AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 1994
REGISTRATION NO.: 33-62158
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 (X)
PRE-EFFECTIVE AMENDMENT NO. ( )
Post-EFFECTIVE AMENDMENT NO. 2 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 (X)
AMENDMENT NO. 3 (X)
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
(A MASSACHUSETTS BUSINESS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN Charter)
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
SHELDON CURTIS, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
DAVID M. BUTOWSKY, ESQ.
GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
Approximate Date of Proposed Public Offering: As soon as practicable
after the effective date of the registration statement.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK
APPROPRIATE BOX)
----- immediately upon filing pursuant to paragraph (b)
__X___ on May 27, 1994 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 FILED A RULE 24F-2 NOTICE FOR
ITS FISCAL PERIOD ENDING MARCH 31, 1994 WITH THE SECURITIES AND EXCHANGE
COMMISSION ON APRIL 22, 1994.
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
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<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
Cross-Reference Sheet
<TABLE>
<CAPTION>
FORM N-1A
PART A
ITEM CAPTION PROSPECTUS
- ---- ----------------
<S> <C>
1. ............ Cover Page
2. ............ Summary of Fund Expenses; Prospectus Summary
3. ............ Performance Information; Financial Highlights
4. ............ Investment Objective and Policies; The Fund and its
Management; Cover Page; Investment Restrictions;
Prospectus Summary
5. ............ The Fund and Its Management; Back Cover;
Investment Objective and Policies
6. ............ Dividends, Distributions and Taxes; Additional
Information
7. ............ Purchase of Fund Shares; Shareholder Services
8. ............ Redemptions and Repurchases; Shareholder Services
9. ............ Not Applicable
PART B
ITEM STATEMENT OF ADDITIONAL INFORMATION
- ---- --------------------------------
10. ............ Cover Page
11. ............ Table of Contents
12. ............ The Fund and Its Management
13. ............ Investment Practices and Policies; Investment
Restrictions; Portfolio Transactions and Brokerage
14. ............ The Fund and Its Management; Trustees and
Officers
15. ............ Trustees and Officers
16. ............ The Fund and Its Management; Purchase of Fund
Shares; Custodian and Transfer Agent;
Independent Accountants
17. ............ Portfolio Transactions and Brokerage
18. ............ Shares of the Fund; Validity of Shares of Beneficial
Interest
19. ............ Redemptions and Repurchases; Statement of Assets
and Liabilities; Shareholder Services
20. ............ Dividends, Distributions and Taxes
21. ............ Not applicable
22. ............ Dividends, Distributions and Taxes
23. ............ Performance Information
</TABLE>
Part C
Information required to be included in Part C is set forth
under the appropriate item, so numbered, in Part C of this Registration
Statement.
<PAGE>
PROSPECTUS
MAY 27, 1994
Dean Witter Limited Term Municipal Trust (the "Fund") is a no-load, open-end
diversified management investment company whose investment objective is to
provide a high level of current income that is exempt from federal income tax
consistent with the preservation of capital and prescribed standards of quality
and maturity. The Fund seeks to achieve its objective by investing
predominately in intermediate term, investment grade municipal securities with
an anticipated average dollar-weighted maturity range of 7 to 10 years and a
maximum average dollar-weighted maturity of 12 years. (See "Investment
Objective and Policies.")
Shares of the Fund are sold and redeemed at net asset value without the
imposition of a sales charge. In accordance with a Plan of Distribution
pursuant to Rule 12b-1 under the Investment Company Act of 1940 with Dean
Witter Distributors Inc. (the "Distributor"), the Fund authorizes the
Distributor or any of its affiliates, including Dean Witter InterCapital Inc.,
to make payments, out of their own resources, for specific expenses incurred in
promoting the distribution of the Fund's shares.
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 May 27, 1994, which has been filed with the
Securities and Exchange Commission, and which is available at no charge upon
request of the Fund at the address or telephone numbers listed below. The
Statement of Additional Information is incorporated herein by reference.
Dean Witter
Limited Term Municipal Trust
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 526-3143
<PAGE>
TABLE OF CONTENTS
Prospectus Summary/ 2
Summary of Fund Expenses/ 3
Financial Highlights/ 4
The Fund and its Management/ 5
Investment Objective and Policies/ 5
Investment Restrictions/ 10
Purchase of Fund Shares/ 10
Shareholder Services/ 12
Redemptions and Repurchases/ 14
Dividends, Distributions and Taxes/ 14
Performance Information/ 16
Additional Information/ 16
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
DEAN WITTER DISTRIBUTORS INC.
