<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 28, 1995
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. 4 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
[ ]
AMENDMENT NO. 5 [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)
__ immediately upon filing pursuant to paragraph (b)
X
__ on September 29, 1995 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, 1995 WITH THE SECURITIES AND EXCHANGE
COMMISSION ON SEPTEMBER 20, 1995.
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER RETIREMENT SERIES
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
PART A
ITEM CAPTION PROSPECTUS
- ---------- -----------------------------------------------------------
<S> <C> <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; Financial Highlights
The Fund and Its Management; Back Cover;
5. ............ Investment Objectives and Policies
6. ............ Dividends, Distributions and Taxes; Additional Information
Purchase of Fund Shares; Shareholder
Services; Repurchases and Redemptions;
7. ............ Determination of Net Asset Value; Prospectus Summary
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. ............ The Fund and Its Management; Trustees and Officers
The Fund and Its Management; Custodian and Transfer Agent;
16. ............ 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; Financial Statements
20. ............ Dividends, Distributions and Taxes; Financial Statements
21. ............ Purchase of Fund Shares
22. ............ Performance Information
23. ............ Experts; Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
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DEAN WITTER
----------------------
RETIREMENT SERIES
----------------------
SEPTEMBER 29,1995
----------------------
PROSPECTUS ENCLOSED
----------------------
<PAGE>
PROSPECTUS DATED SEPTEMBER 29, 1995
DEAN WITTER RETIREMENT SERIES
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048 (212) 392-2550 OR (800)
869-6397
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, entered into by the Fund with the Distributor and Dean
Witter Reynolds Inc., 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
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 29, 1995, which has been
filed with the Securities and Exchange Commission, and which is available at
no charge upon request of the Fund at the address or telephone numbers listed
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/10
Investment Objectives and Policies/11
Liquid Asset Series/11
U.S. Government Money Market Series/13
U.S. Government Securities Series/14
Intermediate Income Securities Series/17
American Value Series/18
Capital Growth Series/19
Dividend Growth Series/20
Strategist Series/20
Utilities Series/22
Value-Added Market Series/24
Global Equity Series/25
General Investment Techniques/26
Investment Restrictions/33
Determination of Net Asset Value/34
Purchase of Fund Shares/35
Shareholder Services/37
Redemptions and Repurchases/39
Dividends, Distributions and Taxes/40
Performance Information/42
Additional Information/43
PROSPECTUS SUMMARY
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
The The Fund is organized as a Trust, commonly known as a Massachusetts business
Fund trust, and 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 10). 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
Offered issuing a 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 43).
Offering The price of the shares of each Series of the Fund offered by this Prospectus
Price is determined once daily as of 4:00 p.m., New York time (or, on days when the
New York Stock Exchange closes prior to 4:00 p.m., at such earlier 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 34). 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.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Investment Each Series has distinct investment objectives and policies, and is subject
Objectives and to various investment restrictions, some of which apply to all Series. The
Policies Liquid Asset Series 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 11-13). 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 13-14). 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 14-17). 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
17-18). 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 18-19). 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
19-20). 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 20). 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 20-22). 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 22-24). 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 24-25).
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 25-26).
Investment Dean Witter InterCapital Inc. ("InterCapital" or the Investment Manager"),
Manager the 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 ninety-six investment
companies and other portfolios with assets of approximately $75.3 billion at
August 31, 1995 (see page 10).
Management The Investment Manager receives monthly fees at the following annual rates of
Fees the daily 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%; and 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.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Dividends and The Liquid Asset Series and the U.S. Government Money Market Series declare
Capital Gains and reinvest all dividends daily and pay cash dividends monthly; the U.S.
Distributions Government Securities Series and the Intermediate Income Securities Series
declare dividends from net investment income daily and pay such dividends
monthly; the Dividend Growth Series and the Utilities Series declare and pay
dividends from net investment income quarterly; the American Value Series,
the Capital Growth Series, the Strategist Series, the Value-Added Market
Series and the Global Equity Series declare and pay dividends from net
investment income at least 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 40-42).
Distributor Dean Witter Distributors Inc. is the distributor of the Fund's shares. The
Distributor and Dean Witter Reynolds Inc. 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 35).
Redemption Shares of the Fund may be redeemed at their net asset value (see pages
39-40).
Shareholder Automatic investment of Dividends and Distributions (unless otherwise
Services requested); Systematic Payroll Deduction Plan; Exchange Privilege;
Systematical Withdrawal Plan (see pages 37-38).
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 26) and "reverse repurchase agreements" (page
26) 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 26), "when-issued and delayed delivery securities and
forward commitments" (page 26) and "reverse repurchase agreements" (page 26).
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 14-17). 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 26-27). 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
26), "when, as and if issued securities" (page 27), "zero coupon securities"
(page 27) and "reverse repurchase agreements" (page 26). 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
</TABLE>
4
<TABLE>
<CAPTION>
<S> <C>
general investment opinions. Shareholders should also refer to the
discussions of "repurchase agreements" (page 26), "when, as and if issued
securities" (page 27) and "warrants" (page 27). 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 26-32). 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 26), "when, as and if issued securities" (page 27) and
"warrants" (page 27). 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 29-32), when-issued and delayed delivery
securities and forward commitments (page 26), when, as and if issued
securities (page 26) and repurchase agreements (page 26). 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 22). 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 26),
"when-issued and delayed delivery securities and forward commitments" (page
26), "when, as and if issued securities" (page 26), "zero coupon securities"
(page 27), and "foreign securities" (pages 27-28). 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 26) and "options and futures transactions"
(pages 29-32). 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 27-29). 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 29). 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
32-33).
</TABLE>
5
<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, 1996, calculated using average net assets for the year
ended July 31, 1995.
Shareholder Transaction Expenses (for each Series)
<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 for the year
ended July 31, 1995)*
<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*
(after fee waiver) .. 0.29% 0.0% 0.0% 0.0% 0.50% 0.04%
12b-1 Fees ............ 0.0 0.0 0.0 0.0 0.0 0.0
Other Expenses*
(after expense
assumption) .......... 0.39 1.00 1.00 1.00 0.33 0.96
Total Series Operating
Expenses ............. 0.68 1.00 1.00 1.00 0.83 1.00
</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) .. 0.44% 0.25% 0.33% 0.29% 0.27%
12b-1 Fees ............ 0.0 0.0 0.0 0.0 0.0
Other Expenses*
(after expense
assumption) .......... 0.23 0.75 0.67 0.42 0.73
Total Series Operating
Expenses ............. 0.67 1.00 1.00 0.71 1.00
</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
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>
1 year .... $ 7 $ 10 $ 10 $ 10 $ 8 $ 10
3 years .. 22 32 32 32 26 32
5 years .. 38 55 55 55 46 55
10 years . 85 122 122 122 103 122
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND
GROWTH STRATEGIST UTILITIES VALUE-ADDED GLOBAL EQUITY
SERIES SERIES SERIES MARKET SERIES SERIES
---------- ------------ ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
1 year .... $ 7 $ 10 $ 10 $ 7 $ 10
3 years .. 21 32 32 23 32
5 years .. 37 55 55 40 55
10 years . 83 122 122 89 122
</TABLE>
"Management Fees" (after fee waiver) and "Other Expenses" (after expense
assumption) as shown above are based upon estimated amounts of management
fees and other expenses of each Series of the Fund for the year ending July
31, 1996.
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 waive the compensation provided for in its
Management Agreement with respect to each Series until December 31, 1995, and
to assume all such expenses (except for brokerage fees and a portion of
organizational expenses) and waive the compensation provided for in its
Management Agreement with respect to any Series to the extent that such
expenses and compensation exceed 1.00% of the daily net assets of the Series
for the period from January 1, 1996 through July 31, 1997.
It is estimated that total operating expenses for each Series for the year
ending July 31, 1996, assuming no waiver of management fees or assumption of
expenses other than the assumption of expenses due to mandatory expense
limitation, and calculated using average net assets for the year ended July
31, 1995, 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 ....... 0.50% 0.50% 0.65% 0.65% 0.85% 0.85%
12b-1 Fees ............ 0.0 0.0 0.0 0.0 0.0 0.0
Other Expenses ........ 0.66 2.00 1.71 1.85 0.57 1.65
Total Series Operating
Expenses ............. 1.16 2.50 2.36 2.50 1.42 2.50
</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 ....... 0.75% 0.85% 0.75% 0.50% 1.00%
12b-1 Fees ............ 0.0 0.0 0.0 0.0 0.0
Other Expenses ........ 0.39 1.29 1.16 0.72 1.25
Total Series Operating
Expenses ............. 1.14 2.14 1.91 1.22 2.25
</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."
7
<PAGE>
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------
The following ratios and per share data for a share of beneficial interest
outstanding throughout each period have been audited by Price Waterhouse LLP,
independent accountants. The financial highlights should be read in
conjunction with the financial statements, notes thereto, and the unqualified
report of independent accountants which are contained in the Statement of
Additional Information. Further 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.
<TABLE>
<CAPTION>
NET ASSET
YEAR VALUE NET NET REALIZED TOTAL FROM TOTAL DIVIDENDS
ENDED BEGINNING INVESTMENT AND UNREALIZED INVESTMENT DIVIDENDS TO DISTRIBUTIONS AND
JULY 31, OF PERIOD INCOME GAIN (LOSS) OPERATIONS SHAREHOLDERS TO SHAREHOLDERS DISTRIBUTIONS
- -------------- ----------- ------------ -------------- ------------ -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
LIQUID ASSET
$ $
1993 (1) $ 1.00 $ 0.02 -- $ 0.02 $(0.02) -- $(0.02)
1994 1.00 0.03 -- 0.03 (0.03) -- (0.03)
1995 1.00 0.06 -- 0.06 (0.06) -- (0.06)
U.S. GOVERNMENT MONEY MARKET
--
1993 (2) 1.00 + -- -- -- -- --
1994 1.00 0.03 -- 0.03 (0.03) -- (0.03)
1995 1.00 0.06 -- 0.06 (0.06) -- (0.06)
U.S. GOVERNMENT SECURITIES
1993 (3) 10.00 0.19 0.07 0.26 (0.20) -- (0.20)
1994 10.06 0.44 (0.50) (0.06) (0.44) -- (0.44)
1995 9.56 0.56 0.15 0.71 (0.56) -- (0.56)
INTERMEDIATE INCOME SECURITIES
1993 (4) 10.00 0.19 (0.02) 0.17 (0.19) -- (0.19)
1994 9.98 0.60 (0.57) 0.03 (0.60) -- (0.60)
1995 9.41 0.61 0.22 0.83 (0.61) -- (0.61)
AMERICAN VALUE
1993 (6) 10.00 0.06 (0.01) 0.05 -- -- --
1994 10.05 0.03 (0.09) (0.06) (0.02) (0.04) (0.06)
1995 9.93 0.14 3.15 3.29 (0.12) -- (0.12)
CAPITAL GROWTH
1993 (7) 10.00 (0.02) (1.10) (1.12) -- -- --
1994 8.88 0.13 0.45 0.58 (0.04) -- (0.04)
1995 9.42 0.10 1.77 1.87 (0.12) -- (0.12)
DIVIDEND GROWTH
1993 (5) 10.00 0.13 0.58 0.71 (0.10) -- (0.10)
1994 10.61 0.28 0.37 0.65 (0.23) (0.01) (0.24)
1995 11.02 0.34 2.13 2.47 (0.31) (0.10) (0.41)
UTILITIES
1993 (3) 10.00 0.19 1.30 1.49 (0.14) -- (0.14)
1994 11.35 0.37 (0.95) (0.58) (0.34) (0.01) (0.35)
1995 10.42 0.42 0.80 1.22 (0.37) (0.02) (0.39)
VALUE-ADDED MARKET
1993 (6) 10.00 0.05 0.02 0.07 (0.04) -- (0.04)
1994 10.03 0.24 0.65 0.89 (0.11) -- (0.11)
1995 10.81 0.21 2.16 2.37 (0.26) (0.12) (0.38)
GLOBAL EQUITY
1993 (3) 10.00 0.07 (0.03) 0.04 -- -- --
1994 10.04 0.08 0.58 0.66 (0.05) -- (0.05)
1995 10.65 0.14 0.49 0.63 (0.11) -- (0.11)
STRATEGIST
1993 (5) 10.00 0.06 (0.23) (0.17) -- -- --
1994 9.83 0.23 (0.20) 0.03 (0.13) -- (0.13)
1995 9.73 0.24 1.49 1.73 (0.18) -- (0.18)
</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.
(c) Restated.
+ Includes dividends from net investment income of $0.004 per share.
* After application of the Fund's state expense limitation.
See Notes to Financial Statements
8
<PAGE>
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE RATIOS TO AVERAGE
NET ASSETS (BEFORE NET ASSETS (AFTER
EXPENSES WERE ASSUMED)* EXPENSES WERE ASSUMED)
----------------------- ----------------------
NET NET
NET ASSET TOTAL NET ASSETS INVESTMENT INVESTMENT PORTFOLIO
VALUE END OF INVESTMENT END OF INCOME INCOME TURNOVER
PERIOD RETURN PERIOD (000'S) EXPENSES (LOSS) EXPENSES (LOSS) RATE
- ------------- --------- -------------- --------- ---------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1.00 1.77%(a) $ 1,081 1.30%(b) 0.53%(b) 0.14%(b) 3.02%(b) N/A
1.00 3.48 1,524 2.50 0.99 -- 3.49 N/A
1.00 5.90 35,631 1.16 4.96 -- 6.12 N/A
1.00 0.42(a) 125 2.50(b) (0.95)(b) 2.13(b) 0.83(b) N/A
1.00 3.52 555 2.50 0.82 -- 3.32 N/A
1.00 5.86 10,695 2.50 3.62 -- 6.12 N/A
10.06 2.60(a) 1,756 1.81(b) 0.33(b) 0.18(b) 3.66(b) --
9.56 (0.69) 2,954 2.50 1.96 -- 4.46(c) 29%
9.71 7.72 4,209 2.36 3.49 -- 5.85 14
9.98 1.67(a) 182 2.50(b) 1.00(b) 1.62(b) 3.50(b) --
9.41 0.26 460 2.50 3.64 -- 6.14 40
9.63 9.22 994 2.50 4.08 -- 6.58 37
10.05 0.50(a) 308 2.50(b) (0.66)(b) 0.74(b) 1.10(b) 121(a)
9.93 (0.59) 6,841 2.50 (0.81) -- 1.69 136
13.10 33.48 22,581 1.42 0.39 -- 1.81 234
8.88 (11.20)(a) 135 2.50(b) (1.01)(b) 1.97(b) (0.47)(b) 2(a)
9.42 6.57 215 2.50 (0.98) -- 1.52 11
11.17 20.08 678 2.50 (1.07) -- 1.43 20
10.61 7.11(a) 2,417 2.50(b) 0.61(b) 0.16(b) 2.89(b) 7(a)
11.02 6.13 12,821 1.51 1.78 -- 3.29 13
13.08 23.07 35,404 1.14 2.34 -- 3.48 29
11.35 14.98(a) 1,334 2.50(b) 1.59(b) 0.30(b) 3.79(b) 8(a)
10.42 (5.23) 3,860 2.50 1.62 -- 4.14 5
11.25 12.16 5,380 1.91 2.41 -- 4.32 24
10.03 0.71(a) 640 2.50(b) (0.16)(b) 0.92(b) 1.42(b) 1(a)
10.81 8.89 5,133 1.82 0.70 -- 2.53 8
12.80 22.65 14,080 1.22 1.33 -- 2.55 7
10.04 0.40(a) 322 2.50(b) (0.90)(b) 1.00(b) 1.77(b) --
10.65 6.54 2,020 2.50 (0.09) -- 2.41 8
11.17 6.08 7,286 2.25 0.48 -- 2.73 55
9.83 (1.70)(a) 551 2.50(b) (0.19)(b) 0.64(b) 1.67(b) 26(a)
9.73 0.12 1,276 2.50 0.70 -- 3.20 57
11.28 18.21 6,759 2.14 1.97 -- 4.11 115
</TABLE>
9
<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: 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. 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 entered into by the Fund with
the Distributor and Dean Witter Reynolds Inc. ("DWR") in accordance with Rule
12b-1 of the Investment Company Act of 1940, as amended (the "Act"), 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 organization 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 ninety-six investment companies (the
"Dean Witter Funds"), thirty of which are listed on the New York Stock
Exchange, with combined assets of approximately $73.0 billion as of August
31, 1995. The Investment Manager also manages portfolios of pension plans,
other institutions and individuals which aggregated approximately $2.3
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 or under the
direction of the Investment Manager to ensure that the Fund's general
investment policies and programs are being properly carried out and that
administrative services are being provided to the Fund in a satisfactory
manner.
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Investment Manager, the Fund pays
the Investment Manager monthly compensation calculated daily by applying 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 waive the compensation provided for in its
Management Agreement with respect to each Series until December 31, 1995, and
to assume all such expenses (except for brokerage fees and a portion of
organizational expenses) and waive the compensation provided for in its
Management Agreement with respect to any Series to the extent that such
expenses and compensation exceed 1.00% of the daily net assets of the Series
for the period from January 1, 1996 through July 31, 1997.
10
<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'
investments in
11
<PAGE>
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 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
12
<PAGE>
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 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.
13
<PAGE>
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.
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
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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. Conversely, 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
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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.
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
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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"), 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
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.
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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 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 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 antici-
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pated 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 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 (Trea-
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sury 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 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
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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 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 Standard &
Poor's Corporation ("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 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
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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 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.
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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.
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
envi-
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ronmental 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 purchased 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
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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.
The Global Equity Series may also invest in securities of foreign issuers
in the form of American Depository Receipts (ADRs), European Depository
Receipts (EDRs) 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
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be converted. ADRs are receipts typically issued by a United States bank or
trust company evidencing ownership of the underlying securities. EDRs are
European receipts evidencing a similar arrangement. Generally, ADRs, in
registered form, are designed for use in the United States securities markets
and EDRs, 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 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
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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.
Foreign securities investments may be affected by changes in currency
rates or exchange control 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.
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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 American Value, Capital
Growth, Strategist, Utilities and Global Equity Series may enter into forward
foreign currency exchange contracts ("forward contracts") to facilitate
settlement of foreign currency denominated portfolio securities. In addition,
the Global Equity Series may enter into forward contracts in connection with
its foreign securities investments under various other circumstances.
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.
When the Series enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may 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 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.
Other circumstances under which the Global Equity Series may enter into
forward contracts are as follows. At 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 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
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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 Global Equity 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 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 Series are not required to enter into such
transactions with regard to their 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's 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, 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
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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 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
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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
Standard & Poor's 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.
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.
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.
Another risk which may arise in employing futures contracts to protect
against the price volatil-
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ity 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
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
32
<PAGE>
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 and of the Global Equity Series since August, 1995; 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.
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.
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
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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 (or, on days when the New York Stock Exchange closes
prior to 4:00 p.m., at such earlier time), on each day 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 or quoted by NASDAQ is valued at its
latest sale price on that exchange or quotation service prior to the time
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 pursuant to procedures adopted by the Trustees); and (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. In either (1) or (2) above, when market quotations are not
readily available, including circumstances under which it is
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<PAGE>
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. (the "Distributor"), an affiliate of InterCapital, shares
of the Fund are distributed by the Distributor and offered by DWR and other
dealers who have entered into selected dealer agreements with the Distributor
("Selected Broker-Dealers"). The principal executive office of the
Distributor is located at Two World Trade Center, New York, New York 10048.
Initial and subsequent purchases may be made by contacting Dean Witter
Trust Company at P.O. Box 1040, Jersey City, NJ 07303, or by contacting an
account executive of DWR or another Selected Broker-Dealer. The Fund and/or
the Distributor reserve the right to permit purchases by non-employee benefit
plan investors.
All shares of the Fund, with the exception of the shares of the Liquid
Asset and U.S. Government
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Money Market Series, are sold through the Distributor on a normal three
business day settlement basis; that is, payment is due on the third 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 as special sales incentives,
including trips, educational and/or business seminars and merchandise. 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, NJ 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 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
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<PAGE>
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 tele- vision, 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 Investment 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 sharehold-
37
<PAGE>
ers, 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' prior written notice 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 another Selected Broker-Dealer 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 Ex- change Privilege by contacting their account executive
(no Exchange Privilege Authorization Form is required). Other shareholders
(and those sharehold- ers 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) 869-6397 (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.
38
<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 share 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 800-869-6397 (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
39
<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 share certificate, the
request for redemption must be accompanied by the share certificate and a
stock power 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
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<PAGE>
"Purchase of Fund Shares"). The Liquid Asset and U.S. Government Money Market
Series pay all 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 any Series 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 each
Series of 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 Series would be eligible for the deduction if the Series were
the shareholder claiming the dividends received deduction. In this regard, a
46-day holding period generally must be met. No portion of the dividends
payable by the Liquid Asset Series, the U.S. Government Money Market Series,
the U.S. Government Securities Series and the Intermediate Income Securities
Series will be eligible for the fed- eral dividends received deduction for
corporations.
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
41
<PAGE>
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.
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 hypothetical investments 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.
42
<PAGE>
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 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 of personal liability is remote.
Code of Ethics. Directors, officers and employees of InterCapital, Dean
Witter Services Company Inc. and the Distributor are subject to a strict Code
of Ethics adopted by those companies. The Code of Ethics is intended to
ensure that the interests of shareholders and other clients are placed ahead
of any personal interest, that no undue personal benefit is obtained from a
person's employment activities and that actual and potential conflicts of
interest are avoided. To achieve these goals and comply with regulatory
requirements, the Code of Ethics requires, among other things, that personal
securities transactions by employees of the companies be subject to an
advance clearance process to monitor that no investment company managed or
advised by InterCapital ("Dean Witter Fund") is engaged at the same time in a
purchase or sale of the same security. The Code of Ethics bans the purchase
of securities in an initial public offering, and also prohibits engaging in
futures and option transactions and profiting on short-term trading (that is,
a purchase within sixty days of a sale or a sale within sixty days of a
purchase) of a security. In addition, investment personnel may not purchase
or sell a security for their personal account within thirty days before or
after any transaction in any Dean Witter Fund managed by them. Any violations
of the Code of Ethics are subject to sanctions, including reprimand, demotion
or suspension or termination of employment. The Code of Ethics comports with
regulatory requirements and the recommendations in the recent report by the
Investment Company Institute Advisory Group on Personal Investing.
Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone numbers or address set forth on the front cover
of this Prospectus.
As of September 1, 1995, the following persons may be deemed to "control"
the designated Series by virtue of ownership of over 25% of the outstanding
shares of the Series: Thomas William Malone P.C. (U.S. Government Money
Market Series); Accu-
43
<PAGE>
Fab Systems Inc. (U.S. Government Money Market Series); SAP America VIP Plus
401(k) Plan dtd. 12/23/93 (American Value and Utilities Series); VVP America
Inc. Retirement Plan (Strategist and Global Equity Series); Pizzagalli
Construction 401(k) Plan (Value-Added Market Series); and The University
Corporation Defined Contribution Plan (Value-Added 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.
44
<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. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
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.
<PAGE>
DEAN WITTER
RETIREMENT SERIES
STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 29, 1995
- -----------------------------------------------------------------------------
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, entered into by the Fund with the Distributor and Dean
Witter Reynolds Inc., 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.
A Prospectus for the Fund dated September 29, 1995, 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 numbers
listed below, from the Fund's Distributor, or from Dean Witter Reynolds Inc.
at any of its branch offices. This Statement of Additional Information is not
a Prospectus. It contains information in addition to and more detailed than
that set forth in the Prospectus. It is intended to provide additional
information regarding the activities and operations of the Fund, and should
be read in conjunction with the Prospectus.
Dean Witter
Retirement Series
Two World Trade Center
New York, New York 10048
(212) 392-2550 or (800) 869-6397
<PAGE>
TABLE OF CONTENTS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
The Fund and its Management ......... 3
Trustees and Officers ............... 6
Investment Practices and Policies .. 13
Investment Restrictions ............. 32
Portfolio Transactions and Brokerage 34
Determination of Net Asset Value ... 36
Purchase of Fund Shares ............. 38
Shareholder Services ................ 40
Redemptions and Repurchases ......... 42
Dividends, Distributions and Taxes . 42
Performance Information ............. 44
Description of Shares ............... 46
Custodian and Transfer Agent ....... 47
Independent Accountants ............. 47
Reports to Shareholders ............. 47
Legal Counsel ....................... 47
Experts ............................. 47
Registration Statement .............. 48
Principal Securities Holders ....... 48
Financial Statements -- July 31,
1995 ............................... 49
Report of Independent Accountants .. 91
Appendix ............................ 92
</TABLE>
2
<PAGE>
THE FUND AND ITS MANAGEMENT
- -----------------------------------------------------------------------------
THE FUND
The Fund is a trust of the type commonly known as a "Massachusetts
business trust" and was organized under the laws of the Commonwealth of
Massachusetts on 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 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 are
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) 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 Securities,
InterCapital Insured California Municipal Securities, InterCapital Insured
Municipal Income Trust, InterCapital California Insured Municipal Income
Trust, 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, Dean Witter Mid-Cap Growth Fund, Dean
Witter Select Dimensions Investment Series, Dean Witter Balanced Growth Fund,
Dean Witter Balanced Income Fund, Dean Witter Hawaii Municipal Trust, Dean
Witter Capital Appreciation Fund and Dean Witter Intermediate Term U.S.
Treasury Trust. The foregoing investment companies, together with the Fund,
are collectively referred to as the Dean Witter Funds.
3
<PAGE>
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
Income Trust, TCW/DW Total Return Trust, TCW/DW Global Convertible Trust and
TCW/DW Emerging Markets Opportunities Trust (the "TCW/DW Funds").
InterCapital also serves as: (i) sub-adviser to Templeton Global
Opportunities Trust, an open-end investment company; (ii) administrator of
The BlackRock Strategic Term Trust Inc., a closed-end investment company; and
(iii) sub-administrator of MassMutual Participation Investors and Templeton
Global Governments Income Trust, closed-end investment companies.
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. On April
17, 1995, DWSC was reorganized in the State of Delaware, necessitating the
entry into a new Services Agreement by InterCapital and DWSC on that date.
The foregoing internal reorganizations did not result in any change in the
nature or scope of the administrative services being provided to the Fund or
any of the fees being paid by the Fund for the overall services being
performed under the terms of the existing Management Agreement.
Expenses not expressly assumed by the Investment Manager under the
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
4
<PAGE>
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);
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 are 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. The Investment Manager
assumed all expenses (except for brokerage fees and a portion of
organizational expenses) for each Series and waived the compensation provided
for in the Agreement with respect to each Series during the fiscal period
ended July 31, 1993 and during the fiscal years ended July 31, 1994 and 1995.
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 with respect to each
Series until December 31, 1995, and to assume all such expenses (except for
brokerage fees and a portion of organizational expenses) and waive the
compensation provided for in its Management Agreement with respect to any
Series to the extent that such expenses and compensation exceed 1.00% of the
daily net assets of the Series for the period from January 1, 1996 through
July 31, 1997. 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 October 30,
1992 and, subsequently, by DWR as the then sole shareholder. The Agreement is
substantively identical to a prior investment management agreement which was
initially approved by the Fund's Trustees on July 29, 1992 and, subsequently,
by DWR as the then sole shareholder. The Agreement took effect on June 30,
1993 upon the spin-off by Sears, Roebuck and Co. of its remaining shares of
DWDC. The Agreement may be terminated at any time, without penalty, on thirty
days' notice by the Trustees of the Fund, by the holders of a majority, as
defined in the Investment Company Act of 1940, as amended (the "Act"), of the
outstanding shares of the Fund, or by the Investment Manager. The Agreement
will automatically terminate in the event of its assignment (as defined in
the Act).
Under its terms, the Agreement had an initial term ending April 30, 1994
and will continue from year to year thereafter 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 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 20, 1995, the Fund's Trustees, including all of the Independent
Trustees, approved the continuance of the Agreement until April 30, 1996.
5
<PAGE>
The Fund has acknowledged that the name "Dean Witter" is a property right
of DWR. The Fund has agreed that DWR or its parent company may use, or at any
time permit others to use, the name "Dean Witter." The Fund has also agreed
that in the event the Agreement is terminated, or if the affiliation between
InterCapital and its parent company is terminated, the Fund will eliminate
the name "Dean Witter" from its name if DWR or its parent company 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 79 Dean Witter Funds and the 13 TCW/DW Funds are
shown below.
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- ------------------------------------------------- --------------------------------------------------------
<S> <C>
Jack F. Bennett (71) Retired; Director or Trustee of the Dean Witter Funds; formerly
Trustee Senior Vice President and Director of Exxon Corporation
c/o Gordon Altman Butowsky (1975-January, 1989) and Under Secretary of the U.S. Treasury
Weitzen Shalov & Wein for Monetary Affairs (1974-1975); Director of Philips
Counsel to the Independent Trustees Electronics N.V., Tandem Computers Inc. and Massachusetts
114 West 47th Street Mutual Life Insurance Co.; director or trustee of various
New York, New York other not-for-profit and business organizations.
Michael Bozic (54) Private investor; Director or Trustee of the Dean Witter Funds;
Trustee formerly President and Chief Executive Officer of Hills
c/o Gordon Altman Butowsky Department Stores (May, 1991- July, 1995); formerly Chairman
Weitzen Shalov & Wein and Chief Executive Officer (January, 1987-August, 1990) and
Counsel to the Independent Trustees President and Chief Operating Officer (August, 1990-February,
114 West 47th Street 1991) of the Sears Merchandise Group of Sears, Roebuck and
New York, New York Co.; Director of Eaglemark Financial Services Inc., the United
Negro College Fund, Weirton Steel Corporation and Domain Inc.
(home decor retailer).
Charles A. Fiumefreddo* (62) Chairman, Chief Executive Officer and Director of InterCapital,
Chairman, President DWSC and Distributors; Executive Vice President and Director
Chief Executive Officer and Trustee of DWR; Chairman, Director or Trustee, President and Chief
Two World Trade Center Executive Officer of the Dean Witter Funds; Chairman, Chief
New York, New York Executive Officer and Trustee of the TCW/DW Funds; Chairman
and Director of Dean Witter Trust Company ("DWTC"); Director
and/or officer of various DWDC subsidiaries.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- ------------------------------------------------- --------------------------------------------------------
<S> <C>
Edwin J. Garn (62) Director or Trustee of the Dean Witter Funds; formerly United
Trustee States Senator (R-Utah) (1974- 1992) and Chairman, Senate
c/o Huntsman Chemical Corporation Banking Committee (1980-1986); formerly Mayor of Salt Lake
2000 Eagle Gate Tower City, Utah (1971-1974); formerly Astronaut, Space Shuttle
Salt Lake City, Utah Discovery (April 12-19, 1985); Vice Chairman, Huntsman Chemical
Corporation (since January, 1993); Member of the board of
various civic and charitable organizations.
John R. Haire (70) Chairman of the Audit Committee and Chairman of the Committee
Trustee of the Independent Directors or Trustees and Director or Trustee
Two World Trade Center of the Dean Witter Funds; Trustee of the TCW/DW Funds; formerly
New York, New York President, Council for Aid to Education (1978-1989) and Chairman
and Chief Executive Officer of Anchor Corporation, an Investment
Adviser (1964-1978); Director of Washington National
Corporation (insurance).
Dr. Manuel H. Johnson (46) Senior Partner, Johnson Smick International, Inc., a consulting
Trustee firm (since June, 1985); Koch Professor of International
c/o Johnson Smick International, Inc. Economics and Director of the Center for Global Market Studies
1133 Connecticut Avenue, N.W. at George Mason University (since September, 1990); Co-Chairman
Washington, DC 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 NASDAQ (since June, 1995); Director
of Greenwich Capital Markets Inc. (broker-dealer); formerly
Vice Chairman of the Board of Governors of the Federal Reserve
System (February, 1986- August, 1990) and Assistant Secretary
of the U.S. Treasury (1982-1988).
Paul Kolton (72) Director or Trustee of the Dean Witter Funds; Chairman of
Trustee the Audit Committee and Chairman of the Committee of the
c/o Gordon Altman Butowsky Independent Trustees and Trustee of the TCW/DW Funds; formerly
Weitzen Shalov & Wein Chairman of the Financial Accounting Standards Advisory
Counsel to the Independent Trustees Council; formerly Chairman and Chief Executive Officer of
114 West 47th Street the American Stock Exchange; Director of UCC Investors Holding
New York, New York Inc. (Uniroyal Chemical Company, Inc.); director or trustee
of various not-for-profit organizations.
Michael E. Nugent (59) General Partner, Triumph Capital, L.P., a private investment
Trustee partnership (since April, 1988); Director or Trustee of the
c/o Triumph Capital, L.P. Dean Witter Funds; Trustee of the TCW/DW Funds; formerly Vice
237 Park Avenue President, Bankers Trust Company and BT Capital Corporation
New York, New York (1984- 1988); Director of various business organizations.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- ------------------------------------------------- --------------------------------------------------------
<S> <C>
Philip J. Purcell* (51) Chairman of the Board of Directors and Chief Executive Officer
Trustee of DWDC, DWR and Novus Credit Services Inc.; Director of
Two World Trade Center InterCapital, DWSC and Distributors; Director or Trustee of
New York, New York the Dean Witter Funds; Director and/or officer of various
DWDC subsidiaries.
John L. Schroeder (65) Retired; Director or Trustee of the Dean Witter Funds; Trustee
Trustee of the TCW/DW Funds; Director of Citizens Utilities Company;
c/o Gordon Altman Butowsky formerly Executive Vice President and Chief Investment Officer
Weitzen Shalov & Wein of the Home Insurance Company (August, 1991-September, 1995),
Counsel to the Independent Trustees Chairman and Chief Investment Officer of Axe-Houghton
114 West 47th Street Management and the Axe-Houghton Funds (April, 1983-June, 1991)
New York, New York and President of USF&G Financial Services, Inc. (June 1990-June,
1991).
Sheldon Curtis (63) Senior Vice President, Secretary and General Counsel of
Vice President, Secretary and General Counsel InterCapital and DWSC; Senior Vice President and Secretary
Two World Trade Center of DWTC; Senior Vice President, Assistant Secretary and
New York, New York Assistant General Counsel of Distributors; Assistant Secretary
of DWR and Vice President, Secretary and General Counsel of
the Dean Witter Funds and the TCW/DW Funds.
Thomas F. Caloia (49) First Vice President (since May, 1991) and Assistant Treasurer
Treasurer (since April, 1988) of InterCapital; First Vice President
Two World Trade Center and Assistant Treasurer of DWSC; Treasurer of the Dean Witter
New York, New York Funds and the TCW/DW Funds; previously Vice President of
InterCapital.
Mark Bavoso (34) Senior Vice President of InterCapital (since June, 1993);
Vice President Vice President of various Dean Witter Funds; previously Vice
Two World Trade Center President of InterCapital.
New York, New York
Patricia A. Cuddy (41) Vice President of InterCapital; Vice President of various
Vice President Dean Witter Funds.
Two World Trade Center
New York, New York
Edward F. Gaylor (54) Senior Vice President of InterCapital; Vice President of various
Vice President Dean Witter Funds.
Two World Trade Center
New York, New York
Rajesh K. Gupta (35) Senior Vice President of InterCapital (since May 1991); Vice
Vice President President of various Dean Witter Funds; previously Vice
Two World Trade Center President of InterCapital.
New York, New York
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- ------------------------------------------------- --------------------------------------------------------
<S> <C>
Jonathan R. Page (49) Senior Vice President of InterCapital; Vice President of various
Vice President Dean Witter Funds.
Two World Trade Center
New York, New York
Paul D. Vance (59) Senior Vice President of InterCapital; Vice President of various
Vice President Dean Witter Funds.
Two World Trade Center
New York, New York
Anita H. Kolleeny (40) Senior Vice President of InterCapital; Vice President of various
Vice President Dean Witter Funds.
Two World Trade Center
New York, New York
Paula LaCosta (44) Vice President of InterCapital; Vice President of various
Vice President Dean Witter Funds.
Two World Trade Center
New York, New York
Rochelle G. Siegel (46) Senior Vice President of InterCapital; Vice President of various
Vice President Dean Witter Funds.
Two World Trade Center
New York, New York
Kenton J. Hinchliffe (51) Senior Vice President of InterCapital; Vice President of various
Vice President Dean Witter Funds.
Two World Trade Center
New York, New York
Alice S. Weiss (47) Vice President of InterCapital; Vice President of various
Vice President Dean Witter Funds.
Two World Trade Center
New York, New York <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, Distributors and DWTC and
Director of DWTC, Edmund C. Puckhaber, Executive Vice President of
InterCapital, Robert S. Giambrone, Senior Vice President of InterCapital,
DWSC, Distributors and DWTC, and Joseph J. McAlinden and Kevin Hurley, Senior
Vice Presidents of InterCapital, are Vice Presidents of the Fund, and Marilyn
K. Cranney and Barry Fink, First Vice Presidents and Assistant General
Counsels of InterCapital and DWSC, and Lou Anne D. McInnis and Ruth Rossi,
Vice Presidents and Assistant General Counsels of InterCapital and DWSC, are
Assistant Secretaries of the Fund.
BOARD OF TRUSTEES; RESPONSIBILITIES AND COMPENSATION OF INDEPENDENT TRUSTEES
As mentioned above under the caption "The Fund and its Management," the
Fund is one of the Dean Witter Funds, a group of investment companies managed
by InterCapital. As of the date of this Statement of Additional Information,
there are a total of 79 Dean Witter Funds, comprised of 119 portfolios. As of
August 31, 1995, the Dean Witter Funds had total net assets of approximately
$67.5 billion and more than five million shareholders.
The Board of Directors or Trustees, consisting of ten (10) directors or
trustees, is the same for each of the Dean Witter Funds. Some of the Funds
are organized as business trusts, others as corporations,
9
<PAGE>
but the functions and duties of directors and trustees are the same.
Accordingly, directors and trustees of the Dean Witter Funds are referred to
in this section as Trustees.
Eight Trustees, that is, 80% of the total number, have no affiliation or
business connection with InterCapital or any of its affiliated persons and do
not own any stock or other securities issued by InterCapital's parent
company, DWDC. These are the "disinterested" or "independent" Trustees. Five
of the eight Independent Trustees are also Independent Trustees of the TCW/DW
Funds. As of the date of this Statement of Additional Information, there are
a total of 13 TCW/DW Funds. Two of the Funds' Trustees, that is, the
management Trustees, are affiliated with InterCapital.
As noted in a federal court ruling, "[T]he independent directors . . . are
expected to look after the interests of shareholders by 'furnishing an
independent check upon management,' especially with respect to fees paid to
the investment company's sponsor." In addition to their general "watchdog"
duties, the Independent Trustees are charged with a wide variety of
responsibilities under the Act. In order to perform their duties effectively,
the Independent Trustees are required to review and understand large amounts
of material, often of a highly technical and legal nature.
The Dean Witter Funds seek as Independent Trustees individuals of
distinction and experience in business and finance, government service or
academia; that is, people whose advice and counsel are valuable and in demand
by others and for whom there is often competition. To accept a position on
the Funds' Boards, such individuals may reject other attractive assignments
because of the demands made on their time by the Funds. Indeed, to serve on
the Funds' Boards, certain Trustees who would be qualified and in demand to
serve on bank boards would be prohibited by law from serving at the same time
as a director of a national bank and as a Trustee of a Fund.
The Independent Trustees are required to select and nominate individuals
to fill any Independent Trustee vacancy on the Board of any Fund that has a
Rule 12b-1 plan of distribution. Since most of the Dean Witter Funds have
such a plan, and since all of the Funds' Boards have the same members, the
Independent Trustees effectively control the selection of other Independent
Trustees of all the Dean Witter Funds.
GOVERNANCE STRUCTURE OF THE DEAN WITTER FUNDS
While the regulatory system establishes both general guidelines and
specific duties for the Independent Trustees, the governance arrangements
from one investment company group to another vary significantly. In some
groups the Independent Trustees perform their role by attendance at periodic
meetings of the board of directors with study of materials furnished to them
between meetings. At the other extreme, an investment company complex may
employ a full-time staff to assist the Independent Trustees in the
performance of their duties.
The governance structure of the Dean Witter Funds lies between these two
extremes. The Independent Trustees and the Funds' Investment Manager alike
believe that these arrangements are effective and serve the interests of the
Funds' shareholders. All of the Independent Trustees serve as members of the
Audit Committee and the Committee of the Independent Trustees. Three of them
also serve as members of the Derivatives Committee.
The Committee of the Independent Trustees is charged with recommending to
the full Board approval of management, advisory and administration contracts,
Rule 12b-1 plans and distribution and underwriting agreements, continually
reviewing Fund performance, checking on the pricing of portfolio securities,
brokerage commissions, transfer agent costs and performance, and trading
among Funds in the same complex, and approving fidelity bond and related
insurance coverage and allocations, as well as other matters that arise from
time to time.
The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing
engagement; approving professional services provided by the independent
accountants and other accounting firms prior to the performance
10
<PAGE>
of such services; reviewing the independence of the independent accountants;
considering the range of audit and non-audit fees; reviewing the adequacy of
the Fund's system of internal controls; advising the independent accountants
and management personnel that they have direct access to the Committee at all
times; and preparing and submitting Committee meeting minutes to the full
Board.
Finally, the Board of each Fund has established a Derivatives Committee to
establish parameters for and oversee the activities of the Fund with respect
to derivative investments, if any, made by the Fund.
During the calendar year ended December 31, 1994, the three Committees
held a combined total of eleven meetings. The Committee meetings are
sometimes held away from the offices of InterCapital and sometimes in the
Board room of InterCapital. These meetings are held without management
directors or officers being present, unless and until they may be invited to
the meeting for purposes of furnishing information or making a report. These
separate meetings provide the Independent Trustees an opportunity to explore
in depth with their own independent legal counsel, independent auditors and
other independent consultants, as needed, the issues they believe should be
addressed and resolved in the interests of the Funds' shareholders.
DUTIES OF CHAIRMAN OF COMMITTEES
The Chairman of the Committees maintains an office at the Funds'
headquarters in New York. He is responsible for keeping abreast of regulatory
and industry developments and the Funds' operations and management. He
screens and/or prepares written materials and identifies critical issues for
the Independent Trustees to consider, develops agendas for Committee
meetings, determines the type and amount of information that the Committees
will need to form a judgment on the issues, and arranges to have the
information furnished. He also arranges for the services of independent
experts to be provided to the Committees and consults with them in advance of
meetings to help refine reports and to focus on critical issues. Members of
the Committees believe that the person who serves as Chairman of all three
Committees and guides their efforts is pivotal to the effective functioning
of the Committees.
The Chairman of the Committees also maintains continuous contact with the
Funds' management, with independent counsel to the Independent Trustees and
with the Funds' independent auditors. He arranges for a series of special
meetings involving the annual review of investment management and other
operating contracts of the Funds and, on behalf of the Committees, conducts
negotiations with the Investment Manager and other service providers. In
effect, the Chairman of the Committees serves as a combination of chief
executive and support staff of the Independent Trustees.
The Chairman of the Committees is not employed by any other organization
and devotes his time primarily to the services he performs as Committee
Chairman and Independent Trustee of the Dean Witter Funds and as an
Independent Trustee of the TCW/DW Funds. The current Committee Chairman has
had more than 35 years experience as a senior executive in the investment
company industry.
VALUE OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL DEAN WITTER
FUNDS
The Independent Trustees and the Funds' management believe that having the
same Independent Trustees for each of the Dean Witter Funds is in the best
interests of all the Funds' shareholders. This arrangement avoids the
duplication of effort that would arise from having different groups of
individuals serving as Independent Trustees for each of the Funds or even of
sub-groups of Funds. It is believed that having the same individuals serve as
Independent Trustees of all the Funds tends to increase their knowledge and
expertise regarding matters which affect the Fund complex generally and
enhances their ability to negotiate on behalf of each Fund with the Fund's
service providers. This arrangement also precludes the likelihood of separate
groups of Independent Trustees arriving at conflicting decisions regarding
operations and management of the Funds and avoids the cost and confusion that
would likely ensue. Finally, it is believed that having the same Independent
Trustees serve on all Fund Boards enhances the ability of each Fund to
obtain, at modest cost to each separate Fund, the services of Independent
Trustees, and a Chairman of their Committees, of the caliber, experience and
business acumen of the individuals who serve as Independent Trustees of the
Dean Witter Funds.
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<PAGE>
COMPENSATION OF INDEPENDENT TRUSTEES
The Fund will pay each Independent Trustee an annual fee of $1,000 plus a
per meeting fee of $50 for meetings of the Board of Trustees or committees of
the Board of Trustees attended by the Trustee (the Fund will pay the Chairman
of the Audit Committee an annual fee of $750 and will pay the Chairman of the
Committee of the Independent Trustees an additional annual fee of $2,400, in
each case inclusive of the Committee meeting fees). The Fund will also
reimburse such Trustees for travel and other out-of-pocket expenses incurred
by them in connection with attending such meetings. Trustees and officers of
the Fund who are or have been employed by the Investment Manager or an
affiliated company will not receive any compensation or expense reimbursement
from the Fund. The Fund paid no compensation to the Independent Trustees for
the fiscal year ended July 31, 1995. Payments will commence as of the time
the Fund begins paying management fees, which, pursuant to an undertaking by
the Investment Manager, will be on January 1, 1996.
At such time as the Fund has been in operation, and has paid fees to the
Independent Trustees, for a full fiscal year, and assuming the same number of
Board and committee meetings as were held by the other Dean Witter Funds
during the calendar year ended December 31, 1994, it is estimated that
compensation paid to each Independent Trustee during such fiscal year will be
the amount shown in the following table.
FUND COMPENSATION (ESTIMATED)
<TABLE>
<CAPTION>
AGGREGATE
NAME OF INDEPENDENT COMPENSATION
TRUSTEE FROM THE FUND
- -------------------------- ---------------
<S> <C>
Jack F. Bennett ........... $1,750
Michael Bozic ............. 1,750
Edwin J. Garn ............. 1,750
John R. Haire ............. 4,450*
Dr. Manuel H. Johnson .... 1,750
Paul Kolton ............... 1,750
Michael E. Nugent ......... 1,750
John L. Schroeder ......... 1,750
<FN>
* Of Mr. Haire's compensation from the Fund, $3,150 is paid to him as
Chairman of the Committee of the Independent Trustees ($2,400) and as
Chairman of the Audit Committee ($750)
The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1994 for
services to the 73 Dean Witter Funds and, in the case of Messrs. Haire,
Johnson, Kolton and Nugent, the 13 TCW/DW Funds that were in operation at
December 31, 1994. With respect to Messrs. Haire, Johnson, Kolton and Nugent,
the TCW/DW Funds are included solely because of a limited exchange privilege
between those Funds and five Dean Witter Money Market Funds. Mr. Schroeder
was elected as a Trustee of the TCW/DW Funds on April 20, 1995.
CASH COMPENSATION FROM DEAN WITTER FUNDS AND TCW/DW FUNDS
</TABLE>
<TABLE>
<CAPTION>
FOR SERVICE AS
FOR SERVICE AS CHAIRMAN OF TOTAL CASH
DIRECTOR OR FOR SERVICE AS COMMITTEES OF COMPENSATION
TRUSTEE AND TRUSTEE AND INDEPENDENT FOR SERVICES TO
COMMITTEE MEMBER COMMITTEE MEMBER DIRECTORS/ 73 DEAN WITTER
NAME OF INDEPENDENT OF 73 DEAN WITTER OF 13 TCW/DW TRUSTEES AND FUNDS AND 13
TRUSTEE FUNDS FUNDS AUDIT COMMITTEES TCW/DW FUNDS
- -------------------------- ----------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Jack F. Bennett ........... $125,761 -- -- $125,761
Michael Bozic ............. 82,637 -- -- 82,637
Edwin J. Garn ............. 125,711 -- -- 125,711
John R. Haire ............. 101,061 $66,950 $225,563** 393,574
Dr. Manuel H. Johnson .... 122,461 60,750 -- 183,211
Paul Kolton ............... 128,961 51,850 34,200*** 215,011
Michael E. Nugent ......... 115,761 52,650 -- 168,411
John L. Schroeder ......... 85,938 -- -- 85,938
<FN>
** For the 73 Dean Witter Funds.
*** For the 13 TCW/DW Funds.
</TABLE>
12
<PAGE>
As of the date of this Statement of Additional Information, the aggregate
number of shares of beneficial interest of the Fund owned by the Fund's
officers and Trustees as a group was less than 1 percent of the Fund's shares
of beneficial interest outstanding.
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 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.
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<PAGE>
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.
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
14
<PAGE>
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.
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
15
<PAGE>
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 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
16
<PAGE>
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.
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.
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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 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
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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 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).
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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 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
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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.
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
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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 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.
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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 value of the premium received will fluctuate
with varying economic market conditions.
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.
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
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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.
The 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 (currency) 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 which is sold. 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 premium would be lost.
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 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).
Purchasing Call and Put Options. As stated in the Prospectus, the Series
may purchase listed and OTC call and put options in amounts equalling up to
10% of the total assets of the Series. The 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
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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. The successful use of options depends on
the ability of the Investment Manager to forecast correctly interest rates
and market movements. 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.
In writing puts, the Series assumes the risk of loss should the market value
of the underlying securities (or, in the case of the Global Equity Series,
the currencies in which they are denominated) decline below the exercise
price of the option (any loss being decreased by the receipt of the premium
on the option written). 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. A covered put option
writer who is unable to effect a closing purchase transaction or to purchase
an offsetting OTC option would continue to bear the risk of decline in the
market price of the underlying security (or, in the case of the Global Equity
Series, currency) 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 or other high grade short-term debt obligations as security for
the put option for other investment purposes until the exercise or expiration
of the option.
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 OTC 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 (or, in the
case of the Global Equity Series, currency) at a time when it might otherwise
be advantageous to do so.
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).
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
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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 Fund's
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 Standard & Poor's 100 Index and the Standard &
Poor's 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 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
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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 be able to 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, the Series, as a call writer, would not be able to 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.
Futures 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.
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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
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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 broker's 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. 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.
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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 initial 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. The
successful use of futures and related options depends on the ability of the
Investment Manager to accurately predict market and interest rate movements.
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
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are denominated) held in the Series may decline. 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.
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 of the
contract held by the Series.
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
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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.
The extent to which the Series may enter into transactions involving
futures contracts and options thereon may be limited by the Internal Revenue
Code's requirements for qualification as a regulated investment company and
the Fund's intention to qualify each Series as such (see "Dividends,
Distributions and Taxes" in the Prospectus).
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
32
<PAGE>
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 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 purpose 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.
33
<PAGE>
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.
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. For
the fiscal period ended July 31, 1993 and the fiscal years ended July 31,
1994 and 1995, the Series of the Fund paid brokerage commissions as follows:
<TABLE>
<CAPTION>
BROKERAGE COMMISSIONS BROKERAGE COMMISSIONS BROKERAGE COMMISSIONS
PAID FOR FISCAL PAID FOR FISCAL YEAR PAID FOR FISCAL YEAR
NAME OF SERIES PERIOD ENDED 7/31/93 ENDED 7/31/94 ENDED 7/31/95
- ------------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
American Value Series ... $ 486 $10,490 $66,581
Capital Growth Series ... 151 125 629
Dividend Growth Series .. 2,664 12,614 37,711
Strategist Series ........ 728 937 6,628
Utilities Series ......... 1,869 3,960 4,444
Value-Added Market Series 502 4,703 7,693
Global Equity Series .... 1,241 492 28,597
</TABLE>
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.
34
<PAGE>
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.
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. For the fiscal year ended July
31, 1995, the Series of the Fund directed the payment of commissions in
connection with transactions in the following aggregate amounts to brokers
because of research services provided:
<TABLE>
<CAPTION>
AGGREGATE DOLLAR
BROKERAGE COMMISSIONS AMOUNT OF TRANSACTIONS
DIRECTED IN CONNECTION FOR WHICH SUCH
WITH RESEARCH SERVICES COMMISSIONS WERE PAID
PROVIDED FOR FISCAL FOR FISCAL YEAR ENDED
NAME OF SERIES YEAR ENDED 7/31/95 7/31/95
- ------------------------- ---------------------- ----------------------
<S> <C> <C>
American Value Series ... $42,926 $29,706,639
Capital Growth Series ... 109 72,517
Dividend Growth Series .. 8,091 4,347,819
Strategist Series ........ 664 315,205
Utilities Series ......... 215 145,999
Value-Added Market Series 315 242,455
Global Equity Series .... 24,765 5,638,895
</TABLE>
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
35
<PAGE>
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. For the fiscal period
ended July 31, 1993, the Series paid the following dollar amounts of
brokerage commissions to DWR: American Value Series: $486; Capital Growth
Series: $144; Dividend Growth Series: $2,525; Strategist Series: $728;
Utilities Series: $1,855; and Global Equity Series: $53. For the fiscal year
ended July 31, 1994, the Series paid the following dollar amounts of
brokerage commissions to DWR: American Value Series: $8,855; Capital Growth
Series: $117; Dividend Growth Series: $11,918; Strategist Series: $711;
Utilities Series: $3,855; and Global Equity Series: $91.For the fiscal year
ended July 31, 1995, the Series paid brokerage commissions to DWR for
transactions as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE
DOLLAR AMOUNT OF
EXECUTED TRADES ON
PERCENTAGE OF AGGREGATE WHICH BROKERAGE
BROKERAGE COMMISSIONS BROKERAGE COMMISSIONS COMMISSIONS WERE PAID
PAID TO DWR FOR FISCAL FOR FISCAL YEAR ENDED FOR FISCAL YEAR ENDED
NAME OF SERIES YEAR ENDED 7/31/95 7/31/95 7/31/95
- ---------------------- ---------------------- ----------------------- -----------------------
<S> <C> <C> <C>
American Value Series $18,882 28.36% 32.52%
Capital Growth Series 519 82.51 83.77
Dividend Growth Series 28,711 76.13 83.46
Strategist Series .... 5,710 86.15 86.81
Utilities Series ...... 3,970 89.33 88.70
Global Equity Series . 3,713 12.98 35.57
</TABLE>
During the fiscal year ended July 31, 1995, the Intermediate Income
Securities Series purchased debt securities issued by Salomon, Inc. and the
American Value Series purchased common stock issued by Merrill Lynch & Co.
Inc. and Morgan Stanley & Co. Inc., which issuers were among the ten brokers
or the ten dealers which executed transactions for or with the Series in the
largest dollar amounts during the year. At July 31, 1995, the Intermediate
Income Securities Series held debt securities issued by Salomon, Inc with a
market value of $25,194, and the American Value Series held common stock
issued by Merrill Lynch & Co. Inc. and Morgan Stanley & Co. Inc. with market
values of $277,500 and $209,063, respectively.
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 (or, on days when
the New York Stock Exchange closes prior to 4:00 p.m., at such earlier 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, Presidents' 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
36
<PAGE>
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.
