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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
TCW/DW CORE EQUITY TRUST
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(Name of Registrant as Specified In Its Charter)
CARSTEN OTTO
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
-------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
- 1 -
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TCW/DW CORE EQUITY TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 26, 1998
A special meeting of shareholders (the "Meeting") of TCW/DW CORE EQUITY
TRUST (the "Fund"), an unincorporated business trust organized under the laws
of the Commonwealth of Massachusetts, will be held in the Career Development
Room, Sixty-First Floor, Two World Trade Center, New York, New York 10048, on
February 26, 1998, at 9:00 a.m., New York City time, for the following
purposes:
1. To approve or disapprove a new investment management agreement (the
"New Investment Management Agreement") between the Fund and Dean Witter
InterCapital Inc.;
2. To approve or disapprove a new sub-advisory agreement (the "New
Sub-Advisory Agreement") between Dean Witter InterCapital Inc. and Morgan
Stanley Asset Management Inc.;
3. To elect or re-elect, as appropriate, nine (9) Fund Trustees to serve
until their successors are elected and qualified; and
4. To transact other business that may properly come before the meeting
or any adjournments thereof.
Upon the effectiveness of the Proposals, the Fund would change its name
from "TCW/DW Core Equity Trust" to "Dean Witter Growth Fund."
Shareholders of record as of the close of business on November 14, 1997
are entitled to notice of and to vote at the Meeting. If you cannot be
present in person, your management would greatly appreciate your filling in,
signing and returning the enclosed proxy promptly in the envelope provided
for that purpose.
In the event that the necessary quorum to transact business at the Meeting
or the vote required to approve or reject any proposal is not obtained, the
persons named as proxies may propose one or more adjournments of the meeting
to permit further solicitation of proxies. Any such adjournment will require
the affirmative vote of the holders of a majority of the Fund's shares present
in person or by proxy at the Meeting. The persons named as proxies will vote
in favor of such adjournment those proxies which they are entitled to vote in
favor of Proposal 1 set forth herein and will vote against any such adjournment
those proxies to be voted against such Proposal.
BARRY FINK
Secretary
December 1, 1997
New York, New York
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IMPORTANT
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS
TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE
UNABLE TO BE PRESENT IN PERSON, PLEASE FILL IN, SIGN AND RETURN THE ENCLOSED
PROXY IN ORDER THAT A QUORUM MAY BE REPRESENTED AT THE MEETING. THE ENCLOSED
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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THE BOARD OF TRUSTEES OF THE FUND RECOMMENDS THAT YOU CAST YOUR VOTE:
o FOR APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENT.
o FOR APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT.
o FOR THE ELECTION OF ALL OF THE TRUSTEES NOMINATED FOR ELECTION OR
RE-ELECTION.
YOUR VOTE IS IMPORTANT
<PAGE>
TCW/DW CORE EQUITY TRUST
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 26, 1998
This statement is furnished in connection with the solicitation of proxies
by the Board of Trustees (the "Board") of TCW/DW CORE EQUITY TRUST (the
"Fund") for use at the special meeting (the "Meeting") of shareholders of the
Fund to be held on February 26, 1998, and at any adjournments thereof.
If the enclosed proxy card is properly executed and returned in time to be
voted at the Meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked on the
card.
Unmarked proxies will be voted in favor of each Proposal as set forth in
the attached Notice of Special Meeting of Shareholders. A proxy may be
revoked at any time prior to its exercise by any of the following: written
notice of revocation to the Secretary of the Fund (if returned and received
in time to be voted), execution and delivery of a later dated proxy to the
Secretary of the Fund, or attendance and voting at the Meeting.
Shareholders of record as of the close of business on November 14, 1997,
the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting, are entitled to one vote for each share held and
a fractional vote for a fractional share. On November 14, 1997, there were
46,824,578 shares of beneficial interest of the Fund outstanding. No person
was known to own as much as 5% of the outstanding shares of the Fund on that
date. The Trustees and officers of the Fund, together, owned less than 1% of
the Fund's outstanding shares on that date. The percentage ownership of
shares of the Fund changes from time to time depending on purchases and sales
by shareholders and the total number of shares outstanding.
The cost of soliciting proxies for the Meeting, which consists principally
of printing and mailing expenses and which is expected to be approximately
$110,000, will be borne by the Fund. The solicitation of proxies will be by
mail, which may be supplemented by solicitation by mail, telephone or
otherwise through Trustees and officers of the Fund and officers and regular
employees of Dean Witter InterCapital Inc. ("InterCapital"), Dean Witter
Trust FSB ("DWT"), Dean Witter Services Company Inc. ("DWSC") and/or Dean
Witter Reynolds Inc. ("DWR"), without special compensation. The first mailing
of this proxy statement is expected to be made on or about December 9, 1997.
DWT may call shareholders to ask if they would be willing to have their
votes recorded by telephone. The telephone voting procedure is designed to
authenticate shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions, and to confirm
that their instructions have been recorded properly. No recommendation will
be made as to how shareholders should vote on a Proposal other than to refer
to the recommendation of the Board. The Fund has been advised by counsel that
these procedures are consistent with the requirements of applicable law.
Shareholders voting by telephone will be asked for their social security
number or other identifying information and will be given an opportunity to
authorize proxies to vote their shares in accordance with their instructions.
To ensure that the shareholders' instructions have been recorded correctly
they will receive a confirmation of their instructions in the mail. A special
toll-free number will be available in case the information contained in the
confirmation is incorrect.
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Although a shareholder's vote may be taken by telephone, each shareholder
will receive a copy of this proxy statement and may vote by mail using the
enclosed proxy card.
(1) APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT
THE PROPOSAL
The Fund's current manager is DWSC, which is a wholly-owned subsidiary of
InterCapital. Under a management agreement (the "Current Management
Agreement"), DWSC manages the Fund's business affairs, supervises its overall
day-to-day operations (other than rendering investment advice), and provides
all administrative services to the Fund.
The Fund's current investment adviser is TCW Funds Management Inc.
("TCW"). In accordance with an investment advisory agreement (the "Current
Advisory Agreement"), TCW invests the Fund's assets, including placing orders
for the purchase and sale of portfolio securities. TCW has informed the Board
that it plans to resign as investment adviser to the Fund, thereby
terminating the Current Advisory Agreement. As a result, the Fund must engage
a new investment adviser.
The Fund's Board is proposing that the Fund engage InterCapital to serve
as the Fund's new investment adviser. InterCapital would be responsible to
the Fund for the services that both DWSC and TCW currently are providing to
the Fund. Thus, the Current Management Agreement with DWSC would be
terminated. The Board is also proposing that the Fund engage Morgan Stanley
Asset Management Inc. ("MSAM") to serve as sub-adviser to the Fund (see
Proposal 2 below). Under the overall supervision of InterCapital, MSAM would
be responsible for investing the Fund's assets. InterCapital and MSAM are
both wholly-owned subsidiaries of Morgan Stanley, Dean Witter, Discover & Co.
("MSDWD").
On November 6, 1997, the Board of Trustees met in person for the purpose
of considering whether it would be in the best interests of the Fund and its
shareholders to enter into a new investment advisory agreement (the "New
Investment Management Agreement") between the Fund and InterCapital. A form
of the New Investment Management Agreement is attached to this proxy
statement as Exhibit A. The New Investment Management Agreement would become
effective when InterCapital has been appointed the Fund's investment adviser.
At the Board meeting, and for the reasons discussed below, the Board,
including a majority of the Trustees who are not "interested persons" as
defined in the Investment Company Act of 1940, of InterCapital (the
"Independent Trustees"), unanimously approved the New Investment Management
Agreement and recommended its approval by shareholders.
If approved by shareholders, the New Investment Management Agreement will
continue in effect for an initial term expiring April 30, 1999. It will be
continued in effect from year to year thereafter if the continuance is
approved by the Board or by a majority of the outstanding voting securities
of the Fund and, in either event, by the vote cast in person of a majority of
the Independent Trustees. In the event that shareholders do not approve the
New Investment Management Agreement, the Board will take such action, if any,
as it deems to be in the best interests of the Fund and its shareholders.
THE BOARD'S CONSIDERATION
At a special meeting of the Fund's Committee of the Independent Trustees
held on November 5, 1997 at which a majority of the Independent Trustees was
present, and a meeting of the Board on November 6, 1997, the Trustees
evaluated the New Investment Management Agreement. Prior to and during the
meetings, the Trustees requested and received all information they deemed
necessary to enable them to determine whether the New Investment Management
Agreement is in the best interests of the Fund and its shareholders. They
were assisted in their review and deliberations by independent legal counsel.
In determining whether to approve the Agreement, the Trustees assessed
InterCapital's ability to provide services to the Fund of the same scope and
quality as are presently provided. They also considered InterCapital's
organizational depth,
2
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reputation and experience. In addition, they took into account InterCapital's
personnel and operations. The Board considered the confluence of all these
factors in arriving at its decision to approve the appointment of
InterCapital and no one factor was given any greater weight than any of the
others.
Based upon the Trustees' review and the evaluations of the materials they
received, and after consideration of all factors they deemed relevant, the
Trustees, including a majority of the Independent Trustees, determined that
the New Investment Management Agreement is in the best interests of the Fund
and its shareholders. Accordingly, the Board, including a majority of the
Independent Trustees, approved the New Investment Management Agreement and
voted to recommend approval by shareholders.
THE CURRENT MANAGEMENT AGREEMENT AND THE CURRENT ADVISORY AGREEMENT
The Current Management Agreement requires DWSC, as investment manager, to
manage the Fund's business affairs, supervise its overall day-to-day
operations (other than rendering investment advice), and provide all
administrative services to the Fund. Under the terms of the Current
Management Agreement, DWSC also maintains certain of the Fund's books and
records and furnishes, at its own expense, the office space, facilities,
equipment, supplies, clerical help and bookkeeping that the Fund may
reasonably require to conduct its business. In addition, DWSC pays the
salaries of all personnel, including officers of the Fund, who are its
employees.
The Current Advisory Agreement requires that TCW invest the Fund's assets,
including placing orders for the purchase and sale of portfolio securities.
TCW also obtains and evaluates information and advice relating to the
economy, securities markets, and specific securities it deems necessary or
useful to continuously manage Fund assets in a manner consistent with the
Fund's investment objectives. TCW pays the salaries of all personnel,
including officers of the Fund, who are its employees.
Under the Current Advisory Agreement, the Fund is obligated to bear all of
the costs and expenses of its operation, except those specifically assumed by
TCW, DWSC, or Dean Witter Distributors Inc. (the "Distributor"), the Fund's
distributor. These costs and expenses include, without limitation: fees
pursuant to any plan of distribution that the Fund may adopt; charges and
expenses of any custodian appointed by the Fund for the safekeeping of its
cash and portfolio securities; brokers' commissions chargeable to the Fund;
all costs and expenses in connection with registration of the Fund and of its
shares with the Securities and Exchange Commission and various states and
other jurisdictions; the expense of printing and distributing Fund
prospectuses; 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 who are not employees of the investment
adviser; and charges and expenses of legal counsel and independent
accountants in connection with any matter relating to the Fund.
