the Trustees may determine,
provided that the interest of the Trust therein is appropriately protected.
The right, title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee he shall automatically cease to
have any right, title or interest in any of the Trust Property, and the right,
title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed
and delivered.
Section 3.4. Issuance and Repurchase of Securities. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VII, VIII and IX and Section
6.9 hereof, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the Trust,
whether capital or surplus or otherwise, to the full extent now or hereafter
permitted by the laws of the Commonwealth of Massachusetts governing business
corporations.
Section 3.5. Borrowing Money; Lending Trust Assets. Subject to the
Fundamental Policies, the Trustee shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, to endorse,
guarantee, or undertake the performance of any obligation, contract or
engagement of any other Person and to lend Trust assets.
Section 3.6. Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of
the Trust and the Trust Property, to delegate from time to time to such of
their number or to officers, employees or agents of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Trustees or otherwise as the Trustees may deem
expedient.
Section 3.7. Collection and Payment. Subject to Section 6.9 hereof, the
Trustees shall have power to collect all property due to the Trust; to pay all
claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to foreclose
any security interest securing any obligations, by virtue of which any
property is owed to the Trust; and to enter into releases, agreements and
other instruments.
Section 3.8. Expenses. Subject to Section 6.9 hereof, the Trustees shall
have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of the
Declaration, and to pay reasonable compensation from the funds of the Trust to
themselves as Trustees. The Trustees shall fix the compensation of all
officers, employees and Trustees.
Section 3.9. Manner of Acting; By-Laws. Except as otherwise provided
herein or in the By-Laws or by any provision of law, any action to be taken
by the Trustees may be taken by a majority of the Trustees present at a
meeting of Trustees (a quorum being present), including any meeting held by
means of a conference telephone circuit or similar communications equipment
by means of which all persons participating in the meeting can hear each
other, or by written consents of all the Trustees. The
5
<PAGE>
Trustees may adopt By-Laws not inconsistent with this Declaration to provide
for the conduct of the business of the Trust and may amend or repeal such
By-Laws to the extent such power is not reserved to the Shareholders.
Section 3.10. Miscellaneous Powers. The Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust or any Series thereof; (b)
enter into joint ventures, partnerships and any other combinations or
associations; (c) remove Trustees or fill vacancies in or add to their number,
elect and remove such officers and appoint and terminate such agents or
employees as they consider appropriate, and appoint from their own number, and
terminate, any one or more committees which may exercise some or all of the
power and authority of the Trustees as the Trustees may determine; (d)
purchase, and pay for out of Trust Property or the property of the appropriate
Series of the Trust, insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, distributors, selected
dealers or independent contractors of the Trust against all claims arising by
reason of holding any such position or by reason of any action taken or
omitted to be taken by any such Person in such capacity, whether or not
constituting negligence, or whether or not the Trust would have the power to
indemnify such Person against such liability; (e) establish pension,
profit-sharing, Share purchase, and other retirement, incentive and benefit
plans for any Trustees, officers, employees and agents of the Trust; (f) to
the extent permitted by law, indemnify any person with whom the Trust or any
Series thereof has dealings, including any Investment Adviser, Distributor,
Transfer Agent and selected dealers, to such extent as the Trustees shall
determine; (g) guarantee indebtedness or contractual obligations of others;
(h) determine and change the fiscal year of the Trust or any Series thereof
and the method by which its accounts shall be kept; and (i) adopt a seal for
the Trust but the absence of such seal shall not impair the validity of any
instrument executed on behalf of the Trust.
Section 3.11. Principal Transactions. Except in transactions permitted by
the 1940 Act or any rule or regulation thereunder, or any order of exemption
issued by the Commission, or effected to implement the provisions of any
agreement to which the Trust is a party, the Trustees shall not, on behalf of
the Trust, buy any securities (other than Shares) from or sell any securities
(other than Shares) to, or lend any assets of the Trust or any Series thereof
to, any Trustee or officer of the Trust or any firm of which any such Trustee
or officer is a member acting as principal, or have any such dealings with any
Investment Adviser, Distributor or Transfer Agent or with any Affiliated
Person of such Person; but the Trust or any Series thereof may employ any such
Person, or firm or company in which such Person is an Interested Person, as
broker, legal counsel, registrar, transfer agent, dividend disbursing agent or
custodian upon customary terms.
Section 3.12. Litigation. The Trustees shall have the power to engage in
and to prosecute, defend, compromise, abandon, or adjust, by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust, and out of the assets of the Trust or any Series
thereof to pay or to satisfy any debts, claims or expenses incurred in
connection therewith, including those of litigation, and such power shall
include without limitation the power of the Trustees or any appropriate
committee thereof, in the exercise of their or its good faith business
judgment, to dismiss any action, suit, proceeding, dispute, claim, or demand,
derivative or otherwise, brought by any person, including a Shareholder in its
own name or the name of the Trust, whether or not the Trust or any of the
Trustees may be named individually therein or the subject matter arises by
reason of business for or on behalf of the Trust.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR, CUSTODIAN AND TRANSFER AGENT
Section 4.1. Investment Adviser. Subject to approval by a Majority
Shareholder Vote, the Trustees may in their discretion from time to time enter
into one or more investment advisory or management contracts or, if the
Trustees establish multiple Series, separate investment advisory or management
contracts with respect to one or more Series whereby the other party or
parties to any such contracts shall undertake to furnish the Trust or such
Series such management, investment advisory, administration,
6
<PAGE>
accounting, legal, statistical and research facilities and services,
promotional or marketing activities, and such other facilities and services,
if any, as the Trustees shall from time to time consider desirable and all
upon such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provisions of the Declaration, the Trustees may
authorize the Investment Advisers, or any of them, under any such contracts
(subject to such general or specific instructions as the Trustees may from
time to time adopt) to effect purchases, sales, loans or exchanges of
portfolio securities and other investments of the Trust on behalf of the
Trustees or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of such
Investment Advisers, or any of them (and all without further action by the
Trustees). Any such purchases, sales, loans and exchanges shall be deemed to
have been authorized by all of the Trustees. The Trustees may, in their sole
discretion, call a meeting of Shareholders in order to submit to a vote of
Shareholders at such meeting the approval or continuance of any such
investment advisory or management contract. If the Shareholders of any one or
more of the Series of the Trust should fail to approve any such investment
advisory or management contract, the Investment Adviser may nonetheless serve
as Investment Adviser with respect to any Series whose Shareholders approve
such contract.
Section 4.2. Administrative Services. The Trustees may in their discretion
from time to time contract for administrative personnel and services whereby
the other party shall agree to provide the Trustees or the Trust
administrative personnel and services to operate the Trust on a daily or other
basis, on such terms and conditions as the Trustees may in their discretion
determine. Such services may be provided by one or more persons or entities.
Section 4.3. Distributor. The Trustees may in their discretion from time to
time enter into one or more contracts, providing for the sale of Shares to net
the Trust or the applicable Series of the Trust not less than the net asset
value per Share (as described in Article VIII hereof) and pursuant to which
the Trust may either agree to sell the Shares to the other parties to the
contracts, or any of them, or appoint any such other party its sales agent for
such Shares. In either case, any such contract shall be on such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the provisions of this Article IV, including, without limitation, the
provision for the repurchase or sale of shares of the Trust by such other
party as principal or as agent of the Trust.
Section 4.4. Transfer Agent. The Trustees may in their discretion from time
to time enter into a transfer agency and shareholder service contract whereby
the other party to such contract shall undertake to furnish transfer agency
and shareholder services to the Trust. The contract shall have such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the Declaration. Such services may be provided by one or more Persons.
Section 4.5. Custodian. The Trustees may appoint or otherwise engage one or
more banks or trust companies, each having an aggregate capital, surplus and
undivided profits (as shown in its last published report) of at least five
million dollars ($5,000,000) to serve as Custodian with authority as its
agent, but subject to such restrictions, limitations and other requirements,
if any, as may be contained in the By-Laws of the Trust.
Section 4.6. Parties to Contract. Any contract of the character described
in Sections 4.1, 4.2, 4.3, 4.4 or 4.5 of this Article IV and any other
contract may be entered into with any Person, although one or more of the
Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such
contract shall be invalidated or rendered voidable by reason of the existence
of any such relationship; nor shall any Person holding such relationship be
liable merely by reason of such relationship for any loss or expense to the
Trust under or by reason of said contract or accountable for any profit
realized directly or indirectly therefrom, provided that the contract when
entered into was not inconsistent with the provisions of this Article IV. The
same Person may be the other party to any contracts entered into pursuant to
Sections 4.1, 4.2, 4.3, 4.4 or 4.5 above or otherwise, and any individual may
be financially interested or otherwise affiliated with Persons who are parties
to any or all of the contracts mentioned in this Section 4.6.
7
<PAGE>
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 5.1. No Personal Liability of Shareholders, Trustees, etc. No
Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or affairs
of the Trust. No Trustee, officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever to any Person, other than the
Trust or its Shareholders, in connection with the Trust Property or the
affairs of the Trust, save only that arising from bad faith, willful
misfeasance, gross negligence or reckless disregard for his duty to such
Person; and all such Persons shall look solely to the Trust Property, or to
the Property of one or more specific Series of the Trust if the claim arises
from the conduct of such Trustee, officer, employee or agent with respect to
only such Series, for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder, Trustee,
officer, employee or agent, as such, of the Trust is made a party to any suit
or proceeding to enforce any such liability, he shall not, on account thereof,
be held to any personal liability. The Trust shall indemnify out of the
property of the Trust and hold each Shareholder harmless from and against all
claims and liabilities, to which such Shareholder may become subject by reason
of his being or having been a Shareholder, and shall reimburse such
Shareholder for all legal and other expenses reasonably incurred by him in
connection with any such claim or liability; provided that, in the event the
Trust shall consist of more than one Series, Shareholders of a particular
Series who are faced with claims or liabilities solely by reason of their
status as Shareholders of that Series shall be limited to the assets of that
Series for recovery of such loss and related expenses. The rights accruing to
a Shareholder under this Section 5.1 shall not exclude any other right to
which such Shareholder may be lawfully entitled, nor shall anything herein
contained restrict the right of the Trust to indemnify or reimburse a
Shareholder in any appropriate situation even though not specifically provided
herein.
Section 5.2. Non-Liability of Trustees, etc. No Trustee, officer, employee
or agent of the Trust shall be liable to the Trust, its Shareholders, or to
any Shareholder, Trustee, officer, employee, or agent thereof for any action
or failure to act (including without limitation the failure to compel in any
way any former or acting Trustee to redress any breach of trust) except for
his own bad faith, willful misfeasance, gross negligence or reckless disregard
of his duties.
Section 5.3. Indemnification. (a) The Trustees shall provide for
indemnification by the Trust, or by one or more Series thereof if the claim
arises from his or her conduct with respect to only such Series, of any person
who is, or has been, a Trustee, officer, employee or agent of the Trust
against all liability and against all expenses reasonably incurred or paid by
him in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or having been
a Trustee, officer, employee or agent and against amounts paid or incurred by
him in the settlement thereof, in such manner as the Trustees may provide from
time to time in the By-Laws.
(b) The words "claim," "action," "suit," or "proceeding" shall apply to all
claims, actions, suits or proceedings (civil, criminal, or other, including
appeals), actual or threatened; and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts paid
in settlement, fines, penalties and other liabilities.
Section 5.4. No Bond Required of Trustees. No Trustee shall be obligated
to give any bond or other security for the performance of any of his duties
hereunder.
Section 5.5. No Duty of Investigation; Notice in Trust Instruments, etc. No
purchaser, lender, transfer agent or other Person dealing with the Trustees or
any officer, employee or agent of the Trust or a Series thereof shall be bound
to make any inquiry concerning the validity of any transaction purporting to
be made by the Trustees or by said officer, employee or agent or be liable for
the application of money or property paid, loaned or delivered to or on the
order of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or a
Series thereof or undertaking, and every other act or thing whatsoever
executed in connection with the Trust shall be conclusively presumed to have
been executed or done by the executors thereof only in their
8
<PAGE>
capacity as officers, employees or agents of the Trust or a Series thereof.
Every written obligation, contract, instrument, certificate, Share, other
security of the Trust or undertaking made or issued by the Trustees shall
recite that the same is executed or made by them not individually, but as
Trustees under the Declaration, and that the obligations of the Trust or a
Series thereof under any such instrument are not binding upon any of the
Trustees or Shareholders, individually, but bind only the Trust Estate (or, in
the event the Trust shall consist of more than one Series, in the case of any
such obligation which relates to a specific Series, only the Series which is a
party thereto), and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not affect the validity of
such obligation, contract instrument, certificate, Share, security or
undertaking and shall not operate to bind the Trustees or Shareholders
individually. The Trustees shall at all times maintain insurance for the
protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to
cover possible tort liability, and such other insurance as the Trustees in
their sole judgment shall deem advisable.
Section 5.6. Reliance on Experts, etc. Each Trustee and officer or employee
of the Trust shall, in the performance of his duties, be fully and completely
justified and protected with regard to any act or any failure to act resulting
from reliance in good faith upon the books of account or other records of the
Trust, upon an opinion of counsel, or upon reports made to the Trust by any of
its officers or employees or by any Investment Adviser, Distributor, Transfer
Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or
employees of the Trust, regardless of whether such counsel or expert may also
be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest of
$.01 par value. The number of such shares of beneficial interest authorized
hereunder is unlimited. The Trustees shall have the authority to establish and
designate one or more Series or classes of shares. Each share of any Series
shall represent an equal proportionate share in the assets of that Series with
each other Share in that Series. The Trustees may divide or combine the shares
of any Series into a greater or lesser number of shares in that Series without
thereby changing the proportionate interests in the assets of that Series.
Subject to the provisions of Section 6.9 hereof, the Trustees may also
authorize the creation of additional series of shares (the proceeds of which
may be invested in separate, independently managed portfolios) and additional
classes of shares within any series. All Shares issued hereunder including,
without limitation, Shares issued in connection with a dividend in Shares or a
split in Shares, shall be fully paid and nonassessable.
Section 6.2. Rights of Shareholders. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore described
are vested exclusively in the Trustees, and the Shareholders shall have no
interest therein other than the beneficial interest conferred by their Shares,
and they shall have no right to call for any partition of division of any
property, profits, rights or interests of the Trust nor can they be called
upon to assume any losses of the Trust or suffer an assessment of any kind by
virtue of their ownership of Shares. The Shares shall be personal property
giving only the rights in the Declaration specifically set forth. The Shares
shall not entitle the holder to preference, preemptive, appraisal, conversion
or exchange rights, except as the Trustees may determine with respect to any
series of Shares.
Section 6.3. Trust Only. It is the intention of the Trustees to create only
the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in the Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 6.4 Issuance of Shares. The Trustees, in their discretion may, from
time to time without vote of the Shareholders, issue Shares of any Series, in
addition to the then issued and outstanding
9
<PAGE>
Shares and Shares held in the treasury, to such party or parties and for such
amount and type of consideration, including cash or property, at such time or
times and on such terms as the Trustees may deem best, and may in such manner
acquire other assets (including the acquisition of assets subject to, and in
connection with the assumption of liabilities) and businesses. In connection
with any issuance of Shares, the Trustees may issue fractional Shares. The
Trustees may from time to time divide or combine the Shares of any Series into
a greater or lesser number without thereby changing the proportionate
beneficial interests in that Series. Contributions to the Trust may be
accepted for, and Shares shall be redeemed as, whole Shares and/or fractions
of a Share as described in the Prospectus.
Section 6.5. Register of Shares. A register shall be kept in respect of
each Series at the principal office of the Trust or at an office of the
Transfer Agent which shall contain the names and addresses of the Shareholders
and the number of Shares of each Series held by them respectively and a record
of all transfers thereof. Such register may be in written form or any other
form capable of being converted into written form within a reasonable time for
visual inspection. Such register shall be conclusive as to who are the holders
of the Shares and who shall be entitled to receive dividends or distributions
or otherwise to exercise or enjoy the rights of Shareholders. No Shareholder
shall be entitled to receive payment of any dividend or distribution, nor to
have notice given to him as herein or in the By-Laws provided, until he has
given his address to the Transfer Agent or such other officer or agent of the
Trustees as shall keep the said register for entry thereon. It is not
contemplated that certificates will be issued for the Shares; however, the
Trustees, in their discretion, may authorize the issuance of Share
certificates and promulgate appropriate rules and regulations as to their use.
Section 6.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder or by his agent thereunto duly
authorized in writing, upon delivery to the Trustees or the Transfer Agent of
a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as
may reasonably be required. Upon such delivery the transfer shall be recorded
on the register of the Trust. Until such record is made, the Shareholder of
record shall be deemed to be the holder of such Shares for all purposes
hereunder and neither the Trustees nor any Transfer Agent or registrar nor any
officer, employee or agent of the Trust shall be affected by any notice of the
proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereunder and neither
the Trustees nor any Transfer Agent or registrar nor any officer or agent of
the Trust shall be affected by any notice of such death, bankruptcy or
incompetence, or other operation of law, except as may otherwise be provided
by the laws of the Commonwealth of Massachusetts.
Section 6.7. Notices. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust. Annual reports and
proxy statements need not be sent to a shareholder if: (i) an annual report
and proxy statement for two consecutive annual meetings, or (ii) all, and at
least two, checks (if sent by first class mail) in payment of dividends or
interest and shares during a twelve month period have been mailed to such
shareholder's address and have been returned undelivered. However, delivery of
such annual reports and proxy statements shall resume once a Shareholder's
current address is determined.
Section 6.8. Voting Powers. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Section 2.2 hereof, (ii) for
the removal of Trustees as provided in Section 2.3 hereof, (iii) with respect
to any investment advisory or management contract as provided in Section 4.1,
(iv) with respect to termination of the Trust as provided in Section 9.2, (v)
with respect to any amendment of the Declaration to the extent and as provided
in Section 9.3, (vi) with respect to any merger, consolidation or sale of
assets as provided in Section 9.4, (vii) with respect to incorporation of the
Trust to the
10
<PAGE>
extent and as provided in Section 9.5, (viii) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders (provided that Shareholders of a Series are not entitled to vote
in connection with the bringing of a derivative or class action with respect
to any matter which only affects another Series or its Shareholders), (ix)
with respect to any plan adopted pursuant to Rule 12b-1 (or any successor
rule) under the 1940 Act and (x) with respect to such additional matters
relating to the Trust as may be required by law, the Declaration, the By-Laws
or any registration of the Trust with the Commission (or any successor agency)
or any state, or as and when the Trustees may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter on which it is
entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote, except that Shares held in the treasury of the
Trust as of the record date, as determined in accordance with the By-Laws,
shall not be voted. On any matter submitted to a vote of Shareholders, all
Shares shall be voted by individual Series except (1) when required by the
1940 Act, Shares shall be voted in the aggregate and not by individual Series;
and (2) when the Trustees have determined that the matter affects only the
interests of one or more Series, then only the Shareholders of such Series
shall be entitled to vote thereon. The Trustees may, in conjunction with the
establishment of any further Series or any classes of Shares, establish
conditions under which the several series or classes of Shares shall have
separate voting rights or no voting rights. There shall be no cumulative
voting in the election of Trustees. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by law,
the Declaration or the By-Laws to be taken by Shareholders. The By-Laws may
include further provisions for Shareholders' votes and meetings and related
matters.
Section 6.9. Series or Classes of Shares. The following provisions are
applicable regarding the Series of Shares of the Trust established in Section
6.1 hereof and shall be applicable if the Trustees shall establish additional
Series or shall divide the shares of any Series into two or more classes, also
as provided in Section 6.1 hereof, and all provisions relating to the Trust
shall apply equally to each Series thereof except as the context requires:
(a) The number of authorized shares and the number of shares of each
Series or of each class that may be issued shall be unlimited. The
Trustees may classify or reclassify any unissued shares or any shares
previously issued and reacquired of any Series or class into one or more
Series or one or more classes that may be established and designated from
time to time. The Trustees may hold as treasury shares (of the same or
some other Series or class), reissue for such consideration and on such
terms as they may determine, or cancel any shares of any Series or any
class reacquired by the Trust at their discretion from time to time.
(b) The power of the Trustees to invest and reinvest the Trust Property
shall be governed by Section 3.2 of this Declaration with respect to any
one or more Series which represents the interests in the assets of the
Trust immediately prior to the establishment of any additional Series and
the power of the Trustees to invest and reinvest assets applicable to any
other Series shall be as set forth in the instrument of the Trustees
establishing such series which is hereinafter described.
(c) All consideration received by the Trust for the issue or sale of
shares of a particular Series or class together with all assets in which
such consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to that Series or class for all purposes,
subject only to the rights of creditors, and shall be so recorded upon the
books of account of the Trust. In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any particular Series or
class, the Trustees shall allocate them among any one or more of the
Series or classes established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and
binding upon the shareholders of all Series or classes for all purposes.
No holder of Shares of any Series shall have any claim on or right to any
assets allocated or belonging to any other Series.
