DEAN WITTER RETIREMENT SERIES, 485BPOS, 1994-09-28

DEAN WITTER RETIREMENT SERIES
485BPOS, 1994-09-28

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 28, 1994

REGISTRATION NOS.: 33-48172
811-6682

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
- -----------------------------------------------------------------------------

FORM N-1A

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
[ ]
PRE-EFFECTIVE AMENDMENT NO.
[ ]
POST-EFFECTIVE AMENDMENT NO. 3
[X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
[ ]
AMENDMENT NO. 4
[X]
- -----------------------------------------------------------------------------

DEAN WITTER RETIREMENT SERIES

(A MASSACHUSETTS BUSINESS TRUST)

(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600

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

(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
DAVID M. BUTOWSKY, ESQ.
GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
- -----------------------------------------------------------------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the post-effective amendment becomes effective.
- -----------------------------------------------------------------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)

X immediately upon filing pursuant to paragraph (b)
on pursuant to paragraph (b)
60 days after filing pursuant to paragraph (b)
on (date) pursuant to paragraph (a) of rule 485.

THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO SECTION (A)(1) OF RULE 24F-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940. THE REGISTRANT HAS FILED A RULE 24F-2 NOTICE
FOR ITS FISCAL PERIOD ENDING JULY 31, 1994 WITH THE SECURITIES AND EXCHANGE
COMMISSION ON SEPTEMBER 22, 1994.
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS

DEAN WITTER RETIREMENT SERIES

CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
PART A
ITEM CAPTION PROSPECTUS
- ---------- --------------------------------------------------------
<S> <C>
1. Cover Page
2. Summary of Fund Expenses; Prospectus Summary
3. Performance Information; Financial Highlights
Investment Objectives and Policies; The Fund and its
Management; Cover Page; Investment Restrictions;
4. Prospectus Summary
The Fund and Is Management; Back Cover;
5. Investment Objective and Policies
Dividends, Distributions and Taxes; Additional
6. Information
Purchase of Fund Shares; Shareholder
Services; Repurchases and Redemptions;
7. Determination of Net Asset Value
8. Repurchases and Redemptions; Shareholder Services
9. Not Applicable
PART B
ITEM STATEMENT OF ADDITIONAL INFORMATION
- ---------- --------------------------------------------------------
10. Cover Page
11. Table of Contents
12. The Fund and Its Management
Investment Practices and Policies; Investment
13. Restrictions; Portfolio Transactions and Brokerage
The Fund and Its Management; Trustees and
14. Officers
15. Trustees and Officers
The Fund and Its Management; Custodian and Transfer
16. Agent; Independent Accountants
17. Portfolio Transactions and Brokerage
18. Description of Shares; Principal Securities Holders
Repurchases and Redemptions; Shareholder Services;
19. Determination of Net Asset Value
20. Dividends, Distributions and Taxes
21. Purchase of Fund Shares
22. Performance Information
Financial Statements
23.
</TABLE>

PART C

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in
Part C of this Registration Statement.

DEAN WITTER

(LOGO)

DEAN WITTER
- -----------------------------------------------------------------------------
RETIREMENT SERIES
- -----------------------------------------------------------------------------
SEPTEMBER 28, 1994
- -----------------------------------------------------------------------------
PROSPECTUS ENCLOSED
- -----------------------------------------------------------------------------

<PAGE>

PROSPECTUS DATED SEPTEMBER 28, 1994

DEAN WITTER RETIREMENT SERIES

TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
(212) 392-2550 or (800) 526-8143

DEAN WITTER RETIREMENT SERIES (the "Fund") is an open-end, no-load,
management investment company which provides a selection of investment
portfolios for institutional and individual investors participating in
various employee benefit plans and Individual Retirement Account rollover
plans. Each Series has its own investment objective and policies.
Shares of the Fund are sold and redeemed at net asset value without the
imposition of a sales charge. Dean Witter Distributors Inc., the Fund's
Distributor (the "Distributor"), and any of its affiliates are authorized,
pursuant to a Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, between the Distributor and Dean
Witter Reynolds Inc. ("DWR") and the Fund, to make payments, out of their own
resources, for expenses incurred in connection with the promotion of
distribution of shares of the Fund.

The LIQUID ASSET SERIES seeks high current income, preservation of capital
and liquidity by investing in corporate and government money market
instruments.

The U.S. GOVERNMENT MONEY MARKET SERIES seeks security of principal, high
current income and liquidity by investing primarily in money market
instruments which are issued and/or guaranteed, as to principal and interest,
by the U.S. Government, its agencies or instrumentalities.

The U.S. GOVERNMENT SECURITIES SERIES seeks high current income consistent
with safety of principal by investing in a diversified portfolio of
obligations issued and/or guaranteed by the U.S. Government or its
instrumentalities.

The INTERMEDIATE INCOME SECURITIES SERIES seeks high current income
consistent with safety of principal by investing primarily in intermediate
term, investment grade fixed-income securities.

The AMERICAN VALUE SERIES seeks long-term growth consistent with an effort
to reduce volatility by investing principally in common stock of companies in
industries which, at the time of the investment, are believed to be
undervalued in the marketplace.

The CAPITAL GROWTH SERIES seeks long-term capital growth by investing
primarily in common stocks selected through utilization of a computerized
screening process.

The DIVIDEND GROWTH SERIES seeks to provide reasonable current income and
long-term growth of income and capital by investing primarily in the common
stock of companies with a record of paying dividends and the potential for
increasing dividends.

The STRATEGIST SERIES seeks to maximize its total return by actively
allocating its assets among the major asset categories of equity securities,
fixed-income securities and money market instruments.

The UTILITIES SERIES seeks to provide current income and long-term growth
of income and capital by investing in equity and fixed-income securities of
companies in the public utilities industry.

The VALUE-ADDED MARKET SERIES' investment objective is to achieve a high
level of total return on its assets through a combination of capital
appreciation and current income. It seeks to achieve this objective by
investing, on an equally-weighted basis, in a diversified portfolio of common
stocks of the companies which are represented in the Standard & Poor's 500
Composite Stock Price Index.

The GLOBAL EQUITY SERIES' investment objective is a high level of total
return on its assets, primarily through long-term capital growth and, to a
lesser extent, from income. It seeks to achieve this objective through
investments in all types of common stocks and equivalents, preferred stocks
and bonds and other debt obligations of domestic and foreign companies and
governments and international organizations.

AN INVESTMENT IN THE LIQUID ASSET, U.S. GOVERNMENT MONEY MARKET AND/OR
U.S. GOVERNMENT SECURITIES SERIES IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE IS NO ASSURANCE THAT THE LIQUID ASSET OR U.S.
GOVERNMENT MONEY MARKET SERIES WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.

SHARES OF SERIES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY OTHER AGENCY.

The availability of the various methods of purchase and redemption of
shares of the Fund and other shareholder services will be governed by the
parameters set forth in the investor's employee benefit plan.

This Prospectus sets forth concisely the information you should know
<PAGE>

before investing in the Fund. It should be read and retained for future
reference. Additional information about the Fund is contained in the
Statement of Additional Information, dated September 28, 1994, which has been
filed with the Securities and Exchange Commission, and which is available at
no charge upon request of the Fund at the address or telephone number listed
above. The Statement of Additional Information is incorporated herein by
reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>

TABLE OF CONTENTS

Prospectus Summary/2
Summary of Fund Expenses/6
Financial Highlights/8
The Fund and its Management/9
Investment Objectives and Policies/10
Liquid Asset Series/10
U.S. Government Money Market Series/12
U.S. Government Securities Series/13
Intermediate Income Securities Series/16
American Value Series/17
Capital Growth Series/18
Dividend Growth Series/19
Strategist Series/19
Utilities Series/21
Value-Added Market Series/23
Global Equity Series/24
General Investment Techniques/25
Investment Restrictions/32
Determination of Net Asset Value/33
Purchase of Fund Shares/34
Shareholder Services/36
Redemptions and Repurchases/38
Dividends, Distributions and Taxes/39
Performance Information/41
Additional Information/41

PROSPECTUS SUMMARY
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
The The Fund is organized as a Trust, commonly known as a Massachusetts business trust, and
Fund is an open-end management investment company. The Fund is comprised of eleven separate
Series: the Liquid Asset Series; the U.S. Government Money Market Series; the
U.S. Government Securities Series; the Intermediate Income Securities Series; the
American Value Series; the Capital Growth Series; the Dividend Growth Series; the
Strategist Series; the Utilities Series; the Value-Added Market Series; and the Global
Equity Series (see page 9). The Trustees of the Fund may establish additional Series at
any time.
- -----------------------------------------------------------------------------
Shares Each Series is managed for investment purposes as if it were a separate fund issuing a
Offered separate class of shares of beneficial interest, with $.01 par value. The assets of each
Series are segregated, so that an interest in the Fund is limited to the assets of the
Series in which shares are held and shareholders are each entitled to a pro rata share
of all dividends and distributions arising from the net income and capital gains, if
any, on the investments of such Series (see page 41).
- -----------------------------------------------------------------------------
Offering The price of the shares of each Series of the Fund offered by this Prospectus is
Price determined once daily as of 4:00 p.m., New York time, on each day that the New York
Stock Exchange is open, and is equal to the net asset value per share without a sales
charge (see page 33). Purchases are limited to institutional and individual investors
participating in various employee benefit plans and Individual Retirement Account
("IRA") rollover plans; there is no minimum initial or subsequent purchase. The Fund and/or the
Distributor reserve the right to permit purchases by non-employee benefit plan investors.

<PAGE>

- -----------------------------------------------------------------------------
Investment Each Series has distinct investment objectives and policies, and is subject to various
Objectives and investment restrictions, some of which apply to all Series. The Liquid Asset Series
Policies seeks high current income, preservation of capital and liquidity by investing in the
following money market instruments: U.S. Government securities, obligations of U.S.
regulated banks and savings institutions having total assets of more than $1 billion, or
less than $1 billion if such are fully federally insured as to principal (the interest
may not be insured) and high grade corporate debt obligations maturing in thirteen
months or less (see pages 10-12). The U.S. Government Money Market Series seeks security
of principal, high current income and liquidity by investing primarily in money market
instruments maturing in thirteen months or less which are issued and/or guaranteed, as
to principal and interest, by the U.S. Government, its agencies or instrumentalities
(see pages 12-13). The U.S. Government Securities Series seeks high current income
consistent with safety of principal by investing in a diversified portfolio of
obligations issued and/or guaranteed by the U.S. Government or its instrumentalities
(see pages 13-16). The Intermediate Income Securities Series seeks high current income
consistent with safety of principal by investing primarily in intermediate term,
investment grade fixed-income securities (see pages 16-17). The American Value Series
seeks long-term growth consistent with an effort to reduce volatility by investing
primarily in common stock of companies in industries which, at the time of the
investment, are believed to be undervalued in the marketplace (see pages 17-18). The
Capital Growth Series seeks long-term capital growth by investing primarily in common
stocks selected through utilization of a computerized screening process (see pages
18-19). The Dividend Growth Series seeks to provide reasonable current income and
long-term growth of income and capital by investing primarily in the common stock of
companies with a record of paying dividends and the potential for increasing dividends
(see page 19). The Strategist Series seeks to maximize its total return by actively
allocating its assets among the major asset categories of equity securities,
fixed-income securities and money market instruments (see pages 19-21). The Utilities
Series seeks to provide current income and long-term growth of income and capital by
investing in equity and fixed-income securities of companies in the public utilities
industry. The Utilities Series will concentrate its investments in the electric
utilities industry (see pages 21-23). The Value-Added Market Series' investment
objective is to achieve a high level of total return on its assets through a combination
of capital appreciation and current income. It seeks to achieve this objective by
investing, on an equally-weighted basis, in a diversified portfolio of common stocks of
the companies which are represented in the Standard & Poor's 500 Composite Stock Price
Index (see pages 23-24). The Global Equity Series' investment objective is a high level
of total return on its assets primarily through long-term capital growth and, to a
lesser extent, from income. It seeks to achieve this objective through investments in
all types of common stocks and equivalents (such as convertible securities and
warrants), preferred stocks and bonds and other debt obligations of domestic and foreign
companies and governments and international organizations
(see pages 24-25).
- -----------------------------------------------------------------------------
Investment Dean Witter InterCapital Inc. ("InterCapital" or the Investment Manager"), the
Manager Investment Manager of the Fund, and its wholly-owned subsidiary, Dean Witter Services
Company, Inc., serve in various investment management, advisory, management and
administrative capacities to investment companies and other portfolios with assets of
approximately $71.3 billion at August 31, 1994 (see page 9).

- -----------------------------------------------------------------------------
Management The Investment Manager receives monthly fees at the following annual rates of the daily
Fees net assets of the respective Series of the Fund: Liquid Asset Series--0.50%; U.S.
Government Money Market Series--0.50%; U.S. Government Securities Series--0.65%;
Intermediate Income Securities Series--0.65%; American Value Series--0.85%; Capital
Growth Series--0.85%; Dividend Growth Series--0.75%; Strategist Series--0.85%; Utilities
Series--0.75%; Value-Added Market Series--0.50%; Global Equity Series--1.0%. The
management fees for the American Value, Capital Growth, Dividend Growth, Strategist,
Utilities and Global Equity Series are higher than those paid by most investment
companies.

<PAGE>

<PAGE>
- -----------------------------------------------------------------------------
Dividends and Liquid Asset Series and U.S. Government Money Market Series declare and reinvest all
Capital Gains dividends daily and pay cash dividends monthly; U.S. Government Securities Series and
Distributions Intermediate Income Securities Series declare dividends from net investment income daily
and pay such dividends monthly; Dividend Growth Series and Utilities Series declare and
pay dividends from net investment income quarterly; American Value Series, Capital
Growth Series, Strategist Series, Value-Added Market Series and Global Equity Series
declare and pay dividends from net investment income once each year. Each Series of the
Fund makes capital gains distributions, if any, at least annually. All dividends and
distributions are automatically reinvested in additional shares at net asset value
unless the shareholder elects to receive cash (see pages 39-41).
- -----------------------------------------------------------------------------

Distributor Dean Witter Distributors Inc. The Distributor and DWR have entered into a Plan of
Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "Act"), with the Fund, authorizing the Distributor and any of its affiliates to make
payments, out of their resources, for expenses incurred in connection with the promotion
of distribution of the Fund's shares (see page 34).
- -----------------------------------------------------------------------------
Redemption Shares of the Fund may be redeemed at their net asset value (see pages 38-39).
- -----------------------------------------------------------------------------
Shareholder Automatic investment of Dividends and Distributions (unless otherwise requested);
Services Systematic Payroll Deduction Plan; Exchange Privilege; Systematical Withdrawal Plan;
(see pages 36-37).
- -----------------------------------------------------------------------------
Risks The Liquid Asset Series invests solely in U.S. Government securities, high quality
corporate debt obligations and obligations of banks and savings and loan associations
having assets of $1 billion or more and certificates of deposit which are fully insured
as to principal; consequently, the portfolio securities of the Series are subject to
minimal risk of loss of income and principal. However, the investor is directed to the
discussions of "repurchase agreements" (page 25) and "reverse repurchase agreements"
(page 25) concerning any risks associated with these investment techniques. The U.S.
Government Money Market Series invests principally in high quality, short-term
fixed-income securities issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities. Such securities are subject to minimal
risk of loss of income and principal. However, shareholders should also refer to the
discussions of "repurchase agreements" (page 25), "when-issued and delayed delivery
securities and forward commitments" (page 25) and "reverse repurchase agreements" (page
25). The U.S. Government Securities Series invests only in obligations issued or
guaranteed by the U.S. Government which are subject to minimal risk of loss of income
and principal. The value of the securities holdings of the U.S. Government Securities
Series and, thereby, the net asset value of its shares, may increase or decrease due to
various factors, principally changes in prevailing interest rates. Generally, a rise in
interest rates will result in a decrease in the net asset value per share. In addition,
the average life of certain of the securities held in the U.S. Government Securities
Series (e.g., GNMA Certificates) may be shortened by prepayments or refinancings of the
mortgage pools underlying such securities (pages 13-16). Such prepayments may have an
impact on dividends paid by the U.S. Government Securities Series. Shareholders should
also refer to the discussions of "repurchase agreements", "when-issued and delayed
delivery securities and forward commitments" and "zero coupon securities" (pages 25-26).
The net asset value of the shares of the Intermediate Income Securities Series will
fluctuate with changes in the market value of its securities holdings. The Series may
invest in securities rated "BBB" by Standard & Poor's Corporation or "Baa" by Moody's
Investors Service, Inc., which securities have speculative characteristics. Shareholders
should also refer to the discussions of "when-issued and delayed delivery securities and
forward commitments" (page 25), "when, as and if issued securities" (page 26), "zero
coupon securities" (page 26) and "reverse repurchase agreements" (page 25). The American
Value Series' emphasis on "undervalued" industries reflects investment views frequently
contrary to general market assessments and may involve risks associated with departure
from
4
<PAGE>

<PAGE>

general investment opinions. Shareholders should also refer to the discussions of
"repurchase agreements" (page 25), "when, as and if issued securities" (page 26) and
"warrants" (page 26). The net asset value of the shares of the Capital Growth Series
will fluctuate with changes in the market value of its portfolio securities. The Capital
Growth Series may purchase foreign, when-issued and delayed delivery, and when, as and
if issued securities, and futures and options, all of which involve certain special
risks (pages 25-31). The net asset value of the shares of the Dividend Growth Series
will fluctuate with changes in the market value of its securities holdings. Dividends
payable by the Dividend Growth Series will vary in relation to the amounts of dividends
and interest paid by its securities holdings. Shareholders should also refer to the
discussions of "repurchase agreements" (page 25), "when, as and if issued securities"
(page 26) and "warrants" (page 26). The net asset value of the shares of Strategist
Series will fluctuate with changes in the market value of its portfolio securities. The
level of income payable to the investor will vary depending upon the market allocation
determined by the Investment Manager and with various market determinants such as
interest rates. The Series may make various investments and may engage in various
investment strategies including options and futures transactions (pages 28-31),
when-issued and delayed delivery securities and forward commitments (page 25), when, as
and if issued securities (page 25) and repurchase agreements (page 25). The Strategist
Series is "non-diversified" and is therefore not subject to the diversification
requirements of the Act. This non-diversified status allows the Strategist Series to
increase its investment in the securities of an individual issuer, and, thereby,
subjects the Series to greater exposure to any risks pertaining to investment in the
issuer's securities (page 21). The net asset value of the shares of the Utilities Series
fluctuates with changes in the market value of its securities holdings. The public
utilities industry has certain characteristics and risks, and developments within that
industry will have an impact on the Utilities Series. The value of public utility debt
securities (and, to a lesser extent, equity securities) tends to have an inverse
relationship to the movement of interest rates. Shareholders should also refer to the
discussions of "repurchase agreements" (page 25), "when-issued and delayed delivery
securities and forward commitments" (page 25), "when, as and if issued securities" (page
26), "zero coupon securities" (page 26), and "foreign securities" (pages 26-27). The net
asset value of the shares of the Value-Added Market Series will fluctuate with changes
in the market value of its securities holdings. Dividends payable by the Value-Added
Market Series will vary in relation to the amounts of income paid by its securities
holdings. Shareholders should also refer to the discussion of "repurchase agreements"
(page 25) and "options and futures transactions" (pages 28-31). The Global Equity Series
is intended for long-term investors who can accept the risks involved in investments in
the securities of companies and countries located throughout the world. It should be
recognized that investing in such securities involves different and perhaps greater
risks than are customarily associated with securities of domestic companies or trading
in domestic markets. In addition, shareholders should consider risks inherent in an
international portfolio, including exchange fluctuations and exchange controls, and
certain of the investment policies which the Global Equity Series may employ, including
transactions in forward foreign currency exchange contracts (see pages 26-28). Moreover,
the expenses of the Global Equity Series are likely to be greater than those incurred by
other Series in the Fund and other investment companies which invest primarily in
securities of domestic issuers. The Intermediate Income Securities, American Value,
Capital Growth, Strategist, Utilities, Value-Added Market and Global Equity Series may
write call options on securities held in their portfolios without limit (see page 28).
Certain of the Series of the Fund may experience high portfolio turnover rates with
corresponding higher transaction expenses and potentially adverse tax consequences. See
"Portfolio Trading" (pages 31-32).

<PAGE>

SUMMARY OF FUND EXPENSES
- -----------------------------------------------------------------------------

The following table illustrates all expenses and fees that a shareholder of
the Fund will incur. The expenses and fees set forth in the table are for the
year ending July 31, 1995, except as otherwise noted.

Shareholder Transaction Expenses (for each Series)

</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Charge Imposed on Purchases ............... None
Maximum Sales Charge Imposed on Reinvested Dividends ... None
Deferred Sales Charge ................................... None
Redemption Fees ......................................... None
Exchange Fee ............................................ None
</TABLE>

Annual Operating Expenses (as a Percentage of Average Net Assets)*

<TABLE>
<CAPTION>
INTERMEDIATE
U.S. GOVERNMENT U.S. GOVERNMENT INCOME AMERICAN
LIQUID ASSET MONEY MARKET SECURITIES SECURITIES VALUE CAPITAL
SERIES SERIES SERIES SERIES SERIES GROWTH
-------------- --------------- --------------- -------------- ---------- ---------

<S> <C> <C> <C> <C> <C> <C>
Management Fees*
(after fee waiver) .. 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
12b-1 Fees ............ 0.0 0.0 0.0 0.0 0.0 0.0
Other Expenses*
(after expense
assumption) .......... 0.0 0.0 0.0 0.0 0.0 0.0
Total Series Operating
Expenses ............. 0.0 0.0 0.0 0.0 0.0 0.0
</TABLE>

<TABLE>
<CAPTION>
DIVIDEND
GROWTH STRATEGIST UTILITIES VALUE-ADDED GLOBAL EQUITY
SERIES SERIES SERIES MARKET SERIES SERIES
---------- ------------ ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Management Fees*
(after fee waiver) .. 0.0% 0.0% 0.0% 0.0% 0.0%
12b-1 Fees ............ 0.0 0.0 0.0 0.0 0.0
Other Expenses* (after
expense assumption) . 0.0 0.0 0.0 0.0 0.0
Total Series Operating
Expenses ............. 0.0 0.0 0.0 0.0 0.0
</TABLE>

Example

You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:

<TABLE>
<CAPTION>
INTERMEDIATE
INCOME CAPITAL
LIQUID ASSET U.S. GOVERNMENT U.S. GOVERNMENT SECURITIES AMERICAN GROWTH
SERIES MONEY MARKET SERIES SECURITIES SERIES SERIES VALUE SERIES SERIES
---------------- ------------------- ------------------- ---------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
1 year ...... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
3 years ..... 0 0 0 0 0 0
5 years ..... 0 0 0 0 0 0
10 years .... 0 0 0 0 0 0
</TABLE>

<PAGE>

DIVIDEND
GROWTH STRATEGIST UTILITIES VALUE-ADDED GLOBAL EQUITY
SERIES SERIES SERIES MARKET SERIES SERIES
------------ -------------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
1 year ...... $ 0 $ 0 $ 0 $ 0 $ 0
3 years ..... 0 0 0 0 0
5 years ..... 0 0 0 0 0
10 years .... 0 0 0 0 0
</TABLE>

"Management Fees," (after fee waiver) for each Series as shown above, is
for the fiscal year of the Fund ending July 31, 1995. "Other Expenses" (after
expense assumption) as shown above is based upon estimated amounts of
expenses of each Series of the Fund for its fiscal year ending July 31, 1995.

If administrative services are performed by Dean Witter Trust Company
("DWTC"), the Fund's Transfer and Dividend Disbursing Agent and an affiliate of
the Investment Manager, it may charge fees for such services which are
negotiated between each employee benefit plan and DWTC.

*The Investment Manager has undertaken to assume all expenses relating to
each Series' operations (except for brokerage fees and a portion of
organizational expenses) and to waive the compensation provided for in its
Management Agreement relating to the management of each Series until such
time as the Series has $50 million of net assets or until July 31, 1995,
whichever occurs first.

It is estimated that total operating expenses for each Series for the
fiscal period of the Fund ending July 31, 1995, assuming no waiver of
management fees or assumption of other expenses, would be:

<TABLE>
<CAPTION>
INTERMEDIATE
U.S. GOVERNMENT U.S. GOVERNMENT INCOME AMERICAN CAPITAL
LIQUID ASSET MONEY MARKET SECURITIES SECURITIES VALUE GROWTH
SERIES SERIES SERIES SERIES SERIES SERIES
-------------- --------------- --------------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management Fees ....... 0.5000% 0.5000% 0.6500% 0.6500% 0.7857% 0.0833%
12b-1 Fees ............ 0.0 0.0 0.0 0.0 0.0 0.0
Other Expenses ........ 2.0000 2.0000 1.8500 1.8500 1.7143 2.4167
Total Series Operating
Expenses ............. 2.5000 2.5000 2.5000 2.5000 2.5000 2.5000
</TABLE>

<TABLE>
<CAPTION>
DIVIDEND
GROWTH STRATEGIST UTILITIES VALUE-ADDED GLOBAL EQUITY
SERIES SERIES SERIES MARKET SERIES SERIES
---------- ------------ ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Management Fees ....... 0.7500% 0.3600% 0.6700% 0.5000% 0.4143%
12b-1 Fees ............ 0.0 0.0 0.0 0.0 0.0
Other Expenses ........ 0.7641 2.1400 1.8300 1.3200 2.0857
Total Series Operating
Expenses ............. 1.5141 2.5000 2.5000 1.8200 2.5000
</TABLE>

The above example should not be considered a representation of future
expenses or performance. Actual expenses of the Fund may be greater or less
than those shown.

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

<PAGE>

FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------

The following per share data and ratios for a share of beneficial interest
outstanding throughout the period have been audited by Price Waterhouse,
independent accountants. The per share data and ratios should be read in
conjunction with the financial statements, and notes thereto, and the report
of independent accountants which are contained in the Statement of Additional
Information. Further information about the performance of the Fund's Series
is contained in the Fund's Annual Report to Shareholders which may be
obtained without charge upon request to the Fund.

NET
NET REAL-
ASSET IZED TOTAL TOTAL NET RATIOS TO
VALUE NET AND FROM DIVI- DISTRI- DIVI- ASSET NET AVERAGE NET ASSETS
BEGIN- INVEST- UNREAL- INVEST- DENDS BUTIONS DENDS VALUE, TOTAL ASSETS, -------------------------
PERIOD NING MENT IZED MENT TO TO AND END INVEST- END OF NET PORTFOLIO
ENDED OF INCOME GAIN OPER- SHARE- SHARE- DISTRI- OF MENT PERIOD INVESTMENT TURNOVER
JULY 31 PERIOD (LOSS) (LOSS) ATIONS HOLDERS HOLDERS BUTIONS PERIOD RETURN (000'S) EXPENSES INCOME (LOSS) RATE
- ------- ------ ------ ------ ------ ------- ------- ------- ------ ------ ------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIQUID ASSET SERIES (1)
1993 $ 1.00 $0.02 -0- $ 0.02 $(0.02) -0- $(0.02) $ 1.00 1.77%(A) $ 1,081 0.14%(B)(C) 3.02%(B)(C) N/A
1994 1.00 0.03 -0- 0.03 (0.03) -0- (0.03) 1.00 3.48 1,524 -0- (D) 3.49 (D) N/A
U.S. GOVERNMENT MONEY MARKET SERIES (2)
1993 1.00 -0- -0- -0- -0- -0- -0- 1.00 0.42 (A) 125 2.13 (B)(C) 0.83 (B)(C) N/A
1994 1.00 0.03 -0- 0.03 (0.03) -0- (0.03) 1.00 3.52 555 -0- (D) 3.32 (D) N/A
U.S. GOVERNMENT SECURITIES SERIES (3)
1993 10.00 0.19 $ 0.07 0.26 (0.20) -0- (0.20) 10.06 2.60 (A) 1,756 0.18 (B)(C) 3.66 (B)(C) -0-
1994 10.06 0.44 (0.50) (0.06) (0.44) -0- (0.44) 9.56 (0.69) 2,954 -0- (D) 4.49 (D) 29
INTERMEDIATE INCOME SECURITIES SERIES (4)
1993 10.00 0.19 (0.02) 0.17 (0.19) -0- (0.19) 9.98 1.67 (A) 182 1.62 (B)(C) 3.50 (B)(C) -0-
1994 9.98 0.60 (0.57) 0.60 (0.60) -0- (0.60) 9.41 0.26 460 -0- (D) 6.14 (D) 40
AMERICAN VALUE SERIES (6)
1993 10.00 0.06 (0.01) 0.05 -0- -0- -0- 10.05 0.50 (A) 308 0.74 (B)(C) 1.10 (B)(C) 121
1994 10.05 0.03 (0.09) (0.06) (0.02) $ (0.04) (0.06) 9.93 (0.59) 6,841 -0- (D) 1.69 (D) 136
CAPITAL GROWTH SERIES (7)
1993 10.00 (0.02) (1.10) (1.12) -0- -0- -0- 8.88 (11.20)(A) 135 1.97 (B)(C) (0.47)(B)(C) 2
1994 8.88 0.13 0.45 0.58 (0.04) -0- (0.04) 9.42 6.57 215 -0- (D) 1.52 (D) 11
DIVIDEND GROWTH SERIES (5)
1993 10.00 0.13 0.58 0.71 (0.10) -0- (0.10) 10.61 7.11 (A) 2,417 0.16 (B)(C) 2.89 (B)(C) 7
1994 10.61 0.28 0.37 0.65 (0.23) (0.01) (0.24) 11.02 6.13 12,821 -0- (D) 3.29 (D) 13
UTILITIES SERIES (3)
1993 10.00 0.19 1.30 1.49 (0.14) -0- (0.14) 11.35 14.98 (A) 1,334 0.30 (B)(C) 3.79 (B)(C) 8
1994 11.35 0.37 (0.95) (0.58) (0.34) (0.01) (0.35) 10.42 (5.23) 3,860 -0- (D) 4.14 (D) 5
VALUE-ADDED MARKET SERIES (6)
1993 10.00 0.05 0.02 0.07 (0.04) -0- (0.04) 10.03 0.71 (A) 640 0.92 (B)(C) 1.42 (B)(C) 1
1994 10.03 0.24 0.65 0.89 (0.11) -0- (0.11) 10.81 8.89 5,133 -0- (D) 2.53 (D) 8
GLOBAL EQUITY SERIES (3)
1993 10.00 0.07 (0.03) 0.04 -0- -0- -0- 10.04 0.40 (A) 322 1.00 (B)(C) 1.77 (B)(C) -0-
1994 10.04 0.08 0.58 0.66 (0.05) -0- (0.05) 10.65 6.54 2,020 -0- (D) 2.41 (D) 8
STRATEGIST SERIES (5)
1993 10.00 0.06 (0.23) (0.17) -0- -0- -0- 9.83 (1.70)(A) 551 0.64 (B)(C) 1.67 (B)(C) 26
1994 9.83 0.23 (0.21) 0.02 (0.13) -0- (0.13) 9.72 0.12 1,276 -0- (D) 3.20 (D) 57
</TABLE>

<PAGE>

Commencement of operations:
(1) December 30, 1992
(2) January 20, 1993
(3) January 8, 1993
(4) January 12, 1993
(5) January 7, 1993
(6) February 1, 1993
(7) February 2, 1993
(a) Not annualized.
(b) Annualized.
(c) If the Fund had borne all its expenses that were assumed or waived by the
Investment Manager, the above annualized expense ratio, after application
of the Fund's state expense limitation, and the above annualized net
investment income (loss) ratio would have been 1.30% and 0.53% for the
Liquid Asset Series, 2.50% and (0.95%) for the U.S. Government Money
Market Series, 1.81% and 0.33% for the U.S. Government Securities Series,
2.50% and 1.00% for the Intermediate Income Securities Series, 2.50% and
(.66%) for the American Value Series, 2.50% and (1.01%) for the Capital
Growth Series, 2.50% and 0.61% for the Dividend Growth Series, 2.50% and
1.59% for the Utilities Series, 2.50% and (0.16%) for the Value-Added
Market Series, 2.50% and (0.90%) for the Global Equity Series and 2.50%
and (0.19%) for the Strategist Series.
(d) If the Fund had borne all its expenses that were assumed or waived by the
Investment Manager, the above expense and net investment income ratio to
average net assets, after application of the Fund's expense limitation,
would have been 2.50% and .99% for the Liquid Asset Series, 2.50% and .82%
for the U.S. Government Money Market Series, 2.50% and 1.96% for the U.S.
Government Securities Series, 2.50% and 3.64% for the Intermediate Income
Securities Series, 2.50% and (.81%) for the American Value Series, 2.50%
and (.98%) for the Capital Growth Series, 1.51% and 1.78% for the Dividend
Growth Series, 2.50% and 1.62% for the Utilities Series, 1.82% and .70%
for the Value-Added Market Series, 2.50% and (.09%) for the Global Equity
Series and 2.50% and .70% for the Strategist Series, respectively.

See Notes to Financial Statements

<PAGE>

THE FUND AND ITS MANAGEMENT
- -----------------------------------------------------------------------------

Dean Witter Retirement Series (the "Fund") is an open-end, no-load,
management investment company consisting of eleven separate Series: Liquid
Asset Series; U.S. Government Money Market Series; U.S. Government Securities
Series; Intermediate Income Securities Series; American Value Series; Capital
Growth Series; Dividend Growth Series; Strategist Series; Utilities Series;
Value-Added Market Series; and Global Equity Series. All of the Series, with
the exception of the Strategist Series, are diversified. The Fund is a trust
of the type commonly known as a "Massachusetts business trust" and was
organized under the laws of Massachusetts on May 14, 1992. The Distributor
and any of its affiliates are authorized, pursuant to a Plan of Distribution
adopted in accordance with Rule 12b-1 of the Investment Company Act of 1940,
as amended (the "Act"), between the Distributor and DWR and the Fund, to make
payments for expenses, out of their own resources, incurred in connection
with the promotion of distribution of shares of the Fund.

Dean Witter InterCapital Inc. ("InterCapital" or the "Investment
Manager"), whose address in Two World Trade Center, New York, New York 10048,
is the Fund's Investment Manager. The Investment Manager, which was
incorporated in July, 1992, is a wholly-owned subsidiary of Dean Witter,
Discover & Co. ("DWDC") a balanced financial services organ-ization providing
a broad range of nationally marketed credit and investment products.

InterCapital and its wholly-owned subsidiary, Dean Witter Services Company
Inc., serve in various investment management, advisory, management and
administrative capacities to a total of eighty-eight investment companies (the
"Dean Witter Funds"), thirty of which are listed on the New York Stock
Exchange, with combined assets of approximately $69.3 billion as of August 31,
1994. The Investment Manager also manages and advises portfolios of pension
plans, other institutions and individuals which aggregated approximately $2.0
billion at such date.

The Fund has retained the Investment Manager to provide administrative
services, manage its business affairs and manage the investment of the Fund's
assets, including the placing of orders for the purchase and sale of
portfolio securities. InterCapital has retained Dean Witter Services Company
Inc. to perform the aforementioned administrative services for the Fund. The
Fund's Trustees review the various services provided by the Investment
Manager to ensure that the Fund's general investment policies and programs
are being properly carried out and that administrative services are being
provided to the Fund in a satisfactory manner.

As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Investment Manager, the Fund pays
the Investment Manager monthly compensation calculated daily by applying the
annual rate of 0.50% to the net assets of the Liquid Asset Series; 0.50% to
the net assets of the U.S. Government Money Market Series; 0.65% to the net
assets of the U.S. Government Securities Series; 0.65% to the net assets of
the Intermediate Income Securities Series; 0.85% to the net assets of the
American Value Series; 0.85% to the net assets of the Capital Growth Series;
0.75% to the net assets of the Dividend Growth Series; 0.85% to the net
assets of the Strategist Series; 0.75% to the net assets of the Utilities
Series; 0.50% to the net assets of the Value-Added Market Series; and 1.0% to
the Global Equity Series, each business day. The management fees set forth
above for the American Value, Capital Growth, Dividend Growth, Strategist,
Utilities and Global Equity Series are higher than those paid by most
investment companies.

The Fund's expenses include: the fee of the Investment Manager; taxes;
certain legal, transfer agent, custodian and auditing fees; and printing and
other expenses relating to the Fund's operations which are not expressly
assumed by the Investment Manager under its Management Agreement with the
Fund. The Investment Manager has undertaken to assume all expenses relating
to each Series' operations (except for brokerage fees and a portion of
organizational expenses) and to waive the compensation provided for in its
Management Agreement relating to the management of each Series until such
time as the pertinent Series has $50 million of net assets or until July 31,
1995, whichever occurs first. As of the date of the Prospectus, no Series has
attained a size of $50 million.

<PAGE>

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

LIQUID ASSET SERIES

The investment objectives of the Liquid Asset Series are high current
income, preservation of capital and liquidity. The investment objectives may
not be changed without approval of the Series' shareholders. The Series seeks
to achieve its objectives by investing in the following money market
instruments:

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

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

Obligations of Savings Institutions. Certificates of deposit of savings
banks and savings and loan associations, having total assets of $1 billion or
more;

Fully Insured Certificates of Deposit. Certificates of deposit of banks
and savings institutions having total assets of less than $1 billion, if the
principal amount of the obligation is federally insured by the Bank Insurance
Fund or the Savings Association Insurance Fund (each of which is administered
by the Federal Deposit Insurance Corporation), limited to $100,000 principal
amount per certificate and to 10% or less of the Fund's total assets in all
such obligations and in all illiquid assets, in the aggregate;

Commercial Paper and Corporate Obligations. Commercial paper and corporate
debt obligations maturing in thirteen months or less which are rated in one
of the two highest rating categories for short-term debt obligations or, if
not rated, have been issued by issuers which have another short-term debt
obligation that is comparable in priority and security to such non-rated
securities and is so rated, by at least two nationally recognized statistical
rating organizations ("NRSROs") (or one NRSRO if the instrument was Rated by
only one such organization) or which, if unrated, are of comparable quality
as determined in accordance with procedures established by the Trustees. The
NRSROs currently rating instruments of the type the Series may purchase are
Moody's Investors Service, Inc., Standard & Poor's Corporation, Duff and
Phelps, Inc., Fitch Investors Service, Inc., IBCA Limited and IBCA Inc., and
Thomson BankWatch, Inc. Their rating criteria are described in the Appendix
to the Fund's Statement of Additional Information.

The foregoing rating limitations apply at the time of acquisition of a
security. Any subsequent change in any rating by a rating service will not
require elimination of any security from the Series' portfolio. However, in
accordance with procedures adopted by the Fund's Trustees pursuant to federal
securities regulations governing money market funds, if the Investment
Manager becomes aware that a portfolio security has received a new rating
from an NRSRO that is below the second highest rating, then, unless the
security is disposed of within five days, the Investment Manager will perform
a creditworthiness analysis of any such downgraded securities, which analysis
will be reported to the Trustees who will, in turn, determine whether the
securities continue to present minimal credit risks to the Liquid Asset
Series.

The ratings assigned by the NRSROs represent their opinions as to the
quality of the securities they undertake to rate. It should be emphasized,
however, that the ratings are general and not absolute standards of quality.

Subject to the foregoing requirements, the Liquid Asset Series may invest
in commercial paper which has been issued pursuant to the "private placement"
exemption afforded by Section 4(2) of the Securities Act of 1933 (the
"Securities Act") and which may be sold to institutional investors pursuant
to Rule 144A under the Securities Act. Management considers such legally
restricted, but readily marketable, commercial paper to be liquid. However,
pursuant to procedures approved by the Trustees of the Fund, if a particular
investment in such commercial paper is determined to be illiquid, that
investment will be included within the 10% limitation on illiquid
investments (see "Investment Restrictions"). If at any time the Liquid Asset
Series'

<PAGE>

PAGE>
investments in illiquid securities exceed 10% of the Series' total assets,
the Series will dispose of illiquid securities in an orderly fashion to
reduce the Series' holdings in such securities to less than 10% of its total
assets.

Variable Rate and Floating Rate Obligations. Certain of the types of
investments described above may be variable rate or floating rate
obligations. The interest rates payable on variable rate or floating rate
obligations are not fixed and may fluctuate based upon changes in market
rates. The interest rate payable on a variable rate obligation may be
adjusted at pre-designated periodic intervals and on a floating rate
obligation whenever there is a change in the market rate of interest on which
the interest rate payable is based.

Although the Liquid Asset Series will generally not seek profits through
short-term trading, it may dispose of any portfolio security prior to its
maturity if, on the basis of a revised credit evaluation of the issuer or
other circumstances or considerations, it believes such disposition
advisable.

The Liquid Asset Series will attempt to balance its objectives of high
income, capital preservation and liquidity by investing in securities of
varying maturities and risks. The Liquid Asset Series will not, however,
invest in securities that mature in more than thirteen months from the date
of purchase. The amounts invested in obligations of various maturities of
thirteen months or less will depend on management's evaluation of the risks
involved. Longer-term issues, while generally paying higher interest rates,
are subject, as a result of general changes in interest rates, to greater
fluctuations in value than shorter-term issues. Thus, when rates on new debt
securities increase, the value of outstanding securities may decline, and
vice versa. Such changes may also occur, but to a lesser degree, with
short-term issues. These changes, if realized, may cause fluctuations in the
amount of daily dividends and, in extreme cases, could cause the net asset
value per share to decline (see "Determination of Net Asset Value").
Longer-term issues also increase the risk that the issuer may be unable to
pay an installment of interest or principal at maturity. Also, in the event
of unusually large redemption demands, such securities may have to be sold at
a loss prior to maturity, or the Liquid Asset Series might have to borrow
money and incur interest expense. Either occurrence would adversely impact
the amount of daily dividend and could result in a decline in the daily net
asset value per share. The Liquid Asset Series will attempt to minimize these
risks by investing in longer-term securities when it appears to management
that interest rates on such securities are not likely to increase
substantially during the period of expected holding, and then only in
securities of high quality which are readily marketable. However, there can
be no assurance that the Portfolio will be successful in achieving this or
its other objectives.

Private Placements. As stated above, the Liquid Asset Series may invest in
commercial paper issued in reliance on the so-called "private placement"
exemption from registration afforded by Section 4(2) of the Securities Act of
1933 (the "Securities Act") and which may be sold to other institutional
investors pursuant to Rule 144A under the Securities Act. The adoption by the
Securities and Exchange Commission of Rule 144A, which permits the resale of
certain restricted securities to institutional investors, had the effect of
broadening and increasing the liquidity of the institutional trading market
for securities subject to restrictions on resale to the general public.
Section 4(2) commercial paper sold pursuant to Rule 144A is restricted in
that it can be resold only to qualified institutional investors. However,
since institutions constitute virtually the entire market for such commercial
paper, the market for such Section 4(2) commercial paper is, in reality, as
liquid as that for other commercial paper. While the Liquid Asset Series
generally holds to maturity commercial paper in its portfolio, the advent of
Rule 144A has greatly simplified the ability to sell Section 4(2) commercial
paper to other institutional investors.

Under procedures adopted by the Trustees of the Fund, the Liquid Asset
Series may purchase Section 4(2) commercial paper without being subject to its
limitation on illiquid investments and will be able to utilize Rule 144A to
sell that paper to other institutional investors. The procedures require that
the Investment Manager consider the following factors in determining that any
restricted security eligible for sale pursuant to Rule 144A be considered
liquid: (1) the frequency of trades and quotes for the security, (2) the number
of dealers willing to purchase or sell the security and the number of other
potential purchasers, (3) dealer undertakings to make a market in the security,
and (4) the nature of the security and the nature of the marketplace trades
(i.e., the time needed to dispose

<PAGE>

of the security, the method of soliciting offers and the mechanics of
transfer). The Investment Manager will report to the Trustees on a quarterly
basis on all restricted securities held by the Liquid Asset Series with
regard to their ongoing liquidity. In the event any Section 4(2) commercial
paper or the restricted security held by the Liquid Asset Series is
determined to be illiquid by the Trustees and the Investment Manager, that
investment would be included as an illiquid security subject to the
limitation on illiquid investments referred to above.

The foregoing investment policies are not fund-amental and may be changed
by the Trustees without shareholder vote.

U.S. GOVERNMENT MONEY MARKET SERIES

The investment objectives of the U.S. Government Money Market Series are
security of principal, high current income and liquidity. There is no
assurance that the investment objectives will be achieved. These investment
objectives may not be changed without the approval of the shareholders of the
U.S. Government Money Market Series. The investment policies discussed below
may be changed without shareholder approval.

The U.S. Government Money Market Series seeks to achieve its objectives by
investing in U.S. Government securities, including a variety of securities
which are issued and/or guaranteed, as to principal and interest, by the
United States Treasury, by various agencies of the United States Government,
and by various instrumentalities which have been established or sponsored by
the United States Government, and in certain interests in the foregoing
securities. Except for U.S. Treasury securities, these obligations, even
those which are guaranteed by Federal agencies or instrumentalities, may or
may not be backed by the "full faith and credit" of the United States. In the
case of securities not backed by the full faith and credit of the United
States, they may be backed, in part, by a line of credit with the U.S.
Treasury (such as the Federal National Mortgage Association), or the U.S.
Government Money Market Series must look to the agency issuing or
guaranteeing the obligation for ultimate repayment (such as securities of the
Federal Farm Credit System), in which case the U.S. Government Money Market
Series may not be able to assert a claim against the United States itself in
the event the agency or instrumentality does not meet its commitments. The
assumption of the liabilities of these agencies or instrumentalities by the
U.S. Government is discretionary and is not a lawful obligation.

Treasury securities include Treasury bills, Treasury notes, and Treasury
bonds. Some of the government agencies and instrumentalities which issue or
guarantee securities include the Federal Farm Credit System, the Federal Home
Loan Banks, the Federal Home Loan Mortgage Corporation, the Government
National Mortgage Association, the Federal National Mortgage Association, the
Farmers Home Administration, the Federal Land Banks, the Small Business
Administration, the Student Loan Marketing Association, the Export-Import
Bank, the Federal Intermediate Credit Banks and the Banks for Cooperatives.

The U.S. Government Money Market Series may invest in securities issued or
guaranteed, as to principal and interest, by any of the foregoing entities or
by any other agency or instrumentality established or sponsored by the United
States Government. Such investments may take the form of participation
interests in, and may be evidenced by deposit or safekeeping receipts for,
any of the foregoing. Participation interests are pro rata interests in U.S.
Government securities such as interests in pools of mortgages sold by the
Government National Mortgage Association; instruments evidencing deposit or
safekeeping are documentary receipts for such original securities held in
custody by others.

The Federal Deposit Insurance Corporation is the administrative authority
over the Bank Insurance Fund and the Savings Association Insurance Fund,
which are the agencies of the U.S. Government which insure (including both
principal and interest) the deposits of certain banks and savings and loan
associations up to $100,000 per deposit. Current federal regulations also
permit such institutions to issue insured negotiable certificates of deposit
("CDs") in principal amounts of $100,000 or more without regard to the
interest rate ceilings on other deposits. To remain fully insured as to
principal, these investments must currently be limited to $100,000 per bank
or savings and loan association. The interest on such investments is not
insured. The U.S. Government Money Market Series may invest in such CDs of
banks and savings and loan institutions limited to the insured amount of
principal ($100,000) in each case and limited with regard to all such CDs and
all illiquid assets, in the aggregate, to 15% of the U.S. Government Money
Market Series' total assets.

The U.S. Government Money Market Series intends normally to hold its
portfolio securities to

<PAGE>

maturity. Historically, securities issued or guaranteed by the U.S.
Government or its agencies and instrumentalities have involved minimal risk
of loss of principal or interest, if held to maturity.

The U.S. Government Money Market Series will generally not seek profits
through short-term trading, although it may dispose of any portfolio security
prior to maturity if, on the basis of a revised evaluation or other
circumstance or consideration, the Investment Manager deems such disposition
advisable.

The U.S. Government Money Market Series will attempt to balance its
objectives of security of principal, high current income and liquidity by
investing in securities of varying maturities and risks. The U.S. Government
Money Market Series will not, however, invest in securities with an effective
maturity of more than thirteen months from the date of purchase. The amounts
invested in obligations of various maturities of thirteen months or less will
depend on management's evaluation of the risks involved. Longer-term U.S.
Government issues, while generally paying higher interest rates, are subject
to greater fluctuations in value resulting from general changes in interest
rates than shorter-term issues. Thus, when rates on new securities increase,
the value of outstanding securities may decline, and vice versa. Such changes
may also occur, to a lesser degree, with short-term issues.

These changes, if realized, may cause fluctuations in the amount of daily
dividends and, in extreme cases, could cause the net asset value per share to
decline (see "Determination of Net Asset Value"). In the event of unusually
large redemption demands, such securities may have to be sold at a loss prior
to maturity, or the U.S. Government Money Market Series might have to borrow
money and incur interest expenses. Either occurrence would adversely impact
upon the amount of daily dividend and could result in a decline in daily net
asset value per share or the redemption by the U.S. Government Money Market
Series of shares held in a shareholder's account. The U.S. Government Money
Market Series will attempt to minimize these risks by investing in relatively
longer-term securities when it appears to management that yields on such
securities are not likely to increase substantially during the period of
expected holding, and then only in securities which are readily marketable.
However, there can be no assurance that the U.S. Government Money Market
Series will be successful in achieving this objective.

U.S. GOVERNMENT SECURITIES SERIES

The investment objective of the U.S. Government Securities Series is high
current income consistent with safety of principal. There is no assurance
that the investment objective will be achieved. The investment objective may
not be changed without approval of the U.S. Government Securities Series
shareholders. The investment policies discussed below may be changed without
shareholder approval.

The U.S. Government Securities Series seeks to achieve its objective by
investing in obligations issued and/or guaranteed by the U.S. Government or
its instrumentalities ("U.S. Government Securities"). All such obligations
are backed by the "full faith and credit" of the United States. Investments
may be made in obligations of instrumentalities of the U.S. Government only
where such obligations are guaranteed by the U.S. Government.

U.S. Government securities include U.S. Treasury securities consisting of
Treasury bills, Treasury notes and Treasury bonds. Some of the other U.S.
Government securities in which the U.S. Government Securities Series may
invest include securities of the Federal Housing Administration, the
Government National Mortgage Association, the Department of Housing and Urban
Development, the Export-Import Bank, the Farmers Home Administration, the
General Services Administration, the Maritime Administration, Resolution
Funding Corporation and the Small Business Administration. The maturities of
such securities usually range from three months to thirty years.

A portion of the U.S. Government securities purchased by the U.S.
Government Securities Series may be zero coupon securities. Such securities
are purchased at a discount from their face amount, giving the purchaser the
right to receive their full value at maturity. The interest earned on such
securities is, implicitly, automatically compounded and paid out at maturity.
While such compounding at a constant rate eliminates the risk of receiving
lower yields upon reinvestment of interest if prevailing interest rates
decline, the owner of a zero coupon security will be unable to participate in
higher yields upon reinvestment of interest received on interest-paying
securities if prevailing interest rates rise. For this reason, zero coupon
securities are subject to substantially greater price fluctuations during
periods of changing prevailing interest rates than are comparable securities
which pay interest currently.

<PAGE>

While the U.S. Government Securities Series has the ability to invest in
any securities backed by the full faith and credit of the United States, it
is currently anticipated that a substantial portion of the U.S. Government
Securities Series' assets will be invested in Certificates of the Government
National Mortgage Association ("GNMA"). Should market or economic conditions
warrant, this policy is subject to change at any time at the discretion of
the Investment Manager.

GNMA Certificates. GNMA Certificates are mortgage-backed securities. Each
Certificate evidences an interest in a specific pool of mortgages insured by
the Federal Housing Administration or the Farmers Home Administration (FHA)
or guaranteed by the Veterans Administration (VA). Scheduled payments of
principal and interest are made to the registered holders of GNMA
Certificates. The GNMA Certificates that the U.S. Government Securities
Series will invest in are of the modified pass-through type. GNMA guarantees
the timely payment of monthly installments of principal and interest on
modified pass-through certificates at the time such payments are due, whether
or not such amounts are collected by the issuer on the underlying mortgages.
The National Housing Act provides that the full faith and credit of the
United States is pledged to the timely payment of principal and interest by
GNMA of amounts due on these GNMA Certificates.

The average life of GNMA Certificates varies with the maturities of the
underlying mortgage instruments with maximum maturities of 30 years. The
average life is likely to be substantially less than the original maturity of
the mortgage pools underlying the securities as a result of prepayments or
refinancing of such mortgages or foreclosure. Such prepayments are passed
through to the registered holder with the regular monthly payments of
principal and interest, which has the effect of reducing future payments. Due
to the GNMA guarantee, foreclosures impose no risk to investment principal.
The occurrence of mortgage prepayments is affected by factors including the
level of interest rates, general economic conditions, the location and age of
the mortgage and other social and demographic conditions. As prepayment rates
vary widely, it is not possible to accurately predict the average life of a
particular pool. However, statistics indicate that the average life of the
type of mortgages backing the majority of GNMA Certificates is approximately
twelve years. For this reason, it is standard practice to treat GNMA
Certificates as 30-year mortgage-backed securities which prepay fully in the
twelfth year. Pools of mortgages with other maturities or different
characteristics will have varying assumptions for average life. The assumed
average life of pools of mortgages having terms of less than 30 years is less
than twelve years, but typically not less than five years.

The coupon rate of interest of GNMA Certificates is lower than the
interest rate paid on the VA-guaranteed or FHA-insured mortgages underlying
the Certificates, but only by the amount of the fees paid to GNMA and the
issuer.

The U.S. Government Securities Series will invest in mortgage pass-through
securities representing participation interests in pools of residential
mortgage loans originated by United States governmental or private lenders
such as banks, broker-dealers and financing corporations and guaranteed, to
the extent provided in such securities, by the United States Government or
one of its agencies or instrumentalities. Such securities, which are
ownership interests in the underlying mortgage loans, differ from
conventional debt securities, which provide for periodic payment of interest
in fixed amounts (usually semi-annually) and principal payments at maturity
or on specified call dates. Mortgage pass-through securities provide for
monthly payments that are a "pass-through" of the monthly interest and
principal payments (including any prepayments) made by the individual
borrowers on the pooled mortgage loans, net of any fees paid to the guarantor
of such securities and the servicer of the underlying mortgage loans. The
guaranteed mortgage pass-through securities in which the U.S. Government
Securities Series may invest include those issued or guaranteed by GNMA or
other entities which securities are backed by the full faith and credit of
the United States.

Certificates for mortgage-backed securities evidence an interest in a
specific pool of mortgages. These certificates are, in most cases, "modified
pass-through" instruments, wherein the issuing agency guarantees the payment
of principal and interest on mortgages underlying the certificates, whether
or not such amounts are collected by the issuer on the underlying mortgages.

Yields on pass-through securities are typically quoted by investment
dealers and vendors based on the maturity of the underlying instruments and
the associated average life assumption. In periods of falling interest rates
the rate of prepayment tends to increase, thereby shortening the actual
average life of a pool of mortgage-related securities. Con-

<PAGE>

versely, in periods of rising rates the rate of prepayment tends to decrease,
thereby lengthening the actual average life of the pool. Reinvestment by the
U.S. Government Securities Series of prepayments may occur at higher or lower
interest rates than the original investment. Historically, actual average
life has been consistent with the twelve-year assumption referred to above.
The actual yield of each GNMA Certificate is influenced by the prepayment
experience of the mortgage pool underlying the Certificates. Interest on GNMA
Certificates is paid monthly rather than semi-annually as for traditional
bonds.

Adjustable Rate Mortgage Securities. The U.S. Government Securities Series
may also invest in adjustable rate mortgage securities ("ARMs"), which are
pass-through mortgage securities collateralized by mortgages with adjustable
rather than fixed rates. ARMs eligible for inclusion in a mortgage pool
generally provide for a fixed initial mortgage interest rate for either the
first three, six, twelve or thirteen scheduled monthly payments. Thereafter,
the interest rates are subject to periodic adjustment based on changes to a
designated benchmark index.

ARMs contain maximum and minimum rates beyond which the mortgage interest
rate may not vary over the lifetime of the security. In addition, certain
ARMs provide for additional limitations on the maximum amount by which the
mortgage interest rate may adjust for any single adjustment period.
Alternatively, certain ARMs contain limitations on changes in the required
monthly payment. In the event that a monthly payment is not sufficient to pay
the interest accruing on an ARM, any such excess interest is added to the
principal balance of the mortgage loan, which is repaid through future
monthly payments. If the monthly payment for such an instrument exceeds the
sum of the interest accrued at the applicable mortgage interest rate and the
principal payment required at such point to amortize the outstanding
principal balance over the remaining term of the loan, the excess is utilized
to reduce the then outstanding principal balance of the ARM.

Collateralized Mortgage Obligations and Multiclass Pass-Through
Securities. The U.S. Government Securities Series may also invest in
collateralized mortgage obligations or "CMOs", which are debt obligations
collateralized by mortgage loans or mortgage pass-through securities.
Typically, CMOs are collateralized by GNMA, FNMA or FHLMC Certificates, but
also may be collateralized by whole loans or private mortgage pass-through
securities (such collateral collectively hereinafter referred to as "Mortgage
Assets"). Multiclass pass-through securities are equity interests in a trust
composed of Mortgage Assets. Payments of principal of and interest on the
Mortgage Assets, and any reinvestment income thereon, provide the funds to
pay debt service on the CMOs or make scheduled distributions on the
multiclass pass-through securities. CMOs may be issued by agencies or
instrumentalities of the United States government, or by private originators
of, or investors in, mortgage loans, including savings and loan associations,
mortgage banks, commercial banks, investment banks and special purpose
subsidiaries of the foregoing. However, the U.S. Government Securities Series
will only invest in CMOs which are backed by the full faith and credit of the
United States.

The issuer of a series of CMOs may elect to be treated as a Real Estate
Mortgage Investment Conduit ("REMIC"). REMICs include governmental and/or
private entities that issue a fixed pool of mortgages secured by an interest
in real property. REMICs are similar to CMOs in that they issue multiple
classes of securities, but unlike CMOs, which are required to be structured
as debt securities, REMICs may be structured as indirect ownership interests
in the underlying assets of the REMICs themselves. However, there are no
effects on the Series from investing in CMOs issued by entities that have
elected to be treated as REMICs, and all future references to CMOs shall also
be deemed to include REMICs. The Fund may invest without limitation in CMOs.

In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMOs, often referred to as a "tranche", is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal prepayments on the Mortgage Assets may cause the CMOs to be
retired substantially earlier than their stated maturities or final
distribution dates. Interest is paid or accrues on all classes of the CMOs on
a monthly, quarterly or semi-annual basis. Certain CMOs may have variable or
floating interest rates and others may be stripped (securities which provide
only the principal or interest feature of the underlying security).

The principal of and interest on the Mortgage Assets may be allocated
among the several classes of a CMO series in a number of different ways.

<PAGE>

Generally, the purpose of the allocation of the cash flow of a CMO to the
various classes is to obtain a more predictable cash flow to the individual
tranches than exists with the underlying collateral of the CMO. As a general
rule, the more predictable the cash flow is on a CMO tranche, the lower the
anticipated yield will be on the tranche at the time of issuance relative to
prevailing market yields on mortgage-backed securities. As part of the
process of creating more predictable cash flows on most of the tranches in a
series of CMOs, one or more tranches generally must be created that absorb
most of the volatility in the cash flows on the underlying mortgage loans.
The yields on these tranches are generally higher than prevailing market
yields on mortgage-backed securities with similar maturities. As a result of
the uncertainty of the cash flows of these tranches, the market prices of and
yield on these tranches generally are more volatile.

The U.S. Government Securities Series also may invest in, among other
things, parallel pay CMOs and Planned Amortization Class CMOs ("PAC Bond").
Parallel pay CMOs are structured to provide payments of principal on each
payment date to more than one class. These simultaneous payments are taken
into account in calculating the stated maturity date or final distribution
date of each class, which, as with other CMO structures, must be retired by
its stated maturity date or final distribution date, but may be retired
earlier. PAC Bonds generally require payments of a specified amount of
principal on each payment date. PAC Bonds always are parallel pay CMOs with
the required principal payment on such securities having the highest priority
after interest has been paid to all classes.

INTERMEDIATE INCOME SECURITIES SERIES

The investment objective of the Intermediate Income Securities Series is
high current income consistent with safety of principal. This investment
objective may not be changed without approval of the Intermediate Income
Securities Series' shareholders. There is no assurance that the investment
objective will be achieved. The investment policies discussed below may be
changed without shareholder approval.

The Intermediate Income Securities Series seeks to achieve its objective
by investing at least 65% of its total assets in intermediate term,
investment grade fixed-income securities. Such securities have a minimum
remaining maturity of three years and a maximum remaining maturity of ten
years. The Intermediate Income Securities Series will maintain an average
dollar-weighted maturity of approximately seven years or less and may not
invest in securities with remaining maturities greater than twelve years.
Under normal conditions, the Intermediate Income Securities Series' average
weighted maturity will not be less than three years.

Under normal circumstances, the Intermediate Income Securities Series will
invest primarily in corporate debt securities and preferred stock of
investment grade, which consists of securities which are rated at the time of
purchase Baa or better by Moody's Investors Service, Inc. ("Moody's") or BBB
or better by Standard & Poor's Corporation ("S&P's"), or which, if unrated,
are determined to be of comparable quality by the Fund's Trustees. While
fixed-income securities rated Baa by Moody's and BBB by S&P are considered
investment grade, they have speculative characteristics. (A more detailed
description of bond ratings is contained in the Appendix to the Statement of
Additional Information.) The Intermediate Income Securities Series may also
purchase U.S. Government securities (securities guaranteed as to principal
and interest by the United States or its agencies or instrumentalities) and
investment grade securities, denominated in U.S. Dollars, issued by foreign
governments or issuers. U.S. Government securities in which the Intermediate
Income Securities Series may invest include zero coupon securities and
mortgage backed securities, such as securities issued by the Government
National Mortgage Association, the Federal National Mortgage Association and
the Federal Home Loan Mortgage Corporation. There can be no assurance that
the investment objective of the Intermediate Income Securities Series will be
achieved.

The Investment Manager believes that the Intermediate Income Securities
Series' policies of purchasing intermediate term securities will reduce the
volatility of the Intermediate Income Securities Series' net asset value over
the long term. Although the values of fixed-income securities generally
increase during periods of declining interest rates and decrease during
periods of increasing interest rates, the extent of these fluctuations has
historically generally been smaller for intermediate term securities than for
securities with longer maturities. Conversely, the yield available on
intermediate term securities has also historically been lower than those
available from long term securities.

Investment by the Intermediate Income Securities Series in U.S. Dollar
denominated fixed-income securities issued by foreign governments and other

<PAGE>

foreign issuers may involve certain risks not associated with U.S. issued
securities (see "Foreign Securities", under "General Portfolio Techniques"
below). The Investment Manager believes that those risks are substantially
lessened because the foreign securities in which the Intermediate Income
Securities Series may invest are investment grade.

While the Intermediate Income Securities Series will invest primarily in
investment grade fixed-income securities, under ordinary circumstances it may
invest up to 35% of its total assets in money market instruments and
repurchase agreements, as well as, with respect to up to 5% of its net
assets, lower-rated fixed-income securities. No more than 5% of the
Intermediate Income Securities Series' net assets may be invested in
lower-rated fixed-income securities.

Lower-rated fixed-income securities, which are those rated from Ba or BB
to C by Moody's or S&P, respectively, are considered to be speculative
investments. Such lower-rated securities, while producing higher yield than
investment grade securities, are subject to a credit risk to a greater extent
than investment grade securities. The Intermediate Income Securities Series
does not have any minimum quality rating standard with respect to the portion
(up to 5%) of its net assets which may be invested in lower-rated securities.
See the Statement of Additional Information for a description of the special
risks and characteristics of lower-rated fixed-income securities.

There may be periods during which, in the opinion of the Investment
Manager, market conditions warrant reduction of some or all of the
Intermediate Income Securities Series' securities holdings. During such
periods, the Intermediate Income Securities Series may adopt a temporary
"defensive" posture in which greater than 35% of its total assets are
invested in cash or money market instruments. Money market instruments in
which the Intermediate Income Securities Series may invest are securities
issued or guaranteed by the U.S. Government (Treasury bills, notes and bonds,
including zero coupon securities); bank obligations; Eurodollar certificates
of deposit; obligations of savings institutions; fully insured certificates
of deposit; and commercial paper rated within the two highest grades by
Moody's or Standard & Poor's or, if not rated, are issued by a company having
an outstanding debt issue rated at least AA by S&P's or Aa by Moody's.