The Current Advisory Agreement was first approved by the Board on March 9,
1992, and by DWR as the then sole shareholder on March 16, 1992. After its
initial term, the Agreement continues in effect from year to year, provided
that each continuance is approved by the vote of a majority of the
outstanding voting securities of the Fund or by the Trustees, and, in either
event, by the vote cast in person by a majority of the Independent Trustees.
The Trustees approved the Agreement's continuation until April 30, 1998, at a
meeting on April 24, 1997. The Current Advisory Agreement also provides that
it may be terminated at any time by the investment adviser, the Trustees or
by a vote of a majority of the outstanding voting securities of the Fund, in
each instance without the payment of any penalty, on thirty days' notice, and
provides for its automatic termination in the event of its assignment.
If shareholders approve the New Investment Management Agreement, the
Current Advisory Agreement will terminate when InterCapital has been
appointed investment adviser to the Fund. TCW has also advised the Board that
in order to ensure an orderly transition to a new investment adviser, it will
continue serving as investment adviser to the Fund until such time as
shareholders of the Fund approve a new investment advisory agreement with a
new investment adviser and a new investment adviser is appointed.
3
<PAGE>
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by DWSC, the Fund currently pays DWSC
monthly compensation calculated daily by applying the annual rate of 0.51% to
the Fund's net assets up to $750 million, scaled down at various asset levels
to 0.45% on assets over $1.5 billion. As compensation for its investment
advisory services, the Fund currently pays TCW monthly compensation
calculated daily by applying an annual rate of 0.34% to the Fund's net assets
up to $750 million, scaled down at various asset levels to 0.30% on assets
over $1.5 billion. For the fiscal year ended March 31, 1997, the Fund accrued
total compensation to DWSC and TCW amounting to 0.51% and 0.34%,
respectively, of the Fund's average daily net assets. During that period, the
Fund's total expenses amounted to 1.73% of the Fund's average daily net
assets.
DEAN WITTER INTERCAPITAL INC.
The Board is proposing that InterCapital serve as the Fund's new
investment adviser. InterCapital would be responsible to the Fund for the
services that both DWSC and TCW currently are providing to the Fund.
InterCapital maintains its offices at Two World Trade Center, New York, New
York 10048. InterCapital, which was incorporated in July 1992, is a
wholly-owned subsidiary of MSDWD, a preeminent global financial services firm
that maintains leading market positions in each of its primary
businesses--securities, asset management and credit services. MSDWD, whose
principal office is located at 1585 Broadway, New York, New York 10036, was
formed as a result of the 1997 merger of Dean Witter, Discover & Co. and
Morgan Stanley Group, Inc.
Set forth below is the name and principal occupation of the principal
executive officer and each director of InterCapital.
NAME AND TITLE PRINCIPAL OCCUPATION
- -------------- ----------------------------------------
Charles A. Fiumefreddo ............ Executive Vice President and Director of
Chairman of the Board of DWR, and Chairman of the Board of
Directors, Chief Executive Directors and Chief Executive Officer of
Officer, and Director DWSC and the Distributor and Chairman of
the Board of Directors and Director of
DWT.
Richard M. DeMartini .............. President and Chief Operating Officer of
Director Dean Witter Capital, and Director of
DWR, the Distributor, DWSC and DWT.
Christine A. Edwards .............. Executive Vice President, Chief Legal
Director Officer and Secretary of MSDWD;
Executive Vice President, Secretary,
General Counsel and Director of DWR,
Executive Vice President, Secretary,
Chief Legal Officer and Director of the
Distributor and Director of DWSC.
James F. Higgins ................. President and Chief Operating Officer of
Director Dean Witter Financial, and Director of
DWR, the Distributor, DWSC and DWT.
Philip J. Purcell ................ Chairman of the Board of Directors and
Director Chief Executive Officer of MSDWD and DWR
and Director of DWSC and the
Distributor.
Thomas C. Schneider .............. Executive Vice President and Chief
Executive Vice President Strategic and Administrative Officer of
MSDWD and Executive Vice President,
Chief Financial Officer and Director of
DWR, the Distributor and DWSC.
The address for Messrs. Fiumefreddo, DeMartini and Higgins is Two World
Trade Center, New York, New York 10048, and the address for Ms. Edwards and
Messrs. Purcell and Schneider is 1585 Broadway, New York, New York 10036.
4
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InterCapital and its wholly-owned subsidiary, DWSC, serve in various
investment management, advisory, management and administrative capacities to
investment companies and pension plans and other institutional and individual
investors. Appendix I lists the investment companies for which InterCapital
provides investment management or investment advisory services and which have
similar investment objectives to those of the Fund and sets forth the fees
payable to InterCapital by these companies and their net assets as of October
31, 1997. DWSC has its offices at Two World Trade Center, New York, New York
10048.
The Distributor serves as the Fund's distributor. Like InterCapital, the
Distributor is a wholly-owned subsidiary of MSDWD. In accordance with the
Fund's Rule 12b-1 plan, the Fund pays the Distributor 12b-1 fees for
distribution related services. DWT, an affiliate of InterCapital, serves as
transfer agent of the Fund. The Fund paid distribution fees to the
Distributor for the last fiscal year of $5,711,981 and paid transfer agency
fees to DWT during the Fund's last fiscal year of $686,285. Once TCW resigns
and the New Investment Management Agreement is approved, the Distributor and
DWT fully intend to continue to provide the same services to the Fund that
they currently provide.
The Fund's brokerage transactions may be effected through DWR, an
affiliated broker-dealer of the Fund. During the Fund's last fiscal year, it
paid $53,710 to DWR in brokerage commissions (approximately 6% of all
brokerage commissions paid during the fiscal year). DWR is an affiliated
broker of the Fund because DWR and InterCapital are under the common control
of MSDWD.
THE NEW INVESTMENT MANAGEMENT AGREEMENT
The New Investment Management Agreement would provide that the Fund
retains InterCapital to serve as investment adviser to the Fund, subject to
the supervision of the Board of Trustees. Under the New Investment Management
Agreement, InterCapital would be responsible to the Fund for all of the
services that are presently being provided in accordance with the Current
Management Agreement and the Current Advisory Agreement, except that the New
Investment Management Agreement would provide that InterCapital could, at its
own expense, enter into a sub-advisory agreement with another money manager,
referred to as a sub-adviser. The sub-adviser would make determinations as to
the securities to be purchased and sold by the Fund and the timing of such
purchases and sales.
The advisory fee rates InterCapital would charge the Fund under the New
Investment Management Agreement would be 0.80% of the Fund's net assets up to
$750 million, scaled down at various asset levels to 0.70% on assets over
$1.5 billion. THE FEE RATE UNDER THE NEW INVESTMENT MANAGEMENT AGREEMENT
WOULD BE 0.05% LOWER THAN THE TOTAL AGGREGATE FEE RATE CURRENTLY IN EFFECT
UNDER THE CURRENT MANAGEMENT AGREEMENT AND THE CURRENT ADVISORY AGREEMENT
COMBINED. Had the advisory fee rate under the New Investment Management
Agreement been in effect during the Fund's last fiscal year, the Fund would
have paid $6,145,994 in advisory/management fees rather than the aggregate
amount of $6,530,895 it paid under the Current Management Agreement and the
Current Advisory Agreement.
EXCHANGE PRIVILEGES
Presently, shareholders may exchange Fund shares for shares of the same
class of any other TCW/DW multi-class fund. Fund shares also may be exchanged
for shares of TCW/DW North American Government Income Trust and for shares of
five Dean Witter money market funds. If shareholders approve the New
Investment Management Agreement, the Fund will become part of the Dean Witter
fund complex. Consequently, shareholders then would have similar exchange
privileges with the other funds in the Dean Witter fund complex and would no
longer be able to exchange Fund shares for shares of TCW/DW multi-class funds
and TCW/DW North American Government Income Trust.
REQUIRED VOTE
The New Investment Management Agreement cannot be implemented unless
approved at the Meeting, or any adjournment thereof, by a majority of the
outstanding voting securities of the Fund. A majority means the
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affirmative vote of the holders of (a) 67% or more of the shares of the Fund
present, in person or by proxy, at the Meeting, if the holders of more than
50% of the outstanding shares are present, or (b) more than 50% of the
outstanding shares of the Fund, whichever is less.
THE BOARD OF THE FUND RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE NEW INVESTMENT MANAGEMENT AGREEMENT.
(2) APPROVAL OR DISAPPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN
INTERCAPITAL AND MORGAN STANLEY ASSET MANAGEMENT INC.
THE PROPOSAL
The Board of Trustees is recommending that MSAM serve as the sub-adviser
to the Fund. The Board's recommendation is based primarily on its favorable
view of the organizational depth, reputation, historical performance,
expertise and experience of MSAM.
THE BOARD'S CONSIDERATION
At the same meeting that the Board considered the New Investment
Management Agreement, it also met for the purpose of considering the
selection of MSAM as sub-adviser and adoption of a new sub-advisory agreement
(the "New Sub-Advisory Agreement"). A form of the New Sub-Advisory Agreement
is attached to this proxy statement as Exhibit B. At the meeting, the
Trustees considered the performance of similar funds and accounts currently
advised by MSAM. The Trustees also considered the quality and extent of the
services that MSAM proposed to provide, and the organizational depth,
reputation and experience of MSAM in equity investing. In addition, the
Trustees reviewed material furnished by MSAM regarding MSAM's personnel and
operations. Prior to the meeting, representatives of MSAM reviewed with the
Independent Trustees MSAM's philosophies of management, performance
expectations and methods of operation. The Board considered the confluence of
all these factors in arriving at its decision to approve the appointment of
MSAM as sub-adviser and no one factor was given any greater weight than any
of the others.
The Board found MSAM's experience in equity investing and historical
performance to be well suited for the Fund. In addition, the Board reviewed
and discussed the terms and provisions of the New Sub-Advisory Agreement.
Based on their consideration of these factors and others that they deemed
relevant, the Trustees determined that it would be in the best interests of
the Fund and its shareholders to select MSAM to serve as sub-adviser to the
Fund pursuant to the New Sub-Advisory Agreement. Accordingly, the Board,
including a majority of the Independent Trustees, approved the New
Sub-Advisory Agreement and voted to recommend approval by shareholders.
6
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MORGAN STANLEY ASSET MANAGEMENT INC.
Like InterCapital, MSAM is a wholly-owned subsidiary of MSDWD. MSAM has
its principal offices at 1221 Avenue of the Americas, New York, New York
10020 and conducts a worldwide portfolio management business.
Set forth below is the name and principal occupation of the principal
executive officer and each director of MSAM. The address for each person is
1221 Avenue of the Americas, New York, New York 10020.
NAME AND TITLE PRINCIPAL OCCUPATION
- -------------- -------------------------------------------------
Barton M. Biggs........... Managing Director, MSAM; Managing Director of
Chairman of the Board of Morgan Stanley & Co. Incorporated ("MS & Co.");
Directors Chairman of Morgan Stanley Asset Management
Limited; Director of Van Kampen/American Capital
Holdings, Inc.