11
<PAGE>
(d) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series and all
expenses, costs, charges and reserves attributable to that Series. All
expenses and liabilities incurred or arising in connection with a
particular Series, or in connection with the management thereof, shall be
payable solely out of the assets of that Series and creditors of a
particular Series shall be entitled to look solely to the property of such
Series for satisfaction of their claims. Any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series shall be allocated and
charged by the Trustees to and among any one or more of the series
established and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and equitable.
Each allocation of liabilities, expenses, costs, charges and reserves by
the Trustees shall be conclusive and binding upon the holders of all
Series for all purposes. The Trustees shall have full discretion, to the
extent not inconsistent with the 1940 Act, to determine which items shall
be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
shareholders.
(e) The power of the Trustees to pay dividends and make distributions
shall be governed by Section 8.2 of this Declaration with respect to any
one or more Series or classes which represents the interests in the assets
of the Trust immediately prior to the establishment of any additional
Series or classes. With respect to any other Series or class, dividends
and distributions on shares of a particular Series or class may be paid
with such frequency as the Trustees may determine, which may be daily or
otherwise, pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, to the holders
of shares of that Series or class, from such of the income and capital
gains, accrued or realized, from the assets belonging to that Series or
class, as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that Series or class. All dividends and
distributions on shares of a particular Series or class shall be
distributed pro rata to the holders of that Series or class in proportion
to the number of shares of that Series or class held by such holders at
the date and time of record established for the payment of such dividends
or distributions.
(f) The Trustees shall have the power to determine the designations,
preferences, privileges, limitations and rights, including voting and
dividend rights, of each class and Series of Shares.
(g) Subject to compliance with the requirements of the 1940 Act, the
Trustees shall have the authority to provide that the holders of Shares of
any Series or class shall have the right to convert or exchange said
Shares into Shares of one or more Series of Shares in accordance with such
requirements and procedures as may be established by the Trustees.
(h) The establishment and designation of any Series or class of shares
in addition to those established in Section 6.1 hereof shall be effective
upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights,
preferences, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of such Series or
class, or as otherwise provided in such instrument. At any time that there
are no shares outstanding of any particular Series or class previously
established and designated, the Trustees may by an instrument executed by
a majority of their number abolish that Series or class and the
establishment and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration.
(i) Shareholders of a Series shall not be entitled to participate in a
derivative or class action with respect to any matter which only affects
another Series or its Shareholders.
(j) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a
Series shall be entitled to receive his pro rata share of distributions of
income and capital gains made with respect to such Series. In the event of
the liquidation of a particular Series, the Shareholders of that Series
which has been established and designated and which is being liquidated
shall be entitled to receive, when and as declared by the Trustees, the
excess of the assets belonging to that Series over the liabilities
belonging to that Series. The holders of Shares of any Series shall not be
entitled hereby to any distribution upon
12
<PAGE>
liquidation of any other Series. The assets so distributable to the
Shareholders of any Series shall be distributed among such Shareholders in
proportion to the number of Shares of that Series held by them and
recorded on the books of the Trust. The liquidation of any particular
Series in which there are Shares then outstanding may be authorized by an
instrument in writing, without a meeting, signed by a majority of the
Trustees then in office, subject to the approval of a majority of the
outstanding voting securities of that Series, as that phrase is defined in
the 1940 Act.
ARTICLE VII
REDEMPTIONS
Section 7.1. Redemptions. Each Shareholder of a particular Series shall
have the right at such times as may be permitted by the Trust to require the
Trust to redeem all or any part of his Shares of that Series, upon and subject
to the terms and conditions provided in this Article VII. The Trust shall,
upon application of any Shareholder or pursuant to authorization from any
Shareholder, redeem or repurchase from such Shareholder outstanding shares for
an amount per share determined by the Trustees in accordance with any
applicable laws and regulations; provided that (a) such amount per share shall
not exceed the cash equivalent of the proportionate interest of each share or
of any class or Series of shares in the assets of the Trust at the time of the
redemption or repurchase and (b) if so authorized by the Trustees, the Trust
may, at any time and from time to time charge fees for effecting such
redemption or repurchase, at such rates as the Trustees may establish, as and
to the extent permitted under the 1940 Act and the rules and regulations
promulgated thereunder, and may, at any time and from time to time, pursuant
to such Act and such rules and regulations, suspend such right of redemption.
The procedures for effecting and suspending redemption shall be as set forth
in the Prospectus from time to time. Payment will be made in such manner as
described in the Prospectus.
Section 7.2. Redemption at the Option of the Trust. Each Share of the Trust
or any Series of the Trust shall be subject to redemption at the option of the
Trust at the redemption price which would be applicable if such Share were
then being redeemed by the Shareholder pursuant to Section 7.1: (i) at any
time, if the Trustees determine in their sole discretion that failure to so
redeem may have materially adverse consequences to the holders of the Shares
of the Trust or of any Series, or (ii) upon such other conditions with respect
to maintenance of Shareholder accounts of a minimum amount as may from time to
time be determined by the Trustees and set forth in the then current
Prospectus of the Trust. Upon such redemption the holders of the Shares so
redeemed shall have no further right with respect thereto other than to
receive payment of such redemption price.
Section 7.3. Effect of Suspension of Determination of Net Asset Value. If,
pursuant to Section 7.4 hereof, the Trustees shall declare a suspension of the
determination of net asset value with respect to Shares of the Trust or of any
Series thereof, the rights of Shareholders (including those who shall have
applied for redemption pursuant to Section 7.1 hereof but who shall not yet
have received payment) to have Shares redeemed and paid for by the Trust or a
Series thereof shall be suspended until the termination of such suspension is
declared. Any record holder who shall have his redemption right so suspended
may, during the period of such suspension, by appropriate written notice of
revocation at the office or agency where application was made, revoke any
application for redemption not honored and withdraw any certificates on
deposit. The redemption price of Shares for which redemption applications have
not been revoked shall be the net asset value of such Shares next determined
as set forth in Section 8.1 after the termination of such suspension, and
payment shall be made within seven (7) days after the date upon which the
application was made plus the period after such application during which the
determination of net asset value was suspended.
Section 7.4. Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New
York Stock Exchange is closed other than customary weekend and holiday
closings, (ii) during which trading on the New York Stock Exchange is
restricted, (iii) during which an emergency exists as a result of which
disposal by the Trust or a Series thereof of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the Trust or a
Series thereof fairly to
13
<PAGE>
determine the value of its net assets, or (iv) during any other period when
the Commission may for the protection of security holders of the Trust by
order permit suspension of the rights of redemption or postponement of the
date of payment or redemption; provided that applicable rules and regulations
of the Commission shall govern as to whether the conditions prescribed in
(ii), (iii) or (iv) exist. Such suspension shall take effect at such time as
the Trust shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter
there shall be no right of redemption or payment on redemption until the Trust
shall declare the suspension at an end, except that the suspension shall
terminate in any event on the first day on which said stock exchange shall
have reopened or the period specified in (ii) or (iii) shall have expired (as
to which in the absence of an official ruling by the Commission, the
determination of the Trust shall be conclusive). In the case of a suspension
of the right of redemption, a Shareholder may either withdraw his request for
redemption or receive payment based on the net asset value existing after the
termination of the suspension.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
Section 8.1. Net Asset Value. The net asset value of each outstanding Share
of each Series of the Trust shall be determined on such days and at such time
or times as the Trustees may determine. The method of determination of net
asset value shall be determined by the Trustees and shall be as set forth in
the Prospectus. The power and duty to make the daily calculations may be
delegated by the Trustees to any Investment Adviser, the Custodian, the
Transfer Agent or such other person as the Trustees by resolution may
determine. The Trustees may suspend the daily determination of net asset value
to the extent permitted by the 1940 Act.
Section 8.2. Distributions to Shareholders. The Trustees shall from time to
time distribute ratably among the Shareholders of the Trust or of any Series
such proportion of the net income, earnings, profits, gains, surplus
(including paid-in surplus), capital, or assets of the Trust or of such Series
held by the Trustees as they may deem proper. Such distribution may be made in
cash or property (including without limitation any type of obligations of the
Trust or of such Series or any assets thereof), and the Trustees may
distribute ratably among the Shareholders of the Trust or of that Series
additional Shares issuable hereunder in such manner, at such times, and on
such terms as the Trustees may deem proper. Such distributions may be among
the Shareholders of record (determined in accordance with the Prospectus) of
the Trust or of such Series at the time of declaring a distribution or among
the Shareholders of record of the Trust or of such Series at such later date
as the Trustees shall determine. The Trustees may always retain from the net
income, earnings, profits or gains of the Trust or of such Series such amount
as they may deem necessary to pay the debts or expenses of the Trust or of
such Series or to meet obligations of the Trust or of such Series, or as they
may deem desirable to use in the conduct of its affairs or to retain for
future requirements or extensions of the business. The Trustees may adopt and
offer to Shareholders of the Trust or of any Series such dividend reinvestment
plans, cash dividend payout plans or related plans as the Trustees deem
appropriate.
Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
Section 8.3. Determination of Net Income. The Trustees shall have the power
to determine the net income of any Series of the Trust and from time to time
to distribute such net income ratably among the Shareholders as dividends in
cash or additional Shares of such Series issuable hereunder. The determination
of net income and the resultant declaration of dividends shall be as set forth
in the Prospectus. The Trustees shall have full discretion to determine
whether any cash or property received by any Series of the Trust shall be
treated as income or as principal and whether any item of expense shall be
charged to the income or the principal account, and their determination made
in good faith shall
14
<PAGE>
be conclusive upon the Shareholders. In the case of stock dividends received,
the Trustees shall have full discretion to determine, in the light of the
particular circumstances, how much, if any, of the value thereof shall be
treated as income, the balance, if any, to be treated as principal.
Section 8.4. Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value of the Shares or net income, or the declaration and
payment of dividends and distributions, as they may deem necessary or
desirable to enable the Trust to comply with any provision of the 1940 Act, or
any rule or regulation thereunder, including any rule or regulation adopted
pursuant to Section 22 of the 1940 Act by the Commission or any securities
association registered under the Securities Exchange Act of 1934, or any order
of exemption issued by said Commission, all as in effect now or hereafter
amended or modified. Without limiting the generality of the foregoing, the
Trustees may establish classes or additional Series of Shares in accordance
with Section 6.9.
ARTICLE IX
DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.
Section 9.1. Duration. The Trust shall continue without limitation of time
but subject to the provisions of this Article IX.
Section 9.2. Termination of Trust. (a) The Trust or any Series may be
terminated (i) by a Majority Shareholder Vote at any meeting of Shareholders
of the Trust or the appropriate Series thereof, (ii) by an instrument in
writing, without a meeting, signed by a majority of the Trustees and consented
to by a Majority Shareholder Vote of the Trust or the appropriate Series
thereof, or by such other vote as may be established by the Trustees with
respect to any class or Series of Shares, or (iii) with respect to a Series as
provided in Section 6.9(h). Upon the termination of the Trust or the Series:
(i) The Trust or the Series shall carry on no business except for the
purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust or
the Series and all of the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust or
the Series, collect its assets, sell, convey, assign, exchange, transfer
or otherwise dispose of all or any part of the remaining Trust Property or
Trust Property allocated or belonging to such Series to one or more
persons at public or private sale for consideration which may consist in
whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and to do all other acts appropriate to
liquidate its business; provided that any sale, conveyance, assignment,
exchange, transfer or other disposition of all or substantially all the
Trust Property or Trust Property allocated or belonging to such Series
shall require Shareholder approval in accordance with Section 9.4 hereof.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property or Trust Property allocated or
belonging to such Series, in cash or in kind or partly each, among the
Shareholders of the Trust according to their respective rights.
Section 9.3. Amendment Procedure. (a) This Declaration may be amended by a
Majority Shareholder Vote, at a meeting of Shareholders, or by written consent
without a meeting. The Trustees may also amend this Declaration without the
vote or consent of Shareholders (i) to change the name of the Trust or any
Series or classes of Shares, (ii) to supply any omission, or cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, (iii) if
they deem it necessary to conform this Declaration to the requirements of
applicable federal or state laws or regulations or the requirements of the
Internal Revenue Code, or to eliminate or reduce any federal, state or local
taxes which are or may by the Trust or the Shareholders, but the Trustees
shall not be liable for failing to do so, or (iv)
15
<PAGE>
for any other purpose which does not adversely affect the rights of any
Shareholder with respect to which the amendment is or purports to be
applicable.
(b) No amendment may be made under this Section 9.3 which would change any
rights with respect to any Shares of the Trust or of any Series of the Trust
by reducing the amount payable thereon upon liquidation of the Trust or of
such Series of the Trust or by diminishing or eliminating any voting rights
pertaining thereto, except with the vote or consent of the holders of
two-thirds of the Shares of the Trust or of such Series outstanding and
entitled to vote, or by such other vote as may be established by the Trustees
with respect to any Series or class of Shares. Nothing contained in this
Declaration shall permit the amendment of this Declaration to impair the
exemption from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon Shareholders.
(c) A certificate signed by a majority of the Trustees or by the Secretary
or any Assistant Secretary of the Trust, setting forth an amendment and
reciting that it was duly adopted by the Shareholders or by the Trustees as
aforesaid or a copy of the Declaration, as amended, and executed by a majority
of the Trustees or certified by the Secretary or any Assistant Secretary of
the Trust, shall be conclusive evidence of such amendment when lodged among
the records of the Trust. Unless such amendment or such certificate sets forth
some later time for the effectiveness of such amendment, such amendment shall
be effective when lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by the
affirmative vote of a majority of the Trustees or by an instrument signed by a
majority of the Trustees.
Section 9.4. Merger, Consolidation and Sale of Assets. The Trust or any
Series thereof may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all or
substantially all of the Trust Property or Trust Property allocated or
belonging to such Series, including its good will, upon such terms and
conditions and for such consideration when and as authorized, at any meeting
of Shareholders called for the purpose, by the affirmative vote of the holders
of not less than two-thirds of the Shares of the Trust or such Series
outstanding and entitled to vote, or by an instrument or instruments in
writing without a meeting, consented to by the holders of not less than
two-thirds of such Shares, or by such other vote as may be established by the
Trustees with respect to any series or class of Shares; provided, however,
that, if such merger, consolidation, sale, lease or exchange is recommended by
the Trustees, a Majority Shareholder Vote shall be sufficient authorization;
and any such merger, consolidation, sale, lease or exchange shall be deemed
for all purposes to have been accomplished under and pursuant to the laws of
the Commonwealth of Massachusetts.
Section 9.5. Incorporation. With approval of a Majority Shareholder Vote,
or by such other vote as may be established by the Trustees with respect to
any Series or class of Shares, the Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other
organization to take over all of the Trust Property or the Trust Property
allocated or belonging to such Series or to carry on any business in which the
Trust shall directly or indirectly have any interest, and to sell, convey and
transfer the Trust Property or the Trust Property allocated or belonging to
such Series to any such corporation, trust, partnership, association or
organization in exchange for the shares or securities thereof or otherwise,
and to lend money to, subscribe for the shares or securities of, and enter
into any contracts with any such corporation, trust, partnership, association
or organization in which the Trust or such Series holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to
the extent permitted by law, as provided under the law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling,
conveying or transferring a portion of the Trust Property to such organization
or entities.
16
<PAGE>
ARTICLE X
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit or cause the officers of
the Trust to submit to the Shareholders a written financial report of each
Series of the Trust, including financial statements which shall at least
annually be certified by independent public accountants.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Filing. This Declaration and any amendment hereto shall be
filed in the office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of Massachusetts and
may also be filed or recorded in such other places as the Trustees deem
appropriate. Each amendment so filed shall be accompanied by a certificate
signed and acknowledged by a Trustee or by the Secretary or any Assistant
Secretary of the Trust stating that such action was duly taken in a manner
provided herein. A restated Declaration, integrating into a single instrument
all of the provisions of the Declaration which are then in effect and
operative, may be executed from time to time by a majority of the Trustees and
shall, upon filing with the Secretary of the Commonwealth of Massachusetts, be
conclusive evidence of all amendments contained therein and may thereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.
Section 11.2. Resident Agent. The Prentice-Hall Corporation System, Inc.,
84 State Street, Boston, Massachusetts 02109 is the resident agent of the
Trust in the Commonwealth of Massachusetts.
Section 11.3. Governing Law. This Declaration is executed by the Trustees
and delivered in the Commonwealth of Massachusetts and with reference to the
laws thereof and the rights of all parties and the validity and construction
of every provision hereof shall be subject to and construed according to the
laws of said State.
Section 11.4. Counterparts. The Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument,
which shall be sufficiently evidenced by any such original counterpart.
Section 11.5. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, appears to be a Trustee
hereunder, or Secretary or Assistant Secretary of the Trust, certifying to:
(a) the number or identity of Trustees or Shareholders, (b) the due
authorization of the execution of any instrument or writing, (c) the form of
any vote passed at a meeting of Trustees or Shareholders, (d) the fact that
the number of Trustees or Shareholders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration, (e) the
form of any By-Laws adopted by or the identity of any officers elected by the
Trustees, or (f) the existence of any fact or facts which in any manner relate
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any Person dealing with the Trustees and their
successors.
Section 11.6. Provisions in Conflict with Law or Regulations. (a) The
provisions of the Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provisions shall be deemed superseded by such law or regulation to
the extent necessary to eliminate such conflict; provided, however, that such
determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
pertain only to such provision in such jurisdiction and shall not in any
manner affect such provision in any other jurisdiction or any other provision
of the Declaration in any jurisdiction.
17
<PAGE>
Section 11.7. Use of the name "Dean Witter." Dean Witter Reynolds Inc.
("DWR") has consented to the use by the Trust of the identifying name "Dean
Witter," which is a property right of DWR. The Trust will only use the name
"Dean Witter" as a component of its name and for no other purpose, and will
not purport to grant to any third party the right to use the name "Dean
Witter" for any purpose. DWR, or any corporate affiliate of the parent of DWR,
may use or grant to others the right to use the name "Dean Witter", or any
combination or abbreviation thereof, as all or a portion of a corporate or
business name or for any commercial purpose, including a grant of such right
to any other investment company. At the request of DWR or its parent, the
Trust will take such action as may be required to provide its consent to the
use by DWR or its parent, or any corporate affiliate of DWR's parent, or by
any person to whom DWR or its parent or an affiliate of DWR's parent shall
have granted the right to the use, of the name "Dean Witter," or any
combination or abbreviation thereof. Upon the termination of any investment
advisory or investment management agreement into which DWR and the Trust may
enter, the Trust shall, upon request by DWR or its parent, cease to use the
name "Dean Witter" as a component of its name, and shall not use the name, or
any combination or abbreviation thereof, as a part of its name or for any
other commercial purpose, and shall cause its officers, trustees and
shareholders to take any and all actions which DWR or its parent may request
to effect the foregoing and to reconvey to DWR or its parent any and all
rights to such name.
18
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Declaration of Trust
this 3rd day of June, 1991.
/s/ Charles A. Fiumefreddo /s/ Andrew J. Melton, Jr.
- ---------------------------- ------------------------------
Charles A. Fiumefreddo, as Andrew J. Melton, Jr., as
Trustee and not individually Trustee and not individually
Two World Trade Center Two World Trade Center
New York, New York 10048 New York, New York 10048
/s/ Sheldon Curtis
- ---------------------------
Sheldon Curtis, as Trustee
and not individually
Two World Trade Center
New York, New York 10048
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK }
On this 3rd day of June 1991, ANDREW J. MELTON, JR., CHARLES A. FIUMEFREDDO
and SHELDON CURTIS, known to me and known to be the individuals described in
and who executed the foregoing instrument, personally appeared before me and
they severally acknowledged the foregoing instrument to be their free act and
deed.
/s/ Marilyn K. Cranney
---------------------------------
Notary Public
MARILYN K. CRANNEY
Notary Public, State of New York
No. 24-4795538
Qualified in Kings County
Commission Expires May 31, 1993
My commission expires: May 31, 1993
19
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this instrument this 4th
day of June, 1991.
/s/ David M. Elwood
---------------------------------
David M. Elwood, as Trustee
and not individually
One Federal Street
Boston, MA 02110
COMMONWEALTH OF MASSACHUSETTS
Suffolk, SS. Boston, MA
June 4, 1991
Then personally appeared before me the above-named David M. Elwood who
acknowledged the foregoing instrument to be his free act and deed.
before me.
/s/ Concetta M. Baulger
---------------------------------
Notary Public
My commission expires:
20
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 30th day of June, 1993 by and between Dean Witter
Short-Term U.S. Treasury Trust, an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter called the
"Fund"), and Dean Witter InterCapital Inc., a Delaware corporation
(hereinafter called the "Investment Manager"):
WHEREAS, The Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "Act"); and
WHEREAS, The Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, and engages in the business of
acting as investment adviser; and
WHEREAS, The Fund desires to retain the Investment Manager to render
management and investment advisory services in the manner and on the terms
and conditions hereinafter set forth; and
WHEREAS, The Investment Manager desires to be retained to perform services
on said terms and conditions:
NOW, Therefore, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:
1. The Fund hereby retains the Investment Manager to act as investment
manager of the Fund and, subject to the supervision of the Trustees, to
supervise the investment activities of the Fund as hereinafter set forth.