DISTRIBUTOR
<PAGE>
PROSPECTUS SUMMARY
===============================================================================
The
Fund
The Fund is organized as a Massachusetts business trust, and is a no-
load, open-end diversified management investment company investing
predominately in intermediate term municipal bonds.
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Shares
Offered
Shares of beneficial interest with $0.01 par value (see page 16).
- ------------------------------------------------------------------------------
Offering
Price
The price of the shares offered by this Prospectus is determined once
daily as of 4:00 p.m., New York time, on each day that the New York Stock
Exchange is open, and is equal to the net asset value per share without a sales
charge (see page 11).
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Minimum
Purchase
Minimum initial purchase through Distributor, $1,000; minimum
subsequent investment, $100 (see page 10).
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Investment
Objective
The investment objective of the Fund is to provide investors with a
high level of current income, that is exempt from federal income tax consistent
with the preservation of capital and prescribed standards of quality and
maturity.
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Investment
Policies
The Fund will invest at least 75% of its net assets in municipal
securities rated A or better by Moody's Investors Service ("Moody's") or
Standard & Poor's Corporation ("S&P"). The municipal securities in the Fund's
portfolio will have an anticipated average dollar-weighted maturity range of 7
to 10 years and a maximum average dollar-weighted maturity of 12 years (see
page 5).
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Investment
Manager
Dean Witter InterCapital Inc. ("InterCapital"), 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 eighty-three investment companies and other
portfolios with assets of approximately $70.8 billion at April 30, 1994 (see
page 5).
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Management
Fee
The Investment Manager receives a monthly fee at the annual rate of
0.50% of the average daily net assets (see page 5).
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Dividends and
Capital Gains
Distributions
Dividends are declared daily and paid monthly. Capital gains
distributions, if any, are paid at least once a year or are retained for
reinvestment by the Fund. Dividends and distributions are automatically
invested in additional shares at net asset value unless the shareholder elects
to receive cash (see page 14).
- ------------------------------------------------------------------------------
Distributor
and Plan of
Distribution
Dean Witter Distributors Inc. (the "Distributor") sells shares of the
Fund through Dean Witter Reynolds Inc. ("DWR") and other selected broker-
dealers pursuant to selected broker-dealer agreements. The Distributor has
entered into a Plan of Distribution pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act") with the Fund authorizing the
Distributor or any of its affiliates, including the Investment Manager to make
payments, out of their own resources, for expenses incurred in connection with
the promotion or distribution of the Fund's shares (see page 10).
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Redemption
Shares are redeemable at net asset value. An account may be
involuntarily redeemed if total value of the account is less than $100 (see
page 14).
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Shareholder
<PAGE>
Services
Automatic Investment of Dividends and Distributions (unless otherwise
requested); Investment of Distributions Received in Cash; Exchange Privilege;
Systematic Withdrawal Plan; EasyInvestSM; (see page 11).
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Risks
The prices of interest-bearing securities are inversely affected by
changes in interest rates and, therefore, are subject to the risk of market
price fluctuations. The values of fixed-income securities also may be affected
by changes in the credit rating or financial condition of the issuing entities.
Certain of the tax-exempt securities in which the Fund may invest without limit
may subject certain investors to the federal, and any applicable state,
alternative minimum tax. (see page 14).
- ------------------------------------------------------------------------------
The above is qualified in its entirety by the detailed information appearing
elsewhere in this Prospectus
and in the Statement of Additional Information.
2
<PAGE>
SUMMARY OF FUND EXPENSES
===============================================================================
The following table illustrates all expenses and fees that a shareholder of the
Fund will incur. The expenses and fees set forth in the table are for the
fiscal year ending March 31, 1995.
Shareholder Transaction Expenses
- --------------------------------
Maximum Sales Charge Imposed on Purchases........................... None
Maximum Sales Charge Imposed on Reinvested Dividends................ None
Deferred Sales Charge............................................... None
Redemption Fees..................................................... None
Exchange Fee........................................................ None
Annual Fund Operating Expenses (as a Percentage of Average Net Assets)
- -----------------------------------------------------------------------
Management Fees*.................................................... 0.50%
12b-1 Fees.......................................................... None
Other Expenses*..................................................... 0.17%
Total Fund Operating Expenses*...................................... 0.67%
"Management Fees" as shown above, are for the fiscal year of the Fund
ending March 31, 1995. "Other Expenses," as shown above, is based upon
estimated amounts of expenses of the Fund expected to be incurred during its
current fiscal year ending March 31, 1995.