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
37
<PAGE>
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 Distributors Inc. (the "Distributor") as exclusive distributor of the
Fund's shares. 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. The Trustees of the Fund, including all of
the Independent Trustees of the Fund, approved, at their meeting held on
October 30, 1992, the current Distribution Agreement. The present
Distribution Agreement is substantively identical to the Fund's previous
distribution agreement. The Distribution Agreement took effect on June 30,
1993 upon the spin-off by Sears, Roebuck and Co. of its remaining shares of
DWDC. By its terms, the Distribution Agreement had an initial term ending
April 30, 1994 and will remain in effect from year to year thereafter if
approved by the Trustees. At their meeting held on April 20, 1995, the
Trustees, including all of the Independent Trustees, approved the
continuation of the Agreement until April 30, 1996.
38
<PAGE>
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 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.
Under its terms, the Plan had an initial term ending April 30, 1993 and
will remain in effect from year to year thereafter, provided such continuance
is approved annually by a vote of the Trustees, including a majority of the
Independent 12b-1 Trustees. 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
39
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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 20, 1995, 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.
Systematic Withdrawal Plan. As discussed in the Prospectus, a systematic
withdrawal plan (the "Withdrawal Plan") is available for shareholders who own
or purchase shares of the Fund having a minimum value of $10,000 based upon
the then current offering price. The Withdrawal Plan provides for monthly or
quarterly (March, June, September and December) checks in any 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
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 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.
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<PAGE>
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 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 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.
With respect to the redemption or 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 selected
broker-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 selected
broker-dealer.
The Distributor and any selected broker-dealer have authorized and
appointed the Transfer Agent to act as their agent in connection with the
application of proceeds of any redemption of Fund shares to the purchase of
shares of any other Series and the general administration of the Exchange
Privilege. No commission or discounts will be paid to the Distributor or any
selected broker-dealer for any transactions pursuant to this Exchange
Privilege.
The Fund may limit the number of times this Exchange Privilege may be
exercised by any investor within a specified period of time. Also, the
Exchange Privilege may be terminated or revised at any time by the Fund, upon
such notice as may be required by applicable regulatory agencies (presently
sixty days' prior written notice for termination or material revision),
provided that the Exchange Privilege may be terminated or materially revised
without notice at times (a) when the New York Stock Exchange is closed for
other than customary weekends and holidays, (b) when trading on that Exchange
is restricted, (c) when an emergency exists as a result of which disposal by
the Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its
41
<PAGE>
net assets, (d) during any other period when the Securities and Exchange
Commission by order so permits (provided that applicable rules and
regulations of the Securities and Exchange Commission shall govern as to
whether the conditions prescribed in (b) or (c) exist), or (e) if the Fund
would be unable to invest amounts effectively in accordance with its
investment objective, policies and restrictions.
For further information regarding the Exchange Privilege, shareholders
should contact their DWR or other selected broker-dealer account executive or
the Transfer Agent.
REDEMPTIONS AND REPURCHASES
- -----------------------------------------------------------------------------
As discussed in the Prospectus, shares of the Fund may be redeemed at net
asset value on any day the New York Stock Exchange is open (see
"Determination of Net Asset Value"). Redemptions will be effected at the net
asset value per share next determined after the receipt of a redemption
request meeting the applicable requirements discussed in the Prospectus. When
a redemption is made by check and a check is presented to the Transfer Agent
for payment, the Transfer Agent will redeem a sufficient number of full and
fractional shares in the shareholder's account to cover the amount of the
check. This enables the shareholder to continue earning daily income
dividends until the check has cleared.
A check drawn by a shareholder against his or her 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. 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
42
<PAGE>
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.
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 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.
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<PAGE>
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 could
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 issued proposed regulation
section 1.1291-8 which establishes a mark-to-market regime which allows
investment companies investing in PFICs to avoid most, if not all, of the
difficulties posed by the PFIC rules. In any event, it is not anticipated
that taxes on the Global Equity Series with respect to investments in PFICs
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 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, 1995 for the Liquid Asset and U.S. Government
Money Market Series, were as follows: 6.09% and 6.28% for the Liquid Asset
Series; and 6.30% and 6.50% for the U.S. Government Money Market Series. Had
the Series been
44
<PAGE>
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 5.11% and 5.24%, and 4.13% and 4.21%, 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, 1995, the yields of the U.S. Government
Securities and Intermediate Income Series were 6.11% and 6.11%, 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 3.42% and 3.16%, 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. 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, the Intermediate Income
Securities, the American Value, the Capital Growth, the Dividend Growth, the
Strategist, the Utilities, the Value-Added Market and the 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; and the
Capital Growth Series commenced operations on February 2, 1993) through July
31, 1995 and for the fiscal year ended July 31, 1995 were: U.S. Government
Securities Series: 3.70% and 7.72%; Intermediate Income Securities Series:
4.31% and 9.22%; American Value Series: 12.24% and 33.48%; Capital Growth
Series: 5.27% and 20.08%; Dividend Growth Series:14.02% and 23.07%;
Strategist Series: 6.09% and 18.21%; Utilities Series: 8.16% and 12.16%;
Value-Added Market Series: 12.63% and 22.65%; and Global Equity Series: 5.07%
and 6.08%; 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, 1995 and for the fiscal year
ended July 31, 1995 would have been: U.S. Government Securities Series: 1.21%
and 5.29%; Intermediate Income Securities Series: 1.58% and 6.37%; American
Value Series: 11.26% and 31.37%; Capital Growth Series: 3.95% and 16.89%;
Dividend Growth Series: 11.75% and 19.60%; Strategist Series: 4.72% and
15.76%; Utilities Series: 6.03% and 9.60%; Value-Added Market Series: 11.41%
and 20.26%; and Global Equity Series: 4.02% and 3.85%; respectively.
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
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<PAGE>
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 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, 1995 and for the
fiscal year ended July 31, 1995 were: U.S. Government Securities Series:
9.75% and 7.72%; Intermediate Income Securities Series: 11.34% and 9.22%;
American Value Series: 33.35% and 33.48%; Capital Growth Series: 13.63% and
20.08%; Dividend Growth Series: 39.91% and 23.07%; Strategist Series: 16.34%
and 18.21%; Utilities Series: 22.21% and 12.16%; Value-Added Market Series:
34.50% and 22.65%; and Global Equity Series: 13.47% and 6.08%; respectively.
A Series may also advertise the growth of hypothetical investments 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. Investments 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, 1995: U.S. Government Securities Series:
$10,975, $54,875 and $109,750; Intermediate Income Securities Series:
$11,134, $55,670 and $111,340; American Value Series: $13,335, $66,675 and
$133,350; Capital Growth Series: $11,363, $56,815 and $113,630; Dividend
Growth Series: $13,991, $69,955 and $139,910; Strategist Series: $11,634,
$58,170 and $116,340; Utilities Series: $12,221, $61,105 and $122,210;
Value-Added Market Series: $13,450, $67,250 and $134,500; and Global Equity
Series: $11,347, $56,735 and $113,470.
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.
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.
46
<PAGE>
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, and of Dean Witter Distributors Inc.,
the Fund's Distributor. As Transfer Agent and Dividend Disbursing Agent, Dean
Witter Trust Company's responsibilities include maintaining shareholder
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.
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 annual financial statements of each Series of the Fund for the year
ended July 31, 1995, which are 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.
47
<PAGE>
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, 1995, five percent or more
of the voting securities of the Series indicated, in the percentage amount
indicated: D.F. and R Restaurants Inc./AAA, Attn: Larry Folk, 2350 Airport
Freeway, Suite 505, Bedford, TX (Liquid Asset Series: 8.2%); The Copley Press
Inc., Attn: Dean P. Dwyer, 7776 Ivanhoe Avenue, La Jolla, CA (Liquid Asset
Series: 11.3%); Accu-Fab Systems Inc. #1, 2121 N.E. Jack London Street,
Corvallis, OR (Liquid Asset Series: 13.1%, U.S. Government Money Market
Series: 43.0%); Indian Health Council, P.O. Box 406, Pauma Valley, CA (Liquid
Asset Series: 6.7%); Thomas William Malone, P.C., Two Ravinia Drive, Suite
300, Atlanta, GA (U.S. Government Money Market Series: 30.7%); Liljenquist
Investment Co., Ltd., a Utah Limited Partnership, 5205 South 300 West, Salt
Lake City, UT (U.S. Government Money Market Series: 16.5%); DWTC as Trustee
for Consolidated Hydro Profit Sharing Plan, P.O. Box 957, Jersey City, NJ
(U.S. Government Securities Series: 5.4%); DWTC as Trustee for Willdan
Associates Profit Sharing Plan Products 401(k) Plan, P.O. Box 957, Jersey
City, NJ (U.S. Government Securities Series: 7.6%); Delaware Charter Guaranty
and Trust Company as Trustee FBO Foulke Management 401(k) Plan dtd. 8/15/89,
Attn: Niccole Coppola, P.O. Box 8706, Wilmington, DE (U.S. Government
Securities Series: 15.4%, Utilities Series: 8.5%); DWTC as Trustee for Fenner
Manheim Inc. Profit Sharing Plan, P.O. Box 957, Jersey City, NJ (U.S.
Government Securities Series: 6.9%, Strategist Series: 17.4%, Global Equity
Series: 5.0%); DWTC as Trustee for Cygnus 401(k) Plan, P.O. Box 957, Jersey
City, NJ (Intermediate Income Securities Series: 14.4%); DWTC as Trustee for
Zeus 401(k) Plan, P.O. Box 957, Jersey City, NJ (Intermediate Income
Securities Series: 5.8%); DWTC as Trustee for Integrated Medical Systems
401(k) Plan, P.O. Box 957, Jersey City, NJ (Intermediate Income Securities
Series: 6.9%); Dean Witter Reynolds Inc. Custodian for John R. Norell IRA
Rollover dated 6/10/94, P.O. Box 789, Divide, CO (Intermediate Income
Securities Series: 8.0%); Frost National Bank FBO Westmoor Mfg. 401(k), P.O.
Box 2479, 100 W. Houston, San Antonio, TX (Intermediate Income Securities
Series: 10.8%); DWTC as Trustee FBO VVP America Inc. Deferred Compensation
Plan, P.O. Box 957, Jersey City, NJ (Intermediate Income Securities Series:
10.5%, Capital Growth Series: 7.4%); Dean Witter Reynolds Inc. C/F SAP
America VIP Plus 401(k) Plan dtd. 12/23/93, 701 Lee Road, Suite 200, Wayne,
PA (American Value Series: 30.7%, Dividend Growth Series: 14.5%, Utilities
Series: 39.6%); DWTC as Trustee for VVP America Inc. Retirement Plan, P.O.
Box 957, Jersey City, NJ (American Value Series: 12.1%, Dividend Growth
Series: 14.3%, Strategist Series: 36.7%, Global Equity Series: 35.6%);
Charles E. Behr, Trustee of the Charles E. Behr Trust dtd. 6/30/94, 802 N.
Ft. Harrison Avenue, Clearwater, FL (American Value Series: 10.0%); Gregory
C. Jewell, Trustee FBO Gregory C. Jewell Revocable Trust dtd. 11/2/94, P.O.
Box 60, Clearwater, FL (American Value Series: 5.7%); DWTC as Trustee for St.
Petersburg Kennel Club 401(k) Plan, P.O. Box 957, Jersey City, NJ (Capital
Growth Series: 21.0%); Dean Witter Reynolds Inc. as Trustee for Private
Business Inc. 401(k) Plan, 1242 Old Hillsboro Road, Franklin, TN (Capital
Growth Series: 20.0%); The Chase Manhattan Bank, N.A., Trustee FBO The NFL
Player Second Career Savings Plan, 3 Chase Metrotech Center, Brooklyn, NY
(Dividend Growth Series: 19.6%); DWTC as Trustee for Citrus Cannery Local
Union 401(k) Plan, P.O. Box 957, Jersey City, NJ (Utilities Series: 7.7%);
DWTC as Trustee for Pizzagalli Construction 401(k) Plan, Harborside Financial
Center, Plaza Two, Jersey City, NJ (Value-Added Market Series: 34.7%); and
DWTC as Trustee FBO The University Corporation Defined Contribution Plan,
P.O. Box 957, Jersey City, NJ (Value-Added Market Series: 41.8%).
In addition, at September 1, 1995, InterCapital held 10.7% of the shares
of the Intermediate Income Securities Series and 15.8% of the shares of the
Capital Growth Series.
48
<PAGE>
DEAN WITTER RETIREMENT SERIES--LIQUID ASSET
PORTFOLIO OF INVESTMENTS July 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED YIELD
AMOUNT (IN ON DATE OF
THOUSANDS PURCHASE MATURITY DATE VALUE
- ----------- ---------------- -------------------- ------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER (73.3%)
AUTOMOTIVE FINANCE (6.3%)
$1,130 Ford Motor Credit Co. ............................. 5.77 to 6.16% 08/14/95 to 09/21/95 $ 1,125,013
1,125 General Motors Acceptance Corp. ................... 5.89 to 6.17 09/05/95 to 10/04/95 1,116,597
------------
2,241,610
------------
BANK HOLDING COMPANIES (14.1%)
1,300 BankAmerica Corp. ................................. 5.75 09/22/95 1,289,316
1,200 Barnett Banks, Inc. ............................... 5.81 08/09/95 1,198,459
850 Chemical Banking Corp. ............................ 5.77 09/08/95 844,904
1,400 First Chicago Corp. ............................... 5.76 12/26/95 1,367,872
325 NationsBank Corp. ................................. 6.34 09/18/95 322,339
------------
5,022,890
------------
BANKS - COMMERCIAL (16.0%)
450 Abbey National North America Corp. ................ 6.02 08/07/95 449,555
1,500 Canadian Imperial Holdings, Inc. .................. 5.79 09/25/95 1,486,869
850 Dresdner U.S. Finance Inc. ........................ 5.79 09/12/95 844,347
1,200 National Australia Funding (Del.) Inc. ............ 5.73 10/11/95 1,186,628
1,000 National Westminster Bancorp Inc. ................. 5.86 09/07/95 994,039
750 Toronto-Dominion Holdings USA Inc. ................ 5.93 09/21/95 743,806
------------
5,705,244
------------
CHEMICALS (1.3%)
475 Monsanto Co. ...................................... 6.14 09/12/95 471,675
------------
DRUGS (0.7%)
250 Warner-Lambert Co. ................................ 5.83 12/22/95 244,389
------------
FINANCE - COMMERCIAL (1.4%)
500 CIT Group Holdings, Inc. .......................... 6.05 08/11/95 499,172
------------
FINANCE - CONSUMER (4.4%)
1,175 American Express Credit Corp. ..................... 5.84 to 6.21 08/09/95 to 12/08/95 1,164,876
400 Household Finance Corp. ........................... 6.14 08/23/95 398,528
------------
1,563,404
------------
FINANCE - CORPORATE (3.3%)
1,200 Ciesco, L.P. ...................................... 5.71 10/19/95 1,185,188
------------
FINANCE - DIVERSIFIED (3.1%)
1,125 General Electric Capital Corp. .................... 5.88 to 6.16 08/18/95 to 08/22/95 1,121,454
------------
FINANCE - EQUIPMENT (2.6%)
950 Deere (John) Capital Corp. ........................ 5.94 11/13/95 934,137
------------
FOOD & BEVERAGES (1.1%)
300 Nestle Capital Corp. .............................. 5.91 11/08/95 295,256
100 PepsiCo, Inc. ..................................... 6.38 10/31/95 98,445
------------
393,701
------------
HEALTH CARE DIVERSIFIED (1.0%)
350 SmithKline Beecham Corp. .......................... 6.24 08/10/95 349,466
------------
</TABLE>
49
<PAGE>
Dean Witter Retirement Series--Liquid Asset
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED YIELD
AMOUNT (IN ON DATE OF
THOUSANDS PURCHASE MATURITY DATE VALUE
- ----------- ---------------- -------------------- ------------
<C> <S> <C> <C> <C>
OFFICE EQUIPMENT (6.9%)
$ 750 Hewlett-Packard Co. ............................... 6.05% 08/22/95 $ 747,375
500 IBM Credit Corp. .................................. 5.78 08/14/95 498,962
1,200 Xerox Credit Corp. ................................ 5.76 to 6.10 08/03/95 to 08/18/95 1,197,469
------------
2,443,806
------------
RETAIL (4.1%)
1,475 Sears Roebuck Acceptance Corp. .................... 5.76 to 6.03 08/28/95 to 11/22/95 1,460,188
------------
TELECOMMUNICATIONS (2.5%)
400 AT&T Corp. ........................................ 6.15 09/01/95 397,930
500 Southwestern Bell Telephone Co. ................... 6.09 08/15/95 498,837
------------
896,767
------------
UTILITIES (4.5%)
1,600 National Rural Utilities Cooperative Finance Corp. 5.78 to 5.83 08/16/95 to 08/24/95 1,595,774
------------
TOTAL COMMERCIAL PAPER (AMORTIZED COST $26,128,865)..................................... 26,128,865
------------
BANKERS' ACCEPTANCES (12.4%)
1,500 First Bank N.A. ................................... 5.76 to 5.78 08/21/95 to 10/06/95 1,487,989
1,000 First Union National Bank ......................... 5.72 11/21/95 982,578
1,000 Mellon Bank, N.A. ................................. 5.75 01/05/96 975,578
1,000 Seattle First National Bank ....................... 5.88 11/30/95 980,673
------------
TOTAL BANKERS' ACCEPTANCES (AMORTIZED COST $4,426,818) ................................. 4,426,818
------------
U.S. GOVERNMENT AGENCIES (8.3%)
2,690 Federal Home Loan Mortgage Corp. .................. 5.75 08/01/95 2,690,000
250 Federal National Mortgage Association ............. 5.84 10/31/95 246,398
------------
TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $2,936,398) ........................................................... 2,936,398
------------
SHORT-TERM BANK NOTES (6.0%)
1,300 La Salle National Bank ............................ 5.75 10/27/95 1,300,000
850 Wachovia Bank of N.C. ............................. 5.78 09/01/95 850,000
------------
TOTAL SHORT-TERM BANK NOTES (AMORTIZED COST $2,150,000) ................................ 2,150,000
------------
TOTAL INVESTMENTS (AMORTIZED COST $35,642,081) (A) ................ 100.0% 35,642,081
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS .................... 0.0 (10,908)
------ ------------
NET ASSETS......................................................... 100.0% $35,631,173
====== ============
</TABLE>
(a) Cost is the same for federal income tax purposes.
See Notes to Financial Statements
50
<PAGE>
DEAN WITTER RETIREMENT SERIES--U.S. GOVERNMENT MONEY MARKET
PORTFOLIO OF INVESTMENTS July 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT (IN YIELD ON DATE
THOUSANDS) OF PURCHASE MATURITY DATE VALUE
- ----------- -------------- -------------------- ------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATION (0.2%)
$ 20 U.S. Treasury Bill (Amortized Cost $19,844) 5.86% 09/21/95 $ 19,844
------------
U.S. GOVERNMENT AGENCIES (99.9%)
3,005 Federal Farm Credit Bank ....................5.64 to 6.07 08/08/95 to 01/16/96 2,981,938
5,705 Federal Home Loan Banks .....................5.63 to 5.93 08/01/95 to 12/26/95 5,668,807
550 Federal Home Loan Mortgage Corp. ............5.85 to 5.90 08/18/95 to 09/18/95 547,249
1,500 Federal National Mortgage Association ......5.68 to 6.25 09/01/95 to 11/20/95 1,482,874
------------
TOTAL U.S. GOVERNMENT AGENCIES (AMORTIZED COST $10,680,868) ......... ......... 10,680,868
------------
TOTAL INVESTMENTS (AMORTIZED COST $10,700,712) (A) .......... 100.1% 10,700,712
(0.1)
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS .............. ------ (5,898)
------------
NET ASSETS ................................................. 100.0% $10,694,814
====== ============
</TABLE>
(a) Cost is the same for federal income tax purposes.
See Notes to Financial Statements
51
<PAGE>
DEAN WITTER RETIREMENT SERIES--U.S. GOVERNMENT SECURITIES
PORTFOLIO OF INVESTMENTS July 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- --------- --------- -----------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT & AGENCIES OBLIGATIONS (98.0%)
Government National Mortgage Association (45.8%)
$ 388 ............................................. 7.00% 06/15/23 $ 378,496
200 ............................................. 7.00 02/15/24 194,694
390 ............................................. 7.00 06/15/24 380,770
1,000 ............................................. 7.00 * 975,625
------------
1,929,585
------------
U.S. Treasury Interest Strips (52.2%)
100 ............................................. 0.00 08/15/96 94,679
500 ............................................. 0.00 05/15/97 450,791
800 ............................................. 0.00 08/15/98 666,968
1,300 ............................................. 0.00 02/15/00 984,315
------------
2,196,753
------------
TOTAL U.S. GOVERNMENT & AGENCIES OBLIGATIONS
(IDENTIFIED COST $4,204,194) .................................... 4,126,338
------------
SHORT-TERM INVESTMENT (A) (25.1%)
U.S. GOVERNMENT OBLIGATION
1,060 U.S. Treasury Bill (Amortized Cost
$1,057,503) ................................. 5.30 08/17/95 1,057,503
------------
TOTAL INVESTMENTS (IDENTIFIED COST $5,261,697) (B) ... 123.1% 5,183,841
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS ....... (23.1) (975,016)
------ ------------
NET ASSETS ............................................ 100.0% $4,208,825
====== ============
</TABLE>
* Securities purchased on a forward commitment basis with an
approximate principal amount and no definite maturity date; the
actual principal amount and maturity date will be determined upon
settlement.
(a) Security was purchased on a discount basis. The interest rate shown
has been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $5,261,697; the
aggregate gross and net unrealized depreciation is $77,856.
See Notes to Financial Statements
52
<PAGE>
DEAN WITTER RETIREMENT SERIES--INTERMEDIATE INCOME SECURITIES
PORTFOLIO OF INVESTMENTS July 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- -------- ---------- ---------
<C> <S> <C> <C> <C>
CORPORATE BONDS (36.5%)
AUTOMOBILE - RENTALS (2.5%)
$25 Hertz Corp. ......................... 6.70 % 06/15/02 $ 24,759
---------
AUTOMOTIVE (2.1%)
20 Chrysler Corp. ...................... 10.40 08/01/99 21,225
---------
AUTOMOTIVE FINANCE (2.7%)
25 General Motors Acceptance Corp. .... 8.40 10/15/99 26,468
---------
BANKS (3.9%)
15 Chase Manhattan Corp. ............... 7.50 12/01/97 15,373
25 Star Bank N.A. ...................... 6.375 03/01/04 23,680
---------
39,053
---------
BANKS - INTERNATIONAL (4.1%)
15 Bank of China ....................... 6.75 03/15/99 14,805
25 Westpac Banking Corp. ............... 7.875 10/15/02 26,106
---------
40,911
---------
CABLE & TELECOMMUNICATIONS (2.5%)
25 TCI Communications, Inc. ............ 8.00 08/01/05 24,853
---------
FINANCIAL (2.5%)
25 Salomon, Inc. ....................... 7.75 05/15/00 25,194
---------
FOODS & BEVERAGES (1.0%)
10 Grand Metropolitan Investment Corp. 8.125 08/15/96 10,211
---------
HEALTHCARE (2.5%)
25 Columbia/HCA Healthcare ............. 6.91 06/15/05 24,515
---------
LEISURE (2.6%)
25 Royal Caribbean Cruises, Ltd. ...... 8.25 04/01/05 26,036
---------
RETAIL STORES (2.5%)
25 Sears, Roebuck & Co. ................ 6.50 06/15/00 24,737
---------
TOBACCO (2.5%)
25 RJR Nabisco, Inc. ................... 8.75 08/15/05 25,020
---------
TRANSPORTATION (2.6%)
25 Union Pacific Corp. ................. 7.375 05/15/01 25,704
---------
UTILITIES - ELECTRIC (2.5%)
25 Southern California Edison Co. ..... 5.60 12/15/98 24,305
---------
TOTAL CORPORATE BONDS (IDENTIFIED COST $356,607) ....... 362,991
---------
</TABLE>
53
<PAGE>
Dean Witter Retirement Series--Intermediate Income Securities
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- -------- ---------- ---------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (58.8%)
$ 20 U.S. Treasury Note .................. 4.25 % 11/30/95 $ 19,906
75 U.S. Treasury Note .................. 7.50 02/29/96 75,762
75 U.S. Treasury Note .................. 7.25 11/15/96 76,324
5 U.S. Treasury Note .................. 6.375 06/30/97 5,046
35 U.S. Treasury Note .................. 6.375 01/15/99 35,252
125 U.S. Treasury Note .................. 6.75 06/30/99 127,598
115 U.S. Treasury Note .................. 6.375 07/15/99 115,952
50 U.S. Treasury Note .................. 7.875 11/15/99 53,164
75 U.S. Treasury Note .................. 6.375 01/15/00 75,574
---------
TOTAL U.S. GOVERNMENT OBLIGATIONS (IDENTIFIED COST
$593,964) .............................................. 584,578
---------
TOTAL INVESTMENTS (IDENTIFIED COST $950,571)
(A) ......................................... 95.3% 947,569
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES ................................. 4.7 46,210
------ ---------
NET ASSETS ................................... 100.0% $993,779
====== =========
</TABLE>
(a) The aggregate cost for federal income tax purposes is $950,571; the
aggregate gross unrealized appreciation is $8,341 and the aggregate gross
unrealized depreciation is $11,343, resulting in net unrealized
depreciation of $3,002.
See Notes to Financial Statements
54
<PAGE>
DEAN WITTER RETIREMENT SERIES--AMERICAN VALUE
PORTFOLIO OF INVESTMENTS July 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -------------
<C> <S> <C>
COMMON STOCKS (91.4%)
AGRICULTURE RELATED (1.5%)
4,000 AGCO Corp. .......................... $ 213,000
3,000 Pioneer Hi-Bred International, Inc. 126,750
-------------
339,750
-------------
AIRCRAFT & AEROSPACE (1.3%)
4,500 Boeing Co. .......................... 301,500
-------------
ALUMINUM (1.3%)
5,000 Aluminum Co. of America ............. 284,375
-------------
AUTOMOTIVE (1.1%)
5,000 General Motors Corp. ................ 243,750
-------------
BANKS (3.3%)
3,500 Bank of Boston Corp. ................ 151,812
4,000 Chase Manhattan Corp. ............... 214,500
6,000 Citicorp ............................ 374,250
-------------
740,562
-------------
BANKS - REGIONAL (1.2%)
1,500 Wells Fargo & Co. ................... 273,562
-------------
BASIC CYCLICALS (1.4%)
4,000 Champion International Corp. ....... 225,500
2,000 Crown Cork & Seal Co., Inc.* ....... 90,250
-------------
315,750
-------------
BIOTECHNOLOGY (1.3%)
3,000 Amgen Inc.* ......................... 254,625
617 Chiron Corp.* ....................... 48,434
-------------
303,059
-------------
BROADCAST MEDIA (1.2%)
7,000 Infinity Broadcasting Corp.* ....... 259,000
-------------
CABLE/CELLULAR (1.5%)
8,000 Ericsson (L.M.) Telephone Co. (ADR)
(Sweden) .......................... 149,000
5,000 Paging Network, Inc. ................ 197,500
-------------
346,500
-------------
CAPITAL GOODS (2.8%)
5,000 AlliedSignal, Inc. .................. 233,750
3,000 Lockheed Corp. ...................... 188,625
3,000 Sunstrand Corp. ..................... 200,625
-------------
623,000
-------------
CHEMICALS (1.0%)
2,400 Monsanto Co. ........................ 223,500
-------------
COMMUNICATIONS - SOFTWARE & SERVICES
(1.0%)
4,000 America Online, Inc.* ............... 220,500
-------------
COMPUTER EQUIPMENT (2.5%)
3,000 Adaptec, Inc. ....................... 127,875
4,000 COMPAQ Computer Corp.* .............. 203,000
5,000 Seagate Technology, Inc.* ........... 221,875
-------------
552,750
-------------
COMPUTER SOFTWARE (7.1%)
1,000 Adobe Systems, Inc. ................. 61,500
2,000 Computer Associates International,
Inc. .............................. 146,750
8,000 Informix Corp.* ..................... 236,000
2,000 Intuit, Inc.* ....................... 171,000
2,700 Microsoft Corp.* .................... $ 244,012
4,000 Oracle Systems Corp.* ............... 167,000
3,000 Parametric Technology Corp.* ....... 167,250
2,500 Peoplesoft, Inc.* ................... 177,500
</TABLE>
<PAGE>
Dean Witter Retirement Series--American Value
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -------------
<C> <S> <C>
8,000 Symantec Corp.* ..................... 216,000
500 Tivoli Systems Inc.* ................ 21,750
-------------
1,608,762
-------------
CONSUMER BUSINESS SERVICES (2.4%)
3,400 Computer Sciences Corp.* ............ 200,600
3,000 First Data Corp. .................... 175,125
2,000 First Financial Management Corp. ... 175,000
-------------
550,725
-------------
DRUGS (2.4%)
2,500 American Home Products Corp. ....... 197,500
2,500 Merck & Co., Inc. ................... 129,062
5,000 SmithKline Beecham PLC (ADR) (United
Kingdom) .......................... 225,000
-------------
551,562
-------------
DRUGS & HEALTHCARE (0.5%)
1,500 Johnson & Johnson ................... 107,625
-------------
ELECTRICAL EQUIPMENT (0.6%)
2,000 Emerson Electric Co. ................ 141,500
-------------
ELECTRONIC & ELECTRICAL EQUIPMENT
(0.4%)
2,000 AMP, Inc. ........................... 86,250
-------------
ELECTRONICS - SEMICONDUCTORS (3.8%)
4,000 LSI Logic Corp.* .................... 187,000
3,500 Motorola, Inc. ...................... 268,187
6,000 National Semiconductor Corp.* ...... 162,000
1,500 Texas Instruments Inc. .............. 234,375
-------------
851,562
-------------
ELECTRONICS - SEMICONDUCTORS/
COMPONENTS (2.6%)
5,300 Intel Corp. ......................... 343,837
4,000 Micron Technology, Inc. ............. 250,000
-------------
593,837
-------------
ELECTRONICS - SPECIALTY (3.1%)
3,000 Altera Corp.* ....................... 167,625
1,000 Linear Technology Corp. ............. 77,500
4,000 Maxim Integrated Products Inc.* .... 236,000
1,800 Xilinx, Inc.* ....................... 215,100
-------------
696,225
-------------
ENTERTAINMENT (4.7%)
3,000 Broderbund Software, Inc.* .......... 215,250
7,500 C U C International, Inc.* .......... 225,938
4,000 Hollywood Entertainment Corp.* ..... 110,000
2,000 Macromedia, Inc.* ................... 95,000
3,000 Sierra On-Line, Inc.* ............... 108,000
3,000 Viacom, Inc. (Class B)* ............. 152,250
2,500 Walt Disney Co. ..................... 146,563
-------------
1,053,001
-------------
</TABLE>
55
<PAGE>
Dean Witter Retirement Series--American Value
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -------------
<C> <S> <C>
FINANCIAL - MISCELLANEOUS (7.8%)
4,000 Ahmanson (H.F.) & Co. ............... $ 89,500
10,000 Bear Stearns Companies, Inc. ....... 221,250
6,000 Countrywide Credit Industries, Inc. 133,500
100 Edwards (A.G.), Inc. ................ 2,450
800 Federal Home Loan Mortgage Corp. ... 52,400
1,400 Federal National Mortgage
Association ....................... 131,075
6,000 Golden West Financial Corp. ......... 280,500
5,000 Great Western Financial Corp. ...... 106,875
2,000 Green Tree Financial Corp. .......... 108,250
5,000 Merrill Lynch & Co., Inc. ........... 277,500
2,500 Morgan Stanley Group, Inc. .......... 209,063
3,000 Schwab (Charles) Corp. .............. 138,375
-------------
1,750,738
-------------
HEALTHCARE PRODUCTS & SERVICES
(1.2%)
3,000 HBO & Co. ........................... 165,000
3,000 Healthsouth Corp.* .................. 57,750
2,000 Medaphis Corp.* ..................... 50,500
-------------
273,250
-------------
HOTELS / MOTELS (2.5%)
1,000 Hilton Hotels Corp. ................. 73,250
600 ITT Corp. ........................... 72,000
4,500 La Quinta Inns, Inc. ................ 126,563
5,000 Marriot International Inc. .......... 181,250
5,000 Prime Hospitality Corp.* ............ 48,750
2,500 Promus Hotel Corporation* ........... 61,563
-------------
563,376
-------------
HOUSEHOLD PRODUCTS (0.8%)
4,000 Scott Paper Co. ..................... 183,500
-------------
INSURANCE (3.9%)
6,000 American General Corp. .............. 218,250
2,550 American International Group, Inc. . 191,250
1,000 Reliastar Financial Corp. ........... 38,125
2,500 SunAmerica Inc. ..................... 143,125
6,000 Travelers Group, Inc. ............... 284,250
-------------
875,000
-------------
MACHINERY - DIVERSIFIED (0.9%)
5,000 Thermo Electron Corp.* .............. 213,750
-------------
MANUFACTURING (2.2%)
9,000 Loral Corp. ......................... 504,000
-------------
MEDIA GROUP (2.4%)
1,300 Capital Cities/ABC, Inc. ............ 151,775
1,500 CBS Inc. ............................ 116,438
8,000 News Corp. Ltd. (ADR) (Australia) .. 189,000
6,000 Westwood One, Inc.* ................. 93,750
-------------
550,963
-------------
MEDICAL PRODUCTS & SUPPLIES (1.2%)
2,500 Medtronic Inc. ...................... 205,000
2,000 Omnicare, Inc. ...................... 62,000
-------------
267,000
-------------
POLLUTION CONTROL (0.9%)
5,000 Browning-Ferris Industries, Inc. ... $ 193,125
-------------
RESTAURANTS (0.3%)
2,000 Starbucks Corp.* .................... 74,250
-------------
RETAIL (1.4%)
1,500 Dayton Hudson Corp. ................. 113,438
7,000 Federated Department Stores, Inc. .. 198,625
-------------
312,063
-------------
</TABLE>
<PAGE>
Dean Witter Retirement Series--American Value
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -------------
<C> <S> <C>
SEMICONDUCTOR - CAPITAL EQUIPMENT
(2.3%)
4,000 Applied Materials, Inc.* ............ 414,000
1,000 Opal Inc.* .......................... 24,250
2,000 Tencor Instruments .................. 87,000
-------------
525,250
-------------
SEMICONDUCTORS (2.3%)
3,500 KLA Instruments Corp.* .............. 303,625
6,000 Ultratech Stepper, Inc.* ............ 223,500
-------------
527,125
-------------
TELECOMMUNICATIONS (10.4%)
4,000 3Com Corp.* ......................... 295,500
3,000 Ascend Communications, Inc.* ....... 216,750
4,000 Cascade Communications Corp. ....... 201,000
5,000 Cisco Systems, Inc.* ................ 278,125
6,000 DSC Communications Corp.* ........... 321,000
3,000 Fore Systems, Inc.* ................. 103,500
3,000 Glenayre Technologies, Inc.* ....... 186,000
4,000 Stratacom, Inc. ..................... 215,000
5,500 Tellabs, Inc.* ...................... 244,750
2,000 U.S. Robotics Corp.* ................ 288,000
-------------
2,349,625
-------------
TRANSPORTATION (0.9%)
3,000 Burlington Northern, Inc. ........... 207,750
-------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $17,327,540) ..... 20,639,372
-------------
CONVERTIBLE PREFERRED STOCK (1.1%)
TELECOMMUNICATIONS
3,700 Nokia Corp. (ADR) (Finland)
(Identified Cost $122,489) ........ 243,275
-------------
PREFERRED STOCK (1.1%)
COMPUTER SOFTWARE
160 Sap AG (Germany) (Identified Cost
$129,818) ......................... 259,201
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS)
- -------------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATION (3.3%)
$4,000 U.S. Treasury Note (Principal Strip)
0.00% due 02/15/19 (Identified Cost
$745,566) ............................. 748,075
--------------
</TABLE>
56
<PAGE>
Dean Witter Retirement Series--American Value
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS) VALUE
- ----------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENT (2.1%)
REPURCHASE AGREEMENT
$470 The Bank of New York 5.8125% due
08/01/95 (dated 07/31/95;
proceeds $470,044;
collateralized by $473,058
Federal Mortgage Acceptance
Corp. valued at $488,532)
(Identified Cost $469,968) ..... $ 469,968
---------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $18,795,381) (a) 99.0% 22,359,891
OTHER ASSETS IN EXCESS OF
LIABILITIES ...................... 1.0 221,596
-------- ------------
NET ASSETS ........................ 100.0% $22,581,487
======== ============
</TABLE>
ADR American Depository Receipt.
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $18,807,474;
the aggregate gross unrealized appreciation is $3,640,590 and the
aggregate gross unrealized depreciation is $88,173 resulting in net
unrealized appreciation of $3,552,417.
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JULY 31, 1995:
<TABLE>
<CAPTION>
IN
CONTRACTS EXCHANGE DELIVERY UNREALIZED
TO DELIVERY FOR DATE APPRECIATION
- --------------- ---------- ---------- --------------
<S> <C> <C> <C>
DEM 40,446 $29,287 08/02/95 $101
==============
</TABLE>
See Notes to Financial Statements
57
<PAGE>
DEAN WITTER RETIREMENT SERIES--CAPITAL GROWTH
PORTFOLIO OF INVESTMENTS July 31, 1995
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ----------
<C> <S> <C>
COMMON STOCKS (97.7%)
ADVERTISING (2.2%)
400 Interpublic Group of Companies, Inc. ..... $14,950
----------
APPAREL (2.2%)
400 Cintas Corp. .............................. 14,800
----------
AUTOMOTIVE (2.2%)
400 Genuine Parts Co. ......................... 15,100
----------
BANKING (2.5%)
300 Fifth Third Bancorp. ...................... 16,950
----------
BEVERAGES (4.4%)
300 Anheuser-Busch Companies, Inc. ............ 16,687
200 Coca Cola Co. ............................. 13,175
----------
29,862
----------
BUSINESS SYSTEMS (1.9%)
300 General Motors Corp. (Class E) ............ 13,200
----------
CHEMICALS - SPECIALTY (2.2%)
300 Sigma-Aldrich Corp. ....................... 14,925
----------
COMPUTER SERVICES (1.9%)
200 Automatic Data Processing, Inc. ........... 12,800
----------
COMPUTER SOFTWARE (4.8%)
200 Computer Associates International, Inc. .. 14,675
200 Microsoft Corp.* .......................... 18,075
----------
32,750
----------
CONSUMER SERVICES (2.2%)
400 Block (H.& R.), Inc. ...................... 15,000
----------
COSMETICS (2.3%)
300 International Flavors & Fragrances Inc. .. 15,675
----------
DISTRIBUTION (2.3%)
500 Sysco Corp. ............................... 15,562
----------
DRUGS & HEALTHCARE (6.4%)
400 Abbott Laboratories ....................... 16,000
300 Forest Laboratories, Inc. (Class A)* ..... 13,312
300 Schering-Plough Corp. ..................... 13,950
----------
43,262
----------
ELECTRONICS - SPECIALTY (3.8%)
300 Dionex Corp.* ............................. 14,400
200 Grainger (W.W.), Inc. ..................... 11,725
----------
26,125
----------
ENTERTAINMENT/GAMING (2.2%)
500 Circus Circus Enterprises, Inc.* .......... 14,875
----------
FOODS (6.3%)
400 ConAgra, Inc. ............................. 15,100
400 Tootsie Roll Industries, Inc. ............. 14,400
300 Wrigley, (Wm), Jr. (Class A) .............. 13,350
----------
42,850
----------
GOLD (2.2%)
600 Barrick Gold Corp. (Canada) ............... 14,925
----------
HEALTH CARE - MISCELLANEOUS (2.3%)
500 U.S. Healthcare, Inc. ..................... $15,813
----------
HOUSEHOLD PRODUCTS (2.2%)
500 Rubbermaid, Inc. .......................... 14,875
----------
INSURANCE (1.6%)
150 American International Group, Inc. ....... 11,250
----------
MACHINERY - DIVERSIFIED (2.5%)
</TABLE>
<PAGE>
Dean Witter Retirement Series--Capital Growth
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ----------
<C> <S> <C>
400 Thermo Electron Corp.* .................... 17,100
----------
MANUFACTURED HOUSING (2.4%)
800 Clayton Homes, Inc. ....................... 16,000
----------
MANUFACTURING (4.9%)
700 Federal Signal Corp. ...................... 16,100
300 Loral Corp. ............................... 16,800
----------
32,900
----------
MANUFACTURING - DIVERSIFIED INDUSTRIES
(2.2%)
400 Sherwin-Williams Co. ...................... 14,600
----------
MEDICAL EQUIPMENT (1.9%)
300 Stryker Corp. ............................. 13,088
----------
MEDICAL PRODUCTS & SUPPLIES (2.3%)
1,000 Biomet, Inc.* ............................. 15,250
----------
RESTAURANTS (6.9%)
800 Brinker International, Inc.* .............. 14,200
800 International Dairy Queen, Inc. (Class A)* 16,800
400 McDonald's Corp. .......................... 15,450
----------
46,450
----------
RETAIL (2.4%)
600 Wal-Mart Stores, Inc. (Class A) ........... 15,975
----------
RETAIL - DRUG STORES (2.3%)
300 Walgreen Co. .............................. 15,525
----------
RETAIL - SPECIALTY (2.6%)
400 Home Depot, Inc. .......................... 17,550
----------
SUPERMARKETS (2.2%)
500 Albertson's Inc. .......................... 14,875
----------
TOBACCO (2.0%)
500 UST, Inc. ................................. 13,625
----------
U.S. GOVERNMENT AGENCY (2.8%)
200 Federal National Mortgage Association .... 18,725
----------
UTILITIES (2.2%)
1,315 Citizens Utilities Co. (Series A)* ....... 14,794
----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $599,659) (a)
97.7% 662,006
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES ................ 2.3 15,500
-------- ---------
NET ASSETS ..................... 100.0% $677,506
======== =========
</TABLE>
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $600,621; the
aggregate gross unrealized appreciation is $65,861 and the aggregate
gross unrealized depreciation is $4,476, resulting in net unrealized
appreciation of $61,385.
See Notes to Financial Statements
58
<PAGE>
DEAN WITTER RETIREMENT SERIES--DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS July 31, 1995
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- ------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS (99.3%)
AEROSPACE (6.0%)
24,500 Honeywell, Inc. ...................... $ 1,050,437
13,100 Raytheon Co. ......................... 1,082,387
------------
2,132,824
------------
ALUMINUM (3.1%)
19,500 Aluminum Co. of America .............. 1,109,062
------------
AUTOMOTIVE (6.0%)
21,900 Chrysler Corp. ....................... 1,067,625
35,900 Ford Motor Co. ....................... 1,036,612
------------
2,104,237
------------
BANK HOLDING COMPANIES (2.9%)
18,400 NationsBank Corp. .................... 1,032,700
------------
BANKS (3.1%)
20,000 BankAmerica Corp. .................... 1,080,000
------------
BEVERAGES - SOFT DRINKS (3.0%)
22,900 PepsiCo Inc. ......................... 1,073,437
------------
CHEMICALS (5.9%)
15,400 Du Pont (E.I.) de Nemours & Co. ..... 1,031,800
16,600 Eastman Chemical Company ............. 1,062,400
------------
2,094,200
------------
COMPUTERS (3.1%)
10,100 International Business Machines Corp. . 1,099,638
------------
CONGLOMERATES (3.1%)
19,500 Minnesota Mining & Manufacturing Co. . 1,104,188
------------
DRUGS (3.0%)
15,200 Bristol-Myers Squibb Co. ............. 1,052,600
------------
DRUGS & HEALTHCARE (3.0%)
26,600 Abbott Laboratories .................. 1,064,000
------------
ELECTRICAL EQUIPMENT (2.9%)
17,600 General Electric Co. ................. 1,038,400
------------
FOODS (6.1%)
32,200 Quaker Oats Company (The) ............ 1,118,950
8,000 Unilever N.V. (ADR) (Netherlands) ... 1,054,000
------------
2,172,950
------------
MACHINERY - AGRICULTURAL (3.1%)
12,100 Deere & Co. .......................... 1,087,488
------------
METALS & MINING (3.0%)
16,300 Phelps Dodge Corp. ................... 1,047,275
------------
NATURAL GAS (5.9%)
29,700 Enron Corp. .......................... 1,032,075
21,200 Tenneco Inc. ......................... 1,049,400
------------
2,081,475
------------
OFFICE EQUIPMENT (2.9%)
25,900 Pitney Bowes, Inc. ................... $ 1,039,238
------------
OIL (3.0%)
16,000 Amoco Corp. .......................... 1,076,000
------------
OIL INTEGRATED -
INTERNATIONAL (3.0%)
14,400 Exxon Corp. .......................... 1,044,000
------------
PAPER & FOREST PRODUCTS (3.0%)
22,700 Weyerhaeuser Co. ..................... 1,061,225
------------
PHOTOGRAPHY (3.0%)
18,100 Eastman Kodak Co. .................... 1,043,013
------------
</TABLE>
<PAGE>
Dean Witter Retirement Series--Dividend Growth
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- ------------------------------------- ------------
<C> <S> <C>
RAILROADS (3.0%)
12,450 CSX Corp. ............................ 1,044,244
------------
RETAIL (0.4%)
10,000 KMart Corp. .......................... 157,500
------------
RETAIL - DEPARTMENT STORES
(3.0%)
24,400 May Department Stores Co. ............ 1,058,350
------------
TELEPHONES (3.0%)
18,700 Bell Atlantic Corp. .................. 1,070,575
------------
TELECOMMUNICATIONS (3.0%)
31,200 Sprint Corporation ................... 1,068,600
------------
TOBACCO (2.9%)
14,400 Philip Morris Companies, Inc. ....... 1,031,400
------------
UTILITIES - ELECTRIC (5.9%)
24,000 Houston Industries, Inc. ............. 1,050,000
35,300 Pacific Gas & Electric Co. ........... 1,041,350
------------
2,091,350
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $30,560,871) ...... 35,159,969
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS)
- -------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (A) (0.9%)
U.S. GOVERNMENT AGENCY
$330 Federal Home Loan Mortgage
Corp. 5.75% due 08/01/95
(Amortized Cost $330,000) ... 330,000
--------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $30,890,871)
(b) ............................. 100.2% 35,489,969
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS .................... (0.2) (85,948)
-------- ------------
NET ASSETS ....................... 100.0% $35,404,021
======== ============
</TABLE>
ADR American Depository Receipt.
(a) Security was purchased on a discount basis. The interest rate shown
has been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $30,962,706;
the aggregate gross unrealized appreciation is $4,535,428 and the
aggregate gross unrealized depreciation is $8,165, resulting in net
unrealized appreciation of $4,527,263.
See Notes to Financial Statements
59
<PAGE>
DEAN WITTER RETIREMENT SERIES--UTILITIES
PORTFOLIO OF INVESTMENTS July 31, 1995
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
COMMON STOCKS (84.4%)
ELECTRIC UTILITIES - EQUIPMENT (2.3%)
2,500 Kenetech Corp. ...................... $ 28,750
3,000 Public Service Co. of Colorado ..... 94,875
-----------
123,625
-----------
ELECTRONICS - SEMICONDUCTORS (2.9%)
2,000 Motorola, Inc. ...................... 153,250
-----------
NATURAL GAS (13.1%)
2,500 Enron Corp. ......................... 86,875
5,000 MCN Corp. ........................... 95,000
5,000 NorAm Energy Corp. .................. 34,375
3,000 Pacific Enterprises ................. 72,375
3,500 Panhandle Eastern Corp. ............. 85,312
3,000 Questar Corp. ....................... 86,250
2,500 Sonat, Inc. ......................... 75,000
2,000 Tenneco Inc. ........................ 99,000
2,000 Williams Companies, Inc. ............ 74,000
-----------
708,187
-----------
TELECOMMUNICATION EQUIPMENT (1.3%)
3,300 Alcatel Alsthom (ADR) (France) ..... 70,125
-----------
TELECOMMUNICATIONS (32.1%)
3,000 Airtouch Communications, Inc.* ..... 94,500
3,200 Alltel Corp. ........................ 84,400
2,000 AT&T Corp. .......................... 105,500
1,500 BellSouth Corp. ..................... 101,625
3,000 Cable & Wireless PLC (ADR) (United
Kingdom) .......................... 60,750
2,000 Century Telephone Enterprises, Inc. 57,000
2,000 Comsat Corp. ........................ 46,250
3,300 Frontier Corp. ...................... 88,687
3,000 GTE Corp. ........................... 106,500
4,000 MCI Communications Corp. ............ 95,500
6,000 Micom Communications Corp. .......... 94,500
2,000 SBC Communications, Inc. ............ 96,250
2,500 Southern New England
Telecommunications Corp. .......... 85,625
3,000 Sprint Corporation .................. 102,750
2,000 Tele Danmark AS (ADR) (Denmark) .... 57,000
1,000 Telecommunications Corp. New
Zealand, Ltd. (ADR) (New Zealand) . 64,125
2,000 Telefonica Espana S.A. (ADR) (Spain) 81,750
2,000 Telefonos de Mexico S.A. (Series L)
(ADR) (Mexico) .................... 66,000
3,000 Telephone & Data Systems, Inc. ..... 116,250
3,000 Vodafone Group PLC (ADR) (United
Kingdom) .......................... 118,125
-----------
1,723,087
-----------
UTILITIES - ELECTRIC (31.3%)
3,000 Central & South West Corp. .......... $ 76,500
3,000 CINergy Corp. ....................... 78,000
3,800 CMS Energy Corp. .................... 95,000
2,500 Detroit Edison Co. .................. 73,750
3,500 DPL, Inc. ........................... 77,875
4,050 DQE, Inc. ........................... 97,200
2,500 Duke Power Co. ...................... 103,750
3,500 Eastern Utilities Associates ....... 76,125
2,000 Florida Progress Corp. .............. 61,500
2,000 General Public Utilities Corp. ..... 57,750
4,000 Illinova Corp. ...................... 100,000
2,500 NIPSCO Industries, Inc. ............. 81,563
3,600 Northeast Utilities ................. 81,000
3,000 PacifiCorp .......................... 55,125
2,500 PECO Energy Co. ..................... 71,563
3,000 Pinnacle West Capital Corp. ......... 73,125
5,000 Public Service Company of New
Mexico* ........................... 71,875
3,000 SCE Corp. ........................... 51,375
4,000 TECO Energy, Inc. ................... 86,000
2,500 Unicom Corp. ........................ 69,375
2,500 Utilicorp United, Inc. .............. 68,750
2,500 Western Resources Corp. ............. 76,250
-----------
</TABLE>
<PAGE>
Dean Witter Retirement Series--Utilities
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
1,683,451
-----------
UTILITIES - GAS (0.7%)
2,500 Southwest Gas Corp. ................. 36,875
-----------
UTILITIES - WATER (0.7%)
3,000 United Water Resources, Inc. ....... 40,125
-----------
TOTAL COMMON STOCKS (IDENTIFIED COST
$4,191,361) ....................... 4,538,725
-----------
PREFERRED STOCKS (1.0%)
U.S. GOVERNMENT AGENCY (0.5%)
1,000 Tennessee Valley Authority 8.00%
(Series 95-A) ..................... 25,375
-----------
UTILITIES - ELECTRIC (0.5%)
1,000 Connecticut Light & Power Capital
9.30% (Series A) .................. 26,875
-----------
TOTAL PREFERRED STOCKS (IDENTIFIED
COST $50,000) ..................... 52,250
-----------
60
</TABLE>
<PAGE>
Dean Witter Retirement Series--Utilities
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS) VALUE
- ----------- -----------
<C> <S> <C>
CORPORATE BOND (1.8%)
UTILITIES - ELECTRIC
Kentucky Utilities Co. 7.55% due
06/01/25 (Identified Cost
$100 $100,000) ........................ $ 97,342
-----------
SHORT-TERM INVESTMENTS (A) (11.6%)
U.S. GOVERNMENT AGENCIES
Federal Home Loan Mortgage Corp.
150 5.64% due 08/02/95 ............... 149,977
Federal National Mortgage
475 Association 5.69% due 08/09/95 ... 474,400
-----------
TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST $624,377) ....... 624,377
-----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $4,965,738) (b) 98.8% 5,312,694
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES .................. 1.2 67,126
-------- -----------
NET ASSETS ....................... 100.0% $5,379,820
======== ===========
</TABLE>
ADR American Depository Receipt.
* Non-income producing security.
(a) Securities were purchased on a discount basis. The interest rates
shown have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $4,969,226; the
aggregate gross unrealized appreciation is $412,166 and the aggregate
gross unrealized depreciation is $68,698, resulting in net unrealized
appreciation of $343,468.