Without limiting the generality of the foregoing, the Investment Manager
shall obtain and evaluate such information and advice relating to the
economy, securities and commodities markets and securities and commodities as
it deems necessary or useful to discharge its duties hereunder; shall
continuously manage the assets of the Fund in a manner consistent with the
investment objectives and policies of the Fund; shall determine the
securities and commodities to be purchased, sold or otherwise disposed of by
the Fund and the timing of such purchases, sales and dispositions; and shall
take such further action, including the placing of purchase and sale orders
on behalf of the Fund, as the Investment Manager shall deem necessary or
appropriate. The Investment Manager shall also furnish to or place at the
disposal of the Fund such of the information, evaluations, analyses and
opinions formulated or obtained by the Investment Manager in the discharge of
its duties as the Fund may, from time to time, reasonably request.
2. The Investment Manager shall, at its own expense, maintain such staff
and employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary or useful to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Investment
Manager shall be deemed to include persons employed or otherwise retained by
the Investment Manager to furnish statistical and other factual data, advice
regarding economic factors and trends, information with respect to technical
and scientific developments, and such other information, advice and
assistance as the Investment Manager may desire. The Investment Manager
shall, as agent for the Fund, maintain the Fund's records and books of
account (other than those maintained by the Fund's transfer agent, registrar,
custodian and other agencies). All such books and records so maintained shall
be the property of the Fund and, upon request therefor, the Investment
Manager shall surrender to the Fund such of the books and records so
requested.
3. The Fund will, from time to time, furnish or otherwise make available
to the Investment Manager such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the
Investment Manager may reasonably require in order to discharge its duties
and obligations hereunder.
4. The Investment Manager shall bear the cost of rendering the investment
management and supervisory services to be performed by it under this
Agreement, and shall, at its own expense, pay the compensation of the
officers and employees, if any, of the Fund, and provide such office space,
facilities and equipment and such clerical help and bookkeeping services as the
Fund shall reasonably require in the conduct of its
<PAGE>
business. The Investment Manager shall also bear the cost of telephone service,
heat, light, power and other utilities provided to the Fund.
5. The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including without limitation: fees pursuant to any plan of
distribution that the Fund may adopt; the charges and expenses of any
registrar, any custodian or depository appointed by the Fund 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
Fund; brokers' commissions chargeable to the Fund in connection with
portfolio transactions to which the Fund is a party; all taxes, including
securities or commodities issuance and transfer taxes, and fees payable by
the Fund to federal, state or other governmental agencies; the cost and
expense of engraving or printing certificates representing shares of the
Fund; all costs and expenses in connection with the registration and
maintenance of registration of the Fund and 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 cost and
expense of printing, including typesetting, and distributing prospectuses and
statements of additional information of the Fund and supplements thereto to
the Fund's shareholders; all expenses of shareholders' and Trustees' meetings
and of preparing, printing and mailing proxy statements and reports to
shareholders; fees and travel expenses of Trustees or members of any advisory
board or committee who are not employees of the Investment Manager or any
corporate affiliate of the Investment Manager; all expenses incident to the
payment of any dividend, distribution, withdrawal or redemption, whether in
shares or in cash; charges and expenses of any outside service used for
pricing of the Fund's shares; charges and expenses of legal counsel,
including counsel to the Trustees of the Fund who are not interested persons
(as defined in the Act) of the Fund or the Investment Manager, and of
independent accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund
borrowings; postage; insurance premiums on property or personnel (including
officers and Trustees) of the Fund which inure to its benefit; extraordinary
expenses (including, but not limited to, legal claims and liabilities and
litigation costs and any indemnification related thereto); and all other
charges and costs of the Fund's operation unless otherwise explicitly
provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, the Fund shall pay to the
Investment Manager monthly compensation determined by applying the annual
rate of 0.35% to the Fund's daily net assets. Except as hereinafter set
forth, compensation under this Agreement shall be calculated and accrued
daily and the amounts of the daily accruals shall be paid monthly. Such
calculations shall be made by applying 1/365ths of the annual rates to the
Fund's net assets each day determined as of the close of business on that day
or the last previous business day. If this Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day
of a month, compensation for that part of the month this Agreement is in
effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above.
Subject to the provisions of paragraph 7 hereof, payment of the Investment
Manager's compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by paragraph 7
hereof.
7. In the event the operating expenses of the Fund, including amounts
payable to the Investment Manager pursuant to paragraph 6 hereof, for any
fiscal year ending on a date on which this Agreement is in effect, exceed the
expense limitations applicable to the Fund imposed by state securities laws
or regulations thereunder, as such limitations may be raised or lowered from
time to time, the Investment Manager shall reduce its management fee to the
extent of such excess and, if required, pursuant to any such laws or
regulations, will reimburse the Fund for annual operating expenses in excess
of any expense limitation that may be applicable; provided, however, there
shall be excluded from such expenses the amount of any interest, taxes,
brokerage commissions, distribution fees and extraordinary expenses
(including but not limited to legal claims and liabilities and litigation
costs and any indemnification related thereto) paid or payable by the Fund.
Such reduction, if any, shall be computed and accrued daily, shall be settled
on a monthly basis, and shall be based upon the expense limitation applicable
to the Fund as at the end of the last business day of the month. Should two or
more such expense limitations be applicable as at the end of the
2
<PAGE>
last business day of the month, that expense limitation which results in the
largest reduction in the Investment Manager's fee shall be applicable.
For purposes of this provision, should any applicable expense limitation
be based upon the gross income of the Fund, such gross income shall include,
but not be limited to, interest on debt securities in the Fund's portfolio
accrued to and including the last day of the Fund's fiscal year, and
dividends declared on equity securities in the Fund's portfolio, the record
dates for which fall on or prior to the last day of such fiscal year, but
shall not include gains from the sale of securities.
8. The Investment Manager will use its best efforts in the supervision
and management of the investment activities of the Fund, but in the absence
of willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations hereunder, the Investment Manager shall not be liable to the
Fund or any of its investors for any error of judgment or mistake of law or
for any act or omission by the Investment Manager or for any losses sustained
by the Fund or its investors.
9. Nothing contained in this Agreement shall prevent the Investment
Manager or any affiliated person of the Investment Manager from acting as
investment adviser or manager for any other person, firm or corporation and
shall not in any way bind or restrict the Investment Manager or any such
affiliated person from buying, selling or trading any securities or
commodities for their own accounts or for the account of others for whom they
may be acting. Nothing in this Agreement shall limit or restrict the right of
any Trustee, officer or employee of the Investment Manager to engage in any
other business or to devote his or her time and attention in part to the
management or other aspects of any other business whether of a similar or
dissimilar nature.
10. This Agreement shall remain in effect until April 30, 1994 and from
year to year thereafter provided such continuance is approved at least
annually by the vote of holders of a majority, as defined in the Investment
Company Act of 1940, as amended (the "Act"), of the outstanding voting
securities of the Fund or by the Trustees of the Fund; provided that in
either event such continuance is also approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party, which vote
must be cast in person at a meeting called for the purpose of voting on such
approval; provided, however, that (a) the Fund may, at any time and without
the payment of any penalty, terminate this Agreement upon thirty days'
written notice to the Investment Manager, either by majority vote of the
Trustees of the Fund or by the vote of a majority of the outstanding voting
securities of the Fund; (b) this Agreement shall immediately terminate in the
event of its assignment (to the extent required by the Act and the rules
thereunder) unless such automatic terminations shall be prevented by an
exemptive order of the Securities and Exchange Commission; and (c) the
Investment Manager may terminate this Agreement without payment of penalty on
thirty days' written notice to the Fund. Any notice under this Agreement
shall be given in writing, addressed and delivered, or mailed post-paid, to
the other party at the principal office of such party.
11. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Fund to supply any omission, to cure,
correct or supplement any ambiguous, defective or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal laws or regulations, but neither the Fund
nor the Investment Manager shall be liable for failing to do so.
12. This Agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflicts with the applicable provisions of the Act, the latter shall
control.
13. The Investment Manager and the Fund each agree that the name "Dean
Witter", which comprises a component of the Fund's name, is a property right
of Dean Witter Reynolds Inc. The Fund agrees and consents that (i) it will
only use the name "Dean Witter" as a component of its name and for no other
purpose, (ii) it will not purport to grant to any third party the right to
use the name "Dean Witter" for any purpose, (iii) the Investment Manager or
its parent, Dean Witter Reynolds Inc., or any corporate affiliate of the
Investment Manager's parent, may use or grant to others the right to use the
name "Dean Witter", or any combination or abbreviation thereof, as all or a
portion of a corporate or business name or for any
3
<PAGE>
commercial purpose, including a grant of such right to any other investment
company, (iv) at the request of the Investment Manager or its parent, the Fund
will take such action as may be required to provide its consent to the use of
the name "Dean Witter", or any combination or abbreviation thereof, by the
Investment Manager or its parent or any corporate affiliate of the Investment
Manager's parent, or by any person to whom the Investment Manager or its parent
or any corporate affiliate of the Investment Manager's parent shall have granted
the right to such use, and (v) upon the termination of any investment advisory
agreement into which the Investment Manager and the Fund may enter, or upon
termination of affiliation of the Investment Manager with its parent, the Fund
shall, upon request by the Investment Manager or its parent, cease to use the
name "Dean Witter" as a component of its name, and shall not use the name, or
any combination or abbreviation thereof, as a part of its name or for any other
commercial purpose, and shall cause its officers, Trustees and shareholders to
take any and all actions which the Investment Manager or its parent may request
to effect the foregoing and to reconvey to the Investment Manager or its parent
any and all rights to such name.
14. The Declaration of Trust establishing Dean Witter Short-Term U.S.
Treasury Trust, dated June 4, 1991, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name Dean
Witter Short-Term U.S. Treasury Trust refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally;
and no Trustee, shareholder, officer, employee or agent of Dean Witter
Short-Term U.S. Treasury Trust shall be held to any personal liability, nor
shall resort be had to their private property for the satisfaction of any
obligation or claim or otherwise, in connection with the affairs of said Dean
Witter Short-Term U.S. Treasury Trust, but the Trust Estate only shall be
liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
DEAN WITTER SHORT-TERM
U.S. TREASURY TRUST
By ...........................................
Attest:
..................................................
DEAN WITTER INTERCAPITAL INC.
By ...........................................
Attest:
..................................................
4
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
DISTRIBUTION AGREEMENT
AGREEMENT made as of this 30th day of June, 1993, between Dean Witter
Short-Term U.S. Treasury Trust, an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts (the "Trust"), and Dean
Witter Distributors Inc., a Delaware corporation (the "Distributor");
W I T N E S S E T H:
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a diversified open-end investment company and
it is in the interest of the Trust to offer its shares for sale continuously,
and
WHEREAS, the Trust and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of the Trust's
transferable shares of beneficial interest, of $.01 par value ("Shares"), in
order to promote the growth of the Trust and facilitate the distribution of
its shares.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. Appointment of the Distributor. (a) The Trust hereby appoints
the Distributor as the principal underwriter of the Trust to sell Shares to
the public on the terms set forth in this Agreement and the Trust's
Prospectus (defined below) and the Distributor hereby accepts such
appointment and agrees to act hereunder. The Trust, during the term of this
Agreement, shall sell Shares to the Distributor upon the terms and conditions
set forth herein.
(b) The Distributor agrees to purchase Shares, as principal for its own
account, from the Trust and to sell Shares as principal to investors, and
securities dealers, including Dean Witter Reynolds Inc. ("DWR"), an affiliate
of the Distributor, upon the terms described herein and in the Trust's
prospectus (the "Prospectus") and statement of additional information
included in the Trust's registration statement (the "Registration Statement")
most recently filed from time to time with the Securities and Exchange
Commission (the "SEC") and effective under the Securities Act of 1933, as
amended (the "1933 Act"), and 1940 Act or as said Prospectus may be otherwise
amended or supplemented and filed with the SEC pursuant to Rule 497 under the
1933 Act.
SECTION 2. Exclusive Nature of Duties. The Distributor shall be the
exclusive principal underwriter and distributor of the Trust, except that the
exclusive rights granted to the Distributor to sell the Shares shall not
apply to Shares issued by the Trust: (i) in connection with the merger or
consolidation of any other investment company or personal holding company
with the Trust or the acquisition by purchase or otherwise of all (or
substantially all) the assets or the outstanding shares of any such company
by the Trust; or (ii) pursuant to reinvestment of dividends or capital gains
distributions; or (iii) pursuant to the reinstatement privilege afforded
redeeming shareholders.
SECTION 3. Purchase of Shares from the Trust. (a) The Distributor shall
have the right to buy from the Trust the Shares needed, but not more than the
Shares needed (except for clerical errors in transmission), to fill
unconditional orders for Shares placed with the Distributor by investors and
securities dealers. The price which the Distributor shall pay for the Shares
so purchased from the Trust shall be the net asset value, determined as set
forth in the Prospectus, used in determining the public offering price on
which such orders were based.
(b) The shares are to be resold by the Distributor at the public offering
price, as set forth in the Prospectus to investors or to securities dealers
including DWR, who have entered into selected dealer agreements with the
Distributor pursuant to Section 7 ("Selected Dealers").
(c) The Trust shall have the right to suspend the sale of the Shares at
times when redemption is suspended pursuant to the conditions set forth in
Section 4(d) hereof. The Trust shall also have the right to suspend the sale
of the Shares if trading on the New York Stock Exchange shall have been
1
<PAGE>
suspended, if a banking moratorium shall have been declared by federal or New
York authorities, or if there shall have been some other extraordinary event
which, in the judgment of the Trust, makes it impracticable to sell the
Shares.
(d) The Trust, or any agent of the Trust designated in writing by the
Trust, shall be promptly advised of all purchase orders for Shares received
by the Distributor. Any order may be rejected by the Trust; provided,
however, that the Trust will not arbitrarily or without reasonable cause
refuse to accept orders for the purchase of Shares. The Distributor will
confirm orders upon their receipt, and the Trust (or its agent) upon receipt
of payment therefor and instructions will deliver share certificates for such
Shares or a statement confirming the issuance of Shares. Payment shall be
made to the Trust in New York Clearing House funds. The Distributor agrees to
cause such payment and such instructions to be delivered promptly to the
Trust (or its agent).
With respect to Shares sold by any Selected Dealer, the Distributor is
authorized to direct the Trust's transfer agent to receive instructions
directly from the Selected Dealer on behalf of the Distributor as to
registration of Shares in the names of investors and to confirm issuance of
the Shares to such investors. The Distributor is also authorized to instruct
the transfer agent to receive payment directly from the Selected Dealer on
behalf of the Distributor, for prompt transmittal to the Trust's custodian,
of the purchase price of the Shares. In such event the Distributor shall
obtain from the Selected Dealer and maintain a record of such registration
instructions and payments.
SECTION 4. Repurchase or Redemption of Shares. (a) Any of the outstanding
Shares may be tendered for redemption at any time, and the Trust agrees to
redeem the Shares so tendered in accordance with the applicable provisions
set forth in the Prospectus. The price to be paid to redeem the Shares shall
be equal to the net asset value determined as set forth in the Prospectus.
Upon any redemption of Shares the Trust shall pay the total amount of the
redemption price in accordance with applicable provisions of the Prospectus
in New York Clearing House funds, or in portfolio securities in event of
redemptions in kind, on or before the seventh day subsequent to its having
received the notice of redemption in proper form.
(b) The Distributor is authorized, as agent for the Trust, to repurchase
Shares, represented by a share certificate which is delivered to any office
of the Distributor in accordance with applicable provisions set forth in the
Prospectus. The Distributor shall promptly transmit to the transfer agent of
the Trust for redemption all Shares so delivered. The Distributor shall be
responsible for the accuracy of instructions transmitted to the Trust's
transfer agent in connection with all such repurchases.
(c) The Distributor is authorized, as agent for the Trust, to repurchase
Shares held in a shareholder's account with the Trust for which no share
certificate has been issued, upon the telephonic or telegraphic request of
the shareholder, or at the discretion of the Distributor. The Distributor
shall promptly transmit to the transfer agent of the Trust, for redemption,
all such orders for repurchase of shares. Payment for shares repurchased may
be made by the Trust to the Distributor for the account of the shareholder.
The Distributor shall be responsible for the accuracy of instructions
transmitted to the Trust's transfer agent in connection with all such
repurchases.
With respect to Shares tendered for redemption or repurchase by any
Selected Dealer on behalf of its customers, the Distributor is authorized to
instruct the transfer agent of the Trust to accept orders for redemption or
repurchase directly from the Selected Dealer on behalf of the Distributor and
to instruct the Trust to transmit payments for such redemptions and
repurchases directly to the Selected Dealer on behalf of the Distributor for
the account of the shareholder. The Distributor shall obtain from the
Selected Dealer and maintain a record of such orders. The Distributor is
further authorized to obtain from the Trust; and shall maintain, a record of
payments made directly to the Selected Dealer on behalf of the Distributor.
(d) Redemption of Shares or payment by the Trust may be suspended at times
when the New York Stock Exchange is closed, when trading on said Exchange is
restricted, when an emergency exists as a result of which disposal by the
Trust of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Trust fairly to determine the value of its net
assets, or during any other period when the Securities and Exchange
Commission, by order, so permits.
2
<PAGE>
SECTION 5. Duties of the Trust. (a) The Trust shall furnish to the
Distributor copies of all information, financial statements and other papers
which the Distributor may reasonably request for use in connection with the
distribution of the Shares, including one certified copy, upon request by the
Distributor, of all financial statements prepared by the Trust and examined by
independent accountants. The Trust shall, at the expense of the Distributor,
make available to the Distributor such number of copies of the Prospectus as the
Distributor shall reasonably request.
(b) The Trust shall take, from time to time, but subject to the necessary
approval of its shareholders, all necessary action to fix the number of its
authorized Shares and to register Shares under the 1933 Act, to the end that
there will be available for sale such number of Shares as investors may
reasonably be expected to purchase.
(c) The Trust shall use its best efforts to qualify and maintain the
qualification of an appropriate number of the Shares for sale under the
securities laws of such states as the Distributor and the Trust may approve.
Any such qualification may be withheld, terminated or withdrawn by the Trust
at any time in its discretion. As provided in Section 8(c) hereof, the
expense of qualification and maintenance of qualification shall be borne by
the Trust. The Distributor shall furnish such information and other material
relating to its affairs and activities as may be required by the Trust in
connection with such qualification.
(d) The Trust shall, at the expense of the Distributor, furnish, in
reasonable quantities upon request by the Distributor, copies of annual and
interim reports of the Trust.
SECTION 6. Duties of the Distributor. (a) The Distributor shall sell
Shares of the Trust through DWR and may sell Shares through other securities
dealers and its own Account Executives, if any, and shall devote reasonable
time and effort to promote sales of the Shares, but shall not be obligated to
sell any specific number of Shares. The services of the Distributor hereunder
are not exclusive and it is understood that the Distributor acts as principal
underwriter for other registered investment companies and intends to do so in
the future. It is also understood that Selected Dealers, including DWR, may
also sell shares for other registered investment companies.
(b) The Distributor and any Selected Dealer shall not give any information
or make any representations, other than those contained in the Registration
Statement or related Prospectus and any sales literature specifically
approved by the Trust.
(c) The Distributor agrees that it will comply with the terms and
limitations of the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. ("NASD").
SECTION 7. Selected Dealers Agreements. (a) The Distributor shall have the
right to enter into selected dealers agreements with Selected Dealers for the
sale of Shares. In making agreements with Selected Dealers, the Distributor
shall act only as principal and not as agent for the Fund. Shares sold to
Selected Dealers shall be for resale by such dealers only at the public
offering price set forth in the Prospectus.
(b) Within the United States, the Distributor shall offer and sell Shares
only to Selected Dealers that are members in good standing of the NASD.
(c) The Distributor shall adopt and follow procedures, as approved by the
Fund, for the confirmation of sales of Shares to investors and Selected
Dealers, the collection of amounts payable by investors and Selected Dealers
on such sales, and the cancellation of unsettled transactions, as may be
necessary to comply with the requirements of the NASD, as such requirements
may from time to time exist.
SECTION 8. Payment of Expenses. (a) The Distributor shall bear all
expenses incurred by it in connection with its duties and activities under
this Agreement including the payment of any sales commissions for sales of
the Trust's shares (except such expenses as are specifically undertaken
herein by the Trust).
(b) The Trust shall bear all costs and expenses of the Trust, including
fees and disbursements of legal counsel including counsel to the Trustees of
the Trust who are not interested persons (as defined in the 1940 Act) of the
Trust or the Distributor, and independent accountants, in connection with the
3
<PAGE>
preparation and filing of any required Registration Statements and
Prospectuses and all amendments and supplements thereto, and the expense of
preparing, printing, mailing and otherwise distributing prospectuses and
statements of additional information, annual or interim reports or proxy
materials to shareholders.