Example 1 year 3 years
- ------- ------ -------
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:....... $7 $21
The fees and expenses disclosed above do not reflect the assumption of
any expenses or the waiver of any compensation by the Investment Manager.
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES OF THE FUND MAY BE MORE OR LESS
THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. For a more complete description of these costs and expenses, see
"The Fund and Its Management."
3
<PAGE>
FINANCIAL HIGHLIGHTS
===============================================================================
The following ratios and per share data for a share of beneficial interest
outstanding throughout the period have been audited by Price Waterhouse,
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 is contained
in the Fund's Annual Report to Shareholders, which may be obtained without
charge upon request from the Fund.
<TABLE>
<CAPTION>
For the period
July 12, 1993*
through
March 31, 1994
-------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................ $10.00
-----
Net investment income............................... 0.29
Net realized and unrealized loss on investments. (0.39)
-----
Total from investment operations..................... (0.10)
-----
Dividends from net investment income................. (0.29)
-----
Net asset value, end of period....................... $ 9.61
-----
-----
TOTAL INVESTMENT RETURN............................... (1.11)%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)............. $170,589
Ratio of expenses to average net assets............... 0.31% (2)(3)
Ratio of net investment income to average net assets.. 3.92%(2)(3)
Portfolio turnover rate............................... 6%
<FN>
- ----------
* Commencement of operations.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were assumed or waived by
the Investment Manager, the above annualized ratios of expenses and net
investment income to average net assets would have been 0.75% and 3.48%,
respectively.
</TABLE>
See Notes to Financial Statements
4
<PAGE>
THE FUND AND ITS MANAGEMENT
- ------------------------------------------------------------------------------
Dean Witter Limited Term Municipal Trust (the "Fund") is a no-load, open-end
diversified management investment company. The Fund is a trust of the type
commonly known as a "Massachusetts businesstrust" and was organized under the
laws of The Commonwealth of Massachusetts on February 25, 1993.
Dean Witter InterCapital Inc. ("InterCapital" or the "Investment Manager"),
whose address is Two World Trade Center, New York, New York 10048, is the
Fund's Investment Manager. The Investment Manager, which was incorporated in
July, 1992, is a wholly-owned subsidiary of Dean Witter, Discover & Co.
("DWDC"), a balanced financial services organization providing a broad range of
nationally marketed credit and investment products.
InterCapital and its wholly-owned subsidiary, Dean Witter Services
Company Inc., serve in various investment management, advisory, management and
administrative capacities to a total of eighty-three investment companies,
thirty of which are listed on the New York Stock Exchange, with combined total
assets including this Fund of approximately $68.8 billion as of April 30, 1994.
The Investment Manager also manages portfolios of pensions plans, other
institutions and individuals which aggregated approximately $2 billion at such
date.
The Fund has retained the Investment Manager, pursuant to an Investment
Management Agreement, to provide administrative services, manage its business
affairs and manage the investment of the Fund's assets, including the placing
of orders for the purchase and sale of portfolio securities. InterCapital has
retained Dean Witter Services Company Inc. to perform the aforementioned
administrative services for the Fund. The Fund's Board of Trustees reviews the
various services provided by or under the direction of the Investment Manager
to ensure that the Fund's general investment policies and programs are being
properly carried out and that administrative services are being provided to the
Fund in a satisfactory manner.
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Investment Manager, the Fund pays
the Investment Manager monthly compensation calculated daily by applying the
annual rate of 0.50% to the Fund's net assets determined as of the close of
each business day. The Fund's expenses include the fees of the Investment
Manager; taxes; legal, transfer agent, custodian and auditing fees; federal and
state registration fees; and printing and other expenses relating to the Fund's
operations which are not expressly assumed by the Investment Manager under the
Investment Management Agreement with the Fund. The Investment Manager had
undertaken to assume all operating expenses (except for any brokerage fees) and
to waive the compensation provided for in its Investment Management Agreement
for the period July 12, 1993 (commencement of operations) through December 31,
1993.