See Notes to Financial Statements
61
<PAGE>
DEAN WITTER RETIREMENT SERIES--VALUE-ADDED MARKET
PORTFOLIO OF INVESTMENTS July 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C> <C>
COMMON STOCKS (95.6%)
AEROSPACE & DEFENSE (1.5%)
380 Boeing Co. ............................. $ 25,460
550 General Dynamics Corp. ................. 26,812
420 Lockheed Corp. ......................... 26,407
330 McDonnell Douglas Corp. ................ 27,266
500 Northrop Grumman Corp. ................. 28,500
340 Raytheon Co. ........................... 28,092
560 Rockwell International Corp. ........... 25,550
325 United Technologies Corp. .............. 27,300
-------------
215,387
-------------
AIRLINES (0.8%)
350 AMR Corp.* ............................. 26,250
330 Delta Air Lines, Inc. .................. 26,152
945 Southwest Airlines Co. ................. 27,169
2,900 USAir Group, Inc.* ..................... 27,550
-------------
107,121
-------------
ALUMINUM (0.6%)
760 Alcan Aluminum Ltd. (Canada) ........... 25,745
480 Aluminum Co. of America ................ 27,300
450 Reynolds Metals Co. .................... 28,125
-------------
81,170
-------------
AUTO PARTS - AFTER MARKET (0.8%)
1,030 Cooper Tire & Rubber Co. ............... 26,522
730 Echlin, Inc. ........................... 28,470
710 Genuine Parts Co. ...................... 26,802
610 Goodyear Tire & Rubber Co. ............. 26,459
-------------
108,253
-------------
AUTOMOBILES (0.6%)
545 Chrysler Corp. ......................... 26,569
955 Ford Motor Co. ......................... 27,576
535 General Motors Corp. ................... 26,081
-------------
80,226
-------------
BANKS - MONEY CENTER (1.5%)
495 BankAmerica Corp. ...................... 26,730
435 Bankers Trust New York Corp. ........... 28,057
500 Chase Manhattan Corp. .................. 26,812
530 Chemical Banking Corp. ................. 27,361
405 Citicorp ............................... 25,262
415 First Chicago Corp. .................... 25,211
360 Morgan (J.P.) & Co., Inc. .............. 26,325
460 Republic New York Corp. ................ 25,760
-------------
211,518
-------------
BANKS - REGIONAL (4.1%)
810 Banc One Corp. ......................... 25,717
630 Bank of Boston Corp. ................... 27,326
650 Bank of New York Co., Inc. ............. 26,081
470 Barnett Banks, Inc. .................... 26,085
700 Boatmen's Bancshares, Inc. ............. 25,462
750 Corestates Financial Corp. ............. 27,375
405 First Fidelity Bancorp, Inc. ........... 25,515
320 First Interstate Bancorp ............... 27,560
570 First Union Corp. ...................... 27,859
710 Fleet Financial Group, Inc. ............ 25,294
865 Keycorp ................................ 27,680
710 Mellon Bank Corp. ...................... $ 28,489
850 National City Corp. .................... 26,031
490 NationsBank Corp. ...................... 27,501
750 NBD Bancorp, Inc. ...................... 25,500
910 Norwest Corp. .......................... 25,707
1,045 PNC Bank Corp. ......................... 25,733
930 Shawmut National Corp. ................. 28,714
440 SunTrust Banks, Inc. ................... 26,565
1,075 U.S. Bancorp ........................... 27,950
710 Wachovia Corp. ......................... 27,069
145 Wells Fargo & Co. ...................... 26,444
-------------
</TABLE>
<PAGE>
Dean Witter Retirement Series--Value-Added Market
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C>
587,657
-------------
BEVERAGES - ALCOHOLIC (0.8%)
490 Anheuser-Busch Companies, Inc. ......... 27,256
815 Brown-Forman Corp (Class B) ............ 27,506
1,600 Coors (Adolph) Co. ..................... 27,200
725 Seagram Co. Ltd. (Canada) .............. 26,009
-------------
107,971
-------------
BEVERAGES - SOFT DRINKS (0.4%)
390 Coca Cola Co. .......................... 25,691
580 PepsiCo Inc. ........................... 27,187
-------------
52,878
-------------
BROADCAST MEDIA (0.8%)
290 Capital Cities/ABC, Inc. ............... 33,857
385 CBS Inc. ............................... 29,886
1,220 Comcast Corp. (Class A Special) ....... 24,552
1,060 Tele-Communications, Inc. .............. 26,500
-------------
114,795
-------------
BUILDING MATERIALS (0.6%)
1,055 Masco Corp. ............................ 27,430
675 Owens-Corning Fiberglas Corp.* ......... 26,494
700 Sherwin-Williams Co. ................... 25,550
-------------
79,474
-------------
CHEMICALS (1.8%)
450 Air Products & Chemicals, Inc. ......... 25,200
355 Dow Chemical Co. ....................... 26,314
385 Du Pont (E.I.) de Nemours & Co. ....... 25,795
430 Eastman Chemical Company ............... 27,520
470 Goodrich (B.F.) Co. .................... 25,497
500 Hercules, Inc. ......................... 26,812
280 Monsanto Co. ........................... 26,075
950 Praxair, Inc. .......................... 26,600
445 Rohm & Haas Co. ........................ 25,921
760 Union Carbide Corp. .................... 26,410
-------------
262,144
-------------
CHEMICALS - DIVERSIFIED (1.0%)
655 Avery Dennison Corp. ................... 26,282
910 Engelhard Corp. ........................ 27,641
765 First Mississippi Corp. ................ 26,106
405 FMC Corp.* ............................. 29,160
600 PPG Industries, Inc. ................... 27,450
-------------
136,639
-------------
62
</TABLE>
<PAGE>
Dean Witter Retirement Series--Value-Added Market
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C>
CHEMICALS - SPECIALTY (1.0%)
450 Grace (W.R.) & Co. ..................... $ 27,844
435 Great Lakes Chemical Corp. ............. 28,547
900 Morton International, Inc. ............. 27,000
750 Nalco Chemical Co. ..................... 26,719
505 Sigma-Aldrich Corp. .................... 25,124
-------------
135,234
-------------
COMMUNICATIONS-
EQUIPMENT/MANUFACTURERS (1.3%)
420 Andrew Corp.* .......................... 24,937
450 Cabletron Systems, Inc. ................ 23,400
465 Cisco Systems, Inc.* ................... 25,866
510 DSC Communications Corp.* .............. 27,285
700 Northern Telecom Ltd. (Canada) ......... 26,337
1,160 Scientific-Atlanta, Inc. ............... 24,940
625 Tellabs, Inc.* ......................... 27,812
-------------
180,577
-------------
COMPUTER SOFTWARE & SERVICES (1.8%)
560 Autodesk, Inc. ......................... 25,340
390 Automatic Data Processing, Inc. ....... 24,960
685 Ceridian Corp.* ........................ 28,342
365 Computer Associates International, Inc. 26,782
460 Computer Sciences Corp.* ............... 27,140
445 First Data Corp. ....................... 25,977
300 Microsoft Corp.* ....................... 27,112
1,545 Novell, Inc.* .......................... 27,810
615 Oracle Systems Corp.* .................. 25,676
600 Shared Medical Systems Corp. ........... 24,825
-------------
263,964
-------------
COMPUTERS - SYSTEMS (2.4%)
2,800 Amdahl Corp.* .......................... 27,825
570 Apple Computer, Inc. ................... 25,507
565 COMPAQ Computer Corp.* ................. 28,674
1,065 Cray Research, Inc.* ................... 27,557
3,190 Data General Corp.* .................... 27,514
630 Digital Equipment Corp.* ............... 24,176
330 Hewlett-Packard Co. .................... 25,699
2,210 Intergraph Corp.* ...................... 25,139
270 International Business Machines Corp. . 29,396
590 Silicon Graphics, Inc.* ................ 24,780
555 Sun Microsystems, Inc.* ................ 26,640
2,100 Tandem Computers Inc.* ................. 27,562
3,140 Unisys Corp.* .......................... 27,867
-------------
348,336
-------------
CONGLOMERATES (0.8%)
225 ITT Corp. .............................. 27,000
1,190 Teledyne, Inc.* ........................ 28,411
565 Tenneco Inc. ........................... 27,967
440 Textron Inc. ........................... 29,260
-------------
112,638
-------------
CONTAINERS - METAL & GLASS (0.4%)
735 Ball Corp. ............................. 27,195
620 Crown Cork & Seal Co., Inc.* ........... 27,977
-------------
55,172
-------------
CONTAINERS - PAPER (0.6%)
950 Bemis Company, Inc. .................... $ 26,956
1,170 Stone Container Corp.* ................. 25,301
535 Temple-Inland Inc. ..................... 27,686
-------------
79,943
-------------
COSMETICS (0.7%)
865 Alberto-Culver Co. ..................... 26,166
385 Avon Products, Inc. .................... 26,180
580 Gillette Co. ........................... 25,375
</TABLE>
<PAGE>
Dean Witter Retirement Series--Value-Added Market
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C>
495 International Flavors & Fragrances Inc. 25,864
-------------
103,585
-------------
DISTRIBUTORS - CONSUMER PRODUCTS (0.6%)
1,035 Fleming Cos., Inc. ..................... 27,298
935 Super Valu Stores, Inc. ................ 28,751
885 Sysco Corp. ............................ 27,546
-------------
83,595
-------------
ELECTRICAL EQUIPMENT (1.7%)
608 AMP, Inc. .............................. 26,220
350 Emerson Electric Co. ................... 24,762
450 General Electric Co. ................... 26,550
775 General Signal Corp. ................... 28,578
475 Grainger (W.W.), Inc. .................. 27,847
615 Honeywell, Inc. ........................ 26,368
665 Raychem Corp. .......................... 25,270
375 Thomas & Betts Corp. ................... 25,359
1,880 Westinghouse Electric Corp. ............ 25,615
-------------
236,569
-------------
ELECTRONICS - DEFENSE (0.4%)
1,480 EG & G, Inc. ........................... 27,565
530 Loral Corp. ............................ 29,680
-------------
57,245
-------------
ELECTRONICS - INSTRUMENTATION (0.4%)
760 Perkin-Elmer Corp. ..................... 25,745
575 Tektronix, Inc. ........................ 27,672
-------------
53,417
-------------
ELECTRONICS - SEMICONDUCTORS (1.3%)
790 Advanced Micro Devices, Inc. ........... 25,774
265 Applied Materials, Inc.* ............... 27,427
425 Intel Corp. ............................ 27,572
440 Micron Technology, Inc. ................ 27,500
360 Motorola, Inc. ......................... 27,585
900 National Semiconductor Corp.* .......... 24,300
175 Texas Instruments Inc. ................. 27,344
-------------
187,502
-------------
ENGINEERING & CONSTRUCTION (0.8%)
460 Fluor Corp. ............................ 25,990
740 Foster Wheeler Corp. ................... 25,807
3,670 Morrison Knudsen Co., Inc. ............. 28,442
1,275 Zurn Industries, Inc. .................. 27,891
-------------
108,130
-------------
</TABLE>
63
<PAGE>
Dean Witter Retirement Series--Value-Added Market
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C>
ENTERTAINMENT (0.7%)
635 King World Productions Inc.* ........... $ 26,591
595 Time Warner, Inc. ...................... 25,511
525 Viacom, Inc.* .......................... 26,644
455 Walt Disney Co. ........................ 26,674
-------------
105,420
-------------
FINANCIAL - MISCELLANEOUS (1.2%)
720 American Express Co. ................... 27,720
745 American General Corp. ................. 27,099
430 Federal Home Loan Mortgage Corp. ...... 28,165
280 Federal National Mortgage Association . 26,215
755 MBNA Corp. ............................. 27,086
450 Transamerica Corp. ..................... 27,844
-------------
164,129
-------------
FOODS (2.4%)
1,590 Archer-Daniels-Midland Co. ............. 26,235
440 C P C International Inc. ............... 27,170
585 Campbell Soup Co. ...................... 27,349
760 ConAgra, Inc. .......................... 28,690
495 General Mills, Inc. .................... 25,864
595 Heinz (H.J.) Co. ....................... 25,808
475 Hershey Foods Corp. .................... 27,372
350 Kellogg Co. ............................ 25,156
765 Quaker Oats Co. ........................ 26,584
530 Ralston-Ralston Purina Group ........... 28,355
950 Sara Lee Corp. ......................... 27,194
210 Unilever NV (ADR) (Netherlands) ....... 27,667
630 Wrigley (Wm.) Jr. Co. (Class A) ....... 28,035
-------------
351,479
-------------
GOLD MINING (1.2%)
1,115 Barrick Gold Corp. ..................... 27,736
3,005 Echo Bay Mines Ltd. (Canada) ........... 27,608
1,725 Homestake Mining Co. ................... 28,247
650 Newmont Mining Corp. ................... 27,787
1,070 Placer Dome Inc. ....................... 26,884
2,290 Santa Fe Pacific Gold Corp. ............ 28,625
-------------
166,887
-------------
HARDWARE & TOOLS (0.5%)
840 Black & Decker Corp. ................... 26,565
645 Snap-On, Inc. .......................... 26,929
670 Stanley Works .......................... 26,549
-------------
80,043
-------------
HEALTH CARE - MISCELLANEOUS (0.8%)
1,060 Alza Corp.* ............................ 27,295
340 Amgen Inc.* ............................ 28,857
2,100 Beverly Enterprises, Inc.* ............. 29,662
885 Manor Care, Inc. ....................... 28,652
-------------
114,466
-------------
HEALTH CARE - DIVERSIFIED (1.4%)
680 Abbott Laboratories .................... 27,200
980 Allergan, Inc. ......................... 29,645
340 American Home Products Corp. ........... 26,860
400 Bristol-Myers Squibb Co. ............... 27,700
380 Johnson & Johnson ...................... 27,265
720 Mallinckrodt Group, Inc. ............... 27,900
305 Warner-Lambert Co. ..................... 25,620
-------------
192,190
-------------
HEALTH CARE - DRUGS (1.0%)
325 Lilly (Eli) & Co. ...................... $ 25,431
520 Merck & Co., Inc. ...................... 26,845
550 Pfizer, Inc. ........................... 27,775
620 Schering-Plough Corp. .................. 28,830
700 Upjohn & Co. ........................... 26,950
-------------
</TABLE>
<PAGE>
Dean Witter Retirement Series--Value-Added Market
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C>
135,831
-------------
HEALTHCARE - HMOs (0.4%)
800 U.S. HealthCare, Inc. .................. 25,300
610 United Healthcare Corp. ................ 27,602
-------------
52,902
-------------
HEAVY DUTY TRUCKS & PARTS (0.9%)
600 Cummins Engine Co., Inc. ............... 25,200
865 Dana Corp. ............................. 25,517
510 Eaton Corp. ............................ 28,496
1,665 Navistar International Corp.* .......... 25,599
520 PACCAR, Inc. ........................... 27,560
-------------
132,372
-------------
HOME BUILDING (0.6%)
990 Centex Corp. ........................... 27,720
1,915 Kaufman & Broad Home Corp. ............. 27,528
1,060 Pulte Corp. ............................ 28,487
-------------
83,735
-------------
HOSPITAL MANAGEMENT (0.6%)
580 Columbia/HCA Healthcare Corp. .......... 28,420
2,180 Community Psychiatric Centers* ......... 27,795
1,815 Tenet Healthcare Corp. ................. 27,679
-------------
83,894
-------------
HOTELS/MOTELS (0.6%)
970 Harrah's Entertainment, Inc. ........... 26,069
345 Hilton Hotels Corp. .................... 25,271
770 Marriot International Inc. ............. 27,912
-------------
79,252
-------------
HOUSEHOLD FURNISHINGS & APPLIANCES
(1.0%)
490 Armstrong World Industries Inc. ....... 27,072
1,170 Bassett Furniture Industries, Inc. .... 28,519
1,635 Maytag Corp. ........................... 26,773
460 Whirlpool Corp. ........................ 26,565
3,190 Zenith Electronics Corp.* .............. 27,912
-------------
136,841
-------------
HOUSEHOLD PRODUCTS (0.9%)
400 Clorox Co. ............................. 26,250
385 Colgate-Palmolive Co. .................. 26,950
440 Kimberly-Clark Corp. ................... 27,885
380 Procter & Gamble Co. ................... 26,172
620 Scott Paper Co. ........................ 28,442
-------------
135,699
-------------
</TABLE>
64
<PAGE>
Dean Witter Retirement Series--Value-Added Market
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C>
HOUSEWARES (0.6%)
1,090 Newell Co. ............................. $ 27,659
510 Premark International, Inc. ............ 26,966
870 Rubbermaid, Inc. ....................... 25,882
-------------
80,507
-------------
INSURANCE BROKERS (0.4%)
1,190 Alexander & Alexander Services, Inc. .. 27,370
325 Marsh & McLennan Cos., Inc. ............ 25,675
-------------
53,045
-------------
INVESTMENT BANKING/ BROKERAGE (0.8%)
525 Dean Witter, Discover & Co. (Note 3) .. 26,512
495 Merrill Lynch & Co., Inc. .............. 27,472
730 Salomon, Inc. .......................... 26,919
600 Travelers, Inc. ........................ 28,425
-------------
109,328
-------------
LEISURE TIME (0.8%)
2,090 Bally Entertainment Corp.* ............. 26,909
1,505 Brunswick Corp. ........................ 30,288
2,715 Handleman Co. .......................... 28,168
1,390 Outboard Marine Corp. .................. 27,800
-------------
113,165
-------------
LIFE INSURANCE (1.1%)
489 Jefferson-Pilot Corp. .................. 27,323
640 Lincoln National Corp. ................. 26,320
725 Providian Corp. ........................ 26,009
705 Torchmark Corp. ........................ 27,142
555 UNUM Corp. ............................. 26,848
670 USLIFE Corp. ........................... 27,972
-------------
161,614
-------------
MACHINE TOOLS (0.4%)
830 Cincinnati Milacron, Inc. .............. 25,937
1,655 Giddings & Lewis, Inc. ................. 27,514
-------------
53,451
-------------
MACHINERY - DIVERSIFIED (1.7%)
770 Briggs & Stratton Corp. ................ 25,699
370 Caterpillar, Inc. ...................... 26,039
740 Cooper Industries, Inc. ................ 27,657
290 Deere & Co. ............................ 26,064
705 Harnischfeger Industries, Inc. ......... 26,437
625 Ingersoll-Rand Co. ..................... 26,094
445 NACCO Industries, Inc. (Class A) ...... 27,256
585 Timken Co. ............................. 26,691
555 Varity Corp.* .......................... 26,016
-------------
237,953
-------------
MANUFACTURED HOUSING (0.2%)
1,320 Fleetwood Enterprises, Inc. ............ 27,225
-------------
MANUFACTURING - DIVERSIFIED INDUSTRIES
(1.9%)
575 AlliedSignal, Inc. ..................... 26,881
680 Crane Co. .............................. 25,160
345 Dover Corp. ............................ 27,341
425 Illinois Tool Works Inc. ............... 25,075
475 Johnson Controls, Inc. ................. 28,619
750 Millipore Corp. ........................ 25,875
1,110 Pall Corp. ............................. $ 25,391
665 Parker-Hannifin Corp. .................. 27,099
750 Trinova Corp. .......................... 28,781
465 Tyco International Ltd. ................ 25,575
-------------
265,797
-------------
MEDICAL PRODUCTS & SUPPLIES (1.7%)
</TABLE>
<PAGE>
Dean Witter Retirement Series--Value-Added Market
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C>
865 Bard (C.R.), Inc. ...................... 27,247
630 Bausch & Lomb, Inc. .................... 26,775
790 Baxter International, Inc. ............. 29,427
480 Becton, Dickinson & Co. ................ 28,260
1,670 Biomet, Inc.* .......................... 25,467
805 Boston Scientific Corp.* ............... 29,382
320 Medtronic Inc. ......................... 26,240
520 St. Jude Medical, Inc.* ................ 28,470
1,220 United States Surgical Corp. ........... 29,280
-------------
250,548
-------------
METALS & MINING (0.2%)
950 Freeport-McMoran Copper & Gold, Inc. .. 25,650
-------------
METALS - MISCELLANEOUS (0.7%)
890 ASARCO, Inc. ........................... 28,257
1,020 Cyprus Amax Minerals Co. ............... 28,432
790 Inco Ltd. (Canada) ..................... 26,761
395 Phelps Dodge Corp. ..................... 25,379
-------------
108,829
-------------
MISCELLANEOUS (2.1%)
855 Airtouch Communications, Inc.* ......... 26,932
880 American Greetings Corp. ............... 26,290
865 Corning, Inc. .......................... 27,680
1,070 Dial Corp. ............................. 25,145
605 Harcourt General, Inc. ................. 27,225
500 Harris Corp. ........................... 28,625
1,220 Jostens, Inc. .......................... 27,755
500 Minnesota Mining &
Manufacturing Co. .................... 28,312
660 Pioneer Hi-Bred International, Inc. ... 27,885
335 TRW, Inc. .............................. 24,999
1,405 Whitman Corp. .......................... 27,397
-------------
298,245
-------------
MULTI-LINE INSURANCE (0.8%)
435 Aetna Life & Casualty Co. .............. 26,916
820 Allstate Corp. (The) ................... 25,625
345 American International Group, Inc. .... 25,875
350 CIGNA Corp. ............................ 28,219
-------------
106,635
-------------
OFFICE EQUIPMENT & SUPPLIES (0.7%)
315 Alco Standard Corp. .................... 25,633
1,110 Moore Corp. Ltd. (Canada) .............. 24,420
670 Pitney Bowes, Inc. ..................... 26,884
220 Xerox Corp. ............................ 26,207
-------------
103,144
-------------
OIL & GAS DRILLING (0.4%)
885 Helmerich & Payne, Inc. ................ 25,444
3,970 Rowan Cos., Inc.* ...................... 28,782
-------------
54,226
-------------
</TABLE>
65
<PAGE>
Dean Witter Retirement Series--Value-Added Market
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C>
OIL - DOMESTIC INTEGRATED (2.0%)
525 Amerada Hess Corp. ..................... $ 25,069
770 Ashland Oil, Inc. ...................... 26,469
240 Atlantic Richfield Co. ................. 27,660
505 Kerr-McGee Corp. ....................... 28,722
640 Louisiana Land & Exploration Co. ...... 25,440
1,170 Occidental Petroleum Corp. ............. 26,325
535 Pennzoil Co. ........................... 25,078
760 Phillips Petroleum Co. ................. 26,885
950 Sun Co., Inc. .......................... 27,906
960 Unocal Corp. ........................... 27,000
1,400 USX-Marathon Group ..................... 28,175
-------------
294,729
-------------
OIL - EXPLORATION & PRODUCTION (0.6%)
660 Burlington Resources, Inc. ............. 25,658
1,980 Oryx Energy Co. ........................ 28,463
2,990 Santa Fe Energy Resources, Inc.* ...... 28,031
-------------
82,152
-------------
OIL - INTERNATIONAL INTEGRATED (1.1%)
390 Amoco Corp. ............................ 26,228
560 Chevron Corp. .......................... 27,650
375 Exxon Corp. ............................ 27,188
270 Mobil Corp. ............................ 26,393
220 Royal Dutch Petroleum Co. (Netherlands) 27,940
415 Texaco, Inc. ........................... 27,598
-------------
162,997
-------------
OIL WELL EQUIPMENT & SERVICE (1.2%)
1,280 Baker Hughes Inc. ...................... 28,320
1,185 Dresser Industries, Inc. ............... 27,255
720 Halliburton Co. ........................ 29,250
1,150 McDermott International, Inc. .......... 28,319
410 Schlumberger Ltd.
(Netherlands Antilles) ............... 27,470
570 Western Atlas Inc.* .................... 25,650
-------------
166,264
-------------
PAPER & FOREST PRODUCTS (2.2%)
610 Boise Cascade Corp. .................... 25,544
470 Champion International Corp. ........... 26,496
700 Federal Paper Board Co., Inc. .......... 26,163
290 Georgia-Pacific Corp. .................. 25,013
305 International Paper Co. ................ 25,773
970 James River Corp. of Virginia .......... 32,374
970 Louisiana-Pacific Corp. ................ 23,886
445 Mead Corp. ............................. 26,199
625 Potlatch Corp. ......................... 26,406
455 Union Camp Corp. ....................... 25,594
585 Westvaco Corp. ......................... 26,471
560 Weyerhaeuser Co. ....................... 26,180
-------------
316,099
-------------
PERSONAL LOANS (0.4%)
580 Beneficial Corp. ....................... 27,478
515 Household International, Inc. .......... 27,038
-------------
54,516
-------------
PHOTOGRAPHY (0.4%)
480 Eastman Kodak Co. ...................... $ 27,660
650 Polaroid Corp. ......................... 27,869
-------------
55,529
-------------
POLLUTION CONTROL (0.5%)
660 Browning-Ferris Industries, Inc. ...... 25,493
2,640 Laidlaw Inc. ........................... 24,750
810 WMX Technologies, Inc. ................. 25,313
-------------
75,556
-------------
</TABLE>
<PAGE>
Dean Witter Retirement Series--Value-Added Market
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C>
PROPERTY - CASUALTY INSURANCE (1.1%)
310 Chubb Corp. ............................ 26,040
195 General Re Corp. ....................... 25,862
220 Loews Corp. ............................ 26,483
460 SAFECO Corp. ........................... 26,853
560 St. Paul Companies, Inc. ............... 27,300
1,585 USF&G Corp. ............................ 26,153
-------------
158,691
-------------
PUBLISHING (0.6%)
495 Dun & Bradstreet Corp. ................. 27,844
345 McGraw-Hill, Inc. ...................... 26,522
1,050 Meredith Corp. ......................... 30,188
-------------
84,554
-------------
PUBLISHING - NEWSPAPER (1.2%)
785 Dow Jones & Co., Inc. .................. 27,868
470 Gannett Co., Inc. ...................... 25,733
450 Knight-Ridder Newspapers, Inc. ......... 25,313
1,125 New York Times Co. (Class A) ........... 28,688
1,045 Times Mirror Co. ....................... 30,044
430 Tribune Co. ............................ 27,466
-------------
165,112
-------------
RAILROADS (1.2%)
385 Burlington Northern, Inc. .............. 26,661
425 Conrail, Inc. .......................... 26,244
315 CSX Corp. .............................. 26,421
365 Norfolk Southern Corp. ................. 26,508
975 Santa Fe Pacific Corp. ................. 27,788
455 Union Pacific Corp. .................... 29,632
-------------
163,254
-------------
RESTAURANTS (1.1%)
2,480 Darden Restaurants, Inc. ............... 26,970
1,330 Luby's Cafeterias, Inc. ................ 26,268
660 McDonald's Corp. ....................... 25,493
4,045 Ryan's Family Steak Houses, Inc.* ..... 27,809
2,285 Shoney's Inc.* ......................... 27,420
1,455 Wendy's International, Inc. ............ 27,099
-------------
161,059
-------------
RETAIL - DEPARTMENT STORES (1.0%)
920 Dillard Department Stores, Inc.
(Class A) ............................ 28,520
625 May Department Stores Co. .............. 27,109
540 Mercantile Stores Co., Inc. ............ 25,178
645 Nordstrom, Inc. ........................ 25,881
560 Penney (J.C.) Co., Inc. ................ 27,090
-------------
133,778
-------------
</TABLE>
66
<PAGE>
Dean Witter Retirement Series--Value-Added Market
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C>
RETAIL - DRUG STORES (0.6%)
715 Longs Drug Stores Corp. ................ $ 26,187
970 Rite Aid Corp. ......................... 27,524
510 Walgreen Co. ........................... 26,393
-------------
80,104
-------------
RETAIL - FOOD CHAINS (1.4%)
910 Albertson's Inc. ....................... 27,073
940 American Stores Co. .................... 27,613
2,200 Bruno's, Inc. .......................... 25,850
890 Giant Food, Inc. (Class A) ............. 27,145
970 Great Atlantic & Pacific Tea Co., Inc. 27,039
960 Kroger Co.* ............................ 29,880
450 Winn-Dixie Stores, Inc. ................ 25,706
-------------
190,306
-------------
RETAIL - GENERAL MERCHANDISE (0.8%)
365 Dayton Hudson Corp. .................... 27,603
1,800 KMart Corp. ............................ 28,350
820 Sears, Roebuck & Co. ................... 26,753
1,010 Wal-Mart Stores, Inc. (Class A) ....... 26,891
-------------
109,597
-------------
RETAIL - SPECIALTY (1.8%)
835 Circuit City Stores, Inc. .............. 30,999
605 Home Depot, Inc. ....................... 26,544
725 Lowe's Companies, Inc. ................. 26,734
765 Melville Corp. ......................... 27,540
950 Pep Boys-Manny Moe & Jack .............. 26,719
1,540 Price/Costco, Inc.* .................... 27,528
480 Tandy Corp. ............................ 28,500
925 Toys 'R' Us, Inc.* ..................... 25,900
1,745 Woolworth Corp. ........................ 27,266
-------------
247,730
-------------
RETAIL - SPECIALTY APPAREL (0.8%)
5,490 Charming Shoppes, Inc. ................. 26,764
770 Gap, Inc. .............................. 26,854
1,265 Limited (The), Inc. .................... 25,933
1,850 TJX Companies, Inc. .................... 27,056
-------------
106,607
-------------
SAVINGS & LOAN COMPANIES (0.6%)
1,165 Ahmanson (H.F.) & Co. .................. 26,067
590 Golden West Financial Corp. ............ 27,583
1,180 Great Western Financial Corp. .......... 25,223
-------------
78,873
-------------
SHOES (0.8%)
1,135 Brown Group Inc. ....................... 28,233
315 Nike, Inc. ............................. 28,468
740 Reebok International Ltd.
(United Kingdom) ..................... 26,548
2,615 Stride Rite Corp. ...................... 29,092
-------------
112,341
-------------
SPECIALIZED SERVICES (1.5%)
735 Block (H.&R.), Inc. .................... 27,563
855 C U C International, Inc.* ............. 25,757
1,015 Ecolab, Inc. ........................... 27,278
715 Interpublic Group of Companies, Inc. .. 26,723
865 National Service Industries, Inc. ..... 25,518
1,200 Ogden Corp. ............................ $ 26,850
1,675 Safety-Kleen Corp. ..................... 26,172
785 Service Corp. International ............ 26,788
-------------
212,649
-------------
SPECIALTY PRINTING (0.6%)
875 Deluxe Corp. ........................... 28,109
</TABLE>
<PAGE>
Dean Witter Retirement Series--Value-Added Market
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C>
710 Donnelley (R.R.) & Sons Co. ............ 26,536
1,160 Harland (John H.) Co. .................. 25,665
-------------
80,310
-------------
STEEL (1.2%)
4,070 Armco, Inc.* ........................... 26,964
1,750 Bethlehem Steel Corp.* ................. 27,563
990 Inland Steel Industries, Inc.* ......... 28,463
510 Nucor Corp. ............................ 27,413
855 USX-U.S. Steel Group ................... 28,322
1,165 Worthington Industries, Inc. ........... 24,319
-------------
163,044
-------------
TELECOMMUNICATIONS - LONG DISTANCE
(0.6%)
490 AT&T Corp. ............................. 25,848
1,240 MCI Communications Corp. ............... 29,605
810 Sprint Corporation ..................... 27,743
-------------
83,196
-------------
TEXTILES (1.0%)
1,260 Fruit of the Loom, Inc. ................ 29,138
1,175 Liz Claiborne, Inc. .................... 26,878
950 Russell Corp. .......................... 26,838
715 Springs Industries, Inc. ............... 28,064
495 VF Corp. ............................... 27,349
-------------
138,267
-------------
TOBACCO (0.5%)
665 American Brands, Inc. .................. 26,517
360 Philip Morris Companies, Inc. .......... 25,785
935 UST, Inc. .............................. 25,479
-------------
77,781
-------------
TOYS (0.4%)
860 Hasbro Inc. ............................ 26,768
1,025 Mattel, Inc. ........................... 28,956
-------------
55,724
-------------
TRANSPORTATION - MISCELLANEOUS (0.6%)
415 Federal Express Corp.* ................. 28,013
1,030 Pittston Services Group ................ 25,750
1,080 Ryder System, Inc. ..................... 26,865
-------------
80,628
-------------
TRUCKERS (0.6%)
1,075 Consolidated Freightways, Inc.* ....... 25,666
505 Roadway Service, Inc. .................. 25,376
1,830 Yellow Corporation ..................... 27,679
-------------
78,721
-------------
UTILITIES - ELECTRIC (4.8%)
790 American Electric Power Co., Inc. ..... 27,255
1,050 Baltimore Gas & Electric Co. ........... 26,119
915 Carolina Power & Light Co. ............. 27,793
1,100 Central & South West Corp. ............. 28,050
</TABLE>
67
<PAGE>
Dean Witter Retirement Series--Value-Added Market
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- -------- -------------
<C> <S> <C>
970 CINergy Corp. .......................... $ 25,220
910 Consolidated Edison Co. of New York,
Inc. ................................. 26,390
940 Detroit Edison Co. ..................... 27,730
730 Dominion Resources, Inc. ............... 26,006
605 Duke Power Co. ......................... 25,108
1,120 Entergy Corp. .......................... 26,600
695 FPL Group, Inc. ........................ 26,584
940 General Public Utilities Corp. ......... 27,143
600 Houston Industries, Inc. ............... 26,250
1,860 Niagara Mohawk Power Corp. ............. 26,040
585 Northern States Power Co. .............. 25,886
1,190 Ohio Edison Co. ........................ 26,180
930 Pacific Gas & Electric Co. ............. 27,435
1,430 PacifiCorp ............................. 26,276
960 PECO Energy Co. ........................ 27,480
975 Public Service Enterprise Group, Inc. . 27,056
1,630 SCE Corp. .............................. 27,914
1,145 Southern Co. ........................... 25,190
820 Texas Utilities Co. .................... 27,778
1,005 Unicom Corp. ........................... 27,889
780 Union Electric Co. ..................... 27,690
-------------
669,062
-------------
UTILITIES - GAS (2.4%)
890 Coastal Corp. .......................... 27,701
715 Consolidated Natural Gas Co. ........... 26,813
895 Eastern Enterprises .................... 27,074
735 Enron Corp. ............................ 25,541
1,560 ENSERCH Corp. .......................... 27,885
1,100 NICOR, Inc. ............................ 27,913
4,200 NorAm Energy Corp. ..................... 28,875
1,235 ONEOK, Inc. ............................ 28,714
1,125 Pacific Enterprises .................... 27,141
1,100 Panhandle Eastern Corp. ................ 26,813
1,005 Peoples Energy Corp. ................... 26,381
890 Sonat, Inc. ............................ 26,700
770 Williams Cos., Inc. .................... 28,490
-------------
356,041
-------------
UTILITIES - TELEPHONE (1.8%)
1,055 Alltel Corp. ........................... $ 27,826
590 Ameritech Corp. ........................ 28,541
490 Bell Atlantic Corp. .................... 28,053
430 BellSouth Corp. ........................ 29,133
790 GTE Corp. .............................. 28,045
680 NYNEX Corp. ............................ 28,050
1,015 Pacific Telesis Group .................. 28,674
570 SBC Communications, Inc. ............... 27,431
630 U.S. West, Inc. ........................ 27,011
-------------
252,764
-------------
TOTAL COMMON STOCKS (IDENTIFIED COST
$12,341,980) ......................... 13,463,677
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS)
- -----------
<C> <S> <C>
SHORT-TERM INVESTMENTS (A) (6.3%)
U.S. GOVERNMENT AGENCIES
$400 Federal Home Loan Banks 5.66%
due 08/01/95 ............... 400,000
480 Federal Home Loan Mortgage
Corp. 5.75% due 08/01/95 ... 480,000
---------
TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST $880,000) .. 880,000
---------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS (IDENTIFIED
COST $13,221,980) (B) ....... 101.9% 14,343,677
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS ................ (1.9) (263,688)
-------- -------------
NET ASSETS ................... 100.0% $14,079,989
======== =============
</TABLE>
ADR American Depository Receipt.
* Non-income producing security.
(a) Securities were purchased on a discount basis. The interest rates
shown have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $13,223,017;
the aggregate gross unrealized appreciation is $1,288,521 and the
aggregate gross unrealized depreciation is $167,861, resulting in net
unrealized appreciation of $1,120,660.
See Notes to Financial Statements
68
<PAGE>
DEAN WITTER RETIREMENT SERIES--GLOBAL EQUITY
PORTFOLIO OF INVESTMENTS July 31, 1995
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<S> <C> <C>
COMMON AND PREFERRED STOCKS (95.3%)
CANADA (4.8%)
MACHINERY - DIVERSIFIED
8,000 Bombardier, Inc. (Class A) .......... $ 98,902
-----------
METALS & MINING
1,800 Barrick Gold Corp. .................. 44,835
3,000 Falconbridge Ltd. ................... 59,890
-----------
104,725
-----------
NATURAL GAS
2,000 Renaissance Energy Ltd.* ............ 41,575
-----------
OIL INTEGRATED - INTERNATIONAL
1,800 Suncor, Inc. ........................ 51,429
-----------
TELECOMMUNICATIONS
1,500 BCE Mobile Communications, Inc.* ... 51,099
-----------
TOTAL CANADA ........................ 347,730
-----------
CHILE (1.1%)
CONGLOMERATES
3,000 Madeco S.A. (ADR) ................... 77,625
-----------
DENMARK (0.8%)
TELECOMMUNICATIONS
2,000 Tele Danmark AS (ADR) ............... 57,000
-----------
FINLAND (2.5%)
MANUFACTURING
1,600 Nokia AB (Series A) ................. 107,060
-----------
METALS & MINING
1,900 Outokumpu Oy (A Shares) ............. 37,100
-----------
PAPER & FOREST PRODUCTS
800 Metsa Serla Oy (B Shares) ........... 37,147
-----------
TOTAL FINLAND ....................... 181,307
-----------
FRANCE (5.1%)
BUILDING MATERIALS
500 Compagnie de Saint Gobain ........... 66,437
-----------
ENGINEERING & CONSTRUCTION
500 Bouygues ............................ 62,049
-----------
FINANCIAL SERVICES
700 Compagnie Bancaire S.A. ............. 84,237
-----------
MACHINERY - DIVERSIFIED
300 Sidel S.A. .......................... 107,051
-----------
MISCELLANEOUS
100 De Dietrich et Compagnie S.A. ...... 51,395
-----------
TOTAL FRANCE ........................ 371,169
-----------
GERMANY (5.4%)
ENGINEERING & CONSTRUCTION
100 Hochtief AG ......................... 55,852
-----------
MACHINERY - DIVERSIFIED
400 Jungheinrich AG (Pref.) ............. 92,077
150 Mannesmann AG ....................... 49,986
-----------
142,063
-----------
METALS
300 Degussa AG .......................... $ 99,365
-----------
PHARMACEUTICALS
200 Gehe AG ............................. 97,402
-----------
TOTAL GERMANY ....................... 394,682
-----------
HONG KONG (4.7%)
</TABLE>
<PAGE>
Dean Witter Retirement Series--Global Equity
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
BANKING
3,900 HSBC Holdings PLC ................... 52,923
-----------
CONGLOMERATES
15,000 Citic Pacific, Ltd. ................. 39,934
-----------
REAL ESTATE
16,000 Sun Hung Kai Properties Ltd. ....... 120,449
-----------
TELECOMMUNICATIONS
4,900 Hong Kong Telecommunications, Ltd.
(ADR) ............................. 89,425
-----------
TRANSPORTATION
28,300 Cathay Pacific Airways Ltd. ......... 40,415
-----------
TOTAL HONG KONG ..................... 343,146
-----------
ITALY (2.5%)
AUTOMOTIVE
13,000 Fiat SpA ............................ 50,366
-----------
TELECOMMUNICATIONS
17,000 Stet Societa Finanziaria Telfonica
SpA ............................... 53,158
-----------
TEXTILES
18,000 Bassetti SpA ........................ 78,064
-----------
TOTAL ITALY ......................... 181,588
-----------
JAPAN (20.8%)
BUILDING & CONSTRUCTION
1,000 Kyocera Corp. ....................... 86,248
8,000 Nishimatsu Construction ............. 103,226
-----------
189,474
-----------
ELECTRONIC & ELECTRICAL EQUIPMENT
14,000 NEC Corp. ........................... 166,384
5,000 Rohm Co. ............................ 282,965
-----------
449,349
-----------
ELECTRONICS
6,000 Canon, Inc. ......................... 108,659
1,000 Secom ............................... 61,573
-----------
170,232
-----------
HEALTH & PERSONAL CARE
8,000 Santen Pharmaceutical Co. ........... 215,507
-----------
MACHINERY - DIVERSIFIED
26,000 Mitsubishi Heavy Industries, Ltd. .. 187,459
-----------
MANUFACTURING
15,000 Hitachi Cable ....................... 102,886
-----------
MULTI-INDUSTRY
25,000 Mitsui & Co. ........................ 202,886
-----------
TOTAL JAPAN ......................... 1,517,793
-----------
</TABLE>
69
<PAGE>
Dean Witter Retirement Series--Global Equity
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
MEXICO (0.8%)
BANKING
6,000 Grupo Financiero Banamex Accival
S.A. de C.V. ...................... $ 12,669
-----------
BUILDING MATERIALS
5,687 Cementos de Mexico S.A. (B Shares) . 23,494
-----------
CONGLOMERATES
3,500 Grupo Carso S.A. de C.V. (A Shares)* 21,975
-----------
TOTAL MEXICO ........................ 58,138
-----------
NETHERLANDS (2.0%)
ELECTRICAL EQUIPMENT
1,900 Philips Electronics NV .............. 93,360
-----------
PUBLISHING
600 Wolters Kluwer NV ................... 54,289
-----------
TOTAL NETHERLANDS ................... 147,649
-----------
NORWAY (1.1%)
SHIPPING
1,800 Kvaerner AS (B Shares) .............. 83,571
-----------
SINGAPORE (3.2%)
BANKING
12,000 United Overseas Bank, Ltd. .......... 119,698
-----------
MACHINERY - DIVERSIFIED
12,500 Keppel Corp., Ltd. .................. 111,231
-----------
TOTAL SINGAPORE ..................... 230,929
-----------
SPAIN (2.1%)
MISCELLANEOUS
2,000 Repsol S.A. ......................... 66,750
-----------
STEEL
600 Acerinox S.A. ....................... 84,741
-----------
TOTAL SPAIN ......................... 151,491
-----------
SWEDEN (2.9%)
BUILDING & CONSTRUCTION
2,900 Svedala Industri (Series AB Free) .. 86,169
-----------
ELECTRONIC & ELECTRICAL EQUIPMENT
2,250 Ericsson AB (B Shares) .............. 42,501
-----------
INTERNATIONAL TRADE
2,500 Kinnevik AB (Series B Free) ......... 82,066
-----------
TOTAL SWEDEN ........................ 210,736
-----------
SWITZERLAND (1.3%)
HEALTH & PERSONAL CARE
14 Roche Holdings AG ................... 95,258
-----------
UNITED KINGDOM (6.3%)
BUSINESS SERVICES
5,100 Reuters Holdings PLC ................ 42,719
-----------
FOOD PROCESSING
4,000 Unilever PLC ........................ 81,690
-----------
FOODS & BEVERAGES
10,000 Allied Domecq PLC ................... 86,795
-----------
RETAIL
12,000 Marks & Spencer PLC ................. $ 84,338
-----------
TELECOMMUNICATIONS
16,000 Chubb Security PLC .................. 84,498
-----------
TRANSPORTATION - MISCELLANEOUS
10,000 British Airport Authority PLC ...... 84,003
------------
</TABLE>
<PAGE>
Dean Witter Retirement Series--Global Equity
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
TOTAL UNITED KINGDOM ................ 464,043
-----------
UNITED STATES (27.9%)
AIRCRAFT & AEROSPACE
1,000 Boeing Co. .......................... 67,000
-----------
ALUMINUM
1,600 Aluminum Co. of America ............. 91,000
-----------
BEVERAGES - SOFT DRINKS
1,700 PepsiCo Inc. ........................ 79,687
-----------
BROADCAST MEDIA
2,550 Infinity Broadcasting Corp.* ....... 94,350
-----------
COMPUTER SOFTWARE
3,600 Informix Corp. ...................... 106,200
1,100 Microsoft Corp.* .................... 99,412
1,400 Peoplesoft, Inc. .................... 99,400
-----------
305,012
-----------
DRUGS & HEALTHCARE
1,100 Johnson & Johnson ................... 78,925
-----------
ELECTRONICS - SEMICONDUCTORS
2,200 Motorola, Inc. ...................... 168,575
-----------
ELECTRONICS -
SEMICONDUCTORS/COMPONENTS .........
1,400 Intel Corp. ......................... 90,825
-----------
INSURANCE
1,500 SunAmerica Inc. ..................... 85,875
-----------
HARDWARE & TOOLS
2,500 Black & Decker Corp. ................ 79,063
-----------
HEALTH CARE DRUGS
1,800 Pfizer, Inc. ........................ 90,900
-----------
HEALTH EQUIPMENT & SERVICES
2,000 Columbia/HCA Healthcare Corp. ...... 98,000
-----------
INSURANCE
1,162 American International Group, Inc. . 87,188
-----------
MANUFACTURING
1,500 Loral Corp. ......................... 84,000
-----------
MEDICAL PRODUCTS & SUPPLIES
1,000 Medtronic Inc. ...................... 82,000
-----------
OIL INTEGRATED - DOMESTIC
1,000 Mobil Corp. ......................... 97,750
-----------
RESTAURANTS
2,000 McDonald's Corp. .................... 77,250
-----------
SOAP & HOUSEHOLD PRODUCTS
1,300 Procter & Gamble Co. ................ 89,538
-----------
TELECOMMUNICATION EQUIPMENT
1,700 DSC Communications Corp.* ........... 90,950
-----------
</TABLE>
70
<PAGE>
Dean Witter Retirement Series--Global Equity
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCY
1,000 Federal National Mortgage
Association ....................... $ 93,625
-----------
TOTAL UNITED STATES ................. 2,031,513
-----------
TOTAL COMMON AND PREFERRED STOCKS
(IDENTIFIED COST $6,421,425) ...... 6,945,368
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS)
- -----------
<C> <S> <C>
SHORT-TERM INVESTMENTS (A) (4.0%)
U.S. GOVERNMENT AGENCIES
$120 Federal Farm Credit Bank 5.68%
due 08/04/95 .................. 119,943
170 Federal Home Loan Mortgage Corp.
5.66% due 08/02/95 ............ 169,973
------------
TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST $289,916) ..... 289,916
------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $6,711,341) (b)
99.3% $7,235,284
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES .................. 0.7 51,021
-------- ------------
NET ASSETS ....................... 100.0% $7,286,305
======== ============
</TABLE>
ADR American Depository Receipt.
* Non-income producing security.
(a) Securities were purchased on a discount basis. The interest rates
shown have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $6,711,341; the
aggregate gross unrealized appreciation is $680,413 and the aggregate
gross unrealized depreciation is $156,470, resulting in net
unrealized appreciation of $523,943.
See Notes to Financial Statements
71
<PAGE>
DEAN WITTER RETIREMENT SERIES--GLOBAL EQUITY
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION July 31, 1995
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------- ------------ ------------
<S> <C> <C>
Aircraft & Aerospace .... $ 67,000 0.9%
Aluminum ................. 91,000 1.2
Automotive ............... 50,366 0.7
Banking .................. 185,290 2.5
Beverages - Soft Drinks . 79,687 1.1
Broadcast Media .......... 94,350 1.3
Building & Construction . 275,643 3.8
Building Materials ....... 89,931 1.2
Business Services ........ 42,719 0.6
Computer Software ........ 305,012 4.2
Conglomerates ............ 139,534 1.9
Drugs & Healthcare ....... 78,925 1.1
Electrical Equipment .... 93,360 1.3
Electronic & Electrical
Equipment ............... 491,850 6.8
Electronics .............. 170,232 2.3
Electronics -
Semiconductors .......... 168,575 2.3
Electronics -
Semiconductors/
Components .............. 90,825 1.2
Engineering &
Construction ............ 117,901 1.6
Financial Services ....... 170,112 2.3
Food Processing .......... 81,690 1.1
Foods & Beverages ........ 86,795 1.2
Hardware & Tools ......... 79,063 1.1
Health & Personal Care .. 310,765 4.3
Health Care Drugs ........ 90,900 1.2
Health Equipment &
Services ................ 180,000 2.5
Insurance ................ 87,188 1.2
International Trade ..... $ 82,066 1.1%
Machinery - Diversified . 646,706 8.9
Manufacturing ............ 293,946 4.0
Metals ................... 99,365 1.4
Metals & Mining .......... 141,825 2.0
Miscellaneous ............ 175,145 2.4
Multi-Industry ........... 202,886 2.8
Natural Gas .............. 41,575 0.6
Oil Integrated - Domestic 97,750 1.3
Oil Integrated -
International ........... 51,429 0.7
Paper & Forest Products . 37,147 0.5
Pharmaceuticals .......... 97,402 1.3
Publishing ............... 54,289 0.7
Real Estate .............. 120,449 1.7
Restaurants .............. 77,250 1.1
Retail ................... 84,338 1.2
Shipping ................. 83,571 1.1
Soap & Household Products 89,538 1.2
Steel .................... 84,741 1.2
Telecommunication
Equipment ............... 90,950 1.2
Telecommunications ....... 278,180 3.8
Textiles ................. 78,064 1.1
Transportation ........... 40,415 0.6
Transportation -
Miscellaneous ........... 84,003 1.2
U.S. Government Agencies 383,541 5.3
------------ ------------
$7,235,284 99.3%
============ ============
</TABLE>
SUMMARY OF INVESTMENTS BY TYPE
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
- ----------------------- ------------ ------------
<S> <C> <C>
Common Stocks .......... $6,853,291 94.0%
Preferred Stocks ....... 92,077 1.3
Short-Term Investments 289,916 4.0
------------ ------------
$7,235,284 99.3%
============ ============
</TABLE>
72
<PAGE>
DEAN WITTER RETIREMENT SERIES--STRATEGIST
PORTFOLIO OF INVESTMENTS July 31, 1995
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (51.5%)
AEROSPACE (0.1%)
205 Honeywell, Inc. ...................... $ 8,789
------------
AIRCRAFT & AEROSPACE (0.8%)
820 Boeing Co. ........................... 54,940
------------
ALUMINUM (0.1%)
130 Reynolds Metals Co. .................. 8,125
------------
AUTOMOTIVE (2.2%)
1,200 Daimler Benz AG (ADR) (Germany) ..... 58,350
210 Ford Motor Co. ....................... 6,064
710 General Motors Corp. ................. 34,612
3,600 Nissan Motor Co., Ltd. (ADR) (Japan) 50,400
------------
149,426
------------
BANKS (1.3%)
1,400 Citicorp ............................. 87,325
------------
BANKS - MONEY CENTER (0.7%)
980 Chemical Banking Corp. ............... 50,592
------------
BANKS - REGIONAL (0.7%)
250 Wells Fargo & Co. .................... 45,594
------------
BEVERAGES - SOFT DRINKS (0.1%)
180 PepsiCo Inc. ......................... 8,437
------------
CHEMICALS - SPECIALTY (0.8%)
1,600 Georgia Gulf Corp. ................... 53,800
------------
COMPUTER SERVICES (1.2%)
1,600 Diebold, Inc. ........................ 74,000
210 General Motors Corp. (Class E) ...... 9,240
------------
83,240
------------
COMPUTERS - SYSTEMS (1.5%)
600 Hewlett-Packard Co. .................. 46,725
1,100 Sun Microsystems, Inc.* .............. 52,800
------------
99,525
------------
CONSUMER PRODUCTS (0.1%)
176 RJR Nabisco Holdings Corp. ........... 4,862
------------
DRUGS (3.0%)
2,600 American Home Products Corp. ......... 205,400
------------
DRUGS & HEALTHCARE (6.2%)
5,150 Abbott Laboratories .................. 206,000
3,000 Johnson & Johnson .................... 215,250
------------
421,250
------------
ELECTRICAL EQUIPMENT (0.2%)
110 Emerson Electric Co. ................. 7,782
130 General Electric Co. ................. 7,670
------------
15,452
------------
ELECTRONIC & ELECTRICAL EQUIPMENT
(0.5%)
600 Sony Corp. (ADR) (Japan) ............. 32,550
------------
ELECTRONICS - SEMICONDUCTORS/
COMPONENTS (6.7%)
1,400 Intel Corp. .......................... 90,825
4,600 Micron Technology, Inc. .............. 287,500
1,000 Motorola, Inc. ....................... 76,625
------------
454,950
------------
ENTERTAINMENT (1.3%)
1,400 Polygram N.V. (ADR) (Netherlands) ... $ 88,200
------------
ENTERTAINMENT/GAMING (1.7%) ..........
</TABLE>
<PAGE>
Dean Witter Retirement Series--Strategist
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
3,600 Circus Circus Enterprises, Inc.* .... 107,100
145 Harrah's Entertainment, Inc. ......... 3,897
------------
110,997
------------
HEALTH CARE - MISCELLANEOUS (3.6%)
9,450 Humana, Inc.* ........................ 183,094
1,800 U.S. Healthcare, Inc. ................ 56,925
------------
240,019
------------
HOME BUILDING (0.7%)
1,600 Centex Corp. ......................... 44,800
------------
HOTELS/MOTELS (0.0%)
72 Promus Hotel Corporation* ............ 1,773
------------
INSURANCE (0.8%)
1,060 Travelers Group, Inc. ................ 50,218
------------
LIFE INSURANCE (0.1%)
240 Providian Corp. ...................... 8,610
------------
NATURAL GAS (2.0%)
20,000 NorAm Energy Corp. ................... 137,500
------------
OIL DRILLING & SERVICES (0.7%)
660 Schlumberger, Ltd. ................... 44,220
------------
OIL INTEGRATED - INTERNATIONAL (1.3%)
850 Chevron Corp. ........................ 41,969
100 Exxon Corp. .......................... 7,250
570 Texaco, Inc. ......................... 37,905
------------
87,124
------------
POLLUTION CONTROL (0.6%)
1,200 WMX Technologies, Inc. ............... 37,500
------------
RETAIL (0.7%)
120 Penney (J.C.) Co., Inc. .............. 5,805
1,500 Wal-Mart Stores, Inc. (Class A) ..... 39,938
------------
45,743
------------
RETAIL - SPECIALTY (1.1%)
7,875 Pier 1 Imports, Inc. ................. 76,781
------------
RETAIL - SPECIALTY APPAREL (1.0%)
1,950 Gap, Inc. ............................ 68,006
------------
TELECOMMUNICATIONS (3.7%)
7,950 Airtouch Communications, Inc.* ...... 250,425
------------
TEXTILES - APPAREL MANUFACTURERS
(3.7%)
11,000 Liz Claiborne, Inc. .................. 251,625
------------
TOBACCO (1.1%)
1,000 Philip Morris Companies, Inc. ....... 71,625
------------
TRANSPORTATION - SHIPPING (0.1%)
90 Federal Express Corp.* ............... 6,075
------------
U.S. GOVERNMENT AGENCY (1.1%)
785 Federal National Mortgage Association 73,496
------------
TOTAL COMMON STOCKS (IDENTIFIED COST
$2,911,659) ........................ 3,478,994
------------
</TABLE>
73
<PAGE>
Dean Witter Retirement Series--Strategist
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS) VALUE
- ------------------------------------------- ------------
<C> <S> <C>
CORPORATE BONDS (16.9%)
AUTOMOTIVE FINANCE (0.2%)
$ 15 Ford Capital BV 9.375% due 05/15/01
(Netherlands) .................... $ 16,724
------------
BANKS (4.4%)
100 Banco Central Hispano 7.50% due
06/15/05 (Cayman Islands) ........ 98,144
100 Bank of Boston Corp. 6.875% due
07/15/03 ......................... 98,229
50 BCO Commercio Exterior 8.625% due
06/02/00 (Columbia) - 144A** ..... 50,750
50 Midland Bank PLC 7.65% due 05/01/25
(United Kingdom) ................. 52,702
------------
299,825
------------
BANKS - MONEY CENTER (0.7%)
50 Chemical Banking Corp. 7.00% due
06/01/05 ......................... 49,273
------------
BROADCAST MEDIA (0.7%)
50 News American Holdings, Inc. 8.25%
due 08/10/18 ..................... 50,676
------------
FINANCIAL (2.2%)
50 BHP Finance Ltd. 5.625% due
11/01/00 (Australia) ............. 47,597
50 Commercial Credit Group, Inc. 7.75%
due 03/01/05 ..................... 52,250
50 Salomon, Inc. 6.75% due 08/15/03 .. 46,254
------------
146,101
------------
FOREIGN GOVERNMENT AGENCY (2.0%)
100 Italy (Republic of) 6.875% due
09/27/23 ......................... 87,480
50 Province of Ontario 7.00% due
08/04/05 (Canada) ................ 50,062
------------
137,542
------------
HOSPITAL MANAGEMENT (0.8%)
50 Columbia/HCA Healthcare Corp. 8.85%
due 01/01/07 ..................... 55,664
------------
INDUSTRIALS (4.5%)
50 Aramark Services Co. 8.15% due
05/01/05 ......................... 51,558
100 Repsol International Finance 7.00%
due 08/01/05 ..................... 100,020
50 RJR Nabisco, Inc. 8.75% due
08/15/05 ......................... 50,040
50 TCI Communications, Inc. 8.75% due
08/01/15 ......................... 50,750
50 Time Warner Entertainment Co.
8.375% due 07/15/33 .............. 48,856
------------
301,224
------------
STEEL & IRON (0.2%)
$ 10 Pohang Iron & Steel Co., Ltd. 7.50%
due 08/01/02 (South Korea) ....... $ 10,164
------------
TRANSPORTATION (0.9%)
50 United Air Lines, Inc. 11.21% due
05/01/14 ......................... 61,331
------------
UTILITIES - ELECTRIC (0.3%)
20 Long Island Lighting Co. 6.25% due
07/15/01 ......................... 18,322
------------
TOTAL CORPORATE BONDS (IDENTIFIED
COST $1,136,110) ................. 1,146,846
------------
U.S. GOVERNMENT & AGENCIES
OBLIGATIONS (23.7%)
200 Federal Home Loan Banks 7.78% due
01/30/97 ......................... 201,625
170 U.S. Treasury Bond 8.125% due
08/15/19 ......................... 193,508
</TABLE>
<PAGE>
Dean Witter Retirement Series--Strategist
Portfolio of Investments July 31, 1995 (continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS) VALUE
- ------------------------------------------- ------------
<C> <S> <C>
100 U.S. Treasury Bond 7.50% due
11/15/24 ......................... 107,938
275 U.S. Treasury Note 6.50% due
05/15/97 ......................... 277,836
75 U.S. Treasury Note 7.875% due
01/15/98 ......................... 78,199
85 U.S. Treasury Note 5.25% due
07/31/98 ......................... 83,194
50 U.S. Treasury Note 6.375% due
01/15/99 ......................... 50,359
235 U.S. Treasury Note 6.50% due
04/30/99 ......................... 237,864
145 U.S. Treasury Note 6.875% due
08/31/99 ......................... 148,693
25 U.S. Treasury Note 7.875% due
11/15/99 ......................... 26,582
20 U.S. Treasury Note 6.75% due
04/30/00 ......................... 20,447
50 U.S. Treasury Note 7.50% due
11/15/01 ......................... 53,086
125 U.S. Treasury Note 6.25% due
02/15/03 ......................... 123,965
------------
TOTAL U.S. GOVERNMENT & AGENCIES
OBLIGATIONS
(IDENTIFIED COST $1,578,468) ..... 1,603,296
------------
74
<PAGE>
Dean Witter Retirement Series--Strategist
Portfolio of Investments July 31, 1995 (continued)
PRINCIPAL
AMOUNT (IN
THOUSANDS) VALUE
- ------------- ------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (A) (7.0%)
U.S. GOVERNMENT AGENCIES
$290 Federal Home Loan Mortgage Corp.