AMERICAN VALUE SERIES

The investment objective of the American Value Series is long-term capital
growth consistent with an effort to reduce volatility. There is no assurance
that the American Value Series' objective will be achieved. The investment
objective may not be changed without the approval of the shareholders of the
American Value Series. The investment policies discussed below may be changed
without shareholder approval.

The American Value Series seeks to achieve its investment objective by
investing in a diversified portfolio of securities consisting principally of
common stocks. The American Value Series utilizes an investment process that
places primary emphasis on seeking to identify industries, rather than
individual companies, as prospects for capital appreciation and whereby the
Investment Manager seeks to invest assets of the American Value Series in
industries it considers to be undervalued at the time of purchase and to sell
those it considers overvalued.

After selection of the American Value Series' target industries, specific
company investments are selected. In this process, the Investment Manager
seeks to identify companies whose prospects are deemed attractive on the
basis of an evaluation of valuation screens and prospective company
fundamentals.

Following selection of the American Value Series' specific investments,
the Investment Manager will attempt to allocate the assets of the American
Value Series so as to reduce the volatility of its portfolio. In doing so,
the American Value Series may hold a portion of its portfolio in fixed-income
securities in an effort to moderate extremes of price fluctuations. The
American Value Series may invest up to 35% of its total assets in common
stocks of non-U.S. companies, including American Depository Receipts (which
are custody receipts with respect to foreign securities), in companies in
industries which have not been determined to be undervalued by the Investment
Manager, and in convertible debt securities, convertible preferred
securities, U.S. Government securities (securities issued or guaranteed as to
principal and interest by the United States or its agencies and
instrumentalities) and investment grade corporate debt securities when, in
the opinion of the Investment Manager, the projected total return on such
securities is equal to or greater than the expected total return on common
stocks, or when such holdings might be expected to reduce the volatility of
the portfolio, and in money

<PAGE>

market instruments under any one or more of the following circumstances: (i)
pending investment of proceeds of sale of shares of the American Value Series
or of portfolio securities; (ii) pending settlement of purchases of Portfolio
securities; or (iii) to maintain liquidity for the purpose of meeting
anticipated redemptions. Greater than 35% of the American Value Series' total
assets may be invested in money market instruments to maintain, temporarily,
a "defensive" posture when, in the opinion of the Investment Manager, it is
advisable to do so because of economic or market conditions.

Because prices of stocks fluctuate from day to day, the value of an
investment in the Fund will vary based upon the American Value Series'
investment performance. The American Value Series' emphasis on "undervalued"
industries reflects investment views which are frequently contrary to general
market assessments and which may involve risks associated with departure from
general investment opinions.

At least 65% of the American Value Series' total assets will be invested
in common stocks of U.S. companies which, at the time of purchase, were in
undervalued or moderately valued industries as determined by the Investment
Manager.

The foregoing limitations apply at the time of acquisition based on the
last determined market value of the American Value Series' assets, and any
subsequent change in any applicable percentage resulting from market
fluctuations or other changes in total assets will not require elimination of
any security from the portfolio.

CAPITAL GROWTH SERIES

The investment objective of the Capital Growth Series is long-term capital
growth. There is no assurance that the objective will be achieved. The
investment objective may not be changed without the approval of the majority
of the shareholders of the Capital Growth Series. The following policies may
be changed by the Trustees without approval by the shareholders of the
Capital Growth Series.

The Capital Growth Series seeks to achieve its investment objective by
investing, under normal circumstances, at least 65% of its total assets in
common stocks. As part of its management of the Capital Growth Series, the
Investment Manager utilizes a two-stage computerized screening process. The
first stage of the process involves the screening of a database of
approximately 3,000 companies for those companies demonstrating a history of
consistent growth in earnings and revenues for the past ten years. The
smaller group of companies resulting from the foregoing screen are then
applied against two additional screens designed to measure current earnings
momentum and current price valuations, respectively, in order to further
refine the list of companies for potential investment by the Capital Growth
Series, which investment may be on an equally-weighted basis. (Current
earnings momentum refers to the rate of change in earnings growth over the
prior four quarters and current price valuations refers to the current price
of a company's stock in relation to a theoretical value based upon current
dividends, projected growth rates and the rate of inflation.) Subject to the
Capital Growth Series' investment objective, the Investment Manager, without
notice, may modify the foregoing screening process and/or may utilize
additional or different screening processes in connection with the investment
of the Series' assets. Dividend income will not be a consideration in the
selection of stocks for purchase.

Although the Capital Growth Series invests primarily in common stocks, the
Series may invest up to 35% of its total assets (taken at current value and
subject to any restrictions appearing elsewhere in this Prospectus), in any
combination of the following: (a) U.S. Government securities (securities
issued or guaranteed as to principal and interest by the U.S. Government or
its agencies or instrumentalities) and investment grade fixed-income
securities; (b) convertible securities; (c) money market instruments; (d)
options on equity and debt securities; and (e) futures contracts and related
options thereon, as described below. The Capital Growth Series may also
purchase unit offerings (where corporate debt securities are offered as a
unit with convertible securities, preferred or common stocks, warrants, or
any combination thereof). U.S. Government securities in which the Capital
Growth Series may invest include zero coupon securities. Convertible
securities in which the Capital Growth Series may invest include bonds,
debentures, corporate notes, preferred stock and other securities. The
Capital Growth Series may also purchase securities on a when-issued or
delayed delivery basis, may purchase or sell securities on a forward
commitment basis, and may purchase securities on a "when, as and if issued"
basis.

There may be periods during which, in the opinion of the Investment
Manager, market conditions warrant reduction of some or all of the Capital
Growth Series' securities holdings. During such

<PAGE>

periods, the Series may adopt a temporary "defensive" posture in which
greater than 35% of its total assets are invested in cash or money market
instruments. Money market instruments in which the Capital Growth Series may
invest are securities issued or guaranteed by the U.S. Government (Treasury
bills, notes and bonds, including zero coupon securities); obligations of
banks (such as certificates of deposit and banker's acceptances) subject to
regulation by the U.S. Government and having total assets of $1 billion or
more; Eurodollar certificates of deposit; obligations of savings banks and
savings and loan associations having total assets of $1 billion or more;
fully insured certificates of deposit; and commercial paper rated within the
two highest grades by Moody's or S&P or, if not rated, are issued by a
company having an outstanding debt issue rated at least AA by S&P or Aa by
Moody's.

DIVIDEND GROWTH SERIES

The investment objective of the Dividend Growth Series is to provide
reasonable current income and long-term growth of income and capital. There
is no assurance that the objective will be achieved. The investment objective
may not be changed without the approval of the shareholders of the Dividend
Growth Series.

The Fund seeks to achieve its investment objective primarily by investing
at least 65% of its total assets in common stock of companies with a record
of paying dividends and the potential for increasing dividends. The net asset
value of the Dividend Growth Series' shares will fluctuate with changes in
market values of portfolio securities. The Dividend Growth Series will
attempt to avoid investing in securities with speculative characteristics.

The following investment policies may be changed without the approval of
the Dividend Growth Series' shareholders:

(1) Up to 35% of the value of the Dividend Growth Series' total assets
may be invested in: (a) convertible debt securities, convertible
pre-ferred securities, U.S. Government securities (securities issued or
guaranteed as to principal and interest by the United States or its
agencies and instrumentalities), investment grade corporate debt
securities and/or money market instruments when, in the opinion of the
Investment Manager, the projected total return on such securities is equal
to or greater than the expected total return on equity securities or when
such holdings might be expected to reduce the volatility of the portfolio
(for purposes of this provision, the term "total return" means the
difference between the cost of a security and the aggregate of its market
value and dividends received); or (b) in money market instruments under
any one or more of the following circumstances: (i) pending investment of
proceeds of sale of Dividend Growth Series' shares or of portfolio
securities; (ii) pending settlement of purchases of portfolio securities;
or (iii) to maintain liquidity for the purpose of meeting anticipated
redemptions.

(2) Notwithstanding any of the foregoing limitations, the Dividend
Growth Series may invest more than 35% in money market in-struments to
maintain, temporarily, a "defensive" posture when, in the opinion of the
Investment Manager, it is advisable to do so because of economic or market
conditions.

The foregoing limitations will apply at the time of acquisition based on
the last determined value of the Dividend Growth Series' assets. Any
subsequent change in any applicable percentage resulting from fluctuations in
value or other changes in total assets will not require elimination of any
security from the portfolio. The Dividend Growth Series may purchase
securities on a when-issued or delayed delivery basis, may purchase or sell
securities on a forward commitment basis and may purchase securities on a
"when, as and if issued" basis.

STRATEGIST SERIES

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

The achievement of the Strategist Series' investment objective depends
upon the ability of the Investment Manager to correctly assess the effects of
economic and market trends on different sectors of the market. The Investment
Manager believes

<PAGE>

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

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

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

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

Within the money market sector of the market, the Investment Manager will
seek to maximize returns by seeking out those short-term instruments with the
highest yields. The money market portion of the Strategist Series will
contain short-term (maturities of up to one year) fixed-income securities,
issued by private and governmental institutions. Such securities may include:
U.S. Government securities; bank obligations (such as certificates of deposit
and banker's acceptances); Eurodollar certificates of deposit issued by
foreign branches of domestic banks; obligations of savings institutions;
fully insured certificates of deposit; and commercial paper rated within the
two highest grades by S&P or the highest grade by Moody's or, if not rated,
issued by a company having an outstanding debt issue rated

<PAGE>

at least AA by S&P or Aa by Moody's. To the extent the Strategist Portfolio
purchases Eurodollar certificates of deposit issued by foreign branches of
domestic banks, consideration will be given to any risks attendant to their
domestic marketability, the lower reserve requirements normally mandated for
overseas banking operations, the possible impact of interruptions in the flow
of international currency transactions, and future international political
and economic developments which might adversely affect the payment of
principal or interest.

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

UTILITIES SERIES

The investment objective of the Utilities Series is to provide current
income and long-term growth of income and capital. There can be no assurance
that the investment objective will be achieved. This objective is fundamental
and may not be changed without shareholder approval. The investment policies
discussed below may be changed without shareholder approval.

The Utilities Series seeks to achieve its invest-ment objective by
investing in equity and fixed-income securities of companies engaged in the
public utilities industry. The term "public utilities industry" consists of
companies engaged in the manufacture, production, generation, transmission,
sale and distribution of gas and electric energy, as well as companies
engaged in the communications field, including telephone, telegraph,
satellite, microwave and other companies providing communication facilities
for the public, but excluding public broadcasting companies. For purposes of
the Utilities Series, a company will be considered to be in the public
utilities industry if, during the most recent twelve month period, at least
50% of the company's gross revenues, on a consolidated basis, are derived
from the public utilities industry. Under ordinary circumstances, at least
65% of the Utilities Series' total assets will be invested in securities of
companies in the public utilities industry.

The Investment Manager believes the Utilities Series' investment policies
are suited to benefit from certain characteristics and historical performance
of the securities of public utility companies. Many of these companies have
historically set a pattern of paying regular dividends and increasing their
common stock dividends over time, and the average common stock dividend yield
of utilities historically has substantially exceeded that of industrial
stocks. The Investment Manager believes that these factors may not only
provide current income but also generally tend to moderate risk and thus may
enhance the opportunity for appreciation of securities owned by the Utilities
Series, although the potential for capital appreciation has historically been
lower for many utility stocks compared with most industrial stocks. There can
be no assurance that the historical investment performance of the public
utilities industry will be indicative of future events and performance.

The Utilities Series invests in both equity securities (common stocks and
securities convertible into common stock) and fixed-income securities (bonds
and preferred stock) in the public utilities industry. The Utilities Series
will shift its asset allocation without restriction between types of
utilities and between equity and fixed-income securities based upon the
Investment Manager's determination of how to achieve the Utilities Series'
investment objective in light of prevailing market, economic and financial
conditions.

Criteria utilized by the Investment Manager in the selection of equity
securities include the following screens: earnings and dividend growth; book
value; dividend discount; and price/earnings relationships. In addition, the
Investment Manager makes continuing assessments of management, the prevailing
regulatory framework and industry trends. The Investment Manager may also
utilize computer-based equity selection models. In keeping with the Utilities
Series' objective, if in the opinion of the Investment Manager favorable
conditions for capital growth of equity securities are not prevalent

<PAGE>

at a particular time, the Utilities Series may allocate its assets
predominantly or exclusively in debt securities with the aim of obtaining
current income as well as preserving capital and thus benefiting long term
growth of capital.

The Utilities Series may purchase equity securities sold on the New York,
American and other stock exchanges and in the over-the-counter market.
Fixed-income securities in which the Utilities Series may invest are debt
securities and preferred stocks, which are rated at the time of purchase Baa
or better by Moody's Investors Service, Inc. ("Moody's") or BBB or better by
Standard & Poor's Corporation ("S&P"), or which, if unrated, are deemed to be
of comparable quality by the Fund's Trustees. The Utilities Series may also
purchase equity and fixed-income securities issued by foreign issuers
(including American Depository Receipts, European Depositary Receipts or
other similar securities convertible into securities of foreign issuers).
Under normal circumstances the average weighted maturity of the fixed-income
securities held by the Utilities Series is expected to be in excess of seven
years. A description of corporate bond ratings is contained in the Appendix
to the Statement of Additional Information.

Investments in fixed-income securities rated either BBB by S&P or Baa by
Moody's (the lowest credit ratings designated "investment grade") have
speculative characteristics and, therefore, changes in economic conditions or
other circumstances are more likely to weaken their capacity to make
principal and interest payments than would be the case with investments in
securities with higher credit ratings. If a fixed-income security held by the
Utilities Series is rated BBB or Baa and is subsequently downgraded by a
rating agency, the Utilities Series will retain such security in its
portfolio until the Investment Manager determines that it is practicable to
sell the security without undue market or tax consequences to the Utilities
Series. In the event that such downgraded securities constitute 5% or more of
the Series' total assets, the Investment Manager will immediately sell
securities sufficient to reduce the total to below 5%.

While the Utilities Series will invest primarily in the securities of
public utility companies, under ordinary circumstances it may invest up to
35% of its total assets in U.S. Government securities (securities issued or
guaranteed as to principal and interest by the United States or its agencies
and instrumentalities), money market instruments, repurchase agreements, and
options and futures, as described below. U.S. Government securities in which
the Utilities Series may invest include zero coupon securities.

There may be periods during which, in the opinion of the Investment
Manager, market conditions warrant reduction of some or all of the Utilities
Series' securities holdings. During such periods, the Utilities Series may
adopt a temporary "defensive" posture in which greater than 35% of its net
assets are invested in cash or money market instruments. Money market
instruments in which the Utilities Series may invest are securities issued or
guaranteed by the U.S. Government (Treasury bills, notes and bonds, including
zero coupon securities); bank obligations (such as certificates of deposit
and bankers' acceptances); Eurodollar certificates of deposit; obligations of
savings institutions; fully insured certificates of deposit; and commercial
paper rated within the two highest grades by Moody's or S&P or, if not rated,
are issued by a company having an outstanding debt issue rated at least AA by
S&P or Aa by Moody's.

Electric Utilities Industry. Under normal circumstances, the Utilities
Series will invest at least 25% of its total assets in debt and equity
securities issued by companies in the electric utilities industry. For
temporary defensive purposes, however, the Series may reduce its investments
in the electric utilities industry to less than 25% of its total assets. The
Utilities Series policy of concentrating its investments in the electric
utilities industry is fundamental and may not be changed without the approval
of a majority of the Utilities Series voting securities.

The electric utilities industry as a whole has certain characteristics and
risks particular to that industry. Unlike industrial companies, the rates
which utility companies may charge their customers generally are subject to
review and limitation by governmental regulatory commissions. Although rate
changes of a utility usually fluctuate in approximate correlation with
financing costs, due to political and regulatory factors, rate changes
ordinarily occur only following a delay after the changes in financing costs.
This factor will tend to favorably affect a utility company's earnings and
dividends in times of decreasing costs, but conversely will tend to adversely
affect earnings and dividends when costs are rising. In addition, the value
of electric utility debt securities (and, to a lesser extent, equity
securities) tends to have an inverse relationship to the movement of interest
rates.

<PAGE>

Among the risks affecting the utilities industry are the following: risks
of increases in fuel and other operating costs; the high cost of borrowing to
finance capital construction during inflationary periods; restrictions on
operations and increased costs and delays associated with compliance with
environmental and nuclear safety regulations; the difficulties involved in
obtaining natural gas for resale or fuel for generating electricity at
reasonable prices; the risks in connection with the construction and
operation of nuclear power plants; the effects of energy conservation,
non-regulated competition, open access to transmission, and the effects of
regulatory changes, such as linking future rate increases to inflation or
other factors not directly related to the actual operating profits of the
enterprise.

VALUE-ADDED MARKET SERIES

The investment objective of the Value-Added Market Series is to achieve a
high level of total return on its assets through a combination of capital
appreciation and current income. This is a fundamental policy and cannot be
changed without the approval of the shareholders of the Value-Added Market
Series. There can be no assurance that the Value-Added Market Series'
investment objective will be achieved. The investment policies discussed
below may be changed without shareholder approval.

The Value-Added Market Series will seek to attain its investment objective
by investing, on an equally-weighted basis, in a diversified portfolio of
common stocks of the companies which are included in the Standard & Poor's
500 Composite Stock Price Index (the "S&P Index"). Standard & Poor's 500 is a
trademark of Standard & Poor's Corporation ("S&P") and has been licensed for
use by the Fund. The Value-Added Market Series is not sponsored, endorsed,
sold or promoted by S&P and S&P makes no representation regarding the
advisability of investing in the Value-Added Market Series. The S&P Index
consists of 500 common stocks selected by S&P, most of which are listed on
the New York Stock Exchange. Inclusion of a stock in the S&P Index implies no
opinion by S&P as to the quality of the stock as an investment. The S&P Index
is determined, composed and calculated by S&P without regard to the
Value-Added Market Series. S&P is neither a sponsor of, nor in any way
affiliated with, the Value-Added Market Series, and S&P makes no
representation or warranty, express or implied, on the advisability of
investing in the Value-Added Market Series or as to the ability of the S&P
Index to track general stock market performance, and S&P disclaims all
warranties of merchantability or fitness for a particular purpose or use with
respect to the S&P Index or any data included therein. S&P has no connection
with the Value-Added Market Series other than the licensing to the Investment
Manager of the use of the S&P Index in connection with the Value-Added Market
Series.

The Value-Added Market Series invests in the stocks included in the S&P
Index on an equally-weighted basis; that is, to the extent practicable and
subject to the specific investment policies and restrictions described below,
an equal portion of the Value-Added Market Series' assets is invested in each
of the 500 securities in the S&P Index. This differs from the S&P Index and
nearly all other major indexes, which generally are weighted on a
market-capitalization basis. For example, the 50 largest capitalization
issuers in the S&P Index represent approximately 45% of the S&P Index.
However, in accordance with its investment policies, the Value-Added Market
Series will strive to maintain each stockholding equally, so that, subject to
the specific investment policies and investment restrictions described below,
approximately 0.20 of 1% of the Value-Added Market Series' total invested
assets will be invested in each of the 500 companies included in the S&P
Index. The equal weighting technique is based on the Investment Manager's
statistical analysis that most portfolio performance is usually generated by
only one-quarter to one-third of the portfolio. Since there is no certainty
that any specific company or industry selection, even within a broad-based
index such as the S&P Index, will achieve superior performance, the
Investment Manager believes equal-weighting may benefit the Value-Added
Market Series in seeking to attain its investment objective.

The holdings of the Value-Added Market Series will be adjusted by the
Investment Manager not less than quarterly to reflect changes in the
Value-Added Market Series' asset levels and in the relative values of the
common stocks held by the Value-Added Market Series so that following each
adjustment the value of the Value-Added Market Series' investment in each
security will be equal to the extent practicable. In addition, whenever a
company is eliminated from or added to the S&P Index, the Value-Added Market
Series will sell or purchase the stock of such company, as the case may be,
as soon as practicable. Accordingly, securities may be pur-

<PAGE>

chased and sold by the Value-Added Market Series when such purchases and
sales would not be made under traditional investment criteria.

In addition, while the Investment Manager will not actively manage the
portfolio other than to follow the guidelines set forth above for following
an equally-weighted S&P Index, it may eliminate one or more securities (or
elect not to increase the Value-Added Market Series' position in such
securities), notwithstanding the continued listing of such securities in the
S&P Index, in the following circumstances: (a) the stock is no longer
publicly traded, such as in the case of a leveraged buyout or merger; (b) an
unexpected adverse development with respect to a company, such as bankruptcy
or insolvency; (c) in the view of the Investment Manager, there is a high
degree of risk with respect to a company that bankruptcy or insolvency will
occur; or (d) in the view of the Investment Manager, based on its
consideration of the price of a company's securities, the depth of the market
in those securities and the amount of those securities held or to be held by
the Value-Added Market Series, retaining shares of a company or making any
additional purchases would be inadvisable because of liquidity risks. The
Investment Manager will monitor on an ongoing basis all companies falling
within any of the circumstances described in this paragraph, and will return
such company's shares to the Value-Added Market Series' holdings, or
recommence purchases, when and if those conditions cease to exist.

The Value-Added Market Series may purchase futures contracts on stock
indexes at a time when it is not fully invested on account of additional cash
invested in the Series or income received by the Series. Purchase of a
futures contract in those circumstances serves as a temporary substitute for
the purchase of individual stocks which may then be purchased in orderly
fashion.

A portion of the Value-Added Market Series' assets, not exceeding 25% of
its total assets, may be invested temporarily in money market instruments
under any one or more of the following circumstances: (a) pending investment
of proceeds of sale of shares of the Value-Added Market Series; (b) pending
settlement of purchases of portfolio securities; or (c) to maintain liquidity
for the purposes of meeting anticipated redemptions. The money market
instruments in which the Value-Added Market Series may invest are
certificates of deposit of U.S. domestic banks with assets of $1 billion or
more; bankers' acceptances; time deposits; U.S. Government and U.S.
Government agency securities; or commercial paper rated within the two
highest grades by S&P or Moody's Investors Service, Inc., or, if not rated,
are of comparable quality as determined by the Fund's Trustees, and which
mature within one year from the date of purchase.

GLOBAL EQUITY SERIES

The investment objective of the Global Equity Series is to seek to obtain
total return on its assets primarily through long-term capital growth and to
a lesser extent from income. There can be no assurance that the Global Equity
Series will achieve its objective. The investment objective is a fundamental
policy and cannot be changed without the approval of the shareholders of the
Global Equity Series. The investment policies discussed below may be changed
without shareholder approval.

The Global Equity Series will invest at least 65% of its total assets in
equity securities issued by issuers located in various countries, around the
world. The Series' investment portfolio will, thereby, be invested in at
least three separate countries.

The Global Equity Series will seek to achieve such objective through
investments in all types of common stocks and equivalents (such as
convertible debt securities and warrants), preferred stocks and bonds and
other debt obligations of domestic and foreign companies and governments and
international organizations. There is no limitation on the percent or amount
of the Global Equity Series' assets which may be invested for growth or
income.

The Global Equity Series will maintain a flexible investment policy and,
based on a worldwide investment strategy, will invest in a diversified
portfolio of securities of companies and governments located throughout the
world. Such securities will generally be those with a record of paying
dividends and the potential for increasing dividends. The percentage of the
Global Equity Series' assets invested in particular geographic sectors will
shift from time to time in accordance with the judgment of the Investment
Manager.

Notwithstanding the Global Equity Series' investment objective of seeking
total return, the Global Equity Series may, for defensive purposes, without
limitation, invest in: obligations of the United States Government, its
agencies or instrumentalities; cash and cash equivalents in major currencies;
repurchase agreements; money market instruments; and commercial paper.

<PAGE>

The Global Equity Series may also invest in securities of foreign issuers
in the form of American Depository Receipts (ADR's), European Depository
Receipts (EDR's) or other similar securities convertible into securities of
foreign issuers. These securities may not necessarily be denominated in the
same currency as the securities into which they may be converted. ADR's are
receipts typically issued by a United States bank or trust company evidencing
ownership of the underlying securities. EDR's are European receipts
evidencing a similar arrangement. Generally, ADR's, in registered form, are
designed for use in the United States securities markets and EDR's, in bearer
form, are designed for use in European securities markets.

The Global Equity Series may purchase securities on a when-issued or
delayed delivery basis, may purchase or sell securities on a forward
commitment basis and may purchase securities on a "when, as and if issued"
basis.

GENERAL INVESTMENT TECHNIQUES

Repurchase Agreements. Each Series of the Fund may enter into repurchase
agreements, which may be viewed as a type of secured lending by the Series,
and which typically involve the acquisition by the Series of debt securities
from a selling financial institution such as a bank, savings and loan
association or broker-dealer. The agreement provides that the Series will
sell back to the institution, and that the institution will repurchase, the
underlying security ("collateral") at a specified price and at a fixed time
in the future, usually not more than seven days from the date of purchase.

While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed
to minimize such risks. These procedures include effecting repurchase
transactions only with large, well-capitalized and well-established financial
institutions whose financial condition will be continually monitored by the
Investment Manager subject to procedures established by the Trustees of the
Fund. In addition, as described above, the value of the collateral underlying
the repurchase agreement will be at least equal to the repurchase price,
including any accrued interest earned on the repurchase agreement. In the
event of a default or bankruptcy by a selling financial institution, the Fund
will seek to liquidate such collateral. However, the exercising of the Fund's
right to liquidate such collateral could involve certain costs or delays and,
to the extent that proceeds from any sale upon a default of the obligation to
repurchase were less than the repurchase price, the Fund could suffer a loss.

Reverse Repurchase Agreements. The Liquid Asset, U.S. Government Money
Market and Intermediate Income Securities Series may also use reverse
repurchase agreements as part of their investment strategy. Reverse
repurchase agreements involve sales by the Series of assets concurrently with
an agreement by the Series to repurchase the same assets at a later date at a
fixed price. Such transactions are only advantageous if the interest cost to
the Series of the reverse repurchase transaction is less than the cost of
otherwise obtaining the cash. Opportunities to achieve this advantage may not
always be available, and the Series intend to use the reverse repurchase
technique only when it will be to their advantage to do so. Reverse
repurchase agreements are considered borrowings by the Series and for
purposes other than meeting redemptions may not exceed 5% of the Series'
total assets.

When-Issued and Delayed Delivery Securities and Forward Commitments. From
time to time, in the ordinary course of business, each Series of the Fund may
purchase securities on a when-issued or delayed delivery basis or may
purchase or sell securities on a forward commitment basis. When such
transactions are negotiated, the price is fixed at the time of the
commitment, but delivery and payment can take place a month or more after the
date of the commitment. While a Series will only purchase securities on a
when-issued, delayed delivery or forward commitment basis with the intention
of acquiring the securities, a Series may sell the securities before the
settlement date, if it is deemed advisable. The securities so purchased or
sold are subject to market fluctuation and no interest accrues to the
purchaser during this period. At the time a Series makes the commitment to
purchase or sell securities on a when-issued, delayed delivery or forward
commitment basis, it will record the transaction and thereafter reflect the
value, each day, of such security purchased or, if a sale, the proceeds to be
received in determining its net asset value. At the time of delivery of the
securities, their value may be more or less than the purchase or sale price.
A Series will also establish a segregated account with its custodian bank in
which it will continually maintain cash or cash equivalents or other high
grade debt portfolio securities equal in value to commitments to purchase
securities on a when-issued, delayed delivery or forward commitment basis. An
increase in the percentage of a Series' assets

<PAGE>

committed to the purchase of securities on a when-issued, delayed delivery or
forward commitment basis may increase the volatility of a Series' net asset
value.

When, As and If Issued Securities. Each Series (other than the U.S.
Government Money Market Series) may purchase securities on a "when, as and if
issued" basis under which the issuance of the security depends upon the
occurrence of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring. The commitment for the purchase of any
such security will not be recognized in the portfolio until the Investment
Manager determines that the issuance of the security is probable, whereupon
the accounting treatment for such commitment will be the same as for a
commitment to purchase a security on a when-issued, delayed delivery or
forward commitment basis, described above and in the Statement of Additional
Information. An increase in the percentage of a Series' assets committed to
the purchase of securities on a "when, as and if issued" basis may increase
the volatility of its net asset value.

Zero Coupon Securities. A portion of the fixed-income securities purchased
by each Series (other than the Liquid Asset, the U.S. Government Money Market
and Value-Added Market Series) may be zero coupon securities. Such securities
are purchased at a discount from their face amount, giving the purchaser the
right to receive their full value at maturity. The interest earned on such
securities is, implicitly, automatically compounded and paid out at maturity.
While such compounding at a constant rate eliminates the risk of receiving
lower yields upon reinvestment of interest if prevailing interest rates
decline, the owner of a zero coupon security will be unable to participate in
higher yields upon reinvestment of interest received on interest-paying
securities if prevailing interest rates rise. For this reason, zero coupon
securities are subject to substantially greater price fluctuations during
periods of changing prevailing interest rates than are comparable securities
which pay interest currently. The Series may have to sell a portion of its
holdings of zero coupon securities to enable it to meet a certain level of
distributions.

Warrants. Each Series (other than the Liquid Asset Series, the U.S.
Government Money Market Series and the U.S. Government Securities Series) may
acquire warrants attached to other securities and, in addition, each of the
Dividend Growth Series, the American Value Series, Strategist Series,
Utilities Series and Global Equity Series may invest up to 5% of the value of
its total assets in warrants not attached to other securities, including up
to 2% of such assets in warrants not listed on either the New York or
American Stock Exchange. Warrants are, in effect, an option to purchase
equity securities at a specific price, generally valid for a specific period
of time, and have no voting rights, pay no dividends and have no rights with
respect to the corporation issuing them. If warrants remain unexercised at
the end of the exercise period, they will lapse and the Series' investment in
them will be lost. The prices of warrants do not necessarily move parallel to
the prices of the underlying securities.

Private Placements. The Intermediate Income Securities, American Value,
Capital Growth, Dividend Growth, Strategist, Utilities, Value-Added Market
and Global Equity Series may invest up to 15% of their net assets in
securities which are subject to restrictions on resale because they have not
been registered under the Securities Act or which are otherwise not readily
marketable ("illiquid securities"). These securities are generally referred
to as private placements or restricted securities. Limitations on the resale
of such securities may have an adverse effect on their marketability, and may
prevent the Series from disposing of them promptly at reasonable prices. The
Series may have to bear the expense of registering such securities for resale
and the risk of substantial delays in effecting such registration. The above
policy on purchase of illiquid securities may be changed by the Fund's
Trustees.

The Securities and Exchange Commission has recently adopted Rule 144A
under the Securities Act, which will permit the Series to sell restricted
securities to qualified institutional buyers without limitation. The Trustees
of the Fund have adopted procedures for the Investment Manager to utilize in
determining the liquidity of securities which may be sold pursuant to Rule
144A. In addition, the Trustees have determined that, where such securities
are determined to be liquid under these procedures, investment in such
securities by the Series shall not be subject to the 15% limitation referred
to above.

Foreign Securities. The Global Equity Portfolio will invest extensively in
foreign securities. In addition, the American Value, Capital Growth,
Strategist, Utilities and Intermediate Income Securities Series may, to a
considerably lesser extent, invest in foreign securities (only U.S.-Dollar
denominated).

Foreign securities investments may be affected by changes in currency
rates or exchange control

<PAGE>

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

Foreign currency exchange rates are determined by forces of supply and
demand on the foreign exchange markets. These forces are themselves affected
by the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. Moreover,
foreign currency exchange rates may be affected by the regulatory control of
the exchanges on which the currencies trade. The foreign currency
transactions of a Series will be conducted on a spot basis or, in the case of
the Global Equity Series, through forward contracts or futures contracts
(described below under "Options and Futures Transactions"). The Series will
incur certain costs in connection with these currency transactions.

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

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

Forward Foreign Currency Exchange Contracts. The Global Equity Series may
enter into forward foreign currency exchange contracts ("forward contracts")
in connection with its foreign securities investments.

A forward contract involves an obligation to purchase or sell a currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the
contract. The Series may enter into forward contracts as a hedge against
fluctuations in future foreign exchange rates.

The Global Equity Series will enter into forward contracts under various
circumstances. When the Series enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may, for example,
desire to "lock in" the price of the security in U.S. dollars or some other
foreign currency which the Series is temporarily holding in its portfolio. By
entering into a forward contract for the purchase or sale, for a fixed amount
of dollars or other currency, of the amount of foreign currency involved in
the underlying security transactions, the Global Equity Series will be able
to protect itself against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar or other currency which is being
used for the security purchase and the foreign currency in which the security
is denominated during the period between the date on which the security is
purchased or sold and the date on which payment is made or received.

At other times, when, for example, the Global Equity Series' Investment
Manager believes that the currency of a particular foreign country may suffer
a substantial decline against the U.S. dollar or some

<PAGE>

other foreign currency, the Global Equity Series may enter into a forward
contract to sell, for a fixed amount of dollars or other currency, the amount
of foreign currency approximating the value of some or all of the Series'
securities holdings (or securities which the Series has purchased for its
portfolio) denominated in such foreign currency. Under identical
circumstances, the Series may enter into a forward contract to sell, for a
fixed amount of U.S. dollars or other currency, an amount of foreign currency
other than the currency in which the securities to be hedged are denominated
approximating the value of some or all of the portfolio securities to be
hedged. This method of hedging, called "cross-hedging," will be selected by
the Investment Manager when it is determined that the foreign currency in
which the portfolio securities are denominated has insufficient liquidity or
is trading at a discount as compared with some other foreign currency with
which it tends to move in tandem.

In addition, when the Global Equity Series' Investment Manager anticipates
purchasing securities at some time in the future, and wishes to lock in the
current exchange rate of the currency in which those securities are
denominated against the U.S. dollar or some other foreign currency, the
Series may enter into a forward contract to purchase an amount of currency
equal to some or all of the value of the anticipated purchase, for a fixed
amount of U.S. dollars or other currency.

Lastly, the Series is permitted to enter into forward contracts with
respect to currencies in which certain of its portfolio securities are
denominated and on which options have been written (see "Options and Futures
Transactions").

In all of the above circumstances, if the currency in which the Global
Equity Series' securities holdings (or anticipated portfolio securities) are
denominated rises in value with respect to the currency which is being
purchased (or sold), then the Series will have realized fewer gains than had
the Series not entered into the forward contracts. Moreover, the precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible, since the future value of such
securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward
contract is entered into and the date it matures. The Global Equity Series is
not required to enter into such transactions with regard to its foreign
currency-denominated securities and will not do so unless deemed appropriate
by the Investment Manager. The Global Equity Series generally will not enter
into a forward contract with a term of greater than one year, although it may
enter into forward contracts for periods of up to five years. The Global
Equity Series may be limited in its ability to enter into hedging
transactions involving forward contracts by the Internal Revenue Code (the
"Code") requirements relating to qualifications as a regulated investment
company (see "Dividends, Distributions and Taxes").

OPTIONS AND FUTURES TRANSACTIONS

As noted above, each of the American Value, Capital Growth, Strategist,
Utilities, Global Equity and Intermediate Income Securities Series may write
covered call options and covered put options on eligible portfolio securities
and on stock and bond indexes and purchase options of the same or similar
series to effect closing transactions, and may hedge against potential
changes in the market value of its investments (or anticipated investments)
by purchasing put and call options on securities which it holds (or has the
right to acquire) in its portfolio and engaging in transactions involving
interest rate futures contracts and index futures contracts and options on
such contracts. The Value-Added Market Series may purchase stock index
futures as a temporary substitute for the purchase of individual stocks. The
Global Equity Series may also hedge against potential changes in the market
value of the currencies in which its investments (or anticipated investments)
are denominated by purchasing put and call options on currencies and engaging
in transactions involving currency futures contracts and options on such
contracts.

Call and put options on U.S. Treasury notes, bonds and bills, on various
foreign currencies and on equity securities are listed on Exchanges and are
written in over-the-counter transactions ("OTC options"). Listed options are
issued or guaranteed by the exchange on which they trade or by a clearing
corporation such as the Options Clearing Corporation ("OCC"). Ownership of a
listed call option gives the Series the right to buy from the OCC (in the
U.S.) or other clearing corporation or exchange the underlying security
covered by the option at the stated exercise price (the price per unit of the
underlying security) by filing an exercise notice prior to the expiration of
the option. The writer (seller) of the option would then have the obligation
to sell to the OCC (in the U.S.) or other clearing corporation or exchange
the underlying security at that exercise price prior to the expiration date
of the option,

<PAGE>

regardless of its then current market price. Ownership of a listed put option
would give the Series the right to sell the underlying security to the OCC
(in the U.S.) or other clearing corporation or exchange at the stated
exercise price. Upon notice of exercise of the put option, the writer of the
put would have the obligation to purchase the underlying security from the
OCC (in the U.S.) or other clearing corporation or exchange at the exercise
price.

Exchange-listed options are issued by the OCC (in the U.S.) or other
clearing corporation or exchange which assures that all transactions in such
options are properly executed. OTC options are purchased from or sold
(written) to dealers or financial institutions which have entered into direct
agreements with the Series. With OTC options, such variables as expiration
date, exercise price and premium will be agreed upon between the Series and
the transacting dealer, without the intermediation of a third party such as
the OCC. If the transacting dealer fails to make or take delivery of the
securities or currency underlying an option it has written, in accordance
with the terms of that option, the Series would lose the premium paid for the
option as well as any anticipated benefit of the transaction. The Series will
engage in OTC option transactions only with member banks of the Federal
Reserve System or primary dealers in U.S. Government securities or with
affiliates of such banks or dealers which have capital of at least $50
million or whose obligations are guaranteed by an entity having capital of at
least $50 million.

Covered Call Writing. Series are permitted to write covered call options
on portfolio securities, without limit, in order to aid them in achieving
their investment objectives. In the case of the Global Equity Series, such
options may be denominated in either U.S. dollars or foreign currencies and
may be on the U.S. dollar and foreign currencies. As a writer of a call
option, the Series has the obligation, upon notice of exercise of the option,
to deliver the security (or amount of currency) underlying the option prior
to the expiration date of the option (certain listed and OTC put options
written by a Series will be exercisable by the purchaser only on a specific
date).

Covered Put Writing. As a writer of covered put options, a Series incurs
an obligation to buy the security underlying the option from the purchaser of
the put, at the option's exercise price at any time during the option period,
at the purchaser's election (certain listed and OTC put options written by a
Series will be exercisable by the purchaser only on a specific date). Series
will write put options for two purposes: (1) to receive the income derived
from the premiums paid by purchasers; and (2) when the Series' management
wishes to purchase the security underlying the option at a price lower than
its current market price, in which case the Series will write the covered put
at an exercise price reflecting the lower purchase price sought. The
aggregate value of the obligations underlying the puts determined as of the
date the options are sold will not exceed 50% of a Series' net assets.

Purchasing Call and Put Options. Series may purchase listed and OTC call
and put options in amounts equalling up to 10% of their total assets. These
Series may purchase call options either to close out a covered call position
or to protect against an increase in the price of a security a Series
anticipates purchasing or, in the case of call options on a foreign currency,
to hedge against an adverse exchange rate change of the currency in which the
security the Global Equity Series anticipates purchasing is denominated
vis-a-vis the currency in which the exercise price is denominated. The Series
may purchase put options on securities which it holds (or has the right to
acquire) in its portfolio only to protect itself against a decline in the
value of the security. Similarly, the Global Equity Series may purchase put
options on currencies in which securities it holds are denominated only to
protect itself against a decline in value of such currency vis-a-vis the
currency in which the exercise price is denominated. The Series may also
purchase put options to close out written put positions in a manner similar
to call option closing purchase transactions. There are no other limits on
the ability of these Series to purchase call and put options.

Stock Index Options. Series may invest in options on stock indexes, which
are similar to options on stock except that, rather than the right to take or
make delivery of stock at a specified price, an option on a stock index gives
the holder the right to receive, upon exercise of the option, an amount of
cash if the closing level of the stock index upon which the option is based
is greater than, in the case of a call, or less than, in the case of a put,
the exercise price of the option.

Futures Contracts. The Intermediate Income Securities, American Value,
Capital Growth, Strategist, Utilities, Value-Added Market and Global Equity
Series may purchase and sell interest rate futures contracts that are
currently traded, or may in the

<PAGE>

future be traded, on U.S. commodity exchanges on such underlying securities
as U.S. Treasury bonds, notes, and bills and GNMA Certificates and stock and
bond index futures contracts that are traded on U.S. commodity exchanges on
such indexes as the Moody's Investment-Grade Corporate Bond Index, the S&P
500 Index and the New York Stock Exchange Composite Index. The Global Equity
Series may also purchase and sell futures contracts that are currently
traded, or may in the future be traded, on foreign commodity exchanges on
such underlying securities as common stocks or any foreign government
fixed-income security, on various currencies ("currency futures") and on
various indexes of foreign equity and fixed-income securities as may exist or
come into being. As a futures contract purchaser, a Series incurs an
obligation to take delivery of a specified amount of the obligation
underlying the contract at a specified time in the future for a specified
price. As a seller of a futures contract, a Series incurs an obligation to
deliver the specified amount of the underlying obligation at a specified time
in return for an agreed upon price.

Series will purchase or sell interest rate futures contracts and bond
index futures contracts for the purpose of hedging their fixed-income
portfolio (or anticipated portfolio) securities against changes in prevailing
interest rates or, in the case of the Strategist and Utilities Series to
alter the Series' asset allocations. Series will, generally, purchase or sell
stock index futures contracts for the purpose of hedging their equity
portfolio (or anticipated portfolio) securities against changes in their
prices. The Value-Added Market Series will purchase stock index futures as a
temporary substitute for the purchase or sale of individual stocks, which may
then be purchased or sold in an orderly fashion. The Global Equity Series
will purchase or sell currency futures on currencies in which its portfolio
securities (or anticipated portfolio securities) are denominated for the
purposes of hedging against anticipated changes in currency exchange rates.
When, for example, either the Strategist or Utilities Series wishes to
increase its allocation in fixed-income securities, it may purchase a futures
contract on a bond index or on a U.S. Treasury bond, or a call option on such
futures contract, thereby increasing its exposure to the fixed-income sector.

Options on Futures Contracts. The Intermediate Income Securities, American
Value, Capital Growth, Strategist, Utilities and Global Equity Series may
purchase and write call and put options on futures contracts which are traded
on an exchange and enter into closing transactions with respect to such
options to terminate an existing position. An option on a futures contract
gives the purchaser the right, in return for the premium paid, to assume a
position in a futures contract (a long position if the option is a call and a
short position if the option is a put) at a specified exercise price at any
time during the term of the option. Series will only purchase and write
options on futures contracts for identical purposes to those set forth above
for the purchase of a futures contract (purchase of a call option or sale of
a put option) and the sale of a futures contract (purchase of a put option or
sale of a call option), or to close out a long or short position in futures
contracts.

Risks of Options and Futures Transactions. A Series may close out its
position as writer of an option, or as a buyer or seller of a futures
contract, only if a liquid secondary market exists for options or futures
contracts of that series. There is no assurance that such a market will
exist, particularly in the case of OTC options, as such options will
generally only be closed out by entering into a closing purchase transaction
with the purchasing dealer.

The extent to which a Series may enter into transactions involving options
and futures contracts may be limited by the Internal Revenue Code's
requirements for qualification of each Series as a regulated investment
company and the Fund's intention to qualify each Series as such. See
"Dividends, Distributions and Taxes."

While the futures contracts and options transactions to be engaged in by
each Series for the purpose of hedging its portfolio securities are not
speculative in nature, there are risks inherent in the use of such
instruments. One such risk is that a Series' management could be incorrect in
its expectations as to the direction or extent of various interest rate
movements or the time span within which the movements take place. For
example, if a Series sold interest rate futures contracts for the sale of
securities in anticipation of an increase in interest rates, and then
interest rates went down instead, causing bond prices to rise, the Series
would lose money on the sale.

<PAGE>

Another risk which may arise in employing futures contracts to protect
against the price volatility of portfolio securities is that the prices of
securities, currencies and indexes subject to futures contracts (and thereby
the futures contract prices) may correlate imperfectly with the behavior of
the U.S. dollar cash prices of the portfolio securities (and, in the case of
the Global Equity Series, the securities' denominated currencies). Another
such risk is that prices of interest rate futures contracts may not move in
tandem with the changes in prevailing interest rates against which the Series
seeks a hedge. A correlation may also be distorted by the fact that the
futures market is dominated by short-term traders seeking to profit from the
difference between a contract or security price objective and their cost of
borrowed funds. Such distortions are generally minor and would diminish as
the contract approached maturity.

The Global Equity Series, by entering into transactions in foreign futures
and options markets, will incur risks similar to those discussed above under
"Foreign Securities."

New options and futures contracts and other financial products and various
combinations thereof continue to be developed. The Fund may invest in any
such options, futures and other products as may be developed to the extent
consistent with their investment objectives and applicable regulatory
requirements, and will make any and all pertinent disclosures relating to
such investments in its Prospectus and/or Statement of Additional
Information. Except as otherwise noted above, and as set forth in other
investment policies and investment restrictions, there are no limitations on
any Series' ability to invest in options, futures or options on futures.

PORTFOLIO TRADING

Although each Series does not intend to engage in short-term trading of
portfolio securities as a means of achieving the investment objectives of the
respective Series, each Series may sell portfolio securities without regard
to the length of time they have been held whenever such sale will in the
opinion of the Investment Manager strengthen the Series' position and
contribute to its investment objectives. In determining which securities to
purchase for the Series or hold in a Series, the Investment Manager will rely
on information from various sources, including research, analysis and
appraisals of brokers and dealers, the views of Trustees of the Fund and
others regarding economic developments and interest rate trends, and the
Investment Manager's own analysis of factors they deem relevant.

Personnel of the Investment Manager have substantial experience in the use
of the investment techniques described above under the heading "Options and
Futures Transactions," which techniques require skills different from those
needed to select the portfolio securities underlying various options and
futures contracts.

Brokerage commissions are not normally charged on the purchase or sale of
money market instruments and U.S. Government obligations, or on currency
conversions, but such transactions will involve costs in the form of spreads
between bid and asked prices. Orders for transactions in portfolio securities
and commodities may be placed for the Fund with a number of brokers and
dealers, including Dean Witter Reynolds Inc. ("DWR"), a broker-dealer
affiliate of the Investment Manager. Pursuant to an order of the Securities
and Exchange Commission, the Fund may effect principal transactions in
certain money market instruments with DWR. In addition, the Fund may incur
brokerage commissions on transactions conducted through DWR.

The Liquid Asset and U.S. Government Money Market Series are expected to
have high portfolio turnovers due to the short-term maturities of securities
purchased, but this should not affect income or net asset value as brokerage
commissions are not normally charged on the purchase or sale of money market
instruments. It is not anticipated that the portfolio turnover rates of the
Series will exceed the following percentages in any year: U.S. Government
Securities Series, Capital Growth Series, Dividend Growth Series, Utilities
Series, Value-Added Market Series and Global Equity Series: 100%;
Intermediate Income Securities Series and Strategist Series: 200%; American
Value Series: 300%. A portfolio turnover rate exceeding 100% in any one year
is greater than that of many other investment companies. Each Series of the
Fund will incur underwriting discount costs (on underwritten securities)
and/or brokerage costs commensurate with its portfolio turnover rate.
Short-term gains and losses may result from such portfolio transactions. See
"Dividends, Distribution and Taxes" for a discussion of the tax implications
of these trading policies.

The expenses of the Global Equity Series relating to its portfolio
management are likely to be greater than those incurred by other investment

<PAGE>

companies investing primarily in securities issued by domestic issuers as
custodial costs, brokerage commissions and other transaction charges related
to investing in foreign markets are generally higher than in the United
States. Short-term gains and losses may result from portfolio transactions.
See "Dividends, Distributions and Taxes" for a discussion of the tax
implications of the Series' trading policies. A more extensive discussion of
the Series' brokerage policies is set forth in the Statement of Additional
Information.

PORTFOLIO MANAGEMENT

The following individuals are primarily responsible for the day-to-day
management of certain of the Series of the Fund: Rajesh K. Gupta, Senior Vice
President of InterCapital, has been the primary portfolio manager of the U.S.
Government Securities Series since its inception; Mr. Gupta has been managing
portfolios comprised of U.S. Government and other securities at InterCapital
for over five years; Rochelle G. Siegel, Senior Vice President of
InterCapital, has been the primary portfolio manager of the Intermediate
Income Securities Series since its inception; Ms. Siegel has been managing
portfolios comprised of fixed-income securities at InterCapital for over five
years; Anita H. Kolleeny, Senior Vice President of InterCapital, has been the
primary portfolio manager of the American Value Series since its inception;
Ms. Kolleeny has been managing portfolios comprised of equity and other
securities at InterCapital for over five years; Paul D. Vance, Senior Vice
President of InterCapital, has been the primary portfolio manager of the
Capital Growth and Dividend Growth Series since their inceptions; Mr. Vance
has been managing portfolios comprised of equity and other securities at
InterCapital for over five years; Mark Bavoso, Senior Vice President of
InterCapital, has been the primary portfolio manager of the Strategist Series
since January, 1994; Mr. Bavoso has been a portfolio manager at InterCapital
for over five years; Edward F. Gaylor, Senior Vice President of InterCapital,
has been the primary portfolio manager of the Utilities Series since its
inception; Mr. Gaylor has been managing portfolios comprised of equity and
other securities at InterCapital for over five years; Kenton J. Hinchliffe,
Senior Vice President of InterCapital, has been the primary portfolio manager
of the Value-Added Market Series since its inception. Mr. Hinchliffe has been
managing portfolios comprised of equity and other securities at InterCapital
for over five years. Thomas H. Connelly, Senior Vice President of
InterCapital, has been the primary portfolio manager of the Global Equity
Series since its inception. Mr. Connelly has been managing portfolios
consisting of foreign and domestic equity and other securities at
InterCapital for over five years.

INVESTMENT RESTRICTIONS
- -----------------------------------------------------------------------------

The investment restrictions listed below are among the restrictions that
have been adopted as fundamental policies of the Intermediate Income
Securities, American Value, Capital Growth, Dividend Growth, Utilities,
Value-Added Market and Global Equity Series. In addition, the Liquid Asset
Series has adopted restrictions two and five as fundamental policies and the
Strategist Series has adopted restrictions three, four and five as
fundamental policies. Under the Investment Company Act of 1940, as amended
(the "Act"), a fundamental policy may not be changed with respect to a Series
without the vote of a majority of the outstanding voting securities of that
Series, as defined in the Act.

Each Series of the Fund may not:

1. As to 75% of its total assets, invest more than 5% of the value of
its total assets in the securities of any one issuer (other than
obligations issued, or guaranteed by, the United States Government, its
agencies or instrumentalities).

2. As to 75% of its total assets, purchase more than 10% of all
outstanding voting securities or any class of securities of any one
issuer. (All of the Series of the Fund may, collectively, purchase more
than 10% of all outstanding voting securities or any class of securities
of any one issuer.)

3. With the exception of the Utilities Series, invest 25% or more of
the value of its total assets in securities of issuers in any one
industry. This restriction does not apply to obligations issued or
guaranteed by the United States Government or its agencies or
instrumentalities.

4. Invest more than 5% of the value of its total assets in securities
of issuers having a record, together with predecessors, of less than three
years of continuous operation. This restriction shall not apply to any
obligation issued or guaranteed by the United States Government, its
agencies or instrumentalities.

<PAGE>

5. Invest more than 15% (10% with respect to the Liquid Asset and U.S.
Government Money Market Series) of its total assets in "illiquid
Securities" (securities for which market quota- tions are not readily
available) and repurchase agreements which have a maturity of longer than
seven days.

Generally, OTC options and the assets used as "cover" for written OTC
options are illiquid securities. However, the Series is permitted to treat
the securities it uses as cover for written OTC options as liquid provided
it follows a procedure whereby it will sell OTC options only to qualified
dealers who agree that the Series may repurchase such options at a maximum
price to be calculated pursuant to a predetermined formula set forth in
the option agreement. The formula set forth in the option agreement may
vary from agreement to agreement, but is generally based on a multiple of
the premium received by the Series for writing the option plus the amount,
if any, of the option's intrinsic value. An OTC option is considered an
illiquid asset only to the extent that the maximum repurchase price under
the formula exceeds the intrinsic value of the option.

The Liquid Asset Series has also adopted the following restrictions as
fundamental policies:

1. With respect to 75% of its total assets, purchase any securities,
other than obligations of the U.S. Government, or its agencies or in-
strumentalities, if, immediately after such purchase, more than 5% of the
value of the Liquid Asset Series' total assets would be invested in
securities of any one issuer. (However, as a non-fundamental policy, the
Liquid Asset Series will not invest more than 10% of its total assets in
the securities of any one issuer. Furthermore, pursuant to current
regulatory requirements, the Liquid Asset Series may only invest more than
5% of its total assets in the securities of a single issuer (and only with
respect to one issuer at a time) for a period of not more than three
business days and only if the securities have received the highest quality
rating by at least two NRSROs.)

2. Purchase any securities, other than obligations of domestic banks
or of the U.S. Government, or its agencies or instrumentalities, if,
immediately after such purchase, more than 25% of the value of the Liquid
Asset Series' total assets would be invested in the securities of issuers
in the same industry; however, there is no limitation as to investments in
domestic bank obligations or in obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities.

All percentage limitations apply immediately after a purchase or initial
investment, and any subsequent change in any applicable percentage resulting
from market fluctuations or other changes in the amount of total assets does
not require elimination of any security from the Series.

DETERMINATION OF NET ASSET VALUE
- -----------------------------------------------------------------------------

The net asset value per share is calculated separately for each Series. In
general, the net asset value per share is computed by taking the value of all
the assets of the Series, subtracting all liabilities, dividing by the number
of shares outstanding and adjusting the result to the nearest cent. The Fund
will compute the net asset value per share of each Series once daily at 4:00
p.m., New York time, on days the New York Stock Exchange is open for trading.
The net asset value per share will not be determined on Good Friday and on
such other Federal and non-Federal holidays as are observed by the New York
Stock Exchange.

The Liquid Asset and U.S. Government Money Market Series utilize the
amortized cost method in valuing their portfolio securities, which method
involves valuing a security at its cost adjusted by a constant amortization
to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. The purpose
of this method of calculation is to facilitate the maintenance of a constant
net asset value per share of $1.00. However, there can be no assurance that
the $1.00 net asset value will be maintained.

In the calculation of the net asset value of the Series other than the
Liquid Asset and U.S. Government Money Market Series: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
domestic or foreign stock exchange is valued at its latest sale price on that
exchange prior to the time when assets are valued (if there were no sales
that day, the security is valued at the closing bid price and in cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated as the primary market by the Trustees); and (2) all
other portfolio securities for which over-the-

<PAGE>

counter market quotations are readily available are valued at the latest
available bid price prior to the time of valuation. In either (1) or (2)
above, when market quotations are not readily available, including
circumstances under which it is determined by the Investment Manager that
sale or bid prices are not reflective of a security's market value, portfolio
securities are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Fund's
Trustees. Valuation of securities for which market quotations are not readily
available may also be based upon current market prices of securities which
are comparable in coupon, rating and maturity or an appropriate matrix
utilizing similar factors. For valuation purposes, quotations of foreign
portfolio securities, other assets and liabilities and forward contracts
stated in foreign currency are translated into U.S. dollar equivalents at the
prevailing market rates as of the morning of valuation. Dividends receivable
are accrued as of the ex-dividend date except for certain dividends from
foreign securities which are accrued as soon as the Fund is informed of such
dividends after the ex-dividend date.

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

Short-term debt securities with remaining maturities of sixty days or less
at the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees. Other short-term debt securities will be valued on a mark-to-market
basis until such time as they reach a remaining maturity of sixty days,
whereupon they will be valued at amortized cost using their value on the 61st
day unless the Trustees determine such does not reflect the securities'
market value, in which case these securities will be valued at their fair
value as determined by the Trustees. Options are valued at the mean between
their latest bid and asked prices. Futures are valued at the latest sale
price on the commodities exchange on which they trade unless the Trustees
determine that such price does not reflect their market value, in which case
they will be valued at their fair value as determined by the Trustees. All
other securities and other assets are valued at their fair value as
determined in good faith under procedures established by and under the
general supervision of the Trustees.

Generally, trading in foreign securities, as well as corporate bonds,
United States government securities and money market instruments, is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. The values of such securities used in computing the
net asset value of a Series' shares are determined as of such times. Foreign
currency exchange rates are also generally determined prior to the close of
the New York Stock Exchange. Occasionally, events which affect the values of
such securities and such exchange rates may occur between the times at which
they are determined and the close of the New York Stock Exchange and will
therefore not be reflected in the computation of a Series' net asset value.
If events materially affecting the value of such securities occur during such
period, then those securities will be valued at their fair value as
determined in good faith under procedures established by and under the
supervision of the Trustees.

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

Shares of the Fund are offered for sale to investors participating in
various employee benefit plans and Individual Retirement Account ("IRA")
rollover plans on a continuous basis, without a sales charge, at the net asset
value per share of each Series. There is no minimum initial or subsequent
purchase of shares of the Fund.

Pursuant to a Distribution Agreement between the Fund and Dean Witter
Distributors Inc., shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor") and offered by DWR and other
broker-dealers who have entered into agreements with the Distributor
("Selected Broker-Dealers"). The principal executive office of the
Distributor is located at Two World Trade Center, New York, New York 10048.

Initial and subsequent purchases may be made by contacting Dean Witter
Trust Company at P.O. Box 1040, Jersey City, N.J. 07303, or by contacting
a DWR or other Selected Broker-Dealers account executive. The Fund and/or the
Distributor reserve the right to permit purchases by non-employee benefit plan
investors.

<PAGE>

All shares of the Fund, with the exception of the shares of the Liquid
Asset and U.S. Government Money Market Series, are sold through the
Distributor on a normal five business day settlement basis; that is, payment
is due on the fifth business day (settlement date) after the order is placed
with the Distributor. The offering price of such shares will be the net asset
value per share next determined following receipt of an order (see
"Determination of Net Asset Value"). Shares of the U.S. Government Securities
and Intermediate Income Securities Series which are purchased through the
Distributor are entitled to dividends beginning on the next business day
following settlement date and shares of these Series purchased through the
Transfer Agent are entitled to dividends beginning on the next business day
following receipt of a purchase order. Investors in the American Value,
Capital Growth, Dividend Growth, Strategist, Utilities, Value-Added Market
and Global Equity Series of the Fund will be entitled to receive income
dividends and capital gains distributions if their order is received by the
close of business on the day prior to the record date for such distributions.
Since the Distributor forwards investors' funds on settlement date, it will
benefit from the temporary use of the funds if payment is made prior thereto.
As noted above, orders placed directly with the Transfer Agent must be
accompanied by payment. The Fund and the Distributor reserve the right to
reject any purchase orders.

Sales personnel of a Selected Broker-Dealer are compensated for shares of
the Fund sold by them by the Distributor or any of its affiliates and/or by a
Selected Broker-Dealer. In addition, some sales personnel of the Selected
Broker-Dealer will receive non-cash compensation in the form of trips to
educational seminars and merchandise as special sales incentives. The Fund
and the Distributor reserve the right to reject any purchase orders.

Liquid Asset and U.S. Government Money Market Series. The offering price
of the shares of the Liquid Asset and U.S. Government Money Market Series
will be at their net asset value next determined after receipt of a purchase
order and acceptance by the Transfer Agent in proper form and accompanied by
payment in Federal Funds (i.e., monies of member banks within the Federal
Reserve System held on deposit at a Federal Reserve Bank) available to the
Fund for investment. Shares commence earning income on the day following the
date of purchase. Share certificates will not be issued unless requested in
writing by the shareholder.

To initiate purchase by mail or wire, the investor should contact Dean
Witter Trust Company, at P.O. Box 1040, Jersey City, N.J. 07303. Purchases by
wire must be preceded by a call to the Transfer Agent advising it of the
purchase and must be wired to Dean Witter Retirement Series: (name of
Series), The Bank of New York, for credit to the Account of Dean Witter Trust
Company, Harborside Financial Center, Plaza Two, Jersey City, New Jersey,
Account No. 8900188413. Wire purchase instructions must include the name of
the Fund and Series and the shareholder's account number. Purchases made by
check are normally effective within two business days for checks drawn on
Federal Reserve System member banks, and longer for most other checks. Wire
purchases received by the Transfer Agent prior to 12 noon New York time are
normally effective that day and wire purchases received after 12 noon New
York time are normally effective the next business day. The Fund reserves the
right to reject any purchase order.

Orders for the purchase of Liquid Asset and U.S. Government Money Market
Series shares placed by customers through the Distributor with payment in
clearing house funds will be transmitted by the Distributor to the Fund with
payment in Federal Funds on the business day following the day the order is
placed by the customer with the Distributor. Investors desiring same day
effectiveness should wire Federal Funds directly to the Transfer Agent.

For further information concerning purchases of the Fund's shares, contact
the Distributor or consult the Statement of Additional Information. The Fund
and the Distributor reserve the right to reject any purchase orders.

PLAN OF DISTRIBUTION

The Fund has entered into a Plan of Distribution pursuant to Rule 12b-1
under the Act with the Distributor and DWR whereby the Distributor and any of
its affiliates are authorized to utilize their own

<PAGE>

resources to finance certain activities in connection with the distribution
of the Fund's shares. Among the activities and services which may be provided
by the Distributor under the Plan are: (1) compensation to, and expenses of,
account executives and other employees of the Distributor and others,
including overhead and telephone expenses; (2) sales incentives and bonuses
to sales representatives and to marketing personnel in connection with
promoting sales of the Fund's shares; (3) expenses incurred in connection
with promoting sales of the Fund's shares; (4) preparing and distributing
sales literature; and (5) providing advertising and promotional activities,
including direct mail solicitation and television, radio, newspaper, magazine
and other media advertisements.

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

Automatic Investment of Dividends and Distributions. All income dividends
and capital gains distributions are automatically paid in full and fractional
shares of the shareholders selected Series, unless the shareholder requests
that they be paid in cash. Each purchase of shares of the Fund is made upon
the condition that the Transfer Agent is thereby automatically appointed as
agent of the investor to receive all dividends and capital gains
distributions on shares owned by the investor. Such dividends and
distributions will be paid in shares, at the net asset value per share, each
day on which the Series' shares are valued (for the Liquid Asset and U.S.
Government Money Market Series) and in shares of the U.S. Government
Securities and Intermediate Income Securities Series on the monthly payment
date, which will be no later than the last business day of the month for
which the dividend or distribution is payable. Shareholders of the Liquid
Asset, U.S. Government Money Market, U.S. Government Securities and
Intermediate Income Securities Series who have requested to receive dividends
in cash will normally receive their monthly dividend check during the first
ten days of the following month. Dividends and distributions of the American
Value, Capital Growth, Dividend Growth, Utilities, Strategist, Value-Added
Market and Global Equity Series will be paid, at the net asset values per
share of each Series, in shares of the Series (or in cash if the shareholder
so requests) as of the close of business on the record date. At any time an
investor may request the Transfer Agent in writing to have subsequent
dividends and/or capital gains distributions paid to the investor in cash
rather than shares. To assure sufficient time to process the change, such
request must be received by the Transfer Agent at least five business days
prior to the payment date for which it commences to take effect. In case of
recently purchased shares for which registration instructions have not been
received on the record date, cash payments will be made to DWR or other
Selected Broker-Dealers through whom shares were purchased.

Systematic Withdrawal Plan. A systematic withdrawal plan (the "Withdrawal
Plan") is available for shareholders who own or purchase shares of the Fund
having a minimum value of $10,000 based upon the then current net asset
value. The Withdrawal Plan provides for monthly or quarterly (March, June,
September and December) checks in any dollar amount, not less than $25, or in
any whole percentage of the account balance, on an annualized basis. Each
withdrawal constitutes a redemption of shares and any gain or loss realized
must be recognized for federal income tax purposes.