(c) The Trust shall bear the cost and expenses of qualification of the
Shares for sale, and, if necessary or advisable in connection therewith, of
qualifying the Trust as a broker or dealer, in such states of the United
States or other jurisdictions as shall be selected by the Trust and the
Distributor pursuant to Section 5(c) hereof and the cost and expenses payable
to each such state for continuing qualification therein until the Trust
decides to discontinue such qualification pursuant to Section 5(c) hereof.
SECTION 9. Indemnification. (a) The Trust shall indemnify and hold
harmless the Distributor and each person, if any, who controls the
Distributor against any loss, liability, claim, damage or expense (including
the reasonable cost of investigating or defending any alleged loss,
liability, claim, damage or expense and reasonable counsel fees incurred in
connection therewith) arising by reason of any person acquiring any Shares,
which may be based upon the 1933 Act, or on any other statute or at common
law, on the ground that the Registration Statement or related Prospectus and
Statements of Additional Information, as from time to time amended and
supplemented, or the annual or interim reports to shareholders of the Trust,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading, unless such statement or omission was made
in reliance upon, and in conformity with, information furnished to the Trust
in connection therewith by or on behalf of the Distributor; provided,
however, that in no case (i) is the indemnity of the Trust in favor of the
Distributor and any such controlling persons to be deemed to protect the
Distributor or any such controlling persons thereof against any liability to
the Trust or its security holders to which the Distributor or any such
controlling persons would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
or by reason of reckless disregard of its obligations and duties under this
Agreement; or (ii) is the Trust to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the
Distributor or any such controlling persons, unless the Distributor or any
such controlling persons, as the case may be, shall have notified the Trust
in writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon the Distributor or such controlling persons (or after the Distributor or
such controlling persons shall have received notice of such service on any
designated agent), but failure to notify the Trust of any such claim shall
not relieve it from any liability which it may have to the person against
whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Trust will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense, of any suit brought to enforce any such liability, but if the
Trust elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to the Distributor or such controlling
person or persons, defendant or defendants in the suit. In the event the
Trust elects to assume the defense of any such suit and retain such counsel,
the Distributor or such controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them, but, in case the Trust does not elect to assume the
defense of any such suit, it will reimburse the Distributor or such
controlling person or persons, defendant or defendants in the suit, for the
reasonable fees and expenses of any counsel retained by them. The Trust shall
promptly notify the Distributor of the commencement of any litigation or
proceedings against it or any of its officers or trustees in connection with
the issuance or sale of the Shares.
(b) (i) The Distributor shall indemnify and hold harmless the Trust and
each of its trustees and officers and each person, if any, who controls the
Trust against any loss, liability, claim, damage, or expense described in the
foregoing indemnity contained in subsection (a) of this Section, but only
with respect to statements or omissions made in reliance upon, and in
conformity with, information furnished to the Trust in writing by or on
behalf of the Distributor for use in connection with the Registration
Statement or related Prospectus and Statement of Additional Information, as
from time to time amended, or the annual or interim reports to shareholders.
In case any action shall be brought against the Trust or any person so
indemnified, in respect of which indemnity may be sought against the
Distributor, the Distributor shall have the rights and duties given to the
Trust and the Trust and each person so indemnified shall have the same rights
and duties given to the Distributor by the provisions of subsection (a) of
this Section 9.
(ii) The Distributor shall indemnify and hold harmless the Trust and the
Trust's transfer agent, individually and in its capacity as the Trust's
transfer agent, from and against any claims, damages and
4
<PAGE>
liabilities which arise as a result of actions taken pursuant to instructions
from, or on behalf of, the Distributor to: (1) redeem all or a part of
shareholder accounts in the Trust pursuant to subsection 4(c) hereof and pay
the proceeds to, or as directed by, the Distributor for the account of each
shareholder whose Shares are so redeemed and (2) register Shares in the names
of investors, confirm the issuance thereof and receive payment therefor
pursuant to subsection 3(d).
(iii) In case any action shall be brought against the Trust or any person
so indemnified by this subsection 9(b) in respect of which indemnity may be
sought against the Distributor, the Distributor shall have the rights and
duties given to the Trust, and the Trust and each person so indemnified shall
have the rights and duties given to the Distributor by the provisions of
subsection (a) of this Section 9.
(c) If the indemnification provided for in this Section 9 is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages, liabilities or expenses
(or actions in respect thereof) referred to herein, then each indemnifiying
party shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Fund on the one hand and the
Distributor on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Fund on the one hand and the Distributor on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Fund on the one hand and the Distributor on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Fund bear to the total
compensation received by the Distributor, in each case as set forth in the
Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Fund or the Distributor and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Fund and the Distributor agree that
it would not be just and equitable if contribution were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to above
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
claim. Notwithstanding the provisions of this subsection (c), the Distributor
shall not be required to contribute any amount in excess of the amount by
which the total price at which the Shares distributed by it to the public
were offered to the public exceeds the amount of any damages which it has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
SECTION 10. Duration and Termination of this Agreement. This Agreement
shall become effective as of the date first above written and shall remain in
force until April 30, 1994, and thereafter, but only so long as such
continuance is specifically approved at least annually by (i) the Board of
Trustees of the Trust, or by the vote of a majority of the outstanding voting
securities of the Trust, cast in person or by proxy, and (ii) a majority of
those Trustees who are not parties to this Agreement or interested persons of
any such party and who have no direct or indirect financial interest in this
Agreement or in the operation of the Trust's Rule 12b-1 Plan or in any
agreement related thereto, cast in person at a meeting called for the purpose
of voting upon such approval.
This Agreement may be terminated at any time without the payment of any
penalty, by the Trustees of the Trust, or by vote of a majority of the
outstanding voting securities of the Trust, or by the
5
<PAGE>
Distributor, on sixty days' written notice to the other party. This Agreement
shall automatically terminate in the event of its assignment.
The terms "vote of a majority of the outstanding voting securities,"
"assignment" and "interested person," when used in this Agreement, shall have
the respective meanings specified in the 1940 Act.
SECTION 11. Amendments of this Agreement. This Agreement may be amended by
the parties only if such amendment is specifically approved by (i) the
Trustees of the Trust, or by the vote of a majority of outstanding voting
securities of the Trust, and (ii) a majority of those Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
and who have no direct or indirect financial interest in this Agreement or in
any Agreement related to the Trust's Plan of Distribution pursuant to Rule
12b-1 under the 1940 Act, cast in person at a meeting called for the purpose
of voting on such approval.
SECTION 12. Governing Law. This Agreement shall be construed in accordance
with the law of the State of New York and the applicable provisions of the
1940 Act. To the extent the applicable law of the State of New York, or any
of the provisions herein, conflict with the applicable provisions of the 1940
Act, the latter shall control.
SECTION 13. Personal Liability. The Declaration of the Trust establishing
Dean Witter Short-Term U.S. Treasury Trust, dated June 4, 1991, a copy of
which, together with all amendments thereto (the "Declaration"), is on file
in the office of the Secretary of the Commonwealth of Massachusetts, provides
that the name Dean Witter Short-Term U.S. Treasury Trust refers to the
Trustees under the Declaration collectively as Trustees, but not as
individuals or personally; and no Trustee, shareholder, officer, employee or
agent of Dean Witter Short-Term U.S. Treasury Trust shall be held to any
personal liability, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise, in connection with the
affairs of said Dean Witter Short-Term U.S. Treasury Trust, but the Trust
Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first written in New York, New York.
DEAN WITTER SHORT-TERM U.S. TREASURY
TRUST
By: ..............................
DEAN WITTER DISTRIBUTORS INC.
BY: ..............................
6
CUSTODY AGREEMENT
-----------------
Agreement made as of this 9th day of August, 1991, between DEAN
WITTER SHORT-TERM U.S. TREASURY TRUST, a Massachusetts business trust organized
and existing under the laws of the Commonwealth of Massachusetts, having its
principal office and place of business at 2 World Trade Center, New York, New
York 10048 (hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New
York corporation authorized to do a banking business, having its principal
office and place of business at 48 Wall Street, New York, New York 10286
(hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth,
the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, shall
have the following meanings:
1. "Agreement" shall mean this Custody Agreement and all
Appendices and Certifications described in the Exhibits
delivered in connection herewith.
2. "Authorized Person" shall mean any person, whether or not
such person is an Officer or employee of the Fund, duly authorized
by the Board of Trustees of the Fund to give Oral Instructions and
Written Instructions on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix A or such other Certificate
as may be received by the Custodian from time to time, provided
that each person who is designated in any such Certificate as an
"Officer of DWTC" shall be an Authorized Person only for purposes
of Articles XII and XIII hereof.
3. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and
federal agency securities, its successor or successors and its
nominee or nominees.
<PAGE>
4. "Call Option" shall mean an exchange traded option with
respect to Securities other than Index, Futures Contracts, and
Futures Contract Options entitling the holder, upon timely exercise
and payment of the exercise price, as specified therein, to
purchase from the writer thereof the specified underlying
instruments, currency, or Securities.
5. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to
be given to the Custodian which is actually received (irrespective
of constructive receipt) by the Custodian and signed on behalf of
the Fund by any two Officers. The term Certificate shall also
include instructions by the Fund to the Custodian communicated by a
Terminal Link.
6. "Clearing Member" shall mean a registered
broker-dealer which is a clearing member under the rules of
O.C.C. and a member of a national securities exchange
qualified to act as a custodian for an investment company, or
any broker-dealer reasonably believed by the Custodian to be
such a clearing member.
7. "Collateral Account" shall mean a segregated account so
denominated which is specifically allocated to a Series and pledged
to the Custodian as security for, and in consideration of, the
Custodian's issuance of any Put Option guarantee letter or similar
document described in paragraph 8 of Article V herein.
8. "Covered Call Option" shall mean an exchange traded option
entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer
thereof the specified underlying instruments, currency, or
Securities (excluding Futures Contracts) which are owned by the
writer thereof.
9. "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and
Exchange Commission, its successor or successors and its nominee or
nominees. The term "Depository" shall further mean and include any
other person authorized to act as a depository under the Investment
Company Act of 1940, its successor or successors and its nominee or
nominees, specifically identified in a certified copy of a
resolution of the Fund's Board of Trustees specifically approving
deposits therein by the Custodian.
10. "Financial Futures Contract" shall mean the firm
commitment to buy or sell financial instruments on a U.S. com-
modities exchange or board of trade at a specified future time
at an agreed upon price.
11. "Futures Contract" shall mean a Financial Futures
Contract and/or Index Futures Contracts.
- 2 -
<PAGE>
12. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.
13. "Investment Company Act of 1940" shall mean the
Investment Company Act of 1940, as amended, and the rules and
regulations thereunder.
14. "Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the
difference between the value of a particular index at the close of
the last business day of the contract and the price at which the
futures contract is originally struck.
15. "Index Option" shall mean an exchange traded option
entitling the holder, upon timely exercise, to receive an amount of
cash determined by reference to the difference between the exercise
price and the value of the index on the date of exercise.
16. "Margin Account" shall mean a segregated account in the
name of a broker, dealer, futures commission merchant, or a
Clearing Member, or in the name of the Fund for the benefit of a
broker, dealer, futures commission merchant, or Clearing Member, or
otherwise, in accordance with an agreement between the Fund, the
Custodian and a broker, dealer, futures commission merchant or a
Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities
and/or money of the Fund shall be deposited and withdrawn from time
to time in connection with such transactions as the Fund may from
time to time determine. Securities held in the Book-Entry System or
a Depository shall be deemed to have been deposited in, or
withdrawn from, a Margin Account upon the Custodian's effecting an
appropriate entry in its books and records.
17. "Money Market Security" shall mean all instruments and
obligations commonly known as a money market instruments, where the
purchase and sale of such securities normally requires settlement
in federal funds on the same day as such purchase or sale,
including, without limitation, certain Reverse Repurchase
Agreements, debt obligations issued or guaranteed as to interest
and/or principal by the government of the United States or agencies
or instrumentalities thereof, any tax, bond or revenue anticipation
note issued by any state or municipal government or public
authority, commercial paper, certificates of deposit and bankers'
acceptances, repurchase agreements with respect to Securities and
bank time deposits.
18. "O.C.C." shall mean the Options Clearing Corpora-
tion, a clearing agency registered under Section 17A of the
- 3 -
<PAGE>
Securities Exchange Act of 1934, its successor or successors, and
its nominee or nominees.
19. "Officers" shall mean the President, any Vice President,
the Secretary, the Clerk, the Treasurer, the Controller, any
Assistant Secretary, any Assistant Clerk, any Assistant Treasurer,
and any other person or persons, whether or not any such other
person is an officer or employee of the Fund, but in each case only
if duly authorized by the Board of Trustees of the Fund to execute
any Certificate, instruction, notice or other instrument on behalf
of the Fund and listed in the Certificate annexed hereto as
Appendix B or such other Certificate as may be received by the
Custodian from time to time; provided that each person who is
designated in any such Certificate as holding the position of
"Officer of DWTC" shall be an Officer only for purposes of Articles
XII and XIII hereof.
20. "Option" shall mean a Call Option, Covered Call Op-
tion, Index Option and/or a Put Option.
21. "Oral Instructions" shall mean verbal instructions
actually received (irrespective of constructive receipt) by the
Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person.
22. "Put Option" shall mean an exchange traded option with
respect to instruments, currency, or Securities other than Index
Options, Futures Contracts, and Futures Contract Options entitling
the holder, upon timely exercise and tender of the specified
underlying instruments, currency, or Securities, to sell such
instruments, currency, or Securities to the writer thereof for the
exercise price.
23. "Reverse Repurchase Agreement" shall mean an agreement
pursuant to which the Fund sells Securities and agrees to
repurchase such Securities at a described or specified date and
price.
24. "Security" shall be deemed to include, without limitation,
Money Market Securities, Call Options, Put Options, Index Options,
Index Futures Contracts, Index Futures Contract Options, Financial
Futures Contracts, Financial Futures Contract Options, Reverse
Repurchase Agreements, over the counter options on Securities,
common stocks and other securities having characteristics similar
to common stocks, preferred stocks, debt obligations issued by
state or municipal governments and by public authorities,
(including, without limitation, general obligation bonds, revenue
bonds, industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing
rights to receive, purchase, sell or subscribe
- 4 -
<PAGE>
for the same, or evidencing or representing any other rights or
interest therein, or rights to any property or assets.
25. "Senior Security Account" shall mean an account maintained
and specifically allocated to a Series under the terms of this
Agreement as a segregated account, by recorda- tion or otherwise,
within the custody account in which certain Securities and/or other
assets of the Fund specifically allocated to such Series shall be
deposited and withdrawn from time to time in accordance with
Certificates received by the Custodian in connection with such
transactions as the Fund may from time to time determine.
26. "Series" shall mean the various portfolios, if any, of the
Fund as described from time to time in the current and effective
prospectus for the Fund, except that if the Fund does not have more
than one portfolio, "Series" shall mean the Fund or be ignored
where a requirement would be imposed on the Fund or the Custodian
which is unnecessary if there is only one portfolio.
27. "Shares" shall mean the shares of beneficial inter-
est of the Fund and its Series.
28. "Terminal Link" shall mean an electronic data transmission
link between the Fund and the Custodian requiring in connection
with each use of the Terminal Link the use of an authorization code
provided by the Custodian and at least two access codes established
by the Fund, provided, that the Fund shall have delivered to the
Custodian a Certificate substantially in the form of Appendix C.
29. "Transfer Agent" shall mean Dean Witter Trust
Company, a New Jersey limited purpose trust company, its suc-
cessors and assigns.
30. "Transfer Agent Account" shall mean any account in the
name of the Transfer Agent maintained with The Bank of New York
pursuant to a Cash Management and Related Services Agreement
between The Bank of New York and the Transfer Agent.
31. "Written Instructions" shall mean written communications
actually received (irrespective of constructive receipt) by the
Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or
any other such system whereby the receiver of such communications
is able to verify by codes or otherwise with a reasonable degree of
certainty the identity of the sender of such communication.
- 5 -
<PAGE>
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of the Securities and moneys at any time owned by the
Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article
and in Article VIII, the Fund will deliver or cause to be delivered
to the Custodian all Securities and all moneys owned by it, at any
time during the period of this Agreement, and shall specify with
respect to such Securities and money the Series to which the same
are specifically allocated, and the Custodian shall not be
responsible for any Securities or money not so delivered. The
Custodian shall physically segregate, keep and maintain the
Securities of the Series separate and apart from each other Series
and from other assets held by the Custodian. Except as otherwise
expressly provided in this Agreement, the Custodian will not be
responsible for any Securities and moneys not actually received by
it, unless the Custodian has been negligent or has engaged in
willful misconduct with respect thereto. The Custodian will be
entitled to reverse any credits of money made on the Fund's behalf
where such credits have been previously made and moneys are not
finally collected, unless the Custodian has been negligent or has
engaged in willful misconduct with respect thereto. The Fund shall
deliver to the Custodian a certified resolution of the Board of
Trustees of the Fund, substantially in the form of Exhibit A
hereto, approving, authorizing and instructing the Custodian on a
continuous and on-going basis to deposit in the Book-Entry System
all Securities eligible for deposit therein, regardless of the
Series to which the same are specifically allocated and to utilize
the Book-Entry System to the extent possible in connection with its
performance hereunder, including, without limitation, in connection
with settlements of purchases and sales of Securities, loans of
Securities and deliveries and returns of Securities collateral.
Prior to a deposit of Securities specifically allocated to a Series
in any Depository, the Fund shall deliver to the Custodian a
certified resolution of the Board of Trustees of the Fund,
substantially in the form of Exhibit B hereto, approving,
- 6 -
<PAGE>
authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a Certificate to
deposit in such Depository all Securities specifically allocated to
such Series eligible for deposit therein, and to utilize such
Depository to the extent possible with respect to such Securities
in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales
of Securities, loans of Securities, and deliveries and returns of
Securities collateral. Securities and moneys deposited in either
the Book-Entry System or a Depository will be represented in
accounts which include only assets held by the Custodian for
customers, including, but not limited to, accounts in which the
Custodian acts in a fiduciary or representative capacity and will
be specifically allocated on the Custodian's books to the separate
account for the applicable Series. Prior to the Custodian's
accepting, utilizing and acting with respect to Clearing Member
confirmations for Options and transactions in Options for a Series
as provided in this Agreement, the Custodian shall have received a
certified resolution of the Fund's Board of Trustees, substantially
in the form of Exhibit C hereto, approving, authorizing and
instructing the Custodian on a continuous and on-going basis, until
instructed to the contrary by a Certificate, to accept, utilize and
act in accordance with such confirmations as provided in this
Agreement with respect to such Series. All securities are to be
held or disposed of by the Custodian for, and subject at all times
to the instructions of, the Fund pursuant to the terms of this
Agreement. The Custodian shall have no power or authority to
assign, hypothecate, pledge or otherwise dispose of any Securities
except as provided by the terms of this Agreement, and shall have
the sole power to release and deliver Securities held pursuant to
this Agreement.
2. The Custodian shall establish and maintain separate
accounts, in the name of each Series, and shall credit to the
separate account for each Series all moneys received by it for the
account of the Fund with respect to such Series. Such moneys will
be held in such manner and account as the Fund and the Custodian
shall agree upon in writing from time to time. Money credited to a
separate account for a Series shall be subject only to drafts,
orders, or charges of the Custodian pursuant to this Agreement and
shall be disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Resolutions of the Fund's Board of
Trustees certified by an Officer and by the Secretary or Assistant
Secretary of the Fund setting forth the name and address of the
person to whom the payment is to be made, the Series account from
which payment is to be made, the purpose for which payment is to be
made, and declaring such purpose to be a proper corporate purpose;
provided, however, that amounts
- 7 -
<PAGE>
representing dividends, distributions, or redemptions proceeds with
respect to Shares shall be paid only to the Transfer Agent Account;
(c) In payment of the fees and in reimbursement of
the expenses and liabilities of the Custodian attributable to
such Series and authorized by this Agreement; or
(d) Pursuant to Certificates to pay interest, taxes,
management fees or operating expenses (including, without
limitation thereto, Board of Trustees' fees and expenses, and fees
for legal accounting and auditing services), which Certificates set
forth the name and address of the person to whom payment is to be
made, state the purpose of such payment and designate the Series
for whose account the payment is to be made.