INVESTMENT OBJECTIVE AND POLICIES
- ------------------------------------------------------------------------------
The investment objective of the Fund is to provide a high level of
current income that is exempt from federal income tax consistent with the
preservation of capital and prescribed standards of quality and maturity. The
Fund will seek to achieve its investment objective by investing predominately
in intermediate term municipal securities. The investment objective is a
fundamental policy of the Fund and may not be changed without the approval of
the holders of a majority of the Fund's shares. There is no assurance that the
Fund's investment objective will be achieved.
The Fund will invest at least 75% of its net assets in (a) Municipal
Bonds which are rated at the time of purchase within the three highest grades
by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation
("S&P"); (b) Municipal Notes which at the time of purchase are rated in the two
highest grades by Moody's or S&P, or, if not rated, have outstanding one or
more issues of Municipal Bonds rated as set forth in clause (a) of this
paragraph; and (c) Municipal Commercial Paper which at the time of purchase are
rated P-1 by Moody's and A-1 by S&P.
5
<PAGE>
The Fund may also invest up to 25% of its net assets in municipal securities
rated Baa by Moody's or BBB by S&P, or if not rated, are determined by the
Investment Manager to be the equivalent of Baa/BBB or better. A description of
municipal security ratings is contained inthe Appendix to the Statement of
Additional Information.
The municipal securities in the Fund's portfolio will have an
anticipated average dollar-weighted maturity range of 7 to 10 years, with a
maximum average dollar-weighted maturity of 12 years. However, at least 80% of
the net assets of the Fund will be subject to an average dollar-weighted
maturity constraint of 15 years. When computing the average dollar-weighted
maturity, the Fund intends to treat investments which permit the holder to
demand payment of principal at any time or at specified intervals prior to the
stated final maturity as having a maturity equal to the next demand date. The
final maturity of these demand obligations will be no more than 25 years, until
such time as the Staff of the Securities and Exchange Commission has determined
the appropriateness of using maturity shortening techniques for obligations
with longer final maturities.
The foregoing percentage and rating limitations apply at the time of
acquisition of a security based on the last previous determination of the net
asset value of the Fund. Any subsequent change in any rating by a rating
service or change in percentages resulting from market fluctuations or other
changes in total assets of the Fund will not require elimination of any
security from the Fund's portfolio. Therefore, the Fund may hold securities
which have been downgraded from ratings of Baa or BBB or lower by Moody's or
S&P. However such investments may not exceed 5% of the net assets of the Fund.
Any investments which exceed this limitation will be eliminated from the
portfolio within a reasonable period of time (such time as the Investment
Manager determines that it is practicable to sell the investment without undue
market or tax consequences to the Fund). Municipal obligations rated below
investment grade by Moody's or S&P are considered to be speculative
investments, some of which may not be currently paying any interest and may
have extremely poor prospects of ever attaining any real investment standing.
Investments in municipal bonds rated either Baa by Moody's or BBB by
S&P (investment grade bonds-- the lowest rated permissible investments by the
Fund) 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.
The ratings assigned by Moody's and S&P represent their opinions as to
the quality of the securities which they undertake to rate (see the Appendix to
the Statement of Additional Information). It should be emphasized, however,
that the ratings are general and not absolute standards of quality.
The two principal classifications of municipal obligations and
commercial paper are "general obligation" and `'revenue" obligations or
commercial paper. General obligation bonds, notes or commercial paper are
secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. Issuers of general obligation bonds, notes
or commercial paper include a state, its counties, cities, towns and other
governmental units. Revenue bonds, notes or commercial paper are payable from
the revenues derived from a particular facility or class of facilities or, in
some cases, from specific revenue sources. Revenue bonds, notes or commercial
paper are issued for a wide variety of purposes, including the financing of
electric, gas, water and sewer systems and other public utilities; industrial
development and pollution control facilities; single and multi-family housing
units; public buildings and facilities; air and marine ports, transportation
facilities such as toll roads, bridges and tunnels; and health and educational
facilities such as hospitals and dormitories. They rely primarily on user fees
to pay debt service, although the principal revenue source is often
supplemented by additional security features which are intended to enhance the
creditworthiness of the issuer's obligations. In some cases, particularly
revenue bonds issued to finance housing and public buildings, a direct or
implied "moral obligation" of a governmental unit may be pledged to the payment
of debt service. In other cases, a special tax or other charge may augment user
fees.