Shareholders wishing to enroll in the Withdrawal Plan should contact their
DWR or other Selected Broker-Dealer account executive or the Transfer Agent.

Systematic Payroll Deduction Plan. There is also available to employers a
Systematic Payroll Deduction Plan by which their employees may invest in
shares of the Fund. For further information please contact the Transfer Agent
or Distributor.

EXCHANGE PRIVILEGE

An "Exchange Privilege," that is, the privilege of exchanging shares of
one of the Fund's Series for another, is available to all shareholders. An
exchange of shares into any Series other than the Liquid Asset and U.S.
Government Money Market Series is effected on the basis of the next
calculated net asset value per share of the respective Series after the
exchange order is received. When exchanging into the Liquid Asset or U.S.
Government Money Market Series, shares of the relevant Series are redeemed at
their next calculated net asset value and exchanged for shares of the Liquid
Asset or U.S. Government Money Market Series at their net asset value
determined the following business day.

Purchases and exchanges should be made for investment purposes only. A
pattern of frequent exchanges may be deemed by the Investment Manager to be
abusive and contrary to the best interests of the Fund's other shareholders
and, at the Invest-

<PAGE>

ment Manager's discretion, may be limited by the Fund's refusal to accept
additional purchases and/or exchanges from the investor. Although the Fund
does not have any specific definition of what constitutes a pattern of
frequent exchanges, and will consider all relevant factors in determining
whether a particular situation is abusive and contrary to the best interests
of the Fund and its other shareholders, investors should be aware that the
Fund may, in its discretion, limit or otherwise restrict the number of times
this Exchange Privilege may be exercised by any investor. Any such
restriction will be made by the Fund on a prospective basis only, upon notice
to the shareholder not later than ten days following such shareholder's most
recent exchange.

The Exchange Privilege may be terminated or revised at any time by the
Fund upon such notice as may be required by applicable regulatory agencies
(presently sixty days for termination or material revision), and provided
further that the Exchange Privilege may be terminated or materially revised
without notice under certain unusual circumstances described in the Statement
of Additional Information. Shareholders maintaining margin accounts with DWR
or other Selected Broker-Dealers are referred to their account executive
regarding restrictions on exchanges of shares of the Fund pledged in their
margin account.

The current prospectus of the Fund describes investment objective(s) and
policies, and shareholders should read the disclosure relating to the Series
whose shares are to be exchanged for carefully before investing. In the case
of any shareholder holding a share certificate or certificates, no exchanges
may be made until all applicable share certificates have been received by the
Transfer Agent and deposited in the shareholder's account. An exchange will
be treated for federal income tax purposes the same as a repurchase or
redemption of shares, on which the shareholder may realize a capital gain or
loss (shareholders holding shares in a qualified employee benefit plan may
not realize a capital gain or loss). However, the ability to deduct capital
losses on an exchange is limited in situations where there is an exchange of
shares within ninety days after the shares are purchased. The Exchange
Privilege is only available in states where an exchange may legally be made.

If DWR or another Selected Broker-Dealer is the current dealer of record
and its account numbers are part of the account information, shareholders may
initiate an exchange of shares of any Series for shares of any other Series
pursuant to this Exchange Privilege by contacting their account executive (no
Exchange Privilege Authorization Form is required). Other shareholders (and
those shareholders who are clients of DWR or another Selected Broker-Dealer
but who wish to make exchanges directly by writing or telephoning the
Transfer Agent) must complete and forward to the Transfer Agent an Exchange
Privilege Authorization Form, copies of which may be obtained from the Transfer
Agent, to initiate an exchange. If the Authorization Form is used, exchanges
may be made in writing or by contacting the Transfer Agent at (800) 526-3143
(toll free). The Fund will employ reasonable procedures to confirm that
exchange instructions communicated over the telephone are genuine. Such
procedures include requiring various forms of personal identification such as
name, mailing address, social security or other tax identification number and
DWR or other Selected Broker-Dealer account number (if any). Telephone
instructions will also be recorded. If such procedures are not employed, the
Fund may be liable for any losses due to unauthorized or fraudulent
instructions.

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

The availability of various shareholder services described above is
determined by the parameters of the investor's employee benefit plan.

For further information regarding the Exchange Privilege, shareholders
should contact their DWR or other Selected Broker-Dealer account executive or
the Transfer Agent.

<PAGE>

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

Redemptions. Shares of the Fund may be redeemed for cash through the
Transfer Agent (without redemption or other charge) on any day that the New
York Stock Exchange is open (see "Determination of Net Asset Value").
Redemptions will be effected at the net asset value per share next determined
after the receipt of a redemption request meeting the applicable requirements
described below. In most instances, however, redemptions of shares will be
governed by the parameters set forth in the investor's employee benefit plan.

With respect to the redemption of shares of all Series of the Fund with
the exception of the Liquid Asset and U.S. Government Money Market Series,
each request for redemption, whether or not accompanied by a share
certificate (see below), must be sent to the Transfer Agent, which will
redeem the shares at their net asset value next computed (see "Determination
of Net Asset Value") after it receives the request, and certificates, if any,
in good order. Any redemption request received after such computation will be
redeemed at the next determined net asset value. The term "good order" means
that the share certificate, if any, and request for redemption are properly
signed, accompanied by any documentation required by the Transfer Agent, and
bear signature guarantees when required by the Fund or the Transfer Agent.

Shares of the Liquid Asset and U.S. Government Money Market Series may be
redeemed in the following manners:

1. BY CHECK

The Transfer Agent will supply blank checks to any shareholder who has
requested them. The shareholder may make checks payable to the order of
anyone in any amount not less than $500 (checks written in amounts under $500
will not be honored by the Transfer Agent). Shareholders must sign checks
exactly as their shares are registered. If the account is a joint account,
the check may contain one signature unless the joint owners have specifically
specified otherwise on an investment application that all owners are required
to sign checks. Only shareholders having accounts in which no share
certificates have been issued will be permitted to redeem shares by check or
enroll in the Systematic Withdrawal Plan.

Shares will be redeemed at their net asset value next determined (see
"Determination of Net Asset Value") after receipt by the Transfer Agent of a
check which does not exceed the value of the account. Payment of the proceeds
of a check will normally be made on the next business day after receipt by
the Transfer Agent of the check in proper form. Shares purchased by check
(including a certified or bank cashier's check) are not normally available to
cover redemption checks until fifteen days after receipt of the check used
for investment by the Transfer Agent. The Transfer Agent will not honor a
check in an amount exceeding the value of the account at the time the check
is presented for payment. Since the dollar value of an account is constantly
changing, it is not possible for a shareholder to determine in advance the
total value of its account so as to write a check for the redemption of the
entire account.

2. BY TELEPHONE OR WIRE INSTRUCTIONS WITH
PAYMENT TO PREDESIGNATED BANK ACCOUNT

A shareholder may redeem shares by telephoning or sending wire
instructions to the Transfer Agent. Payment will be made by the Transfer
Agent to the shareholder's bank account at any commercial bank designated by
the shareholder in an Investment Application, by wire if the amount is $1,000
or more and the shareholder so requests, and otherwise by mail. Normally, the
Transfer Agent will transmit payment the next business day following receipt
of a request for redemption in proper form. Only shareholders having accounts
in which no stock certificates have been issued will be permitted to redeem
shares by wire instructions.

Redemption instructions must include the shareholder's name and account
number and be called to the Transfer Agent at 800-526-3143 (Toll Free).

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

Telephone redemptions will be accepted if received by the Transfer Agent
between 9:00 a.m. and 4:00 p.m. New York Time, on any day the New York

<PAGE>

Stock Exchange is open. Any shareholder wishing to make a telephone
redemption and who is unable to reach the Fund by telephone should contact
his or her DWR or other Selected Broker-Dealer account executive, if
appropriate, or make a written redemption request. Shareholders are advised
that during periods of drastic economic or market changes it is possible that
the telephone redemption procedures may be difficult to implement, although
this has not been the case in the past with other funds managed by the
Investment Manager.

3. BY MAIL

A shareholder may redeem shares by sending a letter to Dean Witter Trust
Company, P.O. Box 983, Jersey City, NJ 07303, requesting redemption and
surrendering stock certificates if any have been issued.

Redemption proceeds will be mailed to the shareholder at his or her
registered address or mailed or wired to his or her predesignated bank
account, as he or she may request. Proceeds of redemption may also be sent to
some other person, as requested by the shareholder in accordance with the
general redemption requirements listed below.
GENERAL REDEMPTION REQUIREMENTS

Written requests for redemption must be signed by the registered
shareholder(s). Whether certificates are held by the shareholder or shares
are held in a shareholder's account, if the proceeds are to be paid to anyone
other than the registered shareholder(s) or sent to any address other than
the shareholder's registered address or predesignated bank account,
signatures must be guaranteed by an eligible guarantor acceptable to the
Transfer Agent (shareholders should contact the Transfer Agent for a
determination as to whether a particular institution is such an eligible
guarantor). Additional documentation may be required where shares are held by
a corporation, partnership, trust or other organization.

If shares to be redeemed are represented by a stock certificate, the
request for redemption must be accompanied by the stock certificate and a
stock assignment form signed by the registered shareholder(s) exactly as the
account is registered. Such signatures must also be guaranteed by an eligible
guarantor acceptable to the Transfer Agent (shareholders should contact the
Transfer Agent for a determination as to whether a particular institution is
such an eligible guarantor). Additional documentation may be required where
shares are held by a corporation, partnership, trust or other organization. A
stock power may be obtained from any dealer or commercial bank. The Fund may
change the signature guarantee requirements from time to time upon notice to
shareholders, which may be by means of a new prospectus.

All requests for redemption should be sent to Dean Witter Trust Company,
P.O. Box 983, Jersey City, NJ 07303.

Generally, the Fund will attempt to make payment for all redemptions
within one business day, and in no event later than seven days after receipt
of such redemption request in proper form. However, if the shares being
redeemed were purchased by check (including a certified or bank cashier's
check), payment may be delayed for the minimum time needed to verify that the
check used for investment has been honored (not more than fifteen days from
the time of investment of the check by the Transfer Agent). In addition, the
Fund may postpone redemptions at certain times when normal trading is not
taking place on the New York Stock Exchange.

Repurchase. DWR and other Selected Broker-Dealers are authorized to
repurchase, as agent for the Fund, shares represented by a share certificate
which is delivered to any of their offices. Shares held in a shareholder's
account without a share certificate may also be repurchased by DWR and other
Selected Broker-Dealers upon the telephonic request of the shareholder. The
repurchase price is the net asset value next determined (see "Purchase of
Fund Shares--Determination of Net Asset Value") after such repurchase order
is received. The offer by the Distributor to repurchase shares from
shareholders may be suspended by the Distributor at any time. In that event,
shareholders may redeem their shares through the Fund's Transfer Agent as set
forth above under "Redemption."

DIVIDENDS, DISTRIBUTIONS AND TAXES
- -----------------------------------------------------------------------------

Dividends and Distributions. The Liquid Asset, U.S. Government Money
Market, U.S. Government Securities and Intermediate Income Securities Series
declare dividends of substantially all of their daily net investment income
on each day the New York Stock Exchange is open for business (see "Purchase
of Fund Shares"). The Liquid Asset and U.S. Government Money Market Series
pay all

<PAGE>

dividends from net investment income (and net short-term capital gains, if
any) to shareholders of record as of the close of business the preceding
business day. The amount of the dividend payable by each Series may fluctuate
from day to day and may be omitted on some days if net realized losses on
portfolio securities exceed its net investment income. The U.S. Government
Securities and Intermediate Income Securities Series will pay all dividends
from net investment income monthly and distribute all distributions from net
realized short-term capital gains, if any, in excess of any net realized
long-term losses, at least once per year. The Dividend Growth and Utilities
Series will declare and pay all dividends from net investment income and (it
is anticipated) net short-term capital gains, if any, quarterly. The American
Value, Capital Growth, Strategist, Value-Added Market and Global Equity
Series will pay all dividends from net investment income and net short-term
capital gains, if any, annually. Any net long-term capital gains realized by
any Series will be distributed at least once each year. However, any Series
may determine to distribute or to retain all or part of any long-term capital
gains in any year for reinvestment.

All dividends and any capital gains distributions will be paid in
additional Fund shares and automatically credited to the shareholder's
account without issuance of a share certificate unless the shareholder
requests in writing that all dividends and/or distributions be paid in cash.

Taxes. Because each Series of the Fund intends to distribute all of its
net investment income and capital gains to shareholders and otherwise
continue to qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, it is not expected that the Fund will be required
to pay any federal income tax. Shareholders normally subject to federal
income tax will normally have to pay federal income taxes, and any state
income taxes, on the dividends and distributions they receive from the Fund.
Such dividends and distributions, to the extent that they are derived from
net investment income or short-term capital gains, are taxable to the
shareholder, who is normally subject to income tax as ordinary income
regardless of whether the shareholder receives such payments in additional
shares or in cash. Any dividends declared in the last quarter of any year
which are paid in the following year prior to February 1 will be deemed
received by the shareholder in the prior year. Dividend payments will be
eligible for the federal dividends received deduction available to the Fund's
corporate shareholders only to the extent the aggregate dividends received by
the Fund would be eligible for the deduction if the Fund were the shareholder
claiming the dividends received deduction. In this regard, a 46-day holding
period generally must be met.

Gains or losses on a Series' transactions, if any, in listed options on
non-equity securities, futures and options on futures generally are treated
as 60% long-term and 40% short-term. When the Series engages in options and
futures transactions, various tax regulations applicable to the Series may
have the effect of causing the Series to recognize a gain or loss for tax
purposes before that gain or loss is realized, or to defer recognition of a
realized loss for tax purposes. Recognition, for tax purposes, of an
unrealized loss may result in a lesser amount of the Series' realized net
gains being available for distribution.

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

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

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

<PAGE>

Shareholders should consult their tax advisers as to the applicability of
the foregoing to their current situation. Moreover, shares of the Fund which
are held in an employee benefit plan are subject to the distribution tax
rules appropriate to that plan. With respect to all purchases, redemptions,
repurchases, exchanges effected and distributions received on such shares of
the Fund, shareholders should consult with their tax adviser.

Dividends, interest and gains received by the Fund (primarily by the
Global Equity Series) may give rise to withholding and other taxes imposed by
foreign countries. If it qualifies for and has made the appropriate election
with the Internal Revenue Service, the Fund will report annually to its
shareholders the amount per share of such taxes, to enable shareholders to
deduct their pro rata portion of such taxes from their taxable income or
claim United States foreign tax credits with respect to such taxes. In the
absence of such an election, a Series would deduct foreign tax in computing
the amount of its distributable income.

A portion of the dividend distributions from the U.S. Government
Securities and U.S. Government Money Market Series may be exempt from certain
state's personal income taxes. The benefit of this tax-exemption may be lost
if the shares of such Series are held in a qualified plan which is exempt
from state income taxation.

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

From time to time, the Liquid Asset and U.S. Government Money Market
Series may advertise their "yields" and "effective yields." The "yield" of
the Liquid Asset and U.S. Government Money Market Series refers to the income
generated by an investment in the Liquid Asset and U.S. Government Money
Market Series over a given period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of
income generated by an investment during that seven-day period is assumed to
be generated each seven-day period within a 365-day period and is shown as a
percentage of investment. The "effective yield" for a seven-day period is
calculated similarly but, when annualized, the income earned by an investment
in the Liquid Asset and U.S. Government Money Market Series is assumed to be
reinvested each week within a 365-day period. The "effective yield" will be
slightly higher than the "yield" because of the compounding effect of this
assumed reinvestment.

From time to time the U.S. Government Securities and Intermediate Income
Securities Series may quote their "yield" in advertisements and sales
literature. The yield of a Series is computed by dividing the Series' net
investment income over a 30-day period by an average value (using the average
number of shares entitled to receive dividends and the net asset value per
share at the end of the period), all in accordance with applicable regulatory
requirements. Such amount is compounded for six months and then annualized
for a twelve-month period to derive the Series' yield.

Each Series of the Fund may also quote its "total return" in
advertisements and sales literature. The "average annual total return" of a
Series refers to a figure reflecting the average annualized percentage
increase (or decrease) in the value of an initial investment in the Fund of
$1,000 over a period of one year, as well as over the life of the Series.
Average annual total return reflects all income earned by a Series, any
appreciation or depreciation of the Series' assets and all expenses incurred
by the Series, for the stated period. It also assumes reinvestment of all
dividends and distributions paid by the Series.

In addition to the foregoing, a Series may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or
other types of total return figures. The Series may also advertise the growth
of a hypothetical investment of $10,000, $50,000 and $100,000 in shares of
the Series. A Series from time to time may also advertise its performance
relative to certain performance rankings and indexes compiled by independent
organizations, such as mutual fund performance rankings of Lipper Analytical
Services, Inc.

Both the yield and the total return of a Series are based on historical
earnings and are not intended to indicate future performance.

ADDITIONAL INFORMATION
- -----------------------------------------------------------------------------

The shares of beneficial interest of the Fund, with $0.01 par value, are
divided into eleven separate Series, and the shares of each Series are equal
as to earnings, assets and voting privileges with all other shares of that
Series. There are no conversion, preemptive or other subscription rights.
Upon

<PAGE>

liquidation of the Fund or any Series, shareholders of a Series are entitled
to share pro rata in the net assets of that Series available for distribution
to shareholders after all debts and expenses have been paid. The shares do
not have cumulative voting rights.

The assets received by the Fund on the sale of shares of each Series and
all income, earnings, profits and proceeds thereof, subject only to the
rights of creditors, are allocated to each Series, and constitute the assets
of such Series. The assets of each Series are required to be segregated on
the Fund's books of account.

Additional Series (the proceeds of which would be invested in separate,
independently managed portfolios with distinct investment objectives,
policies and restrictions) may be offered in the future, but such additional
offerings would not affect the interests of the current shareholders in the
existing Series.

On any matters affecting only one Series, only the shareholders of that
Series are entitled to vote. On matters relating to all the Series but
affecting the Series differently, separate votes by Series are required.
Approval of an Investment Management Agreement and a change in fundamental
policies would be regarded as matters requiring separate voting by each
Series.

The Fund is not required to hold Annual Meetings of Shareholders and, in
ordinary circumstances, the Fund does not intend to hold such meetings.

Under Massachusetts law, shareholders of a business trust may, under
certain limited circumstances, be held personally liable as partners for
obligations of the Fund. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the
Fund, requires that Fund obligations include such disclaimer, and provides
for indemnification and reimbursement of expenses out of the Fund's property
for any shareholder held personally liable for the obligations of the Fund.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund itself
would be unable to meet its obligations. Given the above limitations on
shareholder personal liability, and the nature of the Fund's assets and
operations, in the opinion of Massachusetts counsel to the Fund, the risk to
Fund shareholders is remote.

Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone number or address set forth on the front cover
of this Prospectus.

As of September 1, 1994, the Investment Manager may be deemed to "control"
the Capital Growth Series of the Fund by virtue of ownership of over 25% of
the outstanding shares of the Series. This is primarily a consequence of the
large seed capital initial investment in the Series by the Investment Manager
and the relatively small size of the Series. In addition, the following
persons may be deemed to "control" the designated Series by virtue of
ownership of 25% of the outstanding shares of the Series: National Controls
RSP (U.S. Government Securities); VIP Plus 401k Plan Dtd. 12/23/93 (American
Value and Utilities Series); St. Petersburg Kennel Club 401k Plan (Capital
Growth Series); Pizzagalli Construction 401k Plan (Value-Added Market
Series); and Cygnus 401k Plan (U.S. Government Money Market Series). This is
primarily a consequence of the relative sizes of the particular Series and
the fact that the shareholders of record are employee benefit plans which are
comprised of multiple beneficial shareholders.

<PAGE>

Dean Witter
Retirement Series
Two World Trade Center
New York, New York 10048

TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling

OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Thomas F. Caloia
Treasurer

CUSTODIAN
The Bank of New York
90 Washington Street
New York, New York 10286

TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
[/R]

<PAGE>

DEAN WITTER
RETIREMENT SERIES

STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 28, 1994
- -----------------------------------------------------------------------------

Dean Witter Retirement Series (the "Fund") is an open-end, no-load,
management investment company which provides a selection of investment
portfolios for institutional and individual investors participating in
various employee benefit plans and Individual Retirement Account rollover
plans. Each Series has its own investment objective and policies. Shares of
the Fund are sold and redeemed at net asset value without the imposition of a
sales charge. Dean Witter Distributors Inc. the Fund's Distributor (the
"Distributor") and any of its affiliates are authorized, pursuant to a Plan
of Distribution pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended, between it and the Fund, to make payments, out of its own
resources, for expenses incurred in connection with the promotion of
distribution of shares of the Fund.

The LIQUID ASSET SERIES seeks high current income, preservation of capital
and liquidity by investing in corporate and government money market
instruments.

The INTERMEDIATE INCOME SECURITIES SERIES seeks high current income
consistent with safety of principal by investing primarily in intermediate
term, investment grade fixed-income securities.

The CAPITAL GROWTH SERIES seeks long-term capital growth by investing
primarily in common stocks selected through utilization of a computerized
screening process.

The STRATEGIST SERIES seeks to maximize its total return by actively
allocating its assets among the major asset categories of equity securities,
fixed-income securities and money market instruments.

The UTILITIES SERIES seeks to provide current income and long-term growth
of income and capital by investing in equity and fixed-income securities of
companies in the public utilities industry.

A Prospectus for the Fund dated September 28, 1994, which provides the
basic information you should know before investing in the Fund, may be
obtained without charge from the Fund at the address or telephone number
listed below or from the Fund's Distributor or Dean Witter Reynolds Inc., at
any of its branch offices. This Statement of Additional Information is not a
Prospectus. It contains information in addition to and more detailed than
that set forth in the Prospectus. It is intended to provide additional
information regarding the activities and operations of the Fund, and should
be read in conjunction with the Prospectus.

Dean Witter
Retirement Series

<PAGE>

Two World Trade Center
New York, New York 10048
(212) 392-2550

<PAGE>

TABLE OF CONTENTS
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S> <C>
The Fund and its Management ......... 3
Trustees and Officers ............... 6
Investment Practices and Policies .. 10
Investment Restrictions ............. 29
Portfolio Transactions and Brokerage 31
Determination of Net Asset Value ... 33
Purchase of Fund Shares ............. 34
Shareholder Services ................ 36
Redemptions and Repurchases ......... 38
Dividends, Distributions and Taxes . 38
Performance Information ............. 40
Description of Shares ............... 43
Custodian and Transfer Agent ....... 43
Independent Accountants ............. 43
Reports to Shareholders ............. 44
Legal Counsel ....................... 44
Experts ............................. 44
Registration Statement .............. 44
Principal Securities Holders ....... 44
Financial Statements --July 31, 1994 46
Report of Independent Accountants .. 82
Appendix ............................ 83
</TABLE>

<PAGE>

THE FUND AND ITS MANAGEMENT
- -----------------------------------------------------------------------------

THE FUND

The Fund is a trust of the type commonly known as a "Massachusetts
business trust" and was organized under the laws of the Commonwealth of
Massachusetts on May 14, 1992.

THE INVESTMENT MANAGER

Dean Witter InterCapital Inc. (the "Investment Manager" or
"InterCapital"), a Delaware corporation, whose address is Two World Trade
Center, New York, New York 10048, is the Fund's Investment Manager.
InterCapital is a wholly-owned subsidiary of Dean Witter, Discover & Co.
("DWDC"), a Delaware corporation. In an internal reorganization (the
"Reorganization") which took place in January, 1993, InterCapital assumed the
investment advisory, administrative and management activities previously
performed by the InterCapital Division of Dean Witter Reynolds Inc. ("DWR"),
a broker-dealer affiliate of InterCapital. (As hereinafter used in this
Statement of Additional Information, the terms "InterCapital" and "Investment
Manager" refer to DWR's InterCapital Division prior to the internal
reorganization and to Dean Witter InterCapital Inc. thereafter.) The daily
management of the Fund and research relating to the portfolio of each Series
of the Fund is conducted by or under the direction of officers of the Fund
and of the Investment Manager, subject to review of investments by the Fund's
Board of Trustees. In addition, Trustees of the Fund provide guidance on
economic factors and interest rate trends. Information as to these Trustees
and Officers is contained under the caption "Trustees and Officers."

InterCapital is also the investment manager (or investment adviser and
administrator) of the following investment companies: Dean Witter Liquid
Asset Fund, Inc., InterCapital Income Securities Inc., Dean Witter High Yield
Securities Inc., Dean Witter Tax-Free Daily Income Trust, Dean Witter
Developing Growth Securities Trust, Dean Witter Tax-Exempt Securities Trust,
Dean Witter Dividend Growth Securities Inc., Dean Witter Natural Resource
Development Securities Inc., Dean Witter American Value Fund, Dean Witter
U.S. Government Money Market Trust, Dean Witter Variable Investment Series,
Dean Witter World Wide Investment Trust, Dean Witter Select Municipal
Reinvestment Fund, Dean Witter U.S. Government Securities Trust, Dean Witter
California Tax-Free Income Fund, Dean Witter New York Tax-Free Income Fund,
Dean Witter Convertible Securities Trust, Dean Witter Federal Securities
Trust, Dean Witter Value-Added Market Series, High Income Advantage Trust,
Dean Witter Government Income Trust, InterCapital Insured Municipal Bond
Trust, Dean Witter Utilities Fund, Dean Witter Managed Assets Trust, High
Income Advantage Trust II, Dean Witter California Tax-Free Daily Income
Trust, Dean Witter Strategist Fund, High Income Advantage Trust III, Dean
Witter World Wide Income Trust, Dean Witter Intermediate Income Securities,
Dean Witter New York Municipal Money Market Trust, Dean Witter Capital Growth
Securities, Dean Witter European Growth Fund Inc., Dean Witter Pacific Growth
Fund Inc., Dean Witter Precious Metals and Minerals Trust, Dean Witter Global
Short-Term Income Fund Inc., Dean Witter Multi-State Municipal Series Trust,
Dean Witter Short-Term U.S. Treasury Trust, Dean Witter Premier Income Trust,
InterCapital Quality Municipal Investment Trust, InterCapital Insured
Municipal Trust, Dean Witter Diversified Income Trust, Dean Witter Health
Sciences Trust, Dean Witter Global Dividend Growth Securities, Dean Witter
Limited Term Municipal Trust, InterCapital Insured Municipal Income Trust,
InterCapital California Insured Municipal Income Trust, InterCapital Insured
Municipal Securities, InterCapital Insured California Municipal Securities,
InterCapital Quality Municipal Income Trust, InterCapital Quality Municipal
Securities, InterCapital California Quality Municipal Securities, InterCapital
New York Quality Municipal Securities, Active Assets Money Trust, Active Assets
Tax-Free Trust, Active Assets California Tax-Free Trust, Active Assets
Government Securities Trust, Municipal Income Trust, Municipal Income Trust
II, Municipal Income Trust III, Municipal Income Opportunities Trust,
Municipal Income Opportunities Trust II, Municipal Income Opportunities Trust
III, Prime Income Trust, Municipal Premium Income Trust, Dean Witter
Short-Term Bond Fund, Dean Witter High Income Securities, Dean Witter Global
Utilities Fund, Dean Witter National Municipal Trust, Dean Witter
International SmallCap Fund and Dean Witter Mid-Cap Growth Fund. The
foregoing investment companies, together with the Fund, are collectively
referred to as the Dean Witter Funds. In addition, Dean Witter Services
Company Inc. ("DWSC"), a wholly-owned subsidiary of InterCapital, serves as
manager for the following investment companies for which TCW Funds
Management, Inc. is the investment adviser: TCW/DW Core Equity Trust, TCW/DW
North American Government Income Trust, TCW/DW Latin American Growth Fund,
TCW/DW Income and Growth Fund, TCW/DW Small Cap Growth Fund, TCW/DW Balanced
Fund, TCW/DW Term Trust 2000, TCW/DW Term Trust 2002, TCW/DW Term Trust 2003,
TCW/DW North American Intermediate Fund, TCW/DW Total Return Trust, TCW/DW
Global Convertible Trust, TCW/DW Emerging Markets Opportunities Trust and
TCW/DW Emerging Markets Government Income Trust (the "TCW/DW Funds").
InterCapital also serves as: (i) sub-adviser to Templeton Global Opportunities
Trust, an open-end investment company;

<PAGE>

(ii) administrator of The BlackRock Strategic Term Trust Inc., a closed-end
investment company; and (iii) sub-administrator of MassMutual Participation
Investors and Templeton Global Governments Income Trust, closed-end
investment companies.

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

Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, such office space, facilities,
equipment, clerical help and bookkeeping and certain legal services as the
Fund may reasonably require in the conduct of its business, including the
preparation of prospectuses, statements of additional information, proxy
statements and reports required to be filed with federal and state securities
commissions (except insofar as the participation or assistance of independent
accountants and attorneys is, in the opinion of the Investment Manager,
necessary or desirable). In addition, the Investment Manager pays the
salaries of all personnel, including officers of the Fund, who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone service, heat, light, power and other utilities provided to the
Fund.

Effective December 31, 1993, pursuant to a Services Agreement between
InterCapital and DWSC, DWSC began to provide the administrative services to
the Fund which were previously performed directly by InterCapital. The
foregoing internal reorganization did not result in any change in the nature
or scope of the administrative services being provided to the Fund or any of
the fees being paid by the Fund for the overall services being performed
under the terms of the existing Management Agreement.

Expenses not expressly assumed by the Investment Manager under the
Management Agreement (see below), or by the Distributor of the Fund's shares,
Dean Witter Distributors Inc. ("Distributors") (see "The Distributor") will
be paid by the Fund. Each Series pays all other expenses incurred in its
operation and a portion of the Fund's general administration expenses
allocated on the basis of the asset size of the respective Series. Expenses
that are borne directly by a Series include, but are not limited to: charges
and expenses of any registrar, custodian, share transfer and dividend
disbursing agent; brokerage commissions; certain taxes; registration costs of
the Series and its shares under federal and state securities laws;
shareholder servicing costs; charges and expenses of any outside service used
for pricing of the shares of the Series; interest on borrowings by the
Series; fees and expenses of legal counsel, including counsel to the Trustees
who are not interested persons of the Fund or of the Investment Manager) not
including compensation or expenses of attorneys who are employees of the
Investment Manager and independent accountants; and all other expenses
attributable to a particular Series. Expenses which are allocated on the
basis of size of the respective Series include the costs and expenses 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; state franchise taxes; Securities and
Exchange Commission fees; membership dues of industry associations; postage;
insurance premiums on property or personnel (including officers and Trustees)
of the Fund which inure to its benefit; and all other costs of the Fund's
operations properly payable by the Fund and allocable on the basis of size of
the respective Series. Depending on the nature of a legal claim, liability or
lawsuit, litigation costs, payment of legal claims or liabilities and any
indemnification relating thereto may be directly applicable to the Series or
allocated on the basis of the size of the respective Series. The Trustees
have determined that this is an appropriate method of allocation of expenses.

As full compensation for the services and facilities furnished to the Fund
and expenses of the Fund assumed by the Investment Manager, the Fund pays the
Investment Manager monthly compensation calculated daily by applying each of
the following annual rates to the net assets of the respective Series of the
Fund, each business day: 0.50%. (Liquid Asset Series); 0.50% (U.S. Government
Money Market Series); 0.65% (U.S. Government Securities Series); 0.65%
(Intermediate Income Securities Series);

<PAGE>

0.85% (American Value Series); 0.85% (Capital Growth Series); 0.75% (Dividend
Growth Series); 0.85% (Strategist Series); 0.75% (Utilities Series); 0.50%
(Value-Added Market Series); and 1.0% (Global Equity Series). The management
fees for the American Value, Capital Growth, Dividend Growth, Strategist,
Utilities and Global Equity Series and higher than those paid by most
investment policies.

Pursuant to the Agreement, total operating expenses of each Series of the
Fund are subject to applicable limitations under rules and regulations of
states where a particular Series is authorized to sell its shares. Therefore,
operating expenses of a particular Series are effectively subject to such
limitations as the same may be amended from time to time. Presently, the most
restrictive limitation, is as follows: if, in any fiscal year, the total
operating expenses of a Series, exclusive of taxes, interest, brokerage fees,
distribution fees and extraordinary expenses (to the extent permitted by
applicable state securities laws and regulations), exceed 2-1/2% of the first
$30,000,000 of average daily net assets, 2% of the next $70,000,000 and
1-1/2% of any excess over $100,000,000, the Investment Manager will reimburse
such Series for the amount of such excess. Such amount, if any, will be
calculated daily and credited on a monthly basis. No Series exceeded such
limitation during its fiscal period ended July 31, 1994.

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

The Investment Manager has undertaken to assume all expenses (except for
brokerage fees and a portion of organizational expenses) for each Series and
waive the compensation provided for in the Agreement for services rendered
with respect to each Series until such time as the pertinent Series has $50
million of net assets or until July 31, 1995, whichever occurs first. As of
the date of this Prospectus, no Series has $50 million or more in net assets.
The Fund's Investment Manager paid the organizational expenses of the Fund
in the amount of $150,000 ($13,636 allocated to each of the Series), a
portion of which was reimbursed by the Fund.

The Agreement was initially approved by the Fund's Trustees on July 29,
1992 and, subsequently, by DWR as the then sole shareholder. The Agreement
may be terminated at any time, without penalty, on thirty days' notice by the
Trustees of the Fund, by the holders of a majority as defined in the
Investment Company Act of 1940, as amended (the "Act"), of the outstanding
shares of the Fund, or by the Investment Manager. The Agreement will
automatically terminate in the event of its assignment (as defined in the
Act).

At their meeting held on October 30, 1992, the Trustees of the Fund,
including all of the Independent Trustees of the Fund, in consideration of
the anticipated Reorganization, approved the assumption by InterCapital of
DWR's rights and duties under the Agreement, to take effect upon the
Reorganization. At the same meeting, the Trustees of the Fund, including all
of the Independent Trustees, approved a new investment management agreement
between the Fund and InterCapital (the "New Agreement"), to take effect upon
the spin-off of DWDC by its parent, Sears, Roebuck and Co., which took place
on June 30, 1993, whereupon the New Agreement went into effect. The terms of
the New Agreement are substantially identical in all material respects to
those of the Agreement, except for the dates of effectiveness.

Under its terms, the New Agreement will continue in effect until April 30,
1994, and will continue from year to year thereafter with respect to each
Series, provided continuance of the Agreement is approved at least annually
by the vote of the holders of a majority of the outstanding shares of that
Series, as defined in the Act, or by the Trustees of the Fund; provided that
in either event such continuance is approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to the

<PAGE>

Agreement or "interested persons" (as defined in the Act) of any such party
(the "Independent Trustees"), which vote must be cast in person at a meeting
called for the purpose of voting on such approval. At their meeting held on
April 8, 1994, the Fund's Trustees, including all of the Independent
Trustees approved the continuance of the Agreement for an additional year until
April 30, 1995.

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

TRUSTEES AND OFFICERS
- -----------------------------------------------------------------------------

The Trustees and Executive Officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with
InterCapital and with the Dean Witter Funds and the TCW/DW Funds are shown
below.

<TABLE>
<CAPTION>
NAME, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- ------------------------------------------------- --------------------------------------------------------
<S> <C>
Jack F. Bennett Trustee 141 Taconic Road Retired; Director or Trustee of the Dean Witter Funds; formerly
Greenwich, Connecticut Senior Vice President and Director of Exxon Corporation
(1975-January, 1989) and Under Secretary of the U.S. Treasury
for Monetary Affairs (1974-1975); Director of Philips
Electronics N.V., Tandem Computers Inc. and Massachusetts
Mutual Life Insurance Co.; director or trustee of various
other not-for-profit and business organizations.

Michael Bozic Trustee c/o Hills Stores Inc. 15 President and Chief Executive Officer of Hills Department
Dan Road Canton, Massachusetts Stores (since May, 1991); formerly Chairman and Chief Executive
Officer (January, 1987-August, 1990) and President and Chief
Operating Officer (August, 1990-February, 1991) of the Sears
Merchandise Group of Sears, Roebuck and Co.; Director or Trustee
of the Dean Witter Funds; Director of Harley Davidson Credit
Inc., the United Negro College Fund and Domain Inc. (home
decor retailer).
Charles A. Fiumefreddo* Chairman, President Chief Chairman, Chief Executive Officer and Director of InterCapital,
Executive Officer and Trustee Two World Trade Distributors and DWSC; Director and Executive Vice President
Center New York, New York of DWR; Chairman, Director or Trustee, President and Chief
Executive Officer of the Dean Witter Funds; Chairman, Chief
Executive Officer and Trustee of the TCW/DW Funds; Chairman
and Director of Dean Witter Trust Company ("DWTC") (since
October, 1989); Director and/or officer of various DWDC
subsidiaries.

<PAGE>

NAME, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- ------------------------------------------------- --------------------------------------------------------
Edwin J. Garn Trustee 2000 Eagle Gate Tower Salt Director or Trustee of the Dean Witter Funds; formerly United
Lake City, Utah States Senator (R-Utah) (1974-1992) and Chairman, Senate
Banking Committee (1980-1986); formerly Mayor of Salt Lake
City, Utah (1971-1974); formerly Astronaut, Space Shuttle
Discovery (April 12-19, 1985); Vice Chairman, Huntsman Chemical
Corporation (since January, 1993); Member of the board of
various civic and charitable organizations.
John R. Haire Trustee 439 East 51st Street New Chairman of the Audit Committee and Chairman of the Committee
York, New York of the Independent Directors or Trustees and Director or Trustee
of the Dean Witter Funds; Trustee of the TCW/DW Funds; formerly
President, Council for Aid to Education (1978-October, 1989)
and Chairman and Chief Executive Officer of Anchor Corporation,
an Investment Adviser (1964-1978); Director of Washington
National Corporation (insurance) and Bowne & Co., Inc.
(printing).
Dr. John E. Jeuck Trustee 70 East Cedar Street Retired; Director or Trustee of the Dean Witter Funds; formerly
Chicago, Illinois Robert Law Professor of Business Administration, Graduate
School of Business, University of Chicago (until July, 1989);
Business consultant.
Dr. Manuel H. Johnson Trustee 7521 Old Dominion Senior Partner, Johnson Smick International, Inc., a consulting
Drive MacLean, Virginia firm (since June, 1985); Koch Professor of International
Economics and Director of the Center for Global Market Studies
at George Mason University (since September, 1990); Co-Chairman
and a founder of the Group of Seven Council (G7C), an
international economic commission (since September, 1990);
Director or Trustee of the Dean Witter Funds; Trustee of the
TCW/DW Funds; Director of Greenwich Capital Markets Inc.
(broker-dealer); formerly Vice Chairman of the Board of
Governors of the Federal Reserve System (February, 1986-August,
1990) and Assistant Secretary of the U.S. Treasury (1982-1988).
Paul Kolton Trustee 9 Hunting Ridge Road Director or Trustee of the Dean Witter Funds; Chairman of
Stamford, Connecticut the Audit Committee and Chairman of the Committee of the
Independent Trustees and Trustee of the TCW/DW Funds; formerly
Chairman of the Financial Accounting Standards Advisory
Council; and Chairman and Chief Executive Officer of the American
Stock Exchange; Director of UCC Investors Holding Inc. (Uniroyal
Chemical Company, Inc.); director or trustee of various
not-for-profit organizations.

<PAGE>

NAME, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- ------------------------------------------------- --------------------------------------------------------
Michael E. Nugent Trustee 237 Park Avenue General Partner, Triumph Capital, L.P., a private investment
New York, New York partnership (since April, 1988); Director or Trustee of the
Dean Witter Funds; Trustee of the TCW/DW Funds; formerly Vice
President, Bankers Trust Company and BT Capital Corporation
(September, 1984-March, 1988); Director of various business
organizations.
Philip J. Purcell* Trustee Two World Trade Center Chairman of the Board of Directors and Chief Executive Officer
New York, New York of DWDC, DWR and Novus Credit Services Inc.; Director
of InterCapital, DWSC and Distributors; Director or Trustee
of the Dean Witter Funds; Director and/or officer of various
DWDC subsidiaries.
John L. Schroeder Trustee Northgate 3A Alger Executive Vice President and Chief Investment Officer of the
Court Bronxville, New York Home Insurance Company (since August, 1991); Director or Trustee
of the Dean Witter Funds; Director of Citizens Utilities Company;
formerly Chairman and Chief Investment Officer of Axe-Houghton
Management and the Axe-Houghton Funds (April, 1983-June, 1991)
and President of USF&G Financial Services, Inc. (June 1990-June,
1991).
Edward R. Telling* Sears Tower Chicago, Illinois Retired; Director or Trustee of the Dean Witter Funds; formerly
Chairman of the Board of Directors and Chief Executive Officer
(until December, 1985) and President (from January, 1981-March,
1982 and from February, 1984-August, 1984) of Sears, Roebuck
and Co.; formerly Director of Sears, Roebuck and Co.
Sheldon Curtis Vice President, Secretary and Senior Vice President, Secretary and General Counsel of InterCapital
General Counsel Two World Trade Center New York, and DWSC; Senior Vice President and Secretary of Dean Witter
New York Trust Company (since October, 1989); Senior Vice President,
Assistant Secretary and Assistant General Counsel of
Distributors; Assistant Secretary of DWDC and DWR and Vice President,
Secretary and General Counsel of the Dean Witter Funds and
the TCW/DW Funds.
Thomas F. Caloia Treasurer Two World Trade Center First Vice President and Assistant Treasurer
New York, New York of InterCapital and DWSC and Treasurer of the
Dean Witter Funds and the TCW/DW Funds
Mark Bavoso Vice President Two World Trade Center Senior Vice President of InterCapital (since June, 1993);
New York, New York Vice President of various Dean Witter Funds; previously, Vice
President of InterCapital.

<PAGE>

NAME, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- ------------------------------------------------- --------------------------------------------------------
Thomas H. Connelly Vice President Two World Trade Senior Vice President of InterCapital; Vice President of various
Center New York, New York Dean Witter Funds.
Edward F. Gaylor Vice President Two World Trade Senior Vice President of InterCapital; Vice President of various
Center New York, New York Dean Witter Funds.
Rajesh K. Gupta Vice President Two World Trade Senior Vice President of InterCapital (since May 1991); Vice
Center New York, New York President of various Dean Witter Funds; previously Vice
President of InterCapital.
Jonathan R. Page Vice President Two World Trade Senior Vice President of InterCapital; Vice President of various
Center New York, New York Dean Witter Funds.
Paul D. Vance Vice President Two World Trade Senior Vice President of InterCapital; Vice President of various
Center New York, New York Dean Witter Funds.
Anita H. Kolleny Vice President Two World Trade Senior Vice President of InterCapital; Vice President of
Center New York, New York various Dean Witter Funds.
Paula LaCosta Vice President Two World Trade Vice President of InterCapital; Vice President of various
Center New York, New York Dean Witter Funds.
Rochelle G. Siegel Vice President Two World Trade Senior Vice President of InterCapital; Vice President of various
Center New York, New York Dean Witter Funds.
Kenton J. Hinchliffe Vice President Two World Senior Vice President of InterCapital; Vice President of various
Trade Center New York, New York Dean Witter Funds.
Alice S. Weiss Vice President Two World Trade Vice President of InterCapital since May, 1990, previously
Center New York, New York Assistant Vice President of InterCapital.
<FN>
* Denotes Trustees who are "interested persons" of the Fund, as defined in
the Act.
</TABLE>

In addition, Robert M. Scanlan, President and Chief Operating Officer of
InterCapital and DWSC, Executive Vice President of Distributors and DWTC and
Director of DWTC, David A. Hughey, Executive Vice President and Chief
Administrative Officer of InterCapital, DWSC, DWTC and Distributors and
Director of DWTC, and Edmund C. Puckhaber, Executive Vice President of
InterCapital and Diane Sobin, Vice President of InterCapital are Vice
Presidents of the Fund and Barry Fink and

<PAGE>

Marilyn K. Cranney, First Vice Presidents and Assistant General Counsels of
InterCapital and DWSC and Lawrence S. Lafer, Lou Anne D. McInnis and Ruth
Rossi, Vice Presidents and Assistant General Counsels of InterCapital and DWSC,
are Assistant Secretaries of the Fund.

The Fund pays each Trustee who is not an employee or retired employee of
the Investment Manager or an affiliated company an annual fee of $1,200 ($1,600
prior to December 31, 1993) plus $50 for each meeting of the Board of Trustees,
the Audit Committee or the Committee of Independent Trustees attended by the
Trustee (the Fund pays the Chairman of the Audit Committee an additional annual
fee of $1,000 ($1,200 prior to December 31, 1993) and pays the Chairman of the
Committee of Independent Trustees an annual fee of $2,400, in each case
inclusive of the Committee meeting fees). The Fund also reimburses Trustees for
travel and other out-of-pocket expenses incurred by them in connection with
attending such meetings. Trustees and officers of the Fund who are employed by
the Investment Manager or an affiliated company receive no compensation or
expense reimbursement from the Fund. As of September 1, 1994 the aggregate
shares of beneficial interest of the Fund owned by the Fund's officers and
Trustees as a group was less than 1 percent of the Fund's shares of beneficial
interest outstanding.

INVESTMENT PRACTICES AND POLICIES
- -----------------------------------------------------------------------------

LIQUID ASSET SERIES

Variable and Floating Rate Obligations. As stated in the Prospectus, the
Liquid Asset Series may invest in variable and floating rate obligations. The
interest rate payable on a variable rate obligation is adjusted at
predesignated periodic intervals and, on floating rate obligations, whenever
there is a change in the market rate of interest on which the interest rate
payable is based. Other features may include the right whereby the Liquid
Asset Series may demand prepayment of the principal amount of the obligation
prior to its stated maturity (a "demand feature") and the right of the issuer
to prepay the principal amount prior to maturity. The principal benefit of a
variable rate obligation is that the interest rate adjustment minimizes
changes in the market value of the obligation. As a result, the purchase of
variable rate and floating rate obligations should enhance the ability of the
Liquid Asset Series to maintain a stable net asset value per share (see "How
Net Asset Value is Determined") and to sell obligations prior to maturity at
a price approximating the full principal amount of the obligations. The
principal benefit to the Liquid Asset Series of purchasing obligations with a
demand feature is that liquidity, and the ability of the Liquid Asset Series
to obtain repayment of the full principal amount of an obligation prior to
maturity, is enhanced. The payment of principal and interest by issuers of
certain obligations purchased by the Liquid Asset Series may be guaranteed by
letters of credit or other credit facilities offered by banks or other
financial institutions. Such guarantees will be considered in determining
whether an obligation meets the Liquid Asset Series' investment quality
requirements.

INTERMEDIATE INCOME SECURITIES SERIES

As stated in the Prospectus, the Intermediate Income Securities Series may
invest up to 5% of its net assets in lower rated fixed-income securities,
sometimes referred to as high yield securities. Because of the special nature
of high yield securities, the Investment Manager must take account of certain
special considerations in assessing the risks associated with such
investments. For example, as the high yield securities market is relatively
new, its growth had paralleled a long economic expansion and, until recently,
it had not faced adverse economic and market conditions. Therefore, an
economic downturn or increase in interest rates is likely to have a negative
effect on the high yield bond market and on the value of the high yield
securities held by the Intermediate Income Securities Series, as well as on
the ability of the securities' issuers to repay principal and interest on
their borrowings.

The prices of high yield securities have been found to be less sensitive
to changes in prevailing interest rates than higher-rated investments, but
are likely to be more sensitive to adverse economic changes or individual
corporate developments. During an economic downturn or substantial period of
rising interest rates, highly leveraged issuers may experience financial
stress which would adversely affect their ability to service their principal
and interest payment obligations, to meet their projected business goals or
to obtain additional financing. If the issuer of a fixed-income security
owned by the Intermediate Income Securities Series defaults, the Series may
incur additional expenses to seek

<PAGE>

recovery. In addition, periods of economic uncertainty and change can be
expected to result in an increased volatility of market prices of high yield
securities and a concomitant volatility in the net asset value of a share of
a Series. Moreover, the market prices of certain of the Intermediate Income
Securities Series' securities which are structured as zero coupon and
payment-in-kind securities are affected to a greater extent by interest rate
changes and thereby tend to be more volatile than securities which pay
interest periodically and in cash (see "Dividends, Distributions and Taxes"
for a discussion of the tax ramifications of investments in such securities).

The secondary market for high yield securities may be less liquid than the
markets for higher quality securities and, as such, may have an adverse
effect on the market prices of certain securities. The limited liquidity of
the market may also adversely affect the ability of the Fund's Trustees to
arrive at a fair value for certain high yield securities at certain times and
could make it difficult for the Intermediate Income Securities Series to sell
certain securities.

New laws and proposed new laws may have a potentially negative impact on
the market for high yield bonds. For example, recent legislation requires
federally-insured savings and loan associations to divest their investments
in high yield bonds. This legislation and other proposed legislation may have
an adverse effect upon the value of high yield securities and a concomitant
negative impact upon the net asset value of a share of the Intermediate
Income Securities Series.

AMERICAN VALUE SERIES

As discussed in the Prospectus, the American Value Series offers investors
an opportunity to participate in a diversified portfolio of securities,
consisting principally of common stocks. The portfolio reflects an investment
decision-making process developed by the Investment Manager.

Industry Valuation Approach. As stated in the Prospectus, in managing the
American Value Series, the Investment Manager generally seeks to identify
industries, rather than individual companies, as prospects for capital
appreciation. This approach is designed to capitalize on four basic
assumptions: (1) industry trends are a primary force governing company
earnings; (2) conventional forecasts by security analysts of company earnings
do not fully reflect underlying industry conditions or changing economic
cycles; (3) the market's perception of industry trends is often transitory or
exaggerated; and (4) distortions in relative valuations beyond their normal
ranges provide significant buying or selling opportunities.

The Investment Manager generally seeks to invest assets of the American
Value Series in industries it considers to be "undervalued" at the time of
purchase and to sell those it considers "overvalued". In so doing, the
Investment Manager utilizes a record of historical price/earnings ratios for
each of more than 60 industry groups (which may be increased or decreased,
from time to time) relative to the Standard & Poor's Index of 500 stocks
("S&P Index"). From this record a range or band is established in which
variations in an industry's price/earnings multiple, relative to the S&P
Index, are considered normal. Based upon a forecast of industry earnings, an
industry is considered "undervalued", "moderately valued" or "overvalued"
depending upon whether the relative price/earnings multiple is below, within
or above the normalized channel.

The Investment Manager also uses models which utilize economic indicators
or other financial variables to evaluate the relative attractiveness of
industries. Economic indicators considered would be specific to particular
industries. Financial variables may include cash flow, asset value,
historical and projected earnings, absolute and relative price/earnings
ratios, dividend discount values, as well as other factors.

A basic tenet of the industry valuation approach is that there is no
certainty of superior performance in any specific industry selection, but
rather that approximately equal weighting of investments in a group of
industries, each of which has been identified as undervalued, can benefit
from the performance probabilities of the total group. The Investment Manager
believes that subjective judgment enters into every investment process no
matter how sophisticated or systematized, but that any adverse impact on
investment performance resulting from errors of judgment may be mitigated by
approximately equal weighting of both the industries and companies within
those industries acquired for the portfolio.

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The foregoing represents the main outlines of the industry valuation
approach. The following describes its key features, all of which are subject
to modification as described below or as result of applying the asset
allocation disciplines described later.

1. Equal Industry Weightings.

After determining the industries that it considers to be undervalued, the
Investment Manager generally attempts to invest approximately equal amounts
of the equity portion of the portfolio in securities of companies in each of
such industries, subject to adjustment for company weightings as set forth in
the next paragraph.

2. Equal Company Weightings.

From the total of all companies included in the industry valuation
process, the Investment Manager selects a limited number from each industry
as representative of that industry. Such selections are made on the basis of
various criteria, including size and quality of a company, the consistency of
its earnings and various valuation parameters. Valuation screens may include
dividend discount model values, price-to-book ratios, price-to-cashflow
values, relative and absolute price-to-earnings ratios and ratios of
price-earnings multiples to earnings growth. Price and earnings momentum
ratings derived from external sources are also factored into the stock
selection decision. Those companies which are in undervalued industries and
which the Investment Manager believes to be attractive investments are
finally selected for inclusion in the portfolio. When final selections are
made, approximately equal amounts of the equity portion of the portfolio are
invested in each of such companies. This may vary depending on whether the
Investment Manager is in the process of building or reducing a stock
position. Consideration will also be given to earnings visibility and
valuation. Stock in industries not identified as undervalued may not be
equally weighted. Also, smaller capitalization issues may not be equally
weighted due to liquidity considerations.

3. Relative Industry Values.

Industry valuation only attempts to identify industries whose securities
might be expected to perform relatively better than the market as represented
by the S&P Index. It does not seek to identify securities which will
experience an absolute increase in value notwithstanding market conditions.
However, the process assumes that, despite interim fluctuations in stock
market prices, the long-term trend in equity security values will be up.

4. Industry Coverage.

Industry valuation presently covers securities classified by the
Investment Manager in approximately 60 industries. The classification of
industries in the S&P Index and in the industry valuation group are not
identical and the universe of industry-valued securities includes some which
are not contained in the S&P Index. To provide flexibility for taking
advantage of investment opportunities in "non-classified" industries, that
is, the industries not included in the Investment Manager's industry
valuation, the investment Manager may invest a portion of the American Value
Series assets in a limited number of securities in such non-classified
industries which the Investment Manager identifies as attractive investments.
Also, the Investment Manager may invest, on a selective basis, in stocks of
moderately valued industries.

5. Continuity of Industry Trends.

Industry valuation assumes that the trend of industry price/earnings
ratios relative to the price/ earnings ratios of all the companies in the S&P
Index will be substantially continuous. It is possible, however, that certain
changes in industry trends may result in a discontinuity that will not be
signaled in advance by the industry valuation process. The Investment Manager
believes that such changes are difficult to predict by any investment
decision-making process and that, at times, the company analysis may provide
a useful corrective mechanism.

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6. Practical Applications.

In applying the industry valuation approach to management of the American
Value Series, the Investment Manager will make adjustments in the Series
which reflect modifications of the underlying concepts whenever, in its
opinion, such adjustments are necessary or desirable to achieve the American
Value Series' objectives. Such adjustments may include, for example,
weighting some industries or companies more or less than others, based upon
the Investment Manager's judgment as to the investment merits of specific
companies. In addition, without specific action by the Investment Manager,
adjustments may result from fluctuations in market prices which distort
previously established industry and company weightings. The portfolio may, at
times, include securities of industries which are considered overvalued due
to consideration of the relative stage of the economic cycle (e.g., certain
industries perform better in inflationary times than other industries) or may
not include representation in industries considered undervalued due to
considerations such as valuation criteria, stage-of-cycle analysis or lack of
earnings visibility, balance sheet viability or management quality. Also,
independent of the application of the industry valuation process, the
American Value Series continuously sells and redeems its own shares, and, as
a result, securities may have to be sold at times from the American Value
Series' portfolio to meet redemptions and monies received upon sale of the
American Value Series' shares. Such sales and purchases of portfolio
securities will result in a portfolio that does not completely reflect equal
weighting of investment in industries or companies.

Asset Allocation. Common stocks, particularly those sought for possible
capital appreciation, have historically experienced a great amount of price
fluctuation. The Investment Manager believes it is desirable to attempt to
reduce the risks of extreme price fluctuations even if such an attempt
results, as it likely will at times, in reducing the probabilities of
obtaining greater capital appreciation. Accordingly, the Investment Manager's
investment process incorporates elements which may reduce, although certainly
not eliminate, the volatility of its holdings. The American Value Series may
hold a portion of its assets in fixed-income securities in an effort to
moderate extremes of price fluctuation. The determination of the appropriate
asset allocation as between equity and fixed-income investments will be made
by the Investment Manager in its discretion, based upon its evaluation of
economic and market conditions.

CAPITAL GROWTH SERIES

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

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

Bank Obligations. Obligations (including certificates of deposit, bankers'
acceptances, commercial paper (see below) and other debt obligations) of
banks subject to regulation by the U.S. Government and having total assets of
$1 billion or more, and instruments secured by such obligations, not
including obligations of foreign branches of domestic banks except as
permitted below;

Eurodollar Certificates of Deposit. Eurodollar certificates of deposit
issued by foreign branches of domestic banks having total assets of $1
billion or more (investments in Eurodollar certificates may be affected by
changes in currency rates or exchange control regulations, or changes in
governmental administration or economic or monetary policy in the United
States and abroad);

Obligations of Savings Institutions. Certificates of deposit of savings
banks and savings and loan associations, having total assets of $1 billion or
more (investments in savings institutions above $100,000 in principal amount
are not protected by federal deposit insurance);

Fully Insured Certificates of Deposit. Certificates of deposit of banks
and savings institutions, having total assets of less than $1 billion, if the
principal amount of the obligation is federally insured by

<PAGE>

the Bank Insurance Fund or the Savings Association Insurance Fund (each of
which is administered by the FDIC), limited to $100,000 principal amount per
certificate and to 15% or less of the Capital Growth Series' total assets in
all such obligations and in all illiquid assets, in the aggregate;

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

GLOBAL EQUITY SERIES

Forward Foreign Currency Exchange Contracts. As discussed in the
Prospectus, the Global Equity Series may enter into forward foreign currency
exchange contracts ("forward contracts") as a hedge against fluctuations in
future foreign exchange rates. The Series will conduct its foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market, or through entering into
forward contracts to purchase or sell foreign currencies. A forward contract
involves an obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract. These
contracts are traded in the interbank market conducted directly between
currency traders (usually large, commercial and investment banks) and their
customers. Such forward contracts will only be entered into with United
States banks and their foreign branches or foreign banks whose assets total
$1 billion or more. A forward contract generally has no deposit requirement,
and no commissions are charged at any stage for trades.

When management of the Series believes that the currency of a particular
foreign country may suffer a substantial movement against the U.S. dollar, it
may enter into a forward contract to purchase or sell, for a fixed amount of
dollars or other currency, the amount of foreign currency approximating the
value of some or all of the Series' portfolio securities denominated in such
foreign currency. The Series will also not enter into such forward contracts
or maintain a net exposure to such contracts where the consummation of the
contracts would obligate the Series to deliver an amount of foreign currency
in excess of the value of the Series' portfolio securities or other assets
denominated in that currency. Under normal circumstances, consideration of
the prospect for currency parities will be incorporated into the longer term
investment decisions made with regard to overall diversification strategies.
However, the management of the Fund believes that it is important to have the
flexibility to enter into such forward contracts when it determines that the
best interests of the Series will be served. The Series' custodian bank will
place cash, U.S. Government securities or other appropriate liquid high grade
debt securities in a segregated account of the Series in an amount equal to
the value of the Series' total assets committed to the consummation of
forward contracts entered into under the circumstances set forth above. If
the value of the securities placed in the segregated account declines,
additional cash or securities will be placed in the account on a daily basis
so that the value of the account will equal the amount of the Series'
commitments with respect to such contracts.

Where, for example, the Series is hedging a portfolio position consisting
of foreign fixed-income securities denominated in a foreign currency against
adverse exchange rate moves vis-a-vis the U.S. dollar, at the maturity of the
forward contract for delivery by the Series of a foreign currency, the Series
may either sell the portfolio security and make delivery of the foreign
currency, or it may retain the security and terminate its contractual
obligation to deliver the foreign currency by purchasing an "offsetting"
contract with the same currency trader obligating it to purchase, on the same
maturity date, the same amount of the foreign currency (however, the ability
of the Series to terminate a contract is contingent upon the willingness of
the currency trader with whom the contract has been entered into to permit an
offsetting transaction). It is impossible to forecast the market value of
portfolio securities at the expiration of the contract. Accordingly, it may
be necessary for the Series to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of
the security is less than the amount of foreign currency the Series is
obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to sell on
the spot market some of the foreign currency received upon the sale of the
portfolio securities if its market value exceeds the amount of foreign
currency the Series is obligated to deliver.

<PAGE>

If the Series retains the portfolio securities and engages in an
offsetting transaction, the Series will incur a gain or loss to the extent
that there has been movement in spot or forward contract prices. If the
Series engages in an offsetting transaction, it may subsequently enter into a
new forward contract to sell the foreign currency. Should forward prices
decline during the period between the Series' entering into a forward
contract for the sale of a foreign currency and the date it enters into an
offsetting contract for the purchase of the foreign currency, the Series will
realize a gain to the extent the price of the currency it has agreed to sell
exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Series will suffer a loss to the extent the price of the
currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell.

If the Series purchases a fixed-income security which is denominated in
U.S. dollars but which will pay out its principal based upon a formula tied
to the exchange rate between the U.S. dollar and a foreign currency, it may
hedge against a decline in the principal value of the security by entering
into a forward contract to sell an amount of the relevant foreign currency
equal to some or all of the principal value of the security.

At times when the Series has written a call option on a fixed-income
security or the currency in which it is denominated, it may wish to enter
into a forward contract to purchase or sell the foreign currency in which the
security is denominated. A forward contract would, for example, hedge the
risk of the security on which a call option has been written declining in
value to a greater extent than the value of the premium received for the
option. The Series will maintain with its Custodian at all times, cash, U.S.
Government securities, or other appropriate high grade debt obligations in a
segregated account equal in value to all forward contract obligations and
option contract obligations entered into in hedge situations such as this.

Although the Series values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. It will, however, do so from time to time, and
investors should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize
a profit based on the spread between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to the Series at one rate, while offering a lesser rate of exchange
should the Series desire to resell that currency to the dealer.

GENERAL INVESTMENT TECHNIQUES

Repurchase Agreements. When cash may be available for only a few days, it
may be invested by
a Series in repurchase agreements until such time as it may otherwise be
invested or used for payments of obligations of the Series. A repurchase
agreement may be viewed as a type of secured lending by the Series which
typically involves the acquisition by the Series of government securities
from a selling financial institution such as a bank, savings and loan
association or broker-dealer. The agreement provides that the Series will
sell back to the institution, and that the institution will repurchase, the
underlying security ("collateral") at a specified price and at a fixed time
in the future, usually not more than seven days from the date of purchase.
The collateral will be maintained in a segregated account and will be marked
to market daily to determine that the full value of the collateral, as
specified in the agreement, does not decrease below the repurchase price plus
accrued interest. If such decrease occurs, additional collateral will be
added to the account to maintain full collateralization. In the event the
original seller defaults on its obligations to repurchase, as a result of its
bankruptcy or otherwise, the Series will seek to sell the collateral, which
action could involve costs or delays. In such case, the Series' ability to
dispose of the collateral to recover its investment may be restricted or
delayed.

The Series will, when received, accrue interest from the institution until
the time when the repurchase is to occur. Although such date is deemed by the
Series to be the maturity date of a repurchase agreement, the maturities of
securities subject to repurchase agreements are not subject to any limits and
may exceed one year.

While repurchase agreements involve certain risks not associated with
direct investments in debt securities, each Series follows procedures
designed to minimize such risks. Repurchase agreements will

<PAGE>

be transacted only with large, well-capitalized and well-established
financial institutions whose financial condition will be continuously
monitored by the Investment Manager subject to procedures established by the
Trustees. The procedures also require that the collateral underlying the
agreement be specified.

Reverse Repurchase Agreements. As stated in the Prospectus, the Liquid
Asset, U.S. Government Money Market and Intermediate Income Securities Series
may also use reverse repurchase agreements as part of their investment
strategy. Reverse repurchase agreements involve sales by the Series of assets
concurrently with an agreement by the Series to repurchase the same assets at
a later date at a fixed price. Generally, the effect of such a transaction is
that the Series can recover all or most of the cash invested in the portfolio
securities involved during the term of the reverse repurchase agreement,
while it will be able to keep the interest income associated with those
portfolio securities. Such transactions are only advantageous if the interest
cost to the Series of the reverse repurchase transaction is less than the
cost of otherwise obtaining the cash. Opportunities to achieve this advantage
may not always be available, and the Series intend to use the reverse
repurchase technique only when it will be to its advantage to do so. The
Series will establish a segregated account with its custodian bank in which
it will maintain cash, U.S. Government securities or other high grade debt
securities equal in value to its obligations in respect of reverse repurchase
agreements. Reverse repurchase agreements are considered borrowings by the
Series and for purposes other than meeting redemptions may not exceed 5% of
the Series' total assets.