3. Promptly after the close of business on each day, the
Custodian shall furnish the Fund with confirmations and a summary,
on a per Series basis, of all transfers to or from the account of
the Fund for a Series, either hereunder or with any co-custodian or
sub-custodian appointed in accordance with this Agreement during
said day. Where Securities are transferred to the account of the
Fund for a Series but held in a Depository, the Custodian shall
upon such transfer also by book-entry or otherwise identify such
Securities as belonging to such Series in a fungible bulk of
Securities registered in the name of the Custodian (or its nominee)
or shown on the Custodian's account on the books of the Book-Entry
System or the Depository. At least monthly and from time to time,
the Custodian shall furnish the Fund with a detailed statement, on
a per Series basis, of the Securities and moneys held under this
Agreement for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article
and in Article VIII, all Securities held by the Custodian
hereunder, which are issued or issuable only in bearer form, except
such Securities as are held in the Book-Entry System, shall be held
by the Custodian in that form; all other Securities held hereunder
may be registered in the name of the Fund, in the name of any duly
appointed registered nominee of the Custodian as the Custodian may
from time to time determine, or in the name of the Book-Entry
System or a Depository or their successor or successors, or their
nominee or nominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver
in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or a
Depository any Securities which it may hold hereunder and which may
from time to time be registered in the name of the Fund. The
Custodian shall hold all such Securities specifically allocated to
a Series which are not held in the Book-Entry System or in a
Depository in a separate
- 8 -
<PAGE>
account in the name of such Series physically segregated at all
times from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the
Custodian by itself, or through the use of the Book-Entry System or
a Depository with respect to Securities held hereunder and therein
deposited, shall with respect to all Securities held for the Fund
hereunder in accordance with preceding paragraph 4:
(a) Promptly collect all income and dividends due
or payable;
(b) Promptly give notice to the Fund and promptly present
for payment and collect the amount of money or other consideration
payable upon such Securities which are called, but only if either
(i) the Custodian receives a written notice of such call, or (ii)
notice of such call appears in one or more of the publications
listed in Appendix D annexed hereto, which may be amended at any
time by the Custodian without the prior consent of the Fund,
provided the Custodian gives prior notice of such amendment to the
Fund;
(c) Promptly present for payment and collect for
the Fund's account the amount payable upon all Securities
which mature;
(d) Promptly surrender Securities in temporary form
in exchange for definitive Securities;
(e) Promptly execute, as custodian, any necessary
declarations or certificates of ownership under the Federal Income
Tax Laws or the laws or regulations of any other taxing authority
now or hereafter in effect;
(f) Hold directly, or through the Book-Entry System or
the Depository with respect to Securities therein deposited, for
the account of a Series, all rights and similar securities issued
with respect to any Securities held by the Custodian for such
Series hereunder; and
(g) Promptly deliver to the Fund all notices, prox- ies,
proxy soliciting materials, consents and other written information
(including, without limitation, notices of tender offers and
exchange offers, pendency of calls, maturities of Securities and
expiration of rights) relating to Securities held pursuant to this
Agreement which are actually received by the Custodian, such
proxies and other similar materials to be executed by the
registered holder (if Securities are registered otherwise than in
the name of the Fund), but without indicating the manner in which
proxies or consents are to be voted.
- 9 -
<PAGE>
6. Upon receipt of a Certificate and not otherwise, the
Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:
(a) Promptly execute and deliver to such persons as may
be designated in such Certificate proxies, consents,
authorizations, and any other instruments whereby the authority of
the Fund as owner of any Securities held hereunder for the Series
specified in such Certificate may be exercised;
(b) Promptly deliver any Securities held hereunder for
the Series specified in such Certificate in exchange for other
Securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any right,
warrant or conversion privilege and receive and hold hereunder
specifically allocated to such Series any cash or other Securities
received in exchange;
(c) Promptly deliver any Securities held hereunder for
the Series specified in such Certificate to any protective
committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation,
recapitalization or sale of assets of any corporation, and receive
and hold hereunder specifically allocated to such Series in
exchange therefor such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to evidence
such delivery or such Securities as may be issued upon such
delivery; and
(d) Promptly present for payment and collect the amount
payable upon Securities which may be called as specified in the
Certificate.
7. Notwithstanding any provision elsewhere contained herein,
the Custodian shall not be required to obtain possession of any
instrument or certificate representing any Futures Contract, any
Option, or any Futures Contract Option until after it shall have
determined, or shall have received a Certificate from the Fund
stating, that any such instruments or certificates are available.
The Fund shall deliver to the Custodian such a Certificate no later
than the business day preceding the availability of any such
instrument or certificate. Prior to such availability, the
Custodian shall comply with Section 17(f) of the Investment Company
Act of 1940 in connection with the purchase, sale, settlement,
closing out or writing of Futures Contracts, Options, or Futures
Contract Options by making payments or deliveries specified in
Certificates in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer,
or futures commission merchant of a statement or confirmation
reasonably believed by the Custodian to be in the form customarily
used by brokers, dealers, or future
- 10 -
<PAGE>
commission merchants with respect to such Futures Contracts,
Options, or Futures Contract Options, as the case may be,
confirming that such Security is held by such broker, dealer or
futures commission merchant, in book-entry form or otherwise, in
the name of the Custodian (or any nominee of the Custodian) as
custodian for the Fund, provided, however, that notwithstanding the
foregoing, payments to or deliveries from the Margin Account and
payments with respect to Securities to which a Margin Account
relates, shall be made in accordance with the terms and conditions
of the Margin Account Agreement. Whenever any such instruments or
certificates are available, the Custodian shall, notwithstanding
any provision in this Agreement to the contrary, make payment for
any Futures Contract, Option, or Futures Contract Option for which
such instruments or such certificates are available only against
the delivery to the Custodian of such instrument or such
certificate, and deliver any Futures Contract, Option or Futures
Contract Option for which such instruments or such certificates are
available only against receipt by the Custodian of payment
therefor. Any such instrument or certificate delivered to the
Custodian shall be held by the Custodian hereunder in accordance
with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each execution of a purchase of Securities
by the Fund, other than a purchase of an Option, a Futures
Contract, or a Futures Contract Option, the Fund shall deliver to
the Custodian (i) with respect to each purchase of Securities which
are not Money Market Securities, a Certificate, and (ii) with
respect to each purchase of Money Market Securities, a Certificate,
Oral Instructions or Written Instructions, specifying with respect
to each such purchase: (a) the Series to which such Securities are
to be specifically allocated; (b) the name of the issuer and the
title of the Securities; (c) the number of shares or the principal
amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f) the
total amount payable upon such purchase; (g) the name of the person
from whom or the broker through whom the purchase was made, and the
name of the clearing broker, if any; and (h) the name of the broker
to whom payment is to be made. The Custodian shall, upon receipt of
such Securities purchased by or for the Fund, pay to the broker
specified in
- 11 -
<PAGE>
the Certificate out of the moneys held for the account of such
Series the total amount payable upon such purchase, provided that
the same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions.
2. Promptly after each execution of a sale of Securities by
the Fund, other than a sale of any Option, Futures Contract,
Futures Contract Option, or any Reverse Repurchase Agreement, the
Fund shall deliver such to the Custodian (i) with respect to each
sale of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each sale of Money Market
Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with respect to each such sale: (a) the
Series to which such Securities were specifically allocated; (b)
the name of the issuer and the title of the Security; (c) the
number of shares or principal amount sold, and accrued interest, if
any; (d) the date of sale and settlement; (e) the sale price per
unit; (f) the total amount payable to the Fund upon such sale; (g)
the name of the broker through whom or the person to whom the sale
was made, and the name of the clearing broker, if any; and (h) the
name of the broker to whom the Securities are to be delivered. On
the settlement date, the Custodian shall deliver the Securities
specifically allocated to such Series to the broker in accordance
with generally accepted street practices and as specified in the
Certificate upon receipt of the total amount payable to the Fund
upon such sale, provided that the same conforms to the total amount
payable as set forth in such Certificate, Oral Instructions or
Written Instructions.
ARTICLE V
OPTIONS
1. Promptly after each execution of a purchase of any Option
by the Fund other than a closing purchase transaction the Fund
shall deliver to the Custodian a Certificate specifying with
respect to each Option purchased: (a) the Series to which such
Option is specifically allocated; (b) the type of Option (put or
call); (c) the instrument, currency, or Security underlying such
Option and the number of Options, or the name of the in the case of
an Index Option, the index to which such Option relates and the
number of Index Options purchased; (d) the expiration date; (e) the
exercise price; (f) the dates of purchase and settlement; (g) the
total amount payable by the Fund in connection with such purchase;
and (h) the name of the Clearing Member through whom such Option
was purchased. The Custodian shall pay, upon receipt of a Clearing
Member's statement confirming the purchase of such Option held by
such Clearing Member for the account of the Custodian (or any duly
appointed and registered nominee of the
- 12 -
<PAGE>
Custodian) as custodian for the Fund, out of moneys held for the
account of the Series to which such Option is to be specifically
allocated, the total amount payable upon such purchase to the
Clearing Member through whom the purchase was made, provided that
the same conforms to the total amount payable as set forth in such
Certificate.
2. Promptly after the execution of a sale of any Option
purchased by the Fund, other than a closing sale transaction,
pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to each such sale:
(a) the Series to which such Option was specifically allocated; (b)
the type of Option (put or call); (c) the instrument, currency, or
Security underlying such Option and the number of Options, or the
name of the issuer and the title and number of shares subject to
such Option or, in the case of a Index Option, the index to which
such Option relates and the number of Index Options sold; (d) the
date of sale; (e) the sale price; (f) the date of settlement; (g)
the total amount payable to the Fund upon such sale; and (h) the
name of the Clearing Member through whom the sale was made. The
Custodian shall consent to the delivery of the Option sold by the
Clearing Member which previously supplied the confirmation
described in preceding paragraph 1 of this Article with respect to
such Option against payment to the Custodian of the total amount
payable to the Fund, provided that the same conforms to the total
amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the Custodian a Certificate specifying with
respect to such Call Option: (a) the Series to which such Call
Option was specifically allocated; (b) the name of the issuer and
the title and number of shares subject to the Call Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the
exercise price per share; (f) the total amount to be paid by the
Fund upon such exercise; and (g) the name of the Clearing Member
through whom such Call Option was exercised. The Custodian shall,
upon receipt of the Securities underlying the Call Option which was
exercised, pay out of the moneys held for the account of the Series
to which such Call Option was specifically allocated the total
amount payable to the Clearing Member through whom the Call Option
was exercised, provided that the same conforms to the total amount
payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the Custodian a Certificate specifying with
respect to such Put Option: (a) the Series to which such Put Option
was specifically allocated; (b) the name of the issuer and the
title and number of shares subject to the Put Option; (c) the
expiration date; (d) the date of exercise
- 13 -
<PAGE>
and settlement; (e) the exercise price per share; (f) the total
amount to be paid to the Fund upon such exercise; and (g) the name
of the Clearing Member through whom such Put Option was exercised.
The Custodian shall, upon receipt of the amount payable upon the
exercise of the Put Option, deliver or direct a Depository to
deliver the Securities specifically allocated to such Series,
provided the same conforms to the amount payable to the Fund as set
forth in such Certificate.
5. Promptly after the exercise by the Fund of any Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the Custodian a Certificate specifying with
respect to such Index Option: (a) the Series to which such Index
Option was specifically allocated; (b) the type of Index Option
(put or call); (c) the number of Options being exercised; (d) the
index to which such Option relates; (e) the expiration date; (f)
the exercise price; (g) the total amount to be received by the Fund
in connection with such exercise; and (h) the Clearing Member from
whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Covered Call Option: (a) the Series for which
such Covered Call Option was written; (b) the name of the issuer
and the title and number of shares for which the Covered Call
Option was written and which underlie the same; (c) the expiration
date; (d) the exercise price; (e) the premium to be received by the
Fund; (f) the date such Covered Call Option was written; and (g)
the name of the Clearing Member through whom the premium is to be
received. The Custodian shall deliver or cause to be delivered, in
exchange for receipt of the premium specified in the Certificate
with respect to such Covered Call Option, such receipts as are
required in accordance with the customs prevailing among Clearing
Members dealing in Covered Call Options and shall impose, or direct
a Depository to impose, upon the underlying Securities specified in
the Certificate specifically allocated to such Series such
restrictions as may be required by such receipts. Notwithstanding
the foregoing, the Custodian has the right, upon prior written
notification to the Fund, at any time to refuse to issue any
receipts for Securities in the possession of the Custodian and not
deposited with a Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and
described in the preceding paragraph of this Article is exercised,
the Fund shall promptly deliver to the Custodian a Certificate
instructing the Custodian to deliver, or to direct the Depository
to deliver, the Securities subject to such Covered Call Option and
specifying: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of
shares subject to the Covered Call Option; (c) the Clearing Member
to whom the underlying
- 14 -
<PAGE>
Securities are to be delivered; and (d) the total amount payable to
the Fund upon such delivery. Upon the return and/or cancellation of
any receipts delivered pursuant to paragraph 6 of this Article, the
Custodian shall deliver, or direct a Depository to deliver, the
underlying Securities as specified in the Certificate against
payment of the amount to be received as set forth in such
Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to such Put Option: (a) the Series for which such Put
Option was written; (b) the name of the issuer and the title and
number of shares for which the Put Option is written and which
underlie the same; (c) the expiration date; (d) the exercise price;
(e) the premium to be received by the Fund; (f) the date such Put
Option is written; (g) the name of the Clearing Member through whom
the premium is to be received and to whom a Put Option guarantee
letter is to be delivered; (h) the amount of cash, and/or the
amount and kind of Securities, if any, specifically allocated to
such Series to be deposited in the Senior Security Account for such
Series; and (i) the amount of cash and/or the amount and kind of
Securities specifically allocated to such Series to be deposited
into the Collateral Account for such Series. The Custodian shall,
after making the deposits into the Collateral Account specified in
the Certificate, issue a Put Option guarantee letter substantially
in the form utilized by the Custodian on the date hereof, and
deliver the same to the Clearing Member specified in the
Certificate against receipt of the premium specified in said
Certificate. Notwithstanding the foregoing, the Custodian shall be
under no obligation to issue any Put Option guarantee letter or
similar document if it is unable to make any of the representations
contained therein.
9. Whenever a Put Option written by the Fund and described in
the preceding paragraph is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series
to which such Put Option was written; (b) the name of the issuer
and title and number of shares subject to the Put Option; (c) the
Clearing Member from whom the underlying Securities are to be
received; (d) the total amount payable by the Fund upon such
delivery; (e) the amount of cash and/or the amount and kind of
Securities specifically allocated to such Series to be withdrawn
from the Collateral Account for such Series and (f) the amount of
cash and/or the amount and kind of Securities, specifically
allocated to such Series, if any, to be withdrawn from the Senior
Security Account. Upon the return and/or cancellation of any Put
Option guarantee letter or similar document issued by the Custodian
in connection with such Put Option, the Custodian shall pay out of
the moneys held for the account of the Series to which such Put
Option was specifically allocated the total amount payable to the
Clearing Member specified in the Certificate as set forth in such
Certificate, against delivery of such
- 15 -
<PAGE>
Securities, and shall make the withdrawals specified in such
Certificate.
10. Whenever the Fund writes an Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to such Index Option: (a) the Series for which such Index
Option was written; (b) whether such Index Option is a put or a
call; (c) the number of options written; (d) the index to which
such Option relates; (e) the expiration date; (f) the exercise
price; (g) the Clearing Member through whom such Option was
written; (h) the premium to be received by the Fund; (i) the amount
of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Senior
Security Account for such Series; (j) the amount of cash and/or the
amount and kind of Securities, if any, specifically allocated to
such Series to be deposited in the Collateral Account for such
Series; and (k) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to be
deposited in a Margin Account, and the name in which such account
is to be or has been established. The Custodian shall, upon receipt
of the premium specified in the Certificate, make the deposits, if
any, into the Senior Security Account specified in the Certificate,
and either (1) deliver such receipts, if any, which the Custodian
has specifically agreed to issue, which are in accordance with the
customs prevailing among Clearing Members in Index Options and make
the deposits into the Collateral Account specified in the
Certificate, or (2) make the deposits into the Margin Account
specified in the Certificate.
11. Whenever an Index Option written by the Fund and described
in the preceding paragraph of this Article is exercised, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Index Option: (a) the Series for which such
Index Option was written; (b) such information as may be necessary
to identify the Index Option being exercised; (c) the Clearing
Member through whom such Index Option is being exercised; (d) the
total amount payable upon such exercise, and whether such amount is
to be paid by or to the Fund; (e) the amount of cash and/or amount
and kind of Securities, if any, to be withdrawn from the Margin
Account; and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Senior Security
Account for such Series; and the amount of cash and/or the amount
and kind of Securities, if any, to be withdrawn from the Collateral
Account for such Series. Upon the return and/or cancellation of the
receipt, if any, delivered pursuant to the preceding paragraph of
this Article, the Custodian shall pay out of the moneys held for
the account of the Series to which such Stock Index Option was
specifically allocated to the Clearing Member specified in the
Certificate the total amount payable, if any, as specified therein.
- 16 -
<PAGE>
12. Promptly after the execution of a purchase or sale by the
Fund of any Option identical to a previously written Option
described in paragraphs, 6, 8 or 10 of this Article in a
transaction expressly designated as a "Closing Purchase
Transaction" or a "Closing Sale Transaction", the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to the Option being purchased: (a) that the transaction is
a Closing Purchase Transaction or a Closing Sale Transaction; (b)
the Series for which the Option was written; (c) the instrument,
currency, or Security subject to the Option, or, in the case of an
Index Option, the index to which such Option relates and the number
of Options held; (d) the exercise price; (e) the premium to be paid
by or the amount to be paid to the Fund; (f) the expiration date;
(g) the type of Option (put or call); (h) the date of such purchase
or sale; (i) the name of the Clearing Member to whom the premium is
to be paid or from whom the amount is to be received; and (j) the
amount of cash and/or the amount and kind of Securities, if any, to
be withdrawn from the Collateral Account, a specified Margin
Account, or the Senior Security Account for such Series. Upon the
Custodian's payment of the premium or receipt of the amount, as the
case may be, specified in the Certificate and the return and/or
cancellation of any receipt issued pursuant to paragraphs 6, 8 or
10 of this Article with respect to the Option being liquidated
through the Closing Purchase Transaction or the Closing Sale
Transaction, the Custodian shall remove, or direct a Depository to
remove, the previously imposed restrictions on the Securities
underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Closing
Purchase Transaction with respect to any Option purchased or
written by the Fund and described in this Article, the Custodian
shall delete such Option from the statements delivered to the Fund
pursuant to paragraph 3 Article III herein, and upon the return
and/or cancellation of any receipts issued by the Custodian, shall
make such withdrawals from the Collateral Account, and the Margin
Account and/or the Senior Security Account as may be specified in a
Certificate received in connection with such expiration, exercise,
or consummation.
14. Securities acquired by the Fund through the exercise of an
Option described in this Article shall be subject to Article IV
hereof.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures
Contract, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Futures Contract,
- 17 -
<PAGE>
(or with respect to any number of identical Futures Contract(s)):
(a) the Series for which the Futures Contract is being entered; (b)
the category of Futures Contract (the name of the underlying index
or financial instrument); (c) the number of identical Futures
Contracts entered into; (d) the delivery or settlement date of the
Futures Contract(s); (e) the date the Futures Contract(s) was
(were) entered into and the maturity date; (f) whether the Fund is
buying (going long) or selling (going short) such Futures
Contract(s); (g) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account
for such Series; (h) the name of the broker, dealer, or futures
commission merchant through whom the Futures Contract was entered
into; and (i) the amount of fee or commission, if any, to be paid
and the name of the broker, dealer, or futures commission merchant
to whom such amount is to be paid. The Custodian shall make the
deposits, if any, to the Margin Account in accordance with the
terms and conditions of the Margin Account Agreement. The Custodian
shall make payment out of the moneys specifically allocated to such
Series of the fee or commission, if any, specified in the
Certificate and deposit in the Senior Security Account for such
Series the amount of cash and/or the amount and kind of Securities
specified in said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund to a broker, dealer, or futures
commission merchant with respect to an outstanding Futures Contract
shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from
a broker, dealer, or futures commission merchant to the Fund with
respect to an outstanding Futures Contract shall be received and
dealt with by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder
is retained by the Fund until delivery or settlement is made on
such Futures Contract, the Fund shall deliver to the Custodian
prior to the delivery or settlement date a Certificate specifying:
(a) the Futures Contract and the Series to which the same relates;
(b) with respect to an Index Futures Contract, the total cash
settlement amount to be paid or received, and with respect to a
Financial Futures Contract, the Securities and/or amount of cash to
be delivered or received; (c) the broker, dealer, or futures
commission merchant to or from whom payment or delivery is to be
made or received; and (d) the amount of cash and/or Securities to
be withdrawn from the Senior Security Account for such Series. The
Custodian shall make the payment or delivery specified in the
Certificate, and delete such Futures Contract from the
- 18 -
<PAGE>
statements delivered to the Fund pursuant to paragraph 3 of
Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to
offset a Futures Contract held by the Custodian hereunder, the Fund
shall deliver to the Custodian a Certificate specifying: (a) the
items of information required in a Certificate described in
paragraph 1 of this Article, and (b) the Futures Contract being
offset. The Custodian shall make payment out of the money
specifically allocated to such Series of the fee or commission, if
any, specified in the Certificate and delete the Futures Contract
being offset from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein, and make such withdrawals from
the Senior Security Account for such Series as may be specified in
such Certificate. The withdrawals, if any, to be made from the
Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the execution of a purchase of any Futures
Contract Option by the Fund, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Futures
Contract Option: (a) the Series to which such Option is
specifically allocated; (b) the type of Futures Contract Option
(put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of purchase
and settlement; (g) the amount of premium to be paid by the Fund
upon such purchase; (h) the name of the broker or futures
commission merchant through whom such option was purchased; and (i)
the name of the broker, or futures commission merchant, to whom
payment is to be made. The Custodian shall pay out of the moneys
specifically allocated to such Series the total amount to be paid
upon such purchase to the broker or futures commissions merchant
through whom the purchase was made, provided that the same conforms
to the amount set forth in such Certificate.