Included within the revenue bonds category, as noted above, are
participations in lease obligations or installment purchase contracts
(hereinafter collectively
6
<PAGE>
called "lease obligations") of municipalities. State and local governments,
agencies or authorities issue lease obligations to acquire equipment and
facilities. Lease obligations may have risks not normally associated with
general obligation or other revenue bonds. Leases, and installment purchase or
conditional sale contracts (which may provide for title to the leased asset to
pass eventually to the issuer), have developed as a means for governmental
issuers to acquire property and equipment without the necessity of complying
with the constitutional and statutory requirements generally applicable for the
issuance of debt. Certain lease obligations contain "non-appropriation" clauses
that provide that the governmental issuer has no obligation to make future
payments under the lease or contract unless money is appropriated for such
purpose by the appropriate legislative body on an annual or other periodic
basis. Consequently, continued lease payments on those lease obligations
containing "non-appropriation" clauses are dependent on future legislative
actions. If such legislative actions do not occur, the holders of the lease
obligation may experience difficulty in exercising their rights, including
disposition of the property.
In addition, lease obligations represent a relatively new type of financing
that has not yet developed the depth of marketability associated with more
conventional municipal obligations, and, as a result, certain of such lease
obligations may be considered illiquid securities. To determine whether or not
the Fund will consider such securities to be illiquid (the Fund may not invest
more than fifteen percent of its net assets in illiquid securities), the
Trustees of the Fund have established guidelines to be utilized by the Fund in
determining the liquidity of a lease obligation. The factors to be considered
in making the determination include: 1) the frequency of trades and quoted
prices for the obligation; 2) the number of dealers willing to purchase or
sell the security and the number of other potential purchasers; 3) the
willingness of dealers to undertake to make a market in the security; and 4)
the nature of the marketplace trades, includ- ing, the time needed to dispose
of the security, the method of soliciting offers, and the mechanics of the
transfer.
The value of the Fund's portfolio securities and, therefore, the Fund's net
asset value per share, may increase or decrease due to various factors,
principally changes in prevailing interest rates and the ability of the issuers
of the Fund's portfolio securities to pay interest and principal on such
obligations on a timely basis. Generally, a rise in interest rates will result
in a decrease in the Fund's net asset value per share, while a drop in interest
rates will result in an increase in the Fund's net asset value per share.
Under normal conditions, at least 80% of the total assets of the Fund will be
invested in securities, the interest on which is exempt from federal income
taxes. However, the Fund may invest more than 20% of its total assets in
taxable money market instruments in order to maintain a temporary "defensive"
position, when, in the opinion of the Investment Manager, prevailing market or
financial conditions (including unavailability of securities of requisite
quality) so warrant. Certain of the tax-exempt securities in which the Fund may
invest without limit may subject certain investors to the federal alternative
minimum tax or any applicable state alternative minimum tax and, therefore, a
substantial portion of the income produced by the Fund may be taxable to such
investors under any federal or any applicable state alternative minimum tax.
The Fund, therefore, may not be a suitable investment for investors who are
subject to the alternative minimum tax. The suitability of the Fund for these
investors will depend upon a comparison of the after-tax yield likely to be
provided from the Fund to comparable tax-exempt investments not subject to such
tax and also to comparable fully taxable investments in light of each
investor's tax position. See "Dividends, Distributions and Taxes."
When-Issued and Delayed Delivery Securities and Forward Commitments. From
time to time, in the ordinary course of business, 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. There
is no overall limit on the percentage of the Fund's assets
7
<PAGE>
which may be committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility of the Fund's
net asset value.
When, As and If Issued Securities. The Fund 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. If the
anticipated event does not occur and the securities are not issued, the Fund
will have lost an investment opportunity. There is no overall limit on the
percentage of the Fund's assets which may be committed to the purchase of
securities on a "when, as and if issued" basis. An increase in the percentage
of the Fund's assets committed to the purchase of securities on a "when, as and
if issued" basis may increase the volatility of its net asset value.
HEDGING ACTIVITIES
Subject to applicable state law, the Fund may enter into financial futures
contracts, options on such futures and municipal bond index futures contracts
for hedging purposes.