When-Issued and Delayed Delivery Securities and Forward Commitments. As
discussed in the Prospectus, from time to time, in the ordinary course of
business, a Series may purchase securities on a when-issued or delayed
delivery basis or may purchase or sell securities on a forward commitment
basis--i.e., delivery and payment can take place a month or more after the
date of the transactions. The securities so purchased are subject to market
fluctuation and no interest accrues to the purchaser during this period.
While a Series will only purchase securities on a when-issued, delayed
delivery or forward commitment basis with the intention of acquiring the
securities, the Series may sell the securities before the settlement date, if
it is deemed advisable. At the time the Series makes the commitment to
purchase securities on a when-issued or delayed delivery basis, the Series
will record the transaction and thereafter reflect the value, each day, of
such security in determining the net asset value of the Series. At the time
of delivery of the securities, the value may be more or less than the
purchase price. The Series will also establish a segregated account with the
Series' custodian bank in which it will continuously maintain cash or U.S.
Government securities or other high grade debt portfolio securities equal in
value to commitments for such when-issued or delayed delivery securities;
subject to this requirement, the Series may purchase securities on such basis
without limit. An increase in the percentage of the Series' assets committed
to the purchase of securities on a when-issued or delayed delivery basis may
increase the volatility of the Series' net asset value. The Investment
Manager and the Trustees do not believe that any Series' net asset value or
income will be adversely affected by its purchase of securities on such
basis.

When, As and If Issued Securities. As discussed in the Prospectus, each
Series (with the exception of the U.S. Government Money Market Series) may
purchase securities on a "when, as and if issued" basis under which the
issuance of the security depends upon the occurrence of a subsequent event,
such as approval of a merger, corporate reorganization, leveraged buyout or
debt restructuring. The commitment for the purchase of any such security will
not be recognized by the Series until the Investment Manager determines that
issuance of the security is probable. At such time, the Series will record
the transaction and, in determining its net asset value, will reflect the
value of the security daily. At such time, the Series will also establish a
segregated account with its custodian bank in which it will continuously
maintain cash or U.S. Government securities or other high grade debt
portfolio securities equal in value to recognized commitments for such
securities. Settlement of the trade will occur within five business days of
the occurrence of the subsequent event. The value of the Series' commitments
to purchase the securities of any one issuer, together with the value of all
securities of such issuer owned by the Series, may not exceed 5% of the value
of the Series' total assets at the time the initial commitment to purchase
such securities is made (see "Investment Restrictions"). Subject to the
foregoing restrictions, any Series may purchase securities on such basis
without limit. An increase in the

<PAGE>

percentage of the Series' assets committed to the purchase of securities on a
"when, as and if issued" basis may increase the volatility of its net asset
value. The Investment Manager and the Trustees do not believe that the net
asset value of any Series will be adversely affected by its purchase of
securities on such basis.

Zero Coupon Securities. A portion of the U.S. Government securities
purchased by each Series of the fund (other than the Liquid Asset, U.S.
Government Money Market and Value-Added Market Series) may be "zero coupon"
Treasury securities. These are U.S. Treasury bills, notes and bonds which
have been stripped of their unmatured interest coupons and receipts or which
are certificates representing interests in such stripped debt obligations and
coupons. In addition, a portion of the fixed-income securities purchased by
such Series may be "zero coupon" securities. "Zero coupon" securities are
purchased at a discount from their face amount, giving the purchaser the
right to receive their full value at maturity. A zero coupon security pays no
interest to its holder during its life. Its value to an investor consists of
the difference between its face value at the time of maturity and the price
for which it was acquired, which is generally an amount significantly less
than its face value (sometimes referred to as a "deep discount" price).

The interest earned on such securities is, implicitly, automatically
compounded and paid out at maturity. While such compounding at a constant
rate eliminates the risk of receiving lower yields upon reinvestment of
interest if prevailing interest rates decline, the owner of a zero coupon
security will be unable to participate in higher yields upon reinvestment of
interest received if prevailing interest rates rise. For this reason, zero
coupon securities are subject to substantially greater market price
fluctuations during periods of changing prevailing interest rates than are
comparable debt securities which make current distributions of interest.
Current federal tax law requires that a holder (such as the Series) of a zero
coupon security accrue a portion of the discount at which the security was
purchased as income each year even though the Series receives no interest
payments in cash on the security during the year.

Currently, the only U.S. Treasury security issued without coupons is the
Treasury bill. However, in the last few years a number of banks and brokerage
firms have separated ("stripped") the principal portions from the coupon
portions of the U.S. Treasury bonds and notes and sold them separately in the
form of receipts or certificates representing undivided interests in these
instruments (which instruments are generally held by a bank in a custodial or
trust account).

Lending of Portfolio Securities. Consistent with applicable regulatory
requirements and subject to Investment Restriction (11) below, each Series of
the Fund may lend its portfolio securities to brokers, dealers and other
financial institutions, provided that such loans are callable at any time by
the Series, and are at all times secured by cash or money market instruments,
which are maintained in a segregated account pursuant to applicable
regulations and that are equal to at least the market value, determined
daily, of the loaned securities. The advantage of such loans is that the
Series continues to receive the income on the loaned securities while at the
same time earning interest on the cash amounts deposited as collateral, which
will be invested in short-term obligations. A Series will not lend portfolio
securities having a value of more than 10% of its total assets.

A loan may be terminated by the borrower on one business day's notice, or
by the Series on four business days' notice. If the borrower fails to deliver
the loaned securities within four days after receipt of notice, the Series
could use the collateral to replace the securities while holding the borrower
liable for any excess of replacement cost over collateral. As with any
extensions of credit, there are risks of delay in recovery and in some cases
even loss of rights in the collateral should the borrower of the securities
fail financially. However, these loans of portfolio securities will only be
made of firms deemed by the Fund's management to be creditworthy and when the
income which can be earned from such loans justifies the attendant risks.
Upon termination of the loan, the borrower is required to return the
securities to the Fund. Any gain or loss in the market price during the loan
period would inure to the Series.

When voting or consent rights which accompany loaned securities pass to
the borrower, a Series will follow the policy of calling the loaned
securities, in whole or in part as may be appropriate, to be delivered within
one day after notice, to permit the exercise of such rights if the matters
involved would have a

<PAGE>

material effect on the Series' investment in such loaned securities. A Series
will pay reasonable finder's, administrative and custodial fees in connection
with a loan of its securities. No Series lent any of its portfolio securities
during the fiscal period ended July 31, 1994 and no Series has any intention
of lending any of its porfolio securities during the current fiscal year of
the Fund.

U.S. Government Securities. As stated in the Prospectus, the Intermediate
Income Securities and Utilities Series may invest in U.S. Government
securities. Securities issued by the U.S. Government, its agencies or
instrumentalities in which the Intermediate Income Securities and Utilities
Series may invest include:

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

(2) Securities issued by agencies and instrumentalities of the U.S.
Government which are backed by the full faith and credit of the United
States. Among the agencies and instrumentalities issuing such obligations
are the Federal Housing Administration, the Government National Mortgage
Association ("GNMA"), the Department of Housing and Urban Development, the
Export Import Bank, the Farmers Home Administration; the General Services
Administration, the Maritime Administration and the Small Business
Administration. The maturities of such obligations range from three months
to thirty years although the Fund may not invest in securities with
maturities of more than twelve years.

(3) Securities issued by agencies and instrumentalies which are not
backed by the full faith and credit of the United States, but whose
issuing agency or instrumentality has the right to borrow, to meet its
obligations, from an existing line of credit with the U.S. Treasury. Among
the agencies and instrumentalities issuing such obligations are the
Tennessee Valley Authority, the Federal National Mortgage Association
("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") and the
U.S. Postal Service.

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

OPTIONS AND FUTURES TRANSACTIONS

As discussed in the Prospectus, each of the Intermediate Income
Securities, American Value, Capital Growth, Strategist, Utilities and Global
Equity Series may write covered call options against securities held in its
portfolio and covered put options on eligible portfolio securities (the
Capital Growth Series may also write covered put and call options on stock
and bond indexes) and purchase options of the same series to effect closing
transactions, and may hedge against potential changes in the market value of
investments (or anticipated investments) by purchasing put and call options
on portfolio (or eligible portfolio) securities and engaging in transactions
involving futures contracts and options on such contracts. The Global Equity
Series may also hedge against potential changes in the market value of the
currencies in which its investments (or anticipated investments) are
denominated by purchasing put and call options on currencies and engage in
transactions involving currency futures contracts and options on such
contracts.

Options on Treasury Bonds and Notes. Because trading interest in options
written on Treasury bonds and notes tends to center on the most recently
auctioned issues, the exchanges on which such securities trade will not
continue indefinitely to introduce options with new expirations to replace
expiring options on particular issues. Instead, the expirations introduced at
the commencement of options trading on a particular issue will be allowed to
run their course, with the possible addition of a limited number of new
expirations as the original ones expire. Options trading on each issue of
bonds or notes will thus be phased out as new options are listed on more
recent issues, and options representing a full range of expirations will not
ordinarily be available for every issue on which options are traded.

<PAGE>

Options on Treasury Bills. Because a deliverable Treasury bill changes
from week to week, writers of Treasury bill calls cannot provide in advance
for their potential exercise settlement obligations by acquiring and holding
the underlying security. However, if a Series holds a long position in
Treasury bills with a principal amount of the securities deliverable upon
exercise of the option, the position may be hedged from a risk standpoint by
the writing of a call option. For so long as the call option is outstanding,
the Series will hold the Treasury bills in a segregated account with its
Custodian, so that they will be treated as being covered.

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

Options on Foreign Currencies. The Global Equity Series may purchase and
write options on foreign currencies for purposes similar to those involved
with investing in forward foreign currency exchange contracts. For example,
in order to protect against declines in the dollar value of portfolio
securities which are denominated in a foreign currency, the Global Equity
Series may purchase put options on an amount of such foreign currency
equivalent to the current value of the portfolio securities involved. As a
result, the Global Equity Series would be enabled to sell the foreign
currency for a fixed amount of U.S. dollars, thereby "locking in" the dollar
value of the portfolio securities (less the amount of the premiums paid for
the options). Conversely, the Global Equity Series may purchase call options
on foreign currencies in which securities it anticipates purchasing are
denominated to secure a set U.S. dollar price for such securities and protect
against a decline in the value of the U.S. dollar against such foreign
currency. The Global Equity Series may also purchase call and put options to
close out written option positions.

The Global Equity Series may also write call options on foreign currency
to protect against potential declines in its portfolio securities which are
denominated in foreign currencies. If the U.S. dollar value of the portfolio
securities falls as a result of a decline in the exchange rate between the
foreign currency in which a security is denominated and the U.S. dollar, then
a loss to the Series occasioned by such value decline would be ameliorated by
receipt of the premium on the option sold. At the same time, however, the
Series gives up the benefit of any rise in value of the relevant portfolio
securities above the exercise price of the option and, in fact, only receives
a benefit from the writing of the option to the extent that the value of the
portfolio securities falls below the price of the premium received. The
Global Equity Series may also write options to close out long call option
positions.

The markets in foreign currency options are relatively new and the Global
Equity Series' ability to establish and close out positions on such options
is subject to the maintenance of a liquid secondary market. Although the
Series will not purchase or write such options unless and until, in the
opinion of the management of the Series, the market for them has developed
sufficiently to ensure that the risks in connection with such options are not
greater than the risks in connection with the underlying currency, there can
be no assurance that a liquid secondary market will exist for a particular
option at any specific time. In addition, options on foreign currencies are
affected by all of those factors which influence foreign exchange rates and
investments generally.

The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of
the option position may vary with changes in the value of either

<PAGE>

or both currencies and have no relationship to the investment merits of a
foreign security, including foreign securities held in a "hedged" investment
portfolio. Because foreign currency transactions occurring in the interbank
market involve substantially larger amounts than those that may be involved
in the use of foreign currency options, investors may be disadvantaged by
having to deal in an odd lot market (generally consisting of transactions of
less than $1 million) for the underlying foreign currencies at prices that
are less favorable than for round lots.

There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis.
Quotation information available is generally representative of very large
transactions in the interbank market and thus may not reflect relatively
smaller transactions (i.e., less than $1 million) where rates may be less
favorable. The interbank market in foreign currencies is a global,
around-the-clock market. To the extent that the U.S. options markets are
closed while the markets for the underlying currencies remain open,
significant price and rate movements may take place in the underlying markets
that are not reflected in the options market.

OTC Options. Exchange-listed options are issued by the OCC (in the U.S.)
or other clearing corporation or exchange which assures that all transactions
in such options are properly executed. OTC options are purchased from or sold
(written) to dealers or financial institutions which have entered into direct
agreements with the relevant Series of the Fund. With OTC options, such
variables as expiration date, exercise price and premium will be agreed upon
between a Series and the transacting dealer, without the intermediation of a
third party such as the OCC. If the transacting dealer fails to make or take
delivery of the securities or amount of foreign currency underlying an option
it has written, in accordance with the terms of the option, the Series would
lose the premium paid for the option as well as any anticipated benefit of
the transaction. The Fund will engage in OTC option transactions only with
member banks of the Federal Reserve System or primary dealers in U.S.
Government securities or with affiliates of such banks or dealers which have
capital of at least $50 million or whose obligations are guaranteed by an
entity having capital of at least $50 million.

Covered Call Writing. As stated in the Prospectus, the Series are
permitted to write covered call options on portfolio securities, and the
Global Equity Series is permitted to write covered call options on the U.S.
dollar and foreign currencies, in each case without limit, in order to aid in
achieving their investment objectives. Generally, a call option is "covered"
if the Series owns, or has the right to acquire, without additional cash
consideration (or for additional cash consideration held for the Series by
its Custodian in a segregated account) the underlying security (currency)
subject to the option except that in the case of call options on U.S.
Treasury Bills, a Series might own U.S. Treasury Bills of a different series
from those underlying the call option, but with a principal amount and value
corresponding to the exercise price and a maturity date no later than that of
the securities (currency) deliverable under the call option. A call option is
also covered if the Series holds a call on the same security (currency) as
the underlying security of the written option, where the exercise price of
the call used for coverage is equal to or less than the exercise price of the
call written or greater than the exercise price of the call written if the
mark-to-market difference is maintained by the Series in cash, U.S.
Government securities or other high grade debt obligations which the Series
holds in a segregated account maintained with the Series' Custodian.

The Series will receive from the purchaser, in return for a call it has
written, a "premium"; i.e., the price of the option. Receipt of these
premiums may better enable the Series to achieve a high current income return
for their shareholders or achieve a more consistent average total return than
would be realized from holding the underlying securities (and, in the case of
the Global Equity Series, currencies) alone. Moreover, the premium received
will offset a portion of the potential loss incurred by the Series if the
securities (currencies) underlying the option are ultimately sold (exchanged)
by the Series at a loss. The premium received will fluctuate with varying
economic market conditions. If the market value of the portfolio securities
(or, in the case of the Global Equity Series, the currencies in which they
are denominated) upon which call options have been written increases, the
Series may receive a lower total return from the portion of its portfolio
upon which calls have been written than it would have had such calls not been
written.

<PAGE>

As regards listed options and certain over-the-counter ("OTC") options,
during the option period, the Series may be required, at any time, to deliver
the underlying security (currency) against payment of the exercise price on
any calls it has written (exercise of certain listed and OTC options may be
limited to specific expiration dates). This obligation is terminated upon the
expiration of the option period or at such earlier time when the writer
effects a closing purchase transaction. A closing purchase transaction is
accomplished by purchasing an option of the same series as the option
previously written. However, once the Series has been assigned an exercise
notice, the Series will be unable to effect a closing purchase transaction.

Closing purchase transactions are ordinarily effected to realize a profit
on an outstanding call option, to prevent an underlying security (currency)
from being called, to permit the sale of an underlying security (or the
exchange of the underlying currency) or to enable the Series to write another
call option on the underlying security (currency) with either a different
exercise price or expiration date or both. The Series may realize a net gain
or loss from a closing purchase transaction depending upon whether the amount
of the premium received on the call option is more or less than the cost of
effecting the closing purchase transaction. Any loss incurred in a closing
purchase transaction may be wholly or partially offset by unrealized
appreciation in the market value of the underlying security (currency).
Conversely, a gain resulting from a closing purchase transaction could be
offset in whole or in part or exceeded by a decline in the market value of
the underlying security (currency).

If a call option expires unexercised, the Series realizes a gain in the
amount of the premium on the option less the commission paid. Such a gain,
however, may be offset by depreciation in the market value of the underlying
security (currency) during the option period. If a call option is exercised,
the Series realizes a gain or loss from the sale of the underlying security
(currency) equal to the difference between the purchase price of the
underlying security (currency) and the proceeds of the sale of the security
(currency) plus the premium received when the option was written, less the
commission paid.

Options written by a Series normally have expiration dates of up to
eighteen months from the date written. The exercise price of a call option
may be below, equal to or above the current market value of the underlying
security (currency) at the time the option is written. See "Risks of Options
and Futures Transactions," below.

Covered Put Writing. As stated in the Prospectus, as a writer of a covered
put option, the Series incurs an obligation to buy the security underlying
the option from the purchaser of the put, at the option's exercise price at
any time during the option period, at the purchaser's election (certain
listed and OTC put options written by the Series will be exercisable by the
purchaser only on a specific date). A put is "covered" if the Series
maintains, in a segregated account maintained on its behalf at its Custodian,
cash, U.S. Government securities or other high grade debt obligations in an
amount equal to at least the exercise price of the option, at all times
during the option period. Similarly, a written put position could be covered
by the Series by its purchase of a put option on the same security as the
underlying security of the written option, where the exercise price of the
purchased option is equal to or more than the exercise price of the put
written or less than the exercise price of the put written if the
mark-to-market difference is maintained by the Series in cash, U.S.
Government securities or other high grade debt obligations which the Series
holds in a segregated account maintained at its Custodian. In writing puts,
the Series assumes the risk of loss should the market value of the underlying
security decline below the exercise price of the option (any loss being
decreased by the receipt of the premium on the option written). In the case
of listed options, during the option period, the Series may be required, at
any time, to make payment of the exercise price against delivery of the
underlying security. The operation of and limitations on covered put options
in other respects are substantially identical to those of call options.

A Series will write put options for two purposes: (1) to receive the
income derived from the premiums paid by purchasers; and (2) when the
Investment Manager wishes to purchase the security underlying the option at a
price lower than its current market price, in which case the Series will
write the covered put at an exercise price reflecting the lower purchase
price sought. The potential gain on a covered put option is limited to the
premium received on the option (less the commissions paid on the transaction)
while the potential loss equals the difference between the exercise price of
the option and the current market price of the underlying securities when the
put is exercised, offset by the premium received (less the commissions paid
on the transaction).

<PAGE>

Purchasing Call and Put Options. As stated in the Prospectus, Series may
purchase listed and OTC call and put options in amounts equalling up to 10%
of its total assets. These Series may purchase call options in order to close
out a covered call position (see "Covered Call Writing" above) or purchase
call options on securities they intend to purchase. The Global Equity Series
may purchase a call option on foreign currency to hedge against an adverse
exchange rate move of the currency in which the security it anticipates
purchasing is denominated vis-a-vis the currency in which the exercise price
is denominated. The purchase of the call option to effect a closing
transaction or a call written over-the-counter may be a listed or an OTC
option. In either case, the call purchased is likely to be on the same
securities (currencies) and have the same terms as the written option. If
purchased over-the-counter, the option would generally be acquired from the
dealer or financial institution which purchased the call written by the
Series.

Each Series may purchase put options on securities (and, in the case of
the Global Equity Series, on currencies) which it holds (or has the right to
acquire) in its portfolio only to protect itself against a decline in the
value of the security (currency). If the value of the underlying security
(currency) were to fall below the exercise price of the put purchased in an
amount greater than the premium paid for the option, the Series would incur
no additional loss. A Series may also purchase put options to close out
written put positions in a manner similar to call options closing purchase
transactions. In addition, a Series may sell a put option which it has
previously purchased prior to the sale of the securities (currencies)
underlying such option. Such a sale would result in a net gain or loss
depending on whether the amount received on the sale is more or less than the
premium and other transaction costs paid on the put option when it was
purchased. Any such gain or loss could be offset in whole or in part by a
change in the market value of the underlying security (currency). If a put
option purchased by a Series expired without being sold or exercised, the
Series would realize a loss.

Risks of Options Transactions. During the option period, the covered call
writer has, in return for the premium on the option, given up the opportunity
for capital appreciation above the exercise price should the market price of
the underlying security (or, in the case of the Global Equity Series, the
value of the security's denominated currency) increase, but has retained the
risk of loss should the price of the underlying security (or, in the case of
the Global Equity Series, the value of the security's denominated currency)
decline. The covered put writer also retains the risk of loss should the
market value of the underlying security decline below the exercise price of
the option less the premium received on the sale of the option. In both
cases, the writer has no control over the time when it may be required to
fulfill its obligation as a writer of the option. Once an option writer has
received an exercise notice, it cannot effect a closing purchase transaction
in order to terminate its obligation under the option and must deliver or
receive the underlying securities at the exercise price.

Prior to exercise or expiration, an option position can only be terminated
by entering into a closing purchase or sale transaction. If a covered put
call option writer is unable to effect a closing purchase transaction or to
purchase an offsetting over-the-counter option, it cannot sell the underlying
security until the option expires or the option is exercised. Accordingly, a
covered call option writer may not be able to sell an underlying security at
a time when it might otherwise be advantageous to do so. A secured put option
writer who is unable to effect a closing purchase transaction or to purchase
an offsetting over-the-counter option would continue to bear the risk of
decline in the market price of the underlying security until the option
expires or is exercised. In addition, a covered put writer would be unable to
utilize the amount held in cash or U.S. Government securities or other high
grade short-term obligations securities as security for the put option for
other investment purposes until the exercise or expiration of the option.

A Series' ability to close out its position as a writer of an option is
dependent upon the existence of a liquid secondary market on option
exchanges. There is no assurance that such a market will exist, particularly
in the case of OTC options, as such options will generally only be closed out
by entering into a closing purchase transaction with the purchasing dealer.
However, a Series may be able to purchase an offsetting option which does not
close out its position as a writer but constitutes an asset of equal value to
the obligation under the option written. If the Series is not able to either
enter into a closing purchase transaction or purchase an offsetting position,
it will be required to maintain the securities subject to the call, or the
collateral underlying the put, even though it might not be advantageous to do
so, until a closing transaction can be entered into (or the option is
exercised or expires).

<PAGE>

Among the possible reasons for the absence of a liquid secondary market on
an Exchange are: (i) insufficient trading interest in certain options; (ii)
restrictions on transactions imposed by an Exchange; (iii) trading halts,
suspensions or other restrictions imposed with respect to particular classes
or series of options or underlying securities; (iv) interruption of the
normal operations on an Exchange; (v) inadequacy of the facilities of an
Exchange or the Options Clearing Corporation ("OCC") to handle current
trading volume; or (vi) a decision by one or more Exchanges to discontinue
the trading of options (or a particular class or series of options), in which
event the secondary market on that Exchange (or in that class or series of
options) would cease to exist, although outstanding options on that Exchange
that had been issued by the OCC as a result of trades on that Exchange would
generally continue to be exercisable in accordance with their terms.

In the event of the bankruptcy of a broker through which a Series engages
in transactions in options, the Series could experience delays and/or losses
in liquidating open positions purchased or sold through the broker and/or
incur a loss of all or part of its margin deposits with the broker.
Similarly, in the event of the bankruptcy of the writer of an OTC option
purchased by a Series, the Series could experience a loss of all or part of
the value of the option. Transactions are entered into by a Series only with
brokers or financial institutions deemed creditworthy by the Series'
management.

Each of the Exchanges has established limitations governing the maximum
number of call or put options on the same underlying security or futures
contract (whether or not covered) which may be written by a single investor,
whether acting alone or in concert with others (regardless of whether such
options are written on the same or different Exchanges or are held or written
on one or more accounts or through one or more brokers). An Exchange may
order the liquidation of positions found to be in violation of these limits
and it may impose other sanctions or restrictions. These position limits may
restrict the number of listed options which a Series may write.

The hours of trading for options may not conform to the hours during which
the underlying securities are traded. To the extent that the option markets
close before the markets for the underlying securities, significant price and
rate movements can take place in the underlying markets that cannot be
reflected in the option markets.

Stock Index Options. Series may also invest in options on stock indexes.
As stated in the Prospectus, options on stock indexes are similar to options
on stock except that, rather than the right to take or make delivery of stock
at a specified price, an option on a stock index gives the holder the right
to receive, upon exercise of the option, an amount of cash if the closing
level of the stock index upon which the option is based is greater than, in
the case of a call, or less than, in the case of a put, the exercise price of
the option. This amount of cash is equal to such difference between the
closing price of the index and the exercise price of the option expressed in
dollars times a specified multiple (the "multiplier"). The multiplier for an
index option performs a function similar to the unit of trading for a stock
option. It determines the total dollar value per contract of each point in
the difference between the exercise price of an option and the current level
of the underlying index. A multiplier of 100 means that a one-point
difference will yield $100. Options on different indexes may have different
multipliers. The writer of the option is obligated, in return for the premium
received, to make delivery of this amount. Unlike stock options, all
settlements are in cash and a gain or loss depends on price movements in the
stock market generally (or in a particular segment of the market) rather than
the price movements in individual stocks. Currently, options are traded on,
among other indexes, the S&P 100 Index and the S&P 500 Index on the Chicago
Board Options Exchange, the Major Market Index and the Computer Technology
Index, Oil Index and Institutional Index on the American Stock Exchange and
the NYSE Index and NYSE Beta Index on the New York Stock Exchange). The
Financial News Composite Index on the Pacific Stock Exchange and the Value
Line Index, National O-T-C Index and Utilities Index on the Philadelphia
Stock Exchange, each of which and any similar index on which options are
traded in the future which include stocks that are not limited to any
particular industry or segment of the market is referred to as a "broadly
based stock market index." Options on broad-based stock indexes provide the
Series with a means of protecting the Series against the risk of market-wide
price movements. If the Investment Manager anticipates a market decline, the
Series could purchase a stock index put option. If the expected market
decline materialized, the resulting decrease in the value of the Series'
portfolio

<PAGE>

would be offset to the extent of the increase in the value of the put option.
If the Investment Manager anticipates a market rise, the Series may purchase
a stock index call option to enable the Series to participate in such rise
until completion of anticipated common stock purchases by the Series.
Purchases and sales of stock index options also enable the Investment Manager
to more speedily achieve changes in a Series' equity positions.

Series will write put options on stock indexes only if such positions are
covered by cash, U.S. Government securities or other high grade debt
obligations equal to the aggregate exercise price of the puts, or by a put
option on the same stock index with a strike price no lower than the strike
price of the put option sold by the Series, which cover is held by the Series
in a segregated account maintained for it by its Custodian. All call options
on stock indexes written by a Series will be covered either by a portfolio of
stocks substantially replicating the movement of the index underlying the
call option or by holding a separate call option on the same stock index with
a strike price no higher than the strike price of the call option sold by the
Series.

Risks of Options on Indexes. Because exercises of stock index options are
settled in cash, call writers cannot provide in advance for their potential
settlement obligations by acquiring and holding the underlying securities. A
call writer can offset some of the risk of its position by holding a
diversified portfolio of stocks similar to those on which the underlying
index is based. However, most investors cannot, as a practical matter,
acquire and hold a portfolio containing exactly the same stocks as the
underlying index, and, as a result, bear a risk that the value of the
securities held will vary from the value of the index. Even if an index call
writer could assemble a stock portfolio that exactly reproduced the
composition of the underlying index, the writer still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in
writing index options. When an index option is exercised, the amount of cash
that the holder is entitled to receive is determined by the difference
between the exercise price and the closing index level on the date when the
option is exercised. As with other kinds of options, the writer will not
learn that it has been assigned until the next business day, at the earliest.
The time lag between exercise and notice of assignment poses no risk for the
writer of a covered call on a specific underlying security, such as a common
stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In
contrast, even if the writer of an index call holds stocks that exactly match
the composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those stocks against payment of the
exercise price. Instead, it will be required to pay cash in an amount based
on the closing index value on the exercise date; and by the time it learns
that it has been assigned, the index may have declined, with a corresponding
decline in the value of its stock portfolio. This "timing risk" is an
inherent limitation on the ability of index call writers to cover their risk
exposure by holding stock positions.

A holder of an index option who exercises it before the closing index
value for that day is available runs the risk that the level of the
underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the exercising holder will be
required to pay the difference between the closing index value and the
exercise price of the option (times the applicable multiplier) to the
assigned writer.

If dissemination of the current level of an underlying index is
interrupted, or if trading is interrupted in stocks accounting for a
substantial portion of the value of an index, the trading of options on that
index will ordinarily be halted. If the trading of options on an underlying
index is halted, an exchange may impose restrictions prohibiting the exercise
of such options.

Future Contracts. As stated in the Prospectus, the Utilities, American
Value, Capital Growth, Strategist, Value-Added Market, Intermediate Income
Securities and Global Equity Series may purchase and sell interest rate
futures contracts that are traded, or may in the future be traded, on U.S.
(and in the case of Global Equity Series, foreign) commodity exchanges on
such underlying securities as U.S. Treasury bonds, notes, bills and GNMA
Certificates and stock and bond index futures contracts that are traded, or
may in the future be traded, on U.S. commodity exchanges on such indexes as
the Moody's Investment-Grade Corporate Bond Index, S&P 500 Index and the New
York Stock Exchange Composite Index.

<PAGE>

As a futures contract purchaser, a Series incurs an obligation to take
delivery of a specified amount of the obligation underlying the contract at a
specified time in the future for a specified price. As a seller of a futures
contract, a Series incurs an obligation to deliver the specified amount of
the underlying obligation at a specified time in return for an agreed upon
price.

Series will purchase or sell interest rate futures contracts for the
purpose of hedging their fixed-income portfolio (or anticipated portfolio)
securities against changes in prevailing interest rates or, to alter the
Series' asset allocation in fixed-income securities. If it is anticipated
that interest rates may rise and, concomitantly, the price of certain of its
portfolio securities fall, a Series may sell an interest rate futures
contract or a bond index futures contract. If declining interest rates are
anticipated, or if the Investment Manager wishes to increase the Series'
allocation of fixed-income securities, a Series may purchase an interest rate
futures contract or a bond index futures contract to protect against a
potential increase in the price of securities the Series intends to purchase.
Subsequently, appropriate securities may be purchased by the Series in an
orderly fashion; as securities are purchased, corresponding futures positions
would be terminated by offsetting sales of contracts.

Series will purchase or sell stock index futures contracts for the purpose
of hedging their equity portfolio (or anticipated portfolio) securities
against changes in their prices. If the Investment Manager anticipates that
the prices of stock held by a Series may fall or wishes to decrease the
Series' asset allocation in equity securities, the Series may sell a stock
index futures contract. Conversely, if the Investment Manager wishes to
increase the assets of the Series which are invested in stocks or as a hedge
against anticipated prices rises in those stocks which the Series intends to
purchase, the Series may purchase stock index futures contracts. This allows
the Series to purchase equities, in accordance with the asset allocations of
the Series management, in an orderly and efficacious manner.

The Global Equity Series will purchase or sell futures contracts on
currencies in which its portfolio securities (or anticipated portfolio
securities) are denominated for the purposes of hedging against anticipated
changes in currency exchange rates. The Global Equity Series will enter into
currency futures contracts for the same reasons as set forth under the
heading "Forward Foreign Currency Exchange Contracts" under "The Global
Equity Series" above for entering into forward foreign currency contracts;
namely, to "lock-in" the value of a security purchased or sold in a given
currency vis-a-vis a different currency or to hedge against an adverse
currency exchange rate movement of a portfolio security's (or anticipated
portfolio security's) denominated currency vis-a-vis a different currency.

In addition to the above, interest rate and bond index and stock index
(and currency) futures contracts will be bought or sold in order to close out
a short or long position in a corresponding futures contract.

Although most interest rate futures contracts call for actual delivery or
acceptance of securities, the contracts usually are closed out before the
settlement date without the making or taking of delivery. Index futures
contracts provide for the delivery of an amount of cash equal to a specified
dollar amount times the difference between the index value at the open or
close of the last trading day of the contract and the futures contract price.
A futures contract sale is closed out by effecting a futures contract
purchase for the same aggregate amount of the specific type of security (or,
in the case of the Global Equity Series, currency) and the same delivery
date. If the sale price exceeds the offsetting purchase price, the seller
would be paid the difference and would realize a gain. If the offsetting
purchase price exceeds the sale price, the seller would pay the difference
and would realize a loss. Similarly, a futures contract purchase is closed
out by effecting a futures contract sale for the same aggregate amount of the
specific type of security (currency) and the same delivery date. If the
offsetting sale price exceeds the purchase price, the purchaser would realize
a gain, whereas if the purchase price exceeds the offseting sale price, the
purchaser would realize a loss. There is no assurance that a Series will be
able to enter into a closing transaction.

When a Series enters into a futures contract it is initially required to
deposit with its Custodian, in an account in the name of the broker
performing the transaction, an "initial margin" of cash or U.S. Government
securities or other high grade short-term obligations equal to approximately
2% (for interest

<PAGE>

rate futures contracts) of the contract amount. Initial margin requirements are
established by the Exchanges on which futures contracts trade and may, from
time
to time, change. In addition, brokers may establish margin deposit requirements
in excess of those required by the Exchanges.

Initial margin in futures contract transactions is different from margin
in securities transactions in that initial margin does not involve the
borrowing of funds by a brokers' client but is, rather, a good faith deposit
on the futures contract which will be returned to the Series upon the proper
termination of the futures contract. The margin deposits made are marked to
market daily and the Series may be required to make subsequent deposits of
cash or U.S. Government securities, called "variation margin", with the
Series' futures contract clearing broker, which are reflective of price
fluctuations in the futures contract. Currently, interest rate futures
contracts can be purchased on debt securities such as U.S. Treasury Bills and
Bonds, U.S. Treasury Notes with maturities between 6-1/2 and 10 years, GNMA
Certificates and Bank Certificates of Deposit.

Index Futures Contracts. As discussed in the Prospectus, the Series may
also invest in stock index futures contracts. An index futures contract sale
creates an obligation by the Series, as seller, to deliver cash at a
specified future time. An index futures contract purchase would create an
obligation by the Series, as purchaser, to take delivery of cash at a
specified future time. Futures contracts on indexes do not require the
physical delivery of securities, but provide for a final cash settlement on
the expiration date which reflects accumulated profits and losses credited or
debited to each party's account.

The Series is required to maintain margin deposits with brokerage firms
through which it effects index futures contracts in a manner similar to that
described above for interest rate futures contracts. Currently, the initial
margin requirements range from 3% to 10% of the contract amount for index
futures. In addition, due to current industry practice, daily variations in
gains and losses on open contracts are required to be reflected in cash in
the form of variation margin payments. The Series may be required to make
additional margin payments during the term of the contract.

At any time prior to expiration of the futures contract, the Series may
elect to close the position by taking an opposite position which will operate
to terminate the Series' position in the futures contract. A final
determination of variation margin is then made, additional cash is required
to be paid by or released to the Series and the Series realizes a loss or a
gain.

Currently, index futures contracts can be purchased or sold with respect
to, among others, the Standard & Poor's 500 Stock Price Index and the
Standard & Poor's 100 Stock Price Index on the Chicago Mercantile Exchange,
the New York Stock Exchange Composite Index on the New York Futures Exchange,
the Major Market Index on the American Stock Exchange, the Value Line Stock
Index on the Kansas City Board of Trade and the Moody's Investment-Grade
Corporate Bond Index on the Chicago Board of Trade.

Currency Futures. As noted above, the Global Equity Series may invest in
foreign currency futures. Generally, foreign currency futures provide for the
delivery of a specified amount of a given currency, on the exercise date, for
a set exercise price denominated in U.S. dollars or other currency. Foreign
currency futures contracts would be entered into for the same reason and
under the same circumstances as forward foreign currency exchange contracts.
The Global Equity Series' management will assess such factors as cost
spreads, liquidity and transaction costs in determining whether to utilize
futures contracts or forward contracts in its foreign currency transactions
and hedging strategy. Currently, currency futures exist for, among other
foreign currencies, the Japanese yen, German mark, Canadian dollar, British
pound, Swiss franc and European currency unit.

Purchasers and sellers of foreign currency futures contracts are subject
to the same risks that apply to the buying and selling of futures generally.
In addition, there are risks associated with foreign currency futures
contracts and their use as a hedging device similar to those associated with
options on foreign currencies described above. Further, settlement of a
foreign currency futures contract must occur within the country issuing the
underlying currency. Thus, the Global Equities Series must accept or make
delivery of the underlying foreign currency in accordance with any U.S. or
foreign restrictions or regulation regarding the maintenance of foreign
banking arrangements by U.S. residents and may be required to pay any fees,
taxes or charges associated with such delivery which are assessed in the
issuing country.

<PAGE>

Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency futures contracts is
relatively new. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market. To reduce
this risk, the Global Equity Series will not purchase or write options on
foreign currency futures contracts unless and until, in the opinion of the
Series' management, the market for such options has developed sufficiently
that the risks in connection with such options are not greater than the risks
in connection with transactions in the underlying foreign currency futures
contracts.

Options on Futures Contracts. The Series may purchase and write call and
put options on futures contracts which are traded on an exchange and enter
into closing transactions with respect to such options to terminate an
existing position. An option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the term of
the option. Upon the exericse of the option, the delivery of the futures
position by the writer of the option to the holder of the option is
accompanied by delivery of the accumulated balance in the writer's futures
margin account, which represents the amount by which the market price of the
futures contract at the time of exercise exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract.

The Series will only purchase and write options on futures contracts for
identical purposes to those set forth above for the purchase of a futures
contract (purchase of a call option or sale of a put option) and the sale of
a futures contract (purchase of a put option or sale of a call option), or to
close out a long or short position in futures contracts. If, for example, the
Investment Manager wished to protect against an increase in interest rates
and the resulting negative impact on the value of a portion of a Series'
fixed-income portfolio, it might write a call option on an interest rate
futures contract, the underlying security of which correlates with the
portion of the portfolio the Series' management seeks to hedge. Any premiums
received in the writing of options on futures contracts may, of course,
augment the income of the Series and thereby provide a further hedge against
losses resulting from price declines in portions of its portfolio.

The writer of an option on a futures contract is required to deposit
initial and variation margin pursuant to requirements similar to those
applicable to futures contracts. Premiums received from the writing of an
option on a futures contract are included in initial margin deposits.

Limitations on Futures Contracts and Options on Futures. The Series may
not enter into futures contracts or purchase related options thereon if,
immediately thereafter, the amount committed to margin plus the amount paid
for premiums for unexpired options on futures contracts exceeds 5% of the
value of the Series' total assets, after taking into account unrealized gains
and unrealized losses on such contracts it has entered into, provided,
however, that in the case of an option that is in-the-money (the exercise
price of the call (put) option is less (more) than the market price of the
underlying security) at the time of purchase, the in-the-money amount may be
excluded in calculating the 5%. However, there is no overall limitation on
the percentage of a Series' assets which may be subject to a hedge position.
In addition, in accordance with the regulations of the Commodity Futures
Trading Commission ("CFTC") under which the Fund is exempted from
registration as a commodity pool operator, Series may only enter into futures
contracts and options on futures contracts transactions for purposes of
hedging a part or all of the Series' portfolio. If the CFTC changes its
regulations so that the Fund would be permitted to write options on futures
contracts for income purposes without CFTC registration, these Series may
engage in such transactions for those purposes. Except as described above,
there are no other limitations on the use of futures and options thereon by
these Series.

Risks of Transactions in Futures Contracts and Related Options. As stated
in the Prospectus, a Series may sell a futures contract to protect against
the decline in the value of securities (or, in the case of the Global Equity
Series, the currency in which securities are denominated) held by the Series.
However, it is possible that the futures market may advance and the value of
securites (or, in the case of the Global Equity Series, the currency in which
they are denominated) held in the Series may decline.

<PAGE>

If this occurred, the Series would lose money on the futures contract and
also experience a decline in value of its portfolio securities. However,
while this could occur for a very brief period or to a very small degree,
over time the value of a diversified portfolio will tend to move in the same
direction as the futures contracts.

If the Series purchases a futures contract to hedge against the increase
in value of securities it intends to buy (or the currency in which they are
denominated), and the value of such securities (currency) decreases, then the
Series may determine not to invest in the securities as planned and will
realize a loss on the futures contract that is not offset by a reduction in
the price of the securities.

If a Series maintains a short position in a futures contract or has sold a
call option on a futures contract, it will cover this position by holding, in
a segregated account maintained at its Custodian, cash, U.S. Government
securities or other high grade debt obligations equal in value (when added to
any initial or variation margin on deposit) to the market value of the
securities (currencies) underlying the futures contract or the exercise price
of the option. Such a position may also be covered by owning the securities
(currencies) underlying the futures contract (in the case of a stock index
futures contract a portfolio of securities substantially replicating the
relevant index), or by holding a call option permitting the Series to
purchase the same contract at a price no higher than the price at which the
short position was established.

In addition, if a Series holds a long position in a futures contract or
has sold a put option on a futures contract, it will hold cash, U.S.
Government securities or other high grade debt obligations equal to the
purchase price of the contract or the exercise price of the put option (less
the amount of initial or variation margin on deposit) in a segregated account
maintained for the Series by its Custodian. Alternatively, the Series could
cover its long position by purchasing a put option on the same futures
contract with an exercise price as high or higher than the price at which the
short position was established.

Exchanges limit the amount by which the price of a futures contract may
move on any day. If the price moves equal the daily limit on successive days,
then it may prove impossible to liquidate a futures position until the daily
limit moves have ceased. In the event of adverse price movements, the Series
would continue to be required to make daily cash payments of variation margin
on open futures positions. In such situations, if the Series has insufficient
cash, it may have to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. In addition,
the Series may be required to take or make delivery of the instruments
underlying interest rate futures contracts it holds at a time when it is
disadvantageous to do so. The inability to close out options and futures
positions could also have an adverse impact on the Series' ability to
effectively hedge its portfolio.

With regard to the Global Equity Series, futures contracts and options
thereon which are purchased or sold on foreign commodities exchanges may have
greater price volatility than their U.S. counterparts. Furthermore, foreign
commodities exchanges may be less regulated and under less governmental
scrutiny than U.S. exchanges. Brokerage commissions, clearing costs and other
transaction costs may be higher on foreign exchanges. Greater margin
requirements may limit the Global Equity Series' ability to enter into
certain commodity transactions on foreign exchanges. Moreover, differences in
clearance and delivery requirements on foreign exchanges may occasion delays
in the settlement of the Series' transactions effected on foreign exchanges.

In the event of the bankruptcy of a broker through which the Series
engages in transactions in futures or options thereon, the Series could
experience delays and/or losses in liquidating open positions purchased or
sold through the broker and/or incur a loss of all or part of its margin
deposits with the

<PAGE>

broker. Similarly, in the event of the bankruptcy of the writer of an OTC
option purchased by the Series, the Series could experience a loss of all or
part of the value of the option. Transactions are entered into by a Series
only with brokers or financial institutions deemed creditworthy by the
Series' management.

While the futures contracts and options transactions to be engaged in by a
Series for the purpose of hedging the Series' portfolio securities are not
speculative in nature, there are risks inherent in the use of such
instruments. One such risk which may arise in employing futures contracts to
protect against the price volatility of portfolio securities (and, for the
Global Equity Series, the currencies in which they are denominated) is that
the prices of securities and indexes subject to futures contracts (and
thereby the futures contract prices) may correlate imperfectly with the
behavior of the cash prices of the Series' portfolio securities (and the
currencies in which they are denominated). Another such risk is that prices
of interest rate futures contracts may not move in tandem with the changes in
prevailing interest rates against which the Series seeks a hedge. A
correlation may also be distorted by the fact that the futures market is
dominated by short-term traders seeking to profit from the difference between
a contract or security price objective and their cost of borrowed funds. Such
distortions are generally minor and would diminish as the contract approached
maturity.

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

As stated in the Prospectus, there is no assurance that a liquid secondary
market will exist for futures contracts and related options in which Series
may invest. In the event a liquid market does not exist, it may not be
possible to close out a futures position, and in the event of adverse price
movements, a Series would continue to be required to make daily cash payments
of variation margin. In addition, limitations imposed by an exchange or board
of trade on which futures contracts are traded may compel or prevent a Series
from closing out a contract which may result in reduced gain or increased
loss to the Series. The absence of a liquid market in futures contracts might
cause the Series to make or take delivery of the underlying securities
(currencies) at a time when it may be disadvantageous to do so.

Compared to the purchase or sale of futures contracts, the purchase of
call or put options on futures contracts involves less potential risk to a
Series because the maximum amount at risk is the premium paid for the options
(plus transaction costs). However, there may be circumstances when the
purchase of a call or put option on a futures contract would result in a loss
to the Series notwithstanding that the purchase or sale of a futures contract
would not result in a loss, as in the instance where there is no movement in
the prices of the futures contract or underlying securities (currencies).

INVESTMENT RESTRICTIONS
- -----------------------------------------------------------------------------

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

<PAGE>

apply immediately after a purchase or initial investment; and (ii) any
subsequent change in any applicable percentage resulting from market
fluctuations or other changes in the amount of total or net assets does not
require elimination of any security from the portfolio.

RESTRICTIONS APPLICABLE TO ALL SERIES

Each Series of the Fund may not:

1. Borrow money, except from banks for temporary or emergency purposes,
including the meeting of redemption requests which might otherwise require
the untimely disposition of securities; or through its transactions in
reverse repurchase agreements. Borrowing in the aggregate, including reverse
repurchase agreements, may not exceed 5% (10% for Liquid Asset Series and 15%
for U.S. Government Money Market Series), and borrowing for purposes other
than meeting redemptions may not exceed 5% (10% for Liquid Asset Series) of
the value of the Series' total assets (including the amount borrowed), less
liabilities (not including the amount borrowed) at the time the borrowing is
made.

2. Pledge its assets or assign or otherwise encumber them except to secure
borrowings effected within the limitations set forth in restriction (1). For
the purpose of this restriction, collateral arrangements with respect to the
writing of options and collateral arrangements with respect to initial or
variation margin for futures are not deemed to be pledges of assets.

3. Make short sales of securities.

4. Engage in the underwriting of securities, except insofar as the Series
may be deemed an underwriter under the Securities Act of 1933 in disposing of
a portfolio security.

5. Purchase or sell commodities or commodities contracts, except that the
Series may purchase or write interest rate, currency and stock and bond index
futures contracts and related options thereon.

6. Purchase or sell real estate or interests therein (including real
estate limited partnerships), although the Series may purchase securities of
issuers which engage in real estate operations and securities secured by real
estate or interests therein (as such, in case of default of such securities,
a Series may hold the real estate securing such security).

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

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

9. Issue senior securities as defined in the Act, except insofar as the
Series may be deemed to have issued a senior security by reason of (a)
entering into any repurchase or reverse repurchase agreement; (b) purchasing
any securities on a when-issued or delayed delivery basis; (c) purchasing or
selling futures contracts, forward foreign exchange contracts or options; (d)
borrowing money in accordance with restrictions described above; or (e)
lending portfolio securities.

10. Purchase securities of any issuer for the prupose of exercising
control or management.

11. Make loans of money or securities, except: (a) by the purchase of
publicly distributed debt obligations in which the Series may invest
consistent with its investment objectives and policies; (b) by investment in
repurchase agreements; or (c) by lending its portfolio securities.

12. Participate on a joint or a joint and several basis in any securities
trading account. The "bunching" of orders of two or more Series (or of one or
more Series and of other accounts under the investment management of the
Investment Manager) for the sale or purchase of portfolio securities shall
not be considered participating in a joint securities trading account.

<PAGE>

13. Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets or in accordance with the provisions of Section 12(d) of the Act and
any Rules promulgated thereunder.

In addition, as a nonfundamental policy, the Fund may not invest in
securities of any issuer if, to the knowledge of the Fund, any officer or
trustee of the Fund or any officer or director of the Investment Manager owns
more than 1/2 of 1% of the outstanding securities of such issuer, and such
officers, trustees and directors who own more than 1/2 of 1% own in the
aggregate more than 5% of the outstanding securities of such issuers.

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

Subject to the general supervision of the Board of Trustees, the
Investment Manager is responsible for decisions to buy and sell securities
for each Series of the Fund, the selection of brokers and dealers to effect
the transactions, and the negotiation of brokerage commissions, if any.
Purchases and sales of securities on a stock exchange are effected through
brokers who charge a commission for their services. In the over-the-counter
market, securities are generally traded on a "net" basis with dealers acting
as principal for their own accounts without a stated commission, although the
price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price which
includes an amount of compensation to the underwriter, generally referred to
as the underwriter's concession or discount. When securities are purchased or
sold directly from or to an issuer, no commissions or discounts are paid.

Purchases of money market instruments are made from dealers, underwriters
and issuers; sales, if any, prior to maturity, are made to dealers and
issuers. The Fund does not normally incur brokerage commission expense on
such transactions. Money market instruments are generally traded on a "net"
basis with dealers acting as principal for their own accounts without a
stated commission, although the price of the security usually includes a
profit to the dealer.

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

The policy of the Fund regarding purchases and sales of securities for the
various Series is that primary consideration will be given to obtaining the
most favorable prices and efficient executions of transactions. Consistent
with this policy, when securities transactions are effected on a stock
exchange, the Fund's policy is to pay commissions which are considered fair
and reasonable without necessarily determining that the lowest possible
commissions are paid in all circumstances. The Fund believes that a
requirement always to seek the lowest possible commission cost could impede
effective portfolio management and preclude the Fund and the Investment
Manager from obtaining a high quality of brokerage and research services. In
seeking to determine the reasonableness of brokerage commissions paid in any
transaction, the Investment Manager relies upon its experience and knowledge
regarding commissions generally charged by various brokers and on its
judgment in evaluating the brokerage and research services received from the
broker effecting the transaction. Such determinations are necessarily
subjective and imprecise, as in most cases an exact dollar value for those
services is not ascertainable.

The Fund anticipates that certain of its transactions involving foreign
securities will be effected on foreign securities exchanges. Fixed
commissions on such transactions are generally higher than negotiated
commissions on domestic transactions. There is also generally less government
supervision and regulation of foreign securities exchanges and brokers than
in the United States.

<PAGE>

In seeking to implement the policies of the Series of the Fund, the
Investment Manager effects transactions with those brokers and dealers who
the Investment Manager believes provide the most favorable prices and are
capable of providing efficient executions. If the Investment Manager believes
such price and execution are obtainable from more than one broker or dealer,
it may give consideration to placing portfolio transactions with those
brokers and dealers who also furnish research and other services to the Fund
or the Investment Manager. Such services may include, but are not limited to,
any one or more of the following: information as to the availability of
securities for purchase or sale; statistical or factual information or
opinions pertaining to investment; wire services; and appraisals or
evaluations of portfolio securities. The Fund will give no weight to any
research services provided by a dealer, transacting with the Fund as
principal, in determining the price of a security purchased from or sold to
that dealer.

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

Pursuant to an order of the Securities and Exchange Commission, the Fund
may effect principal transactions in certain money market instruments with
DWR. The Fund will limit its transactions with DWR to U.S. Government and
Government Agency Securities, Bank Money Instruments (i.e., Certificates of
Deposit and Bankers' Acceptance) and Commercial Paper. Such transactions will
be effected with DWR only when the price available from DWR is better than
that available from other dealers.

Consistent with the policy described above, brokerage transactions in
securities listed on exchanges or admitted to unlisted trading privileges may
be effected through DWR. In order for DWR to effect any portfolio
transactions for the Fund, the commissions, fees or other remuneration
received by them must be reasonable and fair compared to the commissions,
fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold
on an exchange during a comparable period of time. This standard would allow
these brokers to receive no more than the remuneration which would be
expected to be received by an unaffiliated broker in a commensurate
arm's-length transaction. Furthermore, the Trustees of the Fund, including a
majority of the Trustees who are not "interested" persons of the Fund, as
defined in the Act, have adopted procedures which are reasonably designed to
provide that any commissions, fees or other remuneration paid to these
brokers are consistent with the foregoing standard. The Fund does not reduce
the management fee it pays to the Investment Manager by any amount of the
brokerage commissions it may pay to these brokers.

The aggregate amount of brokerage commissions paid by the Fund's Series
during the fiscal period ended July 31, 1994, were as follows: American Value
Series: $10,490; Capital Growth Series: $125; Dividend Growth Series:
$12,614; Strategist Series: $937; Utilities Series: $3,960; Value-Added
Market Series: $4,703; and Global Equity Series: $492.

In addition, the following dollar amounts of brokerage commissions were
paid to DWR by the designated Series, followed by the percentage of overall
commissions represented by the DWR total and the percentage of transactions
involving the payment of commissions effected by DWR: American Value Series:
$8,855, 84%, 89%; Strategist Series: $711, 75.9%, 71.8%; Capital Growth
Series: $117, 93.6%, 93%; Dividend Growth Series: $11,918, 94%, 96%;
Utilities Series: $3,855, 97.35%, 98%; and Global Equity Series: $91, 18.5%,
42.39%. None of the brokerage commissions paid by the Value-Added Market
Series were paid to DWR.

Section 11(a) of the Securities Exchange Act of 1934, which generally
prohibits members of the United States national securities exchanges from
executing exchange transactions for their affiliates and institutional
accounts which they manage, permits such exchange members to execute such
securities

<PAGE>

transactions on an exchange only if the affiliate or account expressly
consents. To the extent Section 11(a) would apply to DWR acting as a broker
for the Fund in any of its portfolio transactions executed on any such
securities exchange of which it is a member, appropriate written consents
have been given.

DETERMINATION OF NET ASSET VALUE
- -----------------------------------------------------------------------------

As discussed in the Prospectus, the net asset value of the shares of each
Series is determined once daily at 4:00 p.m., New York time, on each day that
the New York Stock Exchange is open for trading. The New York Stock Exchange
currently observes the following holidays: New Year's Day; President's Day;
Good Friday; Memorial Day; Independence Day; Labor Day; Thanksgiving Day; and
Christmas Day.

As discussed in the Prospectus, the Liquid Asset and U.S. Government Money
Market Series each utilize the amortized cost method in valuing their
portfolio securities for purposes of determining the net asset value of its
shares. The Series utilize the amortized cost method in valuing their
portfolio securities even though the portfolio securities may increase or
decrease in market value, generally in connection with changes in interest
rates. The amortized cost method of valuation involves valuing a security at
its cost at the time of purchase adjusted by a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method
provides certainty in valuation, it may result in periods during which value,
as determined by amortized cost, is higher or lower than the price the Series
would receive if they sold the investment. During such periods, the yield to
investors in the Series may differ somewhat from that obtained in a similar
company which uses mark-to-market values for all of its portfolio securities.
For example, if the use of amortized cost resulted in a lower (higher)
aggregate portfolio value on a particular day, a prospective investor in a
Series would be able to obtain a somewhat higher (lower) yield than would
result from investment in such a similar company and existing investors would
receive less (more) investment income. The purpose of this method of
calculation is to facilitate the maintenance of a constant net asset value
per share of $1.00.

The use of the amortized cost method to value the portfolio securities of
the Liquid Asset and U.S. Government Money Market Series and the maintenance
of the per share net asset value of $1.00 is permitted pursuant to Rule 2a-7
under the Act (the "Rule") and is conditioned on its compliance with various
conditions contained in the Rule including: (a) the Trustees are obligated,
as a particular responsibility within the overall duty of care owed to the
Series' shareholders, to establish procedures reasonably designed, taking
into account current market conditions and the Series' investment objectives,
to stabilize the net asset value per share as computed for the purpose of
distribution and redemption at $1.00 per share; (b) the procedures include
(i) calculation, at such intervals as the Trustees determine are appropriate
and as are reasonable in light of current market conditions, of the
deviation, if any, between net asset value per share using amortized cost to
value portfolio securities and net asset value per share based upon available
market quotations with respect to such portfolio securities; (ii) periodic
review by the Trustees of the amount of deviation as well as methods used to
calculate it; and (iii) maintenance of written records of the procedures, and
the Trustees' considerations made pursuant to them and any actions taken upon
such consideration; (c) the Trustees should consider what steps should be
taken, if any, in the event of a difference of more than 1/2 of 1% between
the two methods of valuation; and (d) the Trustees should take such action as
they deem appropriate (such as shortening the average portfolio maturity,
realizing gains or losses, withholding dividends or, as provided by the
Declaration of Trust, reducing the number of outstanding shares of a Series)
to eliminate or reduce to the extent reasonably practicable material dilution
or other unfair results to investors or existing shareholders which might
arise from differences between the two methods of valuation. Any reduction of
outstanding shares will be effected by having each shareholder
proportionately contribute to the Series' capital the necessary shares that
represent the amount of excess upon such determination.

Generally, for purposes of the procedures adopted under the Rule, the
maturity of a portfolio instrument is deemed to be the period remaining
(calculated from the trade date or such other date on which the Series'
interest in the instrument is subject to market action) until the date noted
on the face of the instrument as the date on which the principal amount must
be paid, or in the case of an instrument called for redemption, the date on
which the redemption payment must be made.

<PAGE>

A variable rate obligation that is subject to a demand feature is deemed
to have a maturity equal to the longer of the period remaining until the next
readjustment of the interest rate or the period remaining until the principal
amount can be recovered through demand. A floating rate instrument that is
subject to a demand feature is deemed to have a maturity equal to the period
remaining until the principal amount can be recovered through demand.

An Eligible Security is defined in the Rule to mean a security which: (a)
has a remaining maturity of thirteen months or less; (b)(i) is rated in the
two highest short-term rating categories by any two nationally recognized
statistical rating organizations ("NRSROs") that have issued a short-term
rating with respect to the security or class of debt obligations of the
issuer; or (ii) if only one NRSRO has issued a short-term rating with respect
to the security, then by that NRSRO; (c) was a long-term security at the time
of issuance whose issuer has outstanding a short-term debt obligation which
is comparable in priority and security and has a rating as specified in
clause (b) above; or (d) if no rating is assigned by any NRSRO as provided in
clauses (b) and (c) above, the unrated security is determined by the Board to
be of comparable quality to any such rated security. The Liquid Asset and
U.S. Government Money Market Series will limit their investments to
securities that meet the requirements for Eligible Securities including the
required ratings by S&P or Moody's, as set forth in the prospectus.

As permitted by the Rule, the Board has delegated to the Fund's Investment
Manager, subject to the Board's oversight pursuant to guidelines and
procedures adopted by the Board, the authority to determine which securities
present minimal credit risks and which unrated securities are comparable in
quality to rated securities.

Also, as required by the Rule, the Series will limit their investments in
securities, other than Government securities, so that, at the time of
purchase: (a) except as further limited in (b) below with regard to certain
securities, no more than 5% of their total assets will be invested in the
securities of any one issuer; and (b) with respect to Eligible Securities
that have received a rating in less than the highest category by any one of
the NRSROs whose ratings are used to qualify the security as an Eligible
Security, or that have been determined to be of comparable quality: (i) no
more than 5% in the aggregate of the Series' total assets in all such
securities, and (ii) no more than the greater of 1% of total assets, or $1
million, in the securities on any one issuer.

The presence of a line of credit or other credit facility offered by a
bank or other financial institution which guarantees the payment obligation
of the issuer, in the event of a default in the payment of principal or
interest of an obligation, may be taken into account in determining whether
an investment is an Eligible Security, provided that the guarantee itself is
an Eligible Security.

The Rule further requires that the Series limit their investments to U.S.
dollar-denominated instruments which the Trustees determine present minimal
credit risks and which are Eligible Securities. The Rule also requires the
Series to maintain a dollar-weighted average portfolio maturity (not more
than 90 days) appropriate to its objective of maintaining a stable net asset
value of $1.00 per share and precludes the purchase of any instrument with a
remaining maturity of more than 397 days. Should the disposition of a
portfolio security result in a dollar-weighted average portfolio maturity of
more than 90 days, the Series will invest its available cash in such a manner
as to reduce such maturity to 90 days or less as soon as is reasonably
practicable.

If the Board determines that it is no longer in the best interests of the
Series and its shareholders to maintain a stable price of $1 per share or if
the Board believes that maintaining such price no longer reflects a
market-based net asset value per share, the Board has the right to change
from an amortized cost basis of valuation to valuation based on market
quotations. The Fund will notify shareholders of the Series of any such
change.

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

As discussed in the Prospectus, shares of the Fund are offered for sale on
a continuous basis at an offering price equal to the net asset value per
share of each Series next determined following a receipt of an order. The
Trustees of the Fund have approved a Distribution Agreement appointing Dean
Witter

<PAGE>

Distributors Inc. as exclusive distributor of the Fund's shares. This
Agreement was approved by the Board of Trustees, including a majority of the
Independent Trustees, on July 29, 1992. This Distribution Agreement will
continue until July 31, 1993, and will continue from year to year thereafter
if approved by the Trustees.

The Distributor has entered into a selected dealer agreement with DWR,
which through its own sales organization sells shares of the Fund. In
addition, the Distributor may enter into similar agreements with other
selected broker-dealers. The Distributor, a Delaware corporation, is a
wholly-owned subsidiary of DWDC.

At their meeting held on October 30, 1992, the Trustees of the Fund,
including all of the Independent Trustees of the Fund, approved continuation
of the Distribution Agreement for an additional year, and approved a new
Distribution Agreement between the Fund and the Distributor, to take effect
upon the spin-off of DWDC by Sears, Roebuck and Co. (which occurred on June
30, 1993). The new Distribution Agreement is substantively identical to the
current Distribution Agreement in all material respects, except for the dates
of effectiveness. By its terms, the Distribution Agreement continues until
April 30, 1994, and provides that it will remain in effect from year to year
thereafter if approved by the Board. At a meeting held on April 8, 1994, the
Trustees, including all of the Independent Trustees, voted to approve the
continuance of the Distribution Agreement until April 30, 1995, and from year
to year thereafter if approved by the Board, in conjunction with the
continuance of the Plan of Distribution (see below).

The Distributor has agreed to pay certain expenses of the offering of the
Fund's shares, including the costs of printing and distributing prospectuses
and supplements thereto used in connection with the offering and sale of the
Fund's shares. The Fund will bear the costs of initial typesetting, printing
and distribution to shareholders. The Fund and the Distributor have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.

PLAN OF DISTRIBUTION

As discussed in the Prospectus, the Fund has entered into a Plan of
Distribution pursuant to Rule 12b-1 under the Act (the "Plan") with the
Distributor and DWR whereby the Distributor and any of its affiliates are
authorized to utilize their own resources to finance certain activities in
connection with the distribution of shares of the Fund. The Plan was
initially approved by the Trustees of the Fund on July 29, 1992 and
subsequently, by DWR as the then sole shareholder of the Fund. The vote of
the Trustees included a majority of the Trustees who are not and were not at
the time of their votes interested persons of the Fund and who have and had
at the time of their votes no direct or indirect financial interest in the
operation of the Plan (the "Independent 12b-1 Trustees"), cast in person at a
meeting called for the purpose of voting on such Plan. In determining to
approve the Plan, the Trustees, including the Independent 12b-1 Trustees,
concluded that, in their judgment, there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders.

The Plan provides that the Fund authorizes the Distributor and DWR to bear
the expense of all promotional and distribution-related activities on behalf
of the Fund, except for expenses that the Trustees determine to reimburse.
Among the activities and services which may be provided by the Distributor
under the Plan are: (1) compensation to and expenses of account executives
and other employees of the Distributor and other broker-dealers, including
overhead and telephone expenses; (2) sales incentives and bonuses to sales
representatives and to marketing personnel in connection with promoting sales
of the Fund's shares; (3) expenses incurred in connection with promoting
sales of the Fund's shares; (4) preparing and distributing sales literature;
and (5) providing advertising and promotional activities, including direct
mail solicitation and television, radio, newspaper, magazine and other media
advertisements.