Peter A. Nadosy........... Managing Director, MSAM; Managing Director of MS
Vice-Chairman of the & Co.; Director of Morgan Stanley Asset
Board of Directors Management Limited.
James M. Allwin........... Managing Director, MSAM; Managing Director of MS
Director and President & Co.; President of Morgan Stanley Realty Inc.;
Director of Van Kampen/American Capital Holdings,
Inc.
Gordon S. Gray ........... Managing Director, MSAM; Managing Director of MS
Director & Co.
Dennis G. Sherva.......... Managing Director, MSAM; Managing Director of MS
Director & Co.
MSAM serves in various portfolio management and similar capacities to
investment companies and pension plans and other institutional and individual
investors. Appendix II lists the investment companies for which MSAM provides
investment management or investment advisory services and which have similar
investment objectives to those of the Fund and sets forth the fees payable to
MSAM by such companies and their net assets as of October 31, 1997.
MS & Co. became an affiliated broker of the Fund on May 31, 1997 upon the
consummation of the merger of Dean Witter, Discover & Co. and Morgan Stanley
Group Inc. During the fiscal year ended March 31, 1997, the Fund paid $29,106
(3.37% of all brokerage commissions paid during the fiscal year) to MS & Co.
MS & Co., MSAM and InterCapital are affiliated with each other because they
are under the common control of MSDWD.
THE NEW SUB-ADVISORY AGREEMENT
The New Sub-Advisory Agreement, which would govern MSAM's relationship
with the Fund, would require MSAM to provide the Fund with investment
advisory services. These advisory services would include, among other things,
obtaining and evaluating information and advice relating to the economy,
securities markets, and specific securities as it deems necessary or useful
to discharge its duties under the New Sub-Advisory Agreement. MSAM would
continuously manage the assets of the Fund in a manner consistent with the
investment objective and policies of the Fund. It would determine the
securities to be purchased and sold by the Fund and the timing of such
purchases and sales. In addition, it would place purchase and sale orders on
behalf of the Fund. In managing the Fund's portfolio, MSAM would implement
certain changes to the Fund's investment policies that the Board has
approved. These changes relate to implementing MSAM's "equity growth"
strategy, which would replace TCW's "top down sector rotational core equity"
philosophy.
7
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TCW first considers market sectors and then focuses on industries and
individual companies. In contrast, MSAM's strategy will emphasize individual
security selection and then consideration of the weighting that selected
companies and industries will have in the portfolio.
MSAM would, at its own expense, maintain staff and employ or retain
personnel and consult with such other persons as it determines to be
necessary or useful to the performance of its obligations under the
Agreement. It also would bear the other costs of rendering the investment
advisory services, including any clerical help and bookkeeping services that
it may require.
In return for the services that MSAM would render under the New
Sub-Advisory Agreement, InterCapital would pay MSAM monthly compensation
equal to 40% of the compensation it receives under the New Investment
Management Agreement. Any change in the New Investment Management Agreement
which has the effect of raising or lowering the compensation would have the
concomitant effect of raising or lowering the fee payable to MSAM.
The New Sub-Advisory Agreement provides that, after its initial period of
effectiveness, it may be continued in effect from year to year, provided that
the continuance is approved by the vote of a majority of the outstanding
voting securities of the Fund or by the Trustees of the Fund, and, in either
event, by the vote cast in person by a majority of the Independent Trustees
at a meeting called for that purpose.
The New Sub-Advisory Agreement also provides that it may be terminated at
any time by the sub-adviser, investment adviser, the Fund's Board or by a
vote of the majority of the outstanding voting securities of the Fund, in
each instance without the payment of any penalty, on thirty days' notice. The
Agreement also terminates in the event of the termination of the New
Investment Management Agreement or in the event of its assignment.
VOTE REQUIRED
The New Sub-Advisory Agreement cannot be implemented unless approved at
the Meeting by a majority of the outstanding voting securities of the Fund. A
majority vote in this context has the same meaning as a majority vote with
respect to the New Investment Management Agreement. In the event the
shareholders do not approve the New Sub-Advisory Agreement, the Board will
take action that it believes is in the best interests of the Fund and its
shareholders, which may include calling a special meeting of shareholders to
vote on another sub-advisory agreement.
THE BOARD OF THE FUND RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE NEW SUB-ADVISORY AGREEMENT.
(3) ELECTION OF TRUSTEES
THE PROPOSAL
The number of Trustees of the Fund has been fixed by the Board at nine. At
the their November 6, 1997 meeting, the Trustees of the Fund nominated for
election or re-election, as appropriate, the following nine nominees to the
Fund's Board of Trustees to serve for indefinite terms: Michael Bozic,
Charles A. Fiumefreddo, Edwin Jacob (Jake) Garn, John R. Haire, Wayne E.
Hedien, Dr. Manuel H. Johnson, Michael E. Nugent, Philip J. Purcell and John
L. Schroeder. Messrs. Fiumefreddo, Haire, Johnson, Nugent and Schroeder
currently serve as Trustees of the Fund and, with the exception of Mr.
Schroeder, were previously elected by shareholders. Messrs. Bozic, Garn,
Hedien and Purcell currently hold directorships or trusteeships with 83 other
investment companies that file periodic reports with the Securities and
Exchange Commission for which InterCapital serves as investment manager or
investment adviser (the "Dean Witter Funds"). Messrs. Bozic, Garn, Hedien and
Purcell are nominated to replace Messrs. Argue, DeMartini, Larkin and Stern
who will be resigning as Trustees, and they would commence service at the
time the New Investment Management Agreement takes effect.
8
<PAGE>
The following information regarding each of the nominees for election as
Trustee includes principal occupations and employment for at least the last
five years, age, positions with the Fund and directorships or trusteeships
with the Dean Witter Funds.
The nominees for Trustee to be elected or re-elected at the Meeting are:
MICHAEL BOZIC, Dean Witter Funds Trustee since April 1994; age 56;
Chairman and Chief Executive Officer of Levitz Furniture Corporation (since
November 1995); Director or Trustee of the Dean Witter Funds; formerly
President and Chief Executive Officer of Hills Department Stores (May
1991-July 1995); formerly variously Chairman, 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,* Dean Witter Funds Trustee since July 1991; age
64; Chairman, Chief Executive Officer and Director of InterCapital, DWSC and
the Distributor; Executive Vice President and Director of DWR; Chairman,
Director or Trustee, President and Chief Executive Officer of the Dean Witter
Funds; Chairman, Chief Executive Officer and Trustee of the TCW/DW Funds;
Chairman and Director of DWT; Director of various MSDWD subsidiaries and
affiliates; formerly Executive Vice President and Director of Dean Witter,
Discover & Co. (until February 1993).
EDWIN JACOB (JAKE) GARN, Dean Witter Funds Trustee since January 1993; age
65; Director or Trustee of the Dean Witter Funds; formerly United States
Senator (R-Utah) (1974-1992) and Chairman, Senate Banking Committee
(1980-1986); formerly Mayor of Salt Lake City, Utah (1971-1974); formerly
Astronaut, Space Shuttle Discovery (April 12-19, 1985); Vice Chairman,
Huntsman Corporation (since January 1993); Director of Franklin Covey (time
management systems), John Alden Financial Corp (health insurance), United
Space Alliance (joint venture between Lockheed Martin and the Boeing Company)
and Nuskin Asia Pacific (multilevel marketing); member of the board of
various civic and charitable organizations.
JOHN R. HAIRE, Dean Witter Funds Trustee since January 1981; age 72;
Chairman of the Audit Committee and Chairman of the Committee of the
Independent Directors or Trustees and Director or Trustee of the Dean Witter
Funds; Chairman of the Audit Committee 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).
WAYNE E. HEDIEN, Dean Witter Funds Trustee since September 1997; age 63;
Retired; Director of The PMI Group, Inc. (private mortgage insurance);
Trustee and Vice Chairman of The Field Museum of Natural History; formerly
associated with the Allstate Companies (1966-1994), most recently as Chairman
of The Allstate Corporation (March 1993-December 1994) and Chairman and Chief
Executive Officer of its wholly-owned subsidiary, Allstate Insurance Company
(July 1989-December 1994); director of various other business and charitable
organizations.
DR. MANUEL H. JOHNSON, Dean Witter Funds Trustee since July 1991; age 48;
Senior Partner, Johnson Smick International, Inc., a consulting firm;
Co-Chairman and a founder 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); Chairman and
Trustee of the Financial Accounting Foundation (oversight organization for
the FASB); 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).
- --------------
* Mr. Fiumefreddo is an "interested person" of the Fund within the meaning of
the Investment Company Act of 1940. This means he is not an Independent
Trustee of the Fund because he is an officer or director of various MSDWD
subsidiaries.
9
<PAGE>
MICHAEL E. NUGENT, Dean Witter Funds Trustee since July 1991; age 61;
General Partner, Triumph Capital, L.P., a private investment partnership;
Director or Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds;
formerly Vice President, Bankers Trust Company and BT Capital Corporation
(1984-1988); Director of various business organizations.
PHILIP J. PURCELL,** Dean Witter Funds Trustee since April 1994; age 54;
Chairman of the Board of Directors and Chief Executive Officer of MSDWD, DWR,
and Novus Credit Services Inc.; Director of InterCapital, DWSC and the
Distributor; Director or Trustee of the Dean Witter Funds; Director and/or
officer of various MSDWD subsidiaries.
JOHN L. SCHROEDER, Dean Witter Funds Trustee since April 1994; age 67;
Retired; Director or Trustee of the Dean Witter Funds; Trustee of the TCW/DW
Funds; Director of Citizens Utilities Company; formerly Executive Vice
President and Chief Investment Officer of the Home Insurance Company
(1991-1995).
The executive officers of the Fund are: Barry Fink, Vice President,
Secretary and General Counsel; Robert M. Scanlan, Vice President; Mitchell M.
Merin, Vice President; Robert S. Giambrone, Vice President; and Thomas F.
Caloia, Treasurer. In addition, Marilyn K. Cranney, Lou Anne D. McInnis, Ruth
Rossi, Carsten Otto, Frank Bruttomesso and Todd Lebo, serve as Assistant
Secretaries. Mr. Fink is 42 years old and is currently Senior Vice President
(since March 1997), Secretary and General Counsel (since February 1997) of
InterCapital and DWSC and Assistant Secretary of DWR (since August 1996); he
is also Senior Vice President (since March 1997), Assistant Secretary and
Assistant General Counsel (since February 1997) of the Distributor. He was
previously First Vice President, Assistant Secretary and Assistant General
Counsel of InterCapital. He has been an employee of InterCapital or DWR, a
broker-dealer affiliate of InterCapital, for over five years. Mr. Scanlan is
61 years old and is currently President and Chief Operating Officer of
InterCapital (since March 1993) and DWSC; he is also Executive Vice President
of the Distributor and Executive Vice President and Director of DWT. He was
previously Executive Vice President of InterCapital (November 1990-March
1993). Mr. Merin is 44 years old and is currently President and Chief
Strategic Officer of InterCapital and DWSC, Executive Vice President of the
Distributor and DWT and Director of DWT, Executive Vice President, Chief
Administrative Officer and Director of DWR, and Director of SPS Transaction
Services, Inc. and various other MSDWD subsidiaries. Mr. Giambrone is 43
years old and is currently Senior Vice President of InterCapital, DWSC, the
Distributor and DWT (since August 1995) and a Director of DWT (since April
1996). He was formerly a partner of KPMG Peat Marwick, LLP. Mr. Caloia is 51
years old and is currently First Vice President and Assistant Treasurer of
InterCapital and DWSC. He has been an employee of InterCapital or DWR for
over five years.