5.65% due 08/02/95 ............... $ 289,954
180 Federal National Mortgage
Association 5.69% due 08/03/95 ... 179,943
------------
TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST $469,897) ... ... 469,897
------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $6,096,134) (b) 99.1% 6,699,033
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES .................. 0.9 59,659
-------- -----------
NET ASSETS ....................... 100.0% $6,758,692
======== ===========
</TABLE>
ADR American Depository Receipt.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
(a) Securities were purchased on a discount basis. The interest rates
shown have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $6,096,900; the
aggregate gross unrealized appreciation is $679,840 and the aggregate
gross unrealized depreciation is $77,707, resulting in net unrealized
appreciation of $602,133.
See Notes to Financial Statements
75
<PAGE>
DEAN WITTER RETIREMENT SERIES
STATEMENTS OF ASSETS AND LIABILITIES July 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. U.S. INTERMEDIATE
GOVERNMENT GOVERNMENT INCOME
LIQUID ASSET MONEY MARKET SECURITIES SECURITIES
-------------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value * .................. $35,642,081 $10,700,712 $5,183,841 $ 947,569
Cash ................................................... 4,801 1,670 14,596 35,535
Receivable for:
Investments sold ...................................... -- -- -- 23,687
Shares of beneficial interest sold .................... 819 4,110 8,877 1,141
Dividends ............................................. -- -- -- --
Interest .............................................. 10,478 -- 9,593 13,922
Foreign withholding taxes reclaimed ................... -- -- -- --
Deferred organizational expenses ....................... 6,583 6,738 6,652 6,680
Prepaid expenses and other assets ...................... 315 3,112 3,381 237
Receivable from affiliate .............................. 28,210 18,828 20,189 17,354
-------------- ------------- ------------ --------------
TOTAL ASSETS ......................................... 35,693,287 10,735,170 5,247,129 1,046,125
-------------- ------------- ------------ --------------
LIABILITIES:
Payable for:
Investments purchased ................................. -- -- 989,826 24,875
Shares of beneficial interest repurchased ............. 26,935 11,678 15,581 2,539
Dividends to shareholders ............................. -- -- 2,675 664
Accrued expenses and other payables .................... 28,596 21,940 23,570 17,588
Organizational expenses payable ........................ 6,583 6,738 6,652 6,680
-------------- ------------- ------------ --------------
TOTAL LIABILITIES .................................... 62,114 40,356 1,038,304 52,346
-------------- ------------- ------------ --------------
NET ASSETS:
Paid-in-capital ........................................ 35,631,144 10,694,809 4,288,505 993,268
Accumulated undistributed net investment income ....... 29 5 -- 426
Accumulated undistributed net realized gain
(accumulated
net realized loss) .................................... -- -- (1,824) 3,087
Net unrealized appreciation (depreciation) ............. -- -- (77,856) (3,002)
-------------- ------------- ------------ --------------
NET ASSETS ........................................... $35,631,173 $10,694,814 $4,208,825 $ 993,779
============== ============= ============ ==============
*IDENTIFIED COST ....................................... $35,642,081 $10,700,712 $5,261,697 $ 950,571
============== ============= ============ ==============
SHARES OF BENEFICIAL INTEREST OUTSTANDING .............. 35,631,144 10,694,809 433,478 103,235
============== ============= ============ ==============
NET ASSET VALUE PER SHARE (unlimited authorized shares
of $.01 par value) .................................... $1.00 $1.00 $9.71 $9.63
============== ============= ============ ==============
</TABLE>
+ Includes $44 of dividends receivable from Dean Witter, Discover &
Co., an affiliate of Dean Witter InterCapital Inc. (the "Investment
Manager").
See Notes to Financial Statements
76
<PAGE>
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN CAPITAL DIVIDEND VALUE-ADDED
VALUE GROWTH GROWTH UTILITIES MARKET GLOBAL EQUITY STRATEGIST
- ------------- ---------- ------------- ------------ ------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
$22,359,891 $662,006 $35,489,969 $5,312,694 $14,343,677 $7,235,284 $6,699,033
-- 21,618 4,639 19,013 20,877 26,451 11,785
660,161 -- -- -- 12,958 -- 101,497
54,908 2,640 104,923 32,035 7,873 21,295 8,824
7,279 317 53,168 22,560 10,689+ 5,397 2,738
76 -- -- 1,263 -- -- 43,122
197 -- -- -- -- 3,519 144
6,830 6,830 6,644 6,652 6,830 6,652 6,644
2,331 431 2,756 3,512 188 1,755 2,231
23,914 14,960 32,879 14,785 18,181 25,055 15,283
- ------------- ---------- ------------- ------------ ------------- --------------- ------------
23,115,587 708,802 35,694,978 5,412,514 14,421,273 7,325,408 6,891,301
- ------------- ---------- ------------- ------------ ------------- --------------- ------------
468,561 9,075 220,868 -- 315,887 -- 99,702
32,547 -- 27,810 7,739 198 5,623 8,697
-- -- -- -- -- -- --
26,162 15,391 35,635 18,303 18,369 26,828 17,566
6,830 6,830 6,644 6,652 6,830 6,652 6,644
- ------------- ---------- ------------- ------------ ------------- --------------- ------------
534,100 31,296 290,957 32,694 341,284 39,103 132,609
- ------------- ---------- ------------- ------------ ------------- --------------- ------------
18,239,931 613,332 30,404,477 5,091,039 12,820,696 6,741,797 5,959,758
149,207 3,673 304,765 59,239 98,210 91,401 131,775
627,839 (1,846) 95,681 (117,414) 39,386 (70,983) 64,260
3,564,510 62,347 4,599,098 346,956 1,121,697 524,090 602,899
- ------------- ---------- ------------- ------------ ------------- --------------- ------------
$22,581,487 $677,506 $35,404,021 $5,379,820 $14,079,989 $7,286,305 $6,758,692
============= ========== ============= ============ ============= =============== ============
$18,795,381 $599,659 $30,890,871 $4,965,738 $13,221,980 $6,711,341 $6,096,134
============= ========== ============= ============ ============= =============== ============
1,723,154 60,665 2,706,023 478,123 1,100,080 652,573 599,295
============= ========== ============= ============ ============= =============== ============
$13.10 $11.17 $13.08 $11.25 $12.80 $11.17 $11.28
============= ========== ============= ============ ============= =============== ============
</TABLE>
77
<PAGE>
DEAN WITTER RETIREMENT SERIES
STATEMENTS OF OPERATIONS For the year ended July 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. U.S. INTERMEDIATE
GOVERNMENT GOVERNMENT INCOME
LIQUID ASSET MONEY MARKET SECURITIES SECURITIES
-------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME
Interest ............................................ $518,526 $ 83,800 $199,657 $ 40,524
Dividends ........................................... -- -- -- --
-------------- ------------ ------------ --------------
TOTAL INCOME ...................................... 518,526 83,800 199,657 40,524
-------------- ------------ ------------ --------------
EXPENSES
Investment management fee ........................... 42,333 6,841 22,158 4,006
Transfer agent fees and expenses .................... 15,227 10,269 19,545 5,905
Shareholder reports and notices ..................... 3,042 1,855 6,685 1,187
Professional fees ................................... 19,938 18,656 25,952 17,906
Registration fees ................................... 13,974 13,867 2,031 3,072
Custodian fees ...................................... 510 525 111 --
Organizational expenses ............................. 2,727 2,727 2,727 2,727
Other ............................................... 711 534 1,361 733
-------------- ------------ ------------ --------------
Total Expenses before Amounts Waived/Assumed ..... 98,462 55,274 80,570 35,536
Less: Amounts Waived/Assumed ...................... (98,462) (55,274) (80,570) (35,536)
-------------- ------------ ------------ --------------
Total Expenses after Amounts Waived/Assumed ...... -- -- -- --
-------------- ------------ ------------ --------------
NET INVESTMENT INCOME ........................... 518,526 83,800 199,657 40,524
-------------- ------------ ------------ --------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ......................................... -- -- (1,820) 3,997
Foreign exchange transactions ....................... -- -- -- --
-------------- ------------ ------------ --------------
TOTAL GAIN (LOSS) ................................. -- -- (1,820) 3,997
-------------- ------------ ------------ --------------
Net change in unrealized appreciation/depreciation
on:
Investments ......................................... -- -- 48,200 12,308
Translation of other assets and liabilities
denominated in foreign currencies .................. -- -- -- --
-------------- ------------ ------------ --------------
TOTAL APPRECIATION ................................ -- -- 48,200 12,308
-------------- ------------ ------------ --------------
NET GAIN .......................................... -- -- 46,380 16,305
-------------- ------------ ------------ --------------
NET INCREASE .................................... $518,526 $ 83,800 $246,037 $ 56,829
============== ============ ============ ==============
</TABLE>
* Net of $626, $6, $3,570, $890, $349, $5,895, $1,091 in foreign
witholding tax, respectively.
+ Includes $157 of dividend income from Dean Witter, Discover & Co.
See Notes to Financial Statements
78
<PAGE>
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN CAPITAL DIVIDEND VALUE-ADDED
VALUE GROWTH GROWTH UTILITIES MARKET GLOBAL EQUITY STRATEGIST
- ------------ ---------- ------------ ----------- ------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 109,299 $ 129 $ 13,201 $ 21,699 $ 19,746 $ 67,484 $ 156,513
130,973* 4,911* 819,339* 156,527* 139,199*+ 53,707* 37,923*
- ------------ ---------- ------------ ----------- ------------- --------------- ------------
240,272 5,040 832,540 178,226 158,945 121,191 194,436
- ------------ ---------- ------------ ----------- ------------- --------------- ------------
112,560 3,006 179,195 30,931 31,221 44,432 40,226
30,182 1,046 42,685 16,544 5,314 14,829 27,595
19,031 1,221 23,438 9,294 1,930 14,521 5,536
16,162 28,699 16,162 16,958 28,496 17,987 18,923
7,196 3,197 8,650 1,521 5,568 5,000 3,967
212 -- 43 154 84 197 430
2,727 2,727 2,727 2,727 2,727 2,727 2,727
38 522 -- 747 875 121 1,656
- ------------ ---------- ------------ ----------- ------------- --------------- ------------
188,108 40,418 272,900 78,876 76,215 99,814 101,060
(188,108) (40,418) (272,900) (78,876) (76,215) (99,814) (101,060)
- ------------ ---------- ------------ ----------- ------------- --------------- ------------
-- -- -- -- -- -- --
- ------------ ---------- ------------ ----------- ------------- --------------- ------------
240,272 5,040 832,540 178,226 158,945 121,191 194,436
- ------------ ---------- ------------ ----------- ------------- --------------- ------------
1,027,333 924 160,385 (111,170) 55,495 (66,417) 64,346
-- -- -- -- -- 462 --
- ------------ ---------- ------------ ----------- ------------- --------------- ------------
1,027,333 924 160,385 (111,170) 55,495 (65,955) 64,346
- ------------ ---------- ------------ ----------- ------------- --------------- ------------
3,493,914 67,202 4,782,860 449,814 1,097,897 520,690 655,133
-- -- -- -- -- 125 --
- ------------ ---------- ------------ ----------- ------------- --------------- ------------
3,493,914 67,202 4,782,860 449,814 1,097,897 520,815 655,133
- ------------ ---------- ------------ ----------- ------------- --------------- ------------
4,521,247 68,126 4,943,245 338,644 1,153,392 454,860 719,479
- ------------ ---------- ------------ ----------- ------------- --------------- ------------
$4,761,519 $ 73,166 $5,775,785 $ 516,870 $1,312,337 $576,051 $ 913,915
============ ========== ============ =========== ============= =============== ============
</TABLE>
79
<PAGE>
DEAN WITTER RETIREMENT SERIES
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------
For the year ended July 31,
<TABLE>
<CAPTION>
U.S.
LIQUID GOVERNMENT
ASSET MONEY MARKET
----------------------------- ----------------------------
1995 1994 1995 1994
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ............................. $ 518,526 $ 42,583 $ 83,800 $ 19,117
Net realized gain (loss) .......................... -- -- -- --
Net change in unrealized appreciation/depreciation -- -- -- --
-------------- ------------- ------------- -------------
Net increase (decrease) ......................... 518,526 42,583 83,800 19,117
-------------- ------------- ------------- -------------
Dividends and distributions to shareholders from:
Net investment income ............................. (518,501) (42,579) (83,795) (19,117)
Net realized gain ................................. -- -- -- --
-------------- ------------- ------------- -------------
Total ........................................... (518,501) (42,579) (83,795) (19,117)
-------------- ------------- ------------- -------------
Transactions in shares of beneficial interest:
Net proceeds from sales ........................... 51,847,905 3,665,368 11,309,909 2,044,990
Reinvestment of dividends and distributions ...... 518,501 42,578 83,795 19,120
Cost of shares repurchased ........................ (18,259,628) (3,264,711) (1,253,703) (1,634,603)
-------------- ------------- ------------- -------------
Net increase .................................... 34,106,778 443,235 10,140,001 429,507
-------------- ------------- ------------- -------------
Total increase .................................. 34,106,803 443,239 10,140,006 429,507
NET ASSETS:
Beginning of period ................................ 1,524,370 1,081,131 554,808 125,301
-------------- ------------- ------------- -------------
END OF PERIOD ...................................... $ 35,631,173 $ 1,524,370 $10,694,814 $ 554,808
============== ============= ============= =============
$
Undistributed Net Investment Income ................ $ 29 $ 4 $ 5 --
============== ============= ============= =============
SHARES ISSUED AND REPURCHASED:
Sold ............................................... 51,847,905 3,665,368 11,309,909 2,044,990
Reinvestment of dividends and distributions ....... 518,501 42,578 83,796 19,120
Repurchased ........................................ (18,259,628) (3,264,711) (1,253,704) (1,634,603)
-------------- ------------- ------------- -------------
Net increase .................................... 34,106,778 443,235 10,140,001 429,507
============== ============= ============= =============
</TABLE>
80
See Notes to Financial Statements
<PAGE>
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT INTERMEDIATE INCOME AMERICAN
SECURITIES SECURITIES VALUE
- --------------------------- ----------------------- ---------------------------
1995 1994 1995 1994 1995 1994
- ------------- ------------ ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
$ 199,657 $ 104,510 $ 40,524 $ 16,488 $ 240,274 $ 47,273
(1,820) (3) 3,997 (910) 1,027,331 (395,854)
48,200 (131,815) 12,308 (15,055) 3,493,914 66,521
- ------------- ------------ ----------- ---------- ------------- ------------
246,037 (27,308) 56,829 523 4,761,519 (282,060)
- ------------- ------------ ----------- ---------- ------------- ------------
(200,544) (103,806) (40,260) (16,354) (138,219) (1,940)
-- -- -- -- (1,962) (3,640)
- ------------- ------------ ----------- ---------- ------------- ------------
(200,544) (103,806) (40,260) (16,354) (140,181) (5,580)
- ------------- ------------ ----------- ---------- ------------- ------------
2,981,288 1,881,846 601,204 342,781 13,053,502 7,750,006
190,802 94,465 39,011 16,235 136,829 5,505
(1,962,783) (646,720) (123,468) (64,630) (2,070,877) (935,273)
- ------------- ------------ ----------- ---------- ------------- ------------
1,209,307 1,329,591 516,747 294,386 11,119,454 6,820,238
- ------------- ------------ ----------- ---------- ------------- ------------
1,254,800 1,198,477 533,316 278,555 15,740,792 6,532,598
2,954,025 1,755,548 460,463 181,908 6,840,695 308,097
- ------------- ------------ ----------- ---------- ------------- ------------
$ 4,208,825 $2,954,025 $ 993,779 $460,463 $22,581,487 $6,840,695
============= ============ =========== ========== ============= ============
$
-- $ 887 $ 426 $ 162 $ 149,207 $ 47,154
============= ============ =========== ========== ============= ============
312,897 191,048 63,283 35,727 1,204,547 749,123
20,021 9,284 4,153 1,683 13,574 527
(208,493) (65,859) (13,120) (6,715) (184,040) (91,227)
- ------------- ------------ ----------- ---------- ------------- ------------
124,425 134,473 54,316 30,695 1,034,081 658,423
============= ============ =========== ========== ============= ============
</TABLE>
81
<PAGE>
DEAN WITTER RETIREMENT SERIES
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- -----------------------------------------------------------------------------
For the year ended July 31,
<TABLE>
<CAPTION>
CAPITAL DIVIDEND
GROWTH GROWTH
---------------------- ----------------------------
1995 1994 1995 1994
---------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ............................. $ 5,040 $ 2,653 $ 832,540 $ 236,186
Net realized gain (loss) .......................... 924 (2,073) 160,385 139,230
Net change in unrealized appreciation/depreciation 67,202 8,318 4,782,860 (222,761)
---------- ---------- ------------- -------------
Net increase (decrease) ......................... 73,166 8,898 5,775,785 152,655
---------- ---------- ------------- -------------
Dividends and distributions to shareholders from:
Net investment income ............................. (3,260) (760) (622,946) (148,288)
Net realized gain ................................. -- -- (202,526) (5,490)
---------- ---------- ------------- -------------
Total ........................................... (3,260) (760) (825,472) (153,778)
---------- ---------- ------------- -------------
Transactions in shares of beneficial interest:
Net proceeds from sales ........................... 419,996 83,346 22,705,910 11,474,602
Reinvestment of dividends and distributions ...... 3,185 760 787,071 121,365
Cost of shares repurchased ........................ (30,293) (12,127) (5,860,692) (1,190,364)
---------- ---------- ------------- -------------
Net increase .................................... 392,888 71,979 17,632,289 10,405,603
---------- ---------- ------------- -------------
Total increase .................................. 462,794 80,117 22,582,602 10,404,480
NET ASSETS:
Beginning of period ................................ 214,712 134,595 12,821,419 2,416,939
---------- ---------- ------------- -------------
END OF PERIOD ...................................... $677,506 $214,712 $35,404,021 $12,821,419
========== ========== ============= =============
Undistributed Net Investment Income ................ $ 3,673 $ 1,893 $ 304,765 $ 95,171
========== ========== ============= =============
SHARES ISSUED AND REPURCHASED:
Sold ............................................... 40,391 8,842 1,985,940 1,033,016
Reinvestment of dividends and distributions ....... 335 80 70,952 11,043
Repurchased ........................................ (2,856) (1,278) (514,831) (107,999)
---------- ---------- ------------- -------------
Net increase ..................................... 37,870 7,644 1,542,061 936,060
========== ========== ============= =============
</TABLE>
See Notes to Financial Statements
82
<PAGE>
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
UTILITIES VALUE-ADDED GLOBAL EQUITY STRATEGIST
MARKET
- --------------------------- --------------------------- -------------------------- ---------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ------------- ------------ ------------- ------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 178,226 $ 95,965 $ 158,945 $ 93,999 $ 121,191 $ 22,808 $ 194,436 $ 28,796
(111,170) 1,413 55,495 41,849 (65,955) (4,589) 64,346 9,623
449,814 (204,664) 1,097,897 17,319 520,815 5,145 655,133 (51,073)
- ------------- ------------ ------------- ------------ ------------ ------------ ------------- ------------
516,870 (107,286) 1,312,337 153,167 576,051 23,364 913,915 (12,654)
- ------------- ------------ ------------- ------------ ------------ ------------ ------------- ------------
(148,664) (72,772) (128,720) (26,537) (51,908) (3,600) (84,091) (11,000)
(7,657) (936) (57,957) (532) -- -- -- --
- ------------- ------------ ------------- ------------ ------------ ------------ ------------- ------------
(156,321) (73,708) (186,677) (27,069) (51,908) (3,600) (84,091) (11,000)
- ------------- ------------ ------------- ------------ ------------ ------------ ------------- ------------
2,925,355 3,572,305 8,377,903 5,098,522 5,661,746 2,169,351 6,668,052 1,105,067
153,082 72,501 185,438 26,782 48,705 3,091 83,213 10,831
(1,918,748) (938,613) (741,603) (759,299) (968,314) (494,286) (2,098,857) (367,178)
- ------------- ------------ ------------- ------------ ------------ ------------ ------------- ------------
1,159,689 2,706,193 7,821,738 4,366,005 4,742,137 1,678,156 4,652,408 748,720
- ------------- ------------ ------------- ------------ ------------ ------------ ------------- ------------
1,520,238 2,525,199 8,947,398 4,492,103 5,266,280 1,697,920 5,482,232 725,066
3,859,582 1,334,383 5,132,591 640,488 2,020,025 322,105 1,276,460 551,394
- ------------- ------------ ------------- ------------ ------------ ------------ ------------- ------------
$ 5,379,820 $3,859,582 $14,079,989 $5,132,591 $7,286,305 $2,020,025 $ 6,758,692 $1,276,460
============= ============ ============= ============ ============ ============ ============= ============
$ 59,239 $ 29,677 $ 98,210 $ 67,985 $ 91,401 $ 21,656 $ 131,775 $ 21,430
============= ============ ============= ============ ============ ============ ============= ============
279,150 333,775 672,727 480,766 551,389 203,467 671,204 111,898
14,928 6,832 17,678 2,532 4,871 290 8,650 1,082
(186,431) (87,688) (65,288) (72,178) (93,327) (46,206) (211,811) (37,803)
- ------------- ------------ ------------- ------------ ------------ ------------ ------------- ------------
107,647 252,919 625,117 411,120 462,933 157,551 468,043 75,177
============= ============ ============= ============ ============ ============ ============= ============
</TABLE>
83
<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
OPERATIONS
---------------
<S> <C>
Liquid Asset ............. December 30, 1992
U.S. Government Money
Market ................... January 20, 1993
U.S. Government
Securities ............... January 8, 1993
Intermediate Income
Securities ............... January 12, 1993
</TABLE>
<TABLE>
<CAPTION>
COMMENCEMENT OF
OPERATIONS
---------------
<S> <C>
American Value ........ February 1, 1993
Capital Growth ........ February 2, 1993
Dividend Growth ....... January 7, 1993
Utilities ............. January 8, 1993
Value-Added Market ... February 1, 1993
Global Equity ......... January 8, 1993
Strategist ............ January 7, 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) an equity security listed or traded on
the New York, 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 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, if available, 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 at time of purchase are valued on a
mark-to-market basis until sixty days prior to maturity and thereafter at
amortized cost based on their value on the 61st day. Short-term debt
securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. Accounting for Investments -- Security transactions are accounted for
on the trade date (date the order to buy or sell is executed). Realized
gains and losses on security transactions are determined by the
identified cost method. 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
84
<PAGE>
Dean Witter Retirement Series
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------
informed after the ex-dividend date. Interest income is accrued daily
except where collection is not expected. In determining net investment
income, Liquid Asset and U.S. Government Money Market amortize premiums
and accrete discounts on securities owned; gains and losses realized upon
the sale of such securities are based on their amortized cost. Discounts
on securities purchased for all other Series are accreted over the life
of the respective securities.
C. Foreign Currency Translation -- The books and records of American
Value and 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 rates prevailing on
the respective dates of such transactions. The resultant exchange gains
and losses are included in the Statement of Operations as realized and
unrealized gain/loss on foreign exchange transactions. 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. American
Value and Global Equity do 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 Contracts --American Value and Global Equity
may enter into forward foreign currency contracts which are valued daily
at the appropriate exchange rates. The resultant unrealized exchange
gains and losses are included in the Statement of Operations as
unrealized foreign currency gain or loss. American Value and Global
Equity record realized gains or losses on delivery of the currency or at
the time the forward contract is extinguished (compensated) by entering
into a closing transaction prior to delivery.
E. 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.
F. 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.
G. Expenses -- Direct expenses are charged to the respective Series and
general Fund expenses are allocated on the basis of relative net assets.
85
<PAGE>
Dean Witter Retirement Series
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------
H. Organizational Expenses -- Dean Witter InterCapital Inc. (the
"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, the Fund pays its Investment Manager a management fee, accrued
daily and payable monthly, 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%.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities,
equipment, clerical, bookkeeping and certain legal services and pays the
salaries of all personnel, including officers of the Fund who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Fund.
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 December 31,
1995.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- Purchases and
sales/maturities of portfolio securities, excluding short-term investments
(except for Liquid Asset and U.S. Government Money Market), for the year
ended July 31, 1995 were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES OTHER
----------------------------------- ----------------------------------
PURCHASES SALES / PREPAYMENTS PURCHASES SALES / MATURITIES
------------ ------------------- ------------- -----------------
<S> <C> <C> <C> <C>
Liquid Asset ................... -- -- $211,514,657 $177,951,996
U.S. Government Money Market .. $113,045,766 $102,983,373 -- --
U.S. Government Securities .... 1,971,468 341,215 -- --
Intermediate Income Securities 252,268 40,552 454,165 176,379
American Value ................. 2,092,413 1,451,076 37,858,212 26,255,081
Capital Growth ................. 13,258 -- 442,141 70,667
Dividend Growth ................ -- -- 24,422,389 6,704,152
Utilities ...................... 25,000 -- 1,844,870 903,584
Value-Added Market ............. 32,601 -- 7,836,795 429,967
Global Equity .................. -- -- 7,834,334 1,855,753
Strategist ..................... 2,347,621 1,098,098 6,133,115 2,700,129
</TABLE>
Included in the aforementioned purchases of portfolio securities of
Value-Added Market are common stock purchases of Dean Witter, Discover & Co.,
an affiliate of the Investment Manager, of $12,320.
For the year ended July 31, 1995, the following respective Portfolios
incurred brokerage commissions with Dean Witter Reynolds Inc. ("DWR"), an
affiliate of the Investment Manager, for portfolio transactions executed on
behalf of such Series.
86
<PAGE>
Dean Witter Retirement Series
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN CAPITAL DIVIDEND GLOBAL
VALUE GROWTH GROWTH UTILITIES EQUITY STRATEGIST
--------- --------- --------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Commissions .. $18,882 $519 $28,711 $3,970 $3,713 $5,710
========== ========= ========== =========== ======== ============
</TABLE>
Dividend Growth's payable for investments purchased for unsettled trades
with DWR at July 31, 1995 was $220,868. For the same period, included in
American Value's receivable for investments sold for unsettled trades with
DWR was $270,173.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Fund's transfer agent. At July 31, 1995, the following Series had approximate
transfer agent fees and expenses payable:
<TABLE>
<CAPTION>
INTERMEDIATE
LIQUID U.S. GOVERNMENT U.S. GOVERNMENT INCOME AMERICAN
ASSET MONEY MARKET SECURITIES SECURITIES VALUE
- --------- --------------- --------------- -------------- ----------
<S> <C> <C> <C> <C>
$1,300 $400 $6,500 $300 $4,000
========= =============== =============== ============== ==========
</TABLE>
<TABLE>
<CAPTION>
DIVIDEND VALUE-ADDED GLOBAL
GROWTH UTILITIES MARKET EQUITY STRATEGIST
- ---------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
$5,000 $1,800 $900 $3,000 $2,000
========== ============= ============= ========== ============
</TABLE>
4. FEDERAL INCOME TAX STATUS -- During the year ended at July 31, 1995,
Capital Growth utilized approximately $400 of its net capital loss carryover.
At July 31, 1995, the following Series had approximate net capital loss
carryovers which may be used to offset future capital gains to the extent
provided by regulations:
<TABLE>
<CAPTION>
AVAILABLE THROUGH
JULY 31,
-----------------
2002 2003
------ ---------
<S> <C> <C>
Capital Growth $900 $ --
Utilities ..... -- 62,800
Global Equity -- 3,500
</TABLE>
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 1995:
<TABLE>
<CAPTION>
TOTAL
--------
<S> <C>
U.S. Government Securities .... $ 1,820
Intermediate Income Securities 1,767
Dividend Growth ................ 80,314
Utilities ...................... 51,163
Global Equity .................. 67,520
Strategist ..................... 14,734
</TABLE>
87
<PAGE>
Dean Witter Retirement Series
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------
At July 31, 1995, the primary reason(s) for significant temporary book/tax
differences were as follows:
<TABLE>
<CAPTION>
POST-OCTOBER LOSS DEFERRALS FROM
CAPITAL LOSSES WASH SALES
-------------- ---------------------
<S> <C> <C>
U.S. Government Securities ........ o
Intermediate Income Securities ... o
American Value .................... o
Capital Growth .................... o
Dividend Growth ................... o o
Utilities ......................... o o
Value-Added Market ................ o
Global Equity ..................... o
o
Strategist ........................ o
</TABLE>
5. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS --
American Value and Global Equity may enter into forward currency contracts
("forward contracts") to facilitate settlement of foreign currency
denominated portfolio transactions or to manage foreign currency exposure
associated with foreign currency denominated securities.
At July 31, 1995, American Value and Global Equity had no outstanding
forward contracts other than those used to facilitate settlement of foreign
currency denominated portfolio transactions.
Forward contracts involve elements of market risk in excess of the amounts
reflected in the Statement of Assets and Liabilities. American Value and
Global Equity bear the risk of an unfavorable change in foreign exchange
rates underlying the forward contracts. Risks may also arise upon entering
into these contracts from the potential inability of the counterparties to
meet the terms of their contracts.
88
<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
YEAR VALUE NET NET REALIZED TOTAL FROM TOTAL DIVIDENDS
ENDED BEGINNING INVESTMENT AND UNREALIZED INVESTMENT DIVIDENDS TO DISTRIBUTIONS TO AND
JULY 31, OF PERIOD INCOME GAIN (LOSS) OPERATIONS SHAREHOLDERS SHAREHOLDERS DISTRIBUTIONS
- -------------- ----------- ------------ -------------- ------------ -------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
LIQUID ASSET
$ $
1993 (1) $ 1.00 $ 0.02 -- $ 0.02 $(0.02) -- $(0.02)
1994 1.00 0.03 -- 0.03 (0.03) -- (0.03)
1995 1.00 0.06 -- 0.06 (0.06) -- (0.06)
U.S. GOVERNMENT MONEY MARKET
--
1993 (2) 1.00 + -- -- -- -- --
1994 1.00 0.03 -- 0.03 (0.03) -- (0.03)
1995 1.00 0.06 -- 0.06 (0.06) -- (0.06)
U.S. GOVERNMENT SECURITIES
1993 (3) 10.00 0.19 0.07 0.26 (0.20) -- (0.20)
1994 10.06 0.44 (0.50) (0.06) (0.44) -- (0.44)
1995 9.56 0.56 0.15 0.71 (0.56) -- (0.56)
INTERMEDIATE INCOME SECURITIES
1993 (4) 10.00 0.19 (0.02) 0.17 (0.19) -- (0.19)
1994 9.98 0.60 (0.57) 0.03 (0.60) -- (0.60)
1995 9.41 0.61 0.22 0.83 (0.61) -- (0.61)
AMERICAN VALUE
1993 (6) 10.00 0.06 (0.01) 0.05 -- -- --
1994 10.05 0.03 (0.09) (0.06) (0.02) (0.04) (0.06)
1995 9.93 0.14 3.15 3.29 (0.12) -- (0.12)
CAPITAL GROWTH
1993 (7) 10.00 (0.02) (1.10) (1.12) -- -- --
1994 8.88 0.13 0.45 0.58 (0.04) -- (0.04)
1995 9.42 0.10 1.77 1.87 (0.12) -- (0.12)
DIVIDEND GROWTH
1993 (5) 10.00 0.13 0.58 0.71 (0.10) -- (0.10)
1994 10.61 0.28 0.37 0.65 (0.23) (0.01) (0.24)
1995 11.02 0.34 2.13 2.47 (0.31) (0.10) (0.41)
UTILITIES
1993 (3) 10.00 0.19 1.30 1.49 (0.14) -- (0.14)
1994 11.35 0.37 (0.95) (0.58) (0.34) (0.01) (0.35)
1995 10.42 0.42 0.80 1.22 (0.37) (0.02) (0.39)
VALUE-ADDED MARKET
1993 (6) 10.00 0.05 0.02 0.07 (0.04) -- (0.04)
1994 10.03 0.24 0.65 0.89 (0.11) -- (0.11)
1995 10.81 0.21 2.16 2.37 (0.26) (0.12) (0.38)
GLOBAL EQUITY
1993 (3) 10.00 0.07 (0.03) 0.04 -- -- --
1994 10.04 0.08 0.58 0.66 (0.05) -- (0.05)
1995 10.65 0.14 0.49 0.63 (0.11) -- (0.11)
STRATEGIST
1993 (5) 10.00 0.06 (0.23) (0.17) -- -- --
1994 9.83 0.23 (0.20) 0.03 (0.13) -- (0.13)
1995 9.73 0.24 1.49 1.73 (0.18) -- (0.18)
</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.
(c) Restated.
+ Includes dividends from net investment income of $0.004 per share.
* After application of the Fund's state expense limitation.
See Notes to Financial Statements
89
<PAGE>
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERGAGE RATIOS TO AVERAGE
NET ASSETS (BEFORE NET ASSETS (AFTER
EXPENSES WERE ASSUMED)* EXPENSES WERE ASSUMED)
------------------------ -----------------------
NET ASSET NET NET
VALUE TOTAL NET ASSETS INVESTMENT INVESTMENT PORTFOLIO
END INVESTMENT END OF INCOME INCOME TURNOVER
OF PERIOD RETURN PERIOD (000'S) EXPENSES (LOSS) EXPENSES (LOSS) RATE
- ---------- ------------ --------------- ---------- ----------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1.00 1.77%(A) $1,081 1.30%(B) 0.53%(B) 0.14%(B) 3.02%(B) N/A
--
1.00 3.48 1,524 2.50 0.99 3.49 N/A
--
1.00 5.90 35,631 1.16 4.96 6.12 N/A
1.00 0.42(a) 125 2.50(b) (0.95)(b) 2.13(b) 0.83(b) N/A
--
1.00 3.52 555 2.50 0.82 3.32 N/A
--
1.00 5.86 10,695 2.50 3.62 6.12 N/A
10.06 2.60(a) 1,756 1.81(b) 0.33(b) 0.18(b) 3.66(b) --
9.56 (0.69) 2,954 2.50 1.96 -- 4.46(c) 29%
9.71 7.72 4,209 2.36 3.49 -- 5.85 14
9.98 1.67(a) 182 2.50(b) 1.00(b) 1.62(b) 3.50(b) --
9.41 0.26 460 2.50 3.64 -- 6.14 40
9.63 9.22 994 2.50 4.08 -- 6.58 37
10.05 0.50(a) 308 2.50(b) (0.66)(b) 0.74(b) 1.10(b) 121(a)
9.93 (0.59) 6,841 2.50 (0.81) -- 1.69 136
13.10 33.48 22,581 1.42 0.39 -- 1.81 234
8.88 (11.20)(a) 135 2.50(b) (1.01)(b) 1.97(b) (0.47)(b) 2(a)
9.42 6.57 215 2.50 (0.98) -- 1.52 11
11.17 20.08 678 2.50 (1.07) -- 1.43 20
10.61 7.11(a) 2,417 2.50(b) 0.61(b) 0.16(b) 2.89(b) 7(a)
11.02 6.13 12,821 1.51 1.78 -- 3.29 13
13.08 23.07 35,404 1.14 2.34 -- 3.48 29
11.35 14.98(a) 1,334 2.50(b) 1.59(b) 0.30(b) 3.79(b) 8(a)
10.42 (5.23) 3,860 2.50 1.62 -- 4.14 5
11.25 12.16 5,380 1.91 2.41 -- 4.32 24
10.03 0.71(a) 640 2.50(b) (0.16)(b) 0.92(b) 1.42(b) 1(a)
10.81 8.89 5,133 1.82 0.70 -- 2.53 8
12.80 22.65 14,080 1.22 1.33 -- 2.55 7
10.04 0.40(a) 322 2.50(b) (0.90)(b) 1.00(b) 1.77(b) --
10.65 6.54 2,020 2.50 (0.09) -- 2.41 8
11.17 6.08 7,286 2.25 0.48 -- 2.73 55
9.83 (1.70)(a) 551 2.50(b) (0.19)(b) 0.64(b) 1.67(b) 26(a)
9.73 0.12 1,276 2.50 0.70 -- 3.20 57
11.28 18.21 6,759 2.14 1.97 -- 4.11 115
</TABLE>
90
<PAGE>
DEAN WITTER RETIREMENT SERIES
REPORT OF INDEPENDENT ACCOUNTANTS
- -----------------------------------------------------------------------------
To the Shareholders and Trustees of Dean Witter Retirement Series
In our opinion, the accompanying statements 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, 1995, the results of each of
their operations for the year then ended, the changes in each of their net
assets for each of the two years in the period then ended and the financial
highlights for each of the periods indicated, 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, 1995
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 13, 1995
- -------------------------------------------------------------------------------
1995 FEDERAL INCOME TAX NOTICE (unaudited)
During the year ended July 31, 1995, the Dividend Growth and Value-Added
Market paid to shareholders long-term capital gains per share of $0.05 and
$0.01, respectively.
Additionally, the following percentages of the income paid qualified for
the dividends received deduction available to corporations:
<TABLE>
<CAPTION>
AMERICAN CAPITAL DIVIDEND VALUE-ADDED GLOBAL
VALUE GROWTH GROWTH UTILITIES MARKET EQUITY STRATEGIST
- ---------- --------- ---------- ----------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
13.9% 96.6% 72.7% 68.1% 78.3% 5.7% 12.4%
========== ========= ========== =========== ============= ======== ============
</TABLE>
- -------------------------------------------------------------------------------
91
<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.
92
<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.
93
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 years ended
July 31, 1994 and 1995 ........................... 8
(2) Financial statements included in the Statement of
Additional Information (Part B): Page in
SAI
Portfolio of Investments at July 31, 1995......... 49
Statement of assets and liabilities at
July 31, 1995 .................................... 76
Statement of operations for the fiscal year ended
July 31, 1995 ................................... 78
Statement of changes in net assets for the
fiscal years ended July 31, 1994 and 1995 ........ 80
Notes to Financial Statements .................... 84
Financial highlights for the period ended July
31, 1993 and for the fiscal years ended
July 31, 1994 and 1995 ........................... 89
(3) Financial statements included in Part C:
None
(b) Exhibits:
1. - Declaration of Trust
2. - Amended and Restated By-Laws
8. - Form of Custody Agreement
1
9. - Form of Services Agreement between Dean
Witter InterCapital Inc. and Dean Witter Services
Company Inc.
11. - Consent of Independent Accountants
15. - Amended and Restated Plan of Distribution pursuant to
Rule 12b-1
16. - Schedules for Computation of Performance
Quotations
27. - Financial Data Schedules
All other exhibits previously filed and incorporated
by reference.
Item 25. Persons Controlled by or Under Common Control With
Registrant.
None.
Item 26. Number of Holders of Securities.
(1) (2)
Number of Record Holders
Title of Class at August 31, 1995
Shares of Beneficial Interest 18,032
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
2
that they are entitled to indemnification against any liability
established in such litigation. The Registrant may also advance
money for these expenses provided that they give their
undertakings to repay the Registrant unless their conduct is
later determined to permit indemnification.
Pursuant to Section 5.2 of the Registrant's Declaration of
Trust and paragraph 8 of the Registrant's Investment Management
Agreement, neither the Investment Manager nor any trustee,
officer, employee or agent of the Registrant shall be liable for
any action or failure to act, except in the case of bad faith,
willful misfeasance, gross negligence or reckless disregard of
duties to the Registrant.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to
trustees, officers and controlling persons of the Registrant
pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a trustee, officer, or controlling person of the
Registrant in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by
such trustee, officer or controlling person in connection with
the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act, and will be governed by the final
adjudication of such issue.
The Registrant hereby undertakes that it will apply the
indemnification provision of its by-laws in a manner consistent
with Release 11330 of the Securities and Exchange Commission
under the Investment Company Act of 1940, so long as the
interpretation of Sections 17(h) and 17(i) of such Act remains in
effect.
Registrant, in conjunction with the Investment Manager,
Registrant's Trustees, and other registered investment management
companies managed by the Investment Manager, maintains insurance
on behalf of any person who is or was a Trustee, officer,
employee, or agent of Registrant, or who is or was serving at the
request of Registrant as a trustee, director, officer, employee
or agent of another trust or corporation, against any liability
asserted against him and incurred by him or arising out of his
position. However, in no event will Registrant maintain
insurance to indemnify any such person for any act for which
Registrant itself is not permitted to indemnify him.
3
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
InterCapital Inc. InterCapital is a wholly-owned subsidiary of
Dean Witter, Discover & Co. The principal address of the Dean
Witter Funds is Two World Trade Center, New York, New York 10048.
The term "Dean Witter Funds" used below refers to the
following registered investment companies:
Closed-End Investment Companies
(1) InterCapital Income Securities Inc.
(2) High Income Advantage Trust
(3) High Income Advantage Trust II
(4) High Income Advantage Trust III
(5) Municipal Income Trust
(6) Municipal Income Trust II
(7) Municipal Income Trust III
(8) Dean Witter Government Income Trust
(9) Municipal Premium Income Trust
(10) Municipal Income Opportunities Trust
(11) Municipal Income Opportunities Trust II
(12) Municipal Income Opportunities Trust III
(13) Prime Income Trust
(14) InterCapital Insured Municipal Bond Trust
(15) InterCapital Quality Municipal Income Trust
(16) InterCapital Quality Municipal Investment Trust
(17) InterCapital Insured Municipal Income Trust
(18) InterCapital California Insured Municipal Income Trust
(19) InterCapital Insured Municipal Trust
(20) InterCapital Quality Municipal Securities
(21) InterCapital New York Quality Municipal Securities
(22) InterCapital California Quality Municipal Securities
(23) InterCapital Insured California Municipal Securities
(24) InterCapital Insured Municipal Securities
Open-end Investment Companies:
(1) Dean Witter Short-Term Bond Fund
(2) Dean Witter Tax-Exempt Securities Trust
(3) Dean Witter Tax-Free Daily Income Trust
(4) Dean Witter Dividend Growth Securities Inc.
(5) Dean Witter Convertible Securities Trust
(6) Dean Witter Liquid Asset Fund Inc.
(7) Dean Witter Developing Growth Securities Trust
(8) Dean Witter Retirement Series
(9) Dean Witter Federal Securities Trust
(10) Dean Witter World Wide Investment Trust
(11) Dean Witter U.S. Government Securities Trust
(12) Dean Witter Select Municipal Reinvestment Fund
(13) Dean Witter High Yield Securities Inc.
4
(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 Municipal Trust
(47) Dean Witter International SmallCap Fund
(48) Dean Witter Mid-Cap Growth Fund
(49) Dean Witter Select Dimensions Investment Series
(50) Dean Witter Global Asset Allocation Fund
(51) Dean Witter Balanced Growth Fund
(52) Dean Witter Balanced Income Fund
(53) Dean Witter Hawaii Municipal Trust
(54) Dean Witter Capital Appreciation Fund
(55) Dean Witter Intermediate Term U.S. Treasury Trust
The term "TCW/DW Funds" refers to the following registered
investment companies:
Open-End Investment Companies
(1) TCW/DW Core Equity Trust
(2) TCW/DW North American Government Income Trust
(3) TCW/DW Latin American Growth Fund
(4) TCW/DW Income and Growth Fund
(5) TCW/DW Small Cap Growth Fund
(6) TCW/DW Balanced Fund
(7) TCW/DW North American Intermediate Income Trust
5
(8) TCW/DW Global Convertible Trust
(9) TCW/DW Total Return Trust
Closed-End Investment Companies
(1) TCW/DW Term Trust 2000
(2) TCW/DW Term Trust 2002
(3) TCW/DW Term Trust 2003
(4) TCW/DW Emerging Markets Opportunities Trust
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
- ------------------ -------------------------------------------------
Charles A. Fiumefreddo Executive Vice President and Director of Dean
Chairman, Chief Witter Reynolds Inc. ("DWR"); Chairman, Chief
Executive Officer and Executive Officer and Director of Dean Witter
Director Distributors Inc. ("Distributors") and Dean
Witter Services Company Inc. ("DWSC"); Chairman
and Director of Dean Witter Trust Company
("DWTC"); Chairman, Director or Trustee, President
and Chief Executive Officer of the Dean Witter
Funds and Chairman, Chief Executive Officer and
Trustee of the TCW/DW Funds; Formerly Executive
Vice President and Director of Dean Witter,
Discover & Co. ("DWDC"); Director and/or officer
of various DWDC subsidiaries.
Philip J. Purcell Chairman, Chief Executive Officer and Director of
Director of DWDC and DWR; Director of DWSC and
Distributors; Director or Trustee of the Dean
Witter Funds; Director and/or officer of various
DWDC subsidiaries.
Richard M. DeMartini Executive Vice President of DWDC; President and
Director Chief Operating Officer of Dean Witter Capital;
Director of DWR, DWSC, Distributors and DWTC;
Trustee of the TCW/DW Funds.
James F. Higgins Executive Vice President of DWDC; President and
Director Chief Operating Officer of Dean Witter Financial;
Director of DWR, DWSC, Distributors and DWTC.
Thomas C. Schneider Executive Vice President and Chief Financial
Executive Vice Officer of DWDC, DWR, DWSC and Distributors;
President, Chief Director of DWR, DWSC and Distributors.
Financial Officer and
Director
6
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
- ------------------ -------------------------------------------------
Christine A. Edwards Executive Vice President, Secretary and General
Director Counsel of DWDC and DWR; Executive Vice President,
Secretary and Chief Legal Officer of Distributors;
Director of DWR, DWSC and Distributors.
Robert M. Scanlan President and Chief Operating Officer of DWSC,
President and Chief Executive Vice President of Distributors;
Operating Officer Executive Vice President and Director of DWTC;
Vice President of the Dean Witter Funds and the
TCW/DW Funds.
David A. Hughey Executive Vice President and Chief Administrative
Executive Vice Officer of DWSC, Distributors and DWTC; Director
President and Chief of DWTC; Vice President of the Dean Witter Funds
Administrative Officer and the TCW/DW Funds.
Edmund C. Puckhaber Director of DWTC; Vice President of the Dean
Executive Vice Witter Funds.
President
John Van Heuvelen President, Chief Operating Officer and Director
Executive Vice of DWTC.
President
Sheldon Curtis Assistant Secretary of DWR; Senior Vice President,
Senior Vice President, Secretary and General Counsel of DWSC; Senior Vice
General Counsel and President, Assistant General Counsel and Assistant
Secretary Secretary of Distributors; Senior Vice President
and Secretary of DWTC; Vice President, Secretary
and General Counsel of the Dean Witter Funds and
the TCW/DW Funds.
Peter M. Avelar
Senior Vice President Vice President of various Dean Witter Funds.
Mark Bavoso
Senior Vice President Vice President of various Dean Witter Funds.
Richard Felegy
Senior Vice President
Edward Gaylor
Senior Vice President Vice President of various Dean Witter Funds.
Robert S. Giambrone
Senior Vice President Senior Vice President of DWSC, Distributors and DWTC;
Vice President of the Dean Witter Funds and the
TCW/DW Funds.
7
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
- ------------------ -------------------------------------------------
Rajesh K. Gupta
Senior Vice President Vice President of various Dean Witter Funds.
Kenton J. Hinchcliffe
Senior Vice President Vice President of various Dean Witter Funds.
Kevin Hurley
Senior Vice President Vice President of various Dean Witter Funds.
John B. Kemp, III Director of the Provident Savings Bank, Jersey
Senior Vice President City, New Jersey.
Anita Kolleeny
Senior Vice President Vice President of various Dean Witter Funds.
Joseph McAlinden
Senior Vice President Vice President of the Dean Witter Funds.
Jonathan R. Page
Senior Vice President Vice President of various Dean Witter Funds.
Ira Ross
Senior Vice President Vice President of various Dean Witter Funds.
Rochelle G. Siegel
Senior Vice President Vice President of various Dean Witter Funds.
Paul D. Vance
Senior Vice President Vice President of various Dean Witter Funds.
Elizabeth A. Vetell
Senior Vice President
James F. Willison
Senior Vice President Vice President of various Dean Witter Funds.
Ronald J. Worobel
Senior Vice President Vice President of various Dean Witter Funds.
Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President DWSC, Assistant Treasurer of Distributors;
and Assistant Treasurer of the Dean Witter Funds and the TCW/DW
Treasurer Funds.
Marilyn K. Cranney Assistant Secretary of DWR; First Vice President
First Vice President and Assistant Secretary of DWSC; Assistant
and Assistant Secretary Secretary of the Dean Witter Funds and the TCW/DW
Funds.
8
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
- ------------------ -------------------------------------------------
Barry Fink First Vice President and Assistant Secretary of
First Vice President DWSC; Assistant Secretary of the Dean Witter
and Assistant Secretary Funds and the TCW/DW Funds.
Michael Interrante First Vice President and Controller of DWSC;
First Vice President Assistant Treasurer of Distributors;First Vice
and Controller President and Treasurer of DWTC.
Robert Zimmerman
First Vice President
Joan Allman
Vice President
Joseph Arcieri
Vice President Vice President of various Dean Witter Funds.
Douglas Brown
Vice President
Thomas Chronert
Vice President
Rosalie Clough
Vice President
Patricia A. Cuddy
Vice President Vice President of various Dean Witter Funds.
B. Catherine Connelly
Vice President
Salvatore DeSteno
Vice President Vice President of DWSC.
Frank J. DeVito
Vice President Vice President of DWSC.
Dwight Doolan
Vice President
Bruce Dunn
Vice President
Jeffrey D. Geffen
Vice President
Deborah Genovese
Vice President
9
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
- ------------------ -------------------------------------------------
Peter W. Gurman
Vice President
Russell Harper
Vice President
John Hechtlinger
Vice President
Peter Hermann
Vice President Vice President of Dean Witter Mid-Cap Growth Fund.
David Hoffman
Vice President
David Johnson
Vice President
Christopher Jones
Vice President
Stanley Kapica
Vice President
Michael Knox Vice President of Dean Witter Convertible
Vice President Securities Trust.
Konrad J. Krill
Vice President Vice President of various Dean Witter Funds.
Paul LaCosta
Vice President Vice President of various Dean Witter Funds.
Thomas Lawlor
Vice President
Gerard Lian
Vice President Vice President of various Dean Witter Funds.
Lou Anne D. McInnis Vice President and Assistant Secretary of DWSC;
Vice President and Assistant Secretary of the Dean Witter Funds and
Assistant Secretary the TCW/DW Funds.
Sharon K. Milligan
Vice President
Julie Morrone
Vice President
10
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
- ------------------ -------------------------------------------------
David Myers
Vice President
James Nash
Vice President
Richard Norris
Vice President
Hugh Rose
Vice President
Ruth Rossi Vice President and Assistant Secretary of DWSC;
Vice President and Assistant Secretary of the Dean Witter Funds and
Assistant Secretary the TCW/DW Funds.
Carl F. Sadler
Vice President
Rafael Scolari
Vice President Vice President of Prime Income Trust
Jayne M. Stevlingson
Vice President Vice President of various Dean Witter Funds.
Kathleen Stromberg
Vice President Vice President of various Dean Witter Funds.
Vinh Q. Tran
Vice President Vice President of various Dean Witter Funds.
Alice Weiss
Vice President Vice President of various Dean Witter Funds.
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 Retirement Series
(5) Dean Witter Dividend Growth Securities Inc.
11
(6) Dean Witter Global Asset Allocation
(7) Dean Witter World Wide Investment Trust
(8) Dean Witter Capital Growth Securities
(9) Dean Witter Convertible Securities Trust
(10) Active Assets Tax-Free Trust
(11) Active Assets Money Trust
(12) Active Assets California Tax-Free Trust
(13) Active Assets Government Securities Trust
(14) Dean Witter Short-Term Bond Fund
(15) Dean Witter Mid-Cap Growth Fund
(16) Dean Witter U.S. Government Securities Trust
(17) Dean Witter High Yield Securities Inc.
(18) Dean Witter New York Tax-Free Income Fund
(19) Dean Witter Tax-Exempt Securities Trust
(20) Dean Witter California Tax-Free Income Fund
(21) Dean Witter Managed Assets Trust
(22) Dean Witter Natural Resource Development Securities Inc.
(23) Dean Witter World Wide Income Trust
(24) Dean Witter Utilities Fund
(25) Dean Witter Strategist Fund
(26) Dean Witter New York Municipal Money Market Trust
(27) Dean Witter Intermediate Income Securities
(28) Prime Income Trust
(29) Dean Witter European Growth Fund Inc.