DWR's account executives are paid a monthly residual commission,
calculated based upon the current value of the respective accounts for which
they are the account executives of record. The "gross residual" is a charge
which reflects residual commissions paid by DWR to its account executives and
DWR's expenses associated with the servicing of shareholders' accounts,
including the expenses of operating DWR's branch offices in connection with
the servicing of shareholders' accounts, which

<PAGE>

expenses include lease costs, the salaries and employee benefits of
operations and sales support personnel, utility costs, communications costs
and the costs of stationery and supplies and other expenses relating to
branch office servicing of shareholder accounts.

Under the Plan, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment
or mistake of law or for any act or omission or for any losses sustained by
the Fund or its shareholders.

The Plan remained in effect until April 30, 1993, and from year to year
thereafter will continue in effect, provided such continuance is approved
annually by a vote of the Trustees, including a majority of the Independent
12b-1 Trustees. An amendment to increase materially the maximum amount
authorized to be spent under the Plan on behalf of any Series must be
approved by the shareholders of such Series, and all material amendments to
the Plan must be approved by the Trustees in the manner described above. The
Plan may be terminated on behalf of any Series at any time, without payment
of any penalty, by vote of the majority of the Independent 12b-1 Trustees or
by a vote of a majority of the outstanding voting securities of such Series
(as defined in the Act) on not more than 30 days written notice to any other
party to the Plan. The authority for the Distributor to finance distribution
activities automatically terminates in the event of an assignment (as defined
in the Act). After such an assignment, the Fund's authority to make payments
to its Distributor would resume, subject to certain conditions. So long as
the Plan is in effect, the selection or nomination of the Independent 12b-1
Trustees is committed to the discretion of the Independent 12b-1 Trustees.
Continuation of the Plan was most recently approved by the Trustees,
including a majority of the Independent 12b-1 Trustees, on April 8, 1994, at
a meeting called for the purpose of voting on such Plan.

No interested person of the Fund nor any Trustee of the Fund who is not an
interested person of the Fund, as defined in the Act, has any direct or
indirect financial interest in the operation of the Plan except to the extent
that the Distributor or DWR or certain of their employees may be deemed to
have such an interest as a result of benefits derived from the successful
operation of the Plan or as a result of receiving a portion of the amounts
expended thereunder by the Distributor.

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

Shareholder Investment Account. Upon purchase of shares of the Fund, a
Shareholder Investment Account is opened for the investor on the books of
each Series of the Fund owned by the investor, maintained by Dean Witter
Trust Company (the "Transfer Agent"), in full and fractional shares of the
Series (rounded to the nearest 1/100 of a share). This is an open account in
which shares owned by the investor are credited by the Transfer Agent in lieu
of issuance of a share certificate. If a share certificate is desired, it
must be requested in writing for each transaction. Certificates are issued
only for full shares and may be redeposited in the account at any time. There
is no charge to the investor for issuance of a certificate. No certificates
will be issued for fractional shares or to shareholders who have elected the
Systematic Withdrawal Plan or check writing privilege of withdrawing cash
from their accounts. Whenever a shareholder-instituted transaction takes
place in the Shareholder Investment Account, the shareholder will be mailed a
statement by DWR or other selected broker-dealer, the Distributor or the
Transfer Agent reflecting the status of such Account.

Automatic Investment of Dividends and Distributions. All dividends and
capital gains distributions are automatically paid in full and fractional
shares of the Fund, unless the shareholder requests that they be paid in
cash. Each purchase of shares of the Fund is made upon the condition that the
Transfer Agent is thereby automatically appointed as agent of the investor to
receive all dividends and capital gains distributions on shares owned by the
investor. An investor may terminate such agency at any time and may request
the Transfer Agent in writing to have subsequent dividends and/or capital
gains distributions paid in cash rather than shares. Such request must be
received by the Transfer Agent at least five (5) business days prior to the
record date for which it commences to take effect. In case of recently
purchased shares for which registration instructions have not been received
on the record date, cash payments will be made to the Distributor.

<PAGE>

Systematic Withdrawal Plan. As discussed in the Prospectus, a withdrawal
plan is available for shareholders who own or purchase shares of the Fund
having a minimum value of $10,000 based upon the then current offering price.
The plan provides for monthly or quarterly (March, June, September and
December) checks in any amount, not less than $25 or in any whole percentage
of the account balance, on an annualized basis.

Dividends and capital gains distributions on shares held under the
Systematic Withdrawal Plan will be invested in additional full and fractional
shares at net asset value. Shares will be credited to an open account for the
investor by the Transfer Agent; no share certificates will be issued. A
shareholder is entitled to a share certificate upon written request to the
Transfer Agent, although in that event the shareholder's Systematic
Withdrawal Plan will be terminated.

The Transfer Agent acts as agent for the shareholder in tendering to the
Fund for redemption sufficient full and fractional shares to provide the
amount of the periodic withdrawal payment designated in the application. The
shares will be redeemed at their net asset value determined, at the
shareholder's option, on the tenth or twenty-fifth day (or next following
business day) of the relevant month or quarter and normally a check for the
proceeds will be mailed by the Transfer Agent within five business days after
the date of redemption. The Withdrawal Plan may be terminated at any time by
the Fund.

Withdrawal Plan payments should not be considered as dividends, yields or
income. If periodic withdrawal plan payments continuously exceed net
investment income and net capital gains, the shareholder's original
investment will be correspondingly reduced and ultimately exhausted.

A shareholder may, at any time change the amount and interval of
withdrawal payments and the address to which checks are mailed by written
notification to the Transfer Agent. The shareholder's signature on such
notification must be guaranteed by an eligible guarantor acceptable to the
Transfer Agent (shareholders should contact the Transfer Agent for a
determination as to whether a particular institution is such an eligible
guarantor). The shareholder may also terminate the Systematic Withdrawal Plan
at any time by written notice to the Transfer Agent. In the event of such
termination, the account will be continued as a Shareholder Investment
Account. The shareholder may also redeem all or part of the shares held in
the Systematic Withdrawal Plan account (see "Redemptions and Repurchases" in
the Prospectus) at any time. Shareholders wishing to enroll in the Withdrawal
Plan should contact their account executive or the Transfer Agent.

EXCHANGE PRIVILEGE

As discussed in the Prospectus, the Fund makes available to its
shareholders an Exchange Privilege whereby shareholders of any Series of the
Fund may exchange their shares for shares of any other Series of the Fund.
There is no holding period for exchanges of shares. An exchange will be
treated for federal income tax purposes the same as a repurchase or
redemption of shares, on which the shareholder may realize a capital gain or
loss, unless shares are held in a qualified retirement plan which is not
subject to taxation.

Any new account established through the Exchange Privilege will have the
same registration and cash dividend or dividend reinvestment plan as the
present account, unless the Transfer Agent receives written notification to
the contrary. For telephone exchanges, the exact registration of the existing
Account and the account number must be provided.

Any shares held in certificate form cannot be exchanged but must be
forwarded to the Transfer Agent and deposited into the shareholder's account
before being eligible for exchange. (Certificates mailed in for deposit
should not be endorsed.)

The Transfer Agent acts as agent for shareholders of the Fund in effecting
redemptions of Fund shares and in applying the proceeds to the purchase of
other fund shares. In the absence of negligence on its part, neither the
Transfer Agent nor the Fund shall be liable for any redemption of Fund shares
caused by unauthorized telephone or telegraph instructions. Accordingly, in
such event the investor shall bear the risk of loss. The staff of the
Securities and Exchange Commission is currently considering the propriety of
such a policy.

<PAGE>

With respect to the repurchase of shares of any Series of the Fund, the
application of proceeds to the purchase of new shares in the Fund and the
general administration of the Exchange Privilege, the Transfer Agent acts as
agent for the Distributor and for the shareholder's Dealer, if any, in the
performance of such functions.

With respect to exchanges, redemptions or repurchases, the Transfer Agent
shall be liable for its own negligence and not for the default or negligence
of its correspondents or for losses in transit. The Fund shall not be liable
for any default or negligence of the Transfer Agent, the Distributor or any
Dealer.

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

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

As discussed in the Prospectus, shares of the Fund may be redeemed at net
asset value on any day the New York Stock Exchange is open (see
"Determination of Net Asset Value"). Redemptions will be effected at the net
asset value per share next determined after the receipt of a redemption
request meeting the applicable requirements discussed in the Prospectus. When
a redemption is made by check and a check is presented to the Transfer Agent
for payment, the Transfer Agent will redeem a sufficient number of full and
fractional shares in the shareholder's account to cover the amount of the
check. This enables the shareholder to continue earning daily income
dividends until the check has cleared.

A check drawn by a shareholder against his or her account in the Fund
constitutes a request for redemption of a number of shares sufficient to
provide proceeds equal to the amount of the check. Payment of the proceeds of
a check will normally be made on the next business day after receipt by the
Transfer Agent of the check in proper form. If a check is presented for
payment to the Transfer Agent by a shareholder or payee in person, the
Transfer Agent will make payment by means of a check drawn on the Fund's
account or, in the case of a shareholder payee, to the shareholder's
predesignated bank account, but will not make payment in cash.

The Fund reserves the right to suspend redemptions or postpone the date of
payment (1) for any periods during which the New York Stock Exchange is
closed (other than for customary weekend and holiday closings), (2) when
trading on that Exchange is restricted or an emergency exists, as determined
by the Securities and Exchange Commission, so that disposal of the Fund's
investments or determination of the Fund's net asset value is not reasonably
practicable, or (3) for such other periods as the Commission by order may
permit for the protection of the Fund's shareholders.

The Transfer Agent acts as agent for shareholders of the Fund in effecting
redemptions of shares of the Fund. In the absence of negligence on its part,
neither the Transfer Agent nor the Fund shall be liable for any redemption of
Fund shares caused by unauthorized telephone or telegraph instructions.

The Prospectus describes redemption procedures by check, telephone or wire
instructions with payment to a predesignated bank account, or by mail.

DIVIDENDS, DISTRIBUTIONS AND TAXES
- -----------------------------------------------------------------------------

Liquid Asset Series and U.S. Government Money Market Series. As discussed
in the Prospectus, dividends from net income on the Liquid Asset and U.S.
Government Money Market Series will be declared payable on each day the New
York Stock Exchange is open for business to shareholders of record as of the
close of business the preceding business day. Net income, for dividend
purposes, includes accrued interest and amortization of original issue and
market discount, less the amortization of market premium and the estimated
expenses of the Series. Net income will be calculated immediately prior to
the determination of net asset value per share of the Series (see
"Determination of Net Asset Value" above and in the Prospectus). The amount
of dividend may fluctuate from day to day and may be omitted on some days if
realized losses on portfolio securities exceed the Series' net investment
income.

<PAGE>

The Trustees may revise the above dividend policy, or postpone the payment of
dividends, if either Series should have or anticipate any large unexpected
expense, loss or fluctuation in net assets which in the opinion of the
Trustees might have a significant adverse effect on shareholders. On
occasion, in order to maintain a constant $1.00 per share net asset value,
the Trustees may direct that the number of outstanding shares of either
Series be reduced in each shareholder's account. Such reduction may result in
taxable income to a shareholder in excess of the net increase (i.e.,
dividends, less such reductions), if any, in the shareholder's account for a
period. Furthermore, such reduction may be realized as a capital loss when
the shares are liquidated. Any net realized capital gains will be declared
and paid at least once per calendar year, except that net short-term gains
may be paid more frequently, with the distribution of dividends from net
investment income.

Other Series. The dividend policies of the U.S. Government Securities,
Intermediate Income Securities, American Value, Capital Growth, Dividend
Growth, Strategist, Utilities, Value-Added Market and Global Equity Series
are discussed in the Prospectus. In computing interest income, these Series
will not amortize any discount or premium resulting from the purchase of debt
securities except those original issue discounts for which amortization is
required for federal income tax purposes. Gains or losses resulting from
unamortized market discount or premium on securities issued prior to July 19,
1984 will be treated as capital gains or losses when realized. With respect
to market discount on bonds issued after July 18, 1984, a portion of any
capital gain realized upon disposition may be recharacterized as taxable
ordinary income in accordance with the provisions of the Internal Revenue
Code (the "Code"). Dividends, interest and capital gains received by Series
holding foreign securities may give rise to withholding and other taxes
imposed by foreign countries.

At July 31, 1994, the Capital Growth Series had approximate net capital loss
carryovers of approximately $1,300 available through July 31, 2002 to be used
to offset future capital gains to the extent provided by regulations. To the
extent that these carryover losses are used to offset future capital gains, it
is probable that the gains so offset will not be distributed so shareholders

Options and Futures. Exchange-traded futures contracts, listed options on
futures contracts and certain listed options are classified as "Section 1256"
contracts under the Code. Unless the Series makes an election as discussed
below, the character of gain or loss resulting from the sale, disposition,
closing out, expiration or other termination of Section 1256 contracts would
generally be treated as long-term capital gain or loss to the extent of 60
percent thereof and short-term capital gain or loss to the extent of 40
percent thereof and such Section 1256 contracts would also be required to be
marked-to-market at the end of the Fund's fiscal year, for purposes of
federal income tax calculations.

Over-the-counter options are not classified as Section 1256 contracts and
are not subject to the mark-to-market or 60 percent-40 percent taxation
rules. When call options written by a Series, or put options purchased by a
Series, are exercised, the gain or loss realized on the sales of the
underlying securities may be either short-term or long-term, depending upon
the holding period of the securities. In determining the amount of gain or
loss, the sales proceeds are reduced by the premium paid for over-the-counter
puts or increased by the premium received for over-the-counter calls.

If a Series holds a security which is offset by a Section 1256 contract,
the Series would by deemed to hold a "mixed straddle" position, as such is
defined in the Code. A Series may elect to identify its mixed straddle
positions pursuant to Section 1256(d) of the Code and thereby avoid
application of both the mark-to-market and 60 percent/40 percent taxation
rules. The Series may also make certain other elections with respect to mixed
straddles which could avoid or limit the application of certain rules which
could, in certain circumstances, cause deferral or disallowance of losses,
change long-term capital gains into short-term capital gains, or change
short-term capital losses into long-term capital losses.

Whether the portfolio security constituting part of the identified mixed
straddle is deemed to have been held for less than three months for purposes
of determining qualification of the Series as a regulated investment company
will be determined generally by the actual holding period of the security. In
certain circumstances, entering into a mixed straddle could result in the
recognition of unrealized gain or loss which would be taken into account in
determining the amount of income available for the Series' distributions, and
can result in an amount which is greater or less than the Series' net
realized gains being available for distribution. If an amount which is less
than the Series' net realized gains is available for distribution, the Series
may elect to distribute more than such available amount, up to the full
amount of such net realized gains. Such a distribution may, in part,
constitute a return of capital to the shareholders. If the Series does not
elect to identify a mixed straddle, no recognition of gain or loss on

<PAGE>

the securities in its portfolio will result when the mixed straddle is
entered into. However, any losses realized on the straddle will be governed
by a number of tax rules which might, under certain circumstances, defer or
disallow the losses in whole or in part, change long-term gains into
short-term gains, or change short-term losses into long-term losses. A
deferral or disallowance of recognition of a realized loss may result in an
amount being available for the Series' distributions which is greater than
the Series' net realized gains.

Special Rules for Certain Foreign Currency Transactions (Global Equity
Series). In general, gains from foreign currencies and from foreign currency
options, foreign currency futures and forward foreign exchange contracts
relating to investments in stock, securities or foreign currencies are
currently considered to be qualifying income for purposes of determining
whether the Global Equity Series qualifies as a regulated investment company.
It is currently unclear, however, who will be treated as the issuer of
certain foreign currency instruments or how foreign currency options,
futures, or forward foreign currency contracts will be valued for purposes of
the regulated investment company diversification requirements applicable to
the Series. The Global Equity Series may request a private letter ruling from
the Internal Revenue Service on some or all of these issues.

Under Code Section 988, special rules are provided for certain
transactions in a foreign currency other than the taxpayer's functional
currency (i.e., unless certain special rules apply, currencies other than the
U.S. dollar). In general, foreign currency gains or losses from forward
contracts, from futures contracts that are not "regulated futures contracts",
and from unlisted options will be treated as ordinary income or loss under
Code Section 988. Also, certain foreign exchange gains or losses derived with
respect to foreign fixed-income securities are also subject to Section 988
treatment. In general, therefore, Code Section 988 gains or losses will
increase or decrease the amount of the Global Equity Series' investment
company taxable income available to be distributed to shareholders as
ordinary income, rather than increasing or decreasing the amount of the
Global Equity Series' net capital gain. Additionally, to the extent that Code
Section 988 losses exceeded other investment company taxable income during a
taxable year, the Global Equity Series' distributions for that year would
constitute a return of capital (i.e., a return of the shareholder's
investment).

If the Global Equity Series invests in an entity which is classified as a
"passive foreign investment company" ("PFIC") for U.S. tax purposes, the
application of certain technical tax provisions applying to such companies
could result in the imposition of federal income tax with respect to such
investments at the Series level which could not be eliminated by
distributions to shareholders. The U.S. Treasury is currently considering
various solutions to this problem and, in any event, it is not anticipated
that taxes on the Global Equity Series with respect to investments in PFIC's
would be significant.

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

The annualized current yield of the Liquid Asset Series and U.S.
Government Money Market Series, as may be quoted from time to time in
advertisements and other communications to shareholders and potential
investors, is computed by determining, for a stated seven-day period, the net
change, exclusive of capital changes and including the value of additional
shares purchased with dividends and any dividends declared therefrom, in the
value of a hypothetical pre-existing account having a balance of one share at
the beginning of the period, subtracting a hypothetical charge which reflects
deductions from shareholder accounts (such as management fees), and dividing
the difference by the value of the account at the beginning of the base
period to obtain the base period return, and then multiplying the base period
return by (365/7).

The Liquid Asset and U.S. Government Money Market Series' annualized
effective yield, as may be quoted from time to time in advertisements and
other communications to shareholders and potential investors, is computed by
determining (for the same stated seven-day period as for the current yield),
the net change, exclusive of capital changes and including the value of
additional shares purchased with dividends and any dividends declared
therefrom, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts, and
dividing the difference by the value of the account at the beginning of the
base period to obtain the base period return, and then compounding the base
period

<PAGE>

return by adding 1, raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result. The annualized and effective yields for the
seven-days ended July 31, 1994 for the Liquid Asset and U.S. Government Money
Market Series, were as follows: 4.41% and 4.51% for the Liquid Asset Series;
and 4.32% and 4.42% for the U.S. Government Money Market Series. Had the Series
been paying their investment management fees and had the Investment Manager not
been assuming any of their expenses during the period, the annualized and
effective yields for the Liquid Asset and U.S. Government Money Market Series
would have been 0.76% and 0.76%, and 0.88% and 0.88%, respectively.

As discussed in the Prospectus, from time to time the U.S. Government
Securities and Intermediate Income Securities Series may quote their "yields"
in advertisements and sales literature. Yield is calculated for any 30-day
period as follows: the amount of interest and/or dividend income for each
security in the Series' portfolio is determined in accordance with regulatory
requirements; the total for the entire portfolio constitutes the Series'
gross income for the period. Expenses accrued during the period are
subtracted to arrive at "net investment income". The resulting amount is
divided by the product of the net asset value per share on the last day of
the period multiplied by the average number of Fund shares outstanding during
the period that were entitled to dividends. This amount is added to 1 and
raised to the sixth power. 1 is then subtracted from the result and the
difference is multiplied by 2 to arrive at the annualized yield. For the
30-day period ended July 31, 1994, the yields of the U.S. Government
Securities and Intermediate Income Series were 6.28% and 6.22%, respectively,
calculated pursuant to the above formula. Had these Series been paying their
investment management fees and had the Investment Manager not been assuming
any expenses during the period, the 30-day period yields for the U.S.
Government Securities and the Intermediate Income Securities Series would
have been 4.64% and 4.65%, respectively.

As discussed in the Prospectus, each Series of the Fund may quote its
"total return" in advertisements and sales literature. A Series' "average
annual return" represents an annualization of the Series' total return over a
particular period and is computed by finding the annual percentage rate which
will result in the ending redeemable value of a hypothetical $1,000
investment made at the beginning of a one year period, or for the period from
the date of commencement of the Series' operations, if shorter than any of
the foregoing. The ending redeemable value is reduced by any contingent
deferred sales charge at the end of the one, five or ten year or other
period. For the purpose of this calculation, it is assumed that all dividends
and distributions are reinvested. The formula for computing the average
annual total return involves a percentage obtained by dividing the ending
redeemable value by the amount of the initial investment, taking a root of
the quotient (where the root is equivalent to the number of years in the
period) and subtracting 1 from the result. The average annual total returns
of the U.S. Government Securities, Intermediate Income Securities, American
Value, Capital Growth, Dividend Growth, Strategist, Utilities, Value-Added
Market and Global Equity Series for the period from commencement of the
Series operations (The Dividend Growth and Strategist Series commenced
operations on January 7, 1993. The Global Equity, U.S. Government Securities
and Utilities Series commenced operations on January 8, 1993. The
Intermediate Income Securities Series commenced operations on January 12,
1993. The American Value and Value-Added Market Series commenced operations
on February 1, 1993. The Capital Growth Series commenced operations on
February 2, 1993) through July 31, 1994 and for the fiscal year ended January
31, 1994 were: U.S. Government Securities Series--1.21%, -0.69%; Intermediate
Income Securities Series--1.25%, 0.26%; American Value Series---0.07%,
- -0.59%; Capital Growth Series---3.64%, 6.57%; Dividend Growth Series--8.56%,
6.13%; Strategist Series---1.02%, 0.12%; Utilities Series--5.66%, -5.23%;
Value-Added Market Series--6.38%, 8.89%; and Global Equity Series--4.42%,
6.54%; respectively. Had the Series been paying their investment management
fees and had the Investment Manager not been assuming any expenses during the
period, the average annual total returns for the period from commencement of
operations through July 31, 1994 and for the fiscal year ended July 31, 1994
were: U.S. Government Securities Series---1.32%, -3.18%; Intermediate Income
Securities Series---1.40%, -2.42%; American Value Series---1.08%, -0.71%;
Capital Growth Series---5.51%, 4.67%; Dividend Growth Series--6.87%, 4.55%;
Strategist Series---2.52%, -1.23%; Utilities Series--3.73%, -6.81%;
Value-Added Market Series--5.38%, 8.25%; and Global Equity Series--3.24%,
5.95%; respectively.

<PAGE>

In addition to the foregoing, a Series may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or
other types of total return figures. A Series may also compute its aggregate
total return for specified periods by determining the aggregate percentage
rate which will result in the ending value of a hypothetical $1,000
investment made at the beginning of the period. For the purpose of this
calculation, it is assumed that all dividends and distributions are
reinvested. The formula for computing aggregate total return involves a
percentage obtained by dividing the ending value (without the reduction for
any contingent deferred sales charge) by the initial $1,000 investment and
subtracting 1 from the result. Based on the foregoing calculation, the total
returns of the period from commencement of operations through July 31, 1994
and for the fiscal year ended July 31, 1994 were: U.S. Government Securities
Series--1.88%, -0.69%; Intermediate Income Securities Series--1.94%, 0.26%;
American Value Series---0.10%, -0.59%; Capital Growth Series---5.37%, 6.57%;
Dividend Growth Series--13.68%, 6.13%; Strategist Series---2.52%, -1.23%;
Utilities Series--8.96%, -5.23%; Value-Added Market Series--9.67%, 8.89%; and
Global Equity Series--3.24%, 5.95%; respectively.

A Series may also advertise the growth of a hypothetical investment of
$10,000, $50,000 and $100,000 in shares of the Series by adding 1 to the
Series' aggregate total return to date (expressed as a decimal) and
multiplying by 10,000, 50,000 or 100,000, as the case may be. An investment
of $10,000, $50,000 and $100,000 in each Series of the Fund would have grown
to the following amounts as of July 31, 1994: U.S. Government Securities
Series--$10,188, $50,940 and $101,880; Intermediate Income Securities
Series--$10,194, $50,970 and $101,940; American Value Series--$9,990, $49,950
and $99,900; Capital Growth Series--$9,463, $47,315 and $94,630; Dividend
Growth Series--$11,368, $56,840 and $113,680; Strategist Series--$9,842,
$49,210 and $98,420; Utilities Series--$10,896, $54,480 and $108,960;
Value-Added Market Series--$10,967, $54,835 and $109,670; and Global Equity
Series--$10,697, $53,485 and $106,970.

The yields quoted in any advertisement or other communication should not
be considered a representation of the yields of the Liquid Asset and U.S.
Government Money Market Series in the future since the yield is not fixed.
Actual yields will depend not only on the type, quality and maturities of the
investments held by the Series and changes in interest rates on such
investments, but also on changes in the Series' expenses during the period.

Yield information may be useful in reviewing the performance of the Liquid
Asset and U.S. Government Money Market Series and for providing a basis for
comparison with other investment alternatives. However unlike bank deposits
or other investments which typically pay a fixed yield for a stated period of
time, the Liquid Asset and U.S. Government Money Market Series yields
fluctuate.

The Fund may, from time to time, advertise the performance of a Series
relative to certain performance rankings and indices compiled by independent
organizations.

<PAGE>

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

As discussed in the Prospectus, the shareholders of each Series of the
Fund are entitled to a full vote for each full share held. The Trustees
themselves have the power to alter the number and the terms of office of the
Trustees as provided for in the Declaration of Trust, and they may at any
time lengthen their own terms or make their terms of unlimited duration and
appoint their own successors, provided that always at least a majority of the
Trustees has been elected by the shareholders of the Fund. Under certain
circumstances, Trustees may be removed by action of the Trustees. The
shareholders also have the right under certain circumstances to remove the
Trustees. The voting rights of shareholders are not cumulative, so that
holders of more than 50 percent of the shares voting can, if they choose,
elect all Trustees being elected, while the holders of the remaining shares
would be unable to elect any Trustees.

The Fund is not required to hold Annual Meetings of Shareholders and, in
ordinary circumstances, the Fund does not intend to hold such meetings. The
Trustees may call Special Meetings of Shareholders for action by shareholders
vote as may be required by the Act or the Fund's Declaration of Trust.

The Declaration of Trust permits the Trustees to authorize the creation of
additional series of shares (the proceeds of which would be invested in
separate, independently managed portfolios) and additional classes of shares
within any series (which would be used to distinguish among the rights of
different categories of shareholders). However, the Trustees have not
presently authorized any such additional series or classes of shares.

The Declaration of Trust further provides that no Trustee, officer,
employee or agent of the Fund is liable to the Fund or to a shareholder, nor
is any Trustee, officer, employee or agent liable to any third persons in
connection with the affairs of the Fund, except as such liability may arise
from his/her or its own bad faith, willful misfeasance, gross negligence, or
reckless disregard of his/her or its duties. It also provides that all third
persons shall look solely to the Fund's property for satisfaction of claims
arising in connection with the affairs of the Fund. With the exceptions
stated, the Declaration of Trust provides that a Trustee, officer, employee
or agent is entitled to be indemnified against all liability in connection
with the affairs of the Fund.

The Fund shall be of unlimited duration subject to the provisions in the
Declaration of Trust concerning termination by action of the shareholders.

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

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

Dean Witter Trust Company, Harborside Financial Center, Plaza Two, Jersey
City, New Jersey 07311 is the Transfer Agent of the Fund's shares and
Dividend Disbursing Agent for payment of dividends and distributions of Fund
shares and Agent for shareholders under various investment plans described
herein. Dean Witter Trust Company is an affiliate of Dean Witter InterCapital
Inc., the Fund's Investment Manager. As Transfer Agent and Dividend
Disbursing Agent, Dean Witter Trust Company's responsibilities include
maintaining shareholder accounts, including providing subaccounting and
recordkeeping services for certain retirement accounts; disbursing cash
dividends and distributions and reinvesting dividends and distributions;
processing account registration changes; handling purchase and redemption
transactions; mailing prospectuses and reports; mailing and tabulating
proxies; processing share certificate transactions; and maintaining
shareholder records and lists. For these services, Dean Witter Trust Company
receives a per shareholder account fee from the Fund.

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

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

<PAGE>

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

The Fund, on behalf of each Series, will send to shareholders, at least
semi-annually, reports showing each Series' portfolio and other information.
An annual report, containing financial statements audited by independent
accountants, together with their report, will be sent to shareholders each
year.

The Fund's fiscal year ends on July 31. The financial statements of the
Fund must be audited at least once a year by independent accountants whose
selection is made annually by the Fund's Trustees.

LEGAL COUNSEL
- -----------------------------------------------------------------------------

Sheldon Curtis, Esq., who is an officer and the General Counsel of the
Investment Manager, is an officer and the General Counsel of the Fund.

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

The financial statements of each series of the Fund included in this
Statement of Additional Information and incorporated by reference in the
Prospectus have been so included and incorporated by reference in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

REGISTRATION STATEMENT
- -----------------------------------------------------------------------------

This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the Securities and Exchange Commission. The complete Registration
Statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the rules and regulations of the Commission.

PRINCIPAL SECURITIES HOLDERS
- -----------------------------------------------------------------------------

The following parties held, as of September 1, 1994, five percent or more
of the voting securities of the Series indicated, in the percentage amount
indicated: DWTC as Custodian for National Controls RSP, P.O. Box 957, Jersey
City, NJ (Liquid Asset Series: 21.9%; U.S. Government Securities Series:
31.5%; Utilities Series: 16%); DWTC as Trustee for Willdan Associates Profit
Sharing Plan, Products 401K Plan, P.O. Box 957, Jersey City, NJ (Liquid Asset
Series: 15.2%; U.S. Government Securities Series: 7.2%; Dividend Growth
Series: 5.7%); Washington State University, Foundation Trust Account, Attn:
Michael Goodwin, Washington State University, Pullman, WA (U.S. Government
Securities Series: 6.2%; Dividend Growth Series: 6.7%); Ruth Going Inc. 401K,
Robert A. Smith Trustee, 1630 Zanker Road, San Jose, CA (Intermediate Income
Securities Series: 7.5%; St. Paul Stamp Works, Inc., Retirement Savings Plan,
Attn: Edmund Mellgren III, 87 Empire Drive, St. Paul, MN (Utilities Series:
5.3%; Value-Added Market Series: 5.8%); Dean Witter Trust Co. as Trustee for
St. Petersburg Kennel Club 401K Plan, P.O. Box 957, Jersey City, NJ (Capital
Growth Series: 36.7%); DWR Custodian for Carp, Kuhn & Sprayberry VIP Plus
Profit Sharing, 5601 Truxton Avenue, Suite # 200, Bakersfield, CA (Strategist
Series: 13.7%; Global Equity Series: 8.7%); Dean Witter Trust Co. as Trustee
for M. Davis 401K Plan, P.O. Box 957, Jersey City, NJ (Strategist Series:
5.1%); DWTC as Trustee for Consolidated Hydro PSP, P.O. Box 9757, Jersey
City, NJ (U.S. Government Securities Series: 5.7%; Intermediate Income
Securities Series: 5.9%; Strategist Series: 5.1%; Global Equity Series:
9.9%); DWTC as Trustee for Cygnus 401K Plan, P.O. Box 957, Jersey City, NJ
(Intermediate Income Securities Series: 25.0%; American Value Series: 5.7%;
Value-Added Market Series: 6.5%; U.S. Government Money Market Series: 42.7%);
Dean Witter Reynolds Custodian for John R. Norell, IRA Rollover, P.O. Box
789, Divide,

<PAGE>

CO (Intermediate Income Securities Series: 15.7%); Dean Witter Reynolds C/F
SAP, Attn. Don Lozier, VIP Plus 401K Plan Dtd. 12/23/93, 300 Stevens Drive,
Suite 350, Lester, PA (American Value Series: 38.9%; Dividend Growth Series:
11.1%; Utilities Series: 27.8%); Charles E. Behr Trustee, Charles E. Behr
Trust, 802 N. Ft. Harrison Ave., Clearwater, FL (American Value Series:
16.9%); The Chase Manhattan Bank, N.A. Trustee FBO The NFL Player Second
Career Savings Plan, 3 Chase Metrotech Center, Brooklyn, NY (Dividend Growth
Series: 23.7%); DWTC as Trustee for Sub Micron 401K Plan, P.O. Box 957,
Jersey City, NJ (Strategist Series: 5.4%); Fidelitone Inc. Employees Profit
Sharing & Savings Plan & Trust, Ronald S. Comm, Trustee, 1260 Karl Court,
Wauconda, IL (Strategist Series: 5.8%); Silverton Marine Corp., 401K Plan,
FBO Employees Savings & Retirement Plan, 301 S. Riverside Drive, Millville,
NJ (Strategist Series: 6.9%); Delaware Charter Guaranty & Trust Company,
Trustee, Foulke Mgt., 401K Plan, P.O. Box 8706, Wilmington, DE (Utilities
Series: 7.2%); DWTC as Trustee for Pizzagalli Construction 401K Plan,
Harborside Financial Center, Jersey City, NJ (Value-Added Market Series:
69.8%); DWTC Trustee for American Health Properties MPP, Harborside Financial
Center, Jersey City, NJ (Value-Added Market Series: 5.1%); DWTC as Trustee
for OCS Technologies 401K Plan, P.O. Box 957, Jersey City, NJ (Global Equity
Series: 7.4%); DWTC as Trustee for Andrulis 401K Plan, P.O. Box 957, Jersey
City, NJ (Global Equity Series: 5.9%); Estate of Bernice W. Barbour c/o Frank
Lloyd, executor, Harwood Lloyd et al., 130 Main Street, Hackensack, NJ
(Liquid Asset Series: 8.0%); DWTC as Trustee for R.T. Moore 401K Plan, Jersey
City, NJ (Liquid Asset Series: 15.2%); and Allied Administrators Inc. Defined
Contribution Pension Plan FBO David S. Walker, 777 Davis Street, San
Francisco, CA (U.S. Government Money Market Series: 12.4%).

In addition, InterCapital held the following percentages of the designated
Series of the Fund on September 1, 1994: Liquid Asset Series (6.3%);
Intermediate Income Securities Series (21.2%); and Capital Growth Series
(43.0%).

<PAGE>

DEAN WITTER RETIREMENT SERIES--LIQUID ASSET SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED YIELD
AMOUNT (IN ON DATE OF
THOUSANDS) DESCRIPTION AND MATURITY DATE PURCHASE VALUE
- ----------- -------------------------------------------------------- ---------------- -----------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES (96.6%)
$ 185 Federal Home Loan Banks 8/04/94 ......................... 4.37% $ 184,889
174 Federal Home Loan Mortgage Corp. 8/24/94 to 9/14/94 .... 3.33 to 4.27 173,445
1,120 Federal National Mortgage Association 8/23/94 to 9/27/94 . 4.23 to 4.56 1,113,643
-----------
TOTAL U.S. GOVERNMENT AGENCIES (Amortized Cost $1,471,977) .............. 1,471,977
-----------
COMMERCIAL PAPER (6.5%)
BANKS--COMMERCIAL (3.2%)
50 ABN AMRO H.A. Fin., Inc. 9/16/94 ...................... 4.65 49,693
BROKERAGE (3.3%)
50 4.60
Goldman Sachs Group L.P. 9/15/94 ...................... 49,703
-----------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST $99,396) ................................................. 99,396
-----------
TOTAL INVESTMENTS (AMORTIZED COST $1,571,373) (A)..................... 103.1% 1,571,373
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS ....................... (3.1) (47,003)
------ -----------
NET ASSETS............................................................ 100.0% $1,524,370
====== ===========
</TABLE>
- ---------------
(a) The aggregate cost for federal tax purposes is the same.

DEAN WITTER RETIREMENT SERIES--U.S. GOVERNMENT MONEY MARKET SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED YIELD
AMOUNT (IN ON DATE OF
THOUSANDS) DESCRIPTION AND MATURITY DATE PURCHASE VALUE
- ----------- ------------------------------------- ---------------- ----------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES (99.9%)
$ 120 Federal Farm Credit Bank
8/17/94 to 8/23/94 ................. 3.24 to 4.44% $119,674
241 Federal Home Loan Mortgage Corp.
8/01/94 to 8/02/94 ................. 4.05 to 4.27 240,939
195 Federal National Mortgage Association
8/02/94 to 12/06/94 ................ 4.23 to 4.95 193,907
----------
TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $554,520) ............................. 554,520
----------
TOTAL INVESTMENTS (AMORTIZED COST $554,520)(A) 99.9% 554,520
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .... 0.1 288
------ ----------
NET ASSETS......................................... 100.0% $554,808
====== ==========
</TABLE>
- ---------------
(a) The aggregate cost for federal tax purposes is the same.

See Notes to Financial Statements

<PAGE>

DEAN WITTER RETIREMENT SERIES--U.S. GOVERNMENT SECURITIES SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON
THOUSANDS) RATE MATURITY DATES VALUE
- ----------- -------- --------------- -----------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY & OBLIGATIONS (97.8%)
Government National Mortgage Association (32.4%)
$1,019 ....................................... 7.00% 6/15/23-6/15/24 $ 957,206
-----------
U.S. Treasury Strips (38.0%)
100 ......................................... 0.00 8/15/96 88,708
500 ......................................... 0.00 5/15/97 420,041
800 ......................................... 0.00 8/15/98 614,643
-----------
1,123,392
-----------
U.S. Treasury Note (10.1%)
300 .......................................... 4.625 12/31/94 299,672
-----------
U.S. Treasury Bill (a) (17.3%)
510 .......................................... 3.533 8/11/94 509,464
-----------
TOTAL U.S. GOVERNMENT AGENCY & OBLIGATIONS
(IDENTIFIED COST $3,015,790) ............... 2,889,734
-----------
TOTAL INVESTMENTS (IDENTIFIED COST $3,015,790)(B)........ 97.8% 2,889,734
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .......... 2.2 64,291
----- -----------
NET ASSETS............................................... 100.0% $2,954,025
===== ===========
</TABLE>
- ---------------
(a) Treasury bill was purchased on a discount basis. The rate shown
reflects the bond equivalent interest rate.

(b) The aggregate cost of investments for federal income tax purposes is
$3,015,790; the aggregate gross unrealized appreciation is $868 and the
aggregate gross unrealized depreciation is $126,924, resulting in net
unrealized depreciation of $126,056.

See Notes to Financial Statements

<PAGE>

DEAN WITTER RETIREMENT SERIES--INTERMEDIATE INCOME SECURITIES SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C>
CORPORATE BONDS (15.8%)
BANKS--INTERNATIONAL (3.1%)
$15 Bank of China ...................... 6.75% 3/15/99 $ 14,494
----------
FOOD & BEVERAGE--INTERNATIONAL (2.2%)
10 Grand Metropolitan Investment Corp. . 8.125 8/15/96 10,319
----------
INDUSTRIALS--INTERNATIONAL (1.1%)
5 Rhone Poulenc S.A. ................. 7.75 1/15/02 5,022
----------
PHOTOGRAPHY (2.3%)
10 Eastman Kodak Co. .................. 10.00 6/15/01 10,555
----------
TOBACCO (1.0%)
5 RJR Nabisco, Inc. .................. 8.625 12/01/02 4,631
----------
TRANSPORTATION (1.1%)
5 Ryder Systems, Inc. ................ 9.375 1/15/98 5,092
----------
UTILITIES--ELECTRIC (5.0%)
15 Pacific Gas & Electric Co. ......... 6.25 3/01/04 13,554
10 United Illuminating Corp. .......... 6.20 1/15/99 9,325
----------
22,879
----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $74,133) ......... 72,992
----------
U.S. GOVERNMENT OBLIGATIONS (80.0%)
20 U.S. Treasury Note ................. 4.25 11/30/95 19,647
75 U.S. Treasury Note ................. 7.50 2/29/96 76,875
75 U.S. Treasury Note ................. 7.25 11/15/96 76,770
5 U.S. Treasury Note ................. 6.375 6/30/97 5,018
35 U.S. Treasury Note ................. 6.375 1/15/99 34,645
15 U.S. Treasury Note ................. 6.375 7/15/99 14,791
50 U.S. Treasury Note ................. 7.875 11/15/99 52,469
75 U.S. Treasury Note ................. 6.375 1/15/00 73,676
15 U.S. Treasury Note ................. 6.375 8/15/02 14,401
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $382,461)................... 368,292
----------
TOTAL INVESTMENTS (IDENTIFIED COST $456,594) (A) ......... 95.8% 441,284
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ........... 4.2 19,179
----- ----------
NET ASSETS ................................................ 100.0% $ 460,463
===== ==========
</TABLE>
- ---------------
(a) The aggregate cost for federal income tax purposes is $456,594; the
aggregate gross unrealized appreciation is $831 and the aggregate gross
unrealized depreciation is $16,141, resulting in net unrealized
depreciation of $15,310.

See Notes to Financial Statements

<PAGE>

DEAN WITTER RETIREMENT SERIES--AMERICAN VALUE SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994
- -----------------------------------------------------------------------------

Number of
Shares Value
---------- --------
<S> <C> <C>
COMMON STOCKS (75.8%)
AUTO RELATED (1.5%)
1,000 General Motors Corp. .................... $ 51,375
3,324 Nissan Motor Co., Ltd. (ADR)* ........... 50,691
---------
102,066
---------
BANKS (4.1%)
2,500 Bank of Boston Corp. .................... 65,937
2,150 Bank of New York Co., Inc. .............. 67,994
2,300 First Bank System ....................... 83,950
1,600 Signet Banking .......................... 64,600
---------
282,481
---------
COMPUTER SOFTWARE (5.4%)
2,700 General Motors (Class E) ................ 95,175
2,000 Microsoft Corp.* ........................ 103,000
3,100 Oracle Systems Corp.* ................... 118,188
1,300 Sybase, Inc.* ........................... 51,025
---------
367,388
---------
CONSUMER PRODUCTS (5.7%)
250 Buenos Aires Embotelladora, S.A. (ADR) . 8,562
3,200 Dial Corp. .............................. 66,000
1,000 Eastman Kodak Co. ....................... 48,375
1,200 Gillette Co. (The) ...................... 83,400
1,300 Procter & Gamble Co. .................... 72,475
2,000 Scott Paper Co. ......................... 115,500
---------
394,312
---------
CYCLICAL COMMODITIES (4.0%)
2,000 Cyprus Amax Minerals .................... 62,500
1,000 Dow Chemical Co. (The) .................. 69,125
900 Monsanto Co. ............................ 69,187
3,300 Praxair, Inc. ........................... 74,250
---------
275,062
---------
DRUGS (2.4%)
1,200 Pfizer, Inc. ............................ 74,400
1,400 Warner-Lambert Co. ...................... 91,000
---------
165,400
---------
ELECTRIC EQUIPMENT (1.5%)
1,980 General Electric Corp. .................. 99,742
---------
ELECTRONICS--SEMICONDUCTORS (5.3%)
1,600 Intel Corp. ............................. 94,400
3,000 LSI Logic* .............................. 81,375
1,800 Maxim Integrated Products, Inc.* ....... 86,850
1,300 Texas Instruments, Inc. ................. 102,213
----------
364,838
---------
ENERGY (6.4%)
1,800 Amoco Corp. ............................. 107,775
2,000 Burlington Resources, Inc. .............. 78,250
2,600 Chevron Corp. ........................... 115,375

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
3,800 Occidental Petroleum Corp. .............. $ 75,525
1,000 Schlumberger, Ltd. (ADR) ................ 59,000
---------
435,925
---------
ENTERTAINMENT (0.6%)
1,150 Time Warner, Inc. ....................... 42,694
---------
FINANCIAL--MISCELLANEOUS (4.4%)
2,000 First Financial Management Corp. ....... 111,500
2,200 First USA, Inc. ......................... 73,700
1,000 General Re Corp. ........................ 115,625
---------
300,825
---------
FOODS (4.0%)
1,500 CPC International, Inc. ................. 75,750
1,000 International Flavors & Fragrances, Inc. 42,000
5,000 Pet, Inc. ............................... 93,125
800 Quaker Oats Co. (The) ................... 60,400
---------
271,275
---------
HEALTH EQUIPMENT & SERVICES (5.6%)
2,110 Columbia HCA Healthcare Corp. ........... 85,455
2,000 Express Scripts, Inc. (Class A) ........ 56,000
2,300 Merck & Co., Inc. ....................... 68,138
3,000 National Medical Enterprises ............ 51,000
2,700 United Healthcare Corp. ................. 122,850
---------
383,443
---------
HOTELS / MOTELS (3.8%)
4,700 Hospitality Franchise Systems, Inc.* ... 125,725
675 La Quinta Inns, Inc. .................... 19,238
4,200 Marriott International, Inc. ............ 116,550
---------
261,513
---------
INDUSTRIALS (2.7%)
530 Deere & Co. ............................. 37,166
500 Empresas ICA S.A. de C.V. (ADS) ........ 13,187
3,750 Wabash National Corp. ................... 135,000
---------
185,353
---------
MACHINERY (1.4%)
700 Caterpillar, Inc. ....................... 75,863
300 Clark Equipment Co.* .................... 20,625
---------
96,488
---------
MEDIA GROUP (3.8%)
1,400 Capital Cities/ABC ...................... 108,150
3,000 Clear Channel Communications* ........... 138,750
375 Infinity Broadcasting Corp.* ............ 10,688
---------
257,588
---------
METALS (2.8%)
3,100 Alcan Aluminium, Ltd. (ADR) ............. 75,950
4,850 Bethlehem Steel Corp.* .................. 107,913
150 Nucor Corp. ............................. 10,350
---------
194,213
---------
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES--AMERICAN VALUE SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- -----------------------------------------------------------------------------

Number of
Shares Value
---------- --------
<S> <C> <C>
POLLUTION CONTROL (1.5%)
3,300 Browning-Ferris Industries, Inc. .... $ 102,300
----------
SEMICONDUCTORS (0.9%)
1,300 Applied Materials, Inc.* ............. 58,175
----------
TELECOMMUNICATIONS (4.4%)
2,100 Ameritech Corp. ...................... 86,100
1,500 AT&T Corp. ........................... 81,938
1,400 BellSouth Corp. ...................... 87,500
1,000 Newbridge Networks Corp.* ............ 41,875
----------
297,413
----------
TOBACCO (0.2%)
500 Empresas La Moderna S.A. de C.V.
(ADR) ................................ 11,812
----------
U.S. GOVERNMENT AGENCIES (3.4%)
1,700 Federal Home Loan Mortgage Corp. .... 101,150
1,500 Federal National Mortgage Association 130,125
----------
231,275
----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $5,110,985) ........ 5,181,581
----------
<CAPTION>
Principal
Amount (in
thousands) Value
- ------------ -----------
<S> <C>
SHORT-TERM INVESTMENTS (20.8%)
U.S. GOVERNMENT AGENCIES (a) (20.8%)
$400 Federal Home Loan Banks 4.204%
due 8/05/94 .................... $ 399,813
600 Federal Home Loan Mortgage
Corp. 4.051% due 8/01/94........ 600,000
425 Federal Home Loan Mortgage
Corp. 4.155% due 8/01/94........ 425,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST $1,424,813) .... 1,424,813
-----------
TOTAL INVESTMENTS
(IDENTIFIED COST $6,535,798) (B) .... 96.6% 6,606,394
CASH AND OTHER ASSETS
IN EXCESS OF LIABILLTLES ............. 3.4 234,301
----- -----------
NET ASSETS ............................ 100.0% $6,840,695
===== ===========
</TABLE>
- ---------------
* Non-income producing security.

ADR American Depository Receipt.

ADS American Depository Shares.

(a) U.S. Government Agencies were purchased on a discount basis. The
interest rates shown have been adjusted to reflect a bond equivalent
yield.

(b) The aggregate cost for federal income tax purposes is $6,545,033; the
aggregate gross unrealized appreciation is $186,337 and the aggregate
gross unrealized depreciation is $124,976, resulting in net unrealized
appreciation of $61,361.

See Notes to Financial Statements

<PAGE>

DEAN WITTER RETIREMENT SERIES--CAPITAL GROWTH SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994
- -----------------------------------------------------------------------------

Number of
Shares Value
---------- --------
<S> <C> <C>
COMMON STOCKS (97.4%)
ADVERTISING (3.0%)
200 Interpublic Group of Cos., Inc. ... $ 6,475
-----------
APPAREL (2.9%)
200 Cintas Corp. ....................... 6,250
-----------
AUTOMOTIVE (1.6%)
100 Genuine Parts ...................... 3,537
-----------
BANKING (7.1%)
110 Banc One Corp. ..................... 3,671
200 Central Fidelity Banks, Inc. ...... 6,450
100 Fifth Third Bancorp. ............... 5,175
-----------
15,296
-----------
BEVERAGES (4.5%)
100 Anheuser-Busch Cos., Inc. .......... 5,225
100 Coca Cola Co. (The) ................ 4,438
-----------
9,663
-----------
BUSINESS SYSTEMS (1.6%)
100 General Motors Corp. (Class E) .... 3,525
-----------
CHEMICALS--SPECIALTY (5.9%)
200 Nalco Chemical ..................... 6,525
200 Sigma-Aldrich, Inc. ................ 6,100
-----------
12,625
-----------
COMPUTER SERVICES (2.4%)
100 Automatic Data Processing, Inc. ... 5,150
-----------
CONSUMER SERVICES (1.8%)
100 Block (H&R), Inc. .................. 3,900
-----------
COSMETICS (2.0%)
100 International Flavors & Fragrances,
Inc. ............................... 4,200
-----------
DISTRIBUTION (2.2%)
200 Sysco Corp. ........................ 4,725
-----------
DRUGS & HEALTHCARE (9.0%)
200 Abbott Laboratories ................ 5,625
103 Block Drugs, Inc. (Class A) ....... 3,116
100 Forest Labs, Inc.* ................. 4,275
100 Schering-PIough Corp. .............. 6,412
-----------
19,428
-----------
ELECTRONICS--SPECIALTY (4.7%)
100 Dionex Corp.* ...................... 3,325
100 Grainger (W.W.), Inc. .............. 6,675
-----------
10,000
-----------
ENTERTAINMENT (2.3%)
200 Circus Circus Enterprise* .......... 4,975
-----------
FOODS (10.1%)
200 ConAgra, Inc. ...................... 6,350

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
200 Smucker (J.M.) Co., (Class A) ..... $ 4,900
100 Tootsie Roll Industries, Inc. ..... 6,250
100 Wrigley, (W.W.), Jr., (Class A) ... 4,100
-----------
21,600
-----------
HOUSEHOLD PRODUCTS (2.5%)
200 Rubbermaid, Inc. ................... 5,475
-----------
INSURANCE (1.5%)
200 Crawford & Co., (Class B) .......... 3,175
-----------
MACHINERY--DIVERSIFIED (2.8%)
150 Thermo Electron Co.* ............... 5,981
-----------
MANUFACTURED HOUSING (2.2%)
250 Clayton Homes, Inc.* ............... 4,656
-----------
MANUFACTURING (2.0%)
233 Federal Signal Corp. ............... 4,311
-----------
MEDICAL EQUIPMENT (2.9%)
200 Stryker Corp. ...................... 6,150
-----------
MEDICAL PRODUCTS & SUPPLIES (1.8%)
400 Biomet, Inc.* ...................... 3,900
-----------
RESTAURANTS (4.1%)
200 International Dairy Queen, Inc.
(Class A)* ......................... 3,250
200 McDonald's Corp. ................... 5,425
-----------
8,675
-----------
RETAIL (2.3%)
200 Wai-Mart Stores, (Class A) ......... 5,000
-----------
RETAIL--DEPARTMENT STORES (3.1%)
200 Dillard Dept. Stores, (Class A) ... 6,700
-----------
RETAIL--DRUG STORES (1.7%)
100 Walgreen Co. ....................... 3,662
-----------
SUPERMARKETS (2.5%)
200 Albertson's, Inc. .................. 5,400
-----------
TOBACCO (2.7%)
200 UST, Inc. .......................... 5,775
-----------
U.S. GOVERNMENT AGENCY (2.0%)
50 Federal National Mortgage
Association ........................ 4,338
-----------
UTILITIES (2.2%)
312 Citizens Utilities Co. of Delaware
(Series A) ......................... 4,602
-----------
TOTAL INVESTMENTS (Identified
Cost $214,004) (a) .................... 97.4% 209,149
CASH AND OTHER ASSETS
IN EXCESS OF LIABILITIES .............. 2.6 5,563
------ ---------
NET ASSETS ............................. 100.0% $214,712
====== =========
</TABLE>
- ---------------
* Non-income producing security.

(a) The aggregate cost for federal income tax purposes is $214,004; the
aggregate gross unrealized appreciation is $8,932 and the aggregate
gross unrealized depreciation is $13,787, resulting in net unrealized
depreciation of $4,855.

See Notes to Financial Statements

<PAGE>

DEAN WITTER RETIREMENT SERIES--DIVIDEND GROWTH SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994
- -----------------------------------------------------------------------------

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
COMMON STOCKS (97.5%)
AEROSPACE (3.9%)
7,500 Raytheon Co. ....................... $492,187
-----------
ALUMINUM (3.6%)
5,900 Aluminum Co. of America ............ 461,675
-----------
AUTOMOBILES (3.7%)
15,000 Ford Motor Co. ..................... 476,250
-----------
BANKING (3.8%)
7,300 Bankers Trust N.Y. Corp. ........... 489,100
-----------
BEVERAGES (3.7%)
15,600 PepsiCo, Inc. ...................... 475,800
-----------
CHEMICALS (7.4%)
7,900 DuPont (E.I.) deNemours & Co. ..... 469,062
9,375 Eastman Chemical Co. ............... 483,984
-----------
953,046
-----------
COMPUTERS (3.7%)
7,700 International Business Machines
Corp. ............................. 475,475
-----------
CONGLOMERATES (7.6%)
9,300 Minnesota Mining & Manufacturing
Co. ............................... 494,063
10,100 Tenneco, Inc. ...................... 484,800
-----------
978,863
-----------
DRUGS (7.5%)
17,000 Abbott Laboratories ................ 478,125
9,200 Bristol-Myers Squibb Co. ........... 484,150
-----------
962,275
-----------
ELECTRIC--MAJOR (3.8%)
9,600 General Electric Co. ............... 483,600
-----------
FOODS (3.8%)
6,400 Quaker Oats Co. (The) .............. 483,200
-----------
MACHINERY--DIVERSIFIED (3.7%)
6,800 Deere & Co. ........................ 476,850
-----------

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
NATURAL GAS (3.8%)
15,000 Enron Corp. ........................ $ 485,625
-----------
OFFICE EQUIPMENT & SUPPLIES (3.7%)
13,400 Pitney Bowes, Inc. ................. 472,350
-----------
OIL--DOMESTIC (3.7%)
7,900 Amoco Corp. ........................ 473,013
-----------
OIL INTEGRATED--INTERNATIONAL (3.8%)
8,250 Exxon Corp. ........................ 490,875
------------
PAPER & FOREST PRODUCTS (3.7%)
11,400 Weyerhaeuser Co. ................... 478,800
-----------
PHOTOGRAPHY (3.7%)
9,800 Eastman Kodak Co. .................. 474,075
-----------
RAILROADS (3.9%)
6,500 CSX Corp. .......................... 504,563
-----------
RETAIL (3.8%)
29,350 K-Mart Corp. ....................... 480,606
-----------
SOAPS & HOUSEHOLD GOODS (3.6%)
4,300 Unilever N.V. NY (ADR) ............. 460,100
-----------
TELEPHONES (3.8%)
15,400 GTE Corp. .......................... 488,950
-----------
UTILITIES--ELECTRIC (3.8%)
13,700 Houston Industries, Inc. ........... 481,213
-----------
TOTAL COMMON STOCKS (IDENTIFIED
COST $12,682,253) ................. 12,498,491
-----------
<CAPTION>
Principal
Amount (in
thousands)
- ------------
<S> <C>
SHORT-TERM INVESTMENT (0.7%)
U.S. GOVERNMENT AGENCY (a) (0.7%)
$95 Federal Home Loan Mortgage Corp.
4.051% due 8/01/94
(Amortized Cost $95,000) .......... 95,000
----------
TOTAL INVESTMENTS
(IDENTIFIED COST $12,777,253) (B) .... 98.2% 12,593,491
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES ................. 1.8 227,928
------ -----------
NET ASSETS ............................. 100.0% $12,821,419
===== ===========
</TABLE>
- ---------------
ADR American Depository Receipt.
(a) U.S. Government Agency was purchased on a discount basis. The
interest rate shown has been adjusted to reflect a bond equivalent
yield.
(b) The aggregate cost for federal income tax purposes is
$12,794,443; the aggregate gross unrealized appreciation is
$409,762 and the aggregate gross unrealized depreciation is
$610,714, resulting in net unrealized depreciation of $200,952.

See Notes to Financial Statements

<PAGE>

DEAN WITTER RETIREMENT SERIES--UTILITIES SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
COMMON STOCKS (87.6%)
ELECTRIC UTILITIES--EQUIPMENT (1.0%)
2,500 Kenetech Corp. ...................... $ 39,965
------------
NATURAL GAS (13.6%)
1,500 Apache Corp. ........................ 38,438
2,500 Enron Corp. ......................... 80,937
2,000 MCN Corp. ........................... 79,750
3,000 Pacific Enterprises ................. 61,500
2,000 Questar Corp. ....................... 66,500
2,500 Sonat, Inc. ......................... 82,813
1,000 Tenneco, Inc. ....................... 48,000
2,000 Williams Cos., Inc. ................. 65,250
-----------
523,188
-----------
TELECOMMUNICATION--LONG DISTANCE (1.4%)
1,000 AT&T Corp. .......................... 54,625
-----------
TELECOMMUNICATIONS (33.0%)
2,500 Airtouch Communications Corp.* ..... 65,000
1,500 BCE, Inc. ........................... 49,500
1,000 BellSouth Corp. ..................... 62,500
3,000 Cable & Wireless PLC (ADR) .......... 59,625
2,000 Century Telephone Enterprises, Inc. 52,000
2,000 Comsat Corp. ........................ 52,250
2,000 GTE Corp. ........................... 63,500
2,500 MCI Communications Corp. ............ 56,562
2,500 Nextel Communications, Inc. (Class A)* 69,688
3,000 Rochester Telephone Corp. ........... 72,375
2,000 Southern New England
Telecommunications Corp. ............ 68,750
1,500 Southwestern Bell Corp. ............. 63,000
2,000 Sprint Corporation .................. 73,250
2,500 Tele Danmark AIS (ADR) .............. 65,000
1,700 Telecommunications Corp. New
Zealand, Ltd. (ADR) ................ 76,925
1,500 Telefonos de Mexico, S.A. Series L
(ADR) .............................. 91,125
2,500 Telephone & Data Systems, Inc. ..... 101,875
2,000 Time Warner, Inc. ................... 74,250
2,000 Vodafone Group, PLC (ADR) ........... 57,250
-----------
1,274,425
-----------
TELECOMMUNICATIONS EQUIPMENT (2.7%)
2,000 Motorola, Inc. ...................... 106,000
-----------

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
UTILITIES--ELECTRIC (34.8%)
2,000 Central & South West Corp. .......... $ 45,250
2,500 CMS Energy Corp. .................... 56,562
2,200 Commonwealth Edison Company ......... 52,250
1,500 Detroit Edison Company .............. 39,562
2,500 DPL, Inc. ........................... 50,937
2,000 DQE, Inc. ........................... 60,250
2,000 Eastern Utilities Associates ....... 49,500
2,500 Entergy Corp. ....................... 63,750
2,000 Florida Progress Corp. .............. 56,000
2,000 General Public Utilities Corp. ..... 51,500
3,000 Illinova Corp. ...................... 62,625
2,000 Montana Power Company ............... 46,750
2,000 NIPSCO Industries, Inc. ............. 58,500
2,500 Northeast Utilities ................. 58,437
2,000 Pacific Gas & Electric Company ..... 48,250
3,000 Pacificorp .......................... 53,250
2,500 Peco Energy Co. ..................... 65,313
3,000 Pinnacle West Capital Corp. ......... 52,875
2,000 Potomac Electric Power Company ..... 41,500
3,000 Public Service Company, New Mexico*.. 36,375
3,000 TECO Energy, Inc. ................... 60,375
1,500 Texas Utilities Electric Company ... 49,313
2,000 Union Electric Company .............. 69,000
2,000 Utilicorp United, Inc. .............. 59,500
2,000 Western Resources Corp. ............. 56,250
-----------
1,343,874
-----------
UTILITIES--WATER (1.1%)
3,000 United Water Resources, Inc. ....... 41,250
-----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $3,486,185) ....... 3,383,327
-----------
<CAPTION>
Principal
Amount (in
thousands)
- ----------
<S> <C>
SHORT-TERM INVESTMENTS (13.3%)
U.S. GOVERNMENT AGENCIES (a) (13.3%)
Federal Home Loan Mortgage Corp.
$ 84 4.0% due 8/01/94 ................... 84,000
Student Loan Market Association
430 4.30% due 8/29/94 .................. 428,562
-----------
TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST $512,562) .......... 512,562
-----------
TOTAL INVESTMENTS
(Identified Cost $3,998,747) (b) ... 100.9% 3,895,889
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS ................... (0.9) (36,307)
----- -----------
NET ASSETS .......................... 100.0% $3,859,582
===== ===========
</TABLE>
- ---------------
* Non-income producing security.

ADR American Depository Receipt.

(a) U.S. Government Agencies were purchased on a discount basis. The
interest rates shown have been adjusted to reflect a bond equivalent
yield.

(b) The aggregate cost for federal income tax purposes is $3,998,747; the
aggregate gross unrealized appreciation is $105,302, and the aggregate
gross unrealized depreciation is $208,160, resulting in net unrealized
depreciation of $102,858.