THE BOARD OF TRUSTEES, THE INDEPENDENT TRUSTEES AND THE COMMITTEES
If shareholders elect the nominated persons to the Board, the Board would
consist of the same individuals who also serve as directors or trustees for
all of the Dean Witter Funds. As of the date of this Proxy Statement, there
are a total of 83 Dean Witter Funds, comprised of 127 portfolios. As of
October 31, 1997, the Dean Witter Funds had total net assets of approximately
$91.8 billion and more than six million shareholders.
If shareholders elect the nominated persons to the Board, seven of the
nine Trustees (or 77%) would be Independent Trustees because they have no
affiliation or business connection with InterCapital or any of its affiliated
persons or companies. The other two Trustees would be affiliated with
InterCapital.
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
- --------------
** Mr. Purcell is an "interested person" of the Fund within the meaning of
the Investment Company Act of 1940. This means he is not an Independent
Trustee of the Fund because he is the Chairman of the Board of Directors and
Chief Executive Officer of MSDWD and an officer or director of various MSDWD
subsidiaries.
10
<PAGE>
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.
As is the case with all of the Fund's current Independent Trustees, all of
the Independent Trustees nominated for election or re-election would serve as
members of the Board's Committee of the Independent Trustees and the Audit
Committee; and three of them would serve as members of the Derivatives
Committee. The other Trustees or officers do not attend these meetings unless
they are invited for purposes of furnishing information or making a report.
The Fund does not have any nominating or compensation committees.
The Committee of the Independent Trustees is charged with, among other
duties, recommending to the full Board approval of management, advisory and
administration contracts, Rule 12b-1 plans and distribution and underwriting
agreements; continually reviewing Fund performance; and checking on the
pricing of portfolio securities and brokerage commissions. The Independent
Trustees are required to select and nominate individuals to fill any
Independent Trustee vacancy on the Board because the Fund has a Rule 12b-1
plan of distribution.
The Audit Committee is charged with, among other tasks, recommending to
the full Board the engagement or discharge of the Fund's independent
accountants; reviewing with the independent accountants the audit plan and
results of the auditing engagement; and reviewing the adequacy of the Fund's
system of internal controls. The Derivatives Committee establishes parameters
for and oversees the activities of the Fund with respect to any derivative
investments.
During the Fund's most recent fiscal year, the Board held the following
number of meetings: Full Board (6), Committee of the Independent Trustees
(10), Audit Committee (1), and Derivatives Committee (4). No Trustee attended
fewer than 75% of the meetings of the Board, the Committee of the Independent
Trustees, the Audit Committee, or the Derivatives Committee held while he
served in such positions.
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 Fund's headquarters in New York. He is
responsible for keeping abreast of regulatory and industry developments and
the Fund's 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
Fund's management, with independent counsel to the Independent Trustees and
with the Fund's independent auditors. He arranges for a series of special
meetings involving the annual review of investment advisory, management and
other operating contracts of the Fund and, on behalf of the Committees,
conducts negotiations with the investment adviser 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 Fund and the other TCW/DW Funds. The current
Committee Chairman has had more than 35 years experience as a senior
executive in the investment company industry.
11
<PAGE>
ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL DEAN
WITTER FUNDS
If shareholders approve the present Board nominees, the Fund will have the
same individuals serving as Independent Trustees as the other Dean Witter
Funds. The Independent Trustees and the Fund's management believe that having
the same Independent Trustees for the Fund and 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 Dean Witter Funds and avoids the
cost and confusion that would likely ensue. Finally, having the same
Independent Trustees serve on all Dean Witter Fund Boards enhances the
ability of each Fund to obtain, at modest cost to each separate Fund, the
services of Independent Trustees, and a Chairman of their Committees, of the
caliber, experience and business acumen of the individuals who serve as
Independent Trustees of the Dean Witter Funds.
SHARE OWNERSHIP BY TRUSTEES
The Trustees have adopted a policy that each Trustee and/or his or her
spouse invest at least $25,000 in any of the funds in the Dean Witter Funds
complex (and, if applicable, in the TCW/DW Funds complex) on whose boards the
Trustee serves. In addition, the policy contemplates that the Trustees will,
over time, increase their aggregate investment in the Funds above the $25,000
minimum requirement.
The Trustees may allocate their investments among specific Funds in any
manner they determine is appropriate based on their individual investment
objectives. As of the date of this Proxy Statement, each Trustee is in
compliance with the policy. Any future Trustee will be given a one year
period following his or her election within which to comply. As of September
30, 1997, the total value of the investments by the Trustees nominated for
election or re-election and/or their spouses in shares of the Dean Witter
Funds (and, if applicable, the TCW/DW Funds) was approximately $6.9 million.
As of the Meeting's record date, the aggregate number of shares of each Fund
owned by the Fund's officers and Trustees as a group was less than 1 percent
of each Fund's outstanding shares.
COMPENSATION OF INDEPENDENT TRUSTEES
The Fund currently pays each Independent Trustee an annual fee of $2,225
plus a per meeting fee of $200 for meetings of the Board of Trustees or
committees of the Board attended by the Trustee. As a Dean Witter Fund, the
Fund would pay each Independent Trustee an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Trustees or Committees of the
Board attended by the Trustee. The Fund currently 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; as a Dean
Witter Fund, the Fund would pay the Chairman of these Committees the same
amounts.
The Fund and the Dean Witter Funds reimburse Trustees for travel and other
out-of-pocket expenses incurred by them in connection with attending
meetings. The Fund does not have a retirement or deferred compensation plan
for its Independent Trustees. (Trustees and officers of the Fund who are or
have been employed by MSDWD, TCW, or an affiliated company of either company
receive no compensation or expense reimbursement from the Fund.)
As of the date of this Proxy Statement, 57 of the Dean Witter Funds 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
12
<PAGE>
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. "Eligible Compensation" is one-fifth
of the total compensation earned by such Eligible Trustee for service to the
Fund in the five year period prior to the date of the Eligible Trustee's
retirement. 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. Benefits under the retirement program are not secured or
funded by the Funds.
The following table illustrates the compensation that the Fund paid to the
current Independent Trustees for the Fund's fiscal year ended March 31, 1997.
FUND COMPENSATION
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
- --------------------------- -------------
John R. Haire................................................ $7,341
Dr. Manuel H. Johnson ...................................... 5,575
Michael E. Nugent............................................ 5,791
John L. Schroeder............................................ 5,791
If shareholders elect the nominated persons to the Board, at such time as
the Fund has paid fees to the Independent Trustees for a full fiscal year,
and assuming that during such fiscal year the Fund holds the same number of
Board and committee meetings as were held by the Dean Witter Funds during the
calendar year ended December 31, 1996, it is estimated that the compensation
paid to each Independent Trustee by the Fund during such fiscal year will be
the amount shown in the following table:
FUND COMPENSATION (ESTIMATED)
AGGREGATE
COMPENSATION
FROM THE FUND
NAME OF INDEPENDENT TRUSTEE (ESTIMATED)
- --------------------------- -------------
Michael Bozic................................................ $1,700
Edwin J. Garn ............................................... 1,700
John R. Haire................................................ 3,650(1)
Wayne E. Hedien.............................................. 1,700
Dr. Manuel H. Johnson ...................................... 1,700
Michael E. Nugent ........................................... 1,700
John L. Schroeder............................................ 1,700
- --------------
(1) Of Mr. Haire's compensation from the Fund, it is estimated that $1,950
will be paid to him as Chairman of the Committee of the Independent
Trustees ($1,200) and as Chairman of the Audit Committee ($750).
13
<PAGE>
The following table illustrates the compensation paid to the nominated
Independent Trustees for the calendar year ended December 31, 1996 for
services to the 82 Dean Witter Funds and, in the case of Messrs. Haire,
Johnson, Nugent and Schroeder, the 14 TCW/DW Funds that were in operation at
December 31, 1996. Mr. Hedien's term as Director or Trustee of each Dean
Witter Fund commenced on September 1, 1997.
CASH COMPENSATION FROM TCW/DW FUNDS AND DEAN WITTER FUNDS
<TABLE>
<CAPTION>
FOR SERVICE FOR SERVICE AS
AS CHAIRMAN OF CHAIRMAN OF
THE COMMITTEES OF THE COMMITTEES OF
INDEPENDENT INDEPENDENT
FOR SERVICE TRUSTEES DIRECTORS/TRUSTEES TOTAL CASH
FOR SERVICE AS AS DIRECTOR OR AND AUDIT AND AUDIT COMPENSATION
TRUSTEE AND TRUSTEE AND COMMITTEES COMMITTEES FOR SERVICE TO
COMMITTEE MEMBER COMMITTEE MEMBER OF 14 OF 82 THE TCW/DW FUNDS
OF 14 TCW/DW OF 82 DEAN WITTER TCW/DW DEAN WITTER AND DEAN WITTER
NAME OF INDEPENDENT TRUSTEE FUNDS FUNDS FUNDS FUNDS FUNDS
- --------------------------- ---------------- ----------------- ------------------ ------------------ ----------------
<S> <C> <C> <C> <C> <C>
Michael Bozic............... -- $138,850 -- -- $138,850
Edwin J. Garn............... -- 140,900 -- -- 140,900
John R. Haire............... $64,283 106,400 $12,187 $195,450 378,320
Wayne E. Hedien............. -- -- -- -- --
Dr. Manuel H. Johnson....... 66,483 137,100 -- -- 203,583
Michael E. Nugent........... 64,283 138,850 -- -- 203,133
John L. Schroeder........... 69,083 137,150 -- -- 206,233
</TABLE>
The following table illustrates the Dean Witter retirement benefits
accrued to the Independent Trustees by the 57 Dean Witter Funds, which have
retirement plans, for the year ended December 31, 1996.
RETIREMENT BENEFITS FROM ALL DEAN WITTER FUNDS
<TABLE>
<CAPTION>
RETIREMENT ESTIMATED ANNUAL
ESTIMATED ESTIMATED BENEFITS ACCRUED BENEFITS UPON
CREDITED YEARS OF PERCENTAGE OF AS EXPENSES RETIREMENT FROM
SERVICE AT RETIREMENT ELIGIBLE OF ALL ALL ADOPTING
NAME OF INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION PARTICIPATING FUNDS FUNDS(1)
- --------------------------- --------------------- --------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Michael Bozic............... 10 50.0% $20,147 $ 51,325
Edwin J. Garn............... 10 50.0 27,772 51,325
John R. Haire............... 10 50.0 46,952 129,550
Wayne E. Hedien............. -- -- -- --
Dr. Manuel H. Johnson ..... 10 50.0 10,926 51,325
Michael E. Nugent........... 10 50.0 19,217 51,325
John L. Schroeder........... 8 41.7 38,700 42,771
</TABLE>
- ------------
(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion of
the retirement program contained in this Proxy Statement.