(30) Dean Witter Developing Growth Securities Trust
(31) Dean Witter Precious Metals and Minerals Trust
(32) Dean Witter Pacific Growth Fund Inc.
(33) Dean Witter Multi-State Municipal Series Trust
(34) Dean Witter Federal Securities Trust
(35) Dean Witter Short-Term U.S. Treasury Trust
(36) Dean Witter Diversified Income Trust
(37) Dean Witter Health Sciences Trust
(38) Dean Witter Global Dividend Growth Securities
(39) Dean Witter American Value Fund
(40) Dean Witter U.S. Government Money Market Trust
(41) Dean Witter Global Short-Term Income Fund Inc.
(42) Dean Witter Premier Income Trust
(43) Dean Witter Value-Added Market Series
(44) Dean Witter Global Utilities Fund
(45) Dean Witter High Income Securities
(46) Dean Witter National Municipal Trust
(47) Dean Witter International SmallCap Fund
(48) Dean Witter Balanced Growth Fund
(49) Dean Witter Balanced Income Fund
(50) Dean Witter Hawaii Municipal Trust
(51) Dean Witter Limited Term Municipal Trust
(52) Dean Witter Variable Investment Series
(53) Dean Witter Capital Appreciation Fund
(54) Dean Witter Intermediate Term U.S. Treasury Trust
(1) TCW/DW Core Equity Trust
(2) TCW/DW North American Government Income Trust
(3) TCW/DW Latin American Growth Fund
12
(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
(9) TCW/DW Total Return Trust
(b) The following information is given regarding directors and officers
of Distributors not listed in Item 28 above. The principal address of
Distributors is Two World Trade Center, New York, New York 10048. None
of the following persons has any position or office with the Registrant.
Positions and
Office with
Name Distributors
- ---- --------------
Fredrick K. Kubler Senior Vice President, Assistant
Secretary and Chief Compliance
Officer.
Michael T. Gregg Vice President and Assistant
Secretary.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder
are maintained by the Investment Manager at its offices, except records
relating to holders of shares issued by the Registrant, which are maintained
by the Registrant's Transfer Agent, at its place of business as shown in the
prospectus.
Item 31. Management Services
Registrant is not a party to any such management-related service
contract.
Item 32. Undertakings
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report
to shareholders, upon request and without charge.
13
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 28th day of September, 1995.
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. 4 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 09/28/95
---------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By /s/ Thomas F. Caloia 09/28/95
----------------------------
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman)
Philip J. Purcell
By /s/ Sheldon Curtis 09/28/95
-----------------------------
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
By /s/ David M. Butowsky 09/28/95
------------------------------
David M. Butowsky
Attorney-in-Fact
Exhibits
1. - Declaration of Trust
2. - Amended and Restated By-Laws
8. - Form of Custody Agreement
9. - Form of Services Agreement between Dean Witter
InterCapital Inc. and Dean Witter Services
Company Inc.
11. - Consent of Independent Accountants
15. - Amended and Restated Plan of Distribution pursuant
to Rule 12b-1
16. - Schedules for Computation of Performance
Quotations
27. - Financial Data Schedules
-------------
All other exhibits previously filed and incorporated
by reference.
<PAGE>
DEAN WITTER
RETIREMENT SERIES
TWO WORLD TRADE CENTER
NEW YORK, NY 10048
DECLARATION OF TRUST
DATED: MAY 13, 1992
C65953
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE I--Name and Definitions .................................................. 2
Section 1.1 Name ........................................................... 2
Section 1.2 Definitions .................................................... 2
ARTICLE II--Trustees ............................................................. 3
Section 2.1 Number of Trustees ............................................. 3
Section 2.2 Election and Term .............................................. 3
Section 2.3 Resignation and Removal ........................................ 3
Section 2.4 Vacancies ...................................................... 3
Section 2.5 Delegation of Power to Other Trustees .......................... 4
ARTICLE III--Powers of Trustees .................................................. 4
Section 3.1 General ........................................................ 4
Section 3.2 Investments .................................................... 4
Section 3.3 Legal Title .................................................... 5
Section 3.4 Issuance and Repurchase of Securities .......................... 5
Section 3.5 Borrowing Money; Lending Trust Assets .......................... 5
Section 3.6 Delegation; Committees ......................................... 5
Section 3.7 Collection and Payment ......................................... 5
Section 3.8 Expenses ....................................................... 5
Section 3.9 Manner of Acting; By-Laws ...................................... 5
Section 3.10 Miscellaneous Powers ........................................... 6
Section 3.11 Principal Transactions ......................................... 6
Section 3.12 Litigation ..................................................... 6
ARTICLE IV--Investment Adviser, Distributor, Custodian and Transfer Agent ........ 6
Section 4.1 Investment Adviser ............................................. 6
Section 4.2 Administrative Services ........................................ 7
Section 4.3 Distributor .................................................... 7
Section 4.4 Transfer Agent ................................................. 7
Section 4.5 Custodian ...................................................... 7
Section 4.6 Parties to Contract ............................................ 7
ARTICLE V--Limitations of Liability of Shareholders, Trustees and Others ......... 8
Section 5.1 No Personal Liability of Shareholders, Trustees, etc. ......... 8
Section 5.2 Non-Liability of Trustees, etc. ................................ 8
Section 5.3 Indemnification ................................................ 8
Section 5.4 No Bond Required of Trustees ................................... 8
Section 5.5 No Duty of Investigation; Notice in Trust Instruments, etc. ... 8
Section 5.6 Reliance on Experts, etc. ...................................... 9
ARTICLE VI--Shares of Beneficial Interest......................................... 9
Section 6.1 Beneficial Interest ............................................ 9
Section 6.2 Rights of Shareholders ......................................... 9
Section 6.3 Trust Only ..................................................... 9
Section 6.4 Issuance of Shares ............................................ 10
Section 6.5 Register of Shares ............................................ 10
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Section 6.6 Transfer of Shares ............................................. 10
Section 6.7 Notices ........................................................ 10
Section 6.8 Voting Powers .................................................. 10
Section 6.9 Series or Classes of Shares .................................... 11
ARTICLE VII--Redemptions ......................................................... 13
Section 7.1 Redemptions .................................................... 13
Section 7.2 Redemption at the Option of the Trust .......................... 13
Section 7.3 Effect of Suspension of Determination of Net Asset Value ...... 13
Section 7.4 Suspension of Right of Redemption .............................. 13
ARTICLE VIII--Determination of Net Asset Value, Net Income and Distributions...... 14
Section 8.1 Net Asset Value ................................................ 14
Section 8.2 Distributions to Shareholders .................................. 14
Section 8.3 Determination of Net Income .................................... 14
Section 8.4 Power to Modify Foregoing Procedures ........................... 15
ARTICLE IX--Duration; Termination of Trust; Amendment; Mergers, etc. ............ 15
Section 9.1 Duration ....................................................... 15
Section 9.2 Termination of Trust or a Series ............................... 15
Section 9.3 Amendment Procedure ............................................ 15
Section 9.4 Merger, Consolidation and Sale of Assets ....................... 16
Section 9.5 Incorporation .................................................. 16
ARTICLE X--Reports to Shareholders ............................................... 17
ARTICLE XI--Miscellaneous ........................................................ 17
Section 11.1 Filing ......................................................... 17
Section 11.2 Resident Agent ................................................. 17
Section 11.3 Governing Law .................................................. 17
Section 11.4 Counterparts ................................................... 17
Section 11.5 Reliance by Third Parties ...................................... 17
Section 11.6 Provisions in Conflict with Law or Regulations ................. 17
Section 11.7 Use of the Name "Dean Witter" .................................. 18
Section 11.8 Principal Place of Business .................................... 18
SIGNATURE PAGE ................................................................... 19
</TABLE>
2
<PAGE>
DECLARATION OF TRUST
OF
DEAN WITTER RETIREMENT SERIES
DATED: MAY 13, 1992
THE DECLARATION OF TRUST of Dean Witter Retirement Series is made the 13th
day of May, 1992 by the parties signatory hereto, as trustees (such persons,
so long as they shall continue in office in accordance with the terms of this
Declaration of Trust, and all other persons who at the time in question have
been duly elected or appointed as trustees in accordance with the provisions
of this Declaration of Trust and are then in office, being hereinafter called
the "Trustees").
W I T N E S S E T H :
WHEREAS, the Trustees desire to form a trust fund under the laws of
Massachusetts for the investment and reinvestment of funds contributed
thereto; and
WHEREAS, it is provided that the beneficial interest in the trust assets
be divided into transferable shares of beneficial interest as hereinafter
provided;
NOW, THEREFORE, the Trustees hereby declare that they will hold in trust,
all money and property contributed to the trust fund to manage and dispose of
the same for the benefit of the holders from time to time of the shares of
beneficial interest issued hereunder and subject to the provisions hereof, to
wit:
1
<PAGE>
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is the "Dean
Witter Retirement Series," and so far as may be practicable the Trustees
shall conduct the Trust's activities, execute all documents and sue or be
sued under that name, which name (and the word "Trust" wherever herein used)
shall refer to the Trustees as Trustees, and not as individuals, or
personally, and shall not refer to the officers, agents, employees or
Shareholders of the Trust. Should the Trustees determine that the use of such
name is not advisable, they may use such other name for the Trust as they
deem proper and the Trust may hold its property and conduct its activities
under such other name.
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "By-Laws" means the By-Laws referred to in Section 3.9 hereof, as
from time to time amended.
(b) the terms "Commission," "Affiliated Person" and "Interested
Person," have the meanings given them in the 1940 Act.
(c) "Declaration" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "Declaration,"
"hereof," "herein" and "hereunder" shall be deemed to refer to this
Declaration rather than the article or section in which such words appear.
(d) "Distributor" means the party, other than the Trust, to a contract
described in Section 4.3 hereof.
(e) "Fundamental Policies" shall mean the investment policies and
restrictions set forth in the Prospectus and Statement of Additional
Information and designated as fundamental policies therein.
(f) "Investment Adviser" means any party, other than the Trust, to a
contract described in Section 4.1 hereof.
(g) "Majority Shareholder Vote" means the vote of the holders of a
majority of Shares, which shall consist of: (i) a majority of Shares
represented in person or by proxy and entitled to vote at a meeting of
Shareholders at which a quorum, as determined in accordance with the
By-Laws, is present; (ii) a majority of Shares issued and outstanding and
entitled to vote when action is taken by written consent of Shareholders;
and (iii) a "majority of the outstanding voting securities," as the phrase
is defined in the 1940 Act, when any action is required by the 1940 Act by
such majority as so defined.
(h) "1940 Act" means the Investment Company Act of 1940 and the rules
and regulations thereunder as amended from time to time.
(i) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
(j) "Prospectus" means the Prospectus and Statement of Additional
Information constituting parts of the Registration Statement of the Trust
under the Securities Act of 1933 as such Prospectus and Statement of
Additional Information may be amended or supplemented and filed with the
Commission from time to time.
(k) "Series" means one of the separately managed components of the
Trust (or, if the Trust shall have only one such component, then that one)
as set forth in Section 6.1 hereof or as may be established and designated
from time to time by the Trustees pursuant to that section.
(l) "Shareholder" means a record owner of outstanding Shares.
(m) "Shares" means the units of interest into which the beneficial
interest in the Trust shall be divided from time to time, including the
shares of any and all series or classes which may be established by the
Trustees, and includes fractions of Shares as well as whole Shares.
2
<PAGE>
(n) "Transfer Agent" means the party, other than the Trust, to the
contract described in Section 4.4 hereof.
(o) "Trust" means the Dean Witter Retirement Series.
(p) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of
the Trust or the Trustees.
(q) "Trustees" means the persons who have signed the Declaration, so
long as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly elected or
appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and reference herein to a Trustee or the Trustees shall
refer to such person or persons in their capacity as trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by
a majority of the Trustees, provided, however, that the number of Trustees
shall in no event be less than three (3) nor more than fifteen (15).
Section 2.2. Election and Term. The Trustees shall be elected by a
Majority Shareholder Vote at the first meeting of Shareholders following the
public offering of Shares of the Trust. The Trustees shall have the power to
set and alter the terms of office of the Trustees, and they may at any time
lengthen or lessen their own terms or make their terms of unlimited duration,
subject to the resignation and removal provisions of Section 2.3 hereof.
Subject to Section 16(a) of the 1940 Act, the Trustees may elect their own
successors and may, pursuant to Section 2.4 hereof, appoint Trustees to fill
vacancies. The Trustees shall adopt By-Laws not inconsistent with this
Declaration or any provision of law to provide for election of Trustees by
Shareholders at such time or times as the Trustees shall determine to be
necessary or advisable.
Section 2.3. Resignation and Removal. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the other Trustees and such resignation shall
be effective upon such delivery, or at a later date according to the terms of
the instrument. Any of the Trustees may be removed (provided the aggregrate
number of Trustees after such removal shall not be less than the number
required by Section 2.1 hereof) by the action of two-thirds of the remaining
Trustees or by the action of the Shareholders of record of not less than
two-thirds of the Shares outstanding (for purposes of determining the
circumstances and procedures under which such removal by the Shareholders may
take place, the provisions of Section 16(c) of the 1940 Act shall be
applicable to the same extent as if the Trust were subject to the provisions
of that Section). Upon the resignation or removal of a Trustee, or his
otherwise ceasing to be a Trustee, he shall execute and deliver such
documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust Property held in
the name of the resigning or removed Trustee. Upon the incapacity or death of
any Trustee, his legal representative shall execute and deliver on his behalf
such documents as the remaining Trustees shall require as provided in the
preceding sentence.
Section 2.4. Vacancies. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the
duties of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy existing by reason of an
increase in the number of Trustees, subject to the provisions of Section
16(a) of the 1940 Act, the remaining Trustees or, prior to the public
offering of Shares of the Trust, if only one Trustee shall then remain in
office, the remaining Trustee, shall fill such vacancy by the appointment of
such other person as they or he, in their or his discretion, shall see fit,
made by a written instrument signed by a majority of the remaining Trustees
or by the remaining Trustee, as the case may be. Any such appointment shall
not become effective, however, until the person named in the written
instrument of appointment shall have accepted in writing such appointment and
agreed in writing to be
3
<PAGE>
bound by the terms of the Declaration. An appointment of a Trustee may be
made in anticipation of a vacancy to occur at a later date by reason of
retirement, resignation or increase in the number of Trustees, provided that
such appointment shall not become effective prior to such retirement,
resignation or increase in the number of Trustees. Whenever a vacancy in the
number of Trustees shall occur, until such vacancy is filled as provided in
this Section 2.4, the Trustees in office, regardless of their number, shall
have all the powers granted to the Trustees and shall discharge all the
duties imposed upon the Trustees by the Declaration. A written instrument
certifying the existence of such vacancy signed by a majority of the Trustees
shall be conclusive evidence of the existence of such vacancy.
Section 2.5. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; provided that in no
case shall less than two (2) Trustees personally exercise the powers granted
to the Trustees under the Declaration except as herein otherwise expressly
provided.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the
same extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its
branches and maintain offices both within and without the Commonwealth of
Massachusetts, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities
wheresoever in the world they may be located as they deem necessary, proper
or desirable in order to promote the interests of the Trust although such
things are not herein specifically mentioned. Any determination as to what is
in the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of the Declaration, the presumption
shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 3.2. Investments. The Trustees shall have the power to:
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute, lend
or otherwise deal in or dispose of negotiable or nonnegotiable
instruments, obligations, evidences of indebtedness, certificates of
deposit or indebtedness, commercial paper, repurchase agreements, reverse
repurchase agreements, options, commodities, commodity futures contracts
and related options, currencies, currency futures and forward contracts,
and other securities, investment contracts and other instruments of any
kind, including, without limitation, those issued, guaranteed or sponsored
by any and all Persons including, without limitation, states, territories
and possessions of the United States, the District of Columbia and any of
the political subdivisions, agencies or instrumentalities thereof, and by
the United States Government or its agencies or instrumentalities, foreign
or international instrumentalities, or by any bank or savings institution,
or by any corporation or organization organized under the laws of the
United States or of any state, territory or possession thereof, and of
corporations or organizations organized under foreign laws, or in "when
issued" contracts for any such securities, or retain Trust assets in cash
and from time to time change the investments of the assets of the Trust;
and to exercise any and all rights, powers and privileges of ownership or
interest in respect of any and all such investments of every kind and
description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more
persons, firms, associations or corporations to exercise any of said
rights, powers and privileges in respect of any of said instruments; and
the Trustees shall be deemed to have the foregoing powers with respect to
any additional securities in which the Trust may invest should the
Fundamental Policies be amended.
4
<PAGE>
The Trustees shall not be limited to investing in obligations maturing before
the possible termination of the Trust, nor shall the Trustees be limited by
any law limiting the investments which may be made by fiduciaries.
Section 3.3. Legal Title. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name
of one or more of the Trustees, or in the name of the Trust, or in the name
of any other Person as nominee, on such terms as the Trustees may determine,
provided that the interest of the Trust therein is appropriately protected.
The right, title and interest of the Trustees in the Trust Property shall
vest automatically in each Person who may hereafter become a Trustee. Upon
the resignation, removal or death of a Trustee he shall automatically cease
to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed
and delivered.
Section 3.4. Issuance and Repurchase of Securities. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares
and, subject to the provisions set forth in Articles VII, VIII and IX and
Section 6.9 hereof, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the Trust,
whether capital or surplus or otherwise, to the full extent now or hereafter
permitted by the laws of the Commonwealth of Massachusetts governing business
corporations.
Section 3.5. Borrowing Money; Lending Trust Assets. Subject to the
Fundamental Policies, the Trustee shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, to endorse,
guarantee, or undertake the performance of any obligation, contract or
engagement of any other Person and to lend Trust assets.
Section 3.6. Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of
the Trust and the Trust Property, to delegate from time to time to such of
their number or to officers, employees or agents of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Trustees or otherwise as the Trustees may deem
expedient.
Section 3.7. Collection and Payment. Subject to Section 6.9 hereof, the
Trustees shall have power to collect all property due to the Trust; to pay
all claims, including taxes, against the Trust Property; to prosecute,
defend, compromise or abandon any claims relating to the Trust Property; to
foreclose any security interest securing any obligations, by virtue of which
any property is owed to the Trust; and to enter into releases, agreements and
other instruments.
Section 3.8. Expenses. Subject to Section 6.9 hereof, the Trustees shall
have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of the
Declaration, and to pay reasonable compensation from the funds of the Trust
to themselves as Trustees. The Trustees shall fix the compensation of all
officers, employees and Trustees.
Section 3.9. Manner of Acting; By-Laws. Except as otherwise provided
herein or in the By-Laws or by any provision of law, any action to be taken
by the Trustees may be taken by a majority of the Trustees present at a
meeting of Trustees (a quorum being present), including any meeting held by
means of a conference telephone circuit or similar communications equipment
by means of which all persons participating in the meeting can hear each
other, or by written consents of all the Trustees. The Trustees may adopt
By-Laws not inconsistent with this Declaration to provide for the conduct of
the business of the Trust and may amend or repeal such By-Laws to the extent
such power is not reserved to the Shareholders.
Section 3.10. Miscellaneous Powers. The Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust or any Series thereof; (b)
enter into joint ventures, partnerships and any other combinations or
associations; (c) remove Trustees or fill vacancies in or add to their
number, elect and remove such
5
<PAGE>
officers and appoint and terminate such agents or employees as they consider
appropriate, and appoint from their own number, and terminate, any one or
more committees which may exercise some or all of the power and authority of
the Trustees as the Trustees may determine; (d) purchase, and pay for out of
Trust Property or the property of the appropriate Series of the Trust,
insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers, distributors, selected dealers or independent
contractors of the Trust against all claims arising by reason of holding any
such position or by reason of any action taken or omitted to be taken by any
such Person in such capacity, whether or not constituting negligence, or
whether or not the Trust would have the power to indemnify such Person
against such liability; (e) establish pension, profit-sharing, Share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (f) to the extent permitted by
law, indemnify any person with whom the Trust or any Series thereof has
dealings, including any Investment Adviser, Distributor, Transfer Agent and
selected dealers, to such extent as the Trustees shall determine; (g)
guarantee indebtedness or contractual obligations of others; (h) determine
and change the fiscal year of the Trust or any Series thereof and the method
by which its accounts shall be kept; and (i) adopt a seal for the Trust but
the absence of such seal shall not impair the validity of any instrument
executed on behalf of the Trust.
Section 3.11. Principal Transactions. Except in transactions permitted by
the 1940 Act or any rule or regulation thereunder, or any order of exemption
issued by the Commission, or effected to implement the provisions of any
agreement to which the Trust is a party, the Trustees shall not, on behalf of
the Trust, buy any securities (other than Shares) from or sell any securities
(other than Shares) to, or lend any assets of the Trust or any Series thereof
to, any Trustee or officer of the Trust or any firm of which any such Trustee
or officer is a member acting as principal, or have any such dealings with
any Investment Adviser, Distributor or Transfer Agent or with any Affiliated
Person of such Person; but the Trust or any Series thereof may employ any
such Person, or firm or company in which such Person is an Interested Person,
as broker, legal counsel, registrar, transfer agent, dividend disbursing
agent or custodian upon customary terms.
Section 3.12. Litigation. The Trustees shall have the power to engage in
and to prosecute, defend, compromise, abandon, or adjust, by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust, and out of the assets of the Trust or any Series
thereof to pay or to satisfy any debts, claims or expenses incurred in
connection therewith, including those of litigation, and such power shall
include without limitation the power of the Trustees or any appropriate
committee thereof, in the exercise of their or its good faith business
judgment, to dismiss any action, suit, proceeding, dispute, claim, or demand,
derivative or otherwise, brought by any person, including a Shareholder in
its own name or the name of the Trust, whether or not the Trust or any of the
Trustees may be named individually therein or the subject matter arises by
reason of business for or on behalf of the Trust.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR, CUSTODIAN AND TRANSFER AGENT
Section 4.1. Investment Adviser. Subject to approval by a Majority
Shareholder Vote, the Trustees may in their discretion from time to time
enter into one or more investment advisory or management contracts or, if the
Trustees establish multiple Series, separate investment advisory or
management contracts with respect to one or more Series whereby the other
party or parties to any such contracts shall undertake to furnish the Trust
or such Series such management, investment advisory, administration,
accounting, legal, statistical and research facilities and services,
promotional or marketing activities, and such other facilities and services,
if any, as the Trustees shall from time to time consider desirable and all
upon such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provisions of the Declaration, the Trustees
may authorize the Investment Advisers, or any of them, under any such
contracts (subject to such general or specific instructions as the Trustees
may from time to time adopt) to effect purchases, sales, loans or exchanges
of portfolio securities and other investments of the Trust on behalf of the
Trustees or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations
6
<PAGE>
of such Investment Advisers, or any of them (and all without further action
by the Trustees). Any such purchases, sales, loans and exchanges shall be
deemed to have been authorized by all of the Trustees. The Trustees may, in
their sole discretion, call a meeting of Shareholders in order to submit to a
vote of Shareholders at such meeting the approval or continuance of any such
investment advisory or management contract. If the Shareholders of any one or
more of the Series of the Trust should fail to approve any such investment
advisory or management contract, the Investment Adviser may nonetheless serve
as Investment Adviser with respect to any Series whose Shareholders approve
such contract.
Section 4.2. Administrative Services. The Trustees may in their discretion
from time to time contract for administrative personnel and services whereby
the other party shall agree to provide the Trustees or the Trust
administrative personnel and services to operate the Trust on a daily or
other basis, on such terms and conditions as the Trustees may in their
discretion determine. Such services may be provided by one or more persons or
entities.
Section 4.3. Distributor. The Trustees may in their discretion from time
to time enter into one or more contracts, providing for the sale of Shares to
net the Trust or the applicable Series of the Trust not less than the net
asset value per Share (as described in Article VIII hereof) and pursuant to
which the Trust may either agree to sell the Shares to the other parties to
the contracts, or any of them, or appoint any such other party its sales
agent for such Shares. In either case, any such contract shall be on such
terms and conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Article IV, including, without
limitation, the provision for the repurchase or sale of shares of the Trust
by such other party as principal or as agent of the Trust.
Section 4.4. Transfer Agent. The Trustees may in their discretion from
time to time enter into a transfer agency and shareholder service contract
whereby the other party to such contract shall undertake to furnish transfer
agency and shareholder services to the Trust. The contract shall have such
terms and conditions as the Trustees may in their discretion determine not
inconsistent with the Declaration. Such services may be provided by one or
more Persons.
Section 4.5. Custodian. The Trustees may appoint or otherwise engage one
or more banks or trust companies, each having an aggregate capital, surplus
and undivided profits (as shown in its last published report) of at least
five million dollars ($5,000,000) to serve as Custodian with authority as its
agent, but subject to such restrictions, limitations and other requirements,
if any, as may be contained in the By-Laws of the Trust.
Section 4.6. Parties to Contract. Any contract of the character described
in Sections 4.1, 4.2, 4.3, 4.4 or 4.5 of this Article IV and any other
contract may be entered into with any Person, although one or more of the
Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such
contract shall be invalidated or rendered voidable by reason of the existence
of any such relationship; nor shall any Person holding such relationship be
liable merely by reason of such relationship for any loss or expense to the
Trust under or by reason of said contract or accountable for any profit
realized directly or indirectly therefrom, provided that the contract when
entered into was not inconsistent with the provisions of this Article IV. The
same Person may be the other party to any contracts entered into pursuant to
Sections 4.1, 4.2, 4.3, 4.4 or 4.5 above or otherwise, and any individual may
be financially interested or otherwise affiliated with Persons who are
parties to any or all of the contracts mentioned in this Section 4.6.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 5.1. No Personal Liability of Shareholders, Trustees, etc. No
Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or affairs
of the Trust. No Trustee, officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever to any Person, other than the
Trust or its Shareholders, in connection with the Trust Property or the
affairs of the Trust, save only that arising from bad faith, willful
misfeasance, gross negligence or reckless disregard for his duty to such
Person; and all such Persons shall look solely
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to the Trust Property, or to the Property of one or more specific Series of
the Trust if the claim arises from the conduct of such Trustee, officer,
employee or agent with respect to only such Series, for satisfaction of
claims of any nature arising in connection with the affairs of the Trust. If
any Shareholder, Trustee, officer, employee or agent, as such, of the Trust
is made a party to any suit or proceeding to enforce any such liability, he
shall not, on account thereof, be held to any personal liability. The Trust
shall indemnify out of the property of the Trust and hold each Shareholder
harmless from and against all claims and liabilities, to which such
Shareholder may become subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability; provided that, in the event the Trust shall consist of more than
one Series, Shareholders of a particular Series who are faced with claims or
liabilities solely by reason of their status as Shareholders of that Series
shall be limited to the assets of that Series for recovery of such loss and
related expenses. The rights accruing to a Shareholder under this Section 5.1
shall not exclude any other right to which such Shareholder may be lawfully
entitled, nor shall anything herein contained restrict the right of the Trust
to indemnify or reimburse a Shareholder in any appropriate situation even
though not specifically provided herein.
Section 5.2. Non-Liability of Trustees, etc. No Trustee, officer, employee
or agent of the Trust shall be liable to the Trust, its Shareholders, or to
any Shareholder, Trustee, officer, employee, or agent thereof for any action
or failure to act (including without limitation the failure to compel in any
way any former or acting Trustee to redress any breach of trust) except for
his own bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties.
Section 5.3. Indemnification. (a) The Trustees shall provide for
indemnification by the Trust, or by one or more Series thereof if the claim
arises from his or her conduct with respect to only such Series, of any
person who is, or has been, a Trustee, officer, employee or agent of the
Trust against all liability and against all expenses reasonably incurred or
paid by him in connection with any claim, action, suit or proceeding in which
he becomes involved as a party or otherwise by virtue of his being or having
been a Trustee, officer, employee or agent and against amounts paid or
incurred by him in the settlement thereof, in such manner as the Trustees may
provide from time to time in the By-Laws.
(b) The words "claim," "action," "suit," or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal, or other,
including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
Section 5.4. No Bond Required of Trustees. No Trustee shall be obligated
to give any bond or other security for the performance of any of his duties
hereunder.
Section 5.5. No Duty of Investigation; Notice in Trust Instruments,
etc. No purchaser, lender, transfer agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust or a Series thereof
shall be bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by said officer, employee or agent
or be liable for the application of money or property paid, loaned or
delivered to or on the order of the Trustees or of said officer, employee or
agent. Every obligation, contract, instrument, certificate, Share, other
security of the Trust or a Series thereof or undertaking, and every other act
or thing whatsoever executed in connection with the Trust shall be
conclusively presumed to have been executed or done by the executors thereof
only in their capacity as officers, employees or agents of the Trust or a
Series thereof. Every written obligation, contract, instrument, certificate,
Share, other security of the Trust or undertaking made or issued by the
Trustees shall recite that the same is executed or made by them not
individually, but as Trustees under the Declaration, and that the obligations
of the Trust or a Series thereof under any such instrument are not binding
upon any of the Trustees or Shareholders, individually, but bind only the
Trust Estate (or, in the event the Trust shall consist of more than one
Series, in the case of any such obligation which relates to a specific
Series, only the Series which is a party thereto), and may contain any
further recital which they or he may deem appropriate, but the omission of
such recital shall not affect the validity of such obligation, contract
instrument, certificate, Share, security or undertaking and shall not operate
to bind the Trustees or Shareholders individually. The Trustees shall at all
times maintain insurance for the
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protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to
cover possible tort liability, and such other insurance as the Trustees in
their sole judgment shall deem advisable.
Section 5.6. Reliance on Experts, etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to
act resulting from reliance in good faith upon the books of account or other
records of the Trust, upon an opinion of counsel, or upon reports made to the
Trust by any of its officers or employees or by any Investment Adviser,
Distributor, Transfer Agent, selected dealers, accountants, appraisers or
other experts or consultants selected with reasonable care by the Trustees,
officers or employees of the Trust, regardless of whether such counsel or
expert may also be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest of
$.01 par value. The number of such shares of beneficial interest authorized
hereunder is unlimited. The Trustees shall have the authority to establish
and designate one or more Series or classes of shares. Each share of any
Series shall represent an equal proportionate share in the assets of that
Series with each other Share in that Series. The Trustees may divide or
combine the shares of any Series into a greater or lesser number of shares in
that Series without thereby changing the proportionate interests in the
assets of that Series. Subject to the provisions of Section 6.9 hereof, the
Trustees may also authorize the creation of additional series of shares (the
proceeds of which may be invested in separate, independently managed
portfolios) and additional classes of shares within any series. All Shares
issued hereunder including, without limitation, Shares issued in connection
with a dividend in Shares or a split in Shares, shall be fully paid and
nonassessable.
Section 6.2. Rights of Shareholders. The ownership of the Trust Property
of every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by
their Shares, and they shall have no right to call for any partition of
division of any property, profits, rights or interests of the Trust nor can
they be called upon to assume any losses of the Trust or suffer an assessment
of any kind by virtue of their ownership of Shares. The Shares shall be
personal property giving only the rights in the Declaration specifically set
forth. The Shares shall not entitle the holder to preference, preemptive,
appraisal, conversion or exchange rights, except as the Trustees may
determine with respect to any series of Shares.
Section 6.3. Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and
each Shareholder from time to time. It is not the intention of the Trustees
to create a general partnership, limited partnership, joint stock
association, corporation, bailment or any form of legal relationship other
than a trust. Nothing in the Declaration shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or members
of a joint stock association.
Section 6.4 Issuance of Shares. The Trustees, in their discretion may,
from time to time without vote of the Shareholders, issue Shares of any
Series, in addition to the then issued and outstanding Shares and Shares held
in the treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times and on such
terms as the Trustees may deem best, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection
with the assumption of liabilities) and businesses. In connection with any
issuance of Shares, the Trustees may issue fractional Shares. The Trustees
may from time to time divide or combine the Shares of any Series into a
greater or lesser number without thereby changing the proportionate
beneficial interests in that Series. Contributions to the Trust may be
accepted for, and Shares shall be redeemed as, whole Shares and/or fractions
of a Share as described in the Prospectus.
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Section 6.5. Register of Shares. A register shall be kept in respect of
each Series at the principal office of the Trust or at an office of the
Transfer Agent which shall contain the names and addresses of the
Shareholders and the number of Shares of each Series held by them
respectively and a record of all transfers thereof. Such register may be in
written form or any other form capable of being converted into written form
within a reasonable time for visual inspection. Such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled
to receive dividends or distributions or otherwise to exercise or enjoy the
rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or distribution, nor to have notice given to him as herein or
in the By-Laws provided, until he has given his address to the Transfer Agent
or such other officer or agent of the Trustees as shall keep the said
register for entry thereon. It is not contemplated that certificates will be
issued for the Shares; however, the Trustees, in their discretion, may
authorize the issuance of Share certificates and promulgate appropriate rules
and regulations as to their use.
Section 6.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder or by his agent thereunto duly
authorized in writing, upon delivery to the Trustees or the Transfer Agent of
a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as
may reasonably be required. Upon such delivery the transfer shall be recorded
on the register of the Trust. Until such record is made, the Shareholder of
record shall be deemed to be the holder of such Shares for all purposes
hereunder and neither the Trustees nor any Transfer Agent or registrar nor
any officer, employee or agent of the Trust shall be affected by any notice
of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the
Transfer Agent, but until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder
and neither the Trustees nor any Transfer Agent or registrar nor any officer
or agent of the Trust shall be affected by any notice of such death,
bankruptcy or incompetence, or other operation of law, except as may
otherwise be provided by the laws of the Commonwealth of Massachusetts.
Section 6.7. Notices. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his
last known address as recorded on the register of the Trust. Annual reports
and proxy statements need not be sent to a shareholder if: (i) an annual
report and proxy statement for two consecutive annual meetings, or (ii) all,
and at least two, checks (if sent by first class mail) in payment of
dividends or interest and shares during a twelve month period have been
mailed to such shareholder's address and have been returned undelivered.
However, delivery of such annual reports and proxy statements shall resume
once a Shareholder's current address is determined.
Section 6.8. Voting Powers. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Section 2.2 hereof, (ii) for
the removal of Trustees as provided in Section 2.3 hereof, (iii) with respect
to any investment advisory or management contract as provided in Section 4.1,
(iv) with respect to termination of the Trust as provided in Section 9.2, (v)
with respect to any amendment of the Declaration to the extent and as
provided in Section 9.3, (vi) with respect to any merger, consolidation or
sale of assets as provided in Section 9.4, (vii) with respect to
incorporation of the Trust to the extent and as provided in Section 9.5,
(viii) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should
or should not be brought or maintained derivatively or as a class action on
behalf of the Trust or the Shareholders (provided that Shareholders of a
Series are not entitled to vote in connection with the bringing of a
derivative or class action with respect to any matter which only affects
another Series or its Shareholders), (ix) with respect to any plan adopted
pursuant to Rule 12b-1 (or any successor rule) under the 1940 Act and (x)
with respect to such additional matters relating to the Trust as may be
required by law, the Declaration, the By-Laws or any registration of the
Trust with the Commission (or any successor agency) or any state, or as and
when the Trustees may consider necessary or desirable. Each whole Share shall
be entitled to one vote as to any matter on which it is entitled to vote and
each
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fractional Share shall be entitled to a proportionate fractional vote, except
that Shares held in the treasury of the Trust as of the record date, as
determined in accordance with the By-Laws, shall not be voted. On any matter
submitted to a vote of Shareholders, all Shares shall be voted by individual
Series except (1) when required by the 1940 Act, Shares shall be voted in the
aggregate and not by individual Series; and (2) when the Trustees have
determined that the matter affects only the interests of one or more Series,
then only the Shareholders of such Series shall be entitled to vote thereon.
The Trustees may, in conjunction with the establishment of any further Series
or any classes of Shares, establish conditions under which the several series
or classes of Shares shall have separate voting rights or no voting rights.
There shall be no cumulative voting in the election of Trustees. Until Shares
are issued, the Trustees may exercise all rights of Shareholders and may take
any action required by law, the Declaration or the By-Laws to be taken by
Shareholders. The By-Laws may include further provisions for Shareholders'
votes and meetings and related matters.
Section 6.9. Series or Classes of Shares. The following provisions are
applicable regarding the Series of Shares of the Trust established in Section
6.1 hereof and shall be applicable if the Trustees shall establish additional
Series or shall divide the shares of any Series into two or more classes,
also as provided in Section 6.1 hereof, and all provisions relating to the
Trust shall apply equally to each Series thereof except as the context
requires:
(a) The number of authorized shares and the number of shares of each
Series or of each class that may be issued shall be unlimited. The
Trustees may classify or reclassify any unissued shares or any shares
previously issued and reacquired of any Series or class into one or more
Series or one or more classes that may be established and designated from
time to time. The Trustees may hold as treasury shares (of the same or
some other Series or class), reissue for such consideration and on such
terms as they may determine, or cancel any shares of any Series or any
class reacquired by the Trust at their discretion from time to time.
(b) The power of the Trustees to invest and reinvest the Trust
Property shall be governed by Section 3.2 of this Declaration with respect
to any one or more Series which represents the interests in the assets of
the Trust immediately prior to the establishment of any additional Series
and the power of the Trustees to invest and reinvest assets applicable to
any other Series shall be as set forth in the instrument of the Trustees
establishing such series which is hereinafter described.
(c) All consideration received by the Trust for the issue or sale of
shares of a particular Series or class together with all assets in which
such consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to that Series or class for all purposes,
subject only to the rights of creditors, and shall be so recorded upon the
books of account of the Trust. In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any particular Series or
class, the Trustees shall allocate them among any one or more of the
Series or classes established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and
binding upon the shareholders of all Series or classes for all purposes.
No holder of Shares of any Series shall have any claim on or right to any
assets allocated or belonging to any other Series.
(d) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series and all
expenses, costs, charges and reserves attributable to that Series. All
expenses and liabilities incurred or arising in connection with a
particular Series, or in connection with the management thereof, shall be
payable solely out of the assets of that Series and creditors of a
particular Series shall be entitled to look solely to the property of such
Series for satisfaction of their claims. Any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series shall be allocated and
charged by the Trustees to and among any one or more of the series
established and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem
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fair and equitable. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and binding upon
the holders of all Series for all purposes. The Trustees shall have full
discretion, to the extent not inconsistent with the 1940 Act, to determine
which items shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive and binding
upon the shareholders.
(e) The power of the Trustees to pay dividends and make distributions
shall be governed by Section 8.2 of this Declaration with respect to any
one or more Series or classes which represents the interests in the assets
of the Trust immediately prior to the establishment of any additional
Series or classes. With respect to any other Series or class, dividends
and distributions on shares of a particular Series or class may be paid
with such frequency as the Trustees may determine, which may be daily or
otherwise, pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, to the holders
of shares of that Series or class, from such of the income and capital
gains, accrued or realized, from the assets belonging to that Series or
class, as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that Series or class. All dividends and
distributions on shares of a particular Series or class shall be
distributed pro rata to the holders of that Series or class in proportion
to the number of shares of that Series or class held by such holders at
the date and time of record established for the payment of such dividends
or distributions.
(f) The Trustees shall have the power to determine the designations,
preferences, privileges, limitations and rights, including voting and
dividend rights, of each class and Series of Shares.
(g) Subject to compliance with the requirements of the 1940 Act, the
Trustees shall have the authority to provide that the holders of Shares of
any Series or class shall have the right to convert or exchange said
Shares into Shares of one or more Series of Shares in accordance with such
requirements and procedures as may be established by the Trustees.
(h) The establishment and designation of any Series or class of shares
in addition to those established in Section 6.1 hereof shall be effective
upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights,
preferences, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of such Series or
class, or as otherwise provided in such instrument. At any time that there
are no shares outstanding of any particular Series or class previously
established and designated, the Trustees may by an instrument executed by
a majority of their number abolish that Series or class and the
establishment and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration.
(i) Shareholders of a Series shall not be entitled to participate in a
derivative or class action with respect to any matter which only affects
another Series or its Shareholders.
(j) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a
Series shall be entitled to receive his pro rata share of distributions of
income and capital gains made with respect to such Series. In the event of
the liquidation of a particular Series, the Shareholders of that Series
which has been established and designated and which is being liquidated
shall be entitled to receive, when and as declared by the Trustees, the
excess of the assets belonging to that Series over the liabilities
belonging to that Series. The holders of Shares of any Series shall not be
entitled hereby to any distribution upon liquidation of any other Series.
The assets so distributable to the Shareholders of any Series shall be
distributed among such Shareholders in proportion to the number of Shares
of that Series held by them and recorded on the books of the Trust. The
liquidation of any particular Series in which there are Shares then
outstanding may be authorized by an instrument in writing, without a
meeting, signed by a majority of the Trustees then in office, subject to
the approval of a majority of the outstanding voting securities of that
Series, as that phrase is defined in the 1940 Act.
ARTICLE VII
REDEMPTIONS
Section 7.1. Redemptions. Each Shareholder of a particular Series shall
have the right at such times as may be permitted by the Trust to require the
Trust to redeem all or any part of his Shares of that
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Series, upon and subject to the terms and conditions provided in this Article
VII. The Trust shall, upon application of any Shareholder or pursuant to
authorization from any Shareholder, redeem or repurchase from such
Shareholder outstanding shares for an amount per share determined by the
Trustees in accordance with any applicable laws and regulations; provided
that (a) such amount per share shall not exceed the cash equivalent of the
proportionate interest of each share or of any class or Series of shares in
the assets of the Trust at the time of the redemption or repurchase and (b)
if so authorized by the Trustees, the Trust may, at any time and from time to
time charge fees for effecting such redemption or repurchase, at such rates
as the Trustees may establish, as and to the extent permitted under the 1940
Act and the rules and regulations promulgated thereunder, and may, at any
time and from time to time, pursuant to such Act and such rules and
regulations, suspend such right of redemption. The procedures for effecting
and suspending redemption shall be as set forth in the Prospectus from time
to time. Payment will be made in such manner as described in the Prospectus.
Section 7.2. Redemption at the Option of the Trust. Each Share of the
Trust or any Series of the Trust shall be subject to redemption at the option
of the Trust at the redemption price which would be applicable if such Share
were then being redeemed by the Shareholder pursuant to Section 7.1: (i) at
any time, if the Trustees determine in their sole discretion that failure to
so redeem may have materially adverse consequences to the holders of the
Shares of the Trust or of any Series, or (ii) upon such other conditions with
respect to maintenance of Shareholder accounts of a minimum amount as may
from time to time be determined by the Trustees and set forth in the then
current Prospectus of the Trust. Upon such redemption the holders of the
Shares so redeemed shall have no further right with respect thereto other
than to receive payment of such redemption price.
Section 7.3. Effect of Suspension of Determination of Net Asset Value. If,
pursuant to Section 7.4 hereof, the Trustees shall declare a suspension of
the determination of net asset value with respect to Shares of the Trust or
of any Series thereof, the rights of Shareholders (including those who shall
have applied for redemption pursuant to Section 7.1 hereof but who shall not
yet have received payment) to have Shares redeemed and paid for by the Trust
or a Series thereof shall be suspended until the termination of such
suspension is declared. Any record holder who shall have his redemption right
so suspended may, during the period of such suspension, by appropriate
written notice of revocation at the office or agency where application was
made, revoke any application for redemption not honored and withdraw any
certificates on deposit. The redemption price of Shares for which redemption
applications have not been revoked shall be the net asset value of such
Shares next determined as set forth in Section 8.1 after the termination of
such suspension, and payment shall be made within seven (7) days after the
date upon which the application was made plus the period after such
application during which the determination of net asset value was suspended.
Section 7.4. Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New
York Stock Exchange is closed other than customary weekend and holiday
closings, (ii) during which trading on the New York Stock Exchange is
restricted, (iii) during which an emergency exists as a result of which
disposal by the Trust or a Series thereof of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the Trust or a
Series thereof fairly to determine the value of its net assets, or (iv)
during any other period when the Commission may for the protection of
security holders of the Trust by order permit suspension of the rights of
redemption or postponement of the date of payment or redemption; provided
that applicable rules and regulations of the Commission shall govern as to
whether the conditions prescribed in (ii), (iii) or (iv) exist. Such
suspension shall take effect at such time as the Trust shall specify but not
later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of
redemption or payment on redemption until the Trust shall declare the
suspension at an end, except that the suspension shall terminate in any event
on the first day on which said stock exchange shall have reopened or the
period specified in (ii) or (iii) shall have expired (as to which in the
absence of an official ruling by the Commission, the determination of the
Trust shall be conclusive). In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the net asset value existing after the termination
of the suspension.
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ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
Section 8.1. Net Asset Value. The net asset value of each outstanding
Share of each Series of the Trust shall be determined on such days and at
such time or times as the Trustees may determine. The method of determination
of net asset value shall be determined by the Trustees and shall be as set
forth in the Prospectus. The power and duty to make the daily calculations
may be delegated by the Trustees to any Investment Adviser, the Custodian,
the Transfer Agent or such other person as the Trustees by resolution may
determine. The Trustees may suspend the daily determination of net asset
value to the extent permitted by the 1940 Act.
Section 8.2. Distributions to Shareholders. The Trustees shall from time
to time distribute ratably among the Shareholders of the Trust or of any
Series such proportion of the net income, earnings, profits, gains, surplus
(including paid-in surplus), capital, or assets of the Trust or of such
Series held by the Trustees as they may deem proper. Such distribution may be
made in cash or property (including without limitation any type of
obligations of the Trust or of such Series or any assets thereof), and the
Trustees may distribute ratably among the Shareholders of the Trust or of
that Series additional Shares issuable hereunder in such manner, at such
times, and on such terms as the Trustees may deem proper. Such distributions
may be among the Shareholders of record (determined in accordance with the
Prospectus) of the Trust or of such Series at the time of declaring a
distribution or among the Shareholders of record of the Trust or of such
Series at such later date as the Trustees shall determine. The Trustees may
always retain from the net income, earnings, profits or gains of the Trust or
of such Series such amount as they may deem necessary to pay the debts or
expenses of the Trust or of such Series or to meet obligations of the Trust
or of such Series, or as they may deem desirable to use in the conduct of its
affairs or to retain for future requirements or extensions of the business.
The Trustees may adopt and offer to Shareholders of the Trust or of any
Series such dividend reinvestment plans, cash dividend payout plans or
related plans as the Trustees deem appropriate.
Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
Section 8.3. Determination of Net Income. The Trustees shall have the
power to determine the net income of any Series of the Trust and from time to
time to distribute such net income ratably among the Shareholders as
dividends in cash or additional Shares of such Series issuable hereunder. The
determination of net income and the resultant declaration of dividends shall
be as set forth in the Prospectus. The Trustees shall have full discretion to
determine whether any cash or property received by any Series of the Trust
shall be treated as income or as principal and whether any item of expense
shall be charged to the income or the principal account, and their
determination made in good faith shall be conclusive upon the Shareholders.
In the case of stock dividends received, the Trustees shall have full
discretion to determine, in the light of the particular circumstances, how
much, if any, of the value thereof shall be treated as income, the balance,
if any, to be treated as principal.
Section 8.4. Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value of the Shares or net income, or the declaration and
payment of dividends and distributions, as they may deem necessary or
desirable to enable the Trust to comply with any provision of the 1940 Act,
or any rule or regulation thereunder, including any rule or regulation
adopted pursuant to Section 22 of the 1940 Act by the Commission or any
securities association registered under the Securities Exchange Act of 1934,
or any order of exemption issued by said Commission, all as in effect now or
hereafter amended or modified. Without limiting the generality of the
foregoing, the Trustees may establish classes or additional Series of Shares
in accordance with Section 6.9.
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ARTICLE IX
DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.
Section 9.1. Duration. The Trust shall continue without limitation of time
but subject to the provisions of this Article IX.
Section 9.2. Termination of Trust. (a) The Trust or any Series may be
terminated (i) by a Majority Shareholder Vote at any meeting of Shareholders
of the Trust or the appropriate Series thereof, (ii) by an instrument in
writing, without a meeting, signed by a majority of the Trustees and
consented to by a Majority Shareholder Vote of the Trust or the appropriate
Series thereof, or by such other vote as may be established by the Trustees
with respect to any class or Series of Shares, or (iii) with respect to a
Series as provided in Section 6.9(h). Upon the termination of the Trust or
the Series:
(i) The Trust or the Series shall carry on no business except for the
purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust or
the Series and all of the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust or
the Series, collect its assets, sell, convey, assign, exchange, transfer
or otherwise dispose of all or any part of the remaining Trust Property or
Trust Property allocated or belonging to such Series to one or more
persons at public or private sale for consideration which may consist in
whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and to do all other acts appropriate to
liquidate its business; provided that any sale, conveyance, assignment,
exchange, transfer or other disposition of all or substantially all the
Trust Property or Trust Property allocated or belonging to such Series
shall require Shareholder approval in accordance with Section 9.4 hereof.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property or Trust Property allocated or
belonging to such Series, in cash or in kind or partly each, among the
Shareholders of the Trust according to their respective rights.
Section 9.3. Amendment Procedure. (a) This Declaration may be amended by a
Majority Shareholder Vote, at a meeting of Shareholders, or by written
consent without a meeting. The Trustees may also amend this Declaration
without the vote or consent of Shareholders (i) to change the name of the
Trust or any Series or classes of Shares, (ii) to supply any omission, or
cure, correct or supplement any ambiguous, defective or inconsistent
provision hereof, (iii) if they deem it necessary to conform this Declaration
to the requirements of applicable federal or state laws or regulations or the
requirements of the Internal Revenue Code, or to eliminate or reduce any
federal, state or local taxes which are or may by the Trust or the
Shareholders, but the Trustees shall not be liable for failing to do so, or
(iv) for any other purpose which does not adversely affect the rights of any
Shareholder with respect to which the amendment is or purports to be
applicable.
(b) No amendment may be made under this Section 9.3 which would change any
rights with respect to any Shares of the Trust or of any Series of the Trust
by reducing the amount payable thereon upon liquidation of the Trust or of
such Series of the Trust or by diminishing or eliminating any voting rights
pertaining thereto, except with the vote or consent of the holders of
two-thirds of the Shares of the Trust or of such Series outstanding and
entitled to vote, or by such other vote as may be established by the Trustees
with respect to any Series or class of Shares. Nothing contained in this
Declaration shall permit the amendment of this Declaration to impair the
exemption from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon Shareholders.
(c) A certificate signed by a majority of the Trustees or by the Secretary
or any Assistant Secretary of the Trust, setting forth an amendment and
reciting that it was duly adopted by the Shareholders or by the Trustees as
aforesaid or a copy of the Declaration, as amended, and executed by a
majority of the
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Trustees or certified by the Secretary or any Assistant Secretary of the
Trust, shall be conclusive evidence of such amendment when lodged among the
records of the Trust. Unless such amendment or such certificate sets forth
some later time for the effectiveness of such amendment, such amendment shall
be effective when lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by
the affirmative vote of a majority of the Trustees or by an instrument signed
by a majority of the Trustees.
Section 9.4. Merger, Consolidation and Sale of Assets. The Trust or any
Series thereof may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all
or substantially all of the Trust Property or Trust Property allocated or
belonging to such Series, including its good will, upon such terms and
conditions and for such consideration when and as authorized, at any meeting
of Shareholders called for the purpose, by the affirmative vote of the
holders of not less than two-thirds of the Shares of the Trust or such Series
outstanding and entitled to vote, or by an instrument or instruments in
writing without a meeting, consented to by the holders of not less than
two-thirds of such Shares, or by such other vote as may be established by the
Trustees with respect to any series or class of Shares; provided, however,
that, if such merger, consolidation, sale, lease or exchange is recommended
by the Trustees, a Majority Shareholder Vote shall be sufficient
authorization; and any such merger, consolidation, sale, lease or exchange
shall be deemed for all purposes to have been accomplished under and pursuant
to the laws of the Commonwealth of Massachusetts.
Section 9.5. Incorporation. With approval of a Majority Shareholder Vote,
or by such other vote as may be established by the Trustees with respect to
any Series or class of Shares, the Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other
organization to take over all of the Trust Property or the Trust Property
allocated or belonging to such Series or to carry on any business in which
the Trust shall directly or indirectly have any interest, and to sell, convey
and transfer the Trust Property or the Trust Property allocated or belonging
to such Series to any such corporation, trust, partnership, association or
organization in exchange for the shares or securities thereof or otherwise,
and to lend money to, subscribe for the shares or securities of, and enter
into any contracts with any such corporation, trust, partnership, association
or organization in which the Trust or such Series holds or is about to
acquire shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to
the extent permitted by law, as provided under the law then in effect.
Nothing contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to such
organization or entities.
ARTICLE X
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit or cause the officers of
the Trust to submit to the Shareholders a written financial report of each
Series of the Trust, including financial statements which shall at least
annually be certified by independent public accountants.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Filing. This Declaration and any amendment hereto shall be
filed in the office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of Massachusetts and
may also be filed or recorded in such other places as the Trustees deem
appropriate. Each amendment so filed shall be accompanied by a certificate
signed and acknowledged
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by a Trustee or by the Secretary or any Assistant Secretary of the Trust
stating that such action was duly taken in a manner provided herein. A
restated Declaration, integrating into a single instrument all of the
provisions of the Declaration which are then in effect and operative, may be
executed from time to time by a majority of the Trustees and shall, upon
filing with the Secretary of the Commonwealth of Massachusetts, be conclusive
evidence of all amendments contained therein and may thereafter be referred
to in lieu of the original Declaration and the various amendments thereto.
Section 11.2. Resident Agent. The Prentice-Hall Corporation System, Inc.,
84 State Street, Boston, Massachusetts 02109 is the resident agent of the
Trust in the Commonwealth of Massachusetts.
Section 11.3. Governing Law. This Declaration is executed by the Trustees
and delivered in the Commonwealth of Massachusetts and with reference to the
laws thereof and the rights of all parties and the validity and construction
of every provision hereof shall be subject to and construed according to the
laws of said State.
Section 11.4. Counterparts. The Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument,
which shall be sufficiently evidenced by any such original counterpart.
Section 11.5. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, appears to be a
Trustee hereunder, or Secretary or Assistant Secretary of the Trust,
certifying to: (a) the number or identity of Trustees or Shareholders, (b)
the due authorization of the execution of any instrument or writing, (c) the
form of any vote passed at a meeting of Trustees or Shareholders, (d) the
fact that the number of Trustees or Shareholders present at any meeting or
executing any written instrument satisfies the requirements of this
Declaration, (e) the form of any By-Laws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with
the Trustees and their successors.
Section 11.6. Provisions in Conflict with Law or Regulations. (a) The
provisions of the Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of
the Internal Revenue Code or with other applicable laws and regulations, the
conflicting provisions shall be deemed superseded by such law or regulation
to the extent necessary to eliminate such conflict; provided, however, that
such determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior
to such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
pertain only to such provision in such jurisdiction and shall not in any
manner affect such provision in any other jurisdiction or any other provision
of the Declaration in any jurisdiction.
Section 11.7. Use of the name "Dean Witter." Dean Witter Reynolds Inc.