Financial Futures Contracts and Options on Futures. The Fund may invest in
financial futures contracts and related options thereon. The Fund may sell a
financial futures contract or purchase a put option on such futures contract,
if the Investment Manager anticipates interest rates to rise, as a hedge
against a decrease in the value of the Funds' portfolio securities. If the
Investment Manager anticipates that interest rates will decline, the Fund may
purchase a financial futures contract or a call option thereon to protect
against an increase in the price of the securities that the Fund intends to
purchase. These futures contracts and related options thereon will be used only
as a hedge against anticipated interest rate changes. A fu- tures contract sale
creates an obligation by the Fund, as seller, to deliver the specific type of
instrument called for in the contract at a specified future time for a
specified price. A futures contract purchase would create an obligation by the
Fund, as purchaser, to take delivery of the specific type of financial
instrument at a specified future time at a specified price. The specific
securities delivered or taken, respectively, at settlement date, would not be
determined until or near that date. The determination would be in accordance
with the rules of the exchange on which the futures contract sale or purchase
was effected.
Although the terms of financial futures contracts specify actual delivery or
receipt of securities, in most instances the contracts are closed out before
the settlement date without the making or taking of delivery of the securities.
Closing out of a futures contract is effected by entering into an offsetting
purchase or sale transaction.
Unlike a financial futures contract, which requires the parties to buy and
sell a security on a set date, an option on such a futures contract entitles
its holder to decide on or before a future date whether to enter into such a
contract (a long position in the case of a call option and a short position in
the case of a put option). If the holder decides not to enter into the
contract, the premium paid for the option on the contract is lost. Since the
value of the option is fixed at the point of sale, there are no daily payments
of cash to reflect the change in the value of the underlying contract as there
is by a purchaser or seller of a futures contract. The value of the option does
change and is reflected in the net asset value of the Fund.
A risk in employing futures contracts to protect against the price volatility
of portfolio securities is that the prices of securities subject to such
futures contracts may correlate imperfectly with the behavior of the cash
prices of the Fund's portfolio securities. The risk of imperfect correlation
will be increased by the fact that the financial futures contracts in which the
Fund may invest are on taxable securities rather than tax-exempt securities,
and there is no guarantee that the prices of taxable securities will move in a
similar
8
<PAGE>
manner to the prices of tax-exempt securities. The correlation may 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.
Another risk is that the Investment Manager 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 the
Fund sold financial 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 Fund would lose money on the
sale.
In addition to the risks that apply to all options transactions (see the
Statement of Additional Information for a description of the characteristics
of, and the risks of investing in, options on debt securities), there are
several special risks relating to options on futures. In particular, the
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid secondary market. It is not certain
that this market will develop or be maintained.
Municipal Bond Index Futures. The Fund may utilize municipal bond index
futures contracts for hedging purposes. The strategies in employing such
contracts will be similar to that discussed above with respect to financial
futures and options thereon. A municipal bond index is a method of reflecting
in a single number the market value of many different municipal bonds and is
designed to be representative of the municipal bond market generally. The index
fluctuates in response to changes in the market values of the bonds included
within the index. Unlike futures contracts on particular financial instruments,
transactions in futures on a municipal bond index will be settled in cash, if
held until the close of trading in the contract. However, like any other
futures contract, a position in the contract may be closed out by a purchase or
sale of an offsetting contract for the same delivery month prior to expiration
of the contract.
The Fund may not enter into futures contracts or related options thereon if
immediately thereafter the amount committed to margin plus the amount paid for
option premiums exceeds 5% of the value of the Fund's total assets. The Fund
may not purchase or sell futures contracts or related options if immediately
thereafter more than one-third of the net assets of the Fund would be hedged.
Options. The Fund may purchase or sell (write) options on debt securities
as a means of achieving additional return or hedging the value of the Fund's
portfolio. The Fund would only buy options listed on national securities
exchanges. The Fund, will not purchase options on behalf of the Fund if, as a
result, the aggregate cost of all outstanding options exceeds 10% of the Fund's
total assets.
Lending of Portfolio Securities. The Fund will not lend portfolio
securities if such loans are not permitted by the laws or regulations of any
state in which its shares are qualified for sale and will not lend more than
25% of the value of the total assets of the Fund.
PORTFOLIO MANAGEMENT
The Fund's portfolio is actively managed by its Investment Manager with a view
to achieving the Fund's investment objective. The Fund is managed within
InterCapital's Municipal Fixed Income Group, which manages 32 tax-exempt
municipal bond funds, with approximately $ billion in assets. Ms. Katherine
H. Stromberg is the Fund's portfolio manager. Ms. Stromberg has been a
municipal bond portfolio manager for more than 14 years. Prior to joining
InterCapital in October 1991, Ms. Stromberg was Vice President of Kidder
Peabody Asset Management Inc. In determining which securities to purchase for
the Fund or hold in the Fund's portfolio, the Investment Manager will rely on
information from various sources, including research, analysis and appraisals
of brokers and dealers, including Dean Witter Reynolds Inc. ("DWR", a broker-
dealer affiliate of the Investment Manager); the views of the Trustees of the
Fund and others regarding economic developments and interest rate trends; and
the Investment Manager's own analysis of factors it deems relevant.