REQUIRED VOTE
The election of each Trustee requires the approval of a majority of the
shares of the Fund represented and entitled to vote at the Meeting. The
persons named as attorneys-in-fact in the enclosed proxy have advised the
Fund that unless a proxy instructs them to withhold authority to vote for all
listed nominees or for any individual nominee, they will vote all validly
executed proxies for the election of the nominees named above.
All of the nominees have consented to being named in this proxy statement
and to serve, if elected, and no circumstances now known will prevent any of
the nominees from serving. If elected, the Trustees not currently serving on
the Fund's Board will commence service at the time the New Investment
Management Agreement takes effect. If any nominee should be unable or
unwilling to serve, the proxy will be voted for a substitute nominee proposed
by the present Trustees or, in the case of an Independent Trustee nominee, by
the Independent Trustees.
14
<PAGE>
THE BOARD OF THE FUND RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION
OF ALL THE NOMINATED TRUSTEES.
THE FUND'S NAME CHANGE
Upon the effectiveness of the proposals in this Proxy Statement, the Fund
will change its name from "TCW/DW Core Equity Trust" to "Dean Witter Growth
Fund." The Trustees approved the name change at their November 6, 1997
meeting.
REPORTS TO SHAREHOLDERS
The Fund's most recent Annual Report, for the fiscal year ended March 31,
1997, and the succeeding Semi-Annual Report have been sent previously to
shareholders and are available without charge upon request from Nina Maceda
at Dean Witter Trust FSB, Harborside Financial Center, Plaza Two, Jersey
City, New Jersey 07311 (telephone 1-800-869-NEWS (toll-free)).
INTEREST OF CERTAIN PERSONS
MSDWD and its various subsidiaries and their respective directors,
officers, and employees, including persons who are Trustees or officers of
the Fund, may be deemed to have an interest in the proposals described in
this Proxy Statement. This may be the case because some of the companies and
their affiliates have contractual and other arrangements, described elsewhere
in this proxy statement, pursuant to which they are paid fees by the Fund. In
addition, some of the individuals are compensated for performing services
relating to the Fund and may also own shares of MSDWD. Thus, these companies
and persons may derive benefits from shareholders approving the proposals in
this proxy statement.
SHAREHOLDER PROPOSALS
The Fund does not hold regular shareholders' meetings. Proposals of
shareholders intended to be presented at the next meeting of shareholders
must be received a reasonable time prior to the mailing of the proxy
materials sent in connection with the meeting, for inclusion in the proxy
statement for that meeting.
OTHER BUSINESS
The management of the Fund knows of no other matters that may be presented
at the Meeting. However, if any matters not now known properly come before
the Meeting, management intends that the persons named in the enclosed proxy
card, or their substitutes, would vote all shares that they are entitled to
vote on any such matter, utilizing their proxy in accordance with their best
judgment on such matters.
By Order of the Board of Trustees
BARRY FINK
Secretary
15
<PAGE>
EXHIBIT A
FORM OF NEW INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the day of , 1998, by and between
Dean Witter Growth Fund, a Massachusetts business trust (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 Board of 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 may, at its own expense, enter into a
Sub-Advisory Agreement with a Sub-Advisor to make determinations as to
certain or all of 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 to take such further action, including the placing of
purchase and sale orders on behalf of the Fund, as the Sub-Advisor, in
consultation with the Investment Manager, shall deem necessary or
appropriate; provided that the Investment Manager shall be responsible for
monitoring compliance by such Sub-Advisor with the investment policies and
restrictions of the Fund and with such other limitations or directions as the
Trustees of the Fund may from time to time prescribe.
3. 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
A-1
<PAGE>
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.
4. 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.
5. 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 business. The
Investment Manager shall also bear the cost of telephone service, heat,
light, power and other utilities provided to the Fund.
6. 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.
7. 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
A-2
<PAGE>
by applying the following annual rates to the Fund's average daily net
assets: 0.80% of daily net assets up to $750 million; 0.75% of the next $750
million; and 0.70% of daily net assets over $1.5 billion. 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 8 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 8
hereof.
8. 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 litigations
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 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.
9. 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.
10. 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 Director, officer or employee of the Investment Manager to engage in any
other business or to devote his time and attention in part to the management
or other aspects of any other business whether of a similar or dissimilar
nature.
A-3
<PAGE>
11. This Agreement shall remain in effect until April 30, 1999 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.
12. 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.
13. 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,
conflict with the applicable provisions of the Act, the latter shall control.
14. 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, Morgan Stanley, Dean Witter, Discover & Co., 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
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.
A-4
<PAGE>
15. The Declaration of Trust establishing TCW/DW Core Equity Trust, dated
April 21, 1992, as amended to reflect the change in the Fund's name from
"TCW/DW Core Equity Trust" to "Dean Witter Growth Fund" on ,
1998, 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 Growth Fund 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 Growth Fund 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 Growth Fund, but the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, on , 1998, in New York, New York.
DEAN WITTER GROWTH FUND
By:
....................................
Attest:
....................................
DEAN WITTER INTERCAPITAL INC.
By:
....................................
Attest:
....................................
A-5
<PAGE>
EXHIBIT B
FORM OF NEW SUB-ADVISORY AGREEMENT
AGREEMENT made as of the day of , 1998 by and between Dean Witter
InterCapital Inc., a Delaware corporation (herein referred to as the
"Investment Manager"), and Morgan Stanley Asset Management Inc., a Delaware
Corporation, (herein referred to as the "Sub-Adviser").
WHEREAS, Dean Witter Growth Fund (herein referred to as 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 has entered into an Investment Management
Agreement with the Fund (the "Investment Management Agreement") wherein the
Investment Manager has agreed to provide investment management services to
the Fund; and
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as an
investment adviser; and
WHEREAS, the Investment Manager desires to retain the services of the
Sub-Adviser to render investment advisory services for the Fund in the manner
and on the terms and conditions hereinafter set forth; and
WHEREAS, the Sub-Adviser desires to be retained by the Investment Manager
to perform services on said terms and conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Subject to the supervision of the Fund, its officers and Trustees,
and the Investment Manager, and in accordance with the investment
objectives, policies and restrictions set forth in the then-current
Registration Statement relating to the Fund, and such investment objectives,
policies and restrictions from time to time prescribed by the Trustees of
the Fund and communicated by the Investment Manager to the Sub-Adviser, the
Sub-Adviser agrees to provide the Fund with investment advisory services
with respect to the Fund's investments to obtain and evaluate such
information and advice relating to the economy, securities markets and
securities as it deems necessary or useful to discharge its duties
hereunder; to continuously manage the assets of the Fund in a manner
consistent with the investment objective and policies of the Fund; to make
decisions as to foreign currency matters and make determinations as to
forward foreign exchange contracts and options and futures contracts in
foreign currencies; shall determine the securities to be purchased, sold or
otherwise disposed of by the Fund and the timing of such purchases, sales
and dispositions; to take such further action, including the placing of
purchase and sale orders on behalf of the Fund, as it shall deem necessary
or appropriate; to furnish to or place at the disposal of the Fund and the
Investment Manager such of the information, evaluations, analyses and
opinions formulated or obtained by it in the discharge of its duties as the
Fund and the Investment Manager may, from time to time, reasonably request.
The Investment Manager and the Sub-Adviser shall each make its officers and
employees available to the other from time to time at reasonable times to
review investment policies of the Fund and to consult with each other.
2. The Sub-Adviser 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
B-1
<PAGE>
of the foregoing, the staff and personnel of the Sub-Adviser shall be deemed
to include persons employed or otherwise retained by the Sub-Adviser 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 Sub-Adviser shall maintain whatever
records as may be required to be maintained by it under the Act. All such
records so maintained shall be made available to the Fund, upon the request
of the Investment Manager or the Fund.
3. The Fund will, from time to time, furnish or otherwise make available
to the Sub-Adviser such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the
Sub-Adviser may reasonably require in order to discharge its duties and
obligations hereunder or to comply with any applicable law and regulations
and the investment objectives, policies and restrictions from time to time
prescribed by the Trustees of the Fund.
4. The Sub-Adviser shall bear the cost of rendering the investment
advisory 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, employed by the Sub-Adviser, and such clerical help and
bookkeeping services as the Sub-Adviser shall reasonably require in
performing its duties hereunder.
5. The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including, without limitation: any fees paid to the Investment
Manager; fees pursuant to any plan of distribution that the Fund may adopt;
the charges and expenses of any registrar, any custodian, sub-custodian or
depository appointed by the Fund for the safekeeping of its cash, portfolio
securities 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 securities transactions to which the Fund is a
party; all taxes, including securities issuance and transfer taxes, and fees
payable by the Fund to federal, state or other governmental agencies or
pursuant to any foreign laws; 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 or pursuant to any foreign laws (including
filing fees and legal fees and disbursements of counsel); the cost and
expense of printing (including typesetting) and distributing prospectuses 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 Sub-Adviser; 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, the Investment Manager or the
Sub-Adviser, 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 Sub-Adviser, the Investment Manager shall pay to the
Sub-Adviser monthly compensation equal to 40% of its monthly compensation
receivable pursuant to the Investment Management Agreement.
B-2
<PAGE>
Any subsequent change in the Investment Management Agreement which has
the effect of raising or lowering the compensation of the Investment Manager
will have the concomitant effect of raising or lowering the fee payable to
the Sub-Adviser under this Agreement. In addition, if the Investment Manager
has undertaken in the Fund's Registration Statement as filed under the Act
(the "Registration Statement") or elsewhere to waive all or part of its fee
under the Investment Management Agreement, the Sub-Adviser's fee payable
under this Agreement will be proportionately waived in whole or in part. The
calculation of the fee payable to the Sub-Adviser pursuant to this Agreement
will be made, each month, at the time designated for the monthly calculation
of the fee payable to the Investment Manager pursuant to the Investment
Management Agreement. 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 the part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fee as set forth
above. Subject to the provisions of paragraph 7 hereof, payment of the
Sub-Adviser'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 the Investment Management
Agreement, 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 Sub-Adviser shall reduce its
advisory fee to the extent of 40% of such excess and, if required, pursuant
to any such laws or regulations, will reimburse the Investment Manager for
annual operating expenses in the amount of 40% of such excess of any expense
limitation that may be applicable, it being understood that the Investment
Manager has agreed to effect a reduction and reimbursement of 100% of such
excess in accordance with the terms of the Investment Management Agreement;
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 last business day of the month, that expense
limitation which results in the largest reduction in the Investment
Manager's fee or the largest expense reimbursement 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 Sub-Adviser will use its best efforts in the performance of
investment activities on behalf of the Fund, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, the Sub-Adviser shall not be liable to the Investment
Manager or the Fund or any of its investors for any error of judgment or
mistake of law or for any act or omission by the Sub-Adviser or for any
losses sustained by the Fund or its investors.