("DWR") has consented to the use by the Trust of the identifying name "Dean
Witter," which is a property right of DWR. The Trust will only use the name
"Dean Witter" as a component of its name and for no other purpose, and will
not purport to grant to any third party the right to use the name "Dean
Witter" for any purpose. DWR, or any corporate affiliate of the parent of
DWR, may use or grant to others the right to use the name "Dean Witter", or
any combination or abbreviation thereof, as all or a portion of a corporate
or business name or for any commercial purpose, including a grant of such
right to any other investment company. At the request of DWR or its parent,
the Trust will take such action as may be required to provide its consent to
the use by DWR or its parent, or any corporate affiliate of DWR's parent, or
by any person to whom DWR or its parent or an affiliate of DWR's parent shall
have granted the right to the use, of the name "Dean Witter," or any
combination or abbreviation thereof. Upon the termination of any investment
advisory or investment management agreement into which DWR and the Trust may
enter, the Trust shall, upon request by DWR or its parent, cease to use the
name "Dean Witter" as a component of its name,
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and shall not use the name, or any combination or abbreviation thereof, as a
part of its name or for any other commercial purpose, and shall cause its
officers, trustees and shareholders to take any and all actions which DWR or
its parent may request to effect the foregoing and to reconvey to DWR or its
parent any and all rights to such name.
Section 11.8. Principal Place of Business. The principal place of business
of the Trust shall be Two World Trade Center, New York, New York 10048, or
such other location as the Trustees may designate from time to time.
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IN WITNESS WHEREOF, the undersigned have executed this Declaration of
Trust this 13th day of May, 1992.
/s/ Charles A. Fiumefreddo /s/ Andrew J. Melton, Jr.
- ----------------------------- ---------------------------------
Charles A. Fiumefreddo, as Andrew J. Melton, Jr., as
Trustee and not individually Trustee and not individually
Two World Trade Center Two World Trade Center
New York, New York 10048 New York, New York 10048
/s/ Sheldon Curtis
- -----------------------------
Sheldon Curtis, as Trustee
and not individually
Two World Trade Center
New York, New York 10048
STATE OF NEW YORK
COUNTY OF NEW YORK } ss.:
On this 13th day of May 1992, ANDREW J. MELTON, CHARLES A. FIUMEFREDDO and
SHELDON CURTIS, known to me and known to be the individuals described in and
who executed the foregoing instrument, personally appeared before me and they
severally acknowledged the foregoing instrument to be their free act and
deed.
/s/ Janet A. Herbert
---------------------------------
Notary Public
My commission expires: November 30, 1993
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IN WITNESS WHEREOF, the undersigned has executed this instrument this 14th
day of May, 1992.
/s/ Joseph F. Mazzella
-------------------------------
Joseph F. Mazzella, as Trustee
and not individually
101 Federal Street
Boston, MA 02110
COMMONWEALTH OF MASSACHUSETTS
Suffolk, SS. Boston, MA
May 14, 1992
Then personally appeared before me the above-named Joseph F. Mazzella who
acknowledged the foregoing instrument to be his free act and deed.
before me.
/s/ Sheila M. McLay
---------------------------------
Notary Public
My commission expires: May 31, 1996
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BY-LAWS
OF
DEAN WITTER RETIREMENT SERIES
(AMENDED AND RESTATED AS OF JANUARY 25, 1995)
ARTICLE I
DEFINITIONS
The terms "Commission", "Declaration", "Distributor", "Investment
Adviser", "Majority Shareholder Vote", "1940 Act", "Shareholder", "Shares",
"Transfer Agent", "Trust", "Trust Property", and "Trustees" have the
respective meanings given them in the Declaration of Trust of Dean Witter
Retirement Series dated May 13, 1992.
ARTICLE II
OFFICES
SECTION 2.1. Principal Office. Until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall be
in the City of Boston, County of Suffolk.
SECTION 2.2. Other Offices. In addition to its principal office in the
Commonwealth of Massachusetts, the Trust may have an office or offices in the
City of New York, State of New York, and at such other places within and
without the Commonwealth as the Trustees may from time to time designate or
the business of the Trust may require.
ARTICLE III
SHAREHOLDERS' MEETINGS
SECTION 3.1. Place of Meetings. Meetings of Shareholders shall be held at
such place, within or without the Commonwealth of Massachusetts, as may be
designated from time to time by the Trustees.
SECTION 3.2. Meetings. Meetings of Shareholders of the Trust shall be held
whenever called by the Trustees or the President of the Trust and whenever
election of a Trustee or Trustees by Shareholders is required by the
provisions of Section 16(a) of the 1940 Act, for that purpose. Meetings of
Shareholders shall also be called by the Secretary upon the written request
of the holders of Shares entitled to vote not less than twenty-five percent
(25%) of all the votes entitled to be cast at such meeting, except to the
extent otherwise required by Section 16(c) of the 1940 Act, as made
applicable to the Trust by the provisions of Section 2.3 of the Declaration.
Such request shall state the purpose or purposes of such meeting and the
matters proposed to be acted on thereat. Except to the extent otherwise
required by Section 16(c) of the 1940 Act, as made applicable to the Trust by
the provisions of Section 2.3 of the Declaration, the Secretary shall inform
such Shareholders of the reasonable estimated cost of preparing and mailing
such notice of the meeting, and upon payment to the Trust of such costs, the
Secretary shall give notice stating the purpose or purposes of the meeting to
all entitled to vote at such meeting. No meeting need be called upon the
request of the holders of Shares entitled to cast less than a majority of all
votes entitled to be cast at such meeting, to consider any matter which is
substantially the same as a matter voted upon at any meeting of Shareholders
held during the preceding twelve months.
SECTION 3.3. Notice of Meetings. Written or printed notice of every
Shareholders' meeting stating the place, date, and purpose or purposes
thereof, shall be given by the Secretary not less than ten (10) nor more than
ninety (90) days before such meeting to each Shareholder entitled to vote at
such meeting. Such notice shall be deemed to be given when deposited in the
United States mail, postage prepaid, directed to the Shareholder at his
address as it appears on the records of the Trust.
<PAGE>
SECTION 3.4. Quorum and Adjournment of Meetings. Except as otherwise
provided by law, by the Declaration or by these By-Laws, at all meetings of
Shareholders the holders of a majority of the Shares issued and outstanding
and entitled to vote thereat, present in person or represented by proxy,
shall be requisite and shall constitute a quorum for the transaction of
business. In the absence of a quorum, the Shareholders present or represented
by proxy and entitled to vote thereat shall have power to adjourn the meeting
from time to time. Any adjourned meeting may be held as adjourned without
further notice. At any adjourned meeting at which a quorum shall be present,
any business may be transacted as if the meeting had been held as originally
called.
SECTION 3.5. Voting Rights, Proxies. At each meeting of Shareholders, each
holder of record of Shares entitled to vote thereat shall be entitled to one
vote in person or by proxy, executed in writing by the Shareholder or his
duly authorized attorney-in-fact, for each Share of beneficial interest of
the Trust and for the fractional portion of one vote for each fractional
Share entitled to vote so registered in his name on the records of the Trust
on the date fixed as the record date for the determination of Shareholders
entitled to vote at such meeting. No proxy shall be valid after eleven months
from its date, unless otherwise provided in the proxy. At all meetings of
Shareholders, unless the voting is conducted by inspectors, all questions
relating to the qualification of voters and the validity of proxies and the
acceptance or rejection of votes shall be decided by the chairman of the
meeting. Pursuant to a resolution of a majority of the Trustees, proxies may
be solicited in the name of one or more Trustees or Officers of the Trust.
SECTION 3.6. Vote Required. Except as otherwise provided by law, by the
Declaration of Trust, or by these By-Laws, at each meeting of Shareholders at
which a quorum is present, all matters shall be decided by Majority
Shareholder Vote.
SECTION 3.7. Inspectors of Election. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman of any meeting of Shareholders may, and on the
request of any Shareholder or his proxy shall, appoint Inspectors of Election
of the meeting. In case any person appointed as Inspector fails to appear or
fails or refuses to act, the vacancy may be filled by appointment made by the
Trustees in advance of the convening of the meeting or at the meeting by the
person acting as chairman. The Inspectors of Election shall determine the
number of Shares outstanding, the Shares represented at the meeting, the
existence of a quorum, the authenticity, validity and effect of proxies,
shall receive votes, ballots or consents, shall hear and determine all
challenges and questions in any way arising in connection with the right to
vote, shall count and tabulate all votes or consents, determine the results,
and do such other acts as may be proper to conduct the election or vote with
fairness to all Shareholders. On request of the chairman of the meeting, or
of any Shareholder or his proxy, the Inspectors of Election shall make a
report in writing of any challenge or question or matter determined by them
and shall execute a certificate of any facts found by them.
SECTION 3.8. Inspection of Books and Records. Shareholders shall have such
rights and procedures of inspection of the books and records of the Trust as
are granted to Shareholders under Section 32 of the Corporations and
Associations Law of the State of Maryland.
SECTION 3.9. Action by Shareholders Without Meeting. Except as otherwise
provided by law, the provisions of these By-Laws relating to notices and
meetings to the contrary notwithstanding, any action required or permitted to
be taken at any meeting of Shareholders may be taken without a meeting if a
majority of the Shareholders entitled to vote upon the action consent to the
action in writing and such consents are filed with the records of the Trust.
Such consent shall be treated for all purposes as a vote taken at a meeting
of Shareholders.
ARTICLE IV
TRUSTEES
SECTION 4.1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or special meetings of the Trustees. Regular
meetings of the Trustees may be held at such time and place as shall be
determined from time to time by the Trustees without further notice. Special
meetings of the Trustees may be called at any time by the President and shall
be called by the President or the Secretary upon the written request of any
two (2) Trustees.
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SECTION 4.2. Notice of Special Meetings. Written notice of special
meetings of the Trustees, stating the place, date and time thereof, shall be
given not less than two (2) days before such meeting to each Trustee,
personally, by telegram, by mail, or by leaving such notice at his place of
residence or usual place of business. If mailed, such notice shall be deemed
to be given when deposited in the United States mail, postage prepaid,
directed to the Trustee at his address as it appears on the records of the
Trust. Subject to the provisions of the 1940 Act, notice or waiver of notice
need not specify the purpose of any special meeting.
SECTION 4.3. Telephone Meetings. Subject to the provisions of the 1940
Act, any Trustee, or any member or members of any committee designated by the
Trustees, may participate in a meeting of the Trustees, or any such
committee, as the case may be, by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means
constitutes presence in person at the meeting.
SECTION 4.4. Quorum, Voting and Adjournment of Meetings. At all meetings
of the Trustees, a majority of the Trustees shall be requisite to and shall
constitute a quorum for the transaction of business. If a quorum is present,
the affirmative vote of a majority of the Trustees present shall be the act
of the Trustees, unless the concurrence of a greater proportion is expressly
required for such action by law, the Declaration or these By-Laws. If at any
meeting of the Trustees there be less than a quorum present, the Trustees
present thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall have been
obtained.
SECTION 4.5. Action by Trustees Without Meeting. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at
any meeting of the Trustees may be taken without a meeting if a consent in
writing setting forth the action shall be signed by all of the Trustees
entitled to vote upon the action and such written consent is filed with the
minutes of proceedings of the Trustees.
SECTION 4.6. Expenses and Fees. Each Trustee may be allowed expenses, if
any, for attendance at each regular or special meeting of the Trustees, and
each Trustee who is not an officer or employee of the Trust or of its
investment manager or underwriter or of any corporate affiliate of any of
said persons shall receive for services rendered as a Trustee of the Trust
such compensation as may be fixed by the Trustees. Nothing herein contained
shall be construed to preclude any Trustee from serving the Trust in any
other capacity and receiving compensation therefor.
SECTION 4.7. Execution of Instruments and Documents and Signing of Checks
and Other Obligations and Transfers. All instruments, documents and other
papers shall be executed in the name and on behalf of the Trust and all
checks, notes, drafts and other obligations for the payment of money by the
Trust shall be signed, and all transfer of securities standing in the name of
the Trust shall be executed, by the Chairman, the President, any Vice
President or the Treasurer or by any one or more officers or agents of the
Trust as shall be designated for that purpose by vote of the Trustees;
notwithstanding the above, nothing in this Section 4.7 shall be deemed to
preclude the electronic authorization, by designated persons, of the Trust's
Custodian (as described herein in Section 9.1) to transfer assets of the
Trust, as provided for herein in Section 9.1.
SECTION 4.8. Indemnification of Trustees, Officers, Employees and
Agents. (a) The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by
reason of the fact that he is or was a Trustee, officer, employee, or agent
of the Trust. The indemnification shall be against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement, actually
and reasonably incurred by him in connection with the action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Trust, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
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(b) The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or on behalf of the Trust to obtain a judgment or decree in its
favor by reason of the fact that he is or was a Trustee, officer, employee,
or agent of the Trust. The indemnification shall be against expenses,
including attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Trust; except that no indemnification shall be
made in respect of any claim, issue, or matter as to which the person has
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Trust, except to the extent that the court in which the
action or suit was brought, or a court of equity in the county in which the
Trust has its principal office, determines upon application that, despite the
adjudication of liability but in view of all circumstances of the case, the
person is fairly and reasonably entitled to indemnity for those expenses
which the court shall deem proper, provided such Trustee, officer, employee
or agent is not adjudged to be liable by reason of his willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office.
(c) To the extent that a Trustee, officer, employee, or agent of the Trust
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in subsection (a) or (b) or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses,
including attorneys' fees, actually and reasonably incurred by him in
connection therewith.
(d) (1) Unless a court orders otherwise, any indemnification under
subsections (a) or (b) of this section may be made by the Trust only as
authorized in the specific case after a determination that indemnification of
the Trustee, officer, employee, or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) or (b).
(2) The determination shall be made:
(i) By the Trustees, by a majority vote of a quorum which consists
of Trustees who were not parties to the action, suit or proceeding; or
(ii) If the required quorum is not obtainable, or if a quorum of
disinterested Trustees so directs, by independent legal counsel in a
written opinion; or
(iii) By the Shareholders.
(3) Notwithstanding any provision of this Section 4.8, no person
shall be entitled to indemnification for any liability, whether or not
there is an adjudication of liability, arising by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of duties
as described in Section 17(h) and (i) of the Investment Company Act of
1940 ("disabling conduct"). A person shall be deemed not liable by reason
of disabling conduct if, either:
(i) a final decision on the merits is made by a court or other body
before whom the proceeding was brought that the person to be indemnified
("indemnitee") was not liable by reason of disabling conduct; or
(ii) in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the indemnitee was not liable by
reason of disabling conduct, is made by either--
(A) a majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a)(19) of
the Investment Company Act of 1940, nor parties to the action, suit
or proceeding, or
(B) an independent legal counsel in a written opinion.
(e) Expenses, including attorneys' fees, incurred by a Trustee, officer,
employee or agent of the Trust in defending a civil or criminal action, suit
or proceeding may be paid by the Trust in advance of the final disposition
thereof if:
(1) authorized in the specific case by the Trustees; and
(2) the Trust receives an undertaking by or on behalf of the
Trustee, officer, employee or agent of the Trust to repay the advance if
it is not ultimately determined that such person is entitled to be
indemnified by the Trust; and
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(3) either, (i) such person provides a security for his
undertaking, or
(ii) the Trust is insured against losses by reason of any lawful
advances, or
(iii) a determination, based on a review of readily available
facts, that there is reason to believe that such person ultimately
will be found entitled to indemnification, is made by either--
(A) a majority of a quorum which consists of Trustees who are
neither "interested persons" of the Trust, as defined in Section
2(a)(19) of the 1940 Act, nor parties to the action, suit or
proceeding, or
(B) an independent legal counsel in a written opinion.
(f) The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which a person may be entitled under any
by-law, agreement, vote of Shareholders or disinterested Trustees or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding the office, and shall continue as to a person
who has ceased to be a Trustee, officer, employee, or agent and inure to the
benefit of the heirs, executors and administrators of such person; provided
that no person may satisfy any right of indemnity or reimbursement granted
herein or to which he may be otherwise entitled except out of the property of
the Trust, and no Shareholder shall be personally liable with respect to any
claim for indemnity or reimbursement or otherwise.
(g) The Trust may purchase and maintain insurance on behalf of any person
who is or was a Trustee, officer, employee, or agent of the Trust, against
any liability asserted against him and incurred by him in any such capacity,
or arising out of his status as such. However, in no event will the Trust
purchase insurance to indemnify any officer or Trustee against liability for
any act for which the Trust itself is not permitted to indemnify him.
(h) Nothing contained in this Section shall be construed to protect any
Trustee or officer of the Trust against any liability to the Trust or to its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
ARTICLE V
COMMITTEES
SECTION 5.1. Executive and Other Committees. The Trustees, by resolution
adopted by a majority of the Trustees, may designate an Executive Committee
and/or committees, each committee to consist of two (2) or more of the
Trustees of the Trust and may delegate to such committees, in the intervals
between meetings of the Trustees, any or all of the powers of the Trustees in
the management of the business and affairs of the Trust. In the absence of
any member of any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a Trustee to act in
place of such absent member. Each such committee shall keep a record of its
proceedings.
The Executive Committee and any other committee shall fix its own rules or
procedure, but the presence of at least fifty percent (50%) of the members of
the whole committee shall in each case be necessary to constitute a quorum of
the committee and the affirmative vote of the majority of the members of the
committee present at the meeting shall be necessary to take action.
All actions of the Executive Committee shall be reported to the Trustees
at the meeting thereof next succeeding to the taking of such action.
SECTION 5.2. Advisory Committee. The Trustees may appoint an advisory
committee which shall be composed of persons who do not serve the Trust in
any other capacity and which shall have advisory functions with respect to
the investments of the Trust but which shall have no power to determine that
any security or other investment shall be purchased, sold or otherwise
disposed of by the Trust. The number of persons constituting any such
advisory committee shall be determined from time to time by the Trustees. The
members of any such advisory committee may receive compensation for their
services and may be allowed such fees and expenses for the attendance at
meetings as the Trustees may from time to time determine to be appropriate.
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SECTION 5.3. Committee Action Without Meeting. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at
any meeting of any Committee of the Trustees appointed pursuant to Section
5.1 of these By-Laws may be taken without a meeting if a consent in writing
setting forth the action shall be signed by all members of the Committee
entitled to vote upon the action and such written consent is filed with the
records of the proceedings of the Committee.
ARTICLE VI
OFFICERS
SECTION 6.1. Executive Officers. The executive officers of the Trust shall
be a Chairman, a President, one or more Vice Presidents, a Secretary and a
Treasurer. The Chairman shall be selected from among the Trustees but none of
the other executive officers need be a Trustee. Two or more offices, except
those of President and any Vice President, may be held by the same person,
but no officer shall execute, acknowledge or verify any instrument in more
than one capacity. The executive officers of the Trust shall be elected
annually by the Trustees and each executive officer so elected shall hold
office until his successor is elected and has qualified.
SECTION 6.2. Other Officers and Agents. The Trustees may also elect one or
more Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers and may elect, or may delegate to the President the power to
appoint, such other officers and agents as the Trustees shall at any time or
from time to time deem advisable.
SECTION 6.3. Term and Removal and Vacancies. Each officer of the Trust
shall hold office until his successor is elected and has qualified. Any
officer or agent of the Trust may be removed by the Trustees whenever, in
their judgment, the best interests of the Trust will be served thereby, but
such removal shall be without prejudice to the contractual rights, if any, of
the person so removed.
SECTION 6.4. Compensation of Officers. The compensation of officers and
agents of the Trust shall be fixed by the Trustees, or by the President to
the extent provided by the Trustees with respect to officers appointed by the
President.
SECTION 6.5. Power and Duties. All officers and agents of the Trust, as
between themselves and the Trust, shall have such authority and perform such
duties in the management of the Trust as may be provided in or pursuant to
these By-Laws, or to the extent not so provided, as may be prescribed by the
Trustees; provided, that no rights of any third party shall be affected or
impaired by any such By-Law or resolution of the Trustees unless he has
knowledge thereof.
SECTION 6.6. The Chairman. The Chairman shall preside at all meetings of
the Shareholders and of the Trustees, shall be a signatory on all Annual and
Semi-Annual Reports as may be sent to shareholders, and he shall perform such
other duties as the Trustees may from time to time prescribe.
SECTION 6.7. The President. (a) The President shall be the chief executive
officer of the Trust; he shall have general and active management of the
business of the Trust, shall see that all orders and resolutions of the
Trustees are carried into effect, and, in connection therewith, shall be
authorized to delegate to one or more Vice Presidents such of his powers and
duties at such times and in such manner as he may deem advisable.
(b) In the absence of the Chairman, the President shall preside at all
meetings of the shareholders and the Board of Trustees; and he shall perform
such other duties as the Board of Trustees may from time to time prescribe.
SECTION 6.8. The Vice Presidents. The Vice Presidents shall be of such
number and shall have such titles as may be determined from time to time by
the Trustees. The Vice President, or, if there be more than one, the Vice
Presidents in the order of their seniority as may be determined from time to
time by the Trustees or the President, shall, in the absence or disability of
the President, exercise the powers and perform the duties of the President,
and he or they shall perform such other duties as the Trustees or the
President may from time to time prescribe.
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SECTION 6.9. The Assistant Vice Presidents. The Assistant Vice President,
or, if there be more than one, the Assistant Vice Presidents, shall perform
such duties and have such powers as may be assigned them from time to time by
the Trustees or the President.
SECTION 6.10. The Secretary. The Secretary shall attend all meetings of
the Trustees and all meetings of the Shareholders and record all the
proceedings of the meetings of the Shareholders and of the Trustees in a book
to be kept for that purpose, and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the Shareholders and special meetings of the Trustees, and shall
perform such other duties and have such powers as the Trustees, or the
President, may from time to time prescribe. He shall keep in safe custody the
seal of the Trust and affix or cause the same to be affixed to any instrument
requiring it, and, when so affixed, it shall be attested by his signature or
by the signature of an Assistant Secretary.
SECTION 6.11. The Assistant Secretaries. The Assistant Secretary, or, if
there be more than one, the Assistant Secretaries in the order determined by
the Trustees or the President, shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary and
shall perform such duties and have such other powers as the Trustees or the
President may from time to time prescribe.
SECTION 6.12. The Treasurer. The Treasurer shall be the chief financial
officer of the Trust. He shall keep or cause to be kept full and accurate
accounts of receipts and disbursements in books belonging to the Trust, and
he shall render to the Trustees and the President, whenever any of them
require it, an account of his transactions as Treasurer and of the financial
condition of the Trust; and he shall perform such other duties as the
Trustees, or the President, may from time to time prescribe.
SECTION 6.13. The Assistant Treasurers. The Assistant Treasurer, or, if
there shall be more than one, the Assistant Treasurers in the order
determined by the Trustees or the President, shall, in the absence or
disability of the Treasurer, perform the duties and exercise the powers of
the Treasurer and shall perform such other duties and have such other powers
as the Trustees, or the President, may from time to time prescribe.
SECTION 6.14. Delegation of Duties. Whenever an officer is absent or
disabled, or whenever for any reason the Trustees may deem it desirable, the
Trustees may delegate the powers and duties of an officer or officers to any
other officer or officers or to any Trustee or Trustees.
ARTICLE VII
DIVIDENDS AND DISTRIBUTIONS
Subject to any applicable provisions of law and the Declaration, dividends
and distributions upon the Shares may be declared at such intervals as the
Trustees may determine, in cash, in securities or other property, or in
Shares, from any sources permitted by law, all as the Trustees shall from
time to time determine.
Inasmuch as the computation of net income and net profits from the sales
of securities or other properties for federal income tax purposes may vary
from the computation thereof on the records of the Trust, the Trustees shall
have power, in their discretion, to distribute as income dividends and as
capital gain distributions, respectively, amounts sufficient to enable the
Trust to avoid or reduce liability for federal income taxes.
ARTICLE VIII
CERTIFICATES OF SHARES
SECTION 8.1. Certificates of Shares. Certificates for Shares of each
series or class of Shares shall be in such form and of such design as the
Trustees shall approve, subject to the right of the Trustees to change such
form and design at any time or from time to time, and shall be entered in the
records of the Trust as they are issued. Each such certificate shall bear a
distinguishing number; shall exhibit the holder's name and certify the number
of full Shares owned by such holder; shall be signed by or in the name of
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the Trust by the President, or a Vice President, and countersigned by the
Secretary or an Assistant Secretary or the Treasurer and an Assistant
Treasurer of the Trust; shall be sealed with the seal; and shall contain such
recitals as may be required by law. Where any certificate is signed by a
Transfer Agent or by a Registrar, the signature of such officers and the seal
may be facsimile, printed or engraved. The Trust may, at its option,
determine not to issue a certificate or certificates to evidence Shares owned
of record by any Shareholder.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall appear on, any such certificate or certificates
shall cease to be such officer or officers of the Trust, whether because of
death, resignation or otherwise, before such certificate or certificates
shall have been delivered by the Trust, such certificate or certificates
shall, nevertheless, be adopted by the Trust and be issued and delivered as
though the person or persons who signed such certificate or certificates or
whose facsimile signature or signatures shall appear therein had not ceased
to be such officer or officers of the Trust.
No certificate shall be issued for any share until such share is fully
paid.
SECTION 8.2. Lost, Stolen, Destroyed and Mutilated Certificates. The
Trustees may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the Trust alleged to
have been lost, stolen or destroyed, upon satisfactory proof of such loss,
theft, or destruction; and the Trustees may, in their discretion, require the
owner of the lost, stolen or destroyed certificate, or his legal
representative, to give to the Trust and to such Registrar, Transfer Agent
and/or Transfer Clerk as may be authorized or required to countersign such
new certificate or certificates, a bond in such sum and of such type as they
may direct, and with such surety or sureties, as they may direct, as
indemnity against any claim that may be against them or any of them on
account of or in connection with the alleged loss, theft or destruction of
any such certificate.
ARTICLE IX
CUSTODIAN
SECTION 9.1. Appointment and Duties. The Trust shall at times employ a
bank or trust company having capital, surplus and undivided profits of at
least five million dollars ($5,000,000) as custodian with authority as its
agent, but subject to such restrictions, limitations and other requirements,
if any, as may be contained in these By-Laws and the 1940 Act:
(1) to receive and hold the securities owned by the Trust and deliver
the same upon written or electronically transmitted order;
(2) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
all upon such basis of compensation as may be agreed upon between the
Trustees and the custodian. If so directed by a Majority Shareholder Vote,
the custodian shall deliver and pay over all property of the Trust held by it
as specified in such vote.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of
the custodian and upon such terms and conditions as may be agreed upon
between the custodian and such sub-custodian and approved by the Trustees.
SECTION 9.2. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct
the custodian to deposit all or any part of the securities owned by the Trust
in a system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible and
may be transferred or pledged by bookkeeping entry without physical delivery
of such securities, provided that all such deposits shall be subject to
withdrawal only upon the order of the Trust.
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ARTICLE X
WAIVER OF NOTICE
Whenever any notice of the time, place or purpose of any meeting of
Shareholders, Trustees, or of any committee is required to be given in
accordance with law or under the provisions of the Declaration or these
By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice and filed with the records of the meeting, whether
before or after the holding thereof, or actual attendance at the meeting of
shareholders, Trustees or committee, as the case may be, in person, shall be
deemed equivalent to the giving of such notice to such person.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Location of Books and Records. The books and records of the
Trust may be kept outside the Commonwealth of Massachusetts at such place or
places as the Trustees may from time to time determine, except as otherwise
required by law.
SECTION 11.2. Record Date. The Trustees may fix in advance a date as the
record date for the purpose of determining Shareholders entitled to notice
of, or to vote at, any meeting of Shareholders, or Shareholders entitled to
receive payment of any dividend or the allotment of any rights, or in order
to make a determination of Shareholders for any other proper purpose. Such
date, in any case, shall be not more than ninety (90) days, and in case of a
meeting of Shareholders not less than ten (10) days, prior to the date on
which particular action requiring such determination of Shareholders is to be
taken. In lieu of fixing a record date the Trustees may provide that the
transfer books shall be closed for a stated period but not to exceed, in any
case, twenty (20) days. If the transfer books are closed for the purpose of
determining Shareholders entitled to notice of a vote at a meeting of
Shareholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting.
SECTION 11.3. Seal. The Trustees shall adopt a seal, which shall be in
such form and shall have such inscription thereon as the Trustees may from
time to time provide. The seal of the Trust may be affixed to any document,
and the seal and its attestation may be lithographed, engraved or otherwise
printed on any document with the same force and effect as if it had been
imprinted and attested manually in the same manner and with the same effect
as if done by a Massachusetts business corporation under Massachusetts law.
SECTION 11.4. Fiscal Year. The fiscal year of the Trust shall end on such
date as the Trustees may by resolution specify, and the Trustees may by
resolution change such date for future fiscal years at any time and from time
to time.
SECTION 11.5. Orders for Payment of Money. All orders or instructions for
the payment of money of the Trust, and all notes or other evidences of
indebtedness issued in the name of the Trust, shall be signed by such officer
or officers or such other person or persons as the Trustees may from time to
time designate, or as may be specified in or pursuant to the agreement
between the Trust and the bank or trust company appointed as Custodian of the
securities and funds of the Trust.
ARTICLE XII
COMPLIANCE WITH FEDERAL REGULATIONS
The Trustees are hereby empowered to take such action as they may deem to
be necessary, desirable or appropriate so that the Trust is or shall be in
compliance with any federal or state statute, rule or regulation with which
compliance by the Trust is required.
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ARTICLE XIII
AMENDMENTS
These By-Laws may be amended, altered, or repealed, or new By-Laws may be
adopted, (a) by a Majority Shareholder Vote, or (b) by the Trustees;
provided, however, that no By-Law may be amended, adopted or repealed by the
Trustees if such amendment, adoption or repeal requires, pursuant to law, the
Declaration, or these By-Laws, a vote of the Shareholders. The Trustees shall
in no event adopt By-Laws which are in conflict with the Declaration, and any
apparent inconsistency shall be construed in favor of the related provisions
in the Declaration.
ARTICLE XIV
DECLARATION OF TRUST
The Declaration of Trust establishing Dean Witter Retirement Series, dated
May 13, 1992, a copy of which is on file in the office of the Secretary of
the Commonwealth of Massachusetts, provides that the name Dean Witter
Retirement Series refers to the Trustees under the Declaration collectively
as Trustees, but not as individuals or personally; and no Trustee,
Shareholder, officer, employee or agent of Dean Witter Retirement Series
shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or
otherwise, in connection with the affairs of said Dean Witter Retirement
Series, but the Trust Estate only shall be liable.
10
CUSTODY AGREEMENT
Agreement made as of this 10th day of August , 1992,
between DEAN WITTER Retirement Series, a Massachusetts business
trust organized and existing under the laws of the Commonwealth
of Massachusetts, having its principal office and place of
business at 2 World Trade Center, New York, New York 10048
(hereinafter called the "Fund"), and THE BANK OF NEW YORK, a
New York corporation authorized to do a banking business, hav-
ing its principal office and place of business at 48 Wall
Street, New York, New York 10286 (hereinafter called the
"Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises
hereinafter set forth, the Fund and the Custodian agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, shall have the following meanings:
1. "Agreement" shall mean this Custody Agreement and all
Appendices and Certifications described in the Exhibits
delivered in connection herewith.
2. "Authorized Person" shall mean any person, whether
or not such person is an Officer or employee of the Fund, duly
authorized by the Board of Trustees of the Fund to give Oral
Instructions and Written Instructions on behalf of the Fund
and listed in the Certificate annexed hereto as Appendix A or
such other Certificate as may be received by the Custodian
from time to time, provided that each person who is designated
in any such Certificate as an "Officer of DWTC" shall be an
Authorized Person only for purposes of Articles XII and XIII
hereof.
3. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and
federal agency securities, its successor or successors and its
nominee or nominees.
4. "Call Option" shall mean an exchange traded option
with respect to Securities other than Index, Futures
Contracts, and Futures Contract Options entitling the holder,
upon timely exercise and payment of the exercise price, as
specified therein, to purchase from the writer thereof the
specified underlying instruments, currency, or Securities.
5. "Certificate" shall mean any notice, instruction, or
other instrument in writing, authorized or required by this
Agreement to be given to the Custodian which is actually
received (irrespective of constructive receipt) by the
Custodian and signed on behalf of the Fund by any two Offic-
ers. The term Certificate shall also include instructions by
the Fund to the Custodian communicated by a Terminal Link.
6. "Clearing Member" shall mean a registered
broker-dealer which is a clearing member under the rules of
O.C.C. and a member of a national securities exchange
qualified to act as a custodian for an investment company, or
any broker-dealer reasonably believed by the Custodian to be
such a clearing member.
7. "Collateral Account" shall mean a segregated account
so denominated which is specifically allocated to a Series and
pledged to the Custodian as security for, and in consideration
of, the Custodian's issuance of any Put Option guarantee let-
ter or similar document described in paragraph 8 of Article V
herein.
8. "Covered Call Option" shall mean an exchange traded
option entitling the holder, upon timely exercise and payment
of the exercise price, as specified therein, to purchase from
the writer thereof the specified underlying instruments, cur-
rency, or Securities (excluding Futures Contracts) which are
owned by the writer thereof.
9. "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and
Exchange Commission, its successor or successors and its
nominee or nominees. The term "Depository" shall further mean
and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or
successors and its nominee or nominees, specifically identi-
fied in a certified copy of a resolution of the Fund's Board
of Trustees specifically approving deposits therein by the
Custodian.
10. "Financial Futures Contract" shall mean the firm
commitment to buy or sell financial instruments on a U.S. com-
modities exchange or board of trade at a specified future time
at an agreed upon price.
11. "Futures Contract" shall mean a Financial Futures
Contract and/or Index Futures Contracts.
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12. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.
13. "Investment Company Act of 1940" shall mean the
Investment Company Act of 1940, as amended, and the rules and
regulations thereunder.
14. "Index Futures Contract" shall mean a bilateral
agreement pursuant to which the parties agree to take or make
delivery of an amount of cash equal to a specified dollar
amount times the difference between the value of a particular
index at the close of the last business day of the contract
and the price at which the futures contract is originally
struck.
15. "Index Option" shall mean an exchange traded option
entitling the holder, upon timely exercise, to receive an
amount of cash determined by reference to the difference
between the exercise price and the value of the index on the
date of exercise.
16. "Margin Account" shall mean a segregated account in
the name of a broker, dealer, futures commission merchant, or
a Clearing Member, or in the name of the Fund for the benefit
of a broker, dealer, futures commission merchant, or Clearing
Member, or otherwise, in accordance with an agreement between
the Fund, the Custodian and a broker, dealer, futures commis-
sion merchant or a Clearing Member (a "Margin Account Agree-
ment"), separate and distinct from the custody account, in
which certain Securities and/or money of the Fund shall be
deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time
determine. Securities held in the Book-Entry System or a
Depository shall be deemed to have been deposited in, or
withdrawn from, a Margin Account upon the Custodian's effect-
ing an appropriate entry in its books and records.
17. "Money Market Security" shall mean all instruments
and obligations commonly known as a money market instruments,
where the purchase and sale of such securities normally
requires settlement in federal funds on the same day as such
purchase or sale, including, without limitation, certain
Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and/or principal by the government
of the United States or agencies or instrumentalities thereof,
any tax, bond or revenue anticipation note issued by any state
or municipal government or public authority, commercial paper,
certificates of deposit and bankers' acceptances, repurchase
agreements with respect to Securities and bank time deposits.
18. "O.C.C." shall mean the Options Clearing Corpora-
tion, a clearing agency registered under Section 17A of the
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Securities Exchange Act of 1934, its successor or successors,
and its nominee or nominees.
19. "Officers" shall mean the President, any Vice
President, the Secretary, the Clerk, the Treasurer, the
Controller, any Assistant Secretary, any Assistant Clerk, any
Assistant Treasurer, and any other person or persons, whether
or not any such other person is an officer or employee of the
Fund, but in each case only if duly authorized by the Board of
Trustees of the Fund to execute any Certificate, instruction,
notice or other instrument on behalf of the Fund and listed in
the Certificate annexed hereto as Appendix B or such other
Certificate as may be received by the Custodian from time to
time; provided that each person who is designated in any such
Certificate as holding the position of "Officer of DWTC" shall
be an Officer only for purposes of Articles XII and XIII
hereof.
20. "Option" shall mean a Call Option, Covered Call Op-
tion, Index Option and/or a Put Option.
21. "Oral Instructions" shall mean verbal instructions
actually received (irrespective of constructive receipt) by
the Custodian from an Authorized Person or from a person
reasonably believed by the Custodian to be an Authorized
Person.
22. "Put Option" shall mean an exchange traded option
with respect to instruments, currency, or Securities other
than Index Options, Futures Contracts, and Futures Contract
Options entitling the holder, upon timely exercise and tender
of the specified underlying instruments, currency, or Securi-
ties, to sell such instruments, currency, or Securities to the
writer thereof for the exercise price.
23. "Reverse Repurchase Agreement" shall mean an agree-
ment pursuant to which the Fund sells Securities and agrees to
repurchase such Securities at a described or specified date
and price.
24. "Security" shall be deemed to include, without
limitation, Money Market Securities, Call Options, Put Op-
tions, Index Options, Index Futures Contracts, Index Futures
Contract Options, Financial Futures Contracts, Financial
Futures Contract Options, Reverse Repurchase Agreements, over
the counter options on Securities, common stocks and other
securities having characteristics similar to common stocks,
preferred stocks, debt obligations issued by state or
municipal governments and by public authorities, (including,
without limitation, general obligation bonds, revenue bonds,
industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments
representing rights to receive, purchase, sell or subscribe
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for the same, or evidencing or representing any other rights
or interest therein, or rights to any property or assets.
25. "Senior Security Account" shall mean an account
maintained and specifically allocated to a Series under the
terms of this Agreement as a segregated account, by recorda-
tion or otherwise, within the custody account in which certain
Securities and/or other assets of the Fund specifically al-
located to such Series shall be deposited and withdrawn from
time to time in accordance with Certificates received by the
Custodian in connection with such transactions as the Fund may
from time to time determine.
26. "Series" shall mean the various portfolios, if any,
of the Fund as described from time to time in the current and
effective prospectus for the Fund, except that if the Fund
does not have more than one portfolio, "Series" shall mean the
Fund or be ignored where a requirement would be imposed on the
Fund or the Custodian which is unnecessary if there is only
one portfolio.
27. "Shares" shall mean the shares of beneficial inter-
est of the Fund and its Series.
28. "Terminal Link" shall mean an electronic data
transmission link between the Fund and the Custodian requiring
in connection with each use of the Terminal Link the use of an
authorization code provided by the Custodian and at least two
access codes established by the Fund, provided, that the Fund
shall have delivered to the Custodian a Certificate
substantially in the form of Appendix C.
29. "Transfer Agent" shall mean Dean Witter Trust
Company, a New Jersey limited purpose trust company, its suc-
cessors and assigns.
30. "Transfer Agent Account" shall mean any account in
the name of the Transfer Agent maintained with The Bank of New
York pursuant to a Cash Management and Related Services Agree-
ment between The Bank of New York and the Transfer Agent.
31. "Written Instructions" shall mean written communica-
tions actually received (irrespective of constructive receipt)
by the Custodian from an Authorized Person or from a person
reasonably believed by the Custodian to be an Authorized
Person by telex or any other such system whereby the receiver
of such communications is able to verify by codes or otherwise
with a reasonable degree of certainty the identity of the
sender of such communication.
- 5 -
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the
Custodian as custodian of the Securities and moneys at any
time owned by the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as
hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, the Fund will deliver or cause to
be delivered to the Custodian all Securities and all moneys
owned by it, at any time during the period of this Agreement,
and shall specify with respect to such Securities and money
the Series to which the same are specifically allocated, and
the Custodian shall not be responsible for any Securities or
money not so delivered. The Custodian shall physically
segregate, keep and maintain the Securities of the Series
separate and apart from each other Series and from other as-
sets held by the Custodian. Except as otherwise expressly
provided in this Agreement, the Custodian will not be
responsible for any Securities and moneys not actually
received by it, unless the Custodian has been negligent or has
engaged in willful misconduct with respect thereto. The
Custodian will be entitled to reverse any credits of money
made on the Fund's behalf where such credits have been previ-
ously made and moneys are not finally collected, unless the
Custodian has been negligent or has engaged in willful
misconduct with respect thereto. The Fund shall deliver to the
Custodian a certified resolution of the Board of Trustees of
the Fund, substantially in the form of Exhibit A hereto, ap-
proving, authorizing and instructing the Custodian on a
continuous and on-going basis to deposit in the Book-Entry
System all Securities eligible for deposit therein, regardless
of the Series to which the same are specifically allocated and
to utilize the Book-Entry System to the extent possible in
connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities and deliveries and
returns of Securities collateral. Prior to a deposit of
Securities specifically allocated to a Series in any
Depository, the Fund shall deliver to the Custodian a certi-
fied resolution of the Board of Trustees of the Fund,
substantially in the form of Exhibit B hereto, approving,
- 6 -
authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a
Certificate to deposit in such Depository all Securities
specifically allocated to such Series eligible for deposit
therein, and to utilize such Depository to the extent possible
with respect to such Securities in connection with its
performance hereunder, including, without limitation, in con-
nection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of Securities
collateral. Securities and moneys deposited in either the
Book-Entry System or a Depository will be represented in ac-
counts which include only assets held by the Custodian for
customers, including, but not limited to, accounts in which
the Custodian acts in a fiduciary or representative capacity
and will be specifically allocated on the Custodian's books to
the separate account for the applicable Series. Prior to the
Custodian's accepting, utilizing and acting with respect to
Clearing Member confirmations for Options and transactions in
Options for a Series as provided in this Agreement, the
Custodian shall have received a certified resolution of the
Fund's Board of Trustees, substantially in the form of Exhibit
C hereto, approving, authorizing and instructing the Custodian
on a continuous and on-going basis, until instructed to the
contrary by a Certificate, to accept, utilize and act in ac-
cordance with such confirmations as provided in this Agreement
with respect to such Series. All securities are to be held or
disposed of by the Custodian for, and subject at all times to
the instructions of, the Fund pursuant to the terms of this
Agreement. The Custodian shall have no power or authority to
assign, hypothecate, pledge or otherwise dispose of any
Securities except as provided by the terms of this Agreement,
and shall have the sole power to release and deliver Securi-
ties held pursuant to this Agreement.
2. The Custodian shall establish and maintain separate
accounts, in the name of each Series, and shall credit to the
separate account for each Series all moneys received by it for
the account of the Fund with respect to such Series. Such
moneys will be held in such manner and account as the Fund and
the Custodian shall agree upon in writing from time to time.
Money credited to a separate account for a Series shall be
subject only to drafts, orders, or charges of the Custodian
pursuant to this Agreement and shall be disbursed by the
Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Resolutions of the Fund's Board of
Trustees certified by an Officer and by the Secretary or As-
sistant Secretary of the Fund setting forth the name and ad-
dress of the person to whom the payment is to be made, the
Series account from which payment is to be made, the purpose
for which payment is to be made, and declaring such purpose to
be a proper corporate purpose; provided, however, that amounts
- 7 -
representing dividends or distributions with respect to
Shares shall be paid only to the Transfer Agent Account;
(c) In payment of the fees and in reimbursement of
the expenses and liabilities of the Custodian attributable to
such Series and authorized by this Agreement; or
(d) Pursuant to Certificates to pay interest,
taxes, management fees or operating expenses (including,
without limitation thereto, Board of Trustees' fees and
expenses, and fees for legal accounting and auditing
services), which Certificates set forth the name and address
of the person to whom payment is to be made, state the purpose
of such payment and designate the Series for whose account the
payment is to be made.
3. Promptly after the close of business on each day,
the Custodian shall furnish the Fund with confirmations and a
summary, on a per Series basis, of all transfers to or from
the account of the Fund for a Series, either hereunder or with
any co-custodian or sub-custodian appointed in accordance with
this Agreement during said day. Where Securities are
transferred to the account of the Fund for a Series but held
in a Depository, the Custodian shall upon such transfer also
by book-entry or otherwise identify such Securities as
belonging to such Series in a fungible bulk of Securities
registered in the name of the Custodian (or its nominee) or
shown on the Custodian's account on the books of the
Book-Entry System or the Depository. At least monthly and
from time to time, the Custodian shall furnish the Fund with a
detailed statement, on a per Series basis, of the Securities
and moneys held under this Agreement for the Fund.
4. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, all Securities held by the
Custodian hereunder, which are issued or issuable only in
bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that
form; all other Securities held hereunder may be registered in
the name of the Fund, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from
time to time determine, or in the name of the Book-Entry
System or a Depository or their successor or successors, or
their nominee or nominees. The Fund agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to
hold or deliver in proper form for transfer, or to register in
the name of its registered nominee or in the name of the
Book-Entry System or a Depository any Securities which it may
hold hereunder and which may from time to time be registered
in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not
held in the Book-Entry System or in a Depository in a separate
account in the name of such Series physically segregated at
all times from those of any other person or persons.
- 8 -
5. Except as otherwise provided in this Agreement and
unless otherwise instructed to the contrary by a Certificate,
the Custodian by itself, or through the use of the Book-Entry
System or a Depository with respect to Securities held
hereunder and therein deposited, shall with respect to all
Securities held for the Fund hereunder in accordance with
preceding paragraph 4:
(a) Promptly collect all income and dividends due
or payable;
(b) Promptly give notice to the Fund and promptly
present for payment and collect the amount of money or other
consideration payable upon such Securities which are called,
but only if either (i) the Custodian receives a written notice
of such call, or (ii) notice of such call appears in one or
more of the publications listed in Appendix D annexed hereto,
which may be amended at any time by the Custodian without the
prior consent of the Fund, provided the Custodian gives prior
notice of such amendment to the Fund;
(c) Promptly present for payment and collect for
the Fund's account the amount payable upon all Securities
which mature;
(d) Promptly surrender Securities in temporary form
in exchange for definitive Securities;
(e) Promptly execute, as custodian, any necessary
declarations or certificates of ownership under the Federal
Income Tax Laws or the laws or regulations of any other taxing
authority now or hereafter in effect;
(f) Hold directly, or through the Book-Entry System
or the Depository with respect to Securities therein
deposited, for the account of a Series, all rights and similar
securities issued with respect to any Securities held by the
Custodian for such Series hereunder; and
(g) Promptly deliver to the Fund all notices, prox-
ies, proxy soliciting materials, consents and other written
information (including, without limitation, notices of tender
offers and exchange offers, pendency of calls, maturities of
Securities and expiration of rights) relating to Securities
held pursuant to this Agreement which are actually received by
the Custodian, such proxies and other similar materials to be
executed by the registered holder (if Securities are
registered otherwise than in the name of the Fund), but
without indicating the manner in which proxies or consents are
to be voted.
- 9 -
6. Upon receipt of a Certificate and not otherwise, the
Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:
(a) Promptly execute and deliver to such persons as
may be designated in such Certificate proxies, consents,
authorizations, and any other instruments whereby the author-
ity of the Fund as owner of any Securities held hereunder for
the Series specified in such Certificate may be exercised;
(b) Promptly deliver any Securities held hereunder
for the Series specified in such Certificate in exchange for
other Securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the
exercise of any right, warrant or conversion privilege and
receive and hold hereunder specifically allocated to such
Series any cash or other Securities received in exchange;
(c) Promptly deliver any Securities held hereunder
for the Series specified in such Certificate to any protective
committee, reorganization committee or other person in connec-
tion with the reorganization, refinancing, merger, consolida-
tion, recapitalization or sale of assets of any corporation,
and receive and hold hereunder specifically allocated to such
Series in exchange therefor such certificates of deposit,
interim receipts or other instruments or documents as may be
issued to it to evidence such delivery or such Securities as
may be issued upon such delivery; and
(d) Promptly present for payment and collect the
amount payable upon Securities which may be called as
specified in the Certificate.
7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain posses-
sion of any instrument or certificate representing any Futures
Contract, any Option, or any Futures Contract Option until
after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments
or certificates are available. The Fund shall deliver to the
Custodian such a Certificate no later than the business day
preceding the availability of any such instrument or
certificate. Prior to such availability, the Custodian shall
comply with Section 17(f) of the Investment Company Act of
1940 in connection with the purchase, sale, settlement, clos-
ing out or writing of Futures Contracts, Options, or Futures
Contract Options by making payments or deliveries specified in
Certificates in connection with any such purchase, sale,
writing, settlement or closing out upon its receipt from a
broker, dealer, or futures commission merchant of a statement
or confirmation reasonably believed by the Custodian to be in
the form customarily used by brokers, dealers, or future
- 10 -
commission merchants with respect to such Futures Contracts,
Options, or Futures Contract Options, as the case may be,
confirming that such Security is held by such broker, dealer
or futures commission merchant, in book-entry form or
otherwise, in the name of the Custodian (or any nominee of the
Custodian) as custodian for the Fund, provided, however, that
notwithstanding the foregoing, payments to or deliveries from
the Margin Account and payments with respect to Securities to
which a Margin Account relates, shall be made in accordance
with the terms and conditions of the Margin Account
Agreement. Whenever any such instruments or certificates are
available, the Custodian shall, notwithstanding any provision
in this Agreement to the contrary, make payment for any
Futures Contract, Option, or Futures Contract Option for which
such instruments or such certificates are available only
against the delivery to the Custodian of such instrument or
such certificate, and deliver any Futures Contract, Option or
Futures Contract Option for which such instruments or such
certificates are available only against receipt by the
Custodian of payment therefor. Any such instrument or
certificate delivered to the Custodian shall be held by the
Custodian hereunder in accordance with, and subject to, the
provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each execution of a purchase of
Securities by the Fund, other than a purchase of an Option, a
Futures Contract, or a Futures Contract Option, the Fund shall
deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money
Market Securities, a Certificate, Oral Instructions or Writ-
ten Instructions, specifying with respect to each such
purchase: (a) the Series to which such Securities are to be
specifically allocated; (b) the name of the issuer and the
title of the Securities; (c) the number of shares or the
principal amount purchased and accrued interest, if any; (d)
the date of purchase and settlement; (e) the purchase price
per unit; (f) the total amount payable upon such purchase; (g)
the name of the person from whom or the broker through whom
the purchase was made, and the name of the clearing broker, if
any; and (h) the name of the broker to whom payment is to be
made. The Custodian shall, upon receipt of such Securities
purchased by or for the Fund, pay to the broker specified in
- 11 -
the Certificate out of the moneys held for the account of such
Series the total amount payable upon such purchase, provided
that the same conforms to the total amount payable as set
forth in such Certificate, Oral Instructions or Written
Instructions.
2. Promptly after each execution of a sale of Securi-
ties by the Fund, other than a sale of any Option, Futures
Contract, Futures Contract Option, or any Reverse Repurchase
Agreement, the Fund shall deliver such to the Custodian (i)
with respect to each sale of Securities which are not Money
Market Securities, a Certificate, and (ii) with respect to
each sale of Money Market Securities, a Certificate, Oral
Instructions or Written Instructions, specifying with respect
to each such sale: (a) the Series to which such Securities
were specifically allocated; (b) the name of the issuer and
the title of the Security; (c) the number of shares or
principal amount sold, and accrued interest, if any; (d) the
date of sale and settlement; (e) the sale price per unit; (f)
the total amount payable to the Fund upon such sale; (g) the
name of the broker through whom or the person to whom the sale
was made, and the name of the clearing broker, if any; and (h)
the name of the broker to whom the Securities are to be
delivered. On the settlement date, the Custodian shall
deliver the Securities specifically allocated to such Series
to the broker in accordance with generally accepted street
practices and as specified in the Certificate upon receipt of
the total amount payable to the Fund upon such sale, provided
that the same conforms to the total amount payable as set
forth in such Certificate, Oral Instructions or Written
Instructions.
ARTICLE V
OPTIONS
1. Promptly after each execution of a purchase of any
Option by the Fund other than a closing purchase transaction
the Fund shall deliver to the Custodian a Certificate specify-
ing with respect to each Option purchased: (a) the Series to
which such Option is specifically allocated; (b) the type of
Option (put or call); (c) the instrument, currency, or
Security underlying such Option and the number of Options, or
the name of the in the case of an Index Option, the index to
which such Option relates and the number of Index Options
purchased; (d) the expiration date; (e) the exercise price;
(f) the dates of purchase and settlement; (g) the total amount
payable by the Fund in connection with such purchase; and (h)
the name of the Clearing Member through whom such Option was
purchased. The Custodian shall pay, upon receipt of a Clear-
ing Member's statement confirming the purchase of such Option
held by such Clearing Member for the account of the Custodian
(or any duly appointed and registered nominee of the
- 12 -
Custodian) as custodian for the Fund, out of moneys held for
the account of the Series to which such Option is to be
specifically allocated, the total amount payable upon such
purchase to the Clearing Member through whom the purchase was
made, provided that the same conforms to the total amount pay-
able as set forth in such Certificate.
2. Promptly after the execution of a sale of any Option
purchased by the Fund, other than a closing sale transaction,
pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to each such
sale: (a) the Series to which such Option was specifically
allocated; (b) the type of Option (put or call); (c) the
instrument, currency, or Security underlying such Option and
the number of Options, or the name of the issuer and the title
and number of shares subject to such Option or, in the case of
a Index Option, the index to which such Option relates and the
number of Index Options sold; (d) the date of sale; (e) the
sale price; (f) the date of settlement; (g) the total amount
payable to the Fund upon such sale; and (h) the name of the
Clearing Member through whom the sale was made. The Custodian
shall consent to the delivery of the Option sold by the Clear-
ing Member which previously supplied the confirmation
described in preceding paragraph 1 of this Article with
respect to such Option against payment to the Custodian of the
total amount payable to the Fund, provided that the same
conforms to the total amount payable as set forth in such
Certificate.
3. Promptly after the exercise by the Fund of any Call
Option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver to the Custodian a Certificate specify-
ing with respect to such Call Option: (a) the Series to which
such Call Option was specifically allocated; (b) the name of
the issuer and the title and number of shares subject to the
Call Option; (c) the expiration date; (d) the date of exercise
and settlement; (e) the exercise price per share; (f) the
total amount to be paid by the Fund upon such exercise; and
(g) the name of the Clearing Member through whom such Call
Option was exercised. The Custodian shall, upon receipt of
the Securities underlying the Call Option which was exercised,
pay out of the moneys held for the account of the Series to
which such Call Option was specifically allocated the total
amount payable to the Clearing Member through whom the Call
Option was exercised, provided that the same conforms to the
total amount payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put
Option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver to the Custodian a Certificate specify-
ing with respect to such Put Option: (a) the Series to which
such Put Option was specifically allocated; (b) the name of
the issuer and the title and number of shares subject to the
Put Option; (c) the expiration date; (d) the date of exercise
- 13 -
and settlement; (e) the exercise price per share; (f) the
total amount to be paid to the Fund upon such exercise; and
(g) the name of the Clearing Member through whom such Put Op-
tion was exercised. The Custodian shall, upon receipt of the
amount payable upon the exercise of the Put Option, deliver or
direct a Depository to deliver the Securities specifically
allocated to such Series, provided the same conforms to the
amount payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Index
Option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver to the Custodian a Certificate specify-
ing with respect to such Index Option: (a) the Series to which
such Index Option was specifically allocated; (b) the type of
Index Option (put or call); (c) the number of Options being
exercised; (d) the index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the total amount
to be received by the Fund in connection with such exercise;
and (h) the Clearing Member from whom such payment is to be
received.