See Notes to Financial Statements

<PAGE>

DEAN WITTER RETIREMENT SERIES--VALUE-ADDED MARKET SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
COMMON STOCKS (94.9%)
AEROSPACE & DEFENSE (1.5%)
200 Boeing Co. ......................... $ 8,925
250 General Dynamics Corp. ............. 10,032
150 Lockheed Corp. ..................... 9,450
200 Martin Marietta Corp. .............. 9,075
79 McDonnell Douglas Corp. ............ 8,927
225 Northrop Corp. ..................... 9,450
150 Raytheon Co. ....................... 9,845
260 Rockwell International Corp. ...... 9,328
---------
75,032
---------
AIR FREIGHT (0.2%)
350 Southwest Airline .................. 9,494
---------
AIRLINES (0.6%)
160 AMR Corp.* ......................... 9,160
200 Delta Air Lines, Inc. .............. 9,626
1,500 USAir Group, Inc.* ................. 9,750
---------
28,536
---------
ALUMINUM (0.6%)
432 Alcan Aluminium, Ltd. .............. 10,585
129 Aluminum Co. of America ............ 10,094
200 Reynolds Metals Co. ................ 10,075
---------
30,754
---------
AUTO PARTS--AFTER MARKET (0.9%)
349 Cooper Tire & Rubber Co. ........... 8,595
300 Echlin, Inc. ....................... 9,525
270 Genuine Parts ...................... 9,551
275 Goodyear Tire & Rubber Co. ......... 9,797
550 SPX Corp. .......................... 9,625
---------
47,093
---------
AUTOMOBILES (0.6%)
175 Chrysler Corp. ..................... 8,422
350 Ford Motor Company ................. 11,113
200 General Motors Corp. ............... 10,275
---------
29,810
---------
BANKS--MONEY CENTER (1.4%)
200 BankAmerica Corp. .................. 9,650
150 Bankers Trust N.Y. Corp. ........... 10,050
265 Chase Manhattan Corp. .............. 9,772
250 Chemical Banking Corp. ............. 9,595
250 Citicorp ........................... 10,313
200 First Chicago Corp. ................ 10,050
160 Morgan (J.P.) & Co., Inc. .......... 10,080
---------
69,510
---------
BANKS--REGIONAL (3.8%)
322 Banc One Corp. ..................... 10,747
380 Bank of Boston Corp. ............... 10,023
221 Barnett Banks of Florida, Inc. .... 9,890
300 Boatmens Bancshares, Inc. .......... 10,275
321 CoreStates Financial Corp. ......... 8,747

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
225 First Fidelity Bancorp. ............ $ 10,520
125 First Interstate Bancorp. .......... 9,390
219 First Union Corp. .................. 9,910
290 Fleet Financial Group, Inc. ....... 10,476
325 Keycorp. ........................... 10,563
170 Mellon Bank Corp. .................. 9,733
200 NationsBank Corp. .................. 11,150
273 NBD Bancorp, Inc. .................. 8,702
352 Norwest Corp. ...................... 9,196
321 PNC Financial Corp. ................ 9,230
425 Shawmut National Corp. ............. 9,030
200 SunTrust Banks, Inc. ............... 9,725
342 US Bancorp. Oregon ................. 9,320
300 Wachovia Corp. ..................... 9,787
65 Wells Fargo & Co. .................. 10,099
---------
196,513
---------
BASIC CYCLICAL COMMODITIES (0.6%)
161 Dow Chemical Co. (The) ............. 11,130
184 duPont (E.I.) deNemours & Co. ..... 10,925
377 Union Carbide Corp. ................ 10,650
---------
32,705
---------
BEVERAGES--ALCOHOLIC (0.8%)
184 Anheuser-Busch Cos., Inc. .......... 9,614
345 Brown-Forman Corp. (Class B) ...... 9,574
500 Coors (Adolph) Co. ................. 10,000
330 Seagram Co., Ltd. .................. 10,148
---------
39,336
---------
BEVERAGES--SOFT DRINKS (0.4%)
200 Coca Cola Co. (The) ................ 8,875
330 PepsiCo, Inc. ...................... 10,065
---------
18,940
---------
BROADCAST MEDIA (0.4%)
140 Capital CIties/ABC ................. 10,815
31 CBS, Inc. .......................... 9,673
---------
20,488
---------
BUILDING MATERIALS (0.6%)
350 Masco Corp. ........................ 9,188
325 Owens-Corning Fiberglass Corp.* ... 10,806
300 Sherwin Williams Co. ............... 9,788
---------
29,782
---------
CHEMICALS (1.3%)
200 Air Products & Chemicals, Inc. .... 9,600
200 Eastman Chemical Co. ............... 10,325
200 Goodrich (B.F.) Co. ................ 9,150
90 Hercules, Inc. ..................... 9,609
129 Monsanto Co. ....................... 9,917
482 Praxair, Inc. ...................... 10,845
150 Rohm & Haas Co. .................... 9,713
---------
69,159
---------
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES--VALUE-ADDED MARKET SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
CHEMICALS--DIVERSIFIED (0.9%)
294 Avery Dennison Corp. ............... $ 9,593
375 Engelhard Corp. .................... 9,188
625 First Mississippi Corp. ............ 9,609
175 FMC Corp.* ......................... 10,281
258 PPG Industries, Inc. ............... 10,095
---------
48,766
---------
CHEMICALS--SPECIALTY (0. 8%)
215 Grace (W.R.) Co. ................... 8,923
175 Great Lakes Chemical Corp. ......... 10,413
125 Morton International, Inc. ......... 10,500
300 Nalco Chemical Co. ................. 9,788
---------
39,624
---------
COMMUNICATIONS--EQUIPMENT/
MANUFACTURERS (1.1%)
250 Andrew Corp.* ...................... 9,689
425 Cisco Systems, Inc.* ............... 8,925
400 DSC Communications Corp.* .......... 9,700
1,400 M/A-Com., Inc.* .................... 10,850
300 Northern Telecom, Ltd. ............. 9,675
275 Scientific-Atlanta, Inc. ........... 9,557
---------
58,396
---------
COMPUTER SOFTWARE (1.9%)
200 Autodesk, Inc. ..................... 10,500
200 Automatic Data Processing, Inc. ... 10,300
375 Ceridian Corp.* .................... 9,610
250 Computer Associates Int'l., Inc. .. 9,720
261 Computer Sciences Corp.* ........... 10,897
275 Lotus Development Corp.* ........... 8,869
200 Microsoft Corporation* ............. 10,300
575 Novell, Inc.* ...................... 9,344
250 Oracle Systems Corp. ............... 9,531
376 Shared Medical Systems Corp. ...... 9,447
---------
98,518
---------
COMPUTERS--SYSTEMS (1.9%)
1,500 Amdahl Corp.* ...................... 10,312
325 Apple Computer, Inc. ............... 10,928
333 COMPAQ Computer Corp.* ............. 10,530
475 Cray Research, Inc.* ............... 9,738
1,250 Data General Corp.* ................ 10,000
475 Digital Equipment Corp.* ........... 9,203
900 Intergraph Corp.* .................. 8,664
450 Sun Microsystems, Inc.* ............ 10,013
800 Tandem Computers, Inc.* ............ 11,000
1,100 Unisys Corp.* ...................... 9,764
---------
100,152
---------
CONGLOMERATES (0.8%)
125 ITT Corp. .......................... 10,720
600 Teledyne, Inc.* .................... 10,350
225 Tenneco, Inc. ...................... 10,800
180 Textron, Inc. ...................... 9,585
---------
41,455
---------

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
CONTAINERS--METAL & GLASS (0.4%)
375 Ball Corp. ......................... $ 9,891
290 Crown Cork & Seal, Inc.* ........... 10,368
---------
20,259
---------
CONTAINERS--PAPER (0.6%)
412 Bemis Company, Inc. ................ 10,147
600 Stone Container Corp.* ............. 9,900
173 Temple-Inland, Inc. ................ 8,844
---------
28,891
---------
COSMETICS (0.8%)
424 Alberto-Culver Co. ................. 9,382
175 Avon Products, Inc. ................ 9,909
149 Gillette Co. (The) ................. 10,356
231 International Flavors & Fragrances,
Inc. .............................. 9,702
---------
39,349
---------
DISTRIBUTORS (CONSUMER PRODUCTS) (1.0%)
350 Fleming Cos., Inc. ................. 10,325
100 McKesson Corp. ..................... 9,950
550 National Intergroup, Inc.* ......... 9,900
350 SuperValu, Inc. .................... 10,020
425 Sysco Corp. ........................ 10,041
---------
50,236
---------
ELECTRIC EQUIPMENT (1.5%)
133 AMP, Inc. .......................... 9,943
157 Emerson Electric Co. ............... 9,538
200 General Electric Co. ............... 10,075
149 Grainger (W.W.), Inc. .............. 9,946
304 Honeywell, Inc. .................... 9,576
240 Raychem Corp. ...................... 8,610
157 Thomas & Betts Corp. ............... 9,774
800 Westinghouse Electric Corp. ....... 9,700
---------
77,162
---------
ELECTRONIC COMPONENTS (0.2%)
170 International Business Machines
Corp. ............................. 10,498
---------
ELECTRONICS--DEFENSE (0.6%)
250 E-Systems, Inc. .................... 9,750
675 EG & G, Inc. ....................... 10,378
268 Loral Corp. ........................ 9,983
---------
30,111
---------
ELECTRONICS--INSTRUMENTATION (0.6%)
121 Hewlett-Packard Co. ................ 9,393
350 Perkin-Elmer Corp. ................. 9,844
300 Tektronix, Inc. .................... 9,413
---------
28,650
---------
ELECTRONICS--SEMICONDUCTORS/
COMPONENTS (0.8%)
400 Advanced Micro Devices, Inc.* ..... 10,800
160 Intel Corp. ........................ 9,440
600 National Semiconductor Corp.* ..... 10,125
146 Texas Instruments, Inc. ............ 11,480
---------
41,845
---------
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES--VALUE-ADDED MARKET SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- -----------------------------------------------------------
ENGINEERING & CONSTRUCTION (0.6%)
200 Fluor Corp. ........................ $ 10,900
226 Foster Wheeler Corp. ............... 9,296
625 Morrison Knudsen Co., Inc. ......... 10,156
---------
30,352
---------
ENTERTAINMENT (0.7%)
1,500 Bally Entertainment Corp.* ......... 10,125
225 Disney (Walt) Co. .................. 9,564
212 King Worid Productions, Inc.* ..... 8,056
275 Time Warner, Inc. .................. 10,209
---------
37,954
---------
FINANCIAL--MISCELLANEOUS (1.3%)
375 American Express Co. ............... 9,939
324 American General Corp. ............. 9,275
275 Dean Witter, Discover & Co. (Note 3) 11,035
411 MBNA Corp. ......................... 9,453
275 Merrill Lynch & Co., Inc. .......... 10,072
200 Salomon, Inc. ...................... 8,625
200 Transamerica Corp. ................. 10,150
---------
68,549
---------
FINANCIAL SERVICES (0.2%)
300 Travelers, Inc. .................... 9,938
---------
FOODS (2.6%)
400 Archer-Daniels-Midland Co. ......... 9,850
800 Borden, Inc. ....................... 9,400
275 Campbell Soup Co. .................. 10,175
350 ConAgra, Inc. ...................... 11,114
189 CPC International, Inc. ............ 9,545
175 General Mills, Inc. ................ 8,728
275 Heinz, (H.J.) Co. .................. 9,075
225 Hershey Foods Corp. ................ 9,534
161 Kellogg Co. ........................ 8,332
500 Pet, Inc. .......................... 9,313
127 Quaker Oats Co. (The) .............. 9,590
275 Ralston-Ralston Purina Group ...... 10,175
450 Sara Lee Corp. ..................... 9,280
200 Wrigley, (WW.), Jr., (Class A) .... 8,200
---------
132,311
---------
GOLD MINING (0.9%)
375 American Barrick Resource Corp. ... 8,392
850 Echo Bay Mines, Ltd. ............... 9,881
500 Homestake Mining Co. ............... 9,375
224 Newmont Mining Corp. ............... 8,848
475 Placer Dome, Inc. .................. 9,857
---------
46,353
---------
HARDWARE & TOOLS (0.6%)
475 Black & Decker Corp. ............... 9,797
270 Snap-On Tools Corp. ................ 9,889
250 Stanley Works ...................... 10,219
---------
29,905
---------

<PAGE>

[CAPTION]
Number of
Shares Value
---------- --------
[S] [C] [C]
HEALTH CARE--MISCELLANEOUS (1.1%)
450 ALZA Corp.* ........................ $ 9,788
200 Amgen, Inc.* ....................... 9,900
700 Beverly Enterprises, Inc.* ......... 8,575
345 Manor Care, Inc. ................... 8,668
275 U.S. HealthCare, Inc. .............. 10,381
225 United Healthcare Corp. ............ 10,238
---------
57,550
---------
HEALTH CARE DIVERSIFIED (1.5%)
300 Abbott Laboratories, Inc. .......... 8,439
400 Allergan, Inc. ..................... 9,650
175 American Cyanamid Co. .............. 10,610
150 American Home Products Corp. ...... 8,606
180 Bristol-Myers Squibb Co. ........... 9,473
200 Johnson & Johnson .................. 9,400
300 Mallinckrodt Group, Inc. ........... 9,150
150 Warner-Lambert Co. ................. 9,750
---------
75,078
---------
HEALTH CARE DRUGS (1.0%)
200 Lilly (Eli) & Co. .................. 9,725
325 Merck & Co., Inc. .................. 9,629
165 Pfizer, Inc. ....................... 10,230
160 Schering-Plough Corp. .............. 10,260
300 Upjohn & Co. ....................... 9,000
---------
48,844
---------
HEAVY DUTY TRUCKS & PARTS (0.9%)
200 Cummins Engine, Inc. ............... 8,026
340 Dana Corp. ......................... 9,775
200 Eaton Corp. ........................ 10,375
700 Navistar International Corp.* ..... 9,100
215 PACCAR, Inc. ....................... 10,750
---------
48,026
---------
HOME BUILDING (0.6%)
350 Centex Corp. ....................... 8,750
700 Kaufman & Broad Home Corp. ......... 10,589
400 Pulte Corp. ........................ 9,100
---------
28,439
---------
HOSPITAL MANAGEMENT (0.6%)
250 Columbia Healthcare Corp. .......... 10,125
750 Community Psychiatric Centers* .... 9,657
674 National Medical Enterprises, Inc.* 11,459
---------
31,241
---------
HOTELS/MOTELS (0.6%)
175 Hilton Hotels Corp. ................ 11,047
350 Marriott International, Inc. ...... 9,713
300 Promus Cos., Inc. .................. 8,700
---------
29,460
---------
HOUSEHOLD FURNISHINGS & APPLIANCES (0.9%)
200 Armstrong World Industries, Inc. .. 9,850
300 Bassett Furniture, Inc. ............ 8,850

[/TABLE]

<PAGE>

DEAN WITTER RETIREMENT SERIES--VALUE-ADDED MARKET SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
546 Maytag Corp. ....................... $10,512
200 Whirlpool Corp. .................... 10,175
1,000 Zenith Electronics* ................ 9,125
---------
48,512
---------
HOUSEHOLD PRODUCTS (0.9%)
200 Clorox Co. ......................... 9,950
190 Colgate-Palmolive Co. .............. 10,142
168 Procter & Gamble Co. ............... 9,367
360 Rubbermaid, Inc. ................... 9,855
95 Unilever N.V. (ADR) ................ 10,165
---------
49,479
---------
HOUSEWARES (0.4%)
217 Newell Co. ......................... 9,684
250 Premark International, Inc. ....... 10,469
---------
20,153
---------
INDUSTRIALS (0.2%)
137 United Technologies Corp. .......... 8,254
---------
INSURANCE BROKERS (0.4%)
500 Alexander & Alexander Services,
Inc. .............................. 9,875
111 Marsh & McLennan Cos., Inc. ....... 9,464
---------
19,339
---------
LEISURE TIME/EQUIPMENT (0.6%)
400 Brunswick Corp. .................... 9,550
875 Handleman Co. ...................... 9,079
470 Outboard Marine Corp. .............. 10,575
---------
29,204
---------
LIFE INSURANCE (1.1%)
179 Jefferson Pilot Corp. .............. 9,309
250 Lincoln National Corp. ............. 9,406
325 Providian Corp. .................... 10,034
275 Torchmark Corp. .................... 10,691
200 UNUM Corp. ......................... 9,275
250 US Life Corp. ...................... 9,220
---------
57,935
---------
MACHINE TOOLS (0.4%)
400 Cincinnati Milacron, Inc. .......... 8,650
600 Giddings & Lewis, Inc. ............. 9,900
---------
18,550
---------
MACHINERY--DIVERSIFIED (1.5%)
150 Briggs & Stratton Corp. ............ 10,894
82 Caterpillar, Inc. .................. 8,887
146 Clark Equipment Co.* ............... 10,037
250 Cooper Industries, Inc. ............ 9,375
125 Deere & Co. ........................ 8,766
500 Harnischfeger Industries, Inc. .... 10,313
300 Ingersoll Rand Co. ................. 10,913
275 Varity Corp.* ...................... 10,313
---------
79,498
---------
MANUFACTURED HOUSING (0.4%)
425 Fleetwood Enterprises, Inc. ....... 9,934

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
550 Skyline Corp. ...................... $ 10,314
---------
20,248
---------
MANUFACTURING--DIVERSIFIED INDUSTRIES (2.1%)
400 Crane Co. .......................... 10,250
152 Dover Corp. ........................ 8,950
222 Illinois Tool Works, Inc. .......... 8,908
200 Johnson Controls, Inc. ............. 10,475
184 Millipore Corp. .................... 9,660
200 Nacco Industries, Inc. (Class A) .. 11,050
550 Pall Corp. ......................... 8,664
250 Parker-Hannifin Corp. .............. 10,781
274 Timken Co. ......................... 9,556
250 Trinova Corp. ...................... 9,625
225 Tyco International, Ltd. ........... 9,731
---------
107,650
---------
MEDICAL PRODUCTS & SUPPLIES (1.6%)
425 Bard (C.R.), Inc. .................. 10,253
275 Bausch & Lomb, Inc. ................ 9,866
400 Baxter International, Inc. ......... 10,550
229 Becton, Dickinson & Co. ............ 9,647
1,025 Biomet, Inc.* ...................... 9,994
125 Medtronic, Inc. .................... 11,141
300 St. Jude Medical, Inc. ............. 9,450
450 United States Surgical Corp. ...... 10,013
---------
80,914
---------
METALS--MISCELLANEOUS (0.8%)
350 ASARCO, Inc. ....................... 10,282
300 Cyprus Amax Minerals ............... 9,375
341 Inco, Ltd. ......................... 9,378
175 Phelps Dodge Corp. ................. 10,806
---------
39,841
---------
MISCELLANEOUS (2.6%)
400 Airtouch Communications Corp.* .... 10,400
275 Allied Signal, Inc. ................ 10,520
325 American Greetings Corp. ........... 9,506
309 Corning, Inc. ...................... 9,811
432 Dial Corp. Arizona ................. 8,910
250 General Signal Corp. ............... 9,094
250 Harcourt General, Inc. ............. 8,969
250 Harris Corp. ....................... 10,906
550 Jostens, Inc. ...................... 8,938
175 McCaw Cellular Comm. (Class A)* ... 9,275
200 Minnesota Mining & Manufacturing
Co. ............................... 10,625
300 Pioneer Hi Bred International ..... 9,525
150 TRW, Inc. .......................... 10,463
540 Whitman Corp. ...................... 8,910
---------
135,852
---------
MULTI-LINE INSURANCE (0.5%)
175 Aetna Life & Casualty Co. .......... 9,013
100 American International Group, Inc. 9,425
135 CIGNA Corp. ........................ 9,248
---------
27,686
---------
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES--VALUE-ADDED MARKET SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- -----------------------------------------------------------

<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
OFFICE EQUIPMENT & SUPPLIES (0.7%)
156 Alco Standard ...................... $ 9,497
550 Moore Corp., Ltd. .................. 9,763
250 Pitney Bowes, Inc. ................. 8,813
100 Xerox Corp. ........................ 10,225
---------
38,298
---------
OIL & GAS DRILLING (0.3%)
320 Helmerich & Payne, Inc. ............ 8,920
1,100 Rowan Cos., Inc.* .................. 9,076
---------
17,996
---------
OIL (EXPLORATION & PRODUCTION) (0.8%)
250 Burlington Resources, Inc. ......... 9,782
1,900 Maxus Energy Corp.* ................ 10,450
625 Oryx Energy Co.* ................... 9,610
1,000 Santa Fe Energy Resources* ......... 9,375
---------
39,217
---------
OIL INTEGRATED--DOMESTIC (2.0%)
200 Amerada Hess Corp. ................. 10,400
256 Ashland Oil, Inc. .................. 9,152
100 Atlantic Richfield Co. ............. 10,788
200 Kerr McGee Corp. ................... 10,050
215 Louisiana Land & Exploration Co.
(The).............................. 9,057
475 Occidental Petroleum Corp. ......... 9,441
165 Pennzoil Co. ....................... 8,312
300 Phillips Petroleum Co. ............. 9,825
350 Sun Co. ............................ 9,538
320 Unocal Corp. ....................... 9,280
500 USX-Marathon Group ................. 8,688
---------
104,531
---------
OIL INTEGRATED--INTERNATIONAL (1.2%)
160 Amoco Corp. ........................ 9,580
220 Chevron Corp. ...................... 9,763
175 Exxon Corp. ........................ 10,413
120 Mobil Corp. ........................ 10,065
90 Royal Dutch Petroleum Co. .......... 10,170
150 Texaco, Inc. ....................... 9,525
---------
59,516
---------
OIL WELL EQUIPMENT & SERVICE (1.1%)
500 Baker Hughes, Inc. ................. 10,563
420 Dresser Industries, Inc. ........... 8,874
256 Halliburton Co. .................... 8,704
374 McDermott International, Inc. ..... 9,397
141 Schlumberger, Ltd. ................. 8,319
200 Western Atlas, Inc.* ............... 9,725
---------
55,582
---------
PAPER & FOREST PRODUCTS (2.6%)
351 Boise Cascade Corp. ................ 8,775
251 Champion International Corp. ...... 8,597
400 Federal Paper Board, Inc. .......... 10,000
150 Georgia-Pacific Corp. .............. 9,675

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
143 International Paper Co. ............ $ 10,422
500 James River Corp. of Virginia ..... 9,625
178 Kimberly-Clark Corp. ............... 10,102
325 Louisiana-Pacific Corp. ............ 10,481
200 Mead Corp. ......................... 8,925
250 Potlatch Corp. ..................... 10,031
175 Scott Paper Co. .................... 10,106
191 Union Camp Corp. ................... 9,025
271 Westvaco Corp. ..................... 9,317
250 Weyerhaeuser Co. ................... 10,500
---------
135,581
---------
PERSONAL LOANS (0.4%)
260 Beneficial Corp. ................... 10,335
256 Household International, Inc. ..... 8,769
---------
19,104
---------
PHOTOGRAPHY (0.4%)
200 Eastman Kodak Co. .................. 9,676
300 Polaroid Corp. ..................... 10,350
---------
20,026
---------
POLLUTION CONTROL (0.8%)
360 Browning-Ferris Industries, Inc. .. 11,160
2,100 Rollins Environmental Services,
Inc.* ............................. 10,238
360 WMX Technologies, Inc. ............. 10,485
475 Zurn Industries, Inc. .............. 8,966
---------
40,849
---------
PROPERTY--CASUALTY INSURANCE (1.1%)
122 Chubb Corp. ........................ 9,135
600 Continental Corp. .................. 9,300
85 General Re Corp. ................... 9,829
175 Safeco Corp. ....................... 9,692
240 St. Paul Cos., Inc. ................ 10,260
675 USF&G Corp. ........................ 8,606
---------
56,822
---------
PUBLISHING (0.5%)
160 Dun & Bradstreet Corp. ............. 9,260
140 McGraw-Hill, Inc. .................. 9,730
200 Meredith Corp. ..................... 8,976
---------
27,966
---------
PUBLISHING--NEWSPAPER (1.1%)
325 Dow Jones & Co., Inc. .............. 9,995
170 Gannett Co., Inc. .................. 8,585
161 Knight-Ridder Newspapers, Inc. .... 8,695
383 New York Times Co. (Class A) ...... 9,048
325 Times Mirror Co. (The) ............. 9,709
175 Tribune Co. ........................ 9,144
---------
55,176
---------
RAILROADS (1.1%)
185 Burlington Northern, Inc. .......... 9,620
175 Conrail, Inc. ...................... 9,406

</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES--VALUE-ADDED MARKET SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
130 CSX Corp. .......................... $ 10,092
134 Norfolk Southern Corp. ............. 8,442
500 Santa Fe Pacific Corp. ............. 10,313
160 Union Pacific Corp. ................ 9,440
---------
57,313
---------
RESTAURANTS (0.9%)
400 Luby's Cafeterias, Inc. ............ 9,150
318 McDonald's Corp. ................... 8,626
1,625 Ryan's Family Steak House, Inc.* .. 10,156
725 Shoney's Inc.* ..................... 10,242
625 Wendys International, Inc. ......... 9,609
---------
47,783
---------
RETAIL--DEPARTMENT STORES (1.0%)
275 Dillard Department Stores (Class A) 9,213
250 May Department Stores Co. .......... 9,906
300 Mercantile Stores, Inc. ............ 9,788
236 Nordstrom, Inc. .................... 10,325
200 Penney (J.C.) Co., Inc. ............ 9,900
---------
49,132
---------
RETAIL--DRUG STORES (0.6%)
267 Longs Drug Stores Corp. ............ 9,245
500 Rite Aid Corp. ..................... 10,125
275 Walgreen Co. ....................... 10,073
---------
29,443
---------
RETAIL--FOOD CHAINS (1.3%)
380 Albertson's, Inc. .................. 10,260
400 American Stores Co. ................ 10,350
1,200 Bruno's, Inc. ...................... 9,300
450 Giant Foods, Inc. (Class A) ....... 9,000
450 Great Atlantic & Pacific Tea, Inc. 9,057
400 Kroger Co.* ........................ 10,050
225 Winn-Dixie Stores, Inc. ............ 10,407
---------
68,424
---------
RETAIL--GENERAL MERCHANDISE (0.7%)
125 Dayton-Hudson Corp. ................ 10,314
625 K-Mart Corp. ....................... 10,234
200 Sears, Roebuck & Co. ............... 9,450
350 Wal-Mart Stores, Inc. .............. 8,750
---------
38,748
---------
RETAIL--SPECIALTY (2.0%)
375 Blockbuster Entertainment .......... 9,750
500 Circuit City Stores, Inc. .......... 10,939
250 Home Depot, Inc. ................... 10,250
308 Lowe's Co., Inc. ................... 11,089
250 Melville Corp. ..................... 9,281
361 Pep Boys-Manny, Moe & Jack ......... 10,875
700 Price/Costco, Inc.* ................ 10,500
275 Tandy Corp. ........................ 10,278
250 Toys 'R' Us, Inc.* ................. 8,594
600 Woolworth (F.W.) Co. ............... 9,075
---------
100,631
---------

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
RETAIL--SPECIALTY APPAREL (0.8%)
1,000 Charming Shoppes, Inc. ............. $ 9,125
249 Gap, Inc. .......................... 9,588
500 Limited, Inc. ...................... 9,875
525 TJX Companies, Inc. ................ 10,500
----------
39,088
---------
SAVINGS & LOAN ASSOCIATIONS (0.6%)
550 Ahmanson (H.F.) & Co. .............. 10,932
230 Golden West Financial Corp. ....... 9,172
500 Great Western Financial Corp. ..... 9,875
---------
29,979
---------
SHOES (0.9%)
280 Brown Group, Inc. .................. 9,940
1,200 Genesco, Inc.* ..................... 3,900
158 Nike, Inc. (Class B) ............... 9,718
300 Reebok International, Ltd. ......... 10,650
775 Stride Rite Corp. .................. 9,978
---------
44,186
---------
SPECIALITY PRINTING (0.5%)
375 Deluxe Corp. ....................... 9,750
340 Donnelley (R.R.) & Sons Co. ....... 9,989
400 Harland (John H.) Co. .............. 8,200
---------
27,939
---------
SPECIALIZED SERVICES (1.6%)
250 Block (H&R), Inc. .................. 9,750
475 Ecolab, Inc. ....................... 10,450
316 Interpublic Group of Cos., Inc. ... 10,232
2,000 National Educational Corp.* ....... 11,000
374 National Service Industries, Inc. . 10,239
425 Ogden Corp. ........................ 9,456
624 Safety-Kleen Corp. ................. 10,920
375 Service Corp. International ....... 9,891
---------
81,938
---------
STEEL (1.2%)
1,600 Armco, Inc.* ....................... 9,400
475 Bethlehem Steel Corp.* ............. 10,570
275 Inland Steel Industries, Inc.* .... 10,450
146 Nucor Corp. ........................ 10,075
300 USX-U.S. Steel Group ............... 11,250
475 Worthington Industries, Inc. ...... 9,500
---------
61,245
---------
TELECOMMUNICATION--LONG DISTANCE (0.5%)
155 AT&T Corp. ......................... 8,467
425 MCI Communications Corp. ........... 9,616
260 Sprint Corp. ....................... 9,523
---------
27,606
---------
TELECOMMUNICATIONS (0.6%)
575 Comcast Corp. (Class A Special) ... 9,488
200 Motorola, Inc. ..................... 10,600
425 Telecommunications, Inc.* .......... 9,882
---------
29,970
---------
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES--VALUE-ADDED MARKET SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S> <C> <C>
Number of
Shares Value
TEXTILES (1.2%)
1,600 Hartmarx Corp.* ................... $ 9,400
450 Liz Claiborne, Inc. ............... 9,564
700 Oshkosh B' Gosh, Inc. (Class A) .. 9,975
325 Russell Corp. ..................... 9,831
300 Springs Industries, Inc. .......... 10,538
200 V.F. Corp. ........................ 10,250
----------
59,558
----------
TOBACCO (0.5%)
275 American Brands, Inc. ............. 9,385
170 Philip Morris Cos., Inc. .......... 9,350
318 UST, Inc. ......................... 9,183
----------
27,918
----------
TOYS (0.4%)
325 Hasbro, Inc. ...................... 9,832
400 Mattel, Inc. ...................... 11,050
----------
20,882
----------
TRANSPORTATION--MISCELLANEOUS (0.6%)
125 Federal Express Corp.* ............ 8,313
360 Pittston Co. ...................... 10,800
375 Ryder System, Inc. ................ 9,797
----------
28,910
----------
TRUCKERS (0.5%)
400 Consolidated Freightways, Inc.* .. 9,150
142 Roadway Service, Inc. ............. 8,592
550 Yellow Corp. ...................... 10,381
----------
28,123
----------
U.S. GOVERNMENT AGENCIES (0.4%)
175 Federal Home Loan Mortgage Corp. .. 10,412
115 Federal National Mortgage
Association ...................... 9,977
----------
20,389
----------
UTILITIES-- ELECTRIC (4.6%)
300 American Electric Power Co., Inc. 9,150
450 Baltimore Gas & Electric Co. ..... 10,294
425 Carolina Power & Light Co. ........ 11,316
450 Central & South West Corp. ........ 10,181
425 Commonwealth Edison Co. ........... 10,094
350 Consolidated Edison of New York,
Inc. ............................. 10,063
325 Detroit Edison Co. ................ 8,572
250 Dominion Resources, Inc. .......... 9,094
275 Duke Power Co. .................... 10,519
375 Entergy Corp. ..................... 9,563
325 FPL Group, Inc. ................... 10,278
300 Houston Industries, Inc. .......... 10,538
625 Niagara Mohawk Power Corp. ........ 10,313
225 Northern States Power Co. ......... 9,620
475 Ohio Edison Co. ................... 9,025
375 Pacific Gas & Electric Co. ........ 9,047

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
570 Pacificorp. ....................... $ 10,118
325 PECO Energy Co. ................... 8,491
425 PSI Resources, Inc. ............... 9,402
325 Public Service Enterprise Group,
Inc. ............................. 9,019
800 SCE Corp. ......................... 10,800
450 Southern Co. ...................... 8,775
300 Texas Utilities Co. ............... 9,862
300 Union Electric Co. ................ 10,350
----------
234,484
----------
UTILITIES-GAS (2.7%)
333 Coastal Corp. ..................... 10,448
250 Consolidated Natural Gas Co. ..... 9,688
450 Eastern Enterprises ............... 10,350
300 Enron Corp. ....................... 9,713
650 ENSERCH Corp. ..................... 10,238
350 NICOR, Inc. ....................... 8,794
1,600 NorAm Energy Corp. ................ 9,600
575 ONEOK, Inc. ....................... 10,638
475 Pacific Enterprises ............... 9,738
500 Panhandle Eastern Corp. ........... 10,250
400 Peoples Energy Corp. .............. 10,250
280 Sonat, Inc. ....................... 9,275
650 Transco Energy, Inc. .............. 9,831
350 Williams Cos., Inc. ............... 11,420
----------
140,233
----------
UTILITIES--TELEPHONE (1.5%)
250 Ameritech Corp. ................... 10,250
170 Bell Atlantic Corp. ............... 9,626
143 BellSouth Corp. ................... 8,938
334 GTE Corp. ......................... 10,605
250 NYNEX Corp. ....................... 9,625
325 Pacific Telesis Group ............. 10,645
200 Southwestern Bell Corp. ........... 8,400
250 U.S. West, Inc. ................... 10,063
----------
78,152
----------
TOTAL COMMON STOCKS (IDENTIFIED
COST $4,847,117) ................. 4,870,917
----------
<CAPTION>
Principal
Amount (in
thousands)
- ------------
<S> <C>
SHORT-TERM INVESTMENT (3.5%)
U.S. GOVERNMENT AGENCY (a) (3.5%)
$180 Federal Home Loan Mortgage
Corp. 4.0% due 8/01/94
(Amortized Cost $180,000) ....... 180,000
-----------
TOTAL INVESTMENTS
(IDENTIFIED COST $5,027,117) (B).... 98.4% 5,050,917
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES .............. 1.6 81,674
----- -----------
NET ASSETS .......................... 100.0% $5,132,591
===== ===========
</TABLE>
- ---------------
* Non-income producing security.
ADR American Depository Receipt.
(a) U.S. Government Agency was purchased on a discount basis. The rate
shown reflects the bond equivalent interest rate.
(b) The aggregate cost for federal income tax purposes is
$5,028,154; the aggregate gross unrealized appreciation is
$312,674 and the aggregate gross unrealized depreciation is
$289,911, resulting in net unrealized appreciation of $22,763.

See Notes to Financial Statements

<PAGE>

DEAN WITTER RETIREMENT SERIES--GLOBAL EQUITY SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
COMMON STOCKS (25.4%)
CANADA (2.0%)
AUTO PARTS
200 Magna International, Inc. .......... $ 8,300
-----------
BANKING
300 Bank of Nova Scotia ................ 5,401
-----------
METALS & MINING
200 American Barrick ................... 4,523
-----------
NATURAL GAS
300 Renaissance Energy Ltd.* ........... 6,405
-----------
NATURAL RESOURCES
300 Noranda, Inc. ...................... 5,292
-----------
PAPER & FOREST PRODUCTS
400 International Forest Products* .... 4,053
-----------
TELECOMMUNICATIONS
100 BCE Mobile Communications, Inc.* .. 2,650
100 BCE, Inc. .......................... 3,310
-----------
5,960
-----------
TOTAL CANADA ....................... 39,934
-----------
FRANCE (1.0%)
BANKING
40 Societe Generale ................... 4,398
-----------
MULTI-INDUSTRY
10 Financiere et Industrielle Gaz et
Eaux ............................. 3,966
-----------
OIL RELATED
30 Esso Ste Anonyme Francaise ......... 5,397
-----------
TELECOMMUNICATIONS
60 Television Francaise ............... 5,822
-----------
TOTAL FRANCE ....................... 19,583
-----------
GERMANY (0.9%)
BANKING
20 Commerzbank AG ..................... 4,253
-----------
BUSINESS SERVICES
20 Rosenthal AG ....................... 3,278
-----------
MULTI-INDUSTRY
10 Preussag AG ........................ 2,873
-----------
OFFICE EQUIPMENT
15 Herlitz AG ......................... 3,563
-----------
RETAIL
10 Kaufhof Holding AG ................. 3,075
-----------
TOTAL GERMANY ...................... 17,042
-----------
HONG KONG (1.0%)
BANKING
300 HSBC Holdings PLC .................. 3,611
-----------
CONGLOMERATES
600 Swire Pacific, Ltd. (A Shares) .... 4,932
-----------

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
REAL ESTATE
1,000 Realty Development Corp. (Class A) $ 4,531
-----------
TRANSPORTATION
2,300 Cathay Pacific Airways, Ltd. ...... 3,721
-----------
UTILITIES--ELECTRIC
1,300 Hong Kong Electric Holdings ....... 3,938
-----------
TOTAL HONG KONG .................... 20,733
-----------
JAPAN (4.9%)
ELECTRONICS
1,000 Hitachi, Ltd. ...................... 9,656
-----------
FINANCE
1,000 Dai-Ichi Kangyo Bank ............... 19,013
-----------
FOODS & BEVERAGES
1,100 House Food Industrial .............. 23,667
-----------
INSURANCE
1,000 Dai-Tokyo Fire & Marine Insurance
Co., Ltd. .......................... 7,906
-----------
MACHINERY
1,000 Komatsu, Ltd. ...................... 9,587
-----------
MULTI-INDUSTRY
1,000 Furukawa Co., Ltd. ................. 6,515
-----------
RETAIL
1,000 Jusco .............................. 23,316
-----------
TOTAL JAPAN ........................ 99,660
-----------
MEXICO (3.7%)
BANKING
1,500 Banacci (C Shares) ................. 10,227
-----------
BEVERAGES--SOFT DRINKS
400 Coca Cola FEMSA (ADR) .............. 12,100
-----------
BUILDING MATERIALS
1,688 Cementos de Mexico, S.A. (B Shares) 12,900
-----------
CONGLOMERATES
1,500 Grupo Carso A2 NVO* ................ 15,550
-----------
FOODS & BEVERAGES
600 Grupo Modelo (C Shares) ............ 12,087
-----------
TELECOMMUNICATIONS
200 Telefonos de Mexico, S.A (ADR) .... 12,150
-----------
TOTAL MEXICO ....................... 75,014
-----------
NETHERLANDS (1.0%)
BANKING
100 ABN-AMRO Holdings .................. 3,331
-----------
INSURANCE
100 Aegon NV ........................... 5,465
100 Fortis Amev NV ..................... 4,219
-----------
9,684
-----------

<PAGE>

DEAN WITTER RETIREMENT SERIES--GLOBAL EQUITY SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- --------------------------------------------------------------

</TABLE>
<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
PUBLISHING
100 Wolters Kluwer ..................... $ 6,376
-----------
TOTAL NETHERLANDS .................. 19,391
-----------
SWITZERLAND (0.8%)
BANKING
10 Swiss Bank Corp. ................... 3,037
-----------
BUILDING MATERIALS
10 Holderbk Financiere ................ 2,605
-----------
HEALTH & PERSONAL CARE
1 Roche Holdings AG .................. 3,960
-----------
HOUSEHOLD PRODUCTS
4 SMH AG (Registered) ................ 2,170
-----------
INSURANCE
4 Zurich Insurance ................... 3,900
-----------
TOTAL SWITZERLAND .................. 15,672
-----------
UNITED KINGDOM (1.5%)
AUTOMOTIVE
1,000 Rolls Royce PLC .................... 2,932
-----------
BANKING
400 National Westminster Bank .......... 2,695
-----------
BUSINESS SERVICES
800 Reuters Holding PLC ................ 5,698
-----------
FOOD PROCESSING
500 Tate & Lyle PLC .................... 3,269
-----------
FOODS & BEVERAGES
400 Grand Metropolitan PLC ............. 2,523
-----------
MULTI-INDUSTRY
800 Hanson Trust PLC ................... 3,185
-----------
RETAIL
400 Boots Co., PLC ..................... 3,227
1,000 Next PLC ........................... 3,904
-----------
7,131
-----------
RETAIL--MERCHANDISING
1,000 Tesco .............................. 3,544
-----------
TOTAL UNLTED KINGDOM ............... 30,977
-----------
UNITED STATES (8.6%)
AUTOMOTIVE
200 Chrysler Corp. ..................... 9,625
100 General Motors Corp. ............... 5,138
-----------
14,763
-----------
BANKING
200 Citicorp ........................... 8,250
100 First Interstate Bancorp ........... 7,513
-----------
15,763
-----------
BUILDING & CONSTRUCTION
150 Heilig-Meyers ...................... 3,975
-----------

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
CHEMICALS
100 Monsanto Co. ....................... $ 7,688
-----------
COMPUTER SOFTWARE
200 Oracle Systems Corp.* .............. 7,625
200 Sybase, Inc.* ...................... 7,850
-----------
15,475
-----------
ELECTRONIC COMPONENTS
200 Maxim Integrated Products, Inc.* .. 9,650
-----------
ELECTRONICS--SEMICONDUCTORS
200 Motorola, Inc. ..................... 10,600
100 Texas Instruments, Inc. ............ 7,863
-----------
18,463
-----------
FINANCE
100 CUC International* ................. 3,012
-----------
FOREST PRODUCTS
100 Georgia Pacific Corp. .............. 6,450
-----------
HEALTH EQUIPMENT & SERVICES
200 United Healthcare Corp. ............ 9,100
-----------
HOSPITAL MANAGEMENT
300 Genesis Health Ventures, Inc.* .... 7,350
-----------
HOTELS
200 Hospitality Franchise Systems,
Inc.* .............................. 5,350
150 Promus Cos., Inc.* ................. 4,350
-----------
9,700
-----------
INSURANCE
75 American International Group, Inc. 7,068
-----------
MACHINERY
100 Caterpillar, Inc. .................. 10,838
-----------
MEDIA GROUP
200 Capital Cities/ABC ................. 15,450
-----------
RAILROAD EQUIPMENT
150 Trinity Industries, Inc. ........... 4,780
-----------
TELECOMMUNICATIONS
200 Newbridge Networks Corp.* .......... 8,375
-----------
TRANSPORTATION--MISCELLANEOUS
100 Federal Express Corp.* ............. 6,650
-----------
TOTAL UNITED STATES ................ 174,550
-----------
TOTAL COMMON STOCKS (IDENTIFIED COST $509,282) 512,556
-----------
<CAPTION>
Principal
Amount (in
thousands)
- ------------
<S> <C>
SHORT-TERM INVESTMENTS (69.2%)
U.S. GOVERNMENT AGENCIES (a)(69.2%)
$85 Federal Farm Credit Bank 4.411%
due 8/05/94 ................... 84,958
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES--GLOBAL EQUITY SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Principal
Amount (in
thousands) Value
- ------------ ---------
<S> <C> <C>
$200 Federal Home Loan Banks 4.367% due
8/08/94.......................... $ 199,831
Federal National Mortgage Association
530 4.268% due 8/31/94............... 528,123
Federal National Mortgage Association
590 4.475% due 9/30/94............... 585,613
----------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $1,398,546)..... 1,398,525
----------
TOTAL INVESTMENTS
(IDENTIFIED COST
$1,907,828) (B) ................... 94.6% $1,911,081
CASH AND OTHER ASSETS
IN EXCESS OF LIABILlTlES ........... 5.4 108,944
----- ----------
NET ASSETS .......................... 100.0% $2,020,025
===== ==========
</TABLE>
- ---------------
* Non-income producing security.

ADR American Depository Receipt.

(a) U.S. Government Agencies were purchased on a discount basis. The
interest rates shown have been adjusted to reflect a bond equivalent
yield.

(b) The aggregate cost for federal income tax purposes is $1,907,828; the
aggregate gross unrealized appreciation is $41,317 and the aggregate
gross unrealized depreciation is $38,064, resulting in net unrealized
appreciation of $3,253.

See Notes to Financial Statements

<PAGE>

DEAN WITTER RETIREMENT SERIES--GLOBAL EQUITY SERIES
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION July 31, 1994
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------- ------------ ------------
<S> <C> <C>
Auto Parts ..................... $ 8,300 0.4%
Automotive ..................... 17,695 0.9
Banking ........................ 52,716 2.6
Beverages--Soft Drinks ......... 12,100 0.6
Building & Construction ........ 3,975 0.2
Building Materials ............. 15,505 0.8
Business Services .............. 8,976 0.4
Chemicals ...................... 7,688 0.4
Computer Software .............. 15,475 0.8
Conglomerates .................. 20,482 1.0
Electronic Components .......... 9,650 0.5
Electronics .................... 9,656 0.5
Electronics--Semiconductors ... 18,463 0.9
Finance ........................ 22,025 1.1
Food Processing ................ 3,269 0.2
Foods & Beverages .............. 38,277 1.9
Forest Products ................ 6,450 0.3
Health Equipment & Services ... 9,100 0.4
Health & Personal Care ......... 3,960 0.2
Hospital Management ............ 7,350 0.4
Hotels ......................... 9,700 0.5
Household Products ............. 2,170 0.1
Insurance ...................... 28,558 1.4
Machinery ...................... 20,425 1.0
Media Group .................... 15,450 0.7
Metals & Mining ................ 4,523 0.2
Multi-Industry ................. 16,539 0.8
Natural Gas .................... 6,405 0.3
Natural Resources .............. 5,292 0.3
Office Equipment ............... 3,563 0.2
Oil Related .................... 5,397 0.3
Paper & Forest Products ........ 4,053 0.2
Publishing ..................... 6,376 0.3
Railroad Equipment ............. 4,780 0.2
Real Estate .................... 4,531 0.2
Retail ......................... 33,522 1.7
Retail--Merchandising .......... 3,544 0.2
Telecommunications ............. 32,307 1.6
Transportation ................. 3,721 0.2
Transportation--Miscellaneous .. 6,650 0.3
Utilities--Electric ............ 3,938 0.2
U.S. Government Agencies ...... 1,398,525 69.2
------------ ------------
$1,911,081 94.6%
============ ============
<CAPTION>
SUMMARY OF INVESTMENTS BY TYPE July 31, 1994
- -----------------------------------------------------------------------------
TYPE OF INVESTMENT
- -----------------------
<S> <C> <C>
Common Stocks .......... $ 512,556 25.4%
Short-Term Investments 1,398,525 69.2
------------ -------
$1,911,081 94.6%
============ =======
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES--STRATEGIST SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
COMMON STOCKS (43.5%)
AIRCRAFT & AEROSPACE (1.3%)
220 Boeing Co. ....................... $ 9,818
105 Lockheed Corp. ................... 6,615
--------
16,433
--------
AIRLINES (0.6%)
130 AMR Corp.-DEL* ................... 7,443
--------
ALUMINUM (1.1%)
240 Alumax Inc.* ..................... 7,380
130 Reynolds Metals Co. .............. 6,549
--------
13,929
--------
AUTOMOBILES (2.1%)
154 Daimler Benz AKT (ADR) ........... 7,854
210 Ford Motor Co. ................... 6,668
110 General Motors Corp. ............. 5,651
420 Nissan Motor Co., Ltd. (ADR)* ... 6,405
--------
26,578
--------
BANKS--MONEY CENTER (0.5%)
180 Chemical Banking Corp. ........... 6,907
--------
BANKS--REGIONAL (0.6%)
50 Wells Fargo & Co. ................ 7,768
--------
BEVERAGES--SOFT DRINKS (0.4%)
180 PepsiCo, Inc. .................... 5,490
---------
BIOTECHNOLOGY (0.6%)
150 Amgen, Inc.* ..................... 7,425
--------
BUILDING & CONSTRUCTION (0.4%)
190 Grupo Tribasa S.A. (ADR)* ........ 5,605
--------
CABLE/CELLULAR (0.4%)
100 Comcast Corp. (Class A Special) . 1,650
200 Comcast Corp. (Class A) .......... 3,225
--------
4,875
--------
CHEMICALS (0.6%)
110 Dow Chemical Co. (The) ........... 7,603
--------
CHEMICALS--SPECIALTY (1.3%)
245 Georgia Gulf Corp.* .............. 8,789
370 Praxair, Inc. .................... 8,325
--------
17,114
--------
COMPUTER SOFTWARE (1.1%)
100 BMC Software Inc.* ............... 4,825
170 Microsoft Corporation* ........... 8,755
--------
13,580
--------
COMPUTER SOFTWARE SERVICES (0.6%)
210 General Motors Corp. (Class E) .. 7,402
--------
COMPUTERS--SYSTEMS (0.9%)
75 Hewlett-Packard Co. .............. 5,822
245 Sun Microsystems, Inc.* .......... 5,451
--------
11,273
--------

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
CONSUMER PRODUCTS (0.4%)
880 RJR Nabisco Holdings Corp.* ..... $ 5,390
--------
DRUGS (1. 8%)
250 Abbott Laboratories .............. 7,031
200 Johnson & Johnson ................ 9,400
215 Merck & Co., Inc. ................ 6,369
--------
22,800
--------
ELECTRIC EQUIPMENT (1.5%)
110 Emerson Electric Co. ............. 6,683
130 General Electric Co. ............. 6,549
205 Honeywell, Inc. .................. 6,458
--------
19,690
--------
ELECTRONIC & ELECTRICAL EQUIPMENT (0.6%)
120 Sony Corp. (ADR) ................. 7,110
--------
ELECTRONICS-SEMICONDUCTORS (0.5%)
100 Intel Corp. ...................... 5,900
--------
ENTERTAINMENT (0.5%)
160 Polygram N V (ADR) ............... 6,900
--------
ENTERTAINMENT, GAMING & LODGING (0.7%)
200 Circus Circus Enterprises, Inc.* 4,975
145 Promus Cos., Inc.* ............... 4,205
--------
9,180
--------
FINANCIAL SERVICES (0.4%)
160 Travelers, Inc. .................. 5,300
--------
FOODS (0.4%)
155 Campbell Soup Co. ................ 5,735
--------
HEALTH CARE--MISCELLANEOUS (1.0%)
350 Humana, Inc.* .................... 6,563
165 U.S. Healthcare, Inc. ............ 6,229
--------
12,792
--------
HOME BUILDING (1.3%)
440 Castle & Cooke Homes, Inc.* ..... 4,455
150 Centex Corp. ..................... 3,750
430 Hovnanian Enterprises (Class A)* 3,494
360 Toll Brothers, Inc.* ............. 4,320
--------
16,019
--------
HOUSEHOLD PRODUCTS (0.4%)
105 Colgate-Palmolive Co. ............ 5,603
--------
LIFE INSURANCE (0.6%)
240 Providian Corp. .................. 7,410
--------
MACHINERY--CONSTRUCTION & MATERIALS (0.5%)
180 Ingersoll Rand Co. ............... 6,547
--------
MEDIA GROUP (0.4%)
90 Grupo Televisa, S.A. de CV (GDS) 5,040
--------
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES--STRATEGIST SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
MEDICAL PRODUCTS & SUPPLIES (0.5%)
280 Lincare Holdings, Inc.* ........... $ 5,950
--------
METALS (0.6%)
125 Phelps Dodge Corp. ................ 7,718
--------
MULTI-LINE INSURANCE (0.7%)
90 American International Group, Inc. 8,483
--------
NATURAL GAS--DISTRIBUTION (1.0%)
290 Pacific Enterprises ............... 5,945
200 Williams Cos., Inc. ............... 6,525
---------
12,470
--------
OIL & GAS PRODUCTS (0.4%)
290 Cabot Oil & Gas Corp. (Class A
Shares) ........................... 5,619
--------
OIL DRILLING & SERVICES (0.6%)
120 Schlumberger, Ltd. (ADR) .......... 7,080
--------
OIL INTEGRATED--DOMESTIC (0.6%)
400 Occidental Petroleum Corp. ........ 7,950
--------
OIL INTEGRATED--INTERNATIONAL (2.2%)
160 Chevron Corp. ..................... 7,100
100 Exxon Corp. ....................... 5,950
90 Mobil Corp. ....................... 7,549
110 Texaco, Inc. ...................... 6,985
--------
27,584
--------
PAPER & FOREST PRODUCTS (0.4%)
160 Louisiana-Pacific Corp. ........... 5,160
--------
POLLUTION CONTROL (1.0%)
230 Browning-Ferris Industries, Inc. . 7,130
230 WMX Technologies, Inc. ............ 6,699
--------
13,829
--------
PUBLISHING (0.4%)
100 News Corp. Ltd. (ADS) ............. 5,150
--------
RAILROADS (0.5%)
80 CSX Corp. ......................... 6,210
--------
RETAIL (0.9%)
120 Penney (J.C.) Co., Inc. ........... 5,940
245 Wal-Mart Stores, Inc. ............. 6,125
--------
12,065
--------

<PAGE>

<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
RETAIL--SPECIALTY (1.5%)
150 Gap, Inc. ......................... $ 5,775
220 Lowe's Companies .................. 7,920
770 Pier 1 Imports, Inc. .............. 5,679
--------
19,374
--------
STEEL & IRON (0.7%)
430 National Steel Corp. (Class B)* .. 8,545
--------
TELECOMMUNICATIONS (4.3%)
410 Airtouch Communications* .......... 10,660
130 AT&T Corp. ........................ 7,101
50 Compania de Telefonos de Chile
(ADR) ............................. 4,019
265 MCI Communications Corp. .......... 5,996
175 NYNEX Corp. ....................... 6,738
130 Pacific Telesis Group ............. 4,258
120 Telecommunications Corp.
New Zealand Ltd. (ADR) ........... 5,430
140 Telefonica Espana, S.A. (ADR) .... 5,968
90 Telefonos de Mexico, S.A.
(Series L) (ADR) ................. 5,468
--------
55,638
--------
TELECOMMUNICATIONS EQUIPMENT (0.9%)
200 MFS Communications Co., Inc.* .... 5,850
125 Newbridge Networks Corp.* ......... 5,234
--------
11,084
--------
TOBACCO (0.5%)
110 Philip Morris Cos., Inc. .......... 6,050
--------
TRANSPORTATION (0.4%)
300 Kirby Corp.* ...................... 4,800
--------
TRANSPORTATION--SHIPPING (0.5%)
90 Federal Express Corp.* ............ 5,985
--------
TRUCKERS (0.8%)
160 Roadway Service, Inc. ............. 9,680
--------
U.S. GOVERNMENT AGENCY (0.6%)
85 Federal National Mortgage
Association ...................... 7,374
--------
TOTAL COMMON STOCKS
(IDENTIFIED COST $583,323) ........ 554,639
--------
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES --STRATEGIST SERIES
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
CORPORATE BONDS (6.3%)
AUTOMOTIVE FINANCE (1.3%)
$ 15 Ford Capital BV .............. 9.375 % 5/15/01 $ 16,434
-----------
BROADCAST MEDIA (1.4%)
20 News American Holdings, Inc. . 8.25 8/10/18 18,251
-----------
PAPER & FOREST PRODUCTS (1.6%)
20 Georgia Pacific Corp. ........ 9.125 7/01/22 20,242
-----------
STEEL & IRON (0.7%)
10 Pohang Iron & Steel, Ltd. ... 7.50 8/01/02 9,533
-----------
UTILITIES--ELECTRIC (1.3%)
20 Long Island Lighting Co. .... 6.25 7/15/01 16,664
-----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $83,342) ..... 81,124
-----------
U.S. GOVERNMENT OBLLGATIONS (15.0%)
50 U.S. Treasury Bond ........... 7.125 2/15/23 48,266
75 U.S. Treasury Bond ........... 6.25 8/15/23 64,840
25 U.S. Treasury Note ........... 7.875 11/15/99 26,234
50 U.S. Treasury Note ........... 7.50 5/15/02 51,515
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS (IDENTIFIED COST
$212,187) ............................................ 190,855
-----------
SHORT-TERM INVESTMENTS (33.9%)
U.S. GOVERNMENT AGENCIES (a) (33.9%)
85 Federal Home Loan Mortgage Corp. 4.25% due 8/24/94 ... 84,769
290 Federal Home Loan Mortgage Corp. 4.26% due 8/31/94 .. 288,970
60 Federal National Mortgage Association 4.44% due 9/30/94 59,555
-----------
TOTAL SHORT-TERM INVESTMENTS (AMORTIZED COST $433,294) 433,294
-----------
TOTAL INVESTMENTS (IDENTIFIED COST $1,312,146)(B) 98.7% 1,259,912
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 1.3 16,548
----- -----------
NET ASSETS 100.0% $1,276,460
===== ===========

</TABLE>
- ---------------
* Non-income producing security.
ADR American Depository Receipt.
ADS American Depository Shares.
GDS Global Depository Shares.
(a) U.S. Government Agencies were purchased on a discount basis.
The rate shown reflects the bond equivalent interest rate.
(b) The aggregate cost for federal income tax purposes is
$1,312,146; the aggregate gross unrealized appreciation is
$35,601 and the aggregate gross unrealized depreciation is
$87,835, resulting in net unrealized depreciation of $52,234.

See Notes to Financial Statements

<PAGE>

DEAN WITTER RETIREMENT SERIES
STATEMENT OF ASSETS AND LIABILITIES July 31, 1994
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
INTERMEDIATE
U.S. GOVERNMENT U.S. GOVERNMENT INCOME
LIQUID ASSET MONEY MARKET SECURITIES SECURITIES
SERIES SERIES SERIES SERIES
------------ --------------- --------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value* (Note 1) .... $1,571,373 $554,520 $2,889,734 $441,284
Cash .............................................. 8,887 628 6,057 29,320
Receivable for:
Investments sold (Note 3) ........................ -- -- -- --
Shares of beneficial interest sold ............... 14,924 -- 58,113 6
Dividends ........................................ -- -- -- --
Interest ......................................... -- -- 7,151 6,516
Foreign withholding taxes reclaimed .............. -- -- -- --
Deferred organizational expenses (Note 1) ........ 9,310 9,467 9,377 9,407
Other receivable .................................. -- -- -- 300
------------ --------------- --------------- --------------
TOTAL ASSETS .................................. 1,604,494 564,615 2,970,432 486,833
------------ --------------- --------------- --------------
LIABILITIES:
Payable for:
Investments purchased (Note 3) ................... -- -- -- 14,733
Shares of beneficial interest repurchased ....... 70,814 340 6,143 2,073
Dividends to shareholders ........................ -- -- 887 157
Organizational expenses payable (Note 1) ......... 9,310 9,467 9,377 9,407
------------ --------------- --------------- --------------
TOTAL LIABILITIES ............................. 80,124 9,807 16,407 26,370
------------ --------------- --------------- --------------
NET ASSETS:
Paid-in-capital ................................... 1,524,366 554,808 3,079,198 476,521
Accumulated undistributed net investment income .. 4 -- 887 162
Accumulated undistributed net realized gain (loss) -- -- (4) (910)
Net unrealized appreciation (depreciation) ....... -- -- (126,056) (15,310)
------------ --------------- --------------- --------------
NET ASSETS .................................... $1,524,370 $554,808 $2,954,025 $460,463
============ =============== =============== ==============
*IDENTIFIED COST .................................. $1,571,373 $554,520 $3,015,790 $456,594
============ =============== =============== ==============
SHARES OF BENEFICIAL INTEREST OUTSTANDING ........ 1,524,366 554,808 309,053 48,919
============ =============== =============== ==============
NET ASSET VALUE PER SHARE
(unlimited authorized shares of $.01 par value) . $1.00 $1.00 $9.56 $9.41
============ =============== =============== ==============

</TABLE>

See Notes to Financial Statements

<PAGE>

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

<TABLE>
<CAPTION>
CAPITAL GLOBAL
AMERICAN GROWTH DIVIDEND UTILITIES VALUE-ADDED EQUITY STRATEGIST
VALUE SERIES SERIES GROWTH SERIES SERIES MARKET SERIES SERIES SERIES
- ------------ ---------- ------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$6,606,394 $209,149 $12,593,491 $3,895,889 $5,050,917 $1,911,081 $1,259,912
26,859 7,131 99,313 4,387 835 18,746 9,205

180,347 1,508 45,073 -- 96,754 -- --
154,530 -- 225,315 60,852 52,486 100,128 9,676
6,124 112 20,922 12,266 5,828 333 1,086
-- -- -- -- -- -- 6,689
-- -- -- -- -- 333 29
9,557 9,564 9,370 9,377 9,557 9,377 9,377
-- -- -- -- -- -- --
- ------------ ---------- ------------- ------------ ------------- ------------ ------------
6,983,811 227,464 12,993,484 3,982,771 5,216,377 2,039,998 1,295,974
- ------------ ---------- ------------- ------------ ------------- ------------ ------------

97,377 3,188 153,946 107,962 52,168 -- --
36,182 -- 8,749 5,850 22,061 10,596 10,137
-- -- -- -- -- -- --
9,557 9,564 9,370 9,377 9,557 9,377 9,377
- ------------ ---------- ------------- ------------ ------------- ------------ ------------
143,116 12,752 172,065 123,189 83,786 19,973 19,514
- ------------ ---------- ------------- ------------ ------------- ------------ ------------

7,120,477 220,444 12,772,188 3,931,350 4,998,958 1,999,660 1,307,350
47,154 1,893 95,171 29,677 67,985 21,656 21,430
(397,532) (2,770) 137,822 1,413 41,848 (4,566) (86)
70,596 (4,855) (183,762) (102,858) 23,800 3,275 (52,234)
- ------------ ---------- ------------- ------------ ------------- ------------ ------------
$6,840,695 $214,712 $12,821,419 $3,859,582 $5,132,591 $2,020,025 $1,276,460
============ ========== ============= ============ ============= ============ ============
$6,535,798 $214,004 $12,777,253 $3,998,747 $5,027,117 $1,907,828 $1,312,146
============ ========== ============= ============ ============= ============ ============
689,073 22,794 1,163,962 370,476 474,963 189,640 131,252
============ ========== ============= ============ ============= ============ ============

$9.93 $9.42 $11.02 $10.42 $10.81 $10.65 $9.73
============ ========== ============= ============ ============= ============ ============
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES
STATEMENT OF OPERATIONS For the year ended July 31, 1994
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
INTERMEDIATE
LIQUID U.S. GOVERNMENT U.S. GOVERNMENT INCOME
ASSET MONEY MARKET SECURITIES SECURITIES
SERIES SERIES SERIES SERIES
---------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME
Interest .................................... $ 42,583 $ 19,117 $ 104,510 $ 16,488
Dividends ................................... -- -- -- --
---------- --------------- --------------- --------------
TOTAL INCOME .............................. 42,583 19,117 104,510 16,488
---------- --------------- --------------- --------------
EXPENSES
Investment management fee (Note 2) ......... 6,107 2,882 15,165 1,745
Transfer agent fees and expenses (Note 3) .. 1,597 815 2,816 478
Shareholder reports and notices ............. 5,109 5,019 5,109 5,075
Professional fees ........................... 21,178 21,178 21,178 17,121
Registration fees ........................... 13,666 13,831 19,995 16,310
Custodian fees .............................. 369 270 2,484 130
Organizational expenses (Note 1) ............ 2,727 2,727 2,727 2,727
Other ....................................... 1,235 1,182 1,320 1,324
---------- --------------- --------------- --------------
Total Expenses before Amounts Waived/
Assumed ................................. 51,988 47,904 70,794 44,910
Less: Amounts Waived/Assumed (Note 2) ...... (51,988) (47,904) (70,794) (44,910)
---------- --------------- --------------- --------------
Total Expenses after Amounts Waived/
Other Expenses Assumed ................... -- -- -- --
---------- --------------- --------------- --------------
NET INVESTMENT INCOME ...................... 42,583 19,117 104,510 16,488
---------- --------------- --------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
(NOTE 1):
Net realized gain (loss) on:
Investments ................................ -- -- (3) (910)
Foreign exchange transactions .............. -- -- -- --
---------- --------------- --------------- --------------
-- -- (3) (910)
---------- --------------- --------------- --------------
Net change in unrealized appreciation
(depreciation) on:
Investments ................................ -- -- (131,815) (15,055)
Translation of other assets and liabilities
denominated in foreign currencies ........ -- -- -- --
---------- --------------- --------------- --------------
-- -- (131,815) (15,055)
---------- --------------- --------------- --------------
NET GAIN (LOSS) ............................ -- -- (131,818) (15,965)
---------- --------------- --------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................ $ 42,583 $ 19,117 $ (27,308) $ 523
========== =============== =============== ==============
</TABLE>
- ---------------
* Net of $20, $1,481, $870, $201, $430, $70 in foreign withholding tax,
respectively.