9. It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or employee
of, or be otherwise interested in, the Sub-Adviser, and in any person
controlled by or under common control with the Sub-Adviser, and that the
B-3
<PAGE>
Sub-Adviser and any person controlled by or under common control with
the Sub-Adviser may have an interest in the Fund. It is also understood that
the Sub-Adviser and any affiliated persons thereof or any persons controlled
by or under common control with the Sub-Adviser have and may have advisory,
management service or other contracts with other organizations and persons,
and may have other interests and businesses, and further may purchase, sell
or trade any securities or commodities for their own accounts or for the
account of others for whom they may be acting.
10. This Agreement shall remain in effect until April 30, 1999 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 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 and the Sub-Adviser,
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 (within
the meaning of the Act) unless such automatic termination shall be prevented
by an exemptive order of the Securities and Exchange Commission; (c) this
Agreement shall immediately terminate in the event of the termination of the
Investment Management Agreement; (d) the Investment Manager may terminate
this Agreement without payment of penalty on thirty days' written notice to
the Fund and the Sub-Adviser and; (e) the Sub-Adviser may terminate this
Agreement without the payment of penalty on thirty days' written notice to
the Fund and the Investment Manager. 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, the Investment Manager nor the Sub-Adviser shall be liable for failing
to do so.
12. This Agreement shall be construed in accordance with the law 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.
B-4
<PAGE>
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 INTERCAPITAL INC.
By:
--------------------------------
Attest:
MORGAN STANLEY ASSET
MANAGEMENT INC.
By:
--------------------------------
Attest:
Accepted and agreed to as of the day and year first above written:
DEAN WITTER GROWTH FUND
By:
--------------------------------
Attest:
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<PAGE>
APPENDIX I
InterCapital serves as investment manager to the Fund and the other
investment companies listed below which have similar investment objectives to
those of the Fund. Set forth below is a chart showing the net assets of each
such investment company as of October 31, 1997 and the investment management
or advisory fee rate(s) applicable to such investment company.
CURRENT INVESTMENT
MANAGEMENT FEE
RATE(S)
NET ASSETS AS A PERCENTAGE
AS OF 10/31/97 OF NET ASSETS
-------------- -------------
1. DEAN WITTER AMERICAN
VALUE FUND ................. $ 3,947,655,086 0.625% on assets up to $250
million, scaled down at
various asset levels to
0.45% on assets over $3.5
billion
2. DEAN WITTER BALANCED
GROWTH FUND ................ $ 173,216,031 0.60%
3. DEAN WITTER CAPITAL
APPRECIATION FUND .......... $ 385,519,838 0.75% on assets up to $500
million and 0.725% on assets
over $500 million
4. DEAN WITTER CAPITAL
GROWTH SECURITIES .......... $ 561,047,149 0.65% on assets up to $500
million, scaled down at
various asset levels to
0.475% on assets over $1.5
billion
5. DEAN WITTER DEVELOPING
GROWTH SECURITIES TRUST .... $ 835,186,248 0.50% on assets up to $500
million and 0.475% on assets
over $500 million
6. DEAN WITTER DIVIDEND GROWTH
SECURITIES INC. ............ $15,214,689,291 0.625% on assets up to $250
million, scaled down at
various asset levels to
0.275% on assets over $15
billion
7. DEAN WITTER EUROPEAN
GROWTH FUND INC. ........... $ 1,710,737,228 1.00% on assets up to $500
million, scaled down at
various assets levels to
0.90% on assets over $2
billion (of which 40% is
paid to a Sub-Adviser)
8. DEAN WITTER FINANCIAL
SERVICES TRUST ............. $ 244,072,018 0.75%
9. DEAN WITTER GLOBAL ASSET
ALLOCATION FUND ............ $ 58,014,911 1.00% (of which 60% is paid
to two Sub-Advisers)
10. DEAN WITTER GLOBAL DIVIDEND
GROWTH SECURITIES .......... $ 3,593,714,969 0.75% on assets up to $1
billion, scaled down at
various asset levels to
0.65% on assets over $3.5
billion
I-1
<PAGE>
CURRENT INVESTMENT
MANAGEMENT FEE
RATE(S)
NET ASSETS AS A PERCENTAGE
AS OF 10/31/97 OF NET ASSETS
-------------- -------------
11. DEAN WITTER GLOBAL
UTILITIES FUND ............. $ 349,123,995 0.65% on assets up to $500
million and 0.625% on assets
over $500 million
12. DEAN WITTER HEALTH SCIENCES
TRUST ...................... $ 420,280,579 1.00% on assets up to $500
million and 0.95% on assets
over $500 million
13. DEAN WITTER INCOME BUILDER
FUND ....................... $ 371,194,036 0.75%
14. DEAN WITTER INFORMATION
FUND ....................... $ 236,023,089 0.75% on assets up to $500
million and 0.725% on assets
over $500 million
15. DEAN WITTER INTERNATIONAL
SMALLCAP FUND .............. $ 78,255,035 1.25% (of which 40% is paid
to a Sub-Adviser)
16. DEAN WITTER JAPAN FUND ..... $ 173,963,766 1.0% (of which 40% is paid
to a Sub-Adviser)
17. DEAN WITTER MARKET LEADER
TRUST ...................... $ 127,216,588 0.75%
18. DEAN WITTER MID-CAP
GROWTH FUND ................ $ 557,773,750 0.75% on assets up to $500
million and 0.725% on assets
over $500 million
19. DEAN WITTER NATURAL
RESOURCE DEVELOPMENT
SECURITIES INC. ............ $ 313,634,192 0.625% on assets up to $250
million and 0.50% on assets
over $250 million
20. DEAN WITTER PACIFIC GROWTH
FUND INC. .................. $ 745,524,519 1.00% on assets up to $1
billion, scaled down at
various asset levels to
0.90% on assets over $2
billion (of which 40% is
paid to a Sub-Adviser)
21. DEAN WITTER PRECIOUS METALS
AND MINERALS TRUST ......... $ 40,049,150 0.80%
22. DEAN WITTER SPECIAL VALUE
FUND ....................... $ 298,355,441 0.75%
23. DEAN WITTER STRATEGIST
FUND ....................... $1,530,734,336 0.60% on assets up to $500
million, scaled down at
various asset levels to
0.475% on assets over $1.5
billion
24. DEAN WITTER UTILITIES
FUND ....................... $2,236,079,236 0.65% on assets up to $500
million, scaled down at
various asset levels to
0.425% on assets over $5
billion
25. DEAN WITTER VALUE-ADDED
MARKET SERIES .............. $1,478,638,975 0.50% on assets up to $500
million, scaled down at
various asset levels to
0.425% on assets over $1
billion
I-2
<PAGE>
CURRENT INVESTMENT
MANAGEMENT FEE
RATE(S)
NET ASSETS AS A PERCENTAGE
AS OF 10/31/97 OF NET ASSETS
-------------- -------------
26. DEAN WITTER WORLD WIDE
INVESTMENT TRUST ........... $ 348,132,655 1.0% on assets up to $500
million and 0.95% on assets
over $500 million (of which
40% is paid to a Sub-
Adviser)
27. DEAN WITTER RETIREMENT
SERIES:
(A) AMERICAN VALUE SERIES .. 0.85%(1)
(B) CAPITAL GROWTH SERIES .. $ 3,325,820 0.85%(1)
(C) DIVIDEND GROWTH SERIES . $ 108,170,154 0.75%(1)
(D) GLOBAL EQUITY SERIES ... $ 16,891,121 1.00%(1)
(E) STRATEGIST SERIES ...... $ 24,538,457 0.85%(1)
(F) UTILITIES SERIES ....... $ 5,055,229 0.75%(1)
(G) VALUE-ADDED MARKET
SERIES ................. $ 22,515,077 0.50%(1)
28. DEAN WITTER SELECT
DIMENSIONS INVESTMENT
SERIES:*
(A) AMERICAN VALUE
PORTFOLIO .............. $ 209,989,328 0.625%
(B) BALANCED PORTFOLIO ..... $ 65,604,460 0.75% (of which 40% is paid
to a Sub-Adviser)
(C) CORE EQUITY PORTFOLIO .. $ 36,940,763 0.85% (of which 40% is paid
to a Sub-Adviser)
(D) DEVELOPING GROWTH
PORTFOLIO .............. $ 82,721,821 0.50%
(E) DIVIDEND GROWTH
PORTFOLIO .............. $ 479,588,759 0.625%
(F) EMERGING MARKETS
PORTFOLIO .............. $ 24,321,302 1.25% (of which 40% is paid
to a Sub-Adviser)
(G) GLOBAL EQUITY
PORTFOLIO .............. $ 96,964,480 1.00%
(H) UTILITIES PORTFOLIO .... $ 43,731,602 0.65%
(I) MID-CAP GROWTH
PORTFOLIO .............. $ 15,160,968 0.75%(2)
(J) VALUE-ADDED MARKET
PORTFOLIO ............. $ 128,994,048 0.50%
29. DEAN WITTER VARIABLE
INVESTMENT SERIES:*
(A) CAPITAL APPRECIATION
PORTFOLIO .............. $ 27,907,229 0.75%(3)
(B) CAPITAL GROWTH
PORTFOLIO .............. $ 126,544,533 0.65%
(C) DIVIDEND GROWTH
PORTFOLIO .............. $1,787,786,891 0.625% on assets up to $500
million, scaled down at
various asset levels to
0.475% on assets over $1
billion
(D) EQUITY PORTFOLIO ....... $ 758,501,705 0.50% on assets up to $1
billion and 0.475% on assets
over $1 billion
I-3
<PAGE>
CURRENT INVESTMENT
MANAGEMENT FEE
RATE(S)
NET ASSETS AS A PERCENTAGE
AS OF 10/31/97 OF NET ASSETS
-------------- -------------
(E) EUROPEAN GROWTH
PORTFOLIO .............. $ 380,486,751 1.00% (of which 40% is paid
to a Sub-Adviser)
(F) GLOBAL DIVIDEND GROWTH
PORTFOLIO .............. $ 472,456,387 0.75%
(G) INCOME BUILDER
PORTFOLIO .............. $ 41,170,640 0.75%(3)
(H) STRATEGIST PORTFOLIO ... $ 486,628,455 0.50%
(I) PACIFIC GROWTH
PORTFOLIO .............. $ 79,018,981 1.00% (of which 40% is paid
to a Sub-Adviser)
(J) UTILITIES PORTFOLIO .... $ 408,975,860 0.65% on assets up to $500
million and 0.55% on assets
over $500 million
30. DEAN WITTER S&P 500 INDEX
FUND ....................... $ 232,775,445 0.40%(4)
31. DEAN WITTER FUND OF FUNDS... $ 0 None(5)
- --------------
* Open-end investment company offered only to life insurance companies in
connection with variable annuity and/or variable life insurance contracts.
(1) InterCapital has undertaken, until December 31, 1997, to continue to
assume all operating expenses of the Series of Dean Witter Retirement
Series (except for any brokerage fees and a portion of organizational
expenses) and to waive the compensation provided for each Series in its
investment management agreement with that company to the extent that such
expenses and compensation on an annualized basis exceed 1.0% of the daily
net assets of the pertinent Series.