6. Whenever the Fund writes a Covered Call Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Covered Call Option: (a) the
Series for which such Covered Call Option was written; (b) the
name of the issuer and the title and number of shares for
which the Covered Call Option was written and which underlie
the same; (c) the expiration date; (d) the exercise price; (e)
the premium to be received by the Fund; (f) the date such
Covered Call Option was written; and (g) the name of the
Clearing Member through whom the premium is to be received.
The Custodian shall deliver or cause to be delivered, in
exchange for receipt of the premium specified in the
Certificate with respect to such Covered Call Option, such
receipts as are required in accordance with the customs
prevailing among Clearing Members dealing in Covered Call Op-
tions and shall impose, or direct a Depository to impose, upon
the underlying Securities specified in the Certificate
specifically allocated to such Series such restrictions as may
be required by such receipts. Notwithstanding the foregoing,
the Custodian has the right, upon prior written notification
to the Fund, at any time to refuse to issue any receipts for
Securities in the possession of the Custodian and not
deposited with a Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate instructing the Custodian to deliver, or to direct
the Depository to deliver, the Securities subject to such
Covered Call Option and specifying: (a) the Series for which
such Covered Call Option was written; (b) the name of the is-
suer and the title and number of shares subject to the Covered
Call Option; (c) the Clearing Member to whom the underlying
- 14 -
Securities are to be delivered; and (d) the total amount pay-
able to the Fund upon such delivery. Upon the return and/or
cancellation of any receipts delivered pursuant to paragraph 6
of this Article, the Custodian shall deliver, or direct a
Depository to deliver, the underlying Securities as specified
in the Certificate against payment of the amount to be
received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund
shall promptly deliver to the Custodian a Certificate specify-
ing with respect to such Put Option: (a) the Series for which
such Put Option was written; (b) the name of the issuer and
the title and number of shares for which the Put Option is
written and which underlie the same; (c) the expiration date;
(d) the exercise price; (e) the premium to be received by the
Fund; (f) the date such Put Option is written; (g) the name of
the Clearing Member through whom the premium is to be received
and to whom a Put Option guarantee letter is to be delivered;
(h) the amount of cash, and/or the amount and kind of Securi-
ties, if any, specifically allocated to such Series to be
deposited in the Senior Security Account for such Series; and
(i) the amount of cash and/or the amount and kind of Securi-
ties specifically allocated to such Series to be deposited
into the Collateral Account for such Series. The Custodian
shall, after making the deposits into the Collateral Account
specified in the Certificate, issue a Put Option guarantee
letter substantially in the form utilized by the Custodian on
the date hereof, and deliver the same to the Clearing Member
specified in the Certificate against receipt of the premium
specified in said Certificate. Notwithstanding the foregoing,
the Custodian shall be under no obligation to issue any Put
Option guarantee letter or similar document if it is unable to
make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and
described in the preceding paragraph is exercised, the Fund
shall promptly deliver to the Custodian a Certificate specify-
ing: (a) the Series to which such Put Option was written; (b)
the name of the issuer and title and number of shares subject
to the Put Option; (c) the Clearing Member from whom the
underlying Securities are to be received; (d) the total amount
payable by the Fund upon such delivery; (e) the amount of cash
and/or the amount and kind of Securities specifically al-
located to such Series to be withdrawn from the Collateral
Account for such Series and (f) the amount of cash and/or the
amount and kind of Securities, specifically allocated to such
Series, if any, to be withdrawn from the Senior Security Ac-
count. Upon the return and/or cancellation of any Put Option
guarantee letter or similar document issued by the Custodian
in connection with such Put Option, the Custodian shall pay
out of the moneys held for the account of the Series to which
such Put Option was specifically allocated the total amount
payable to the Clearing Member specified in the Certificate as
set forth in such Certificate, against delivery of such
- 15 -
Securities, and shall make the withdrawals specified in such
Certificate.
10. Whenever the Fund writes an Index Option, the Fund
shall promptly deliver to the Custodian a Certificate specify-
ing with respect to such Index Option: (a) the Series for
which such Index Option was written; (b) whether such Index
Option is a put or a call; (c) the number of options written;
(d) the index to which such Option relates; (e) the expiration
date; (f) the exercise price; (g) the Clearing Member through
whom such Option was written; (h) the premium to be received
by the Fund; (i) the amount of cash and/or the amount and kind
of Securities, if any, specifically allocated to such Series
to be deposited in the Senior Security Account for such
Series; (j) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to
be deposited in the Collateral Account for such Series; and
(k) the amount of cash and/or the amount and kind of Securi-
ties, if any, specifically allocated to such Series to be
deposited in a Margin Account, and the name in which such ac-
count is to be or has been established. The Custodian shall,
upon receipt of the premium specified in the Certificate, make
the deposits, if any, into the Senior Security Account
specified in the Certificate, and either (1) deliver such
receipts, if any, which the Custodian has specifically agreed
to issue, which are in accordance with the customs prevailing
among Clearing Members in Index Options and make the deposits
into the Collateral Account specified in the Certificate, or
(2) make the deposits into the Margin Account specified in the
Certificate.
11. Whenever an Index Option written by the Fund and
described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Index Option: (a)
the Series for which such Index Option was written; (b) such
information as may be necessary to identify the Index Option
being exercised; (c) the Clearing Member through whom such
Index Option is being exercised; (d) the total amount payable
upon such exercise, and whether such amount is to be paid by
or to the Fund; (e) the amount of cash and/or amount and kind
of Securities, if any, to be withdrawn from the Margin
Account; and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Senior Security
Account for such Series; and the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from
the Collateral Account for such Series. Upon the return
and/or cancellation of the receipt, if any, delivered pursuant
to the preceding paragraph of this Article, the Custodian
shall pay out of the moneys held for the account of the Series
to which such Stock Index Option was specifically allocated to
the Clearing Member specified in the Certificate the total
amount payable, if any, as specified therein.
- 16 -
12. Promptly after the execution of a purchase or sale
by the Fund of any Option identical to a previously written
Option described in paragraphs, 6, 8 or 10 of this Article in
a transaction expressly designated as a "Closing Purchase
Transaction" or a "Closing Sale Transaction", the Fund shall
promptly deliver to the Custodian a Certificate specifying
with respect to the Option being purchased: (a) that the
transaction is a Closing Purchase Transaction or a Closing
Sale Transaction; (b) the Series for which the Option was
written; (c) the instrument, currency, or Security subject to
the Option, or, in the case of an Index Option, the index to
which such Option relates and the number of Options held; (d)
the exercise price; (e) the premium to be paid by or the
amount to be paid to the Fund; (f) the expiration date; (g)
the type of Option (put or call); (h) the date of such
purchase or sale; (i) the name of the Clearing Member to whom
the premium is to be paid or from whom the amount is to be
received; and (j) the amount of cash and/or the amount and
kind of Securities, if any, to be withdrawn from the
Collateral Account, a specified Margin Account, or the Senior
Security Account for such Series. Upon the Custodian's
payment of the premium or receipt of the amount, as the case
may be, specified in the Certificate and the return and/or
cancellation of any receipt issued pursuant to paragraphs 6, 8
or 10 of this Article with respect to the Option being
liquidated through the Closing Purchase Transaction or the
Closing Sale Transaction, the Custodian shall remove, or
direct a Depository to remove, the previously imposed
restrictions on the Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a
Closing Purchase Transaction with respect to any Option
purchased or written by the Fund and described in this
Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3
Article III herein, and upon the return and/or cancellation of
any receipts issued by the Custodian, shall make such
withdrawals from the Collateral Account, and the Margin Ac-
count and/or the Senior Security Account as may be specified
in a Certificate received in connection with such expiration,
exercise, or consummation.
14. Securities acquired by the Fund through the exercise
of an Option described in this Article shall be subject to
Article IV hereof.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures
Contract, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Futures Contract,
- 17 -
(or with respect to any number of identical Futures
Contract(s)): (a) the Series for which the Futures Contract is
being entered; (b) the category of Futures Contract (the name
of the underlying index or financial instrument); (c) the
number of identical Futures Contracts entered into; (d) the
delivery or settlement date of the Futures Contract(s); (e)
the date the Futures Contract(s) was (were) entered into and
the maturity date; (f) whether the Fund is buying (going long)
or selling (going short) such Futures Contract(s); (g) the
amount of cash and/or the amount and kind of Securities, if
any, to be deposited in the Senior Security Account for such
Series; (h) the name of the broker, dealer, or futures commis-
sion merchant through whom the Futures Contract was entered
into; and (i) the amount of fee or commission, if any, to be
paid and the name of the broker, dealer, or futures commission
merchant to whom such amount is to be paid. The Custodian
shall make the deposits, if any, to the Margin Account in ac-
cordance with the terms and conditions of the Margin Account
Agreement. The Custodian shall make payment out of the moneys
specifically allocated to such Series of the fee or commis-
sion, if any, specified in the Certificate and deposit in the
Senior Security Account for such Series the amount of cash
and/or the amount and kind of Securities specified in said
Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund to a broker, dealer, or
futures commission merchant with respect to an outstanding
Futures Contract shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agree-
ment.
(b) Any variation margin payment or similar payment
from a broker, dealer, or futures commission merchant to the
Fund with respect to an outstanding Futures Contract shall be
received and dealt with by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement
is made on such Futures Contract, the Fund shall deliver to
the Custodian prior to the delivery or settlement date a
Certificate specifying: (a) the Futures Contract and the
Series to which the same relates; (b) with respect to an Index
Futures Contract, the total cash settlement amount to be paid
or received, and with respect to a Financial Futures Contract,
the Securities and/or amount of cash to be delivered or
received; (c) the broker, dealer, or futures commission
merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be
withdrawn from the Senior Security Account for such Series.
The Custodian shall make the payment or delivery specified in
the Certificate, and delete such Futures Contract from the
- 18 -
statements delivered to the Fund pursuant to paragraph 3 of
Article III herein.
4. Whenever the Fund shall enter into a Futures
Contract to offset a Futures Contract held by the Custodian
hereunder, the Fund shall deliver to the Custodian a
Certificate specifying: (a) the items of information required
in a Certificate described in paragraph 1 of this Article, and
(b) the Futures Contract being offset. The Custodian shall
make payment out of the money specifically allocated to such
Series of the fee or commission, if any, specified in the
Certificate and delete the Futures Contract being offset from
the statements delivered to the Fund pursuant to paragraph 3
of Article III herein, and make such withdrawals from the
Senior Security Account for such Series as may be specified in
such Certificate. The withdrawals, if any, to be made from
the Margin Account shall be made by the Custodian in ac-
cordance with the terms and conditions of the Margin Account
Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the execution of a purchase of any
Futures Contract Option by the Fund, the Fund shall deliver to
the Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the Series to which such Option
is specifically allocated; (b) the type of Futures Contract
Option (put or call); (c) the type of Futures Contract and
such other information as may be necessary to identify the
Futures Contract underlying the Futures Contract Option
purchased; (d) the expiration date; (e) the exercise price;
(f) the dates of purchase and settlement; (g) the amount of
premium to be paid by the Fund upon such purchase; (h) the
name of the broker or futures commission merchant through whom
such option was purchased; and (i) the name of the broker, or
futures commission merchant, to whom payment is to be made.
The Custodian shall pay out of the moneys specifically al-
located to such Series the total amount to be paid upon such
purchase to the broker or futures commissions merchant through
whom the purchase was made, provided that the same conforms to
the amount set forth in such Certificate.
2. Promptly after the execution of a sale of any
Futures Contract Option purchased by the Fund pursuant to
paragraph 1 hereof, the Fund shall deliver to the Custodian a
Certificate specifying with respect to each such sale: (a)
Series to which such Futures Contract Option was specifically
allocated; (b) the type of Future Contract Option (put or
call); (c) the type of Futures Contract and such other
- 19 -
information as may be necessary to identify the Futures
Contract underlying the Futures Contract Option; (d) the date
of sale; (e) the sale price; (f) the date of settlement; (g)
the total amount payable to the Fund upon such sale; and (h)
the name of the broker of futures commission merchant through
whom the sale was made. The Custodian shall consent to the
cancellation of the Futures Contract Option being closed
against payment to the Custodian of the total amount payable
to the Fund, provided the same conforms to the total amount
payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the
Fund pursuant to paragraph 1 is exercised by the Fund, the
Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the Series to which such Futures Contract Op-
tion was specifically allocated; (b) the particular Futures
Contract Option (put or call) being exercised; (c) the type of
Futures Contract underlying the Futures Contract Option; (d)
the date of exercise; (e) the name of the broker or futures
commission merchant through whom the Futures Contract Option
is exercised; (f) the net total amount, if any, payable by the
Fund; (g) the amount, if any, to be received by the Fund; and
(h) the amount of cash and/or the amount and kind of Securi-
ties to be deposited in the Senior Security Account for such
Series. The Custodian shall make, out of the moneys and
Securities specifically allocated to such Series, the payments
of money, if any, and the deposits of Securities, if any, into
the Senior Security Account as specified in the Certificate.
The deposits, if any, to be made to the Margin Account shall
be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a)
the Series for which such Futures Contract Option was written;
(b) the type of Futures Contract Option (put or call); (c) the
type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the
Futures Contract Option; (d) the expiration date; (e) the
exercise price; (f) the premium to be received by the Fund;
(g) the name of the broker or futures commission merchant
through whom the premium is to be received; and (h) the amount
of cash and/or the amount and kind of Securities, if any, to
be deposited in the Senior Security Account for such Series.
The Custodian shall, upon receipt of the premium specified in
the Certificate, make out of the moneys and Securities
specifically allocated to such Series the deposits into the
Senior Security Account, if any, as specified in the
Certificate. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
- 20 -
5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the
Series to which such Futures Contract Option was specifically
allocated; (b) the particular Futures Contract Option
exercised; (c) the type of Futures Contract underlying the
Futures Contract Option; (d) the name of the broker or futures
commission merchant through whom such Futures Contract Option
was exercised; (e) the net total amount, if any, payable to
the Fund upon such exercise; (f) the net total amount, if any,
payable by the Fund upon such exercise; and (g) the amount of
cash and/or the amount and kind of Securities to be deposited
in the Senior Security Account for such Series. The Custodian
shall, upon its receipt of the net total amount payable to the
Fund, if any, specified in such Certificate make the payments,
if any, and the deposits, if any, into the Senior Security
Account as specified in the Certificate. The deposits, if any,
to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
6. Whenever a Futures Contract Option which is written
by the Fund and which is a put is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying:
(a) the Series to which such Option was specifically al-
located; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying such Futures
Contract Option; (d) the name of the broker or futures commis-
sion merchant through whom such Futures Contract Option is
exercised; (e) the net total amount, if any, payable to the
Fund upon such exercise; (f) the net total amount, if any,
payable by the Fund upon such exercise; and (g) the amount and
kind of Securities and/or cash to be withdrawn from or
deposited in, the Senior Security Account for such Series, if
any. The Custodian shall, upon its receipt of the net total
amount payable to the Fund, if any, specified in the
Certificate, make out of the moneys and Securities
specifically allocated to such Series, the payments, if any,
and the deposits, if any, into the Senior Security Account as
specified in the Certificate. The deposits to and/or
withdrawals from the Margin Account, if any, shall be made by
the Custodian in accordance with the terms and conditions of
the Margin Account Agreement.
7. Promptly after the execution by the Fund of a
purchase of any Futures Contract Option identical to a previ-
ously written Futures Contract Option described in this
Article in order to liquidate its position as a writer of such
Futures Contract Option, the Fund shall deliver to the
Custodian a Certificate specifying with respect to the Futures
Contract Option being purchased: (a) the Series to which such
Option is specifically allocated; (b) that the transaction is
a closing transaction; (c) the type of Future Contract and
such other information as may be necessary to identify the
- 21 -
Futures Contract underlying the Futures Option Contract; (d)
the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the name of the broker or futures
commission merchant to whom the premium is to be paid; and (h)
the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the Senior Security Account for
such Series. The Custodian shall effect the withdrawals from
the Senior Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall
be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
8. Upon the expiration, exercise, or consummation of a
closing transaction with respect to, any Futures Contract Op-
tion written or purchased by the Fund and described in this
Article, the Custodian shall (a) delete such Futures Contract
Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein and, (b) make such withdraw-
als from and/or in the case of an exercise such deposits into
the Senior Security Account as may be specified in a
Certificate. The deposits to and/or withdrawals from the
Margin Account, if any, shall be made by the Custodian in ac-
cordance with the terms and conditions of the Margin Account
Agreement.
9. Futures Contracts acquired by the Fund through the
exercise of a Futures Contract Option described in this
Article shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after the execution of any short sales of
Securities by any Series of the Fund, the Fund shall deliver
to the Custodian a Certificate specifying: (a) the Series for
which such short sale was made; (b) the name of the issuer and
the title of the Security; (c) the number of shares or
principal amount sold, and accrued interest or dividends, if
any; (d) the dates of the sale and settlement; (e) the sale
price per unit; (f) the total amount credited to the Fund upon
such sale, if any, (g) the amount of cash and/or the amount
and kind of Securities, if any, which are to be deposited in a
Margin Account and the name in which such Margin Account has
been or is to be established; (h) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in
a Senior Security Account, and (i) the name of the broker
through whom such short sale was made. The Custodian shall
upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to the Fund upon
such sale, if any, as specified in the Certificate is held by
- 22 -
such broker for the account of the Custodian (or any nominee
of the Custodian) as custodian of the Fund, issue a receipt or
make the deposits into the Margin Account and the Senior
Security Account specified in the Certificate.
2. Promptly after the execution of a purchase to
close-out any short sale of Securities, the Fund shall
promptly deliver to the Custodian a Certificate specifying
with respect to each such closing out: (a) the Series for
which such transaction is being made; (b) the name of the is-
suer and the title of the Security; (c) the number of shares
or the principal amount, and accrued interest or dividends, if
any, required to effect such closing-out to be delivered to
the broker; (d) the dates of closing-out and settlement; (e)
the purchase price per unit; (f) the net total amount payable
to the Fund upon such closing-out; (g) the net total amount
payable to the broker upon such closing-out; (h) the amount of
cash and the amount and kind of Securities to be withdrawn, if
any, from the Margin Account; (i) the amount of cash and/or
the amount and kind of Securities, if any, to be withdrawn
from the Senior Security Account; and (j) the name of the
broker through whom the Fund is effecting such closing-out.
The Custodian shall, upon receipt of the net total amount pay-
able to the Fund upon such closing-out, and the return and/ or
cancellation of the receipts, if any, issued by the Custodian
with respect to the short sale being closed-out, pay out of
the moneys held for the account of the Fund to the broker the
net total amount payable to the broker, and make the withdraw-
als from the Margin Account and the Senior Security Account,
as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase
Agreement with respect to Securities and money held by the
Custodian hereunder, the Fund shall deliver to the Custodian a
Certificate, or in the event such Reverse Repurchase Agreement
is a Money Market Security, a Certificate, Oral Instructions,
or Written Instructions specifying: (a) the Series for which
the Reverse Repurchase Agreement is entered; (b) the total
amount payable to the Fund in connection with such Reverse
Repurchase Agreement and specifically allocated to such
Series; (c) the broker, dealer, or financial institution with
whom the Reverse Repurchase Agreement is entered; (d) the
amount and kind of Securities to be delivered by the Fund to
such broker, dealer, or financial institution; (e) the date of
such Reverse Repurchase Agreement; and (f) the amount of cash
and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Senior Security
Account for such Series in connection with such Reverse
Repurchase Agreement. The Custodian shall, upon receipt of
- 23 -
the total amount payable to the Fund specified in the
Certificate, Oral Instructions, or Written Instructions make
the delivery to the broker, dealer, or financial institution
and the deposits, if any, to the Senior Security Account,
specified in such Certificate, Oral Instructions, or Written
Instructions.
2. Upon the termination of a Reverse Repurchase Agree-
ment described in preceding paragraph 1 of this Article, the
Fund shall promptly deliver a Certificate or, in the event
such Reverse Repurchase Agreement is a Money Market Security,
a Certificate, Oral Instructions, or Written Instructions to
the Custodian specifying: (a) the Reverse Repurchase Agreement
being terminated and the Series for which same was entered;
(b) the total amount payable by the Fund in connection with
such termination; (c) the amount and kind of Securities to be
received by the Fund and specifically allocated to such Series
in connection with such termination; (d) the date of termina-
tion; (e) the name of the broker, dealer, or financial
institution with whom the Reverse Repurchase Agreement is to
be terminated; and (f) the amount of cash and/or the amount
and kind of Securities to be withdrawn from the Senior Securi-
ties Account for such Series. The Custodian shall, upon
receipt of the amount and kind of Securities to be received by
the Fund specified in the Certificate, Oral Instructions, or
Written Instructions, make the payment to the broker, dealer,
or financial institution and the withdrawals, if any, from the
Senior Security Account, specified in such Certificate, Oral
Instructions, or Written Instructions.
3. The Certificates, Oral Instructions, or Written
Instructions described in paragraphs 1 and 2 of this Article
may with respect to any particular Reverse Repurchase Agree-
ment be combined and delivered to the Custodian at the time of
entering into such Reverse Repurchase Agreement.
ARTICLE X
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities
specifically allocated to a Series held by the Custodian
hereunder, the Fund shall deliver or cause to be delivered to
the Custodian a Certificate specifying with respect to each
such loan: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the
title of the Securities, (c) the number of shares or the
principal amount loaned, (d) the date of loan and delivery,
(e) the total amount to be delivered to the Custodian against
the loan of the Securities, including the amount of cash col-
lateral and the premium, if any, separately identified, and
(f) the name of the broker, dealer, or financial institution
- 24 -
to which the loan was made. The Custodian shall deliver the
Securities thus designated to the broker, dealer or financial
institution to which the loan was made upon receipt of the
total amount designated in the Certificate as to be delivered
against the loan of Securities. The Custodian may accept pay-
ment in connection with a delivery otherwise than through the
Book-Entry System or a Depository only in the form of a certi-
fied or bank cashier's check payable to the order of the Fund
or the Custodian drawn on New York Clearing House funds.
2. In connection with each termination of a loan of
Securities by the Fund, the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with
respect to each such loan termination and return of Securi-
ties: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the
title of the Securities to be returned, (c) the number of
shares or the principal amount to be returned, (d) the date of
termination, (e) the total amount to be delivered by the
Custodian (including the cash collateral for such Securities
minus any offsetting credits as described in said
Certificate), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be
returned. The Custodian shall receive all Securities returned
from the broker, dealer, or financial institution to which
such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of the Fund, the
total amount payable upon such return of Securities as set
forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall establish a Senior Security Ac-
count and from time to time make such deposits thereto, or
withdrawals therefrom, as specified in a Certificate. Such
Certificate shall specify the Series for which such deposit or
withdrawal is to be made and the amount of cash and/or the
amount and kind of Securities specifically allocated to such
Series to be deposited in, or withdrawn from, such Senior
Security Account for such Series. In the event that the Fund
fails to specify in a Certificate the Series, the name of the
issuer, the title and the number of shares or the principal
amount of any particular Securities to be deposited by the
Custodian into, or withdrawn from, a Senior Securities Ac-
count, the Custodian shall be under no obligation to make any
such deposit or withdrawal and shall promptly notify the Fund
that no such deposit has been made.
- 25 -
2. The Custodian shall make deliveries or payments from
a Margin Account to the broker, dealer, futures commission
merchant or Clearing Member in whose name, or for whose
benefit, the account was established as specified in the
Margin Account Agreement.
3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any
Margin Account shall be dealt with in accordance with the
terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and
security interest in and to any property at any time held by
the Custodian in any Collateral Account described herein. In
accordance with applicable law the Custodian may enforce its
lien and realize on any such property whenever the Custodian
has made payment or delivery pursuant to any Put Option
guarantee letter or similar document or any receipt issued
hereunder by the Custodian. In the event the Custodian should
realize on any such property net proceeds which are less than
the Custodian's obligations under any Put Option guarantee
letter or similar document or any receipt, such deficiency
shall be a debt owed the Custodian by the Fund within the
scope of Article XIV herein.
5. On each business day the Custodian shall furnish the
Fund with a statement with respect to each Margin Account in
which money or Securities are held specifying as of the close
of business on the previous business day: (a) the name of the
Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker,
dealer, or futures commission merchant specified in the name
of a Margin Account a copy of the statement furnished the Fund
with respect to such Margin Account.
6. The Custodian shall establish a Collateral Account
and from time to time shall make such deposits thereto as may
be specified in a Certificate. Promptly after the close of
business on each business day in which cash and/or Securities
are maintained in a Collateral Account for any Series, the
Custodian shall furnish the Fund with a statement with respect
to such Collateral Account specifying the amount of cash
and/or the amount and kind of Securities held therein. No
later than the close of business next succeeding the delivery
to the Fund of such statement, the Fund shall furnish to the
Custodian a Certificate or Written Instructions specifying the
then market value of the Securities described in such state-
ment. In the event such then market value is indicated to be
less than the Custodian's obligation with respect to any
outstanding Put Option guarantee letter or similar document,
- 26 -
the Fund shall promptly specify in a Certificate the ad-
ditional cash and/or Securities to be deposited in such Col-
lateral Account to eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of
the resolution of the Board of Trustees of the Fund, certified
by the Secretary, the Clerk, any Assistant Secretary or any
Assistant Clerk, either (i) setting forth with respect to the
Series specified therein the date of the declaration of a
dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall
be determined, the amount payable per Share of such Series to
the shareholders of record as of that date and the total
amount payable to the Dividend Agent and any sub-dividend
agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein
and the declaration of dividends and distributions thereon
the Custodian to rely on Oral Instructions, Written Instruc-
tions, or a Certificate setting forth the date of the declara-
tion of such dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per Share of
such Series to the shareholders of record as of that date and
the total amount payable to the Dividend Agent on the payment
date.
2. Upon the payment date specified in such resolution,
Oral Instructions, Written Instructions, or Certificate, as
the case may be, the Custodian shall pay to the Transfer Agent
Account out of the moneys held for the account of the Series
specified therein the total amount payable to the Dividend
Agent and any sub-dividend agent or co-dividend agent of the
Fund with respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall
deliver or cause to be delivered, to the Custodian a
Certificate duly specifying:
(a) The Series, the number of Shares sold, trade
date, and price; and
- 27 -
(b) The amount of money to be received by the
Custodian for the sale of such Shares and specifically al-
located to the separate account in the name of such Series.
2. Upon receipt of such money from the Transfer Agent,
the Custodian shall credit such money to the separate account
in the name of the Series for which such money was received.
3. Upon issuance of any Shares of any Series the
Custodian shall pay, out of the money held for the account of
such Series, all original issue or other taxes required to be
paid by the Fund in connection with such issuance upon the
receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund
desires the Custodian to make payment out of the money held by
the Custodian hereunder in connection with a redemption of any
Shares, it shall furnish, or cause to be furnished, to the
Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt of an advice from an Authorized Person
setting forth the Series and number of Shares received by the
Transfer Agent for redemption and that such Shares are in
good form for redemption, the Custodian shall make payment to
the Transfer Agent Account out of the moneys held in the
separate account in the name of the Series the total amount
specified in the Certificate issued pursuant to the foregoing
paragraph 4 of this Article.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian, should in its sole discretion
advance funds on behalf of any Series which results in an
overdraft because the moneys held by the Custodian in the
separate account for such Series shall be insufficient to pay
the total amount payable upon a purchase of Securities
specifically allocated to such Series, as set forth in a
Certificate, Oral Instructions, or Written Instructions or
which results in an overdraft in the separate account of such
Series for some other reason, or if the Fund is for any other
reason indebted to the Custodian with respect to a Series,
(except a borrowing for investment or for temporary or
emergency purposes using Securities as collateral pursuant to
a separate agreement and subject to the provisions of
paragraph 2 of this Article), such overdraft or indebtedness
shall be deemed to be a loan made by the Custodian to the Fund
- 28 -
for such Series payable on demand and shall bear interest from
the date incurred at a rate per annum (based on a 360-day year
for the actual number of days involved) equal to the Federal
Funds Rate plus 1/2%, such rate to be adjusted on the effec-
tive date of any change in such Federal Funds Rate but in no
event to be less than 6% per annum. In addition, the Fund
hereby agrees that the Custodian shall have a continuing lien
and security interest in the aggregate amount of such
overdrafts and indebtedness as may from time to time exist in
and to any property specifically allocated to such Series at
any time held by it for the benefit of such Series or in which
the Fund may have an interest which is then in the Custodian's
possession or control or in possession or control of any third
party acting in the Custodian's behalf. The Fund authorizes
the Custodian, in its sole discretion, at any time to charge
any such overdraft or indebtedness together with interest due
thereon against any money balance of account standing to such
Series' credit on the Custodian's books. In addition, the
Fund hereby covenants that on each Business Day on which
either it intends to enter a Reverse Repurchase Agreement and/
or otherwise borrow from a third party, or which next succeeds
a Business Day on which at the close of business the Fund had
outstanding a Reverse Repurchase Agreement or such a borrow-
ing, it shall prior to 9 a.m., New York City time, advise the
Custodian, in writing, of each such borrowing, shall specify
the Series to which the same relates, and shall not incur any
indebtedness, including pursuant to any Reverse Repurchase
Agreement, not so specified other than from the Custodian.
2. The Fund will cause to be delivered to the Custodian
by any bank (including, if the borrowing is pursuant to a
separate agreement, the Custodian) from which it borrows money
for investment or for temporary or emergency purposes using
Securities held by the Custodian hereunder as collateral for
such borrowings, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount
of collateral. The Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each such
borrowing: (a) the Series to which such borrowing relates; (b)
the name of the bank, (c) the amount and terms of the borrow-
ing, which may be set forth by incorporating by reference an
attached promissory note, duly endorsed by the Fund, or other
loan agreement, (d) the time and date, if known, on which the
loan is to be entered into, (e) the date on which the loan
becomes due and payable, (f) the total amount payable to the
Fund on the borrowing date, (g) the market value of Securities
to be delivered as collateral for such loan, including the
name of the issuer, the title and the number of shares or the
principal amount of any particular Securities, and (h) a
statement specifying whether such loan is for investment
purposes or for temporary or emergency purposes and that such
loan is in conformance with the Investment Company Act of 1940
and the Fund's prospectus. The Custodian shall deliver on the
- 29 -
borrowing date specified in a Certificate the specified col-
lateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount
payable as set forth in the Certificate. The Custodian may,
at the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory
note or loan agreement. The Custodian shall deliver such
Securities as additional collateral as may be specified in a
Certificate to collateralize further any transaction described
in this paragraph. The Fund shall cause all Securities
released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time
such return of collateral as may be tendered to it. In the
event that the Fund fails to specify in a Certificate the
Series, the name of the issuer, the title and number of shares
or the principal amount of any particular Securities to be
delivered as collateral by the Custodian, to any such bank,
the Custodian shall not be under any obligation to deliver any
Securities.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. The Custodian shall use reasonable care in the
performance of its duties hereunder, and, except as
hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including counsel
fees, resulting from its action or omission to act or
otherwise, either hereunder or under any Margin Account Agree-
ment, except for any such loss or damage arising out of its
own negligence, bad faith, or willful misconduct or that of
its officers, employees, or agents. The Custodian may, with
respect to questions of law arising hereunder or under any
Margin Account Agreement, apply for and obtain the advice and
opinion of counsel to the Fund, at the expense of the Fund,
or of its own counsel, at its own expense, and shall be fully
protected with respect to anything done or omitted by it in
good faith in conformity with such advice or opinion. The
Custodian shall be liable to the Fund for any loss or damage
resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence or willful
misconduct on the part of the Custodian or any of its
employees or agents.
2. Notwithstanding the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be li-
able for:
- 30 -
(a) The validity (but not the authenticity) of the
issue of any Securities purchased, sold, or written by or for
the Fund, the legality of the purchase, sale or writing
thereof, or the propriety of the amount paid or received
therefor, as specified in a Certificate, Oral Instructions, or
Written Instructions;
(b) The legality of the sale or redemption of any
Shares, or the propriety of the amount to be received or paid
therefor, as specified in a Certificate;
(c) The legality of the declaration or payment of
any dividend by the Fund, as specified in a resolution,
Certificate, Oral Instructions, or Written Instructions;
(d) The legality of any borrowing by the Fund using
Securities as collateral;
(e) The legality of any loan of portfolio Securi-
ties, nor shall the Custodian be under any duty or obligation
to see to it that the cash collateral delivered to it by a
broker, dealer, or financial institution or held by it at any
time as a result of such loan of portfolio Securities of the
Fund is adequate collateral for the Fund against any loss it
might sustain as a result of such loan, except that this sub-
paragraph shall not excuse any liability the Custodian may
have for failing to act in accordance with Article X hereof or
any Certificate, Oral Instructions, or Written Instructions
given in accordance with this Agreement. The Custodian
specifically, but not by way of limitation, shall not be under
any duty or obligation periodically to check or notify the
Fund that the amount of such cash collateral held by it for
the Fund is sufficient collateral for the Fund, but such duty
or obligation shall be the sole responsibility of the Fund.
In addition, the Custodian shall be under no duty or obliga-
tion to see that any broker, dealer or financial institution
to which portfolio Securities of the Fund are lent pursuant to
Article X of this Agreement makes payment to it of any
dividends or interest which are payable to or for the account
of the Fund during the period of such loan or at the termina-
tion of such loan, provided, however, that the Custodian shall
promptly notify the Fund in the event that such dividends or
interest are not paid and received when due; or
(f) The sufficiency or value of any amounts of
money and/or Securities held in any Margin Account, Senior
Security Account or Collateral Account in connection with
transactions by the Fund, except that this sub-paragraph shall
not excuse any liability the Custodian may have for failing to
establish, maintain, make deposits to or withdrawals from such
accounts in accordance with this Agreement. In addition, the
Custodian shall be under no duty or obligation to see that any
broker, dealer, futures commission merchant or Clearing Member
makes payment to the Fund of any variation margin payment or
- 31 -
similar payment which the Fund may be entitled to receive from
such broker, dealer, futures commission merchant or Clearing
Member, to see that any payment received by the Custodian from
any broker, dealer, futures commission merchant or Clearing
Member is the amount the Fund is entitled to receive, or to
notify the Fund of the Custodian's receipt or non-receipt of
any such payment.
3. The Custodian shall not be liable for, or considered
to be the Custodian of, any money, whether or not represented
by any check, draft, or other instrument for the payment of
money, received by it on behalf of the Fund until the
Custodian actually receives such money directly or by the
final crediting of the account representing the Fund's inter-
est at the Book-Entry System or the Depository.
4. With respect to Securities held in a Depository,
except as otherwise provided in paragraph 5(b) of Article III
hereof, the Custodian shall have no responsibility and shall
not be liable for ascertaining or acting upon any calls,
conversions, exchange offers, tenders, interest rate changes
or similar matters relating to such Securities, unless the
Custodian shall have actually received timely notice from the
Depository in which such Securities are held. In no event
shall the Custodian have any responsibility or liability for
the failure of a Depository to collect, or for the late col-
lection or late crediting by a Depository of any amount pay-
able upon Securities deposited in a Depository which may
mature or be redeemed, retired, called or otherwise become
payable. However, upon receipt of a Certificate from the Fund
of an overdue amount on Securities held in a Depository the
Custodian shall make a claim against the Depository on behalf
of the Fund, except that the Custodian shall not be under any
obligation to appear in, prosecute or defend any action suit
or proceeding in respect to any Securities held by a
Depository which in its opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all
expense and liability be furnished as often as may be
required, or alternatively, the Fund shall be subrogated to
the rights of the Custodian with respect to such claim against
the Depository should it so request in a Certificate. This
paragraph shall not, however, excuse any failure by the
Custodian to act in accordance with a Certificate, Oral
Instructions, or Written Instructions given in accordance with
this Agreement.
5. The Custodian shall not be under any duty or obliga-
tion to take action to effect collection of any amount due to
the Fund from the Transfer Agent of the Fund nor to take any
action to effect payment or distribution by the Transfer Agent
of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this Agreement.
- 32 -
6. The Custodian shall not be under any duty or obliga-
tion to take action to effect collection of any amount if the
Securities upon which such amount is payable are in default,
or if payment is refused after the Custodian has timely and
properly, in accordance with this Agreement, made due demand
or presentation, unless and until (i) it shall be directed to
take such action by a Certificate and (ii) it shall be assured
to its satisfaction of reimbursement of its costs and expenses
in connection with any such action, but the Custodian shall
have such a duty if the Securities were not in default on the
payable date and the Custodian failed to timely and properly
make such demand for payment and such failure is the reason
for the non-receipt of payment.
7. The Custodian may appoint one or more banking
institutions as Sub-Custodian or Sub-Custodians, or as
Co-Custodian or Co-Custodians including, but not limited to,
banking institutions located in foreign countries, of
Securities and moneys at any time owned by the Fund, upon such
terms and conditions as may be approved in a Certificate or
contained in an agreement executed by the Custodian, the Fund
and the appointed institution.
8. The Custodian agrees to indemnify the Fund against
and save the Fund harmless from all liability, claims, losses
and demands whatsoever, including attorney's fees, howsoever
arising or incurred because of the negligence, bad faith or
willful misconduct of any Sub-Custodian of the Securities and
moneys owned by the Fund, provided such Sub-Custodian is a
banking institution located in a foreign country and appointed
by the Custodian pursuant to paragraph 7 of this Article.
9. The Custodian shall not be under any duty or obliga-
tion (a) to ascertain whether any Securities at any time
delivered to, or held by it, for the account of the Fund and
specifically allocated to a Series are such as properly may be
held by the Fund or such Series under the provisions of its
then current prospectus, or (b) to ascertain whether any
transactions by the Fund, whether or not involving the
Custodian, are such transactions as may properly be engaged in
by the Fund.
10. The Custodian shall be entitled to receive and the
Fund agrees to pay to the Custodian all reasonable
out-of-pocket expenses and such compensation as may be agreed
upon from time to time between the Custodian and the Fund.
The Custodian may charge such compensation, and any such
expenses with respect to a Series incurred by the Custodian in
the performance of its duties under this Agreement against any
money specifically allocated to such Series. The Custodian
shall also be entitled to charge against any money held by it
for the account of a Series the amount of any loss, damage,
liability or expense, including counsel fees, for which it
- 33 -
shall be entitled to reimbursement under the provisions of
this Agreement attributable to, or arising out of, its serving
as Custodian for such Series. The expenses for which the
Custodian shall be entitled to reimbursement hereunder shall
include, but are not limited to, the expenses of
sub-custodians and foreign branches of the Custodian incurred
in settling outside of New York City transactions involving
the purchase and sale of Securities of the Fund.
Notwithstanding the foregoing or anything else contained in
this Agreement to the contrary, the Custodian shall, prior to
effecting any charge for compensation, expenses, or any
overdraft or indebtedness or interest thereon, submit an
invoice therefor to the Fund.
11. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing, Oral
Instructions, or Written Instructions received by the
Custodian and reasonably believed by the Custodian to be
genuine. The Fund agrees to forward to the Custodian a
Certificate or facsimile thereof confirming Oral Instructions
or Written Instructions in such manner so that such
Certificate or facsimile thereof is received by the Custodian,
whether by hand delivery, telecopier or other similar device,
or otherwise, by the close of business of the same day that
such Oral Instructions or Written Instructions are given to
the Custodian. The Fund agrees that the fact that such
confirming instructions are not received by the Custodian
shall in no way affect the validity of the transactions or
enforceability of the transactions thereby authorized by the
Fund. The Fund agrees that the Custodian shall incur no li-
ability to the Fund in acting upon Oral Instructions or Writ-
ten Instructions given to the Custodian hereunder concerning
such transactions provided such instructions reasonably appear
to have been received from an Authorized Person.
12. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian
and reasonably believed by the Custodian to be given in ac-
cordance with the terms and conditions of any Margin Account
Agreement. Without limiting the generality of the foregoing,
the Custodian shall be under no duty to inquire into, and
shall not be liable for, the accuracy of any statements or
representations contained in any such instrument or other
notice including, without limitation, any specification of any
amount to be paid to a broker, dealer, futures commission
merchant or Clearing Member. This paragraph shall not excuse
any failure by the Custodian to have acted in accordance with
any Margin Agreement it has executed or any Certificate, Oral
Instructions, or Written Instructions given in accordance with
this Agreement.
13. The books and records pertaining to the Fund, as
described in Appendix E hereto, which are in the possession of
the Custodian shall be the property of the Fund. Such books
- 34 -
and records shall be prepared and maintained by the Custodian
as required by the Investment Company Act of 1940, as amended,
and other applicable securities laws and rules and regula-
tions. The Fund, or the Fund's authorized representatives,
shall have access to such books and records during the
Custodian's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's
authorized representative, and the Fund shall reimburse the
Custodian its expenses of providing such copies. Upon reason-
able request of the Fund, the Custodian shall provide in hard
copy or on micro-film, whichever the Custodian elects, any
records included in any such delivery which are maintained by
the Custodian on a computer disc, or are similarly maintained,
and the Fund shall reimburse the Custodian for its expenses of
providing such hard copy or micro-film.
14. The Custodian shall provide the Fund with any report
obtained by the Custodian on the system of internal accounting
control of the Book-Entry System, each Depository or O.C.C.,
and with such reports on its own systems of internal account-
ing control as the Fund may reasonably request from time to
time.
15. The Custodian shall furnish upon request annually to
the Fund a letter prepared by the Custodian's accountants with
respect to the Custodian's internal systems and controls in
the form generally provided by the Custodian to other invest-
ment companies for which the Custodian acts as custodian.
16. The Fund agrees to indemnify the Custodian against
and save the Custodian harmless from all liability, claims,
losses and demands whatsoever, including attorney's fees,
howsoever arising out of, or related to, the Custodian's
performance of its obligations under this Agreement, except
for any such liability, claim, loss and demand arising out of
the Custodian's own negligence, bad faith, or willful
misconduct or that of its officers, employees, or agents.
17. Subject to the foregoing provisions of this Agree-
ment, the Custodian shall deliver and receive Securities, and
receipts with respect to such Securities, and shall make and
receive payments only in accordance with the customs prevail-
ing from time to time among brokers or dealers in such Securi-
ties and, except as may otherwise be provided by this
Agreement or as may be in accordance with such customs, shall
make payment for Securities only against delivery thereof and
deliveries of Securities only against payment therefor.
18. The Custodian shall have no duties or
responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this Agree-
ment, and no covenant or obligation shall be implied in this
Agreement against the Custodian.
- 35 -
ARTICLE XVI
TERMINATION
1. Except as provided in paragraph 3 of this Article,
this Agreement shall continue until terminated by either the
Custodian giving to the Fund, or the Fund giving to the
Custodian, a notice in writing specifying the date of such
termination, which date shall be not less than 60 days after
the date of the giving of such notice. In the event such
notice or a notice pursuant to paragraph 3 of this Article is
given by the Fund, it shall be accompanied by a copy of a
resolution of the Board of Trustees of the Fund, certified by
an Officer and the Secretary or an Assistant Secretary of the
Fund, electing to terminate this Agreement and designating a
successor custodian or custodians, each of which shall be
eligible to serve as a custodian for the securities of a
management investment company under the Investment Company Act
of 1940. In the event such notice is given by the Custodian,
the Fund shall, on or before the termination date, deliver to
the Custodian a copy of a resolution of the Board of Trustees
of the Fund, certified by the Secretary, the Clerk, any
Assistant Secretary or any Assistant Clerk, designating a
successor custodian or custodians. In the absence of such
designation by the Fund, the Custodian may designate a
successor custodian which shall be a bank or trust company
having not less than $2,000,000 aggregate capital, surplus and
undivided profits. Upon the date set forth in such notice
this Agreement shall terminate, and the Custodian shall upon
receipt of a notice of acceptance by the successor custodian
on that date deliver directly to the successor custodian all
Securities and moneys then owned by the Fund and held by it as
Custodian, after deducting all fees, expenses and other
amounts for the payment or reimbursement of which it shall
then be entitled.
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding
paragraph, the Fund shall upon the date specified in the
notice of termination of this Agreement and upon the delivery
by the Custodian of all Securities (other than Securities held
in the Book-Entry System which cannot be delivered to the
Fund) and moneys then owned by the Fund be deemed to be its
own custodian and the Custodian shall thereby be relieved of
all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the
Book Entry System which cannot be delivered to the Fund to
hold such Securities hereunder in accordance with this Agree-
ment.
3. Notwithstanding the foregoing, the Fund may
terminate this Agreement upon the date specified in a written
- 36 -
notice in the event of the "Bankruptcy" of The Bank of New
York. As used in this sub-paragraph, the term "Bankruptcy"
shall mean The Bank of New York's making a general assignment,
arrangement or composition with or for the benefit of its
creditors, or instituting or having instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or
the entry of a order for relief under any applicable
bankruptcy law or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors'
rights, or if a petition is presented for the winding up or
liquidation of the party or a resolution is passed for its
winding up or liquidation, or it seeks, or becomes subject to,
the appointment of an administrator, receiver, trustee,
custodian or other similar official for it or for all or
substantially all of its assets or its taking any action in
furtherance or, or indicating its consent to approval of, or
acquiescence in, any of the foregoing.
ARTICLE XVII
TERMINAL LINK
1. At no time and under no circumstances shall the Fund
be obligated to have or utilize the Terminal Link, and the
provisions of this Article shall apply if, but only if, the
Fund in its sole and absolute discretion elects to utilize the
Terminal Link to transmit Certificates to and to receive
notices from the Custodian.
2. The parties hereto shall utilize the Terminal Link
only for the purpose of the Fund providing Certificates to the
Custodian and the Custodian providing notices to the Fund and
only after the Fund and the Custodian shall have established
access codes and internal safekeeping procedures to safeguard
and protect the confidentiality and availability of such
access codes. Each use of the Terminal Link by the Fund shall
constitute a representation and warranty that at least two
such access codes have been utilized and that such procedures
have been established.
3. Each party shall obtain and maintain at its own cost
and expense all equipment and services, including, but not
limited to communications services, necessary for it to
utilize the Terminal Link, and the other party shall not be
responsible for the reliability or availability of any such
equipment or services, except that the Custodian shall not pay
any communications costs of any line leased by the Fund, even
if such line is also used by the Custodian.
4. The Fund acknowledges that any data bases made
available as part of, or through the Terminal and any
proprietary data, software, processes, information and
documentation (other than any such which are or become part of
- 37 -
the public domain or are legally required to be made available
to the public) (collectively, the "Information"), are the
exclusive and confidential property of the Custodian. The
Fund shall, and shall cause others to which it discloses the
Information, to keep the Information confidential by using the
same care and discretion it uses with respect to its own
confidential property and trade secrets, and shall neither
make nor permit any disclosure without the express prior writ-
ten consent of the Custodian.
5. Upon termination of this Agreement for any reason,
each Fund shall return to the Custodian any and all copies of
the Information which are in the Fund's possession or under
its control, or which the Fund distributed to third parties.
The provisions of this Article shall not affect the copyright
status of any of the Information which may be copyrighted and
shall apply to all Information whether or not copyrighted.
6. The Custodian reserves the right to modify the
Terminal Link from time to time without notice to the Fund,
except that the Custodian shall give the Fund notice not less
than 75 days in advance of any modification which would
materially adversely affect the Fund's operation, and the Fund
agrees not to modify or attempt to modify the Terminal Link
without the Bank's prior written consent. The Fund
acknowledges that the Terminal Link is the property of the
Custodian and, accordingly, the Fund agrees that any
modifications to the Terminal Link, whether by the Fund or the
Custodian and whether with or without the Custodian's consent,
shall become the property of the Custodian.
7. Neither the Custodian nor any manufacturers and sup-
pliers it utilizes or the Fund utilizes in connection with the
Terminal Link makes any warranties or representations, express
or implied, in fact or in law, including but not limited to
warranties of merchantability and fitness for a particular
purpose.
8. Each party will, and will cause its officers and
employees to, treat the user and authorization codes,
passwords and authentication keys applicable to Terminal Link
with extreme care. Each party hereby irrevocably authorizes
the other to act in accordance with and rely on Certificates
and notices received by it through the Terminal Link. Each
party acknowledges that it is its responsibility to assure
that only its authorized persons use the Terminal Link on its
behalf, and that a party shall not be responsible nor liable
for use of the Terminal Link on its behalf of the other party
by unauthorized persons except that the other party shall be
liable for such use thereof by unauthorized persons who have
obtained access thereto as a result of the bad faith or
willful misconduct of such party or any of its officers or
employees.
- 38 -
9. Notwithstanding anything else in this Agreement to
the contrary, neither party shall have any liability to the
other for any losses, damages, injuries, claims, costs or
expenses arising as a result of a delay, omission or error in
the transmission of a Certificate or notice by use of the
Terminal Link except for money damages for those suffered as
the result of the negligence, bad faith or willfull misconduct
of such party or its officers, employees or agents in an
amount not exceeding for any incident $100,000, provided,
however, that a party shall have no liability under this
Section 9 if the other party fails to comply with the
provisions of Section 11.
10. Without limiting the generality of the foregoing, it
is hereby agreed that in no event shall either party or any
manufacturer or supplier of its computer equipment, software
or services relating to the Terminal Link be responsible for
any special, indirect, incidental or consequential damages
which the other party may incur or experience by reason of its
use of the Terminal Link even if such party, manufacturer or
supplier has been advised of the possibility of such damages,
nor with respect to the use of the Terminal Link shall either
party or any such manufacturer or supplier be liable for acts
of God, or with respect to the following to the extent beyond
such person's reasonable control: machine or computer
breakdown or malfunction, interruption or malfunction of
communication facilities, labor difficulties or any other
similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors,
omissions or interruptions in, or delay or unavailability of,
the Terminal Link as promptly as practicable, and in any event
within 24 hours after the earliest of (i) discovery thereof,
(ii) the business day on which discovery should have occurred
through the exercise of reasonable care and (iii) in the case
of any error, the date of actual receipt of the earliest
notice which reflects such error, it being agreed that
discovery and receipt of notice may only occur on a business
day. The Custodian shall promptly advise the Fund whenever the
Custodian learns of any errors, omissions or interruption in,
or delay or unavailability of, the Terminal Link.
12. Each party shall, as soon as practicable after its
receipt of a Certificate or of any notice transmitted by the
Terminal Link, verify to the other party by use of the
Terminal Link its receipt of such Certificate or notice, and
in the absence of such verification a party to whom a
Certificate or notice is sent shall not be liable for any
failure to act in accordance with such Certificate or notice,
and the sending party may not claim that such Certificate or
notice was received by the other.
- 39 -
ARTICLE XVIII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed
by two of the present Officers of the Fund under its seal,
setting forth the names and the signatures of the present
Authorized Persons. The Fund agrees to furnish to the
Custodian a new Certificate in similar form in the event that
any such present Authorized Person ceases to be an Authorized
Person or in the event that other or additional Authorized
Persons are elected or appointed. Until such new Certificate
shall be received, the Custodian shall be entitled to rely and
to act upon Oral Instructions, Written Instructions, or
signatures of the present Authorized Persons as set forth in
the last delivered Certificate to the extent provided by this
Agreement.
2. Annexed hereto as Appendix B is a Certificate signed
by two of the present Officers of the Fund under its seal,
setting forth the names and the signatures of the present Of-
ficers of the Fund. The Fund agrees to furnish to the
Custodian a new Certificate in similar form in the event any
such present Officer ceases to be an Officer of the Fund, or
in the event that other or additional Officers are elected or
appointed. Until such new Certificate shall be received, the
Custodian shall be entitled to rely and to act upon the
signatures of the Officers as set forth in the last delivered
Certificate to the extent provided by this Agreement.
3. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Custodian, other than any Certificate or Written Instructions,
shall be sufficiently given if addressed to the Custodian and
mailed or delivered to it at its offices at 90 Washington
Street, New York, New York 10286, or at such other place as
the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Fund shall be sufficiently given if addressed to the Fund and
mailed or delivered to it at its office at the address for the
Fund first above written, or at such other place as the Fund
may from time to time designate in writing.
5. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties
with the same formality as this Agreement and approved by a
resolution of the Board of Trustees of the Fund, except that
Appendices A and B may be amended unilaterally by the Fund
without such an approving resolution.
- 40 -
6. This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of the
Custodian, or by the Custodian or The Bank of New York without
the written consent of the Fund, authorized or approved by a
resolution of the Fund's Board of Trustees. For purposes of
this paragraph, no merger, consolidation, or amalgamation of
the Custodian, The Bank of New York, or the Fund shall be
deemed to constitute an assignment of this Agreement.
7. This Agreement shall be construed in accordance with
the laws of the State of New York without giving effect to
conflict of laws principles thereof. Each party hereby
consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any
dispute arising hereunder and hereby waives its right to trial
by jury.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.
9. A copy of the Declaration of Trust of the Fund is on
file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on
behalf of the Board of Trustees of the Fund as Trustees and
not individually and that the obligations of this instrument
are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and property
of the Fund; provided, however, that the Declaration of Trust
of the Fund provides that the assets of a particular Series of
the Fund shall under no circumstances be charged with li-
abilities 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.
- 41 -
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers,
thereunto duly authorized and their respective seals to be
hereunto affixed, as of the day and year first above written.
DEAN WITTER Retirement Series
______________________________
[SEAL] By: David A. Hughey
_______________________
Attest:
Lou Anne McInnis
_______________________
THE BANK OF NEW YORK
[SEAL] By: Steve Grunston
_______________________
Attest:
Vincent M. Blazewicz, V.P.
__________________________
APPENDIX A
I, , President and I,
, of DEAN WITTER
, a Massachusetts business trust (the "Fund"), do
hereby certify that:
The following individuals have been duly authorized by
the Board of Trustees of the Fund in conformity with the
Fund's Declaration of Trust and By-Laws to give Oral Instruc-
tions and Written Instructions on behalf of the Fund, except
that those persons designated as being an "Officer of DWTC"
shall be an Authorized Person only for purposes of Articles
XII and XIII. The signatures set forth opposite their
respective names are their true and correct signatures:
Name Position Signature
_________________ ________________ _________________
APPENDIX B
I, , President and I,
, of DEAN WITTER , a
Massachusetts business trust (the "Fund"), do hereby certify
that:
The following individuals for whom a position other than
"Officer of DWTC" is specified serve in the following posi-
tions with the Fund and each has been duly elected or ap-
pointed by the Board of Trustees of the Fund to each such
position and qualified therefor in conformity with the Fund's
Declaration of Trust and By-Laws. With respect to the
following individuals for whom a position of "Officer of DWTC"
is specified, each such individual has been designated by a
resolution of the Board of Trustees of the Fund to be an
Officer for purposes of the Fund's Custody Agreement with The
Bank of New York, but only for purposes of Articles XII and
XIII thereof and a certified copy of such resolution is
attached hereto. The signatures of each individual below set
forth opposite their respective names are their true and
correct signatures:
Name Position Signature
____________________ ___________________ _________________
APPENDIX C
The undersigned, hereby
certifies that he or she is the duly elected and acting
of DEAN WITTER (the "Fund"), further
certifies that the following resolutions were adopted by the
Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum at all times present and that such
resolutions have not been modified or rescinded and are in
full force an effect as of the date hereof.