See Notes to Financial Statements

<PAGE>

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

<TABLE>
<CAPTION>
CAPITAL DIVIDEND GLOBAL
AMERICAN GROWTH GROWTH UTILITIES VALUE-ADDED EQUITY STRATEGIST
VALUE SERIES SERIES SERIES SERIES MARKET SERIES SERIES SERIES
- ------------ ---------- ----------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 24,980 $ 16 $ 5,024 $ 10,465 $ 11,589 $ 16,304 $ 18,161
22,293* 2,637 231,162* 85,500* 82,410* 6,504* 10,635*
- ------------ ---------- ----------- ------------ ------------- ---------- ------------
47,273 2,653 236,186 95,965 93,999 22,808 28,796
- ------------ ---------- ----------- ------------ ------------- ---------- ------------

23,785 1,488 53,781 17,297 18,501 9,462 7,584
6,831 1,493 8,824 3,088 1,327 3,185 1,917
5,075 5,025 5,075 4,985 4,985 5,073 4,985
16,121 16,227 16,121 17,121 16,121 18,121 17,121
18,893 16,588 20,123 17,184 18,060 17,117 16,773
947 14 460 349 58 196 104
2,727 2,727 2,727 2,727 2,727 2,727 2,727
1,305 1,099 1,460 1,335 6,120 1,223 1,293
- ------------ ---------- ----------- ------------ ------------- ---------- ------------

75,684 44,661 108,571 64,086 67,899 57,104 52,504
(75,684) (44,661) (108,571) (64,086) (67,899) (57,104) (52,504)
- ------------ ---------- ----------- ------------ ------------- ---------- ------------

-- -- -- -- -- -- --
- ------------ ---------- ----------- ------------ ------------- ---------- ------------
47,273 2,653 236,186 95,965 93,999 22,808 28,796
- ------------ ---------- ----------- ------------ ------------- ---------- ------------

(395,854) (2,073) 139,230 1,413 41,849 (4,566) 9,623
-- -- -- -- -- (23) --
- ------------ ---------- ----------- ------------ ------------- ---------- ------------
(395,854) (2,073) 139,230 1,413 41,849 (4,589) 9,623
- ------------ ---------- ----------- ------------ ------------- ---------- ------------

66,521 8,318 (222,761) (204,664) 17,319 5,123 (51,073)
-- -- -- -- -- 22 --
- ------------ ---------- ----------- ------------ ------------- ---------- ------------
66,521 8,318 (222,761) (204,664) 17,319 5,145 (51,073)
- ------------ ---------- ----------- ------------ ------------- ---------- ------------
(329,333) 6,245 (83,531) (203,251) 59,168 556 (41,450)
- ------------ ---------- ----------- ------------ ------------- ---------- ------------

$(282,060) $ 8,898 $ 152,655 $(107,286) $153,167 $ 23,364 $(12,654)
============ ========== =========== ============ ============= ========== ============
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------

For the year ended July 31, 1994 and the period ended July 31, 1993

<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY
LIQUID ASSET SERIES MARKET SERIES
---------------------------- -------------------------
1994 1993 (1) 1994 1993 (2)
------------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ............................... $ 42,583 $ 32,878 $ 19,117 $ 506
Net realized gain (loss) ............................ -- 182 -- --
Net change in unrealized appreciation (depreciation) -- -- -- --
------------- ------------- ------------- ----------
Net increase (decrease) in net assets resulting
from operations .................................. 42,583 33,060 19,117 506
------------- ------------- ------------- ----------
Dividends and distributions to shareholders from:
Net investment income ............................... (42,579) (32,878) (19,117) (506)
Net realized gain ................................... -- (182) -- --
------------- ------------- ------------- ----------
Total dividends and distributions ................. (42,579) (33,060) (19,117) (506)
------------- ------------- ------------- ----------
Transactions in shares of beneficial interest:
Net proceeds from sales ............................. 3,665,368 3,988,705 2,044,990 24,839
Reinvestment of dividends and distributions ........ 42,578 33,060 19,120 506
Cost of shares repurchased .......................... (3,264,711) (3,040,634) (1,634,603) (44)
------------- ------------- ------------- ----------
Net increase in net assets from
transactions in shares of beneficial interest ... 443,235 981,131 429,507 25,301
------------- ------------- ------------- ----------
Total increase .................................... 443,239 981,131 429,507 25,301
NET ASSETS:
Beginning of period .................................. 1,081,131 100,000 125,301 100,000
------------- ------------- ------------- ----------
END OF PERIOD ........................................ $ 1,524,370 $ 1,081,131 $ 554,808 $125,301
============= ============= ============= ==========
Undistributed Net Investment Income .................. $ 4 $ -- $ -- $ --
============= ============= ============= ==========
SHARES ISSUED AND REPURCHASED:
Sold ................................................. 3,665,368 3,988,705 2,044,990 24,839
Issued in reinvestment of dividends and distributions 42,578 33,060 19,120 506
Repurchased .......................................... (3,264,711) (3,040,634) (1,634,603) (44)
------------- ------------- ------------- ----------
Net increase ......................................... 443,235 981,131 429,507 25,301
============= ============= ============= ==========
</TABLE>
- ---------------
Commencement of operations:
(1) December 30, 1992
(2) January 20, 1993
(3) January 8, 1993
(4) January 12, 1993
(5) January 7, 1993
(6) February 1, 1993
(7) February 2, 1993

See Notes to Financial Statements

<PAGE>

- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES INTERMEDIATE INCOME
SERIES(3) SECURITIES SERIES AMERICAN VALUE SERIES
- -------------------------- ---------------------- -------------------------
1994 1993 (3) 1994 1993 (4) 1994 1993 (6)
- ------------ ------------ ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
$ 104,510 $ 27,481 $ 16,488 $ 2,948 $ 47,273 $ 1,821
(3) -- (910) -- (395,854) 1,962
(131,815) 5,759 (15,055) (255) 66,521 4,075
- ------------ ------------ ---------- ---------- ------------ -----------

(27,308) 33,240 523 2,693 (282,060) 7,858
- ------------ ------------ ---------- ---------- ------------ -----------

(103,806) (27,298) (16,354) (2,920) (1,940) --
-- -- -- -- (3,640) --
- ------------ ------------ ---------- ---------- ------------ -----------
(103,806) (27,298) (16,354) (2,920) (5,580) --
- ------------ ------------ ---------- ---------- ------------ -----------

1,881,846 1,711,084 342,781 79,271 7,750,006 557,136
94,465 24,035 16,235 2,864 5,505
(646,720) (85,513) (64,630) -- (935,273) (356,897)
- ------------ ------------ ---------- ---------- ------------ -----------

1,329,591 1,649,606 294,386 82,135 6,820,238 200,239
- ------------ ------------ ---------- ---------- ------------ -----------
1,198,477 1,655,548 278,555 81,908 6,532,598 208,097

1,755,548 100,000 181,908 100,000 308,097 100,000
- ------------ ------------ ---------- ---------- ------------ -----------
$2,954,025 $1,755,548 $460,463 $181,908 $6,840,695 $ 308,097
============ ============ ========== ========== ============ ===========
$ 887 $ 183 $ 162 $ 28 $ 47,154 $ 1,821
============ ============ ========== ========== ============ ===========

191,048 170,690 35,727 7,937 749,123 56,269
9,284 2,391 1,683 287 527
(65,859) (8,501) (6,715) -- (91,227) (35,619)
- ------------ ------------ ---------- ---------- ------------ -----------
134,473 164,580 30,695 8,224 658,423 20,650
============ ============ ========== ========== ============ ===========
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------

For the year ended July 31, 1994 and the period ended July 31, 1993

<TABLE>
<CAPTION>
CAPITAL GROWTH SERIES DIVIDEND GROWTH SERIES
---------------------- ---------------------------
1994 1993 (7) 1994 1993 (5)
---------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss) ........................ $ 2,653 $ (292) $ 236,186 $ 25,278
Net realized gain (loss) ............................ (2,073) (697) 139,230 4,082
Net change in unrealized appreciation
(depreciation) ..................................... 8,318 (13,173) (222,761) 38,999
---------- ---------- ------------- ------------
Net increase (decrease) in net assets resulting
from operations ................................... 8,898 (14,162) 152,655 68,359
---------- ---------- ------------- ------------
Dividends and distributions to shareholders from:
Net investment income ............................... (760) -- (148,288) (18,005)
Net realized gain ................................... -- -- (5,490) --
---------- ---------- ------------- ------------
Total dividends and distributions .................. (760) -- (153,778) (18,005)
---------- ---------- ------------- ------------
Transactions in shares of beneficial interest:
Net proceeds from sales ............................ 83,346 48,774 11,474,602 2,339,105
Reinvestment of dividends and distributions ....... 760 -- 121,365 10,400
Cost of shares repurchased ......................... (12,127) (17) (1,190,364) (82,920)
---------- ---------- ------------- ------------
Net increase in net assets from transactions in
shares of beneficial interest .................... 71,979 48,757 10,405,603 2,266,585
---------- ---------- ------------- ------------
Total increase .................................... 80,117 34,595 10,404,480 2,316,939
NET ASSETS:
Beginning of period .................................. 134,595 100,000 2,416,939 100,000
---------- ---------- ------------- ------------
END OF PERIOD ........................................ $214,712 $134,595 $12,821,419 $2,416,939
========== ========== ============= ============
UNDISTRIBUTED NET INVESTMENT INCOME .................. $ 1,893 $ -- $ 95,171 $ 7,273
========== ========== ============= ============
SHARES ISSUED AND REPURCHASED:
Sold ................................................. 8,842 5,152 1,033,016 224,725
Issued in reinvestment of dividends and distributions 80 -- 11,043 986
Repurchased .......................................... (1,278) (2) (107,999) (7,809)
---------- ---------- ------------- ------------
Net increase ......................................... 7,644 5,150 936,060 217,902
========== ========== ============= ============
</TABLE>
- ---------------
Commencement of operations:
(1) December 30, 1992
(2) January 20, 1993
(3) January 8, 1993
(4) January 12, 1993
(5) January 7, 1993
(6) February 1, 1993
(7) February 2, 1993

See Notes to Financial Statements

<PAGE>

- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE-ADDED MARKET
UTILITIES SERIES SERIES GLOBAL EQUITY SERIES STRATEGIST SERIES
- -------------------------- ------------------------ ------------------------ ------------------------
1994 1993 (3) 1994 1993 (6) 1994 1993 (3) 1994 1993 (5)
- ------------ ------------ ------------ ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 95,965 $ 17,729 $ 93,999 $ 1,895 $ 22,808 $ 2,471 $ 28,796 $ 3,634
1,413 936 41,849 531 (4,589) -- 9,623 (9,709)
(204,664) 101,806 17,319 6,481 5,145 (1,870) (51,073) (1,161)
- ------------ ------------ ------------ ---------- ------------ ---------- ------------ ----------
(107,286) 120,471 153,167 8,907 23,364 601 (12,654) (7,236)
- ------------ ------------ ------------ ---------- ------------ ---------- ------------ ----------

(72,772) (11,245) (26,537) (1,372) (3,600) (11,000) --
(936) -- (532) -- -- -- -- --
- ------------ ------------ ------------ ---------- ------------ ---------- ------------ ----------
(73,708) (11,245) (27,069) (1,372) (3,600) -- (11,000) --
- ------------ ------------ ------------ ---------- ------------ ---------- ------------ ----------

3,572,305 1,125,330 5,098,522 531,581 2,169,351 225,504 1,105,067 460,459
72,501 11,233 26,782 1,372 3,091 -- 10,831 --
(938,613) (11,406) (759,299) -- (494,286) (4,000) (367,178) (1,829)
- ------------ ------------ ------------ ---------- ------------ ---------- ------------ ----------

2,706,193 1,125,157 4,366,005 532,953 1,678,156 221,504 748,720 458,630
- ------------ ------------ ------------ ---------- ------------ ---------- ------------ ----------
2,525,199 1,234,383 4,492,103 540,488 1,697,920 222,105 725,066 451,394
1,334,383 100,000 640,488 100,000 322,105 100,000 551,394 100,000
- ------------ ------------ ------------ ---------- ------------ ---------- ------------ ----------
$3,859,582 $1,334,383 $5,132,591 $640,488 $2,020,025 $322,105 $1,276,460 $551,394
============ ============ ============ ========== ============ ========== ============ ==========
$ 29,677 $ 6,484 $ 67,985 $ 523 $ 21,656 $ 2,471 $ 21,430 $ 3,634
============ ============ ============ ========== ============ ========== ============ ==========

333,775 107,573 480,766 53,703 203,467 22,486 111,898 46,260
6,832 1,039 2,532 140 290 -- 1,082 --
(87,688) (1,055) (72,178) -- (46,206) (397) (37,803) (185)
- ------------ ------------ ------------ ---------- ------------ ---------- ------------ ----------
252,919 107,557 411,120 53,843 157,551 22,089 75,177 46,075
============ ============ ============ ========== ============ ========== ============ ==========
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES
NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------

1. ORGANIZATION AND ACCOUNTING POLICIES--Dean Witter Retirement Series (the
"Fund") is registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company, consisting of eleven separate
Series ("Series"). All of the Series, with the exception of Strategist, are
diversified.

The Fund was organized on May 14, 1992 as a Massachusetts business trust
and each of the Series commenced operations as follows:

<TABLE>
<CAPTION>
COMMENCEMENT OF COMMENCEMENT OF
PORTFOLIO OPERATIONS PORTFOLIO OPERATIONS
- ----------------------------------- --------------------- ---------------------- --------------------
<S> <C> <C> <C>
Liquid Asset ....................... December 30, 1992 Dividend Growth ....... January 7, 1993
U.S. Government Money Market ...... January 20, 1993 Utilities ............. January 8, 1993
U.S. Government Securities ......... January 8, 1993 Value-Added Market ... February 1, 1993
Intermediate Income Securities .... January 12, 1993 Global Equity ......... January 8, 1993
American Value ..................... February 1, 1993 Strategist ............ January 7, 1993
Capital Growth ..................... February 2, 1993
</TABLE>

The following is a summary of significant accounting policies:

A. Valuation of Investments--Liquid Asset and U.S. Government Money Market:
Securities are valued at amortized cost which approximates market value. All
remaining Series: (1) equity securities listed or traded on the New York or
American Stock Exchange or other domestic or foreign stock exchange are
valued at its latest sale price on that exchange prior to the time when
assets are valued (if there were no sales that day, the security is valued at
the latest bid price; in cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated as the primary
market by the Trustees); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, portfolio securities are valued at
their fair value as determined in good faith under procedures established by
and under the general supervision of the Trustees; (4) certain of the Fund's
portfolio securities may be valued by an outside pricing service approved by
the Trustees. The pricing service utilizes a matrix system incorporating
security quality, maturity and coupon as the evaluation model parameters,
and/or research and evaluations by its staff, including review of
broker-dealer market price quotations, in determining what it believes is the
fair valuation of the securities valued by such pricing service; and (5)
short-term debt securities having a maturity date of more than sixty days are
valued on a mark-to-market basis, that is, at prices based on market
quotations for securities of a similar type, yield, quality and maturity,
until sixty days prior to maturity and thereafter at amortized cost.
Short-term securities having a maturity date of sixty days or less at the
time of purchase are valued at amortized cost.

B. Accounting for Investments--Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined on the identified cost method.
Dividend income is recorded on the ex-dividend date except for certain
dividends on foreign securities which are recorded as soon as the Fund is
informed after the ex-dividend date. Interest income is accrued daily except
where collection is not expected. In

<PAGE>

DEAN WITTER RETIREMENT SERIES
NOTES TO FINANCIAL STATEMENTS (continued)
- -----------------------------------------------------------------------------
determining net investment income, Liquid Asset and U.S. Government Money
Market amortizes premiums and discounts; gains and losses realized upon the
sale of such securities are based on their amortized cost. All other Series
do not amortize premiums or accrue discounts on fixed income securities
except original issue discounts which are required for federal income tax
purposes.

C. Foreign Currency Translation--The books and records of Global Equity
are translated into U.S. dollars as follows: (1) the foreign currency market
value of investment securities, other assets and liabilities and forward
contracts are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the
exchange rate prevailing on the respective dates of such transactions. The
resultant exchange gains and losses are included in the Statement of
Operations. Pursuant to U.S. Federal income tax regulations, certain foreign
exchange gains/losses included in realized and unrealized gain/loss are
included in or are a reduction of ordinary income for federal income tax
purposes. The Series does not isolate that portion of the results of
operations arising as a result of changes in the foreign exchange rates from
the changes in the market prices of the securities.

D. Forward Foreign Currency Exchange Contracts--Global Equity is permitted
to enter into forward foreign currency exchange contracts as a hedge against
fluctuations in foreign exchange rates. Forward contracts are valued daily at
the appropriate exchange rates and any resulting unrealized currency gains or
losses are reflected in the respective Series' accounts. The Series records
realized gains or losses on delivery of the currency.

E. Repurchase Agreements--The Fund's custodian takes possession on behalf
of the Fund of the collateral pledged for investments in repurchase
agreements. It is the policy of the Fund to value the underlying collateral
daily on a mark-to-market basis to determine that the value, including
accrued interest, is at least equal to the repurchase price plus accrued
interest. In the event of default of the obligation to repurchase, the Fund
has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation.

F. Federal Income Tax Status--It is the Fund's policy to comply
individually for each Series with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of
its taxable income to its shareholders. Accordingly, no federal income tax
provision is required.

G. Dividends and Distributions to Shareholders--The Fund records dividends
and distributions to its shareholders on the record date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends
and distributions which exceed net investment income and net realized capital
gains for financial reporting purposes but not for tax purposes are reported
as dividends in excess of net investment income or distributions in excess of
net realized capital gains. To the extent they exceed net investment income
and net realized capital gains for tax purposes, they are reported as
distributions of paid-in-capital.

<PAGE>

DEAN WITTER RETIREMENT SERIES
NOTES TO FINANCIAL STATEMENTS (continued)
- -----------------------------------------------------------------------------
H. Expenses--Direct expenses are charged to the respective Series and
general corporate expenses are allocated on the basis of relative net assets.

I. Organizational Expenses--The Fund's Investment Manager paid the
organizational expenses of the Fund in the amount of $150,000 ($13,636
allocated to each of the Series).

2. INVESTMENT MANAGEMENT AGREEMENT--Pursuant to an Investment Management
Agreement, Dean Witter InterCapital Inc. (the "Investment Manager") manages
the Fund's investments. Under the Agreement, the Fund pays its Investment
Manager a monthly management fee, calculated and accrued daily, by applying
the following annual rates to each Series' net assets determined at the close
of each business day: Liquid Asset, U.S. Government Money Market and
Value-Added Market-0.50%; U.S. Government Securities and Intermediate Income
Securities-0.65%; Dividend Growth and Utilities-0.75%; American Value,
Capital Growth and Strategist-0.85%; and Global Equity-1.0%.

The Investment Manager has undertaken to assume all expenses (except for
brokerage fees and a portion of the organizational expenses) for each Series
and waive the compensation provided for in the Agreement until such time as
the pertinent Series has $50 million of net assets or until July 31, 1995.

3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES--Purchases and
sales/prepayments of portfolio securities, excluding short-term investments
(except for Liquid Asset and U.S. Government Money Market), for the year
ended July 31, 1994 were as follows:

<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES OTHER
--------------------------- --------------------------------
SALES/
PURCHASES PREPAYMENTS PURCHASES SALES/MATURITIES
------------ ------------- -------------- ----------------
<S> <C> <C> <C> <C>
Liquid Asset .................. -- -- $128,724,060 $128,256,561
U.S. Government Money Market . -- -- 105,861,108 105,437,985
U.S. Government Securities ... $1,656,760 $651,003 -- --
Intermediate Income Securities 319,074 84,621 88,925 14,238
American Value ................ 226,698 -- 7,950,277 2,961,048
Capital Growth ................ 4,140 -- 88,046 19,491
Dividend Growth ............... -- -- 11,108,420 931,789
Utilities ..................... -- -- 2,584,377 93,608
Value-Added Market ............ -- -- 4,468,329 249,611
Global Equity ................. -- -- 245,158 34,752
Strategist .................... 128,680 -- 639,444 398,375
</TABLE>

Included in the aforementioned Value-Added Market purchases are purchases
of common stock of Dean Witter, Discover & Co., an affiliated issuer, of
$11,035.

<PAGE>

DEAN WITTER RETIREMENT SERIES
NOTES TO FINANCIAL STATEMENTS (continued)
- -----------------------------------------------------------------------------
For the year ended July 31, 1994, the American Value, Capital Growth,
Dividend Growth, Utilities, Global Equity and Strategist Series incurred
brokerage commissions of $8,855, $117, $11,918, $3,855, $91 and $711,
respectively, with Dean Witter Reynolds Inc. ("DWR"), an affiliate of the
Investment Manager, for portfolio transactions executed on behalf of such
Series.

Included in American Value, Capital Growth, Dividend Growth and Utilities
Series' receivables and payables for investments sold and purchased are
$161,597 and $37,100; $1,508 and $0; $45,073 and $58,978; and $0 and $67,150,
respectively, for unsettled trades with DWR at July 31, 1994.

Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Fund's transfer agent.

4. FEDERAL INCOME TAX STATUS--At July 31, 1994, Capital Growth had
approximate net capital loss carryovers of approximately $1,300 available
through July 31, 2002 to be used to offset future capital gains to the extent
provided by regulations. To the extent that these carryover losses are used
to offset future capital gains, it is probable that the gains so offset will
not be distributed to shareholders.

Capital losses incurred after October 31 ("Post-October losses") within
the taxable year are deemed to arise on the first business day of the Series'
next taxable year. The following Series incurred and will elect to defer net
capital losses during such period in fiscal 1994:

<TABLE>
<CAPTION>
TOTAL
----------
<S> <C>
American Value $390,259
Capital Growth 1,471
Utilities ..... 6,244
Global Equity 4,591
</TABLE>

At July 31, 1994, the primary reason(s) for significant temporary book/tax
differences were as follows:

<TABLE>
<CAPTION>
TEMPORARY DIFFERENCES
---------------------------------------
POST-OCTOBER LOSS DEFERRALS FROM
SERIES CAPITAL LOSSES WASH SALES
- ------------------- ------------------ -------------------
<S> <C> <C>
American Value ..... o o
Capital Growth ..... o
Dividend Growth ... o
Utilities .......... o
Global Equity ...... o
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
NET ASSET NET
PERIOD VALUE, INVESTMENT NET REALIZED TOTAL FROM DIVIDENDS DISTRIBUTIONS
ENDED BEGINNING INCOME AND UNREALIZED INVESTMENT TO SHARE- TO SHARE-
JULY 31 OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS HOLDERS HOLDERS
- --------- ----------- ------------ -------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
LIQUID ASSET SERIES (1)
1993 $ 1.00 $ 0.02 -0- $ 0.02 $ (0.02) -0-
1994 1.00 0.03 -0- 0.03 (0.03) -0-
U.S. GOVERNMENT MONEY MARKET SERIES (2)
1993 1.00 -0- -0- -0- -0- -0-
1994 1.00 0.03 -0- 0.03 (0.03) -0-
U.S. GOVERNMENT SECURITIES SERIES (3)
1993 10.00 0.19 $ 0.07 0.26 (0.20) -0-
1994 10.06 0.44 (0.50) (0.06) (0.44) -0-
INTERMEDIATE INCOME SECURITIES SERIES (4)
1993 10.00 0.19 (0.02) 0.17 (0.19) -0-
1994 9.98 0.60 (0.57) 0.60 (0.60) -0-
AMERICAN VALUE SERIES (6)
1993 10.00 0.06 (0.01) 0.05 -0- -0-
1994 10.05 0.03 (0.09) (0.06) (0.02) $ (0.04)
CAPITAL GROWTH SERIES (7)
1993 10.00 (0.02) (1.10) (1.12) -0- -0-
1994 8.88 0.13 0.45 0.58 (0.04) -0-
DIVIDEND GROWTH SERIES (5)
1993 10.00 0.13 0.58 0.71 (0.10) -0-
1994 10.61 0.28 0.37 0.65 (0.23) (0.01)
UTILITIES SERIES (3)
1993 10.00 0.19 1.30 1.49 (0.14) -0-
1994 11.35 0.37 (0.95) (0.58) (0.34) (0.01)
VALUE-ADDED MARKET SERIES (6)
1993 10.00 0.05 0.02 0.07 (0.04) -0-
1994 10.03 0.24 0.65 0.89 (0.11) -0-
GLOBAL EQUITY SERIES (3)
1993 10.00 0.07 (0.03) 0.04 -0- -0-
1994 10.04 0.08 0.58 0.66 (0.05) -0-
STRATEGIST SERIES (5)
1993 10.00 0.06 (0.23) (0.17) -0- -0-
1994 9.83 0.23 (0.21) 0.02 (0.13) -0-
</TABLE>
- ---------------
Commencement of operations:
(1) December 30, 1992
(2) January 20, 1993
(3) January 8, 1993
(4) January 12, 1993
(5) January 7, 1993
(6) February 1, 1993
(7) February 2, 1993
(a) Not annualized.
(b) Annualized.

<PAGE>

DEAN WITTER RETIREMENT SERIES
FINANCIAL HIGHLIGHTS (continued)
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
RATIOS TO
AVERAGE NET ASSETS
------------------------
TOTAL NET ASSETS,
DIVIDENDS NET ASSET TOTAL END OF NET PORTFOLIO
AND VALUE, END INVESTMENT PERIOD INVESTMENT TURNOVER
DISTRIBUTIONS OF PERIOD RETURN (000'S) EXPENSES INCOME (LOSS) RATE
- -------------- ------------ ---------- --------- ----------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ (0.02) $ 1.00 1.77 %(a) $ 1,081 0.14%(b)(c) 3.02 %(b)(c) N/A
(0.03) 1.00 3.48 1,524 -0- (d) 3.49 (d) N/A

-0- 1.00 0.42 (a) 125 2.13 (b)(c) 0.83 (b)(c) N/A
(0.03) 1.00 3.52 555 -0- (d) 3.32 (d) N/A

(0.20) 10.06 2.60 (a) 1,756 0.18 (b)(c) 3.66 (b)(c) -0-
(0.44) 9.56 (0.69 ) 2,954 -0- (d) 4.49 (d) 29

(0.19) 9.98 1.67 (a) 182 1.62 (b)(c) 3.50 (b)(c) -0-
(0.60) 9.41 0.26 460 -0- (d) 6.14 (d) 40

-0- 10.05 0.50 (a) 308 0.74 (b)(c) 1.10 (b)(c) 121
(0.06) 9.93 (0.59 ) 6,841 -0- (d) 1.69 (d) 136

-0- 8.88 (11.20 ) (a) 135 1.97 (b)(c) (0.47 ) (b)(c) 2
(0.04) 9.42 6.57 215 -0- (d) 1.52 (d) 11

(0.10) 10.61 7.11 (a) 2,417 0.16 (b)(c) 2.89 (b)(c) 7
(0.24) 11.02 6.13 12,821 -0- (d) 3.29 (d) 13

(0.14) 11.35 14.98 (a) 1,334 0.30 (b)(c) 3.79 (b)(c) 8
(0.35) 10.42 (5.23 ) 3,860 -0- (d) 4.14 (d) 5

(0.04) 10.03 0.71 (a) 640 0.92 (b)(c) 1.42 (b)(c) 1
(0.11) 10.81 8.89 5,133 -0- (d) 2.53 (d) 8

-0- 10.04 0.40 (a) 322 1.00 (b)(c) 1.77 (b)(c) -0-
(0.05) 10.65 6.54 2,020 -0- (d) 2.41 (d) 8

-0- 9.83 (1.70 ) (a) 551 0.64 (b)(c) 1.67 (b)(c) 26
(0.13) 9.72 0.12 1,276 -0- (d) 3.20 (d) 57
</TABLE>
- ---------------
(c) If the Fund had borne all its expenses that were assumed or waived by the
Investment Manager, the above annualized expense ratio, after application
of the Fund's state expense limitation, and the above annualized net
investment income (loss) ratio would have been 1.30% and 0.53% for the
Liquid Asset Series, 2.50% and (0.95%) for the U.S. Government Money
Market Series, 1.81% and 0.33% for the U.S. Government Securities Series,
2.50% and 1.00% for the Intermediate Income Securities Series, 2.50% and
(.66%) for the American Value Series, 2.50% and (1.01%) for the Capital
Growth Series, 2.50% and 0.61% for the Dividend Growth Series, 2.50% and
1.59% for the Utilities Series, 2.50% and (0.16%) for the Value-Added
Market Series, 2.50% and (0.90%) for the Global Equity Series and 2.50%
and (0.19%) for the Strategist Series.

(d) If the Fund had borne all its expenses that were assumed or waived by the
Investment Manager, the above expense and net investment income ratio to
average net assets, after application of the Fund's expense limitation,
would have been 2.50% and .99% for the Liquid Asset Series, 2.50% and .82%
for the U.S. Government Money Market Series, 2.50% and 1.96% for the U.S.
Government Securities Series, 2.50% and 3.64% for the Intermediate Income
Securities Series, 2.50% and (.81%) for the American Value Series, 2.50%
and (.98%) for the Capital Growth Series, 1.51% and 1.78% for the Dividend
Growth Series, 2.50% and 1.62% for the Utilities Series, 1.82% and .70%
for the Value-Added Market Series, 2.50% and (.09%) for the Global Equity
Series and 2.50% and .70% for the Strategist Series, respectively.

See Notes to Financial Statements

<PAGE>

DEAN WITTER RETIREMENT SERIES
REPORT OF INDEPENDENT ACCOUNTANTS
- -----------------------------------------------------------------------------

To the Shareholders and Trustees of Dean Witter Retirement Series

In our opinion, the accompanying statement of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Liquid Asset
Series, the U.S. Government Money Market Series, the U.S. Government
Securities Series, the Intermediate Income Securities Series, the American
Value Series, the Capital Growth Series, the Dividend Growth Series, the
Utilities Series, the Value-Added Market Series, the Global Equity Series,
and the Strategist Series (constituting Dean Witter Retirement Series,
hereafter referred to as the "Fund") at July 31, 1994 and the results of each
of their operations for the year then ended, the changes in each of their net
assets and the financial highlights for the year then ended and for the
period December 30, 1992 (commencement of operations for the Liquid Asset
Series) or January 7, 1993 (commencement of operations for the Dividend
Growth and Strategist Series) or January 8, 1993 (commencement of operations
for the U.S. Government Securities, Utilities and Global Equity Series) or
January 12, 1993 (commencement of operations for the Intermediate Income
Securities Series) or January 20, 1993 (commencement of operations for the
U.S. Government Money Market Series) or February 1, 1993 (commencement of
operations for the American Value and Value-Added Market Series) or February
2, 1993 (commencement of operations for the Capital Growth Series) through
July 31, 1993, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management, our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at July 31, 1994 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
September 19, 1994

<PAGE>

APPENDIX
- -----------------------------------------------------------------------------

Description of the highest commercial paper, bond and other short-and
long-term rating categories assigned by Standard & Poor's Corporation
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch Investors
Service, Inc. ("Fitch"), Duff and Phelps, Inc. ("Duff"), IBCA Limited and
IBCA Inc. ("IBCA") and Thomson BankWatch, Inc. ("Thomson"):

COMMERCIAL PAPER AND SHORT-TERM RATINGS

The designation A-1 by S&P indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined
to possess overwhelming safety characteristics are denoted with a plus sign
(+) designation. Capacity for timely payment on issues with an A-2
designation is strong. However, the relative degree of safety is not as high
as for issues designated A-1.

The rating Prime-1 (P-1) is the highest commercial paper rating assigned
by Moody's. Issuers of P-1 paper must have a superior capacity for repayment
of short-term promissory obligations and ordinarily will be evidenced by
leading market positions in well established industries, high rates of return
of funds employed, conservative capitalization structures with moderate
reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well established access to a range of financial markets and assured sources
of alternate liquidity. Issues rated Prime-2 (P-2) have a strong capacity for
repayment of short-term promissory obligations. This ordinarily will be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is
maintained.

The rating Fitch-1 (Highest Grade) is the highest commercial paper rating
assigned by Fitch. Paper rated Fitch-1 is regarded as having the strongest
degree of assurance for timely payment. The rating Fitch-2 (Very Good Grade)
is the second highest commercial paper rating assigned by Fitch which
reflects an assurance of timely payment only slightly less in degree than the
strongest issues.

The rating Duff-1 is the highest commercial paper rating assigned by Duff.
Paper rated Duff-1 is regarded as having very high certainty of timely
payment with excellent liquidity factors which are supported by good
fundamental protection factors. Risk factors are minor. Duff applies the
modifiers (+) and (-) to the rating Duff-1 in recognition of significant
quality differences within the highest tier. Paper rated Duff-2 is regarded
as having good certainty of timely payment, good access to capital markets
and sound liquidity factors and company fundamentals. Risk factors are small.

The designation A1 by IBCA indicates that the obligation is supported by a
very strong capacity for timely repayment. Those obligations rated A1+ are
supported by the highest capacity for timely repayment. The designation A2 by
IBCA indicates that the obligation is supported by a strong capacity for
timely repayment, although such capacity may be susceptible to adverse
changes in business, economic, or financial conditions.

The rating TBW-1 is the highest short-term rating assigned by Thomson and
indicates a very high degree of likelihood that principal and interest will
be paid on a timely basis. The rating TBW-2 by Thomson is its second highest
rating; while the degree of safety regarding timely repayment of principal
and interest is strong, the relative degree of safety is not as high as for
issues rated TBW-1.

BOND AND LONG-TERM RATINGS

Bonds rated AAA are considered by S&P to be the highest grade obligations
and possess an extremely strong capacity to pay interest and repay principal.
Bonds rated AA by S&P are judged by S&P to have a very strong capacity to pay
interest and repay principal, and differ only in small degrees from issues
rated AAA.

<PAGE>

Bonds which are rated Aaa by Moody's are judged to be of the best quality.
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. Aa bonds are rated lower than Aaa bonds because margins
of protection may not be as large or fluctuations of protective elements may
be of greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa rated bonds. Moody's
applies numerical modifiers 1, 2 and 3 in the Aa rating category. The
modifier 1 indicates a ranking for the security in the higher end of this
rating category, the modifier 2 indicates a mid-range ranking, and the
modifier 3 indicates a ranking in the lower end of the rating category.

Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade,
broadly marketable, suitable for investment by trustees and fiduciary
institutions and liable to but slight market fluctuation other than through
changes in the money rate. The prime feature of an AAA bond is a showing of
earnings several times or many times interest requirements, with such
stability of applicable earnings that safety is beyond reasonable question
whatever changes occur in conditions. Bonds rated AA by Fitch are judged by
Fitch to be of safety virtually beyond question and are readily salable,
whose merits are not unlike those of the AAA class, but whose margin of
safety is less strikingly broad. The issue may be the obligation of a small
company, strongly secured but influenced as to rating by the lesser financial
power of the enterprise and more local type of market.

Bonds rated AAA by Duff are considered to be of the highest credit quality
with negligible risk factors that are only slightly more than for risk-free
U.S. Treasury debt. Bonds rated AA are judged by Duff to be of high credit
quality with strong protection factors; risk is modest but may vary slightly
from time to time because of economic conditions. Duff applies modifiers of
(+) and (-) to the AA category.

Obligations rated AAA by IBCA have the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions are
unlikely to increase investment risk significantly. Obligations rated AA have
a very low expectation of investment risk. Capacity for timely repayment of
principal and interest is substantial. Adverse changes in business, economic
or financial conditions may increase investment risk albeit not very
significantly.

IBCA also assigns a rating to certain international and U.S. banks. An
IBCA bank rating represents IBCA's current assessment of the strength of the
bank and whether such bank would receive support should it experience
difficulties. In its assessment of a bank, IBCA uses a dual rating system
comprised of Legal Ratings and Individual Ratings. In addition, IBCA assigns
banks Long- and Short-Term Ratings as used in the corporate ratings discussed
above. Legal Ratings, which range in gradation from 1 through 5, address the
question of whether the bank would receive support by central banks or
shareholders if it experienced difficulties, and such ratings are considered
by IBCA to be a prime factor in its assessment of credit risk. Individual
Ratings, which range in gradations from A through E, represent IBCA's
assessment of a bank's economic merits and address the question of how the
bank would be viewed if it were entirely independent and could not rely on
support from state authorities or its owners.

Companies rated A are considered by Thomson to possess an exceptionally
strong balance sheet and earnings record, translating into an excellent
reputation and unquestioned access to their natural money markets; if
weakness or vulnerability exists in any aspect of a company's business, it is
entirely mitigated by the strengths of the organization. Companies rated
A/B-by Thomson are judged by Thomson to be financially very solid with a
favorable track record and no readily apparent weakness; their overall risk
profiles, while low, are not quite as favorable as for companies in the
highest rating category.

<PAGE>

DEAN WITTER RETIREMENT SERIES

PART C OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements

(1) Financial statements and schedules, included
in Prospectus (Part A): Page in
Prospectus

Financial highlights for the period ended July
31, 1993 and for the fiscal year ended
July 31, 1994..................................... 8

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

Portfolio of Investments at July 31, 1994......... 46

Statement of assets and liabilities at
July 31, 1994 .................................... 68

Statement of operations for the fiscal year ended
July 31, 1994 ................................... 70

Statement of changes in net assets for the
period ended July 31, 1993 and the fiscal year
ended July 31, 1994............................... 72

Notes to Financial Statements .................... 76

Financial highlights for the period ended July
31, 1993 and for the fiscal year ended
July 31, 1994..................................... 80

(3) Financial statements included in Part C:

None

(b) Exhibits:

8. - Form of Amended and Restated Transfer Agency and
Services Agreement between Registrant and Dean Witter
Trust Company

9. - Form of Services Agreement between Dean
Witter InterCapital Inc. and Dean Witter Services
Company Inc.

<PAGE>

11. - Consent of Independent Accountants

16. - Schedules for Computation of Performance
Quotations

27. - Financial Data Schedule

Other - Powers of Attorney

All other exhibits previously filed and incorporated
by reference.

Item 25. Persons Controlled by or Under Common Control With
Registrant.

Information relating to the ownership of Dean Witter
InterCapital Inc. and the ownership by Dean Witter InterCapital
Inc. of the voting securities of the Capital Growth Series of the
Registrant appears in Part A (Prospectus) and B (Statement of
Additional Information) of this Post-Effective Amendment Number
Three to the Registration Statement of the Registrant, and is
incorporated herein by reference.

Item 26. Number of Holders of Securities.

(1) (2)
Number of Record Holders
Title of Class at September 8, 1994

Shares of Beneficial Interest 18,239

Item 27. Indemnification

Pursuant to Section 5.3 of the Registrant's Declaration of
Trust and under Section 4.8 of the Registrant's By-Laws, the
indemnification of the Registrant's trustees, officers, employees
and agents is permitted if it is determined that they acted under
the belief that their actions were in or not opposed to the best
interest of the Registrant, and, with respect to any criminal
proceeding, they had reasonable cause to believe their conduct
was not unlawful. In addition, indemnification is permitted only
if it is determined that the actions in question did not render
them liable by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of
reckless disregard of their obligations and duties to the
Registrant. Trustees, officers, employees and agents will be
indemnified for the expense of litigation if it is determined
that they are entitled to indemnification against any liability
established in such litigation. The Registrant may also advance
money for these expenses provided that they give their
undertakings to repay the Registrant unless their conduct is
later determined to permit indemnification.

<PAGE>

Pursuant to Section 5.2 of the Registrant's Declaration of
Trust and paragraph 8 of the Registrant's Investment Management
Agreement, neither the Investment Manager nor any trustee,
officer, employee or agent of the Registrant shall be liable for
any action or failure to act, except in the case of bad faith,
willful misfeasance, gross negligence or reckless disregard of
duties to the Registrant.

Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to
trustees, officers and controlling persons of the Registrant
pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a trustee, officer, or controlling person of the
Registrant in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by
such trustee, officer or controlling person in connection with
the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act, and will be governed by the final
adjudication of such issue.

The Registrant hereby undertakes that it will apply the
indemnification provision of its by-laws in a manner consistent
with Release 11330 of the Securities and Exchange Commission
under the Investment Company Act of 1940, so long as the
interpretation of Sections 17(h) and 17(i) of such Act remains in
effect.

Registrant, in conjunction with the Investment Manager,
Registrant's Trustees, and other registered investment management
companies managed by the Investment Manager, maintains insurance
on behalf of any person who is or was a Trustee, officer,
employee, or agent of Registrant, or who is or was serving at the
request of Registrant as a trustee, director, officer, employee
or agent of another trust or corporation, against any liability
asserted against him and incurred by him or arising out of his
position. However, in no event will Registrant maintain
insurance to indemnify any such person for any act for which
Registrant itself is not permitted to indemnify him.

Item 28. Business and Other Connections of Investment Adviser.

See "The Fund and Its Management" in the Prospectus
regarding the business of the investment adviser. The following
information is given regarding officers of Dean Witter

<PAGE>

InterCapital Inc. The term "Dean Witter Funds" used below refers
to the following Funds: (1) InterCapital Income Securities Inc.,
(2) High Income Advantage Trust, (3) High Income Advantage Trust
II, (4) High Income Advantage Trust III, (5) Municipal Income
Trust, (6) Municipal Income Trust II, (7) Municipal Income Trust
III, (8) Dean Witter Government Income Trust, (9) Municipal
Premium Income Trust, (10) Municipal Income Opportunities Trust,
(11) Municipal Income Opportunities Trust II, (12) Municipal
Income Opportunities Trust III, (13) Prime Income Trust, (14)
InterCapital Insured Municipal Bond Trust, (15) InterCapital
Quality Municipal Income Trust, (16) InterCapital Quality
Municipal Investment Trust, (17) InterCapital Insured Municipal
Income Trust, (18) InterCapital California Insured Municipal
Income Trust, (19) InterCapital Insured Municipal Trust, (20)
InterCapital Quality Municipal Securities, (21) InterCapital New
York Quality Municipal Securities, (22) InterCapital California
Quality Municipal Securities, (23) InterCapital Insured
California Municipal Securities and (24) InterCapital Insured
Municipal Securities, registered closed-end investment companies,
and (1) Dean Witter Short-Term Bond Fund, (2) Dean Witter Tax-
Exempt Securities Trust, (3) Dean Witter Tax-Free Daily Income
Trust, (4) Dean Witter Dividend Growth Securities Inc., (5) Dean
Witter Convertible Securities Trust, (6) Dean Witter Liquid Asset
Fund Inc., (7) Dean Witter Developing Growth Securities Trust,
(8) Dean Witter Retirement Series, (9) Dean Witter Federal
Securities Trust, (10) Dean Witter World Wide Investment Trust,
(11) Dean Witter U.S. Government Securities Trust, (12) Dean
Witter Select Municipal Reinvestment Fund, (13) Dean Witter High
Yield Securities Inc., (14) Dean Witter Intermediate Income
Securities, (15) Dean Witter New York Tax-Free Income Fund, (16)
Dean Witter California Tax-Free Income Fund, (17) Dean Witter
Health Sciences Trust, (18) Dean Witter California Tax-Free Daily
Income Trust, (19) Dean Witter Managed Assets Trust, (20) Dean
Witter American Value Fund, (21) Dean Witter Strategist Fund,
(22) Dean Witter Utilities Fund, (23) Dean Witter World Wide
Income Trust, (24) Dean Witter New York Municipal Money Market
Trust, (25) Dean Witter Capital Growth Securities, (26) Dean
Witter Precious Metals and Minerals Trust, (27) Dean Witter
European Growth Fund Inc., (28) Dean Witter Global Short-Term
Income Fund Inc., (29) Dean Witter Pacific Growth Fund Inc., (30)
Dean Witter Multi-State Municipal Series Trust, (31) Dean Witter
Premier Income Trust, (32) Dean Witter Short-Term U.S. Treasury
Trust, (33) Dean Witter Diversified Income Trust, (34) Dean
Witter U.S. Government Money Market Trust, (35) Dean Witter
Global Dividend Growth Securities, (36) Active Assets California
Tax-Free Trust, (37) Dean Witter Natural Resource Development
Securities Inc., (38) Active Assets Government Securities Trust,
(39) Active Assets Money Trust, (40) Active Assets Tax-Free
Trust, (41) Dean Witter Limited Term Municipal Trust, (42) Dean
Witter Variable Investment Series, (43) Dean Witter Value-Added
Market Series, (44) Dean Witter Global Utilities Fund, (45) Dean
Witter High Income Securities, (46) Dean Witter National

<PAGE>

Municipal Trust, (47) Dean Witter International SmallCap Fund and
(48) Dean Witter Mid-Cap Growth Fund, registered open-end
investment companies. InterCapital is a wholly-owned subsidiary
of Dean Witter, Discover & Co. The principal address of the Dean
Witter Funds is Two World Trade Center, New York, New York 10048.
The term "TCW/DW Funds" refers to the following Funds: (1) TCW/DW
Core Equity Trust, (2) TCW/DW North American Government Income
Trust, (3) TCW/DW Latin American Growth Fund, (4) TCW/DW Income
and Growth Fund, (5) TCW/DW Small Cap Growth Fund, (6) TCW/DW
Balanced Fund, (7) TCW/DW North American Intermediate Income
Trust, (8) TCW/DW Global Convertible Trust,registered open-end
investment companies and (9) TCW/DW Term Trust 2002, (10) TCW/DW
Term Trust 2003 (11) TCW/DW Term Trust 2000, and (12) TCW/DW
Emerging Markets Opportunities Trust, registered closed-end
investment companies.
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
---- ------------- -------------------------
Charles A. Chairman, Chief Executive Vice
Fiumefreddo Executive Officer President and Director
and Director of Dean Witter
Reynolds Inc.
("DWR"); Chairman,
Director or Trustee,
President and
Chief Executive
Officer of the
Dean Witter Funds;
Chairman, Chief
Executive Officer and
Trustee of the TCW/DW
Funds; Chairman and
Director of Dean
Witter Trust Company
("DWTC"); Chairman,
Chief Executive
Officer and Director
of Dean Witter
Distributors Inc.
("Distributors") and
Dean Witter Services
Company Inc. ("DWSC");
Formerly Executive
Vice President and
Director of Dean
Witter, Discover & Co.
("DWDC"); Director
and/or officer of
various DWDC
subsidiaries.

<PAGE>

Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
----- ------------- -----------------------
Philip J. Director Chairman, Chief
Purcell Executive Officer and
Director of DWDC and
DWR; Director of DWSC
and Distributors;
Director or Trustee
of the Dean Witter
Funds; Director and/
or officer of various
DWDC subsidiaries.

Richard M. Director President and Chief
DeMartini Operating Officer of
Dean Witter Capital
and Director of DWR,
DWSC and Distibutors;
Trustee of the TCW/DW
Funds.

James F. Director President and Chief
Higgins Operating Officer of
Dean Witter Financial;
Director of DWR, DWSC
and Distributors.

Thomas C. Executive Vice Executive Vice
Schneider President, Chief President, Chief
Financial Officer Financial Officer
and Director and Director of
DWSC, DWR and
Distributors.

Christine A. Director Executive Vice
Edwards President, Secretary,
General Counsel and
Director of DWR,
DWSC and Distributors.

Robert M. Scanlan President and Vice President of
Chief Operating the Dean Witter Funds
Officer and the TCW/DW Funds;
President and Chief
Operating Officer
of DWSC; Executive
Vice President of
Distributors;
Executive Vice
President and
Director of DWTC.

<PAGE>

Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
---- ------------- ------------------------
David A. Hughey Executive Vice Vice President of the
President and Dean Witter Funds and
Chief Administrative the TCW/DW Funds;
Officer Executive Vice
President, Chief
Administrative Officer
and Director of DWTC;
Executive Vice
President and Chief
Administrative Officer
of DWSC and
Distributors.

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

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

Sheldon Curtis Senior Vice Vice President,
President, Secretary and
General Counsel General Counsel of the
and Secretary Dean Witter Funds and
the TCW/DW Funds;
Senior Vice
President and
Secretary of
DWTC; Assistant
Secretary
of DWR and DWDC;
Senior Vice
President, General
Counsel and Secretary
of DWSC; Senior Vice
President, Assistant
General Counsel and
Assistant Secretary
of Distributors.

Peter M. Avelar Senior Vice Vice President of
President various Dean Witter
Funds.

Mark Bavoso Senior Vice Vice President of
President various Dean Witter
Funds.

<PAGE>

Thomas H. Connelly Senior Vice Vice President of
President various Dean Witter
Funds.

Edward F. Gaylor Senior Vice Vice President of
President various Dean Witter
Funds.

Rajesh K. Gupta Senior Vice Vice President of
President various Dean Witter
Funds.

Kenton J. Senior Vice Vice President of
Hinchliffe President various Dean Witter
Funds.

John B. Kemp, III Senior Vice Director of the
President Provident Savings
Bank, Jersey City,
New Jersey.

Anita H. Kolleeny Senior Vice Vice President of
President various Dean Witter
Funds.

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

Ira Ross Senior Vice Vice President of
President various Dean Witter
Funds.

Rochelle G. Siegel Senior Vice Vice President of
President various Dean Witter
Funds.

Paul D. Vance Senior Vice Vice President of
President various Dean Witter
Funds.

Elizabeth A. Senior Vice
Vetell President

James F. Willison Senior Vice Vice President of
President various Dean Witter
Funds.

Ronald J. Worobel Senior Vice Vice President of
President various Dean Witter
Funds.

<PAGE>

Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
---- ------------- -----------------------
Thomas F. Caloia First Vice Treasurer of the
President and Dean Witter Funds
Assistant Treasurer and the TCW/DW Funds;
First Vice President
and Assistant
Treasurer of DWSC;
Assistant Treasurer
of Distributors.

Marilyn K. Cranney First Vice Assistant Secretary
President and of the Dean Witter
Assistant Funds and the TCW/DW
Secretary Funds; First Vice
President and
Assistant Secretary
of DWSC; Assistant
Secretary of DWR
and DWDC.

Barry Fink First Vice Assistant Secretary
President of the Dean Witter
and Assistant Funds and the TCW/DW
Secretary Funds; First Vice
President and
Assistant Secretary
of DWSC.

Michael First Vice First Vice President
Interrante President and and Controller of
Controller DWSC; Assistant
Treasurer of
Distributors.

Robert Zimmerman First Vice
President

Joan G. Allman Vice President

Joseph Arcieri Vice President

Stephen Brophy Vice President

Terence P. Brennan,II Vice President

Douglas Brown Vice President

Thomas Chronert Vice President

Rosalie Clough Vice President

B. Catherine Vice President
Connelly

<PAGE>

Frank J. DeVito Vice President Vice President of
DWSC.

Dwight Doolan Vice President

Bruce Dunn Vice President

Jeffrey D. Geffen Vice President

Deborah Genovese Vice President

Peter W. Gurman Vice President

Shant Harootunian Vice President

Russell Harper Vice President

John Hechtlinger Vice President

David T. Hoffman Vice President

David Johnson Vice President

Christopher Jones Vice President

Stanley Kapica Vice President

Konrad J. Krill Vice President

Paula LaCosta Vice President Vice President of
various Dean Witter
Funds.

Lawrence S. Lafer Vice President Assistant Secretary
and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
and Assistant
Secretary of DWSC.

Thomas Lawlor Vice President

Lou Anne D. McInnis Vice President Assistant Secretary
and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
and Assistant
Secretary of DWSC.

<PAGE>

James Mulcahy Vice President

James Nash Vice President

Richard Norris Vice President

Hugh Rose Vice President

Ruth Rossi Vice President Assistant Secretary
and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
and Assistant
Secretary of DWSC.

Carl F. Sadler Vice President

Rafael Scolari Vice President

Diane Lisa Sobin Vice President Vice President of
various Dean Witter
Funds.

Kathleen Stromberg Vice President Vice President of
various Dean Witter
Funds.

Vinh Q. Tran Vice President Vice President of
various Dean Witter
Funds.

Alice Weiss Vice President Vice President
of various Dean
Witter Funds.

Jayne M. Wolff Vice President

Marianne Zalys Vice President

Item 29. Principal Underwriters

(a) Dean Witter Distributors Inc. ("Distributors"), a Delaware
corporation, is the principal underwriter of the Registrant.
Distributors is also the principal underwriter of the following
investment companies:

(1) Dean Witter Liquid Asset Fund Inc.
(2) Dean Witter Tax-Free Daily Income Trust
(3) Dean Witter California Tax-Free Daily Income Trust
(4) Dean Witter Mid-Cap Growth Fund

<PAGE>

(5) Dean Witter Dividend Growth Securities Inc.
(6) Dean Witter Natural Resource Development Securities Inc.
(7) Dean Witter World Wide Investment Trust
(8) Dean Witter Capital Growth Securities
(9) Dean Witter Convertible Securities Trust
(10) Active Assets Tax-Free Trust
(11) Active Assets Money Trust
(12) Active Assets California Tax-Free Trust
(13) Active Assets Government Securities Trust
(14) Dean Witter Short-Term Bond Fund
(15) Dean Witter Federal Securities Trust
(16) Dean Witter U.S. Government Securities Trust
(17) Dean Witter High Yield Securities Inc.
(18) Dean Witter New York Tax-Free Income Fund
(19) Dean Witter Tax-Exempt Securities Trust
(20) Dean Witter California Tax-Free Income Fund
(21) Dean Witter Managed Assets Trust
(22) Dean Witter Limited Term Municipal Trust
(23) Dean Witter World Wide Income Trust
(24) Dean Witter Utilities Fund
(25) Dean Witter Strategist Fund
(26) Dean Witter New York Municipal Money Market Trust
(27) Dean Witter Intermediate Income Securities
(28) Prime Income Trust
(29) Dean Witter European Growth Fund Inc.
(30) Dean Witter Developing Growth Securities Trust
(31) Dean Witter Precious Metals and Minerals Trust
(32) Dean Witter Pacific Growth Fund Inc.
(33) Dean Witter Multi-State Municipal Series Trust
(34) Dean Witter Premier Income Trust
(35) Dean Witter Short-Term U.S. Treasury Trust
(36) Dean Witter Diversified Income Trust
(37) Dean Witter Health Sciences Trust
(38) Dean Witter Global Dividend Growth Securities
(39) Dean Witter American Value Fund
(40) Dean Witter U.S. Government Money Market Trust
(41) Dean Witter Global Short-Term Income Fund Inc.
(42) Dean Witter Variable Investment Series
(43) Dean Witter Value-Added Market Series
(44) Dean Witter Global Utilities Fund
(45) Dean Witter High Income Securities
(46) Dean Witter National Municipal Trust
(47) Dean Witter International SmallCap Fund

(1) TCW/DW Core Equity Trust
(2) TCW/DW North American Government Income Trust
(3) TCW/DW Latin American Growth Fund
(4) TCW/DW Income and Growth Fund
(5) TCW/DW Small Cap Growth Fund
(6) TCW/DW Balanced Fund
(7) TCW/DW North American Intermediate Income Trust
(8) TCW/DW Global Convertible Trust

(b) The following information is given regarding directors and officers
of Distributors not listed in Item 28 above. The principal address of
Distributors is Two World Trade Center, New York, New York 10048. None of
the following persons has any position or office with the Registrant.

<PAGE>

Positions and
Office with
Name Distributors
- ---- --------------
Fredrick K. Kubler Senior Vice President, Assistant
Secretary and Chief Compliance
Officer.

Michael T. Gregg Vice President and Assistant
Secretary.

Item 30. Location of Accounts and Records

All accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are maintained by the Investment Manager at its offices,
except records relating to holders of shares issued by the Registrant,
which are maintained by the Registrant's Transfer Agent, at its place
of business as shown in the prospectus.

Item 31. Management Services

Registrant is not a party to any such management-related service
contract.

Item 32. Undertakings

Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.

yh:\paras\retire\partc.94

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York and
State of New York on the 27th day of September, 1994.

DEAN WITTER RETIREMENT SERIES

By /s/ Sheldon Curtis
------------------------------
Sheldon Curtis
Vice President and Secretary

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 3 has been signed below by the following persons in
the capacities and on the dates indicated.

Signatures Title Date

(1) Principal Executive Officer President, Chief
Executive Officer,
Trustee and Chairman
By /s/ Charles A. Fiumefreddo 09/27/94
----------------------------
Charles A. Fiumefreddo

(2) Principal Financial Officer Treasurer and Principal
Accounting Officer

By /s/ Thomas F. Caloia 09/27/94
---------------------
Thomas F. Caloia

(3) Majority of the Trustees

Charles A. Fiumefreddo (Chairman)
Edward R. Telling
Philip J. Purcell

By /s/ Sheldon Curtis 09/27/94
-------------------
Sheldon Curtis
Attorney-in-Fact

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

By /s/ David M. Butowsky 09/27/94
-----------------------
David M. Butowsky
Attorney-in-Fact

<PAGE>

DEAN WITTER RETIREMENT SERIES

EXHIBIT INDEX

Exhibit No. Description

8. - Form of Amended and Restated Transfer Agency
and Services Agreement between Registrant and
Dean Witter Trust Company

9. - Form of Services Agreement between Dean Witter
InterCapital Inc. and Dean Witter Services
Company Inc.

11. - Consent of Independent Accountants

16. - Schedules for Computation of Performance
Quotations

27. - Financial Data Schedule

Other - Powers of Attorney

yh:\retire\exhibit.94

AMENDED AND RESTATED
TRANSFER AGENCY AND SERVICE AGREEMENT

with

DEAN WITTER TRUST COMPANY

DWR

(open-end)

<PAGE>

TABLE OF CONTENTS

Page

Article 1 Terms of Appointment; Duties of DWTC . . . 2

Article 2 Fees and Expenses. . . . . . . . . . . . . 6

Article 3 Representations and Warranties of DWTC . . 7

Article 4 Representations and Warranties of the
Fund . . . . . . . . . . . . . . . . . . . 8

Article 5 Duty of Care and Indemnification . . . . . 9

Article 6 Documents and Covenants of the Fund and
DWTC . . . . . . . . . . . . . . . . . . . 12

Article 7 Duration and Termination of Agreement. . . 16

Article 8 Assignment . . . . . . . . . . . . . . . . 16

Article 9 Affiliations . . . . . . . . . . . . . . . 17

Article 10 Amendment. . . . . . . . . . . . . . . . . 18

Article 11 Applicable Law . . . . . . . . . . . . . . 18

Article 12 Miscellaneous. . . . . . . . . . . . . . . 18

Article 13 Merger of Agreement. . . . . . . . . . . . 20

Article 14 Personal Liability . . . . . . . . . . . . 21

<PAGE>

AMENDED AND RESTATED TRANSFER AGENCY AND SERVICE AGREEMENT

AMENDED AND RESTATED AGREEMENT made as of the 1st
day of August, 1993 by and between each of the Dean Witter
Funds listed on the signature pages hereof, each of such Funds
acting severally on its own behalf and not jointly with any of
such other Funds (each such Fund hereinafter referred to as
the "Fund"), each such Fund having its principal office and
place of business at Two World Trade Center, New York, New
York, 10048, and DEAN WITTER TRUST COMPANY, a trust company
organized under the laws of New Jersey, having its principal
office and place of business at Harborside Financial Center,
Plaza Two, Jersey City, New Jersey 07311 ("DWTC").

WHEREAS, the Fund desires to appoint DWTC as its
transfer agent, dividend disbursing agent and shareholder
servicing agent and DWTC desires to accept such appointment;

NOW THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereto agree as
follows:

<PAGE>

Article 1 Terms of Appointment; Duties of DWTC
1.1 Subject to the terms and conditions set
forth in this Agreement, the Fund hereby employs and appoints
DWTC to act as, and DWTC agrees to act as, the transfer agent
for each series and class of shares of the Fund, whether now
or hereafter authorized or issued ("Shares"), dividend
disbursing agent and shareholder servicing agent in connection
with any accumulation, open-account or similar plans provided
to the holders of such Shares ("Shareholders") and set out in
the currently effective prospectus and statement of additional
information ("prospectus") of the Fund, including without
limitation any periodic investment plan or periodic withdrawal
program.

1.2 DWTC agrees that it will perform the fol-
lowing services:

(a) In accordance with procedures established
from time to time by agreement between the Fund and DWTC, DWTC
shall:

(i) Receive for acceptance, orders for the
purchase of Shares, and promptly deliver payment and
appropriate documentation therefor to the custodian of the
assets of the Fund (the "Custodian");

<PAGE>

(ii) Pursuant to purchase orders, issue the
appropriate number of Shares and issue certificates therefor
or hold such Shares in book form in the appropriate
Shareholder account;

(iii) Receive for acceptance redemption
requests and redemption directions and deliver the appropriate
documentation therefor to the Custodian;

(iv) At the appropriate time as and when it
receives monies paid to it by the Custodian with respect to
any redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the redeeming
Shareholders;

(v) Effect transfers of Shares by the
registered owners thereof upon receipt of appropriate
instructions;

(vi) Prepare and transmit payments for divi-
dends and distributions declared by the Fund;

(vii) Calculate any sales charges payable by
a Shareholder on purchases and/or redemptions of Shares of the
Fund as such charges may be reflected in the prospectus;

(viii) Maintain records of account for and
advise the Fund and its Shareholders as to the foregoing; and

<PAGE>

(ix) Record the issuance of Shares of the Fund
and maintain pursuant to Rule 17Ad-10(e) under the Securities
Exchange Act of 1934 ("1934 Act") a record of the total number
of Shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. DWTC
shall also provide to the Fund on a regular basis the total
number of Shares which are authorized, issued and outstanding
and shall notify the Fund in case any proposed issue of Shares
by the Fund would result in an overissue. In case any issue
of Shares would result in an overissue, DWTC shall refuse to
issue such Shares and shall not countersign and issue any
certificates requested for such Shares. When recording the
issuance of Shares, DWTC shall have no obligation to take
cognizance of any Blue Sky laws relating to the issue of sale
of such Shares, which functions shall be the sole
responsibility of the Fund.

(b) In addition to and not in lieu of the
services set forth in the above paragraph (a), DWTC shall: (i)
perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, shareholder ser-
vicing agent in connection with dividend reinvestment,
accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal
program), including but not limited to, maintaining all
Shareholder accounts, preparing Shareholder meeting lists,

<PAGE>

mailing proxies, receiving and tabulating proxies, mailing
shareholder reports and prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing appropriate forms required with
respect to dividends and distributions by federal tax
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders
for all purchases and redemptions of Shares and other confirm-
able transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders and providing
Shareholder account information; (ii) open any and all bank
accounts which may be necessary or appropriate in order to
provide the foregoing services; and (iii) provide a system
which will enable the Fund to monitor the total number of
Shares sold in each State or other jurisdiction.

(c) In addition, the Fund shall (i) identify
to DWTC in writing those transactions and assets to be treated
as exempt from Blue Sky reporting for each State and (ii)
verify the establishment of transactions for each State on the
system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of DWTC for the
Fund's registration status under the Blue Sky or securities
laws of any State or other jurisdiction is solely limited to
the initial establishment of transactions subject to Blue Sky
compliance by the Fund and the reporting of such transactions

<PAGE>

to the Fund as provided above and as agreed from time to time
by the Fund and DWTC.

(d) DWTC shall provide such additional
services and functions not specifically described herein as
may be mutually agreed between DWTC and the Fund. Procedures
applicable to such services may be established from time to
time by agreement between the Fund and DWTC.

Article 2 Fees and Expenses

2.1 For performance by DWTC pursuant to this
Agreement, each Fund agrees to pay DWTC an annual maintenance
fee for each Shareholder account and certain transactional
fees, if applicable, as set out in the respective fee schedule
attached hereto as Schedule A. Such fees and out-of-pocket
expenses and advances identified under Section 2.2 below may
be changed from time to time subject to mutual written
agreement between the Fund and DWTC.

2.2 In addition to the fees paid under Section
2.1 above, the Fund agrees to reimburse DWTC in connection
with the services rendered by DWTC hereunder. In addition,
any other expenses incurred by DWTC at the request or with the
consent of the Fund will be reimbursed by the Fund.

2.3 The Fund agrees to pay all fees and
reimbursable expenses within a reasonable period of time

<PAGE>

following the mailing of the respective billing notice.
Postage for mailing of dividends, proxies, Fund reports and
other mailings to all Shareholder accounts shall be advanced
to DWTC by the Fund upon request prior to the mailing date of
such materials.

Article 3 Representations and Warranties of DWTC

DWTC represents and warrants to the Fund that:

3.1 It is a trust company duly organized and
existing and in good standing under the laws of New Jersey and
it is duly qualified to carry on its business in New Jersey.

3.2 It is and will remain registered with the
U.S. Securities and Exchange Commission ("SEC") as a Transfer
Agent pursuant to the requirements of Section 17A of the 1934
Act.

3.3 It is empowered under applicable laws and
by its charter and By-Laws to enter into and perform this
Agreement.

3.4 All requisite corporate proceedings have
been taken to authorize it to enter into and perform this
Agreement.

3.5 It has and will continue to have access to
the necessary facilities, equipment and personnel to perform
its duties and obligations under this Agreement.

<PAGE>

Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to DWTC that:

4.1 It is a corporation duly organized and
existing and in good standing under the laws of Delaware or
Maryland or a trust duly organized and existing and in good
standing under the laws of Massachusetts, as the case may be.

4.2 It is empowered under applicable laws and
by its Articles of Incorporation or Declaration of Trust, as
the case may be, and under its By-Laws to enter into and
perform this Agreement.

4.3 All corporate proceedings necessary to
authorize it to enter into and perform this Agreement have
been taken.

4.4 It is an investment company registered
with the SEC under the Investment Company Act of 1940, as
amended (the "1940 Act").

4.5 A registration statement under the
Securities Act of 1933 (the "1933 Act") is currently effective
and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with
respect to all Shares of the Fund being offered for sale.

<PAGE>

Article 5 Duty of Care and Indemnification
5.1 DWTC shall not be responsible for, and the
Fund shall indemnify and hold DWTC harmless from and against,
any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or
attributable to:

(a) All actions of DWTC or its agents or
subcontractors required to be taken pursuant to this
Agreement, provided that such actions are taken in good faith
and without negligence or willful misconduct.

(b) The Fund's refusal or failure to comply with
the terms of this Agreement, or which arise out of the Fund's
lack of good faith, negligence or willful misconduct or which
arise out of breach of any representation or warranty of the
Fund hereunder.

(c) The reliance on or use by DWTC or its agents or
subcontractors of information, records and documents which (i)
are received by DWTC or its agents or subcontractors and
furnished to it by or on behalf of the Fund, and (ii) have
been prepared and/or maintained by the Fund or any other
person or firm on behalf of the Fund.