2. Promptly after the execution of a sale of any Futures
Contract Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) Series to which such
Futures Contract Option was specifically allocated; (b) the type of
Future Contract Option (put or call); (c) the type of Futures
Contract and such other
- 19 -
<PAGE>
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the date of sale; (e)
the sale price; (f) the date of settlement; (g) the total amount
payable to the Fund upon such sale; and (h) the name of the broker
of futures commission merchant through whom the sale was made. The
Custodian shall consent to the cancellation of the Futures Contract
Option being closed against payment to the Custodian of the total
amount payable to the Fund, provided the same conforms to the total
amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund
pursuant to paragraph 1 is exercised by the Fund, the Fund shall
promptly deliver to the Custodian a Certificate specifying: (a) the
Series to which such Futures Contract Option was specifically
allocated; (b) the particular Futures Contract Option (put or call)
being exercised; (c) the type of Futures Contract underlying the
Futures Contract Option; (d) the date of exercise; (e) the name of
the broker or futures commission merchant through whom the Futures
Contract Option is exercised; (f) the net total amount, if any,
payable by the Fund; (g) the amount, if any, to be received by the
Fund; and (h) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account for such
Series. The Custodian shall make, out of the moneys and Securities
specifically allocated to such Series, the payments of money, if
any, and the deposits of Securities, if any, into the Senior
Security Account as specified in the Certificate. The deposits, if
any, to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a) the
Series for which such Futures Contract Option was written; (b) the
type of Futures Contract Option (put or call); (c) the type of
Futures Contract and such other information as may be necessary to
identify the Futures Contract underlying the Futures Contract
Option; (d) the expiration date; (e) the exercise price; (f) the
premium to be received by the Fund; (g) the name of the broker or
futures commission merchant through whom the premium is to be
received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account
for such Series. The Custodian shall, upon receipt of the premium
specified in the Certificate, make out of the moneys and Securities
specifically allocated to such Series the deposits into the Senior
Security Account, if any, as specified in the Certificate. The
deposits, if any, to be made to the Margin Account shall be made by
the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
- 20 -
<PAGE>
5. Whenever a Futures Contract Option written by the Fund
which is a call is exercised, the Fund shall promptly deliver to
the Custodian a Certificate specifying: (a) the Series to which
such Futures Contract Option was specifically allocated; (b) the
particular Futures Contract Option exercised; (c) the type of
Futures Contract underlying the Futures Contract Option; (d) the
name of the broker or futures commission merchant through whom such
Futures Contract Option was exercised; (e) the net total amount, if
any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the
amount of cash and/or the amount and kind of Securities to be
deposited in the Senior Security Account for such Series. The
Custodian shall, upon its receipt of the net total amount payable
to the Fund, if any, specified in such Certificate make the
payments, if any, and the deposits, if any, into the Senior
Security Account as specified in the Certificate. The deposits, if
any, to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
6. Whenever a Futures Contract Option which is written by the
Fund and which is a put is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series
to which such Option was specifically allocated; (b) the particular
Futures Contract Option exercised; (c) the type of Futures Contract
underlying such Futures Contract Option; (d) the name of the broker
or futures commission merchant through whom such Futures Contract
Option is exercised; (e) the net total amount, if any, payable to
the Fund upon such exercise; (f) the net total amount, if any,
payable by the Fund upon such exercise; and (g) the amount and kind
of Securities and/or cash to be withdrawn from or deposited in, the
Senior Security Account for such Series, if any. The Custodian
shall, upon its receipt of the net total amount payable to the
Fund, if any, specified in the Certificate, make out of the moneys
and Securities specifically allocated to such Series, the payments,
if any, and the deposits, if any, into the Senior Security Account
as specified in the Certificate. The deposits to and/or withdrawals
from the Margin Account, if any, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
7. Promptly after the execution by the Fund of a purchase of
any Futures Contract Option identical to a previously written
Futures Contract Option described in this Article in order to
liquidate its position as a writer of such Futures Contract Option,
the Fund shall deliver to the Custodian a Certificate specifying
with respect to the Futures Contract Option being purchased: (a)
the Series to which such Option is specifically allocated; (b) that
the transaction is a closing transaction; (c) the type of Future
Contract and such other information as may be necessary to identify
the
- 21 -
<PAGE>
Futures Contract underlying the Futures Option Contract; (d) the
exercise price; (e) the premium to be paid by the Fund; (f) the
expiration date; (g) the name of the broker or futures commission
merchant to whom the premium is to be paid; and (h) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Senior Security Account for such Series. The
Custodian shall effect the withdrawals from the Senior Security
Account specified in the Certificate. The withdrawals, if any, to
be made from the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or
purchased by the Fund and described in this Article, the Custodian
shall (a) delete such Futures Contract Option from the statements
delivered to the Fund pursuant to paragraph 3 of Article III herein
and, (b) make such withdrawals from and/or in the case of an
exercise such deposits into the Senior Security Account as may be
specified in a Certificate. The deposits to and/or withdrawals from
the Margin Account, if any, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
9. Futures Contracts acquired by the Fund through the exercise
of a Futures Contract Option described in this Article shall be
subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after the execution of any short sales of
Securities by any Series of the Fund, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the Series for which such
short sale was made; (b) the name of the issuer and the title of
the Security; (c) the number of shares or principal amount sold,
and accrued interest or dividends, if any; (d) the dates of the
sale and settlement; (e) the sale price per unit; (f) the total
amount credited to the Fund upon such sale, if any, (g) the amount
of cash and/or the amount and kind of Securities, if any, which are
to be deposited in a Margin Account and the name in which such
Margin Account has been or is to be established; (h) the amount of
cash and/or the amount and kind of Securities, if any, to be
deposited in a Senior Security Account, and (i) the name of the
broker through whom such short sale was made. The Custodian shall
upon its receipt of a statement from such broker confirming such
sale and that the total amount credited to the Fund upon such sale,
if any, as specified in the Certificate is held by
- 22 -
<PAGE>
such broker for the account of the Custodian (or any nominee of the
Custodian) as custodian of the Fund, issue a receipt or make the
deposits into the Margin Account and the Senior Security Account
specified in the Certificate.
2. Promptly after the execution of a purchase to close-out any
short sale of Securities, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each such
closing out: (a) the Series for which such transaction is being
made; (b) the name of the issuer and the title of the Security; (c)
the number of shares or the principal amount, and accrued interest
or dividends, if any, required to effect such closing-out to be
delivered to the broker; (d) the dates of closing-out and
settlement; (e) the purchase price per unit; (f) the net total
amount payable to the Fund upon such closing-out; (g) the net total
amount payable to the broker upon such closing-out; (h) the amount
of cash and the amount and kind of Securities to be withdrawn, if
any, from the Margin Account; (i) the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from the
Senior Security Account; and (j) the name of the broker through
whom the Fund is effecting such closing-out. The Custodian shall,
upon receipt of the net total amount payable to the Fund upon such
closing-out, and the return and/ or cancellation of the receipts,
if any, issued by the Custodian with respect to the short sale
being closed-out, pay out of the moneys held for the account of the
Fund to the broker the net total amount payable to the broker, and
make the withdrawals from the Margin Account and the Senior
Security Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase
Agreement with respect to Securities and money held by the
Custodian hereunder, the Fund shall deliver to the Custodian a
Certificate, or in the event such Reverse Repurchase Agreement is a
Money Market Security, a Certificate, Oral Instructions, or Written
Instructions specifying: (a) the Series for which the Reverse
Repurchase Agreement is entered; (b) the total amount payable to
the Fund in connection with such Reverse Repurchase Agreement and
specifically allocated to such Series; (c) the broker, dealer, or
financial institution with whom the Reverse Repurchase Agreement is
entered; (d) the amount and kind of Securities to be delivered by
the Fund to such broker, dealer, or financial institution; (e) the
date of such Reverse Repurchase Agreement; and (f) the amount of
cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Senior Security
Account for such Series in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of
- 23 -
<PAGE>
the total amount payable to the Fund specified in the Certificate,
Oral Instructions, or Written Instructions make the delivery to the
broker, dealer, or financial institution and the deposits, if any,
to the Senior Security Account, specified in such Certificate, Oral
Instructions, or Written Instructions.
2. Upon the termination of a Reverse Repurchase Agreement
described in preceding paragraph 1 of this Article, the Fund shall
promptly deliver a Certificate or, in the event such Reverse
Repurchase Agreement is a Money Market Security, a Certificate,
Oral Instructions, or Written Instructions to the Custodian
specifying: (a) the Reverse Repurchase Agreement being terminated
and the Series for which same was entered; (b) the total amount
payable by the Fund in connection with such termination; (c) the
amount and kind of Securities to be received by the Fund and
specifically allocated to such Series in connection with such
termination; (d) the date of termination; (e) the name of the
broker, dealer, or financial institution with whom the Reverse
Repurchase Agreement is to be terminated; and (f) the amount of
cash and/or the amount and kind of Securities to be withdrawn from
the Senior Securities Account for such Series. The Custodian shall,
upon receipt of the amount and kind of Securities to be received by
the Fund specified in the Certificate, Oral Instructions, or
Written Instructions, make the payment to the broker, dealer, or
financial institution and the withdrawals, if any, from the Senior
Security Account, specified in such Certificate, Oral Instructions,
or Written Instructions.
3. The Certificates, Oral Instructions, or Written
Instructions described in paragraphs 1 and 2 of this Article may
with respect to any particular Reverse Repurchase Agreement be
combined and delivered to the Custodian at the time of entering
into such Reverse Repurchase Agreement.
ARTICLE X
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities
specifically allocated to a Series held by the Custodian hereunder,
the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan: (a) the
Series to which the loaned Securities are specifically allocated;
(b) the name of the issuer and the title of the Securities, (c) the
number of shares or the principal amount loaned, (d) the date of
loan and delivery, (e) the total amount to be delivered to the
Custodian against the loan of the Securities, including the amount
of cash collateral and the premium, if any, separately identified,
and (f) the name of the broker, dealer, or financial institution
- 24 -
<PAGE>
to which the loan was made. The Custodian shall deliver the
Securities thus designated to the broker, dealer or financial
institution to which the loan was made upon receipt of the total
amount designated in the Certificate as to be delivered against the
loan of Securities. The Custodian may accept payment in connection
with a delivery otherwise than through the Book-Entry System or a
Depository only in the form of a certified or bank cashier's check
payable to the order of the Fund or the Custodian drawn on New York
Clearing House funds.
2. In connection with each termination of a loan of Securities
by the Fund, the Fund shall deliver or cause to be delivered to the
Custodian a Certificate specifying with respect to each such loan
termination and return of Securities: (a) the Series to which the
loaned Securities are specifically allocated; (b) the name of the
issuer and the title of the Securities to be returned, (c) the
number of shares or the principal amount to be returned, (d) the
date of termination, (e) the total amount to be delivered by the
Custodian (including the cash collateral for such Securities minus
any offsetting credits as described in said Certificate), and (f)
the name of the broker, dealer, or financial institution from which
the Securities will be returned. The Custodian shall receive all
Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt
thereof shall pay, out of the moneys held for the account of the
Fund, the total amount payable upon such return of Securities as
set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall establish a Senior Security Account and
from time to time make such deposits thereto, or withdrawals
therefrom, as specified in a Certificate. Such Certificate shall
specify the Series for which such deposit or withdrawal is to be
made and the amount of cash and/or the amount and kind of
Securities specifically allocated to such Series to be deposited
in, or withdrawn from, such Senior Security Account for such
Series. In the event that the Fund fails to specify in a
Certificate the Series, the name of the issuer, the title and the
number of shares or the principal amount of any particular
Securities to be deposited by the Custodian into, or withdrawn
from, a Senior Securities Account, the Custodian shall be under no
obligation to make any such deposit or withdrawal and shall
promptly notify the Fund that no such deposit has been made.
- 25 -
<PAGE>
2. The Custodian shall make deliveries or payments from a
Margin Account to the broker, dealer, futures commission merchant
or Clearing Member in whose name, or for whose benefit, the account
was established as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any Margin
Account shall be dealt with in accordance with the terms and
conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security
interest in and to any property at any time held by the Custodian
in any Collateral Account described herein. In accordance with
applicable law the Custodian may enforce its lien and realize on
any such property whenever the Custodian has made payment or
delivery pursuant to any Put Option guarantee letter or similar
document or any receipt issued hereunder by the Custodian. In the
event the Custodian should realize on any such property net
proceeds which are less than the Custodian's obligations under any
Put Option guarantee letter or similar document or any receipt,
such deficiency shall be a debt owed the Custodian by the Fund
within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund
with a statement with respect to each Margin Account in which money
or Securities are held specifying as of the close of business on
the previous business day: (a) the name of the Margin Account; (b)
the amount and kind of Securities held therein; and (c) the amount
of money held therein. The Custodian shall make available upon
request to any broker, dealer, or futures commission merchant
specified in the name of a Margin Account a copy of the statement
furnished the Fund with respect to such Margin Account.
6. The Custodian shall establish a Collateral Account and from
time to time shall make such deposits thereto as may be specified
in a Certificate. Promptly after the close of business on each
business day in which cash and/or Securities are maintained in a
Collateral Account for any Series, the Custodian shall furnish the
Fund with a statement with respect to such Collateral Account
specifying the amount of cash and/or the amount and kind of
Securities held therein. No later than the close of business next
succeeding the delivery to the Fund of such statement, the Fund
shall furnish to the Custodian a Certificate or Written
Instructions specifying the then market value of the Securities
described in such statement. In the event such then market value is
indicated to be less than the Custodian's obligation with respect
to any outstanding Put Option guarantee letter or similar document,
- 26 -
<PAGE>
the Fund shall promptly specify in a Certificate the additional
cash and/or Securities to be deposited in such Collateral Account
to eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the
resolution of the Board of Trustees of the Fund, certified by the
Secretary, the Clerk, any Assistant Secretary or any Assistant
Clerk, either (i) setting forth with respect to the Series
specified therein the date of the declaration of a dividend or
distribution, the date of payment thereof, the record date as of
which shareholders entitled to payment shall be determined, the
amount payable per Share of such Series to the shareholders of
record as of that date and the total amount payable to the Dividend
Agent and any sub-dividend agent or co-dividend agent of the Fund
on the payment date, or (ii) authorizing with respect to the Series
specified therein and the declaration of dividends and
distributions thereon the Custodian to rely on Oral Instructions,
Written Instructions, or a Certificate setting forth the date of
the declaration of such dividend or distribution, the date of
payment thereof, the record date as of which shareholders entitled
to payment shall be determined, the amount payable per Share of
such Series to the shareholders of record as of that date and the
total amount payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions, or Certificate, as the case may
be, the Custodian shall pay to the Transfer Agent Account out of
the moneys held for the account of the Series specified therein the
total amount payable to the Dividend Agent and any sub-dividend
agent or co-dividend agent of the Fund with respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver
or cause to be delivered, to the Custodian a Certificate duly
specifying:
(a) The Series, the number of Shares sold, trade
date, and price; and
- 27 -
<PAGE>
(b) The amount of money to be received by the Custodian
for the sale of such Shares and specifically allocated to the
separate account in the name of such Series.
2. Upon receipt of such money from the Transfer Agent, the
Custodian shall credit such money to the separate account in the
name of the Series for which such money was received.
3. Upon issuance of any Shares of any Series the Custodian
shall pay, out of the money held for the account of such Series,
all original issue or other taxes required to be paid by the Fund
in connection with such issuance upon the receipt of a Certificate
specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires
the Custodian to make payment out of the money held by the
Custodian hereunder in connection with a redemption of any Shares,
it shall furnish, or cause to be furnished, to the Custodian a
Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt of an advice from an Authorized Person setting
forth the Series and number of Shares received by the Transfer
Agent for redemption and that such Shares are in good form for
redemption, the Custodian shall make payment to the Transfer Agent
Account out of the moneys held in the separate account in the name
of the Series the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian, should in its sole discretion advance
funds on behalf of any Series which results in an overdraft because
the moneys held by the Custodian in the separate account for such
Series shall be insufficient to pay the total amount payable upon a
purchase of Securities specifically allocated to such Series, as
set forth in a Certificate, Oral Instructions, or Written
Instructions or which results in an overdraft in the separate
account of such Series for some other reason, or if the Fund is for
any other reason indebted to the Custodian with respect to a
Series, (except a borrowing for investment or for temporary or
emergency purposes using Securities as collateral pursuant to a
separate agreement and subject to the provisions of paragraph 2 of
this Article), such overdraft or indebtedness shall be deemed to be
a loan made by the Custodian to the Fund
- 28 -
<PAGE>
for such Series payable on demand and shall bear interest from the
date incurred at a rate per annum (based on a 360-day year for the
actual number of days involved) equal to the Federal Funds Rate
plus 1/2%, such rate to be adjusted on the effective date of any
change in such Federal Funds Rate but in no event to be less than
6% per annum. In addition, the Fund hereby agrees that the
Custodian shall have a continuing lien and security interest in the
aggregate amount of such overdrafts and indebtedness as may from
time to time exist in and to any property specifically allocated to
such Series at any time held by it for the benefit of such Series
or in which the Fund may have an interest which is then in the
Custodian's possession or control or in possession or control of
any third party acting in the Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, at any time to
charge any such overdraft or indebtedness together with interest
due thereon against any money balance of account standing to such
Series' credit on the Custodian's books. In addition, the Fund
hereby covenants that on each Business Day on which either it
intends to enter a Reverse Repurchase Agreement and/ or otherwise
borrow from a third party, or which next succeeds a Business Day on
which at the close of business the Fund had outstanding a Reverse
Repurchase Agreement or such a borrowing, it shall prior to 9 a.m.,
New York City time, advise the Custodian, in writing, of each such
borrowing, shall specify the Series to which the same relates, and
shall not incur any indebtedness, including pursuant to any Reverse
Repurchase Agreement, not so specified other than from the
Custodian.
2. The Fund will cause to be delivered to the Custodian by any
bank (including, if the borrowing is pursuant to a separate
agreement, the Custodian) from which it borrows money for
investment or for temporary or emergency purposes using Securities
held by the Custodian hereunder as collateral for such borrowings,
a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund
against delivery of a stated amount of collateral. The Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to each such borrowing: (a) the Series to which such
borrowing relates; (b) the name of the bank, (c) the amount and
terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund,
or other loan agreement, (d) the time and date, if known, on which
the loan is to be entered into, (e) the date on which the loan
becomes due and payable, (f) the total amount payable to the Fund
on the borrowing date, (g) the market value of Securities to be
delivered as collateral for such loan, including the name of the
issuer, the title and the number of shares or the principal amount
of any particular Securities, and (h) a statement specifying
whether such loan is for investment purposes or for temporary or
emergency purposes and that such loan is in conformance with the
Investment Company Act of 1940 and the Fund's prospectus. The
Custodian shall deliver on the
- 29 -
<PAGE>
borrowing date specified in a Certificate the specified collateral
and the executed promissory note, if any, against delivery by the
lending bank of the total amount of the loan payable, provided that
the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank,
keep such collateral in its possession, but such collateral shall
be subject to all rights therein given the lending bank by virtue
of any promissory note or loan agreement. The Custodian shall
deliver such Securities as additional collateral as may be
specified in a Certificate to collateralize further any transaction
described in this paragraph. The Fund shall cause all Securities
released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time such
return of collateral as may be tendered to it. In the event that
the Fund fails to specify in a Certificate the Series, the name of
the issuer, the title and number of shares or the principal amount
of any particular Securities to be delivered as collateral by the
Custodian, to any such bank, the Custodian shall not be under any
obligation to deliver any Securities.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. The Custodian shall use reasonable care in the performance
of its duties hereunder, and, except as hereinafter provided,
neither the Custodian nor its nominee shall be liable for any loss
or damage, including counsel fees, resulting from its action or
omission to act or otherwise, either hereunder or under any Margin
Account Agreement, except for any such loss or damage arising out
of its own negligence, bad faith, or willful misconduct or that of
its officers, employees, or agents. The Custodian may, with respect
to questions of law arising hereunder or under any Margin Account
Agreement, apply for and obtain the advice and opinion of counsel
to the Fund, at the expense of the Fund, or of its own counsel, at
its own expense, and shall be fully protected with respect to
anything done or omitted by it in good faith in conformity with
such advice or opinion. The Custodian shall be liable to the Fund
for any loss or damage resulting from the use of the Book-Entry
System or any Depository arising by reason of any negligence or
willful misconduct on the part of the Custodian or any of its
employees or agents.