RESOLVED, that The Bank New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agree-
ment") is authorized and instructed on a continuous and ongo-
ing basis to act in accordance with, and to rely on instruc-
tions by the Fund to the Custodian communicated by a Terminal
Link as defined in the Custody Agreement.
RESOLVED, that the Fund shall establish access codes and
grant use of such access codes only to officers of the Fund as
defined in the Custody Agreement, and shall establish internal
safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes.
RESOLVED, that Officers of the Fund as defined in the
Custody Agreement shall, following the establishment of such
access codes and such internal safekeeping procedures, advise
the Custodian that the same have been established by deliver-
ing a Certificate, as defined in the Custody Agreement, and
the Custodian shall be entitled to rely upon such advice.
IN WITNESS WHEREOF, I hereunto set my hand in the seal of
DEAN WITTER , as of the day of ,
199 .
--------------------
APPENDIX D
I, , an Assistant Vice
President with THE BANK OF NEW YORK do hereby designate the
following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
APPENDIX E
The following books and records pertaining to Fund shall
be prepared and maintained by the Custodian and shall be the
property of the Fund:
EXHIBIT A
CERTIFICATION
The undersigned, Sheldon Curtis, hereby certifies
that he or she is the duly elected and acting Secretary of
Dean Witter Retirement Series, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution
was adopted by the Board of Trustees of the Fund at a meeting
duly held on July 29, 1992, at which a quorum was at all
times present and that such resolution has not been modified
or rescinded and is in full force and effect as of the date
hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of August 10, 1992, (the
"Custody Agreement") is authorized and instructed on a
continuous and ongoing basis to deposit in the Book-Entry
System, as defined in the Custody Agreement, all securi-
ties eligible for deposit therein, regardless of the
Series to which the same are specifically allocated, and
to utilize the Book-Entry System to the extent possible
in connection with its performance thereunder, including,
without limitation, in connection with settlements of
purchases and sales of securities, loans of securities,
and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of Dean Witter Retirement Series, as of the 4th day of January, 1993.
/s/ Sheldon Curtis
-------------------------
[SEAL]
EXHIBIT B
CERTIFICATION
The undersigned, Sheldon Curtis, hereby
certifies that he or she is the duly elected and acting
Secretary of Dean Witter Retirement Series, a Massachusetts business
Trust (the "Fund"), and further certifies that the following
resolution was adopted by the Board of Trustees of the Fund at
a meeting duly held on July 29, 1992, at which a quorum
was at all times present and that such resolution has not been
modified or rescinded and is in full force and effect as of
the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of August 10, 1992, (the
"Custody Agreement") is authorized and instructed on a
continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody Agree-
ment, to the contrary to deposit in The Depository Trust
Company ("DTC"), as a "Depository" as defined in the
Custody Agreement, all securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize DTC to the extent
possible in connection with its performance thereunder,
including, without limitation, in connection with
settlements of purchases and sales of securities, loans
of securities, and deliveries and returns of securities
collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of Dean Witter Retirement Series, as of the 4th day of January, 1993.
/s/ Sheldon Curtis
-------------------------
[SEAL]
EXHIBIT B-1
CERTIFICATION
The undersigned, Sheldon Curtis, hereby
certifies that he or she is the duly elected and acting
Secretary of Dean Witter Retirement Series, a Massachusetts
business Trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of
the Fund at a meeting duly held on July 29, 1992, at which a quorum
was at all times present and that such resolution has not been
modified or rescinded and is in full force and effect as of
the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of August 10, 1992 (the
"Custody Agreement") is authorized and instructed on a
continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody Agree-
ment, to the contrary to deposit in the Participants
Trust Company as a Depository, as defined in the Custody
Agreement, all securities eligible for deposit therein,
regardless of the Series to which the same are
specifically allocated, and to utilize the Participants
Trust Company to the extent possible in connection with
its performance thereunder, including, without limita-
tion, in connection with settlements of purchases and
sales of securities, loans of securities, and deliveries
and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of Dean Witter Retirement Series, as of the 4th day of January, 1993.
/s/ Sheldon Curtis
-------------------------
[SEAL]
EXHIBIT C
CERTIFICATION
The undersigned, Sheldon Curtis, hereby
certifies that he or she is the duly elected and acting Secretary
of Dean Witter Retirement Series, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution
was adopted by the Board of Trustees of the Fund at a meeting
duly held on July 29, 1992, at which a quorum was at all
times present and that such resolution has not been modified
or rescinded and is in full force and effect as of the date
hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of August 10, 1992, (the
"Custody Agreement") is authorized and instructed on a
continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody Agree-
ment, to the contrary, to accept, utilize and act with
respect to Clearing Member confirmations for Options and
transaction in Options, regardless of the Series to which
the same are specifically allocated, as such terms are
defined in the Custody Agreement, as provided in the
Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of Dean Witter Retirement Series, as of the 4th day of January, 1993.
/s/ Sheldon Curtis
-------------------------
[SEAL]
<PAGE>
SERVICES AGREEMENT
AGREEMENT made as of the 17th day of April, 1995 by and between Dean Witter
InterCapital Inc., a Delaware corporation (herein referred to as
"InterCapital"), and Dean Witter Services Company Inc., a Delaware
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
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.
1
<PAGE>
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, 1995, 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 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 written agreement executed by each of the parties hereto.
2
<PAGE>
11. This Agreement may be assigned by either party with the written
consent of the other party.
12. 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:
................................
3
<PAGE>
SCHEDULE A
DEAN WITTER FUNDS
AT APRIL 17, 1995
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 Balanced Growth Fund
7. Dean Witter Balanced Income Fund
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter California Tax-Free Income Fund
10. Dean Witter Capital Growth Securities
11. Dean Witter Convertible Securities Trust
12. Dean Witter Developing Growth Securities Trust
13. Dean Witter Diversified Income Trust
14. Dean Witter Dividend Growth Securities Inc.
15. Dean Witter European Growth Fund Inc.
16. Dean Witter Federal Securities Trust
17. Dean Witter Global Asset Allocation Fund
18. Dean Witter Global Dividend Growth Securities
19. Dean Witter Global Short-Term Income Fund Inc.
20. Dean Witter Global Utilities Fund
21. Dean Witter Health Sciences Trust
22. Dean Witter High Income Securities
23. Dean Witter High Yield Securities Inc.
24. Dean Witter Intermediate Income Securities
25. Dean Witter International Small Cap Fund
26. Dean Witter Limited Term Municipal Trust
27. Dean Witter Liquid Asset Fund Inc.
28. Dean Witter Managed Assets Trust
29. Dean Witter Mid-Cap Growth Fund
30. Dean Witter Multi-State Municipal Series Trust
31. Dean Witter National Municipal Trust
32. Dean Witter Natural Resource Development Securities Inc.
33. Dean Witter New York Municipal Money Market Trust
34. Dean Witter New York Tax-Free Income Fund
35. Dean Witter Pacific Growth Fund Inc.
36. Dean Witter Precious Metals and Minerals Trust
37. Dean Witter Premier Income Trust
38. Dean Witter Retirement Series
39. Dean Witter Select Dimensions Series
40. Dean Witter Select Municipal Reinvestment Fund
41. Dean Witter Short-Term Bond Fund
42. Dean Witter Short-Term U.S. Treasury Trust
43. Dean Witter Strategist Fund
44. Dean Witter Tax-Exempt Securities Trust
45. Dean Witter Tax-Free Daily Income Trust
46. Dean Witter U.S. Government Money Market Trust
47. Dean Witter U.S. Government Securities Trust
48. Dean Witter Utilities Fund
49. Dean Witter Value-Added Market Series
50. Dean Witter Variable Investment Series
51. Dean Witter World Wide Income Trust
52. Dean Witter World Wide Investment Trust
CLOSED-END FUNDS
53. High Income Advantage Trust
54. High Income Advantage Trust II
55. High Income Advantage Trust III
56. InterCapital Income Securities Inc.
57. Dean Witter Government Income Trust
58. InterCapital Insured Municipal Bond Trust
59. InterCapital Insured Municipal Trust
60. InterCapital Insured Municipal Income Trust
61. InterCapital California Insured Municipal Income Trust
62. InterCapital Insured Municipal Securities
63. InterCapital Insured California Municipal Securities
64. InterCapital Quality Municipal Investment Trust
65. InterCapital Quality Municipal Income Trust
66. InterCapital Quality Municipal Securities
67. InterCapital California Quality Municipal Securities
68. InterCapital New York Quality Municipal Securities
4
<PAGE>
SCHEDULE B
DEAN WITTER SERVICES COMPANY INC.
SCHEDULE OF ADMINISTRATIVE FEES--APRIL 17, 1995
Monthly compensation calculated daily by applying the following annual
rates to a fund's net assets:
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
- ------------------
<S> <C>
Dean Witter Balanced Income Fund 0.60% to the net assets.
Dean Witter California Tax-Free 0.055% of the portion of daily net assets
Income Fund not exceeding $500 million; 0.0525% of the
portion exceeding $500 million but not
exceeding $750 million; 0.050% of the
portion exceeding $750 million but not
exceeding $1 billion; and 0.0475% of the
portion of the daily net assets exceeding
$1 billion.
Dean Witter Convertible Securities 0.060% of the portion of the daily net
Securities Trust assets not exceeding $750 million; .055% of
the portion of the daily net assets
exceeding $750 million but not exceeding
$1 billion; 0.050% of the portion of the daily
net assets of the exceeding $1 billion but
not exceeding $1.5 billion; 0.0475% of the
portion of the daily net assets exceeding
$1.5 billion but not exceeding $2 billion;
0.045% of the portion of the daily net
assets exceeding $2 billion but not
exceeding $3 billion; and 0.0425% of the
portion of the daily net assets exceeding
$3 billion.
Dean Witter Diversified 0.040% of the net assets.
Income Trust
Dean Witter Federal Securities 0.055% of the portion of the daily net
Trust assets not exceeding $1 billion; 0.0525% of
the portion of the daily net assets
exceeding $1 billion but not exceeding
$1.5 billion; 0.050% of the portion of the daily
net assets exceeding $1.5 billion but not
exceeding $2 billion; 0.0475% of the portion
of the daily net assets exceeding $2 billion
but not exceeding $2.5 billion; 0.045% of
the portion of daily net assets exceeding
$2.5 billion but not exceeding $5 billion;
0.0425% of the portion of the daily net
assets exceeding $5 billion but not
exceeding $7.5 billion; 0.040% of the
portion of the daily net assets exceeding
$7.5 billion but not exceeding $10 billion;
0.0375% of the portion of the daily net
assets exceeding $10 billion but not
exceeding $12.5 billion; and 0.035% of the
portion of the daily net assets exceeding
$12.5 billion.
Dean Witter Global Short-Term 0.055% of the portion of the daily net
Income Fund assets not exceeding $500 million; and
0.050% of the portion of the daily net
assets exceeding $500 million.
Dean Witter High Income 0.050% to the net assets.
Securities
Dean Witter High Yield 0.050% of the portion of the daily net
Securities Inc. assets not exceeding $500 million; 0.0425%
of the portion of the daily net assets
exceeding $500 million but not exceeding
$750 million; 0.0375% of the portion of the
daily net assets exceeding $750 million but
not exceeding $1 billion; 0.035% of the
portion of the daily net assets exceeding
$1 billion but not exceeding $2 billion;
0.0325% of the portion of the daily net
assets exceed-
B-1
<PAGE>
ing $2 billion but not exceeding
$3 billion; and 0.030% of the portion of
daily net assets exceeding $3 billion.
Dean Witter Intermediate 0.060% of the portion of the daily net
Income Securities assets not exceeding $500 million; 0.050% of
the portion of the daily net assets
exceeding $500 million but not exceeding
$750 million; 0.040% of the portion of the
daily net assets exceeding $750 million but
not exceeding $1 billion; and 0.030% of the
portion of the daily net assets exceeding
$1 billion.
Dean Witter Limited Term 0.050% to the net assets.
Municipal Trust
Dean Witter Multi-State Municipal 0.035% to the net assets.
Series Trust (10)
Dean Witter National 0.035% to the net assets.
Municipal Trust
Dean Witter New York Tax-Free 0.055% to the net assets not exceeding
Income Fund $500 million and 0.0525% of the net assets
exceeding $500 million.
Dean Witter Premier 0.050% to the net assets.
Income Trust
Dean Witter Retirement Series 0.065% to the net assets.
Intermediate Income
Dean Witter Retirement Series 0.065% to the net assets.
U.S. Government Securities Trust
Dean Witter Select Dimensions 0.65% to the net assets.
Series-North American Government
Securities Portfolio
Dean Witter Short-Term 0.070% to the net assets.
Bond Fund
Dean Witter Short-Term U.S. 0.035% to the net assets.
Treasury Trust
Dean Witter Tax-Exempt 0.050% of the portion of the daily net
Securities Trust assets not exceeding $500 million; 0.0425%
of the portion of the daily net assets
exceeding $500 million but not exceeding
$750 million; 0.0375% of the portion of the
daily net assets exceeding $750 million but
not exceeding $1 billion; and 0.035% of the
portion of the daily net assets exceeding
$1 billion but not exceeding $1.25 billion;
.0325% of the portion of the daily net
assets exceeding $1.25 billion.
Dean Witter U.S. Government 0.050% of the portion of such daily net
Securities Trust assets not exceeding $1 billion; 0.0475% of
the portion of such daily net assets
exceeding $1 billion but not exceeding
$1.5 billion; 0.045% of the portion of such daily
net assets exceeding $1.5 billion but not
exceeding $2 billion; 0.0425% of the portion
of such daily net assets exceeding
$2 billion but not exceeding $2.5 billion;
0.040% of that portion of such daily net
assets exceeding $2.5 billion but not
exceeding $5 billion; 0.0375% of that
portion of such daily net assets exceeding
$5 billion but not exceeding $7.5 billion;
0.035% of that portion of such daily net
assets exceeding $7.5 billion but not
exceeding $10 billion; 0.0325% of that
portion of such daily net assets exceeding
$10 billion but not exceeding $12.5 billion;
and 0.030% of that portion of such daily net
assets exceeding $12.5 billion.
B-2
<PAGE>
Dean Witter Variable Investment 0.050% to the net assets.
Series-High Yield
Dean Witter Variable Investment 0.050% to the net assets.
Series-Quality Income
Dean Witter World Wide Income 0.075% of the daily net assets up to
Trust $250 million; 0.060% of the portion of the daily
net assets exceeding $250 million but not
exceeding $500 million; 0.050% of the
portion of the daily net assets of the
exceeding $500 million but not exceeding
$750 milliion; 0.040% of the portion of the
daily net assets exceeding $750 million but
not exceeding $1 billion; and 0.030% of the
daily net assets exceeding $1 billion.
Dean Witter Select Municipal 0.050% to the net assets.
Reinvestment Fund
EQUITY FUNDS
- ------------
Dean Witter American Value 0.0625% of the portion of the daily net
Fund assets not exceeding $250 million and 0.050%
of the portion of the daily net assets
exceeding $250 million.
Dean Witter Balanced Growth Fund 0.60% to the net assets.
Dean Witter Capital Growth 0.065% to the portion of daily net assets
Securities not exceeding $500 million; 0.055% of the
portion exceeding $500 million but not
exceeding $1 billion; 0.050% of the portion
exceeding $1 billion but not exceeding
$1.5 billion; and 0.0475% of the net assets
exceeding $1.5 billion.
Dean Witter Developing Growth 0.050 of the portion of daily net assets not
Securities Trust exceeding $500 million; and 0.0475% of the
portion of daily net assets exceeding $500
million.
Dean Witter Dividend Growth 0.0625% of the portion of the daily net
Securities Inc. assets not exceeding $250 million; 0.050% of
the portion exceeding $250 million but not
exceeding $1 billion; 0.0475% of the portion
of daily net assets exceeding $1 billion but
not exceeding $2 billion; 0.045% of the
portion of daily net assets exceeding
$2 billion but not exceeding $3 billion;
0.0425% of the portion of daily net assets
exceeding $3 billion but not exceeding
$4 billion; 0.040% of the portion of daily net
assets exceeding $4 billion but not
exceeding $5 billion; 0.0375% of the portion
of the daily net assets exceeding $5 billion
but not exceeding $6 billion; 0.035% of the
portion of the daily net assets exceeding
$6 billion but not exceeding $8 billion; and
0.0325% of the portion of the daily net
assets exceeding $8 billion.
Dean Witter European Growth 0.060% of the portion of daily net assets
Fund Inc. not exceeding $500 million; and 0.057% of
the portion of daily net assets exceeding
$500 million.
Dean Witter Global Asset 1.0% to the net assets.
Allocation Fund
Dean Witter Global Dividend 0.075% to the net assets.
Growth Securities
Dean Witter Global Utilities Fund 0.065% to the net assets.
Dean Witter Health Sciences Trust 0.10% to the net assets.
B-3
<PAGE>
Dean Witter International 0.075% to the net assets.
Small Cap Fund
Dean Witter Managed Assets Trust 0.060% to the daily net assets not exceeding
$500 million and 0.055% to the daily net
assets exceeding $500 million.
Dean Witter Mid-Cap Growth Fund 0.75% to the net assets.
Dean Witter Natural Resource 0.0625% of the portion of the daily net
Development Securities Inc. assets not exceeding $250 million and 0.050%
of the portion of the daily net assets
exceeding $250 million.
Dean Witter Pacific Growth 0.060% of the portion of daily net assets
Fund Inc. not exceeding $1 billion; and 0.057% of the
portion of daily net assets exceeding
$1 billion.
Dean Witter Precious Metals 0.080% to the net assets.
and Minerals Trust
Dean Witter Retirement Series 0.085% to the net assets.
American Value
Dean Witter Retirement Series 0.085% to the net assets.
Capital Growth
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 0.065% to the net assets.
Intermediate Income Securities
Dean Witter Retirement Series 0.050% to the net assets.
Liquid Asset
Dean Witter Retirement Series 0.085% to the net assets.
Strategist
Dean Witter Retirement Series 0.050% to the net assets.
U.S. Government Money Market
Dean Witter Retirement Series 0.065% to the net assets.
U.S. Government Securities
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 Select Dimensions Series-
American Value Portfolio 0.625% to the net assets.
Balanced Portfolio 0.75% to the net assets.
Core Equity Portfolio 0.85% to the net assets.
Developing Growth Portfolio 0.50% to the net assets.
Diversified Income Portfolio 0.40% to the net assets.
Dividend Growth Portfolio 0.625% to the net assets.
Emerging Markets Portfolio 1.25% to the net assets.
Global Equity Portfolio 1.0% to the net assets.
Utilities Portfolio 0.65% to the net assets.
Value-Added Market Portfolio 0.50% to the net assets.
Dean Witter Strategist Fund 0.060% of the portion of daily net assets
not exceeding $500 million; 0.055% of the
portion of the daily net assets exceeding
$500 million but not exceeding $1 billion;
and 0.050% of the portion of the daily net
assets exceeding $1 billion.
Dean Witter Utilities Fund 0.065% of the portion of daily net assets
not exceeding $500 million; 0.055% of the
portion exceeding $500 million but not
exceeding $1 billion; 0.0525% of the portion
exceeding $1 billion but not exceeding
$1.5 billion; 0.050% of the portion exceeding
$1.5 billion but not exceeding $2.5 billion;
0.0475% of the portion exceeding
$2.5 billion but not exceed-
B-4
<PAGE>
ing $3.5 billion; 0.045% of the portion of
the daily net assets exceeding $3.5 but not
exceeding $5 billion; and 0.0425% of the
portion of daily net assets exceeding
$5 billion.
Dean Witter Value-Added Market 0.050% of the portion of daily net assets
Series not exceeding $500 million; and 0.45% of the
portion of daily net assets exceeding
$500 million.
Dean Witter Variable Investment 0.065% to the net assets.
Series-Capital Growth
Dean Witter Variable Investment 0.0625% of the portion of daily net assets
Series-Dividend Growth not exceeding $500 million; and 0.050% of
the portion of daily net assets exceeding
$500 million.
Dean Witter Variable Investment 0.050% to the net assets.
Series-Equity
Dean Witter Variable Investment 0.060% to the net assets.
Series-European Growth
Dean Witter Variable Investment 0.050% to the net assets.
Series-Managed
Dean Witter Variable Investment 0.065% of the portion of daily net assets
Series-Utilities exceeding $500 million and 0.055% of the
portion of daily net assets exceeding
$500 million.
Dean Witter World Wide 0.055% of the portion of daily net assets
Investment Trust not exceeding $500 million; and 0.05225% of
the portion of daily net assets exceeding
$500 million.
MONEY MARKET FUNDS
- ------------------
Active Assets Account (4) 0.050% of the portion of the daily net
assets not exceeding $500 million; 0.0425%
of the portion of the daily net assets
exceeding $500 million but not exceeding
$750 million; 0.0375% of the portion of the
daily net assets exceeding $750 million but
not exceeding $1 billion; 0.035% of the
portion of the daily net assets exceeding
$1 billion but not exceeding $1.5 billion;
0.0325% of the portion of the daily net
assets exceeding $1.5 billion but not
exceeding $2 billion; 0.030% of the portion
of the daily net assets exceeding $2 billion
but not exceeding $2.5 billion; 0.0275% of
the portion of the daily net assets
exceeding $2.5 billion but not exceeding
$3 billion; and 0.025% of the portion of the
daily net assets exceeding $3 billion.
Dean Witter California Tax-Free 0.050% of the portion of the daily net
Daily Income Trust assets not exceeding $500 million; 0.0425%
of the portion of the daily net assets
exceeding $500 million but not exceeding
$750 million; 0.0375% of the portion of the
daily net assets exceeding $750 million but
not exceeding $1 billion; 0.035% of the
portion of the daily net assets exceeding
$1 billion but not exceeding $1.5 billion;
0.0325% of the portion of the daily net
assets exceeding $1.5 billion but not
exceeding $2 billion; 0.030% of the portion
of the daily net assets exceeding $2 billion
but not exceeding $2.5 billion; 0.0275% of
the portion of the daily net assets
exceeding $2.5 billion but not exceeding
B-5
<PAGE>
$3 billion; and 0.025% of the portion of
the daily net assets exceeding $3 billion.
Dean Witter Liquid Asset 0.050% of the portion of the daily net
Fund Inc. assets not exceeding $500 million; 0.0425%
of the portion of the daily net assets
exceeding $500 million but not exceeding
$750 million; 0.0375% of the portion of the
daily net assets exceeding $750 million but
not exceeding $1 billion; 0.035% of the
portion of the daily net assets exceeding
$1 billion but not exceeding $1.35 billion;
0.0325% of the portion of the daily net
assets exceeding $1.35 billion but not
exceeding $1.75 billion; 0.030% of the
portion of the daily net assets exceeding
$1.75 billion but not exceeding $2.15 billion;
0.0275% of the portion of the daily
net assets exceeding $2.15 billion but not
exceeding $2.5 billion; 0.025% of the
portion of the daily net assets exceeding
$2.5 billion but not exceeding $15 billion;
0.0249% of the portion of the daily net
assets exceeding $15 billion but not
exceeding $17.5 billion; and 0.0248% of the
portion of the daily net assets exceeding
$17.5 billion.
Dean Witter New York Municipal 0.050% of the portion of the daily net
Money Market Trust assets not exceeding $500 million; 0.0425%
of the portion of the daily net assets
exceeding $500 million but not exceeding
$750 million; 0.0375% of the portion of the
daily net assets exceeding $750 million but
not exceeding $1 billion; 0.035% of the
portion of the daily net assets exceeding
$1 billion but not exceeding $1.5 billion;
0.0325% of the portion of the daily net
assets exceeding $1.5 billion but not
exceeding $2 billion; 0.030% of the portion
of the daily net assets exceeding $2 billion
but not exceeding $2.5 billion; 0.0275% of
the portion of the daily net assets
exceeding $2.5 billion but not exceeding $3
billion; and 0.025% of the portion of the
daily net assets exceeding $3 billion.
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
Dean Witter Select Dimensions 0.50% to the net assets.
Series-Money Market Portfolio
Dean Witter Tax-Free Daily 0.050% of the portion of the daily net
Income Trust assets not exceeding $500 million; 0.0425%
of the portion of the daily net assets
exceeding $500 million but not exceeding
$750 million; 0.0375% of the portion of the
daily net assets exceeding $750 million but
not exceeding $1 billion; 0.035% of the
portion of the daily net assets exceeding
$1 billion but not exceeding $1.5 billion;
0.0325% of the portion of the daily net
assets exceeding $1.5 billion but not
exceeding $2 billion; 0.030% of the portion
of the daily net assets exceeding $2 billion
but not exceeding $2.5 billion; 0.0275% of
the portion of the daily net assets
exceeding $2.5 billion but not exceeding
$3 billion; and 0.025% of the portion of the
daily net assets exceeding $3 billion.
B-6
<PAGE>
Dean Witter U.S. Government 0.050% of the portion of the daily net
Money Market Trust assets not exceeding $500 million; 0.0425%
of the portion of the daily net assets
exceeding $500 million but not exceeding
$750 million; 0.0375% of the portion of the
daily net assets exceeding $750 million but
not exceeding $1 billion; 0.035% of the
portion of the daily net assets exceeding
$1 billion but not exceeding $1.5 billion;
0.0325% of the portion of the daily net
assets exceeding $1.5 billion but not
exceeding $2 billion; 0.030% of the portion
of the daily net assets exceeding $2 billion
but not exceeding $2.5 billion; 0.0275% of
the portion of the daily net assets
exceeding $2.5 billion but not exceeding
$3 billion; and 0.025% of the portion of the
daily net assets exceeding $3 billion.
Dean Witter Variable Investment 0.050% to the net assets.
Series-Money Market
</TABLE>
Monthly compensation calculated weekly by applying the following annual
rates to the weekly net assets.
<TABLE>
<CAPTION>
CLOSED-END FUNDS
- ----------------
<S> <C>
Dean Witter Government Income 0.060% to the average weekly net assets.
Trust
High Income Advantage Trust 0.075% of the portion of the average weekly
net assets not exceeding $250 million;
0.060% of the portion of average weekly net
assets exceeding $250 million and not
exceeding $500 million; 0.050% of the
portion of average weekly net assets
exceeding $500 million and not exceeding
$750 million; 0.040% of the portion of
average weekly net assets exceeding $750
million and not exceeding $1 billion; and
0.030% of the portion of average weekly net
assets exceeding $1 billion.
High Income Advantage Trust II 0.075% of the portion of the average weekly
net assets not exceeding $250 million;
0.060% of the portion of average weekly net
assets exceeding $250 million and not
exceeding $500 million; 0.050% of the
portion of average weekly net assets
exceeding $500 million and not exceeding
$750 million; 0.040% of the portion of
average weekly net assets exceeding $750
million and not exceeding $1 billion; and
0.030% of the portion of average weekly net
assets exceeding $1 billion.
High Income Advantage Trust III 0.075% of the portion of the average weekly
net assets not exceeding $250 million;
0.060% of the portion of average weekly net
assets exceeding $250 million and not
exceeding $500 million; 0.050% of the
portion of average weekly net assets
exceeding $500 million and not exceeding
$750 million; 0.040% of the portion of the
average weekly net assets exceeding $750
million and not exceeding $1 billion; and
0.030% of the portion of average weekly net
assets exceeding $1 billion.
InterCapital Income Securities Inc. 0.050% to the average weekly net assets.
InterCapital Insured Municipal 0.035% to the average weekly net assets.
Bond Trust
B-7
<PAGE>
InterCapital Insured Municipal
Trust 0.035% to the average weekly net assets.
InterCapital Insured Municipal
Income Trust 0.035% to the average weekly net assets.
InterCapital California Insured
Municipal Income Trust 0.035% to the average weekly net assets.
InterCapital Quality Municipal
Investment Trust 0.035% to the average weekly net assets.
InterCapital New York Quality
Municipal Securities 0.035% to the average weekly net assets.
InterCapital Quality Municipal
Income Trust 0.035% to the average weekly net assets.
InterCapital Quality Municipal
Securities 0.035% to the average weekly net assets.
InterCapital California Quality
Municipal Securities 0.035% to the average weekly net assets.
InterCapital Insured Municipal
Securities 0.035% to the average weekly net assets.
InterCapital Insured California
Municipal Securities 0.035% to the average weekly net assets.
</TABLE>
B-8
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 4 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
September 13, 1995, relating to the financial statements and financial
highlights of Dean Witter Retirement Series, which appears in such Statement of
Additional Information, and to the incorporation by reference of our report
into the Prospectus which constitutes part of this Registration Statement. We
also consent to the 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 26, 1995
AMENDED AND RESTATED PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
DEAN WITTER RETIREMENT SERIES
WHEREAS, Dean Witter Retirement Series (the "Fund") is engaged in business
as an open-end management investment company and is registered as such under
the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, on November 23, 1992, the Fund and Dean Witter Reynolds Inc.
("DWR") entered into a separate Distribution Agreement, pursuant to which the
Fund employed DWR as distributor of the Fund's shares; and
WHEREAS, on November 23, 1992, the Fund adopted a Plan of Distribution
pursuant to Rule 12b-1 under the Act, and the Trustees then determined that
there was a reasonable likelihood that the Plan of Distribution would benefit
the Fund and its shareholders; and
WHEREAS, the Trustees believe that continuation of said Plan of
Distribution, as amended and restated herein, is reasonably likely to continue
to benefit the Fund and its shareholders; and
WHEREAS, the Fund and DWR desire to substitute DW Distributors Inc. (the
"Distributor") in the place of DWR as distributor of the Fund's shares; and
WHEREAS, the Fund, DWR and the Distributor intend that DWR will continue to
promote the sale of Fund shares and provide personal services to Fund
shareholders with respect to their holdings of Fund shares; and
WHEREAS, the Fund and the Distributor have entered into a separate
Distribution Agreement dated as of this date, pursuant to which the Fund has
employed the Distributor in such capacity during the continuous offering of
shares of the Fund; and
WHEREAS, the Fund is authorized to issue shares of beneficial interest in
separate portfolios or series (the "Series") with each such Series representing
interests in a separate portfolio of securities and other assets.
NOW, THEREFORE, the Fund hereby amends and restates the Plan of
Distribution previously adopted, and the Distributor hereby agrees to the terms
of said Plan of Distribution (the "Plan"), as amended and restated herein, in
accordance with Rule 12b-1 under the Act on the following terms and conditions;
1. Subject to the supervision of the Board of Trustees and the terms of
the Distribution Agreement, the Distributor and any of its affiliates,
including Dean Witter, Discover & Co. ("DWDC"), Dean Witter InterCapital Inc.
("InterCapital") or DWR, are authorized to utilize their own resources to
finance services and expenses incurred by any of them in connection with the
distribution of the Fund's shares or services to shareholders, including: (1)
compensation to, and expenses of, account executives and other employees,
including overhead and telephone expenses; (2) sales incentives and bonuses to
sales representatives of the Distributor, DWR, its affiliates and other broker-
dealers, and to marketing personnel in connection with promoting sales of
shares of the Fund; (3) expenses incurred in connection with promoting sales of
shares of the Fund; (4) preparing and distributing sales literature; and (5)
providing advertising and promotional activities, including direct mail
solicitation and television, radio, newspaper, magazine and other media
advertisements.
2. The Distributor hereby undertakes to directly, or indirectly through
DWDC, InterCapital or DWR, bear all costs of rendering the services to be
performed by it under this Plan and under the Distribution Agreement.
3. No Series of the Fund will make separate payments to the Distributor
or any other party pursuant to this Plan, it being recognized that the Series
pay, and will continue to pay, management fees to InterCapital, pursuant to the
Investment Management Agreement or Agreements in effect between the Series and
InterCapital. To the extent that any payment made by any Series of the Fund to
the Distributor or InterCapital, including the payment of any management fees,
should be deemed to be indirect financing of any activity primarily intended to
result in the sales of shares of the Fund within the purview of Rule 12b-1
under the Act, then such payments shall be deemed to be authorized by this
Plan.
4. The Distributor shall provide the Fund for review by the Board of
Trustees, and the Board of Trustees shall review, promptly after the end of
each fiscal quarter a written report regarding the distribution expenses
incurred by the Distributor, DWDC, InterCapital or DWR on behalf of the Fund
during such fiscal quarter, which report shall include: (1) an itemization of
the types of expenses and the purposes therefor; (2) the amounts of such
expenses; and (3) a description of the benefits derived by the Fund.
5. This Plan, as amended and restated, shall become effective upon
approval by a vote of the Board of Trustees of the Fund, and of the Trustees
who are not "interested persons" of the Fund, as defined in the Act, and who
have no direct or indirect financial interest in the operation of this Plan,
cast in person at a meeting called for the purpose of voting on this Plan.
6. This Plan shall continue in effect until April 30, 1993, and from year
to year thereafter, provided such continuance is specifically approved at least
annually in the manner provided for approval of this Plan in paragraph 5
hereof. This Plan may not be amended to institute the assumption of any
payments to be made directly by the Fund for any services provided herein, and
no material amendments to this Plan shall be made unless approved in the manner
provided for approval in paragraph 5 hereof.
7. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Trustees who are not "interested persons"
of the Fund, as defined in the Act, and who have no direct or indirect
financial interest in the operation of this Plan, or by any Series 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 this
Plan.
8. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons of the Fund shall be committed to the discretion
of the Trustees who not interested persons.
9. The Fund shall preserve copies of this Plan and all reports made
pursuant to paragraph 4 hereof, for a period of not less than six years from
the date of this Plan or any such report, as the case may be, the first two
years in an easily accessible place.
10. This Plan shall be construed in accordance with the laws of the State
of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Act, the latter shall control.
11. The Declaration of Trust establishing Dean Witter Retirement Series,
dated May 14, 1992, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of the Commonwealth
of Massachusetts, provides that the name Dean Witter Retirement Series refers
to the Trustees under the Declaration collectively as Trustees, but not as
individuals or personally; and no Trustee, shareholder, officer, employee or
agent of Dean Witter Retirement Series shall be held to any personal liability,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim or otherwise, in connection with the affairs of said Dean
Witter Retirement Series, but the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the Fund, the Distributor and DWR have executed this
Plan of Distribution, as amended and restated, as of the day and year set forth
below in New York, New York.
Dated: November 23, 1992
As amended on January 4, 1993 DEAN WITTER RETIREMENT SERIES
By: ..........................
Attest:
...................................
DW DISTRIBUTORS INC.
By: ..........................
Attest:
...................................
DEAN WITTER REYNOLDS INC.
By: ..........................
Attest:
...................................
DEAN WITTER RETIREMENT SERIES - LIQUID ASSET FUND
07/31/95
Exhibit 16: Schedule for computation of each performance
quotation provided in the Statement of Additional Information.
(A) The Fund's current yield for the seven days ending
July 31, 1995
(A-B) x 365/N
(1.001168 -1) x 365/7 = 6.09%
The Fund's effective annualized yield for the seven days ending
July 31, 1995
365/N
A - 1
365/7
1.001168 - 1 = 6.28%
WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES
(B) The Fund's current yield for the seven days ending
July 31, 1995
(A-B) x 365/N
(1.000980 -1) x 365/7 = 5.11%
The Fund's effective annualized yield for the seven days ending
July 31, 1995
365/N
A - 1
365/7
1.000980 - 1 = 5.24%
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.
DEAN WITTER RETIREMENT SERIES - U.S. GOV'T MONEY MARKET SERIES
07/31/95
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, 1995
(A-B) x 365/N
(1.001207 -1) x 365/7 = 6.30%
The Fund's effective annualized yield for the seven days ending
July 31, 1995
365/N
A - 1
365/7
1.001207 - 1 = 6.50%
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.
DEAN WITTER RETIREMENT SERIES - U.S. GOV'T MONEY MARKET SERIES
07/31/95
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, 1995
(A-B) x 365/N
(1.000791 -1) x 365/7 = 4.13%
The Fund's effective annualized yield for the seven days ending
July 31, 1995
365/N
A - 1
365/7
1.000791 - 1 = 4.21%
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.
DEAN WITTER RETIREMENT SERIES U.S. GOVERNMENT SECURITIES TRUST
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
30 DAYS AS OF 7/31/95
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 { [ ((20,473.65 - 8,955.38) /419,592.925 X 9.71) +1] -1}
= 3.42%
(B) Without Waiver of Fees and Assumption of Expenses.
DEAN WITTER RETIREMENT SERIES U.S. GOVERNMENT SECURITIES TRUST
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
30 DAYS AS OF 7/31/95
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 { [ ((20,473.65 - 0.00) /419,592.925 X 9.71) +1] -1}
= 6.11%
(C) With Waiver of Fees and Assumption of Expenses.
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER RETIREMENT - INTERMEDIATE INCOME SECURITIES SERIES
30 day Yield as of 7/31/95
6
YIELD = 2{ [ ((a-b)/c * d) + 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 WITHOUT EXPENSES 6
YIELD = 2{ [(( 4412.34-0.00)/91073.475*9.63)+1] -1}
= 6.113594%
YIELD WITH EXPENSES 6
YIELD = 2{ [(( 4412.34-2115.47)/91073.475*9.63)+1] -1}
= 3.163323%
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-95 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ----------- ----------- -------------------- -------------------
<S> <C> <C> <C> <C>
31-Jul-94 $1,077.20 7.72% 1.0000 7.72%
08-Jan-93 $1,097.50 9.75% 2.5519 3.70%
</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
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 YEARS - n COMPOUND RETURN - tb
- ----------- ------------ ----------- --------------------
31-Jul-94 $1,052.90 1.0000 5.29%
08-Jan-93 $1,031.30 2.5572 1.21%
(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 9.75 $10,975 $54,875 $109,750
</TABLE>
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-95 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ----------- ----------- -------------------- -------------------
<S> <C> <C> <C> <C>
31-Jul-94 $1,092.20 9.22% 1.0000 9.22%
12-Jan-93 $1,113.40 11.34% 2.5462 4.31%
</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
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 YEARS - n COMPOUND RETURN - tb
- ----------- ------------ ----------- --------------------
31-Jul-94 $1,063.70 1.0000 6.37%
12-Jan-93 $1,040.70 2.5462 1.58%
(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>
12-Jan-93 11.34 $11,134 $55,670 $111,340
</TABLE>
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>
<CAPTION>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ----------- ----------- -------------------- -------------------
<S> <C> <C> <C> <C>
31-Jul-94 $1,334.80 33.48% 1.0000 33.48%
01-Feb-93 $1,333.50 33.35% 2.4914 12.24%
</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
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 YEARS - n COMPOUND RETURN - tb
- ----------- ------------ ----------- --------------------
31-Jul-94 $1,313.70 1.0000 31.37%
01-Feb-93 $1,304.50 2.4914 11.26%
(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>
01-Feb-93 33.35 $13,335 $66.675 $133,350
</TABLE>
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>
<CAPTION>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ----------- ----------- -------------------- -------------------
<S> <C> <C> <C> <C>
31-Jul-94 $1,230.70 23.07% 1.0000 23.07%
07-Jan-93 $1,399.10 39.91% 2.5599 14.02%
</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
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 YEARS - n COMPOUND RETURN - tb
- ----------- ------------ ----------- --------------------
31-Jul-94 $1,196.00 1.0000 19.60%
07-Jan-93 $1,329.10 2.5599 11.75%
(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>
07-Jan-93 39.91 $13,991 $69,955 $139,910
</TABLE>
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>
<CAPTION>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ----------- ----------- -------------------- -------------------
<S> <C> <C> <C> <C>
31-Jul-94 $1,200.80 20.08% 1.0000 20.08%
02-Feb-93 $1,136.30 13.63% 2.4887 5.27%
</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
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 YEARS - n COMPOUND RETURN - tb
- ----------- ------------ ----------- --------------------
31-Jul-94 $1,168.90 1.00 16.89%
02-Feb-93 $1,101.10 2.4887 3.95%
(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>
02-Feb-93 13.63 $11,363 $56,815 $113,630
</TABLE>
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-95 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ----------- ----------- -------------------- -------------------
<S> <C> <C> <C> <C>
31-Jul-94 $1,121.60 12.16% 1.0000 12.16%
08-Jan-93 $1,222.10 22.21% 2.5572 8.16%
</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
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 YEARS - n COMPOUND RETURN - tb
- ----------- ------------ ----------- --------------------
31-Jul-94 $1,096.00 1.0000 9.60%
08-Jan-93 $1,161.50 2.5572 6.03%
(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 22.21 $12,221 $61,105 $122,210
</TABLE>
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>
<CAPTION>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ----------- ----------- -------------------- -------------------
<S> <C> <C> <C> <C>
31-Jul-94 $1,182.10 18.21% 1.0000 18.21%
07-Jan-93 $1,163.40 16.34% 2.5599 6.09%
</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
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 YEARS - n COMPOUND RETURN - tb
- ----------- ------------ ----------- --------------------
31-Jul-94 $1,157.60 1.0000 15.76%
07-Jan-93 $1,125.20 2.5599 4.72%
(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>
07-Jan-93 16.34 $11,634 $58.170 $116,340
</TABLE>
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-95 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ----------- ----------- -------------------- -------------------
<S> <C> <C> <C> <C>
31-Jul-94 $1,226.50 22.65% 1.0000 22.65%
01-Feb-93 $1,345.00 34.50% 2.4914 12.63%
</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
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 YEARS - n COMPOUND RETURN - tb
- ----------- ------------ ----------- --------------------
31-Jul-94 $1,202.60 1.0000 20.26%
01-Feb-93 $1,309.00 2.4914 11.41%
(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>
01-Feb-93 34.50 $13,450 $67,250 $134,500
</TABLE>
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>
<CAPTION>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 RETURN - TR YEARS - n COMPOUND RETURN - t
- ----------- ----------- ----------- -------------------- -------------------
<S> <C> <C> <C> <C>
31-Jul-94 $1,060.80 6.08% 1.0000 6.08%
08-Jan-93 $1,134.70 13.47% 2.5572 5.07%
</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
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Jul-95 YEARS - n COMPOUND RETURN - tb
- ----------- ------------ ----------- --------------------
31-Jul-94 $1,038.50 1.0000 3.85%
08-Jan-93 $1,106.00 2.5572 4.02%
(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 13.47 $11,347 $56,735 $113,470
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> RETIREMENT LIQUID ASSETS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 35,642,081
<INVESTMENTS-AT-VALUE> 35,642,081
<RECEIVABLES> 39,507
<ASSETS-OTHER> 11,699
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35,693,287
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62,114
<TOTAL-LIABILITIES> 62,114
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 35,631,144
<SHARES-COMMON-STOCK> 35,631,114
<SHARES-COMMON-PRIOR> 1,524,366
<ACCUMULATED-NII-CURRENT> 29
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 35,631,173
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 518,526
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 518,526
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 518,526
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (518,501)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 51,847,905
<NUMBER-OF-SHARES-REDEEMED> (18,259,628)
<SHARES-REINVESTED> 518,501
<NET-CHANGE-IN-ASSETS> 34,106,803
<ACCUMULATED-NII-PRIOR> 4
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 42,333
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 98,462
<AVERAGE-NET-ASSETS> 8,420,515
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.06)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> RETIREMENT US GOV'T MONEY MARKET
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 10,700,112
<INVESTMENTS-AT-VALUE> 10,700,112
<RECEIVABLES> 24,608
<ASSETS-OTHER> 9,850
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,735,170
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40,356
<TOTAL-LIABILITIES> 40,356
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,694,809
<SHARES-COMMON-STOCK> 10,694,809
<SHARES-COMMON-PRIOR> 668,553
<ACCUMULATED-NII-CURRENT> 5
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10,694,814
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 83,800
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 83,800
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 83,800
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (83,795)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,309,909
<NUMBER-OF-SHARES-REDEEMED> (1,253,703)
<SHARES-REINVESTED> 83,795
<NET-CHANGE-IN-ASSETS> 10,140,006
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,841
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 55,274
<AVERAGE-NET-ASSETS> 1,360,790
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.06)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> RETIREMENT US GOV'T SECURITIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 5,261,697
<INVESTMENTS-AT-VALUE> 5,183,841
<RECEIVABLES> 18,470
<ASSETS-OTHER> 44,818
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,247,129
<PAYABLE-FOR-SECURITIES> 989,826
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48,478
<TOTAL-LIABILITIES> 1,038,304
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,288,505
<SHARES-COMMON-STOCK> 433,478
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,824)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (77,856)
<NET-ASSETS> 4,208,025
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 199,657
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 199,657
<REALIZED-GAINS-CURRENT> (1,820)
<APPREC-INCREASE-CURRENT> 48,200
<NET-CHANGE-FROM-OPS> 246,037
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (200,544)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 312,897
<NUMBER-OF-SHARES-REDEEMED> (208,493)
<SHARES-REINVESTED> 20,021
<NET-CHANGE-IN-ASSETS> 1,254,800
<ACCUMULATED-NII-PRIOR> 887
<ACCUMULATED-GAINS-PRIOR> (4)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22,158
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 80,570
<AVERAGE-NET-ASSETS> 3,408,932
<PER-SHARE-NAV-BEGIN> 956
<PER-SHARE-NII> .56
<PER-SHARE-GAIN-APPREC> .15
<PER-SHARE-DIVIDEND> (.56)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.71
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> RETIREMENT INTERMEDIATE INCOME
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 950,571
<INVESTMENTS-AT-VALUE> 947,569
<RECEIVABLES> 56,104
<ASSETS-OTHER> 42,452
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,046,125
<PAYABLE-FOR-SECURITIES> 24,875
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27,471
<TOTAL-LIABILITIES> 52,346
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 993,268
<SHARES-COMMON-STOCK> 103,235
<SHARES-COMMON-PRIOR> 48,919
<ACCUMULATED-NII-CURRENT> 426
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,087
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,002)
<NET-ASSETS> 993,779
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 40,524
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 40,524
<REALIZED-GAINS-CURRENT> 3,997
<APPREC-INCREASE-CURRENT> 12,308
<NET-CHANGE-FROM-OPS> 56,829
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (40,260)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 63,283
<NUMBER-OF-SHARES-REDEEMED> (13,120)
<SHARES-REINVESTED> 4,153
<NET-CHANGE-IN-ASSETS> 533,316
<ACCUMULATED-NII-PRIOR> 162
<ACCUMULATED-GAINS-PRIOR> (910)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,006
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 35,536
<AVERAGE-NET-ASSETS> 616,250
<PER-SHARE-NAV-BEGIN> 9.41
<PER-SHARE-NII> .61
<PER-SHARE-GAIN-APPREC> .22
<PER-SHARE-DIVIDEND> (.61)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.63
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> RETIREMENT AMERICAN VALUE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 18,795,381
<INVESTMENTS-AT-VALUE> 22,359,891
<RECEIVABLES> 746,535
<ASSETS-OTHER> 9,161
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 23,115,587
<PAYABLE-FOR-SECURITIES> 468,561
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 65,539
<TOTAL-LIABILITIES> 534,100
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18,239,931
<SHARES-COMMON-STOCK> 1,723,154
<SHARES-COMMON-PRIOR> 689,073
<ACCUMULATED-NII-CURRENT> 149,207
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 627,839
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,564,510
<NET-ASSETS> 22,581,487
<DIVIDEND-INCOME> 130,973
<INTEREST-INCOME> 109,299
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 240,272
<REALIZED-GAINS-CURRENT> 1,027,333
<APPREC-INCREASE-CURRENT> 3,493,914
<NET-CHANGE-FROM-OPS> 4,761,519
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 138,219
<DISTRIBUTIONS-OF-GAINS> 1,962
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,204,547
<NUMBER-OF-SHARES-REDEEMED> 184,040
<SHARES-REINVESTED> 13,574
<NET-CHANGE-IN-ASSETS> 15,740,792
<ACCUMULATED-NII-PRIOR> 47,154
<ACCUMULATED-GAINS-PRIOR> (397,532)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 112,560
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 188,108
<AVERAGE-NET-ASSETS> 13,242,343
<PER-SHARE-NAV-BEGIN> 9.93
<PER-SHARE-NII> .14
<PER-SHARE-GAIN-APPREC> 3.15
<PER-SHARE-DIVIDEND> (.12)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.10
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> RETIREMENT CAPITAL GROWTH
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 599,659
<INVESTMENTS-AT-VALUE> 662,006
<RECEIVABLES> 17,917
<ASSETS-OTHER> 7,261
<OTHER-ITEMS-ASSETS> 21,618
<TOTAL-ASSETS> 708,802
<PAYABLE-FOR-SECURITIES> 9,075
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22,221
<TOTAL-LIABILITIES> 31,296
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 613,332
<SHARES-COMMON-STOCK> 60,664
<SHARES-COMMON-PRIOR> 22,794
<ACCUMULATED-NII-CURRENT> 3,673
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,846)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 62,347
<NET-ASSETS> 677,506
<DIVIDEND-INCOME> 4,911
<INTEREST-INCOME> 129
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 5,040
<REALIZED-GAINS-CURRENT> 924
<APPREC-INCREASE-CURRENT> 67,202
<NET-CHANGE-FROM-OPS> 73,166
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,260)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 40,391
<NUMBER-OF-SHARES-REDEEMED> (2,856)
<SHARES-REINVESTED> 335
<NET-CHANGE-IN-ASSETS> 462,794
<ACCUMULATED-NII-PRIOR> 1,893
<ACCUMULATED-GAINS-PRIOR> (2,770)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,006
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 40,418
<AVERAGE-NET-ASSETS> 353,635
<PER-SHARE-NAV-BEGIN> 9.42
<PER-SHARE-NII> .10
<PER-SHARE-GAIN-APPREC> 1.77
<PER-SHARE-DIVIDEND> (0.12)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.17
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> RETIREMENT DIVIDEND GROWTH
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 30,890,871
<INVESTMENTS-AT-VALUE> 35,489,969
<RECEIVABLES> 190,970
<ASSETS-OTHER> 14,039
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35,694,978
<PAYABLE-FOR-SECURITIES> 220,868
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 70,089
<TOTAL-LIABILITIES> 290,957
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 30,404,477
<SHARES-COMMON-STOCK> 2,706,023
<SHARES-COMMON-PRIOR> 1,163,962
<ACCUMULATED-NII-CURRENT> 304,765
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 95,681
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,599,098
<NET-ASSETS> 35,404,021
<DIVIDEND-INCOME> 819,339
<INTEREST-INCOME> 13,201
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 832,540
<REALIZED-GAINS-CURRENT> 160,385
<APPREC-INCREASE-CURRENT> 4,782,860
<NET-CHANGE-FROM-OPS> 5,775,785
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 622,946
<DISTRIBUTIONS-OF-GAINS> 202,526
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,985,940
<NUMBER-OF-SHARES-REDEEMED> 514,831
<SHARES-REINVESTED> 70,952
<NET-CHANGE-IN-ASSETS> 22,582,602
<ACCUMULATED-NII-PRIOR> 95,171
<ACCUMULATED-GAINS-PRIOR> 137,822
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 179,195
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 272,900
<AVERAGE-NET-ASSETS> 23,892,704
<PER-SHARE-NAV-BEGIN> 11.02
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> 2.13
<PER-SHARE-DIVIDEND> (0.31)
<PER-SHARE-DISTRIBUTIONS> (0.10)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.08
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> RETIREMENT UTILITIES SERIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 4,965,738
<INVESTMENTS-AT-VALUE> 5,312,694
<RECEIVABLES> 70,643
<ASSETS-OTHER> 29,177
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,412,514
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32,694
<TOTAL-LIABILITIES> 32,694
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,091,039
<SHARES-COMMON-STOCK> 478,123
<SHARES-COMMON-PRIOR> 370,476
<ACCUMULATED-NII-CURRENT> 59,239
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (117,414)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 346,956
<NET-ASSETS> 5,379,820
<DIVIDEND-INCOME> 156,527
<INTEREST-INCOME> 21,699
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 178,226
<REALIZED-GAINS-CURRENT> (111,170)
<APPREC-INCREASE-CURRENT> 449,814
<NET-CHANGE-FROM-OPS> 516,870
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (148,664)
<DISTRIBUTIONS-OF-GAINS> (7,657)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 279,150
<NUMBER-OF-SHARES-REDEEMED> (186,431)
<SHARES-REINVESTED> 14,928
<NET-CHANGE-IN-ASSETS> 1,520,238
<ACCUMULATED-NII-PRIOR> 29,677
<ACCUMULATED-GAINS-PRIOR> 1,413
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 30,931
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 78,876
<AVERAGE-NET-ASSETS> 4,124,097
<PER-SHARE-NAV-BEGIN> 10.42
<PER-SHARE-NII> .42
<PER-SHARE-GAIN-APPREC> .80
<PER-SHARE-DIVIDEND> (.37)
<PER-SHARE-DISTRIBUTIONS> (.02)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.25
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> RETIREMENT VALUE-ADDED MARKET
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-1-1995
<PERIOD-END> JUL-1-1995
<INVESTMENTS-AT-COST> 13,221,980
<INVESTMENTS-AT-VALUE> 14,343,677
<RECEIVABLES> 49,701
<ASSETS-OTHER> 7,018
<OTHER-ITEMS-ASSETS> 20,877
<TOTAL-ASSETS> 14,421,273
<PAYABLE-FOR-SECURITIES> 351,887
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25,397
<TOTAL-LIABILITIES> 341,284
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,820,696
<SHARES-COMMON-STOCK> 1,100,080
<SHARES-COMMON-PRIOR> 474,963
<ACCUMULATED-NII-CURRENT> 98,210
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 39,586
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,121,697
<NET-ASSETS> 14,079,989
<DIVIDEND-INCOME> 139,199
<INTEREST-INCOME> 19,746
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 158,945
<REALIZED-GAINS-CURRENT> 55,495
<APPREC-INCREASE-CURRENT> 1,097,897
<NET-CHANGE-FROM-OPS> 1,312,337
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (128,720)
<DISTRIBUTIONS-OF-GAINS> (57,957)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 672,727
<NUMBER-OF-SHARES-REDEEMED> (65,388)
<SHARES-REINVESTED> 17,678
<NET-CHANGE-IN-ASSETS> 8,947,398
<ACCUMULATED-NII-PRIOR> 67,985
<ACCUMULATED-GAINS-PRIOR> 41,848
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31,221
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 76,215
<AVERAGE-NET-ASSETS> 6,244,204
<PER-SHARE-NAV-BEGIN> 10.81
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> 2.16
<PER-SHARE-DIVIDEND> (.26)
<PER-SHARE-DISTRIBUTIONS> (.12)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12,80
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> RETIREMENT GLOBAL EQUITY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 6,711,341
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<TABLE> <S> <C>
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<SERIES>
<NUMBER> 11
<NAME> RETIREMENT STRATEGIST
<S> <C>
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