(2) InterCapital has undertaken, until the earlier of July 31, 1998 or the
attainment by the Portfolio of $50 million of net assets, to assume all
operating expenses (except for any brokerage fees) of the Mid-Cap Growth
Portfolio of Dean Witter Select Dimensions Investment Series and to waive
the compensation provided for that Portfolio in its investment management
agreement with the company.
(3) InterCapital has undertaken, until the earlier of July 31, 1998 or the
attainment by the respective Portfolio of $50 million of net assets, to
assume all operating expenses (except for any brokerage fees) of the
Income Builder Portfolio and the Capital Appreciation Portfolio of Dean
Witter Variable Investment Series and to waive the compensation provided
for each of these Portfolios in its investment management agreement with
that company.
(4) InterCapital has agreed to assume all expenses (except for brokerage and
12b-1 fees) of Dean Witter S&P 500 Index Fund and to waive the
compensation provided for in its investment management agreement with that
company to the extent such expenses and compensation on an annualized
basis exceed 0.50% of the daily net assets of that company.
(5) InterCapital has undertaken to assume all operating expenses of Dean
Witter Fund of Funds (except for any 12b-1 fees and brokerage fees) until
such time as that company has $50 million of net assets or until six
months from that company's commencement of operations. Dean Witter Fund of
Funds is expected to commence operations on or about November 25, 1997.
InterCapital receives no investment management fee for serving as
Investment Manager, it being understood that InterCapital receives
investment management fees from the "Underlying Funds" (various Dean
Witter Funds that are the underlying investments of Dean Witter Fund of
Funds).
I-4
<PAGE>
APPENDIX II
MSAM serves as investment adviser or manager to the investment companies
listed below which have similar investment objectives to that of the Fund.
Set forth below is a chart showing the net assets of each such investment
company as of October 31, 1997 and the investment management or advisory fee
rate(s) applicable to such investment company.
CURRENT INVESTMENT
MANAGEMENT FEE
RATE(S)
NET ASSETS AS A PERCENTAGE
AS OF 10/31/97 OF NET ASSETS
-------------- -------------
1.MORGAN STANLEY INSTITUTIONAL
FUND, INC.* (1)
(A) ACTIVE COUNTRY ALLOCATION
PORTFOLIO ........................ $ 128,857,432 0.65%
(B) AGGRESSIVE EQUITY PORTFOLIO ...... 167,199,717 0.80%
(C) ASIAN EQUITY PORTFOLIO............ 124,603,842 0.80%
(D) BALANCED PORTFOLIO................ 5,076,974 0.50%
(E) CHINA GROWTH PORTFOLIO (2) ....... 0 1.25%
(F) EMERGING GROWTH PORTFOLIO......... 60,718,382 1.00%
(G) EMERGING MARKETS PORTFOLIO ....... 1,612,645,934 1.25%
(H) EQUITY GROWTH PORTFOLIO .......... 571,166,679 0.60%
(I) EUROPEAN EQUITY PORTFOLIO......... 255,953,013 0.80%
(J) GLOBAL EQUITY PORTFOLIO........... 110,658,187 0.80%
(K) GOLD PORTFOLIO(3)................. 18,424,001 1.00%
(L) GROWTH AND INCOME FUND(2)......... 0 0.75%
(M) INTERNATIONAL EQUITY PORTFOLIO ... 2,843,491,490 0.80%
(N) INTERNATIONAL MAGNUM PORTFOLIO .. 183,634,416 0.80%
(O) INTERNATIONAL SMALL CAP
PORTFOLIO ........................ 274,143,203 0.95%
(P) JAPANESE EQUITY PORTFOLIO ....... 157,251,881 0.80%
(Q) LATIN AMERICAN PORTFOLIO.......... 68,495,540 1.10%
(R) MICROCAP PORTFOLIO(2)............. 0 1.00%
(S) SMALL CAP VALUE EQUITY PORTFOLIO . 43,868,578 0.85%
(T) TECHNOLOGY PORTFOLIO.............. 33,557,723 1.00%
(U) U.S. REAL ESTATE PORTFOLIO ....... 356,555,875 0.80%
(V) VALUE EQUITY PORTFOLIO............ 91,470,670 0.50%
(W) ASIAN REAL ESTATE PORTFOLIO ..... 2,761,464 0.80%
(X) EUROPEAN REAL ESTATE PORTFOLIO .. 16,939,346 0.80%
(Y) U.S. EQUITY PLUS PORTFOLIO ...... 14,502 0.45%
II-1
<PAGE>
CURRENT INVESTMENT
MANAGEMENT FEE
RATE(S)
NET ASSETS AS A PERCENTAGE
AS OF 10/31/97 OF NET ASSETS
-------------- -------------
2.MORGAN STANLEY FUND, INC.** (4)
(A) AMERICAN VALUE FUND .............. $ 225,688,869 (4)
(B) AGGRESSIVE EQUITY FUND............ 87,683,277 (4)
(C) ASIAN GROWTH FUND ................ 154,667,772 (4)
(D) EMERGING MARKETS FUND ............ 200,553,538 (4)
(E) EQUITY GROWTH FUND(2)............. 0 (4)
(F) EUROPEAN EQUITY FUND(2) .......... 0 (4)
(G) GLOBAL EQUITY ALLOCATION FUND ... 205,703,329 (4)
(H) GLOBAL EQUITY FUND ............... 515,695,856 (4)
(I) GROWTH AND INCOME FUND(2)......... 0 (4)
(J) JAPANESE EQUITY FUND(2)........... 0 (4)
(K) INTERNATIONAL MAGNUM FUND ....... 83,230,901 (4)
(L) LATIN AMERICA FUND................ 100,621,882 (4)
(M) U.S. REAL ESTATE FUND............. 33,868,928 (4)
3.MORGAN STANLEY UNIVERSAL FUNDS, INC.*
(A) ASIAN EQUITY PORTFOLIO............ 7,027,587 0.80% on assets up to
$500 million, scaled
down to 0.70% on
assets over $1 billion
(B) EMERGING MARKETS EQUITY
PORTFOLIO......................... 29,027,715 1.25% on assets up to
$500 million, scaled
down to 1.15% on
assets over $1 billion
(C) GLOBAL EQUITY PORTFOLIO........... 10,116,720 0.80% on assets up to
$500 million, scaled
down to 0.70% on
assets over $1 billion
(D) EQUITY GROWTH PORTFOLIO........... 7,204,978 0.55% on assets up to
$500 million, scaled
down to 0.45% on
assets over $1 billion
(E) INTERNATIONAL MAGNUM PORTFOLIO ... 18,623,880 0.80% on assets up to
$500 million, scaled
down to 0.70% on
assets over $1 billion
(F) U.S. REAL ESTATE PORTFOLIO ....... 9,295,611 0.80% on assets up to
$500 million, scaled
down to 0.70% on
assets over $1 billion
4.AMERICAN ADVANTAGE INTERNATIONAL
EQUITY FUND**......................... $ 256,103,537 (5)
5.EQ ADVISORS TRUST
--MORGAN STANLEY EMERGING MARKETS
EQUITY PORTFOLIO**.................. 15,803,837 (6)
II-2
<PAGE>
CURRENT INVESTMENT
MANAGEMENT FEE
RATE(S)
NET ASSETS AS A PERCENTAGE
AS OF 10/31/97 OF NET ASSETS
-------------- -------------
6.FORTIS SERIES FUND, INC.
--GLOBAL ASSET ALLOCATION SERIES** ... $ 50,135,832 (7)
7.FOUNTAIN SQUARE INTERNATIONAL EQUITY
FUND** ............................... 138,635,656 (8)
8.THE LEGENDS FUND, INC.
--MORGAN STANLEY ASIAN GROWTH
PORTFOLIO** ........................ 5,538,138 (9)
9.NASL SERIES TRUST
--GLOBAL EQUITY TRUST**............... 832,983,576 (10)
10.NORTH AMERICAN FUNDS
--GLOBAL EQUITY FUND**............... 124,135,147 (11)
11.NEW ENGLAND ZENITH FUND
--MORGAN STANLEY INTERNATIONAL
MAGNUM EQUITY SERIES** ............ 52,166,335 (12)
12.PACIFIC SELECT FUND
--INTERNATIONAL PORTFOLIO**.......... 730,034,717 (13)
13.PRINCIPAL AGGRESSIVE GROWTH
FUND, INC.**......................... 130,574,932 (14)
14.PRINCIPAL ASSET ALLOCATION
FUND, INC.** ........................ 76,471,300 (14)
15.SUN AMERICA SERIES TRUST
--INTERNATIONAL DIVERSIFIED EQUITIES (15)
PORTFOLIO**........................ 246,024,961
16.VAN KAMPEN AMERICAN CAPITAL
--GLOBAL EQUITY FUND**............... 294,316,087 (16)
17.VAN KAMPEN AMERICAN CAPITAL LIFE
INVESTMENT TRUST
--GLOBAL EQUITY FUND**............... 3,116,336 (17)
18.VAN KAMPEN AMERICAN CAPITAL
--GLOBAL MANAGED ASSETS FUND** ...... 22,933,706 (16)
19.THE LATIN AMERICAN DISCOVERY
FUND, INC. .......................... 205,221,210 1.15%
20.THE MALAYSIA FUND, INC. ............. 65,617,828 0.90% on assets up to
$50 million, scaled
down at various asset
levels to 0.50% on
assets over $100
million
21.MORGAN STANLEY AFRICA INVESTMENT
FUND, INC. .......................... 303,705,879 1.20%
22.MORGAN STANLEY ASIA-PACIFIC FUND,
INC. ................................ 716,262,236 1.00%
23.MORGAN STANLEY EMERGING MARKETS
FUND, INC. .......................... 372,246,050 1.25%
24.MORGAN STANLEY INDIA INVESTMENT
FUND, INC. .......................... 370,349,718 1.10%
II-3
<PAGE>
CURRENT INVESTMENT
MANAGEMENT FEE
RATE(S)
NET ASSETS AS A PERCENTAGE
AS OF 10/31/97 OF NET ASSETS
-------------- -------------
25.MORGAN STANLEY RUSSIA & NEW EUROPE
FUND, INC. .......................... $ 157,034,240 1.60%
26.THE PAKISTAN INVESTMENT FUND, INC. .. 72,886,495 1.00%
27.THE THAI FUND, INC................... 72,832,613 0.90% on assets up to
$50 million, scaled
down at various asset
levels to 0.50% on
assets over $100
million
28.THE TURKISH INVESTMENT FUND, INC .... 61,744,722 0.95% on assets up to
$50 million, scaled
down at various asset
levels to 0.55% on
assets over $100
million
- --------------
* With respect to each of Morgan Stanley Institutional Fund, Inc. and Morgan
Stanley Universal Funds, Inc., MSAM has voluntarily agreed to a reduction
in the fees payable to it and to reimburse each Portfolio or Fund, if
necessary, if payment of advisory fees would cause the total annual
operating expenses of such Portfolio or Fund to exceed certain minimums.