2. Notwithstanding the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be li-
able for:
- 30 -
<PAGE>
(a) The validity (but not the authenticity) of the issue
of any Securities purchased, sold, or written by or for the Fund,
the legality of the purchase, sale or writing thereof, or the
propriety of the amount paid or received therefor, as specified in
a Certificate, Oral Instructions, or Written Instructions;
(b) The legality of the sale or redemption of any
Shares, or the propriety of the amount to be received or paid
therefor, as specified in a Certificate;
(c) The legality of the declaration or payment of
any dividend by the Fund, as specified in a resolution,
Certificate, Oral Instructions, or Written Instructions;
(d) The legality of any borrowing by the Fund using
Securities as collateral;
(e) The legality of any loan of portfolio Securities, nor
shall the Custodian be under any duty or obligation to see to it
that the cash collateral delivered to it by a broker, dealer, or
financial institution or held by it at any time as a result of such
loan of portfolio Securities of the Fund is adequate collateral for
the Fund against any loss it might sustain as a result of such
loan, except that this sub- paragraph shall not excuse any
liability the Custodian may have for failing to act in accordance
with Article X hereof or any Certificate, Oral Instructions, or
Written Instructions given in accordance with this Agreement. The
Custodian specifically, but not by way of limitation, shall not be
under any duty or obligation periodically to check or notify the
Fund that the amount of such cash collateral held by it for the
Fund is sufficient collateral for the Fund, but such duty or
obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to see
that any broker, dealer or financial institution to which portfolio
Securities of the Fund are lent pursuant to Article X of this
Agreement makes payment to it of any dividends or interest which
are payable to or for the account of the Fund during the period of
such loan or at the termination of such loan, provided, however,
that the Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due; or
(f) The sufficiency or value of any amounts of money
and/or Securities held in any Margin Account, Senior Security
Account or Collateral Account in connection with transactions by
the Fund, except that this sub-paragraph shall not excuse any
liability the Custodian may have for failing to establish,
maintain, make deposits to or withdrawals from such accounts in
accordance with this Agreement. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer, futures
commission merchant or Clearing Member makes payment to the Fund of
any variation margin payment or
- 31 -
<PAGE>
similar payment which the Fund may be entitled to receive from such
broker, dealer, futures commission merchant or Clearing Member, to
see that any payment received by the Custodian from any broker,
dealer, futures commission merchant or Clearing Member is the
amount the Fund is entitled to receive, or to notify the Fund of
the Custodian's receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be
the Custodian of, any money, whether or not represented by any
check, draft, or other instrument for the payment of money,
received by it on behalf of the Fund until the Custodian actually
receives such money directly or by the final crediting of the
account representing the Fund's interest at the Book-Entry System
or the Depository.
4. With respect to Securities held in a Depository, except as
otherwise provided in paragraph 5(b) of Article III hereof, the
Custodian shall have no responsibility and shall not be liable for
ascertaining or acting upon any calls, conversions, exchange
offers, tenders, interest rate changes or similar matters relating
to such Securities, unless the Custodian shall have actually
received timely notice from the Depository in which such Securities
are held. In no event shall the Custodian have any responsibility
or liability for the failure of a Depository to collect, or for the
late collection or late crediting by a Depository of any amount
payable upon Securities deposited in a Depository which may mature
or be redeemed, retired, called or otherwise become payable.
However, upon receipt of a Certificate from the Fund of an overdue
amount on Securities held in a Depository the Custodian shall make
a claim against the Depository on behalf of the Fund, except that
the Custodian shall not be under any obligation to appear in,
prosecute or defend any action suit or proceeding in respect to any
Securities held by a Depository which in its opinion may involve it
in expense or liability, unless indemnity satisfactory to it
against all expense and liability be furnished as often as may be
required, or alternatively, the Fund shall be subrogated to the
rights of the Custodian with respect to such claim against the
Depository should it so request in a Certificate. This paragraph
shall not, however, excuse any failure by the Custodian to act in
accordance with a Certificate, Oral Instructions, or Written
Instructions given in accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation to
take action to effect collection of any amount due to the Fund from
the Transfer Agent of the Fund nor to take any action to effect
payment or distribution by the Transfer Agent of the Fund of any
amount paid by the Custodian to the Transfer Agent of the Fund in
accordance with this Agreement.
- 32 -
<PAGE>
6. The Custodian shall not be under any duty or obligation to
take action to effect collection of any amount if the Securities
upon which such amount is payable are in default, or if payment is
refused after the Custodian has timely and properly, in accordance
with this Agreement, made due demand or presentation, unless and
until (i) it shall be directed to take such action by a Certificate
and (ii) it shall be assured to its satisfaction of reimbursement
of its costs and expenses in connection with any such action, but
the Custodian shall have such a duty if the Securities were not in
default on the payable date and the Custodian failed to timely and
properly make such demand for payment and such failure is the
reason for the non-receipt of payment.
7. The Custodian may appoint one or more banking institutions
as Sub-Custodian or Sub-Custodians, or as Co-Custodian or
Co-Custodians including, but not limited to, banking institutions
located in foreign countries, of Securities and moneys at any time
owned by the Fund, upon such terms and conditions as may be
approved in a Certificate or contained in an agreement executed by
the Custodian, the Fund and the appointed institution.
8. The Custodian agrees to indemnify the Fund against and save
the Fund harmless from all liability, claims, losses and demands
whatsoever, including attorney's fees, howsoever arising or
incurred because of the negligence, bad faith or willful misconduct
of any Sub-Custodian of the Securities and moneys owned by the
Fund, provided such Sub-Custodian is a banking institution located
in a foreign country and appointed by the Custodian pursuant to
paragraph 7 of this Article.
9. The Custodian shall not be under any duty or obligation (a)
to ascertain whether any Securities at any time delivered to, or
held by it, for the account of the Fund and specifically allocated
to a Series are such as properly may be held by the Fund or such
Series under the provisions of its then current prospectus, or (b)
to ascertain whether any transactions by the Fund, whether or not
involving the Custodian, are such transactions as may properly be
engaged in by the Fund.
10. The Custodian shall be entitled to receive and the Fund
agrees to pay to the Custodian all reasonable out-of-pocket
expenses and such compensation as may be agreed upon from time to
time between the Custodian and the Fund. The Custodian may charge
such compensation, and any such expenses with respect to a Series
incurred by the Custodian in the performance of its duties under
this Agreement against any money specifically allocated to such
Series. The Custodian shall also be entitled to charge against any
money held by it for the account of a Series the amount of any
loss, damage, liability or expense, including counsel fees, for
which it
- 33 -
<PAGE>
shall be entitled to reimbursement under the provisions of this
Agreement attributable to, or arising out of, its serving as
Custodian for such Series. The expenses for which the Custodian
shall be entitled to reimbursement hereunder shall include, but are
not limited to, the expenses of sub-custodians and foreign branches
of the Custodian incurred in settling outside of New York City
transactions involving the purchase and sale of Securities of the
Fund. Notwithstanding the foregoing or anything else contained in
this Agreement to the contrary, the Custodian shall, prior to
effecting any charge for compensation, expenses, or any overdraft
or indebtedness or interest thereon, submit an invoice therefor to
the Fund.
11. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing, Oral
Instructions, or Written Instructions received by the Custodian and
reasonably believed by the Custodian to be genuine. The Fund agrees
to forward to the Custodian a Certificate or facsimile thereof
confirming Oral Instructions or Written Instructions in such manner
so that such Certificate or facsimile thereof is received by the
Custodian, whether by hand delivery, telecopier or other similar
device, or otherwise, by the close of business of the same day that
such Oral Instructions or Written Instructions are given to the
Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way
affect the validity of the transactions or enforceability of the
transactions thereby authorized by the Fund. The Fund agrees that
the Custodian shall incur no liability to the Fund in acting upon
Oral Instructions or Written Instructions given to the Custodian
hereunder concerning such transactions provided such instructions
reasonably appear to have been received from an Authorized Person.
12. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian and
reasonably believed by the Custodian to be given in accordance with
the terms and conditions of any Margin Account Agreement. Without
limiting the generality of the foregoing, the Custodian shall be
under no duty to inquire into, and shall not be liable for, the
accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any
specification of any amount to be paid to a broker, dealer, futures
commission merchant or Clearing Member. This paragraph shall not
excuse any failure by the Custodian to have acted in accordance
with any Margin Agreement it has executed or any Certificate, Oral
Instructions, or Written Instructions given in accordance with this
Agreement.
13. The books and records pertaining to the Fund, as
described in Appendix E hereto, which are in the possession of
the Custodian shall be the property of the Fund. Such books
- 34 -
<PAGE>
and records shall be prepared and maintained by the Custodian as
required by the Investment Company Act of 1940, as amended, and
other applicable securities laws and rules and regulations. The
Fund, or the Fund's authorized representatives, shall have access
to such books and records during the Custodian's normal business
hours. Upon the reasonable request of the Fund, copies of any such
books and records shall be provided by the Custodian to the Fund or
the Fund's authorized representative, and the Fund shall reimburse
the Custodian its expenses of providing such copies. Upon
reasonable request of the Fund, the Custodian shall provide in hard
copy or on micro-film, whichever the Custodian elects, any records
included in any such delivery which are maintained by the Custodian
on a computer disc, or are similarly maintained, and the Fund shall
reimburse the Custodian for its expenses of providing such hard
copy or micro-film.
14. The Custodian shall provide the Fund with any report
obtained by the Custodian on the system of internal accounting
control of the Book-Entry System, each Depository or O.C.C., and
with such reports on its own systems of internal accounting control
as the Fund may reasonably request from time to time.
15. The Custodian shall furnish upon request annually to the
Fund a letter prepared by the Custodian's accountants with respect
to the Custodian's internal systems and controls in the form
generally provided by the Custodian to other investment companies
for which the Custodian acts as custodian.
16. The Fund agrees to indemnify the Custodian against and
save the Custodian harmless from all liability, claims, losses and
demands whatsoever, including attorney's fees, howsoever arising
out of, or related to, the Custodian's performance of its
obligations under this Agreement, except for any such liability,
claim, loss and demand arising out of the Custodian's own
negligence, bad faith, or willful misconduct or that of its
officers, employees, or agents.
17. Subject to the foregoing provisions of this Agreement, the
Custodian shall deliver and receive Securities, and receipts with
respect to such Securities, and shall make and receive payments
only in accordance with the customs prevailing from time to time
among brokers or dealers in such Securities.
18. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are
specifically set forth in this Agreement, and no covenant or
obligation shall be implied in this Agreement against the
Custodian.
- 35 -
<PAGE>
ARTICLE XVI
TERMINATION
1. Except as provided in paragraph 3 of this Article, this
Agreement shall continue until terminated by either the Custodian
giving to the Fund, or the Fund giving to the Custodian, a notice
in writing specifying the date of such termination, which date
shall be not less than 60 days after the date of the giving of such
notice. In the event such notice or a notice pursuant to paragraph
3 of this Article is given by the Fund, it shall be accompanied by
a copy of a resolution of the Board of Trustees of the Fund,
certified by an Officer and the Secretary or an Assistant Secretary
of the Fund, electing to terminate this Agreement and designating a
successor custodian or custodians, each of which shall be eligible
to serve as a custodian for the securities of a management
investment company under the Investment Company Act of 1940. In the
event such notice is given by the Custodian, the Fund shall, on or
before the termination date, deliver to the Custodian a copy of a
resolution of the Board of Trustees of the Fund, certified by the
Secretary, the Clerk, any Assistant Secretary or any Assistant
Clerk, designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may
designate a successor custodian which shall be a bank or trust
company having not less than $2,000,000 aggregate capital, surplus
and undivided profits. Upon the date set forth in such notice this
Agreement shall terminate, and the Custodian shall upon receipt of
a notice of acceptance by the successor custodian on that date
deliver directly to the successor custodian all Securities and
moneys then owned by the Fund and held by it as Custodian, after
deducting all fees, expenses and other amounts for the payment or
reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or
the Custodian in accordance with the preceding paragraph, the Fund
shall upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all Securities
(other than Securities held in the Book-Entry System which cannot
be delivered to the Fund) and moneys then owned by the Fund be
deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in
the Book Entry System which cannot be delivered to the Fund to hold
such Securities hereunder in accordance with this Agreement.
3. Notwithstanding the foregoing, the Fund may
terminate this Agreement upon the date specified in a written
notice in the event of the "Bankruptcy" of The Bank of New York. As
used in this sub-paragraph, the term "Bankruptcy"
- 36 -
<PAGE>
shall mean The Bank of New York's making a general assignment,
arrangement or composition with or for the benefit of its
creditors, or instituting or having instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or the
entry of a order for relief under any applicable bankruptcy law or
any other relief under any bankruptcy or insolvency law or other
similar law affecting creditors' rights, or if a petition is
presented for the winding up or liquidation of the party or a
resolution is passed for its winding up or liquidation, or it
seeks, or becomes subject to, the appointment of an administrator,
receiver, trustee, custodian or other similar official for it or
for all or substantially all of its assets or its taking any action
in furtherance or, or indicating its consent to approval of, or
acquiescence in, any of the foregoing.
ARTICLE XVII
TERMINAL LINK
1. At no time and under no circumstances shall the Fund be
obligated to have or utilize the Terminal Link, and the provisions
of this Article shall apply if, but only if, the Fund in its sole
and absolute discretion elects to utilize the Terminal Link.
2. The parties hereto shall utilize the Terminal Link only for
the purpose of the Fund providing Certificates to the Custodian and
only after the Fund and the Custodian shall have established access
codes and internal safekeeping procedures to safeguard and protect
the confidentiality and availability of such access codes. Each use
of the Terminal Link by the Fund shall constitute a representation
and warranty that at least two such access codes have been utilized
and that such procedures have been established.
3. Each party shall obtain and maintain at its own cost and
expense all equipment and services, including, but not limited to
communications services, necessary for it to utilize the Terminal
Link, and the Custodian shall not be responsible for the
reliability or availability of any such equipment or services
used in connection with the Terminal Link.
4. The Fund acknowledges that any data bases made available as
part of, or through the Terminal and any proprietary data,
software, processes, information and documentation (other than any
such which are or become part of the public domain or are legally
required to be made available to the public) (collectively, the
"Information"), are the exclusive and confidential property of the
Custodian. The Fund shall, and shall cause others to which it
discloses the Information, to keep the Information confidential by
using the
- 37 -
<PAGE>
same care and discretion it uses with respect to its own
confidential property and trade secrets, and shall neither make nor
permit any disclosure without the express prior written consent of
the Custodian.
5. Upon termination of this Agreement for any reason, each
Fund shall return to the Custodian any and all copies of the
Information which are in the Fund's possession or under its
control, or which the Fund distributed to third parties. The
provisions of this Article shall not affect the copyright status of
any of the Information which may be copyrighted and shall apply to
all Information whether or not copyrighted.
6. The Custodian reserves the right to modify the Terminal
Link from time to time without notice to the Fund, and the Fund
agrees not to modify or attempt to modify the Terminal Link without
the Bank's prior written consent. The Fund acknowledges that the
Terminal Link is the property of the Custodian and, accordingly,
the Fund agrees that any modifications to the Terminal Link, whether
by the Fund or the Custodian and whether with or without the
Custodian's consent, shall become the property of the Custodian.
7. Neither the Custodian nor any manufacturers and suppliers
it utilizes or any Fund utilizes in connection with the Terminal
Link makes any warranties or representations, express or implied,
in fact or in law, including but not limited to warranties of
merchantability and fitness for a particular purpose.
8. Each party will, and will cause its officers and employees
to, treat the user and authorization codes, passwords and
authentication keys applicable to Terminal Link with extreme care.
The Custodian is hereby irrevocably authorized to act in accordance
with and rely on Certificates received by it through the Terminal
Link. The Fund acknowldges that it is its sole responsibility to
assure that only authorized persons use the Terminal Link, and that
the Custodian shall not be responsible nor liable therefor.
9. Notwithstanding anything else in this Agreement to the
contrary, the Custodian shall have no liability for any losses,
damages, injuries, claims, costs or expenses of a Fund arising out
of or in connection with the Terminal Link except for money damages
suffered as the direct result of the gross negligence of the
Custodian in an amount not exceeding, in the aggregate for all such
losses, damages, injuries, claims, costs and expenses of a Fund
arising during any month, one month's average total monthly charges
paid by the Fund to the Custodian for the Terminal Link and
services hereunder which caused such loss, damage, injury, claim,
cost or expense during the 12 months preceding the month in
question, or such lesser number of months as the Terminal Link has
been available to the Fund if less than 12 months, provided,
however,
- 38 -
<PAGE>
that the Custodian shall have no liability under this Section 9
if the other party fails to comply with the provisions of Section
11.
10. Without limiting the generality of the foregoing, it is
hereby agreed that in no event shall the Custodian or any
manufacturer or supplier of its computer equipment, software or
services relating to the Terminal Link be responsible for any
special, indirect, incidental or consequential damages which the
Fund may incur or experience by reason of its having entered into
or relied on this Agreement or arising out of or in connection with
the Terminal Link and services hereunder, even if the Custodian or
such manufacturer or supplier has been advised of the possibility
of such damages nor shall the Custodian or any such manufacturer or
supplier be liable for acts of God, machine or computer breakdown
or malfunction, interruption or malfunction of communication
facilities, labor difficulties or any other similar or dissimilar
cause beyond such persons's reasonable control.
11. The Fund shall notify the Custodian of any errors, omissions
or interruptions in, or delay or unavailability of, the Terminal
Link as promptly as practicable, and in any event within 24 hours
after the earliest of (i) discovery thereof, (ii) the date discovery
should have occurred through the exercise of reasonable care and
(iii) in the case of any error, the date of the earlies notice to
such Fund which reflects such error.
ARTICLE XVIII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two
of the present Officers of the Fund under its seal, setting forth
the names and the signatures of the present Authorized Persons. The
Fund agrees to furnish to the Custodian a new Certificate in
similar form in the event that any such present Authorized Person
ceases to be an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until such
new Certificate shall be received, the Custodian shall be entitled
to rely and to act upon Oral Instructions, Written Instructions, or
signatures of the present Authorized Persons as set forth in the
last delivered Certificate to the extent provided by this
Agreement.
2. Annexed hereto as Appendix B is a Certificate signed by two
of the present Officers of the Fund under its seal, setting forth
the names and the signatures of the present Officers of the Fund.
The Fund agrees to furnish to the
- 39 -
<PAGE>
Custodian a new Certificate in similar form in the event any such
present Officer ceases to be an Officer of the Fund, or in the
event that other or additional Officers are elected or appointed.
Until such new Certificate shall be received, the Custodian shall
be entitled to rely and to act upon the signatures of the Officers
as set forth in the last delivered Certificate to the extent
provided by this Agreement.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, other than
any Certificate or Written Instructions, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it
at its offices at 90 Washington Street, New York, New York 10286,
or at such other place as the Custodian may from time to time
designate in writing.
4. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Fund shall be
sufficiently given if addressed to the Fund and mailed or delivered
to it at its office at the address for the Fund first above
written, or at such other place as the Fund may from time to time
designate in writing.
5. This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the
same formality as this Agreement and approved by a resolution of
the Board of Trustees of the Fund, except that Appendices A and B
may be amended unilaterally by the Fund without such an approving
resolution.
6. This Agreement shall extend to and shall be binding upon
the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by
the Fund without the written consent of the Custodian, or by the
Custodian or The Bank of New York without the written consent of
the Fund, authorized or approved by a resolution of the Fund's
Board of Trustees. For purposes of this paragraph, no merger,
consolidation, or amalgamation of the Custodian, The Bank of New
York, or the Fund shall be deemed to constitute an assignment of
this Agreement.
7. This Agreement shall be construed in accordance with the
laws of the State of New York without giving effect to conflict of
laws principles thereof. Each party hereby consents to the
jurisdiction of a state or federal court situated in New York City,
New York in connection with any dispute arising hereunder and
hereby waives its right to trial by jury.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but
such counterparts shall, together, constitute only one instrument.
- 40 -
<PAGE>
9. A copy of the Declaration of Trust of the Fund is on file
with the Secretary of The Commonwealth of Massachusetts, and notice
is hereby given that this instrument is executed on behalf of the
Board of Trustees of the Fund as Trustees and not individually and
that the obligations of this instrument are not binding upon any of
the Trustees or shareholders individually but are binding only upon
the assets and property of the Fund; provided, however, that the
Declaration of Trust of the Fund provides that the assets of a
particular Series of the Fund shall under no circumstances be
charged with liabilities attributable to any other Series of the
Fund and that all persons extending credit to, or contracting with
or having any claim against a particular Series of the Fund shall
look only to the assets of that particular Series for payment of
such credit, contract or claim.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers, thereunto
duly authorized and their respective seals to be hereunto affixed,
as of the day and year first above written.