(d) The reliance on, or the carrying out by DWTC or
its agents or subcontractors of, any instructions or requests

<PAGE>

of the Fund.

(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations
or the securities or Blue Sky laws of any State or other
jurisdiction that such Shares be registered in such State or
other jurisdiction or in violation of any stop order or other
determination or ruling by any federal agency or any State or
other jurisdiction with respect to the offer or sale of such
Shares in such State or other jurisdiction.

5.2 DWTC shall indemnify and hold the Fund
harmless from or against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability
arising out of or attributable to any action or failure or
omission to act by DWTC as a result of the lack of good faith,
negligence or willful misconduct of DWTC, its officers,
employees or agents.

5.3 At any time, DWTC may apply to any officer
of the Fund for instructions, and may consult with legal
counsel to the Fund, with respect to any matter arising in
connection with the services to be performed by DWTC under
this Agreement, and DWTC and its agents or subcontractors
shall not be liable and shall be indemnified by the Fund for
any action taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel. DWTC, its

<PAGE>

agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf
of the Fund, reasonably believed to be genuine and to have
been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided
to DWTC or its agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized
by the Fund, and shall not be held to have notice of any
change of authority of any person, until receipt of written
notice thereof from the Fund. DWTC, its agents and
subcontractors shall also be protected and indemnified in
recognizing stock certificates which are reasonably believed
to bear the proper manual or facsimile signature of the
officers of the Fund, and the proper countersignature of any
former transfer agent or registrar, or of a co-transfer agent
or co-registrar.

5.4 In the event either party is unable to
perform its obligations under the terms of this Agreement
because of acts of God, strikes, equipment or transmission
failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, such party shall not be
liable for damages to the other for any damages resulting from
such failure to perform or otherwise from such causes.

<PAGE>

5.5 Neither party to this Agreement shall be
liable to the other party for consequential damages under any
provision of this Agreement or for any act or failure to act
hereunder.

5.6 In order that the indemnification
provisions contained in this Article 5 shall apply, upon the
assertion of a claim for which either party may be required to
indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall
keep the other party advised with respect to all developments
concerning such claim. The party who may be required to
indemnify shall have the option to participate with the party
seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any
claim or make any compromise in any case in which the other
party may be required to indemnify it except with the other
party's prior written consent.

Article 6 Documents and Covenants of the Fund and DWTC

6.1 The Fund shall promptly furnish to DWTC
the following:

(a) If a corporation:

(i) A certified copy of the resolution of the Board
of Directors of the Fund authorizing the appointment of DWTC
and the execution and delivery of this Agreement;

<PAGE>

(ii) A certified copy of the Articles of
Incorporation and By-Laws of the Fund and all amendments
thereto;

(iii) Certified copies of each vote of the Board
of Directors designating persons authorized to give
instructions on behalf of the Fund and signature cards bearing
the signature of any officer of the Fund or any other person
authorized to sign written instructions on behalf of the Fund;

(iv) A specimen of the certificate for Shares of the
Fund in the form approved by the Board of Directors, with a
certificate of the Secretary of the Fund as to such approval;

(b) If a business trust:

(i) A certified copy of the resolution of the Board
of Trustees of the Fund authorizing the appointment of DWTC
and the execution and delivery of this Agreement;

(ii) A certified copy of the Declaration of Trust
and By-laws of the Fund and all amendments thereto;

(iii) Certified copies of each vote of the Board
of Trustees designating persons authorized to give
instructions on behalf of the Fund and signature cards bearing
the signature of any officer of the Fund or any other person
authorized to sign written instructions on behalf of the Fund;

<PAGE>

(iv) A specimen of the certificate for Shares of the
Fund in the form approved by the Board of Trustees, with a
certificate of the Secretary of the Fund as to such approval;

(c) The current registration statements and any
amendments and supplements thereto filed with the SEC pursuant
to the requirements of the 1933 Act or the 1940 Act;

(d) All account application forms or other
documents relating to Shareholder accounts and/or relating to
any plan, program or service offered or to be offered by the
Fund; and

(e) Such other certificates, documents or opinions
as DWTC deems to be appropriate or necessary for the proper
performance of its duties.

6.2 DWTC hereby agrees to establish and
maintain facilities and procedures reasonably acceptable to
the Fund for safekeeping of Share certificates, check forms
and facsimile signature imprinting devices, if any; and for
the preparation or use, and for keeping account of, such
certificates, forms and devices.

6.3 DWTC shall prepare and keep records
relating to the services to be performed hereunder, in the
form and manner as it may deem advisable and as required by
applicable laws and regulations. To the extent required by

<PAGE>

Section 31 of the 1940 Act, and the rules and regulations
thereunder, DWTC agrees that all such records prepared or
maintained by DWTC relating to the services performed by DWTC
hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such Section
31 of the 1940 Act, and the rules and regulations thereunder,
and will be surrendered promptly to the Fund on and in
accordance with its request.

6.4 DWTC and the Fund agree that all books,
records, information and data pertaining to the business of
the other party which are exchanged or received pursuant to
the negotiation or the carrying out of this Agreement shall
remain confidential and shall not be voluntarily disclosed to
any other person except as may be required by law or with the
prior consent of DWTC and the Fund.

6.5 In case of any request or demands for the
inspection of the Shareholder records of the Fund, DWTC will
endeavor to notify the Fund and to secure instructions from an
authorized officer of the Fund as to such inspection. DWTC
reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the
Shareholder records to such person.

<PAGE>

Article 7 Duration and Termination of Agreement

7.1 This Agreement shall remain in full force
and effect until July 31, 1996 and from year-to-year
thereafter unless terminated by either party as provided in
Section 7.2 hereof.

7.2 This Agreement may be terminated by the
Fund on 60 days written notice, and by DWTC on 90 days written
notice, to the other party without payment of any penalty.

7.3 Should the Fund exercise its right to
terminate, all out-of-pocket expenses associated with the
movement of records and other materials will be borne by the
Fund. Additionally, DWTC reserves the right to charge for any
other reasonable fees and expenses associated with such
termination.

Article 8 Assignment

8.1 Except as provided in Section 8.3 below,
neither this Agreement nor any rights or obligations hereunder
may be assigned by either party without the written consent of
the other party.

8.2 This Agreement shall inure to the benefit
of and be binding upon the parties and their respective
permitted successors and assigns.

<PAGE>

8.3 DWTC may, in its sole discretion and
without further consent by the Fund, subcontract, in whole or
in part, for the performance of its obligations and duties
hereunder with any person or entity including but not limited
to companies which are affiliated with DWTC; provided,
however, that such person or entity has and maintains the
qualifications, if any, required to perform such obligations
and duties, and that DWTC shall be as fully responsible to the
Fund for the acts and omissions of any agent or subcontractor
as it is for its own acts or omissions under this Agreement.

Article 9 Affiliations

9.1 DWTC may now or hereafter, without the
consent of or notice to the Fund, function as transfer agent
and/or shareholder servicing agent for any other investment
company registered with the SEC under the 1940 Act and for any
other issuer, including without limitation any investment
company whose adviser, administrator, sponsor or principal
underwriter is or may become affiliated with Dean Witter,
Discover & Co. or any of its direct or indirect subsidiaries
or affiliates.

9.2 It is understood and agreed that the
Directors or Trustees (as the case may be), officers,
employees, agents and shareholders of the Fund, and the
directors, officers, employees, agents and shareholders of the

<PAGE>

Fund's investment adviser and/or distributor, are or may be
interested in DWTC as directors, officers, employees, agents
and shareholders or otherwise, and that the directors,
officers, employees, agents and shareholders of DWTC may be
interested in the Fund as Directors or Trustees (as the case
may be), officers, employees, agents and shareholders or
otherwise, or in the investment adviser and/or distributor as
directors, officers, employees, agents, shareholders or
otherwise.

Article 10 Amendment

10.1 This Agreement may be amended or modified
by a written agreement executed by both parties and authorized
or approved by a resolution of the Board of Directors or the
Board of Trustees (as the case may be) of the Fund.

Article 11 Applicable Law

11.1 This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with
the laws of the State of New York.

Article 12 Miscellaneous

12.1 In the event that one or more additional
investment companies managed or administered by Dean Witter
InterCapital Inc. or any of its affiliates ("Additional
Funds") desires to retain DWTC to act as transfer agent,
dividend disbursing agent and/or shareholder servicing agent,

<PAGE>

and DWTC desires to render such services, such services shall
be provided pursuant to a letter agreement, substantially in
the form of Exhibit A hereto, between DWTC and each Additional
Fund.

12.2 In the event of an alleged loss or
destruction of any Share certificate, no new certificate shall
be issued in lieu thereof, unless there shall first be
furnished to DWTC an affidavit of loss or non-receipt by the
holder of Shares with respect to which a certificate has been
lost or destroyed, supported by an appropriate bond
satisfactory to DWTC and the Fund issued by a surety company
satisfactory to DWTC, except that DWTC may accept an affidavit
of loss and indemnity agreement executed by the registered
holder (or legal representative) without surety in such form
as DWTC deems appropriate indemnifying DWTC and the Fund for
the issuance of a replacement certificate, in cases where the
alleged loss is in the amount of $1000 or less.

12.3 In the event that any check or other order for
payment of money on the account of any Shareholder or new
investor is returned unpaid for any reason, DWTC will (a) give
prompt notification to the Fund's distributor ("Distributor")
(or to the Fund if the Fund acts as its own distributor) of
such non-payment; and (b) take such other action, including
imposition of a reasonable processing or handling fee, as DWTC

<PAGE>

may, in its sole discretion, deem appropriate or as the Fund
and, if applicable, the Distributor may instruct DWTC.

12.4 Any notice or other instrument authorized or
required by this Agreement to be given in writing to the Fund
or to DWTC shall be sufficiently given if addressed to that
party and received by it at its office set forth below or at
such other place as it may from time to time designate in
writing.

To the Fund:

(Name of Fund)
Two World Trade Center
New York, New York 10048

Attention: General Counsel

To DWTC:

Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, New Jersey 07311

Attention: President

Article 13 Merger of Agreement

13.1 This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior
agreement with respect to the subject matter hereof whether
oral or written.

<PAGE>

Article 14 Personal Liability

14.1 In the case of a Fund organized as a
Massachusetts business trust, a copy of the Declaration of
Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Board of Trustees
of the Fund as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the
Trustees or shareholders individually but are binding only
upon the assets and property of the Fund; provided, however,
that the Declaration of Trust of the Fund provides that the
assets of a particular Series of the Fund shall under no
circumstances be charged with liabilities attributable to any
other Series of the Fund and that all persons extending credit
to, or contracting with or having any claim against, a
particular Series of the Fund shall look only to the assets of
that particular Series for payment of such credit, contract or
claim.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused
this Amended and Restated Agreement to be executed in their
names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.

(1) Dean Witter Liquid Asset Fund Inc.
(2) Dean Witter Tax-Free Daily Income Trust
(3) Dean Witter California Tax-Free Daily Income Trust
(4) Dean Witter Retirement Series
(5) Dean Witter Dividend Growth Securities Inc.
(6) Dean Witter Natural Resource Development Securities Inc.
(7) Dean Witter World Wide Investment Trust
(8) Dean Witter Capital Growth Securities
(9) Dean Witter Convertible Securities Trust
(10) Active Assets Tax-Free Trust
(11) Active Assets Money Trust
(12) Active Assets California Tax-Free Trust
(13) Active Assets Government Securities Trust
(14) Dean Witter Equity Income Trust
(15) Dean Witter Federal Securities Trust
(16) Dean Witter U.S. Government Securities Trust
(17) Dean Witter High Yield Securities Inc.
(18) Dean Witter New York Tax-Free Income Fund
(19) Dean Witter Tax-Exempt Securities Trust
(20) Dean Witter California Tax-Free Income Fund
(21) Dean Witter Managed Assets Trust
(22) Dean Witter Limited Term Municipal Trust
(23) Dean Witter World Wide Income Trust
(24) Dean Witter Utilities Fund
(25) Dean Witter Strategist Fund
(26) Dean Witter New York Municipal Money Market Trust
(27) Dean Witter Intermediate Income Securities
(28) Prime Income Trust
(29) Dean Witter European Growth Fund Inc.
(30) Dean Witter Developing Growth Securities Trust
(31) Dean Witter Precious Metals and Minerals Trust
(32) Dean Witter Pacific Growth Fund Inc.
(33) Dean Witter Multi-State Municipal Series Trust
(34) Dean Witter Premier Income Trust
(35) Dean Witter Short-Term U.S. Treasury Trust
(36) Dean Witter Diversified Income Trust
(37) Dean Witter Health Sciences Trust
(38) Dean Witter Global Dividend Growth Securities
(39) Dean Witter American Value Fund

<PAGE>

(40) Dean Witter U.S. Government Money Market Trust
(41) Dean Witter Global Short-Term Income Fund Inc.
(42) Dean Witter Value-Added Market Series
(43) Dean Witter Select Municipal Reinvestment Fund
(44) Dean Witter Variable Investment Series

By:/s/ Sheldon Curtis
------------------------------------
Sheldon Curtis
Vice President and General Counsel

ATTEST:

/s/ Barry Fink
- -------------------------
Barry Fink
Assistant Secretary

DEAN WITTER TRUST COMPANY

By:/s/ Charles A. Fiumefreddo
----------------------------------
Charles A. Fiumefreddo
Chairman

ATTEST:

/s/ David A. Hughey
- --------------------------
David A. Hughey
Executive Vice President

f:\transfer.dw

<PAGE>

EXHIBIT A

Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, NJ 07311

Gentlemen:

The undersigned,( Name of Fund )
a (Massachusetts business trust/Maryland Corporation) (the
"Fund"), desires to employ and appoint Dean Witter Trust
Company ("DWTC") to act as transfer agent for each series and
class of shares of the Fund, whether now or hereafter
authorized or issued ("Shares"), dividend disbursing agent and
shareholder servicing agent, registrar and agent in connection
with any accumulation, open-account or similar plan provided
to the holders of Shares, including without limitation any
periodic investment plan or periodic withdrawal plan.

The Fund hereby agrees that, in consideration for
the payment by the Fund to DWTC of fees as set out in the fee
schedule attached hereto as Schedule A, DWTC shall provide
such services to the Fund pursuant to the terms and conditions
set forth in the Transfer Agency and Service Agreement annexed
hereto, as if the Fund was a signatory thereto.

<PAGE>

Please indicate DWTC's acceptance of employment and
appointment by the Fund in the capacities set forth above by
so indicating in the space provided below.

Very truly yours,
( Name of the Fund )

By:..................................
Sheldon Curtis
Vice President and General Counsel

ACCEPTED AND AGREED TO:

DEAN WITTER TRUST COMPANY

By:.......................
Its:......................
Date:.....................

f:\transfer.dw

<PAGE>

SCHEDULE A

Fund: Dean Witter Retirement Series

Fees: (1) Annual maintenance fee of $11.00 per
shareholder account, payable monthly.

(2) A fee equal to 1/12 of the fee set forth in
(1) above, for providing Forms 1099 for accounts
closed during the year, payable following the end
of the calendar year.

(3) Out-of-pocket expenses in accordance with
Section 2.2 of the Agreement.

(4) Fees for additional services not set forth in
this Agreement shall be as negotiated between the
parties.

f:\schedA\24

SERVICES AGREEMENT

AGREEMENT made as of the 31st day of December, 1993 by and between Dean
Witter InterCapital Inc., a Delaware corporation (herein referred to as
"InterCapital"), and Dean Witter Services Company Inc., a New Jersey
corporation (herein referred to as "DWS").

WHEREAS, InterCapital has entered into separate agreements (each such
agreement being herein referred to as an "Investment Management Agreement")
with certain investment companies as set forth on Schedule A (each such
investment company being herein referred to as a "Fund" and, collectively, as
the "Funds") pursuant to which InterCapital is to perform, or supervise the
performance of, among other services, administrative services for the Funds
(and, in the case of Funds with multiple portfolios, the Series or Portfolios
of the Funds (such Series and Portfolio being herein individually referred to
as "a Series" and, collectively, as "the Series"));

WHEREAS, InterCapital desires to retain DWS to perform the administrative
services as described below; and

WHEREAS, DWS desires to be retained by InterCapital to perform such
administrative services:

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. DWS agrees to provide administrative services to each Fund as hereinafter
set forth. Without limiting the generality of the foregoing, DWS shall (i)
administer the Fund's business affairs and supervise the overall day-to-day
operations of the Fund (other than rendering investment advice); (ii) provide
the Fund with full administrative services, including the maintenance of
certain books and records, such as journals, ledger accounts and other records
required under the Investment Company Act of 1940, as amended (the"Act"), the
notification to the Fund and InterCapital of available funds for investment,
the reconciliation of account information and balances among the Fund's
custodian, transfer agent and dividend disbursing agent and InterCapital, and
the calculation of the net asset value of the Fund's shares; (iii) provide the
Fund with the services of persons competent to perform such supervisory,
administrative and clerical functions as are necessary to provide effective
operation of the Fund; (iv) oversee the performance of administrative and
professional services rendered to the Fund by others, including its custodian,
transfer agent and dividend disbursing agent, as well as accounting, auditing
and other services; (v) provide the Fund with adequate general office space and
facilities; (vi) assist in the preparation and the printing of the periodic
updating of the Fund's registration statement and prospectus (and, in the case
of an open-end Fund, the statement of additional information), tax returns,
proxy statements, and reports to its shareholders and the Securities and
Exchange Commission; and (vii) monitor the compliance of the Fund's investment
policies and restrictions.

In the event that InterCapital enters into an Investment Management Agreement
with another investment company, and wishes to retain DWS to perform
administrative services hereunder, it shall notify DWS in writing. If DWS is
willing to render such services, it shall notify InterCapital in writing,
whereupon such other Fund shall become a Fund as defined herein.

2. DWS shall, at its own expense, maintain such staff and employ or retain
such personnel and consult with such other persons as it shall from time to
time determine to be necessary or useful to the performance of its obligations
under this Agreement. Without limiting the generality of the foregoing, the
staff and personnel of DWS shall be deemed to include officers of DWS and
persons employed or otherwise retained by DWS (including officers and employees
of InterCapital, with the consent of InterCapital) to furnish services,
statistical and other factual data, information with respect to technical and
scientific developments, and such other information, advice and assistance as
DWS may desire. DWS shall maintain each 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, DWS shall surrender to
InterCapital or to the Fund such of the books and records so requested.

3. InterCapital will, from time to time, furnish or otherwise make available
to DWS such financial reports, proxy statements and other information relating
to the business and affairs of the Fund as DWS may

<PAGE>

reasonably require in order to discharge its duties and obligations to the Fund
under this Agreement or to comply with any applicable law and regulation or
request of the Board of Directors/Trustees of the Fund.

4. For the services to be rendered, the facilities furnished, and the
expenses assumed by DWS, InterCapital shall pay to DWS monthly compensation
calculated daily (in the case of an open-end Fund) or weekly (in the case of a
closed-end Fund) by applying the annual rate or rates set forth on Schedule B
to the net assets of each Fund. Except as hereinafter set forth, (i) in the
case of an open-end Fund, compensation under this Agreement shall be calculated
by applying 1/365th of the annual rate or rates to the Fund's or the Series'
daily net assets determined as of the close of business on that day or the last
previous business day and (ii) in the case of a closed-end Fund, compensation
under this Agreement shall be calculated by applying the annual rate or rates
to the Fund's average weekly net assets determined as of the close of the last
business day of each week. 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
on Schedule B. Subject to the provisions of paragraph 5 hereof, payment of DWS'
compensation for the preceding month shall be made as promptly as possible
after completion of the computations contemplated by paragraph 5 hereof.

5. In the event the operating expenses of any open-end Fund and/or any Series
thereof, or of InterCapital Income Securities Inc., including amounts payable
to InterCapital 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 and/or any Series thereof imposed by state
securities laws or regulations thereunder, as such limitations may be raised or
lowered from time to time, or, in the case of InterCapital Income Securities
Inc. or Dean Witter Variable Investment Series or any Series thereof, the
expense limitation specified in the Fund's Investment Management Agreement, the
fee payable hereunder shall be reduced on a pro rata basis in the same
proportion as the fee payable by the Fund under the Investment Management
Agreement is reduced.

6. DWS shall bear the cost of rendering the administrative 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
DWS, and such clerical help and bookkeeping services as DWS shall reasonably
require in performing its duties hereunder.

7. DWS will use its best efforts in the performance of administrative
activitives on behalf of each Fund, but in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations hereunder,
DWS 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 DWS or for any losses
sustained by the Fund or its investors. It is understood that, subject to the
terms and conditions of the Investment Management Agreement between each Fund
and InterCapital, InterCapital shall retain ultimate responsibility for all
services to be performed hereunder by DWS. DWS shall indemnify InterCapital and
hold it harmless from any liability that InterCapital may incur arising out of
any act or failure to act by DWS in carrying out its responsibilities
hereunder.

8. It is understood that any of the shareholders, Directors/Trustees,
officers and employees of the Fund may be a shareholder, director, officer or
employee of, or be otherwise interested in, DWS, and in any person controlling,
controlled by or under common control with DWS, and that DWS and any person
controlling, controlled by or under common control with DWS may have an
interest in the Fund. It is also understood that DWS and any affiliated persons
thereof or any persons controlling, controlled by or under common control with
DWS have and may have advisory, management, administration 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.

9. This Agreement shall continue until April 30, 1994, and thereafter shall
continue automatically for successive periods of one year unless terminated by
either party by written notice delivered to the other party within 30 days of
the expiration of the then-existing period. Notwithstanding the foregoing, this
Agreement may be terminated at any time, by either party on 30 days' written
notice delivered to the other party. In the

<PAGE>

event that the Investment Management Agreement between any Fund and
InterCapital is terminated, this Agreement will automatically terminate with
respect to such Fund.

10. This Agreement may be amended or modified by the parties in any manner by
mutual written agreement executed by each of the parties hereto.

11. This Agreement shall be construed and interpreted in accordance with the
laws of the State of New York.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written in New York, New York.

DEAN WITTER INTERCAPITAL INC.

By: .....................

Attest:

.....................

DEAN WITTER SERVICES COMPANY INC.

By: .....................

Attest:

.....................

<PAGE>

SCHEDULE A
DEAN WITTER FUNDS
AT DECEMBER 31, 1993

OPEN-END FUNDS

1. Active Assets California Tax-Free Trust
2. Active Assets Government Securities Trust
3. Active Assets Money Trust
4. Active Assets Tax-Free Trust
5. Dean Witter American Value Fund
6. Dean Witter California Tax-Free Daily Income Trust
7. Dean Witter California Tax-Free Income Fund
8. Dean Witter Capital Growth Securities
9. Dean Witter Convertible Securities Trust
10. Dean Witter Developing Growth Securities Trust
11. Dean Witter Diversified Income Trust
12. Dean Witter Dividend Growth Securities Inc.
13. Dean Witter Equity Income Trust
14. Dean Witter European Growth Fund Inc.
15. Dean Witter Federal Securities Trust
16. Dean Witter Global Dividend Growth Securities
17. Dean Witter Global Short-Term Income Fund Inc.
18. Dean Witter Health Sciences Trust
19. Dean Witter High Yield Securities Inc.
20. Dean Witter Intermediate Income Securities
21. Dean Witter Limited Term Municipal Trust
22. Dean Witter Liquid Asset Fund Inc.
23. Dean Witter Managed Assets Trust
24. Dean Witter Multi-State Municipal Series Trust
25. Dean Witter Natural Resource Development Securities Inc.
26. Dean Witter New York Municipal Money Market Trust
27. Dean Witter New York Tax-Free Income Fund
28. Dean Witter Pacific Growth Fund Inc.
29. Dean Witter Precious Metals and Minerals Trust
30. Dean Witter Premier Income Trust
31. Dean Witter Retirement Series
32. Dean Witter Select Municipal Reinvestment Fund
33. Dean Witter Short-Term U.S. Treasury Trust
34. Dean Witter Strategist Fund
35. Dean Witter Tax-Exempt Securities Trust
36. Dean Witter Tax-Free Daily Income Trust
37. Dean Witter U.S. Government Money Market Trust
38. Dean Witter U.S. Government Securities Trust
39. Dean Witter Utilities Fund
40. Dean Witter Value-Added Market Series
41. Dean Witter Variable Investment Series
42. Dean Witter World Wide Income Trust
43. Dean Witter World Wide Investment Trust

CLOSED-END FUNDS
44. High Income Advantage Trust
45. High Income Advantage Trust II
46. High Income Advantage Trust III
47. InterCapital Income Securities Inc.
48. Dean Witter Government Income Trust
49. InterCapital Insured Municipal Bond Trust
50. InterCapital Insured Municipal Trust
51. InterCapital Insured Municipal Income Trust
52. InterCapital California Insured Municipal Income Trust
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. InterCapital Quality Municipal Securities
56. InterCapital California Quality Municipal Securities
57. InterCapital New York Quality Municipal Securities

<PAGE>

SCHEDULE B

DEAN WITTER SERVICES COMPANY

SCHEDULE OF ADMINISTRATIVE FEES - JANUARY 1, 1994

Monthly compensation calculated daily by applying the following annual rates to
a fund's net assets:

Dean Witter Retirement 0.065% to the net assets.
Series Intermediate
Income Securities

Dean Witter Retirement 0.065% to the net assets.
Series U.S. Government
Securities

Dean Witter Retirement Series 0.085% to the net assets.
American Value

Dean Witter Retirement Series 0.075% to the net assets.
Dividend Growth

Dean Witter Retirement Series 0.10% to the net assets.
Global Equity

Dean Witter Retirement Series 0.085% to the net assets.
Strategist

Dean Witter Retirement Series 0.075% to the net assets.
Utilities

Dean Witter Retirement Series 0.050% to the net assets.
Value Added

Dean Witter Retirement Series 0.085% to the net assets.
Capital Growth

Dean Witter Retirement Series 0.050% of the net assets.
Liquid Assets

Dean Witter Retirement Series 0.050% of the net assets.
U.S. Government Money Market

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 3 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
September 19, 1994 relating to the financial statements and financial
highlights of Dean Witter Retirement Series, comprising Liquid Asset Series,
U.S. Government Money Market Series, U.S. Government Securities Series,
Intermediate Income Securities Series, American Value Series, Capital Growth
Series, Dividend Growth Series, Strategist Series, Utilities Series, Value-
Added Market Series and Global Equity Series, which appears in such Statement
of Additional Information, and to the incorporation by reference of such report
into the Prospectus which constitutes part of this Registration Statement. We
also consent to the reference to us under the heading "Financial Highlights" in
such Prospectus and to the references to us under the headings "Independent
Accountants" and "Experts" in such Statement of Additional Information.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
September 27, 1994

f:\wp_data\paras\consent

DEAN WITTER RETIREMENT SERIES - LIQUID ASSET FUND
07/31/94

With Waiver of Fees and Assumption of Expenses.

Exhibit 16: Schedule for computation of each performance
quotation provided in the Statement of Additional Information.

(16) The Fund's current yield for the seven days ending
July 31, 1994

(A-B) x 365/N

(1.000145 -1) x 365/7 = 0.76%

The Fund's effective annualized yield for the seven days ending
July 31, 1994

365/N
A - 1

365/7
1.000145 - 1 = 0.76%

A = Value of a share of the Trust at end of period.
B = Value of a share of the Trust at beginning of period.
N = Number of days in the period.

<PAGE>

DEAN WITTER RETIREMENT SERIES - LIQUID ASSET FUND
07/31/94

Without Waiver of Fees and Assumption of Expenses.

Exhibit 16: Schedule for computation of each performance
quotation provided in the Statement of Additional Information.

(16) The Fund's current yield for the seven days ending
July 31, 1994

(A-B) x 365/N

(1.000846 -1) x 365/7 = 4.41%

The Fund's effective annualized yield for the seven days ending
July 31, 1994

365/N
A - 1

365/7
1.000846 - 1 = 4.51%

A = Value of a share of the Trust at end of period.
B = Value of a share of the Trust at beginning of period.
N = Number of days in the period.

<PAGE>

DEAN WITTER RETIREMENT SERIES - U.S. GOV'T MONEY MARKET SERIES
07/31/94

With Waiver of Fees and Assumption of Expenses.

Exhibit 16: Schedule for computation of each performance
quotation provided in the Statement of Additional Information.

(16) The Fund's current yield for the seven days ending
July 31, 1994

(A-B) x 365/N

(1.000168 -1) x 365/7 = 0.88%

The Fund's effective annualized yield for the seven days ending
July 31, 1994

365/N
A - 1

365/7
1.000168 - 1 = 0.88%

A = Value of a share of the Trust at end of period.

B = Value of a share of the Trust at beginning of period.

N = Number of days in the period.

<PAGE>

DEAN WITTER RETIREMENT SERIES - U.S. GOV'T MONEY MARKET SERIES
7 DAY YIELD
07/31/94

Without Waiver of Fees and Assumption of Expenses.

Exhibit 16: Schedule for computation of each performance
quotation provided in the Statement of Additional Information.

(16) The Fund's current yield for the seven days ending
July 31, 1994

(A-B) x 365/N

(1.000829 -1) x 365/7 = 4.32%

The Fund's effective annualized yield for the seven days ending
July 31, 1994

365/N
A - 1

365/7
1.000829 - 1 = 4.42%

A = Value of a share of the Trust at end of period.

B = Value of a share of the Trust at beginning of period.

N = Number of days in the period.

<PAGE>

SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER RETIREMENT SERIES U.S. GOVERNMENT SECURITIES TRUST

(A) AVERAGE ANNUAL TOTAL RETURNS (NO LOAD FUND)

(B) TOTAL RETURN (NO LOAD FUND)

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

EV
TR = ---------- - 1
P

t = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
EV = ENDING VALUE
P = INITIAL INVESTMENT
TR = TOTAL RETURN

<TABLE>
<CAPTION>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-JUL-94 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ---------- ----------- ---------------- --------------------
<S> <C> <C> <C> <C>
31-JUL93 $993.10 -0.69% 1.0000 -0.69%
08-JAN-93 $1,018.80 1.88% 1.5546 1.21%

</TABLE>

(C) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT

<TABLE>
<CAPTION>
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-JUL-94 YEARS - n COMPOUND RETURN - tb
- ----------- ----------- ----------- -------------------------------
<S> <C> <C> <C>
31-JUL-93 $968.20 1.0000 -3.18%
08-JAN-93 $979.50 1.5578 -1.32%

</TABLE>

(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000

FORMULA: G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION

<TABLE>
<CAPTION>
$10,000 TOTAL (D) GROWTH OF (E) GROWTH OF (F) GROWTH OF
INVESTED - P RETURN - TR $10,000 INVESTMENT - G $50,000 INVESTMENT - G $100,000 INVESTMENT - G
- ----------- ----------- --------------------- --------------------- -----------------------
<S> <C> <C> <C> <C>
08-JAN-93 1.88 $10,188 $50,940 $101,880
</TABLE>

<PAGE>

DEAN WITTER RETIREMENT SERIES U.S. GOVERNMENT SECURITIES TRUST
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
30 DAYS AS OF 7/31/94

6
(A) YIELD = 2 { [ ((a-b) /cd) +1] -1}

WHERE: a = Dividends and interest earned during the period

b = Expenses accrued for the period

c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends

d = The maximum offering price per share on the last
day of the period

YIELD = 2 { [ ((14,859.49 - 3,855.18) /300,683.615 X 9.56) +1] -1}

= 4.64%

<PAGE>

DEAN WITTER RETIREMENT SERIES U.S. GOVERNMENT SECURITIES TRUST
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
30 DAYS AS OF 7/31/94

6
(A) YIELD = 2 { [ ((a-b) /cd) +1] -1}

WHERE: a = Dividends and interest earned during the period

b = Expenses accrued for the period

c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends

d = The maximum offering price per share on the last
day of the period

YIELD = 2 { [ ((14,859.49 - 0.00) /300,683.615 X 9.56) +1] -1}

= 6.28%

(B) Without Waiver of Fees and Assumption of Expenses.

<PAGE>

SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER RETIREMENT SERIES INTERMEDIATE INCOME

(A) AVERAGE ANNUAL TOTAL RETURNS (NO LOAD FUND)

(B) TOTAL RETURN (NO LOAD FUND)

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

EV
TR = ---------- - 1
P

t = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
EV = ENDING VALUE
P = INITIAL INVESTMENT
TR = TOTAL RETURN

<TABLE>
<CAPTION>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-JUL-94 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ---------- ----------- ---------------- --------------------
<S> <C> <C> <C> <C>
31-JUL-93 $1,002.60 0.26% 1.0000 0.26%
12-JAN-93 $1,019.40 1.94% 1.5469 1.25%
</TABLE>

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT

<TABLE>
<CAPTION>
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-JUL-94 YEARS - n COMPOUND RETURN - tb
- ----------- ----------- ----------- -------------------------------
<S> <C> <C> <C>
31-JUL-93 $975.80 1.0000 -2.42%
12-JAN-93 $978.40 1.5469 -1.40%

</TABLE>

(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000

FORMULA: G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION

</TABLE>

<PAGE>

SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER RETIREMENT-INTERMEDIATE INCOME SECURITIES SERIES
30 DAYS AS OF 7/31/94

--With Waiver of Fees and Assumption of Expenses.

6
(A) YIELD = 2{ [((a-b)/cd)+1]-1 }
WHERE: a = Dividends and interest earned during the period.
b = Expenses accrued for the period.
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = The maximum offering price per share on the last
day of the period.
6
YIELD = 2{ [((2238.60-0)/46,481.316 X 9.41) + 1]-1}
=6.22%

(B) Without Waiver of Fees and Assumption of Expenses.

6
YIELD = 2{ [((2238.60-559)/46,481.316 X 9.41) + 1]-1}
= 4.65%

<PAGE>

SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER RETIREMENT SERIES AMERICAN VALUE

(A) AVERAGE ANNUAL TOTAL RETURNS (NO LOAD FUND)

(B) TOTAL RETURN (NO LOAD FUND)

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

EV
TR = ---------- - 1
P

t = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
EV = ENDING VALUE
P = INITIAL INVESTMENT
TR = TOTAL RETURN

<TABLE>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-94 RETURN - TR YEARS - n COMPOUND RETURN - t
- ------------ ---------- ----------- --------- -------------------
<S> <C> <C> <C> <C>
31-Jul-93 $994.10 -0.59% 1.0000 -0.59%
01-Feb-93 $999.00 -0.10% 1.4921 -0.07%

</TABLE>

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT

<TABLE>
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-94 YEARS - n COMPOUND RETURN - tb
- ------------ ----------- ----------- ----------------------
<S> <C> <C> <C>
31-Jul-93 $992.94 1.0000 -0.71%
01-Feb-93 $984.00 1.4921 -1.08%

</TABLE>

(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000

FORMULA:G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION

<TABLE>
$10,000 TOTAL (D) GROWTH OF (E) GROWTH OF (F) GROWTH OF
INVESTED - P RETURN - TR $10,000 INVESTMENT - G $50,000 INVESTMENT - G $100,000 INVESTMENT - G
- ------------ ----------- --------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
01-Feb-93 -0.10 $9,990 $49,950 $99,900
</TABLE>

<PAGE>

SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER RETIREMENT SERIES CAPITAL GROWTH

(A) AVERAGE ANNUAL TOTAL RETURNS (NO LOAD FUND)

(B) TOTAL RETURN (NO LOAD FUND)

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

EV
TR = ---------- - 1
P

t = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
EV = ENDING VALUE
P = INITIAL INVESTMENT
TR = TOTAL RETURN

<TABLE>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-94 RETURN - TR YEARS - n COMPOUND RETURN - t
- ------------ ---------- ----------- --------- -------------------
<S> <C> <C> <C> <C>
31-Jul-93 $1,065.70 6.57% 1.0000 6.57%
02-Feb-93 $946.30 -5.37% 1.4894 -3.64%
</TABLE>

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT

<TABLE>
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-94 YEARS - n COMPOUND RETURN - tb
- ------------ ----------- ----------- ----------------------
<S> <C> <C> <C>
31-Jul-93 $1,046.69 1.00 4.67%
02-Feb-93 $919.00 1.49 -5.51%
</TABLE>

(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000

FORMULA:G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION

<PAGE>

SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER RETIREMENT SERIES DIVIDEND GROWTH

(A) AVERAGE ANNUAL TOTAL RETURNS (NO LOAD FUND)

(B) TOTAL RETURN (NO LOAD FUND)

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

EV
TR = ---------- - 1
P

t = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
EV = ENDING VALUE
P = INITIAL INVESTMENT
TR = TOTAL RETURN

<TABLE>

(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-94 RETURN - TR YEARS - n COMPOUND RETURN - t
- ------------ ---------- ----------- --------- -------------------
<S> <C> <C> <C> <C>
31-Jul-93 $1,061.30 6.13% 1.0000 6.13%
07-Jan-93 $1,136.80 13.68% 1.5606 8.56%
</TABLE>

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT

<TABLE>
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-94 YEARS - n COMPOUND RETURN - tb
- ------------ ----------- ----------- ----------------------
<S> <C> <C> <C>
31-Jul-93 $1,045.50 1.0000 4.55%
07-Jan-93 $1,109.30 1.5606 6.87%

</TABLE>

(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000

FORMULA:G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION

</TABLE>

<PAGE>

SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER RETIREMENT SERIES STRATEGIST

(A) AVERAGE ANNUAL TOTAL RETURNS (NO LOAD FUND)

(B) TOTAL RETURN (NO LOAD FUND)

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

EV
TR = ---------- - 1
P

t = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
EV = ENDING VALUE
P = INITIAL INVESTMENT
TR = TOTAL RETURN

<TABLE>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-94 RETURN - TR YEARS - n COMPOUND RETURN - t
- ------------ ---------- ----------- --------- -------------------
<S> <C> <C> <C> <C>
31-Jul-93 $1,001.20 0.12% 1.0000 0.12%
07-Jan-93 $984.20 -1.58% 1.5606 -1.02%
</TABLE>

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT

<TABLE>
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-94 YEARS - n COMPOUND RETURN - tb
- ------------ ----------- ----------- ----------------------
<S> <C> <C> <C>
31-Jul-93 $987.70 1.0000 -1.23%
07-Jan-93 $961.00 1.5606 -2.52%

</TABLE>

(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000

FORMULA:G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION

<PAGE>

SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER RETIREMENT SERIES UTILITIES

(A) AVERAGE ANNUAL TOTAL RETURNS (NO LOAD FUND)

(B) TOTAL RETURN (NO LOAD FUND)

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

EV
TR = ---------- - 1
P

t = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
EV = ENDING VALUE
P = INITIAL INVESTMENT
TR = TOTAL RETURN

<TABLE>
<CAPTION>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-JUL-94 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ---------- ----------- ---------------- --------------------
<S> <C> <C> <C> <C>
31-JUL-93 $947.70 -5.23% 1.0000 -5.23%
08-JAN-93 $1,089.60 8.96% 1.5578 5.66%
</TABLE>

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT

<TABLE>
<CAPTION>
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-JUL-94 YEARS - n COMPOUND RETURN - tb
- ----------- ----------- ----------- -------------------------------
<S> <C> <C> <C>
31-JUL-93 $931.90 1.0000 -6.81%
08-JAN-93 $1,058.70 1.5578 3.73%
</TABLE>

(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000

FORMULA: G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION

</TABLE>

<PAGE>

SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER RETIREMENT SERIES VALUE ADDED

(A) AVERAGE ANNUAL TOTAL RETURNS (NO LOAD FUND)

(B) TOTAL RETURN (NO LOAD FUND)

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

EV
TR = ---------- - 1
P

t = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
EV = ENDING VALUE
P = INITIAL INVESTMENT
TR = TOTAL RETURN

<TABLE>
<CAPTION>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-JUL-94 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ---------- ----------- ---------------- --------------------
<S> <C> <C> <C> <C>
31-JUL-93 $1,088.90 8.89% 1.0000 8.89%
01-FEB-93 $1,096.70 9.67% 1.4921 6.38%

</TABLE>

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT

<TABLE>
<CAPTION>
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-JUL-94 YEARS - n COMPOUND RETURN - tb
- ----------- ----------- ----------- -------------------------------
<S> <C> <C> <C>
31-JUL-93 $1,082.50 1.0000 8.25%
31-FEB-93 $1,081.40 1.4921 5.38%
</TABLE>

(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000

FORMULA: G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION

<PAGE>

SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER RETIREMENT SERIES GLOBAL EQUITY

(A) AVERAGE ANNUAL TOTAL RETURNS (NO LOAD FUND)

(B) TOTAL RETURN (NO LOAD FUND)

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

EV
TR = ---------- - 1
P

t = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
EV = ENDING VALUE
P = INITIAL INVESTMENT
TR = TOTAL RETURN

<TABLE>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-94 RETURN - TR YEARS - n COMPOUND RETURN - t
- ------------ ---------- ----------- --------- -------------------
<S> <C> <C> <C> <C>
31-Jul-93 $1,065.40 6.54% 1.0000 6.54%
08-Jan-93 $1,069.70 6.97% 1.5578 4.42%
</TABLE>

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|

tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT

<TABLE>
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-94 YEARS - n COMPOUND RETURN - tb
- ------------ ----------- ----------- ----------------------
<S> <C> <C> <C>
31-Jul-93 $1,059.50 1.0000 5.95%
08-Jan-93 $1,051.00 1.5578 3.24%

</TABLE>

(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000

FORMULA:G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> LIQUID ASSETS

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-END> JUL-31-1994
<INVESTMENTS-AT-COST> 1,571,373
<INVESTMENTS-AT-VALUE> 1,571,373
<RECEIVABLES> 14,924
<ASSETS-OTHER> 18,197
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,604,494
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 80,124
<TOTAL-LIABILITIES> 80,124
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,524,366
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 4
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,524,370
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 42,583
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 42,583
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 42,583
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (42,579)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,665,368
<NUMBER-OF-SHARES-REDEEMED> (3,264,711)
<SHARES-REINVESTED> 42,578
<NET-CHANGE-IN-ASSETS> 443,235
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,107
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 1,221,422
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 3.48
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> US GOV'T MONEY MARKET

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-END> JUL-31-1994
<INVESTMENTS-AT-COST> 554,520
<INVESTMENTS-AT-VALUE> 554,520
<RECEIVABLES> 0
<ASSETS-OTHER> 9,467
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 564,615
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,807
<TOTAL-LIABILITIES> 9,807
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 554,808
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 554,808
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 19,117
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 19,117
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 19,117
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (19,117)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,044,990
<NUMBER-OF-SHARES-REDEEMED> (1,634,603)
<SHARES-REINVESTED> 19,120
<NET-CHANGE-IN-ASSETS> 429,507
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,882
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 576,358
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 3.52
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> US GOV'T SECURITIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-END> JUL-31-1994
<INVESTMENTS-AT-COST> 3,015,790
<INVESTMENTS-AT-VALUE> 2,889,734
<RECEIVABLES> 58,113
<ASSETS-OTHER> 16,528
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,970,432
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16,407
<TOTAL-LIABILITIES> 16,407
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,079,198
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 887
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (126,056)
<NET-ASSETS> 2,954,025
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 104,510
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 104,510
<REALIZED-GAINS-CURRENT> (3)
<APPREC-INCREASE-CURRENT> (131,815)
<NET-CHANGE-FROM-OPS> (27,308)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (103,806)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 191,048
<NUMBER-OF-SHARES-REDEEMED> (65,859)
<SHARES-REINVESTED> 9,284
<NET-CHANGE-IN-ASSETS> 134,473
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 15,165
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 2,340,992
<PER-SHARE-NAV-BEGIN> 10.06
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> (.43)
<PER-SHARE-DIVIDEND> (.44)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.69)
<PER-SHARE-NAV-END> 9.56
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> INTERMEDIATE INCOME

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-END> JUL-31-1994
<INVESTMENTS-AT-COST> 456,594
<INVESTMENTS-AT-VALUE> 441,284
<RECEIVABLES> 6,822
<ASSETS-OTHER> 38,727
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 486,833
<PAYABLE-FOR-SECURITIES> 14,733
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,637
<TOTAL-LIABILITIES> 26,370
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 476,521
<SHARES-COMMON-STOCK> 48,919
<SHARES-COMMON-PRIOR> 18,224
<ACCUMULATED-NII-CURRENT> 162
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (910)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (15,310)
<NET-ASSETS> 460,463
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16,488
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 16,488
<REALIZED-GAINS-CURRENT> (910)
<APPREC-INCREASE-CURRENT> (15,055)
<NET-CHANGE-FROM-OPS> 523
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16,354)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35,727
<NUMBER-OF-SHARES-REDEEMED> (6,715)
<SHARES-REINVESTED> 1,683
<NET-CHANGE-IN-ASSETS> 278,555
<ACCUMULATED-NII-PRIOR> 28
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 268,417
<PER-SHARE-NAV-BEGIN> 9.98
<PER-SHARE-NII> 0.60
<PER-SHARE-GAIN-APPREC> (0.57)
<PER-SHARE-DIVIDEND> (0.60)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.41
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> AMERICAN VALUE

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-END> JUL-31-1994
<INVESTMENTS-AT-COST> 6,535,798
<INVESTMENTS-AT-VALUE> 6,606,394
<RECEIVABLES> 341,001
<ASSETS-OTHER> 36,416
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,983,811
<PAYABLE-FOR-SECURITIES> 97,377
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45,739
<TOTAL-LIABILITIES> 143,116
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,120,477
<SHARES-COMMON-STOCK> 689,073
<SHARES-COMMON-PRIOR> 30,650
<ACCUMULATED-NII-CURRENT> 47,154
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (397,532)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 70,596
<NET-ASSETS> 6,840,695
<DIVIDEND-INCOME> 22,293
<INTEREST-INCOME> 24,980
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 47,273
<REALIZED-GAINS-CURRENT> (395,854)
<APPREC-INCREASE-CURRENT> 66,521
<NET-CHANGE-FROM-OPS> (282,060)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,940)
<DISTRIBUTIONS-OF-GAINS> (3,640)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,750,006
<NUMBER-OF-SHARES-REDEEMED> (935,273)
<SHARES-REINVESTED> 5,505
<NET-CHANGE-IN-ASSETS> 6,532,598
<ACCUMULATED-NII-PRIOR> 1,821
<ACCUMULATED-GAINS-PRIOR> 1,962
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 23,785
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 75,684
<AVERAGE-NET-ASSETS> 2,798,253
<PER-SHARE-NAV-BEGIN> 10.05
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> (0.09)
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> (0.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.93
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> CAPITAL GROWTH

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-END> JUL-31-1994
<INVESTMENTS-AT-COST> 214,004
<INVESTMENTS-AT-VALUE> 209,149
<RECEIVABLES> 1,620
<ASSETS-OTHER> 16,695
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 227,464
<PAYABLE-FOR-SECURITIES> 3,188
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,564
<TOTAL-LIABILITIES> 12,752
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 220,444
<SHARES-COMMON-STOCK> 22,794
<SHARES-COMMON-PRIOR> 15,150
<ACCUMULATED-NII-CURRENT> 1,893
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,770)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4,855)
<NET-ASSETS> 214,712
<DIVIDEND-INCOME> 2,637
<INTEREST-INCOME> 16
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 2,653
<REALIZED-GAINS-CURRENT> (2,073)
<APPREC-INCREASE-CURRENT> 8,318
<NET-CHANGE-FROM-OPS> 8,898
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (760)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 83,346
<NUMBER-OF-SHARES-REDEEMED> (12,127)
<SHARES-REINVESTED> 760
<NET-CHANGE-IN-ASSETS> 80,117
<ACCUMULATED-NII-PRIOR> (292)
<ACCUMULATED-GAINS-PRIOR> (697)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,488
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 44,661
<AVERAGE-NET-ASSETS> 175,091
<PER-SHARE-NAV-BEGIN> 8.88
<PER-SHARE-NII> .13
<PER-SHARE-GAIN-APPREC> .45
<PER-SHARE-DIVIDEND> (.04)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.42
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> DIVIDEND GROWTH

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-END> JUL-31-1994
<INVESTMENTS-AT-COST> 12,777,253
<INVESTMENTS-AT-VALUE> 12,593,491
<RECEIVABLES> 291,310
<ASSETS-OTHER> 108,683
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,993,484
<PAYABLE-FOR-SECURITIES> 153,946
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18,119
<TOTAL-LIABILITIES> 172,065
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,772,188
<SHARES-COMMON-STOCK> 1,163,962
<SHARES-COMMON-PRIOR> 227,902
<ACCUMULATED-NII-CURRENT> 95,171
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 137,822
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (183,762)
<NET-ASSETS> 12,821,419
<DIVIDEND-INCOME> 231,162
<INTEREST-INCOME> 5,024
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 236,186
<REALIZED-GAINS-CURRENT> 139,230
<APPREC-INCREASE-CURRENT> (222,761)
<NET-CHANGE-FROM-OPS> 152,655
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (148,288)
<DISTRIBUTIONS-OF-GAINS> (5,490)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,474,602
<NUMBER-OF-SHARES-REDEEMED> (1,190,364)
<SHARES-REINVESTED> 121,365
<NET-CHANGE-IN-ASSETS> 10,404,480
<ACCUMULATED-NII-PRIOR> 7,273
<ACCUMULATED-GAINS-PRIOR> 4,082
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 53,781
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 108,571
<AVERAGE-NET-ASSETS> 7,170,722
<PER-SHARE-NAV-BEGIN> 10.61
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 0.37
<PER-SHARE-DIVIDEND> (0.23)
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.02
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> STRATEGIST

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-END> JUL-31-1994
<INVESTMENTS-AT-COST> 1,312,146
<INVESTMENTS-AT-VALUE> 1,259,912
<RECEIVABLES> 26,857
<ASSETS-OTHER> 9,205
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,295,974
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,514
<TOTAL-LIABILITIES> 19,514
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,307,350
<SHARES-COMMON-STOCK> 131,252
<SHARES-COMMON-PRIOR> 56,075
<ACCUMULATED-NII-CURRENT> 21,430
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (86)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (52,234)
<NET-ASSETS> 1,276,460
<DIVIDEND-INCOME> 10,635
<INTEREST-INCOME> 18,161
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 28,796
<REALIZED-GAINS-CURRENT> 9,623
<APPREC-INCREASE-CURRENT> (51,073)
<NET-CHANGE-FROM-OPS> (12,654)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (11,000)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 111,898
<NUMBER-OF-SHARES-REDEEMED> (37,803)
<SHARES-REINVESTED> 1,082
<NET-CHANGE-IN-ASSETS> 725,066
<ACCUMULATED-NII-PRIOR> 3,634
<ACCUMULATED-GAINS-PRIOR> (9,709)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 899,277
<PER-SHARE-NAV-BEGIN> 9.83
<PER-SHARE-NII> 0.23
<PER-SHARE-GAIN-APPREC> (0.21)
<PER-SHARE-DIVIDEND> (0.13)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.72
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> UTILITIES SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-END> JUL-31-1994
<INVESTMENTS-AT-COST> 3,998,747
<INVESTMENTS-AT-VALUE> 3,895,889
<RECEIVABLES> 82,495
<ASSETS-OTHER> 4,387
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,982,771
<PAYABLE-FOR-SECURITIES> 107,962
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,227
<TOTAL-LIABILITIES> 123,189
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,931,350
<SHARES-COMMON-STOCK> 370,476
<SHARES-COMMON-PRIOR> 117,557
<ACCUMULATED-NII-CURRENT> 29,677
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,413
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (102,858)
<NET-ASSETS> 3,859,582
<DIVIDEND-INCOME> 85,500
<INTEREST-INCOME> 10,465
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 95,965
<REALIZED-GAINS-CURRENT> 1,413
<APPREC-INCREASE-CURRENT> (204,664)
<NET-CHANGE-FROM-OPS> (107,286)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (72,772)
<DISTRIBUTIONS-OF-GAINS> (936)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 333,775
<NUMBER-OF-SHARES-REDEEMED> (87,688)
<SHARES-REINVESTED> 6,832
<NET-CHANGE-IN-ASSETS> 2,525,199
<ACCUMULATED-NII-PRIOR> 6,484
<ACCUMULATED-GAINS-PRIOR> 936
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 2,327,443
<PER-SHARE-NAV-BEGIN> 11.35
<PER-SHARE-NII> 0.37
<PER-SHARE-GAIN-APPREC> (0.95)
<PER-SHARE-DIVIDEND> (0.34)
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.42
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> VALUE-ADDED MARKET

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-END> JUL-31-1994
<INVESTMENTS-AT-COST> 5,027,117
<INVESTMENTS-AT-VALUE> 5,050,917
<RECEIVABLES> 164,625
<ASSETS-OTHER> 835
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,216,377
<PAYABLE-FOR-SECURITIES> 52,168
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31,618
<TOTAL-LIABILITIES> 83,786
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,998,958
<SHARES-COMMON-STOCK> 474,963
<SHARES-COMMON-PRIOR> 63,843
<ACCUMULATED-NII-CURRENT> 67,985
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 41,848
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,800
<NET-ASSETS> 5,132,591
<DIVIDEND-INCOME> 82,410
<INTEREST-INCOME> 11,589
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 93,999
<REALIZED-GAINS-CURRENT> 41,849
<APPREC-INCREASE-CURRENT> 17,319
<NET-CHANGE-FROM-OPS> 153,167
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (26,537)
<DISTRIBUTIONS-OF-GAINS> (532)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 480,766
<NUMBER-OF-SHARES-REDEEMED> (72,178)
<SHARES-REINVESTED> 2,532
<NET-CHANGE-IN-ASSETS> 4,492,103
<ACCUMULATED-NII-PRIOR> 523
<ACCUMULATED-GAINS-PRIOR> 531
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 3,728,130
<PER-SHARE-NAV-BEGIN> 10.03
<PER-SHARE-NII> 0.24
<PER-SHARE-GAIN-APPREC> 0.65
<PER-SHARE-DIVIDEND> (0.11)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.81
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> GLOBAL EQUITY

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-END> JUL-31-1994
<INVESTMENTS-AT-COST> 1,907,828
<INVESTMENTS-AT-VALUE> 1,911,081
<RECEIVABLES> 100,794
<ASSETS-OTHER> 28,123
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,039,998
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,973
<TOTAL-LIABILITIES> 19,973
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,999,660
<SHARES-COMMON-STOCK> 189,640
<SHARES-COMMON-PRIOR> 32,089
<ACCUMULATED-NII-CURRENT> 21,656
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,566)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,275
<NET-ASSETS> 2,020,025
<DIVIDEND-INCOME> 6,504
<INTEREST-INCOME> 16,304
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 22,808
<REALIZED-GAINS-CURRENT> (4,589)
<APPREC-INCREASE-CURRENT> 5,145
<NET-CHANGE-FROM-OPS> 23,364
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,600)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,169,351
<NUMBER-OF-SHARES-REDEEMED> (494,286)
<SHARES-REINVESTED> 3,091
<NET-CHANGE-IN-ASSETS> 1,697,920
<ACCUMULATED-NII-PRIOR> 2,471
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,462
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 57,104
<AVERAGE-NET-ASSETS> 946,218
<PER-SHARE-NAV-BEGIN> 10.04
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> .58
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.65
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of JACK F. BENNETT,
EDWIN J. GARN, JOHN R. HAIRE, JOHN E. JEUCK, MANUEL H. JOHNSON,
PAUL KOLTON and MICHAEL E. NUGENT, whose signatures appear below,
constitutes and appoints David M. Butowsky, Ronald Feiman and
Stuart Strauss, or any of them, his true and lawful attorneys-in-
fact and agents, with full power of substitution among himself and
each of the persons appointed herein, for him and in his name,
place and stead, in any and all capacities, to sign any amendments
to any registration statement of ANY OF THE DEAN WITTER FUNDS SET
FORTH ON SCHEDULE A ATTACHED HERETO, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.

Dated: May 10, 1994

/s/ Jack F. Bennett /s/ Manuel H. Johnson
Jack F. Bennett Manuel H. Johnson

/s/ Edwin J. Garn /s/ Paul Kolton
Edwin J. Garn Paul Kolton

/s/ John R. Haire /s/ Michael E. Nugent
John R. Haire Michael E. Nugent

/s/ John E. Jeuck
John E. Jeuck

<PAGE>

DEAN WITTER FUNDS

MONEY MARKET

1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust

EQUITY FUNDS

10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities

ASSET ALLOCATION FUNDS

24. Dean Witter Managed Assets Trust
25. Dean Witter Strategist Fund

FIXED-INCOME FUNDS

26. Dean Witter High Yield Securities Inc.
27. Dean Witter Convertible Securities Trust
28. Dean Witter Intermediate Income Securities
29. Dean Witter World Wide Income Trust
30. Dean Witter Global Short-Term Income Fund Inc.
31. Dean Witter Diversified Income Trust
32. Dean Witter Premier Income Trust
33. Dean Witter U.S. Government Securities Trust

<PAGE>

34. Dean Witter Federal Securities Trust
35. Dean Witter Short-Term U.S. Treasury Trust
36. Dean Witter Tax-Exempt Securities Trust
37. Dean Witter California Tax-Free Income Fund
38. Dean Witter New York Tax-Free Income Fund
39. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
40. Dean Witter Select Municipal Reinvestment Fund
41. Dean Witter Limited Term Municipal Trust

SPECIAL PURPOSE FUNDS

42. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio

43. Dean Witter Retirement Series
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series

<PAGE>

CLOSED-END FUNDS

44. High Income Advantage Trust
45. High Income Advantage Trust II
46. High Income Advantage Trust III
47. InterCapital Income Securities Inc.
48. Dean Witter Government Income Trust
49. InterCapital Insured Municipal Bond Trust
50. InterCapital Insured Municipal Trust
51. InterCapital Quality Municipal Investment Trust
52. InterCapital Quality Municipal Income Trust
53. Municipal Income Trust
54. Municipal Income Trust II
55. Municipal Income Trust III
56. Municipal Income Opportunities Trust
57. Municipal Income Opportunities Trust II
58. Municipal Income Opportunities Trust III
59. Municipal Premium Income Trust
60. Prime Income Trust
61. InterCapital Insured Municipal Income Trust
62. InterCapital California Insured Municipal Income Trust
63. InterCapital Quality Municipal Securities
64. InterCapital California Quality Municipal Securities
65. InterCapital New York Quality Municipal Securities

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of CHARLES A.
FIUMEFREDDO and EDWARD R. TELLING, whose signatures appear below,
constitutes and appoints Sheldon Curtis, Marilyn K. Cranney and
Barry Fink, or any of them, his true and lawful attorneys-in-fact
and agent, with full power of substitution among himself and each
of the persons appointed herein, for him and in his name, place and
stead, in any and all capacities, to sign any amendments to any
registration statement of ANY OF THE DEAN WITTER FUNDS SET FORTH ON
SCHEDULE A ATTACHED HERETO, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.

Dated: May 10, 1994

/s/ Charles A. Fiumefreddo /s/ Edward R. Telling
Charles A. Fiumefreddo Edward R. Telling

<PAGE>

DEAN WITTER FUNDS

MONEY MARKET

EQUITY FUNDS

ASSET ALLOCATION FUNDS

24. Dean Witter Managed Assets Trust
25. Dean Witter Strategist Fund

FIXED-INCOME FUNDS

<PAGE>

SPECIAL PURPOSE FUNDS

<PAGE>

CLOSED-END FUNDS

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that MICHAEL BOZIC, whose signature
appears below, constitues and appoints David M. Butowsky, Ronald Feiman and
Stuart Strauss, or any of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution among himself and each of the persons
appointed herein, for him and in his name, place and stead, in any and all
capacities, to sign any amendments to any registration statement of ANY OF THE
DEAN WITTER FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.

Dated: April 15, 1994

/s/ Michael Bozic
- ------------------------
Michael Bozic

<PAGE>

DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust

EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
24. Dean Witter Global Utilities Fund

ASSET ALLOCATION FUNDS
25. Dean Witter Managed Assets Trust
26. Dean Witter Strategist Fund

FIXED-INCOME FUNDS
27. Dean Witter High Yield Securities Inc.
28. Dean Witter Convertible Securities Trust
29. Dean Witter Intermediate Income Securities
30. Dean Witter World Wide Income Trust
31. Dean Witter Global Short-Term Income Fund Inc.
32. Dean Witter Diversified Income Trust
33. Dean Witter Premier Income Trust
34. Dean Witter U.S. Government Securities Trust
35. Dean Witter Federal Securities Trust
36. Dean Witter Short-Term U.S. Treasury Trust
37. Dean Witter Tax-Exempt Securities Trust
38. Dean Witter California Tax-Free Income Fund
39. Dean Witter New York Tax-Free Income Fund
40. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
41. Dean Witter Select Municipal Reinvestment Fund
42. Dean Witter Limited Term Municipal Trust
43. Dean Witter Short-Term Bond Fund

SPECIAL PURPOSE FUNDS
44. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
45. Dean Witter Retirement Series
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series

CLOSED-END FUNDS
46. High Income Advantage Trust
47. High Income Advantage Trust II
48. High Income Advantage Trust III
49. InterCapital Income Securities Inc.
50. Dean Witter Government Income Trust
51. InterCapital Insured Municipal Bond Trust
52. InterCapital Insured Municipal Trust
53. InterCapital Quality Municipal Investment Trust
<PAGE>

54. InterCapital Quality Municipal Income Trust
55. Municipal Income Trust
56. Municipal Income Trust II
57. Municipal Income Trust III
58. Municipal Income Opportunities Trust
59. Municipal Income Opportunities Trust II
60. Municipal Income Opportunities Trust III
61. Municipal Premium Income Trust
62. Prime Income Trust
63. InterCapital Insured Municipal Income Trust
64. InterCapital California Insured Municipal Income Trust
65. InterCapital Quality Municipal Securities
66. InterCapital California Quality Municipal Securities
67. InterCapital New York Quality Municipal Securities
68. InterCapital California Insured Municipal Securities
69. InterCapital Insured Municipal Securities

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that JOHN L. SCHROEDER, whose signature
appears below, constitues and appoints David M. Butowsky, Ronald Feiman and
Stuart Strauss, or any of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution among himself and each of the persons
appointed herein, for him and in his name, place and stead, in any and all
capacities, to sign any amendments to any registration statement of ANY OF THE
DEAN WITTER FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.

Dated: April 13, 1994

/s/ John L Schroeder
- ------------------------
John L. Schroeder

<PAGE>

ASSET ALLOCATION FUNDS
25. Dean Witter Managed Assets Trust
26. Dean Witter Strategist Fund

53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. Municipal Income Trust
56. Municipal Income Trust II
57. Municipal Income Trust III
58. Municipal Income Opportunities Trust
59. Municipal Income Opportunities Trust II
60. Municipal Income Opportunities Trust III
61. Municipal Premium Income Trust
62. Prime Income Trust
63. InterCapital Insured Municipal Income Trust
64. InterCapital California Insured Municipal Income Trust
65. InterCapital Quality Municipal Securities
66. InterCapital California Quality Municipal Securities
67. InterCapital New York Quality Municipal Securities
68. InterCapital California Insured Municipal Securities
69. InterCapital Insured Municipal Securities

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that PHILIP J. PURCELL, whose signature
appears below, constitutes and appoints Sheldon Curtis, Marilyn K. Cranney and
Barry Fink, or any of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution among himself and each of the persons appointed
herein, for him and in his name, place and stead, in any and all capacities, to
sign any amendments to any registration statement OF ANY OF THE DEAN WITTER
FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.

Dated: April 8, 1994

/s/ Philip J. Purcell
- -------------------------------
Philip J. Purcell

<PAGE>

ASSET ALLOCATION FUNDS
25. Dean Witter Managed Assets Trust
26. Dean Witter Strategist Fund

55. Municipal Income Trust
56. Municipal Income Trust II
57. Municipal Income Trust III
58. Municipal Income Opportunities Trust
59. Municipal Income Opportunities Trust II
60. Municipal Income Opportunities Trust III
61. Municipal Premium Income Trust
62. Prime Income Trust
63. InterCapital Insured Municipal Income Trust
64. InterCapital California Insured Municipal Income Trust
65. InterCapital Quality Municipal Securities
66. InterCapital California Quality Municipal Securities
67. InterCapital New York Quality Municipal Securities
68. InterCapital California Insured Municipal Securities
69. InterCapital Insured Municipal Securities