** MSAM acts as sub-adviser to this Fund.
(1) Includes Class A and Class B shares.
(2) Currently Inactive.
(3) Management fee includes a 0.40% sub-advisory fee payable by the Manager.
(4) Includes Class A, Class B and Class C shares. Van Kampen American Capital
Investment Advisory Corp. ("VKAC") is the investment adviser and
administrator for each of the Morgan Stanley Fund, Inc. Funds. VKAC
charges an advisory fee of 0.70% (Equity Growth Fund), 0.80%
(International Magnum Fund), 0.85% (American Value Fund), 0.90%
(Aggressive Equity Fund), 1.00% (Asian Growth Fund, European Equity Fund,
Global Equity Allocation Fund, Global Equity Fund, Growth and Income Fund,
Japanese Equity Fund, U.S. Real Estate Fund) and 1.25% (Emerging Markets
Fund, Latin American Fund) of average daily net assets. MSAM serves as
sub-adviser. If average daily net assets of a Fund are less than or equal
to $500 million, VKAC will pay MSAM 50% of the total investment advisory
fee payable to VKAC (after application of any fee waivers in effect) for
such monthly period. If average daily net assets of a Fund are greater
than $500 million, VKAC will pay MSAM a fee for such monthly period equal
to the greater of (a) 50% of what the total advisory fee payable to VKAC
(after application of any fee waivers in effect) for such period would
have been had the Fund's average daily net assets been equal to $500
million, or (b) 45% of the total advisory fee payable to VKAC by the Fund
(after application of any fee waivers in effect) for such monthly period.
VKAC has agreed to waive a portion of its advisory fees and/or to
reimburse a portion of the expenses of a Fund, if necessary, if such fees
would cause the total annual operating expenses of such Fund, as a
percentage of average daily net assets, to exceed certain minimums.
(5) AMR Investment Services, Inc. serves as the manager (the "Manager") of the
Fund. MSAM serves as adviser. The Manager pays MSAM a fee computed at an
annual rate equal to 0.80% on assets up to $425 million, scaled down at
various asset levels to 0.40% on assets over $75 million.
(6) EQ Financial Consultants, Inc. serves as the manager (the "Manager") of
the Portfolio. MSAM serves as adviser. The Manager pays MSAM a fee
computed at an annual rate equal to 1.15% on assets up to $100 million,
scaled down at various asset levels to 0.40% on assets over $500 million.
In the interest of limiting expenses of the Portfolio, the Manger has
entered into an expense limitation agreement with the Trust,pursuant to
which the Manager has agreed to waive or limit its fees and to assume
other expenses so that the total annual operating expenses of the
Portfolio are limited to 1.75% of the Portfolio's average daily net
assets.
(7) Fortis Advisers, Inc. serves as the manager (the "Manager") of the Series.
MSAM serves as sub-adviser. The Manager pays MSAM a fee computed at an
annual rate equal to 0.50% on assets up to $100 million and 0.40% on
assets over $100 million. Out of its advisory fee, but not in excess
thereof, the Manager reimburses the Series for the Series' expenses from
the date of the initial public offering until the date a Series' aggregate
net assets first reach $10,000,000, to the extent that the aggregate
expenses of the Series (including the investment advisory and management
fees under the Investment Advisory and Management Agreement, but excluding
interest, taxes, brokerage fees and commissions) exceed an amount equal,
on an annual basis, to 2.00% of the average daily net assets of the
Series.
II-4
<PAGE>
(8) Fifth Third Bank serves as adviser (the "Adviser") of the Fund. MSAM
serves as sub-adviser. The Adviser pays MSAM a fee computed at an annual
rate equal to 0.50%. The Adviser may from time to time and for such
periods as it deems appropriate reduce its compensation (and, if
appropriate, assume expenses of the Fund) to the extent that the Fund's
expenses exceed such lower expense limitations and/or for any other
reason, as the Adviser may, by notice to the Fund, voluntarily declare to
be effective.
(9) ARM Capital Advisors, Inc. serves as manager of the Portfolio (the
"Manager"). MSAM serves as sub-adviser. The Manager pays MSAM a fee
computed at an annual rate equal to 0.85%. The Manager has agreed to
reimburse the Portfolio on a pro rata basis up to the amount of its fee to
the extent that the total expenses of the Portfolio in a given year
(excluding interest, taxes, brokerage commissions, and extraordinary
expenses) exceed any applicable state expense limitations. The Manager
voluntarily limits the expenses of the Portfolio, other than for brokerage
commissions and the management fee, to 1.00% of average net assets on an
annualized basis.
(10) Manufactures Securities Services, LLC serves as the adviser (the
"Adviser") of the Trust. MSAM serves as sub-adviser. The Adviser pays MSAM
a fee computed at an annual rate equal to 0.50% on assets up to $50
million, scaled down at various asset levels to 0.325% on assets over $500
million. The Adviser may reduce its advisory fee or reimburse the Trust if
the total of all expenses (excluding advisory fees, taxes, portfolio
brokerage commissions, interest, litigation and indemnification expenses
and other extraordinary expenses not incurred in the ordinary course of
the Trust's business) applicable to the Trust exceeds an annual rate of
0.75% of average annual net assets of such Portfolio.
(11) CypressTree Asset Management Corporation, Inc. is the Fund's adviser (the
"Adviser"). MSAM serves as sub-adviser. The Adviser pays MSAM a fee
computed at an annual rate equal to 0.50% on assets up to $50 million,
scaled down at various asset levels to 0.325% on assets over $500 million.
The Adviser has agreed to reduce a Fund's advisory fee, or if necessary to
reimburse the Fund, in order to prevent the expenses of a Fund from
exceeding either the most restrictive expense limitation imposed by
applicable state law or a fixed expense limitation contained in the
advisory agreement, whichever results in the lowest expenses to the Fund.
(12) TNE Advisers, Inc. serves as manager (the "Manager") of the Series. MSAM
serves as sub-adviser. The Manager pays MSAM a fee computed at an annual
rate equal to 0.75% on assets up to $30 million, scaled down at various
asset levels to 0.40% on assets over $100 million. Pursuant to an expense
deferral arrangement, which the Manager may terminate at any time, the
Manager has agreed to pay the expenses of the Series' operations
(exclusive of any brokerage costs, interest, taxes, or extraordinary
expenses) in excess of 1.30%, subject to the obligation of the Series to
repay the Manager such expenses in future years, if any, when the Series'
expenses fall below 1.30%; such deferred expenses may be charged to the
Series in a subsequent year to the extent that the charge does not cause
the total expenses in such subsequent year to exceed 1.30%; provided,
however, that the Series is not obligated to repay any expense paid by the
Manager more than two years after the end of the fiscal year in which such
expense was incurred. The expense limits can be prospectively discontinued
by the Manager but any expenses that were deferred while the Series'
expense limit was in place can never be charged to that Series unless the
Series' expenses fall below the limit.
(13) Pacific Mutual Life Insurance Company serves as adviser (the "Adviser") of
the Portfolio. MSAM serves as portfolio manager. The Adviser pays MSAM a
fee computed at an annual rate equal to 0.35%. The Adviser has agreed that
it will reimburse the Portfolio, up to the amount of its fees payable
under the Advisory Agreement with respect to the assets of the Portfolio,
if and to the extent that the total expenses of the Portfolio for such
year (including compensation payable pursuant to the Advisory Agreement,
but excluding interest, taxes, brokerage commissions, and extraordinary
expenses) exceed limits applicable to the Portfolio in any state in which
shares of the Portfolio are then registered and qualified for sale.
(14) Princor Management Corporation is the Fund's manager (the "Manager"). MSAM
serves as sub-adviser. The Manager pays MSAM a fee computed at an annual
rate of 0.45% on assets up to $40 million, scaled down at various asset
levels to 0.20% on assets over $300 million. The Manager may, at its
option, waive all or part of its compensation for such period of time as
it deems necessary or appropriate.
(15) Sun America Asset Management Corp. serves as adviser (the "Adviser"). MSAM
serves as sub-adviser. The Adviser pays MSAM a fee computed at an annual
rate equal to 0.65% on assets up to $350 million and 0.60% on assets over
$350 million.
(16) VKAC is the adviser of the Fund. MSAM serves as sub-adviser. MSAM receives
50% of the compensation actually received by VKAC. VKAC charges an
advisory fee of 1.00%. VKAC may voluntarily undertake to reduce expenses
by reducing the fees payable to it to the extent of, or bearing expenses
in excess of, such limitations as it may establish.
(17) VKAC is the adviser of the Fund. MSAM serves as sub-adviser. MSAM receives
50% of the compensation actually received by VKAC. VKAC charges an
advisory fee of 1.00%. VKAC may, from time to time, agree to waive its fee
or any portion thereof or to elect to reimburse the Fund for ordinary
business expenses in excess of an agreed upon amount.
II-5
<PAGE>
TCW/DW CORE EQUITY TRUST
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Robert M. Scanlan, Barry Fink and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Special Meeting of Shareholders of
TCW/DW Core Equity Trust on February 26, 1998, at 9:00 a.m., New York City
time, and at any adjournment thereof, on the proposals set forth in the
Notice of Meeting dated December 1, 1997 as follows:
(Continued on reverse side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE TRUSTEES AND THE PROPOSALS SET FORTH ON THE REVERSE HEREOF
AND AS RECOMMENDED BY THE BOARD OF TRUSTEES.
IMPORTANT--This Proxy must be signed and dated on the reverse side.
<PAGE>
[X] PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK
1. Approval or Disapproval of the New Investment FOR AGAINST ABSTAIN
Management Agreement between the TCW/DW [ ] [ ] [ ]
Core Equity Trust and Dean Witter InterCapital
Inc.
2. Approval or Disapproval of the New Sub-Advisory FOR AGAINST ABSTAIN
Agreement between Dean Witter InterCapital Inc. [ ] [ ] [ ]
and Morgan Stanley Asset Management Inc.
3. Election of Trustees: FOR ALL
FOR WITHHOLD EXCEPT
[ ] [ ] [ ]
Michael Bozic, Charles A. Fiumefreddo,
Edwin Jacob (Jake) Garn, John R. Haire, Wayne E. Hedien,
Dr. Manuel H. Johnson, Michael E. Nugent, Philip J. Purcell,
and John L. Schroeder
If you wish to withhold authority for any particular nominee, mark the "FOR ALL
EXCEPT" box and strike a line through the Nominee's name.
Date
-------------------------------------
Please make sure to sign and date this Proxy using black or blue ink.
If the shares are registered in more than one name, each joint owner
or each fiduciary should sign personally. Only authorized officers
should sign for corporations.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Shareholder sign in the box above
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Co-Owner (if any) sign in the box above
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
| | PLEASE DETACH AT PERFORATION | |
TCW/DW CORE EQUITY TRUST
- -------------------------------------------------------------------------------
IMPORTANT
PLEASE SEND IN YOUR PROXY.........TODAY!
YOU ARE URGED TO DATE AND SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO
STOCKHOLDERS WHO HAVE NOT RESPONDED.
- -------------------------------------------------------------------------------