DEAN WITTER SHORT-TERM
U.S. TREASURY TRUST
[SEAL] By: /s/
-----------------------
Attest:
/s/
----------------------------
THE BANK OF NEW YORK
[SEAL] By: /s/
-----------------------
Attest:
/s/
-----------------------------
- 41 -
<PAGE>
APPENDIX A
I, , President and I,
, of
, a Massachusetts business trust (the
"Fund"), do hereby certify that:
The following individuals have been duly authorized by the
Board of Trustees of the Fund in conformity with the Fund's
Declaration of Trust and By-Laws to give Oral Instructions and
Written Instructions on behalf of the Fund, except that those
persons designated as being an "Officer of DWTC" shall be an
Authorized Person only for purposes of Articles XII and XIII. The
signatures set forth opposite their respective names are their true
and correct signatures:
Name Position Signature
----------------- ---------------- -----------------
<PAGE>
APPENDIX B
I, , President and I,
, of , a
Massachusetts business trust (the "Fund"), do hereby certify that:
The following individuals for whom a position other than
"Officer of DWTC" is specified serve in the following positions
with the Fund and each has been duly elected or appointed by the
Board of Trustees of the Fund to each such position and qualified
therefor in conformity with the Fund's Declaration of Trust and
By-Laws. With respect to the following individuals for whom a
position of "Officer of DWTC" is specified, each such individual
has been designated by a resolution of the Board of Trustees of the
Fund to be an Officer for purposes of the Fund's Custody Agreement
with The Bank of New York, but only for purposes of Articles XII
and XIII thereof and a certified copy of such resolution is
attached hereto. The signatures of each individual below set forth
opposite their respective names are their true and correct
signatures:
Name Position Signature
-------------------- ------------------- -----------------
<PAGE>
APPENDIX C
The undersigned, hereby certifies that he or
she is the duly elected and acting of
(the
"Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held
on , , at which a quorum was at all times present and
that such resolution has not been modified or rescinded and is in
full force and effect as of the date hereof.
RESOLVED, that The Bank New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated
as of , 1991 (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis to act in accordance
with, and to rely on instructions by the Fund to the Custodian
communicated by a Terminal Link as defined in the Custody
Agreement.
RESOLVED, that the Fund shall establish access codes and grant
use of such access codes only to officers of the Fund as defined in
the Custody Agreement, and shall establish internal safekeeping
procedures to safeguard and protect the confidentiality and
availability of such access codes.
RESOLVED, that Officers of the Fund as defined in the Custody
Agreement shall, following the establishment of such access codes
and such internal safekeeping procedures, advise the Custodian that
the same have been established by delivering a Certificate, as
defined in the Custody Agreement, and the Custodian shall be
entitled to rely upon such advice.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of , as of the day of
, .
/s/
-----------------
[SEAL]
<PAGE>
APPENDIX D
I, , an Assistant Vice President with THE BANK
OF NEW YORK do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
<PAGE>
APPENDIX E
The following books and records pertaining to Fund shall be
prepared and maintained by the Custodian and shall be the property
of the Fund:
<PAGE>
EXHIBIT A
CERTIFICATION
The undersigned, Sheldon Curtis , hereby certifies that he or
she is the duly elected and acting Vice President of
, a Massachusetts business Trust (the
"Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held
on June 3, 1993, at which a quorum was at all times present and
that such resolution has not been modified or rescinded and is in
full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New York
and the Fund dated as of , 1991, (the "Custody
Agreement") is authorized and instructed on a continuous and
ongoing basis to deposit in the Book-Entry System, as defined
in the Custody Agreement, all securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Book-Entry System
to the extent possible in connection with its performance
thereunder, including, without limitation, in connection with
settlements of purchases and sales of securities, loans of
securities, and deliveries and returns of securities
collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of
, as of the day of
, 1991.
/s/
--------------------------------
[SEAL]
<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned, , hereby certifies that he or
she is the duly elected and acting Vice President of
, a Massachusetts business Trust (the
"Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held
on , 1991, at which a quorum was at all times present and
that such resolution has not been modified or rescinded and is in
full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New York
and the Fund dated as of , 1991, (the "Custody
Agreement") is authorized and instructed on a continuous and
ongoing basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary to deposit
in The Depository Trust Company ("DTC"), as a "Depository" as
defined in the Custody Agreement, all securities eligible for
deposit therein, regardless of the Series to which the same
are specifically allocated, and to utilize DTC to the extent
possible in connection with its performance thereunder,
including, without limitation, in connection with settlements
of purchases and sales of securities, loans of securities, and
deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of , as of the day of
, 1991.
/s/
--------------------------------
[SEAL]
<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, , hereby certifies that he or
she is the duly elected and acting Vice President of
a Massachusetts business Trust (the
"Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held
on , 1991, at which a quorum was at all times present and
that such resolution has not been modified or rescinded and is in
full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New York
and the Fund dated as of , 1991 (the "Custody
Agreement") is authorized and instructed on a continuous and
ongoing basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary to deposit
in the Participants Trust Company as a Depository, as defined
in the Custody Agreement, all securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Participants Trust
Company to the extent possible in connection with its
performance thereunder, including, without limitation, in
connection with settlements of purchases and sales of
securities, loans of securities, and deliveries and returns of
securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of , as of the day of
, 1991.
/s/
-----------------------------------
[SEAL]
<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, , hereby certifies that he or
she is the duly elected and acting Vice President of
, a Massachusetts business Trust (the
"Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held
on , 1991, at which a quorum was at all times present and
that such resolution has not been modified or rescinded and is in
full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New York
and the Fund dated as of , 1991, (the "Custody
Agreement") is authorized and instructed on a continuous and
ongoing basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary, to accept,
utilize and act with respect to Clearing Member confirmations
for Options and transaction in Options, regardless of the
Series to which the same are specifically allocated, as such
terms are defined in the Custody Agreement, as provided in the
Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of , as of the day of
, 1991.
/s/
---------------------------
[SEAL]
AMENDMENT TO CUSTODY AGREEMENT
Amendment made as of this 17th day of April, 1996 by and between Dean
Witter Short-Term U.S. Treasury Trust (the "Fund") and The Bank of New York (the
"Custodian") to the Custody Agreement between the Fund and the Custodian dated
August 8, 1991 (the "Custody Agreement"). The Custody Agreement is hereby
amended as follows:
Article XV Section 8 of the Custody Agreement shall be deleted and be
replaced by Sections 8.(a), 8.(b) and 8.(c) as set forth below:
"8. (a) The Custodian will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of Securities and moneys
owned by the Fund. The Custodian shall indemnify the Fund against and save the
Fund harmless from all liability, claims, losses and demands whatsoever,
including attorneys' fees, howsoever arising or incurred as the result of the
failure of a subcustodian which is a banking institution located in a foreign
country and identified on Schedule A attached hereto and as amended from time
to time upon mutual agreement of the parties (each, a "Subcustodian") to
exercise reasonable care with respect to the safekeeping of such Securities
and moneys to the same extent that the Custodian would be liable to the Fund
if the Custodian were holding such securities and moneys in New York. In the
event of any loss to the Fund by reason of the failure of the Custodian or a
Subcustodian to utilize reasonable care, the Custodian shall be liable to the
Fund only to the extent of the Fund's direct damages, to be determined based
on the market value of the Securities and moneys which are the subject of the
loss at the date of discovery of such loss and without reference to any
special conditions or circumstances.
8. (b) The Custodian shall not be liable for any loss which results
from (i) the general risk of investing, or (ii) investing or holding
Securities and moneys in a particular country including, but not limited to,
losses resulting from nationalization, expropriation or other governmental
actions; regulation of the banking or securities industry; currency
restrictions, devaluations or fluctuations; or market conditions which prevent
the orderly execution of securities transactions or affect the value of
Securities or moneys.
8. (c) Neither party shall be liable to the other for any loss due
to forces beyond its control including, but not limited to, strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear fusion,
fission or radiation, or acts of God."
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective Officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
[SEAL] By:
------------------------
Attest:
- ------------------
THE BANK OF NEW YORK
[SEAL] By:
-------------------------
Attest:
- -------------------
SCHEDULE A
COUNTRY/MARKET SUBCUSTODIAN
- -------------- ------------
Argentina The Bank of Boston
Australia ANZ Banking Group Limited
Austria Girocredit Bank AG
Bangladesh* Standard Charted Bank
Belgium Banque Bruxelles Lambert
Botswana* Stanbic Bank Botswana Ltd.
Brazil The Bank of Boston
Canada Royal Trust/Royal Bank of Canada
Chile The Bank of Boston/Banco de Chile
China Standard Charted Bank
Columbia Citibank, N.A.
Denmark Den Danske Bank
Euromarket CEDEL
Euroclear
First Chicago Clearing Centre
Finland Union Bank of Finland
France Banque Paribas/Credit Commercial de France
Germany Dresdner Bank A.G.
Ghana* Merchant Bank Ghana Ltd.
Greece Alpha Credit Bank
Hong Kong Hong Kong and Shanghai Banking Corp.
Indonesia Hong Kong and Shanghai Banking Corp.
Ireland Allied Irish Bank
Israel Israel Discount Bank
Italy Banca Commerciale Italiana
Japan Yasuda Trust & Banking Co., Lt.
Korea Bank of Seoul
Luxembourg Kredietbank S.A.
Malaysia Hong Kong Bank Malaysia Berhad
Mexico Banco Nacional de Mexico (Banamex)
Netherlands Mees Pierson
New Zealand ANZ Banking Group Limited
Norway Den Norske Bank
Pakistan Standard Chartered Bank
Peru Citibank N.A.
Philippines Hong Kong and Shanghai Banking Corp.
Poland Bank Handlowy w Warsawie
Portugal Banco Comercial Portugues
Singapore United Overseas Bank
South Africa Standard Bank of South Africa Limited
Spain Banco Bilbao Vizcaya
Sri Lanka Standard Chartered Bank
SCHEDULE A
COUNTRY/MARKET SUBCUSTODIAN
- -------------- ------------
Sweden Skandinaviska Enskilda Banken
Switzerland Union Bank of Switzerland
Taiwan Hong Kong and Shanghai Banking Corp.
Thailand Siam Commercial Bank
Turkey Citibank N.A.
United Kingdom The Bank of New York
United States The Bank of New York
Uruguay The Bank of Boston
Venezuela Citibank N.A.
Zimbabwe* Stanbic Bank Zimbabwe Ltd.
* Not yet 17(f) 5 compliant
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 6 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated July
10, 1996, relating to the financial statements and financial highlights of Dean
Witter Short-Term U.S. Treasury Trust, which appears in such Statement of
Additional Information, and to the incorporation by reference of our report into
the Prospectus which constitutes part of this Registration Statement. We also
consent to the references to us under the headings "Independent Accountants" and
"Experts" in such Statement of Additional Information and to the reference to us
under the heading "Financial Highlights" in such prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
July 10, 1996
<PAGE>
AMENDED AND RESTATED PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
OF
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
Whereas, Dean Witter Short-Term U.S. Treasury Trust (the "Fund") is engaged
in business as an open-end management investment company and is registered as
such under the Investment Company Act of 1940, as amended (the "Act"); and
Whereas, on July 22, 1991, the Fund and Dean Witter Reynolds Inc. ("DWR")
entered into a separate Distribution Agreement, pursuant to which the Fund
employed DWR as distributor of the Fund's shares; and
Whereas, on July 22, 1991, the Fund adopted a Plan and Agreement of
Distribution pursuant to Rule 12b-1 under the Act, and the Trustees then
determined that there was a reasonable likelihood that the Plan of
Distribution would benefit the Fund and its shareholders; and
Whereas, the Trustees believe that continuation of said Plan of
Distribution, as amended and restated herein, is reasonably likely to
continue to benefit the Fund and its shareholders; and
Whereas, on January 4, 1993, the Fund and DWR substituted Dean Witter
Distributors Inc. (the "Distributor") in the place of DWR as distributor of
the Fund's shares; and
Whereas, the Fund, DWR and the Distributor intend that DWR will continue to
promote the sale of Fund shares and provide personal services to Fund
shareholders with respect to their holdings of Fund shares; and
Whereas, the Fund and the Distributor have entered into a separate
Distribution Agreement dated as of January 4, 1993, pursuant to which the
Fund has employed the Distributor in such capacity during the continuous
offering of shares of the Fund.
Now, Therefore, the Fund hereby amends the Plan of Distribution previously
adopted and amended and restated, and the Distributor hereby agrees to the
terms of said Plan of Distribution (the "Plan"), as amended herein, in
accordance with Rule 12b-1 under the Act on the following terms and
conditions:
1. The Fund is hereby authorized to utilize its assets to finance certain
activities in connection with the distribution of its shares.
2. Subject to the supervision of the Board of Trustees and the terms of
the Distribution Agreement, the Distributor is authorized to promote the
distribution of the Fund's shares and to provide related services through
DWR, its affiliates or other broker-dealers it may select, and its own
Registered Representatives. The Distributor, DWR, its affiliates and said
broker-dealers shall be reimbursed, directly or through the Distributor, as
it may direct, as provided in paragraph 4 hereof for their services and
expenses, which may include one or more of the following: (1) compensation
to, and expenses of, account executives and other employees, including
overhead and telephone expenses; (2) sales incentives and bonuses to sales
representatives of the Distributor, DWR, its affiliates and other
broker-dealers, and to marketing personnel in connection with promoting sales
of shares of the Fund; (3) expenses incurred in connection with promoting
sales of shares of the Fund; (4) preparing and distributing sales literature;
and (5) providing advertising and promotional activities, including direct
mail solicitation and television, radio, newspaper, magazine and other media
advertisements.
3. The Distributor hereby undertakes to directly bear all costs of
rendering the services to be performed by it under this Plan and under the
Distribution Agreement, except for those specific expenses that the Board of
Trustees determines to reimburse as hereinafter set forth.
4. The Fund is hereby authorized to reimburse the Distributor, DWR, its
affiliates and other broker-dealers for distribution expenses incurred by
them specifically on behalf of the Fund. Reimbursement will be made through
payments at the end of each month in such amounts determined at the beginning
of each fiscal quarter by the Fund's Board of Trustees, including a majority
of the Trustees who are not "interested persons" of the Fund, as defined in
the Act. The amount of each monthly payment may in no event exceed an amount
equal to a payment at the annual rate of 0.35 of 1% of the Fund's average net
assets during the month. In making quarterly determinations of the amounts that
may be expended by the Fund, the Distributor shall provide, and the Trustees
shall
1
<PAGE>
review, a quarterly budget of projected distribution expenses to be incurred by
the Distributor, DWR, its affiliates or other broker-dealers on behalf of the
Fund, together with a report explaining the purposes and anticipated benefits of
incurring such expenses. The Board of Trustees shall determine the particular
expenses, and the portion thereof, that may be borne by the Fund, and in making
such determination shall consider the scope of the Distributor's commitment to
promoting the distribution of the shares of the Fund directly or through DWR,
its affiliates or other broker-dealers. All payments made hereunder pursuant to
the Plan shall be in accordance with the terms and limitations of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc.
5. The Distributor may direct that all or any part of the amounts
receivable by it under this Plan be paid directly to DWR, its affiliates or
other broker-dealers.
6. If, as of the end of any fiscal year, the actual expenses incurred by
the Distributor, DWR, its affiliates and other broker-dealers on behalf of
the Fund (including accrued expenses and amounts reserved for incentive
compensation and bonuses) are less than the amount of payments made by the
Fund pursuant to this Plan, the Distributor shall promptly make appropriate
reimbursement to the Fund. If, however, as of the end of any fiscal year, the
actual expenses of the Distributor, DWR, its affiliates and other
broker-dealers are greater than the amount of payments made by the Fund
pursuant to this Plan, the Fund will not reimburse the Distributor, DWR, its
affiliates or other broker-dealers for such expenses through payments accrued
pursuant to this Plan in the subsequent fiscal year.
7. The Distributor shall provide the Fund for review by the Board of
Trustees, and the Board of Trustees shall review, promptly after the end of
each fiscal quarter a written report regarding the distribution expenses
incurred by the Distributor, DWR, its affiliates or other broker-dealers on
behalf of the Fund during such fiscal quarter, which report shall include:
(1) an itemization of the types of expenses and the purposes therefor; (2)
the amounts of such expenses; and (3) a description of the benefits derived
by the Fund.
8. This Plan, as amended and restated, shall become effective upon
approval by a vote of the Board of Trustees of the Fund, and of the Trustees
who are not "interested persons" of the Fund, as defined in the Act, and who
have no direct or indirect financial interest in the operation of this Plan,
cast in person at a meeting called for the purpose of voting on this Plan.
9. This Plan shall continue in effect until April 30, 1993, and from year
to year thereafter, provided such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph
8 hereof. This Plan may not be amended to increase materially the amount to
be spent for the services described herein unless such amendment is approved
by a vote of at least a majority of the outstanding voting securities of the
Fund, as defined in the Act, and no material amendment to this Plan shall be
made unless approved in the manner provided for approval in paragraph 8
hereof.
10. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Trustees who are not "interested
persons" of the Fund, as defined in the Act, and who have no direct or
indirect financial interest in the operation of this Plan or by a vote of a
majority of the outstanding voting securities of the Fund, as defined in the
Act, on no more than 30 days' written notice to any other party to this Plan.
11. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons of the Fund shall be committed to the
discretion of the Trustees who are not interested persons.
12. The Fund shall preserve copies of this Plan and all reports made
pursuant to paragraph 7 hereof, for a period of not less than six years from
the date of this Plan, as amended and restated herein, or any such report, as
the case may be, the first two years in an easily accessible place.
13. This Plan shall be construed in accordance with the laws of the State
of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Act, the latter shall control.
14. The Declaration of Trust establishing Dean Witter Short-Term U.S.
Treasury Trust, dated June 4, 1991, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name Dean
Witter Short-Term U.S. Treasury Trust refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally;
and no Trustee,
2
<PAGE>
shareholder, officer, employee or agent of Dean Witter Short-Term U.S. Treasury
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise,
in connection with the affairs of said Dean Witter Short-Term U.S. Treasury
Trust, but the Trust Estate only shall be liable.
In Witness Whereof, the Fund, the Distributor and DWR have executed this
amended and restated Plan of Distribution, as amended, as of the day and year
set forth below in New York, New York.
Date: July 22, 1991
As amended on January 4, 1993
and April 28, 1993
Attest:
- -------------------------------------
Attest:
- -------------------------------------
Attest:
- -------------------------------------
DEAN WITTER SHORT-TERM U.S. TREASURY
Trust
By:
- -------------------------------------
Dean Witter Distributors Inc.
By:
- -------------------------------------
Dean Witter Reynolds Inc.
By:
- -------------------------------------
3
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER SHORT TERM US TREASURY TRUST
(A) AVERAGE ANNUAL TOTAL RETURNS (NO LOAD FUND)
(B) TOTAL RETURN (NO LOAD FUND)
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
EV = ENDING VALUE
P = INITIAL INVESTMENT
TR = TOTAL RETURN
<TABLE>
<CAPTION>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-May-96 RETURN - TR YEARS - n COMPOUND RETURN - t
- ------------ --------- ----------- ---------- --------------------
<S> <C> <C> <C> <C>
31-May-95 $1,040.90 4.09% 1.00 4.09%
13-Aug-91 $1,260.60 26.06% 4.80 4.94%
</TABLE>
(C) GROWTH OF $10,000
(D) GROWTH OF $50,000
(E) GROWTH OF $100,000
FORMULA: G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION
<TABLE>
<CAPTION>
$10,000 TOTAL (C) GROWTH OF (D) GROWTH OF (E) GROWTH OF
INVESTED - P RETURN - TR $10,000 INVESTMENT- G $50,000 INVESTMENT- G $100,000 INVESTMENT- G
- ----------- ----------- ---------------------- --------------------- -----------------------
<S> <C> <C> <C> <C>
13-Aug-91 26.06 $12,606 $63,030 $126,060
</TABLE>
<PAGE>
DEAN WITTER SHORT - TERM U.S. TREASURY TRUST
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
05/31/96
6
YIELD = 2 { [ ((a-b) /cd) +1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2 { [ ((1,281,917.14 - 179,220.74) / 26,471,595.538 X 9.83) +1] -1}
= 5.14%
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1,000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 256,999,063
<INVESTMENTS-AT-VALUE> 256,094,276
<RECEIVABLES> 3,859,767
<ASSETS-OTHER> 150,153
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 260,104,196
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,466,928
<TOTAL-LIABILITIES> 1,466,928
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 277,185,866
<SHARES-COMMON-STOCK> 26,278,463
<SHARES-COMMON-PRIOR> 27,372,328
<ACCUMULATED-NII-CURRENT> 276,397
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (17,920,208)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (904,787)
<NET-ASSETS> 258,637,268
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 17,101,746
<OTHER-INCOME> 0
<EXPENSES-NET> 2,322,885
<NET-INVESTMENT-INCOME> 14,778,861
<REALIZED-GAINS-CURRENT> (87,549)
<APPREC-INCREASE-CURRENT> (3,742,190)
<NET-CHANGE-FROM-OPS> 10,949,122
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14,943,028
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 344,385,684
<NUMBER-OF-SHARES-REDEEMED> 367,063,467
<SHARES-REINVESTED> 12,124,758
<NET-CHANGE-IN-ASSETS> (14,546,931)
<ACCUMULATED-NII-PRIOR> 440,564
<ACCUMULATED-GAINS-PRIOR> (17,832,659)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 970,394
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,322,885
<AVERAGE-NET-ASSETS> 277,255,523
<PER-SHARE-NAV-BEGIN> 9.98
<PER-SHARE-NII> .54
<PER-SHARE-GAIN-APPREC> (.14)
<PER-SHARE-DIVIDEND> (.54)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.84
<EXPENSE-RATIO> .84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