9
<PAGE>
Brokerage commissions are not normally charged on the purchase or sale of
municipal obligations, but such transactions may involve costs in the form of
spreads between bid and asked prices. Pursuant to an order of the Securities
and Exchange Commission, the Fund may effect principal transactions in certain
taxable money market instruments with DWR. In addition, the Fund may incur
brokerage commissions on futures' and options' transactions conducted through
DWR. It is not anticipated that the portfolio trading engaged in by the Fund
will result in its portfolio turnover rate exceeding 100%.
INVESTMENT RESTRICTIONS
- ------------------------------------------------------------------------------
The investment restrictions listed below are among the restrictions, a
complete listing of which is contained in the Statement of Additional
Information, which have been adopted by the Fund as fundamental policies. Under
the Investment Company Act of 1940, as amended (the "Act"), a fundamental
policy may not be changed without the vote of a majority of the outstanding
voting securities of the Fund, as defined in the Act.
For purposes of the following restrictions: (a) an "issuer" of a security is
the entity whose assets and revenues are committed to the payment of interest
and principal on that particular security, provided that the guarantee of a
security will be considered a separate security and provided further that a
guarantee of a security shall not be deemed to be a security issued by the
guarantor if the value of all securities issued or guaranteed by the guarantor
and owned by the Fund does not exceed 10% of the value of the total assets of
the Fund; (b) a "taxable security" is any security the interest on which is
subject to federal income tax; and (c) all percentage limitations apply
immediately after a purchase or initial investment, and any subsequent change
in any applicable percentage resulting from market fluctuations does not
require elimination of any security from the portfolio.
The Fund may not:
1. With respect to 75% of its total assets, purchase securities of any issuer
if, immediately thereafter, more than 5% of the value of its total assets are
in the securities of any one issuer (other than obligations issued, or
guaranteed by, the United States Government, its agencies or
instrumentalities).
2. With respect to 75% of its total assets, purchase more than 10% of all
outstanding taxable debt securities of any one issuer (other than debt
securities issued, or guaranteed as to principal and interest by, the United
States Government, its agencies or instrumentalities).
3. Invest 25% or more of the value of its total assets in securities of
issuers in any one industry (industrial development and pollution control bonds
are grouped into industries based upon the business in which the issuers of
such obligations are engaged). This restriction does not apply to obligations
issued or guaranteed by the United States Government, its agencies or
instrumentalities or to domestic bank obligations.
PURCHASE OF FUND SHARES
- ------------------------------------------------------------------------------
The Fund offers it shares for sale to the public on a continuous basis at
the offering price without the imposition of a sales charge. The offering price
will be the net asset value per share next determined following receipt of an
order (see "Determination of Net Asset Value"). Pursuant to a Distribution
Agreement between the Fund and Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Man- ager, shares of the Fund
are distributed by the Distributor and are offered by DWR and other broker-
dealers which have entered into selected broker-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.
10
<PAGE>
The minimum initial purchase is $1,000 and subsequent purchases of $100
or more may be made by sending a check, payable to Dean Witter Limited Term
Municipal Trust, directly to Dean Witter Trust Company (the "Transfer Agent")
at P.O. Box 1040, Jersey City, NJ 07303 or by contacting an account executive
of DWR or of another Selected Broker-Dealer. In the case of investments
pursuant to Systematic Payroll Deduction Plans, the Fund, in its discretion,
may accept investments without regard to any minimum amounts which would
otherwise be required if the Fund has reason to believe that additional
investments will increase the investment in all accounts under such Plans to at
least $1,000. Certificates for shares purchased will not be issued unless a
request is made by the shareholder in writing to the Transfer Agent.
Shares of the Fund are sold through the Distributor or a Selected
Broker-Dealer on a normal five business day settlement basis; that is, payment
is due on the fifth business day (settlement date) after the order is placed
with the Distributor or Selected Broker-Dealer. Since DWR or any other Selected
Broker-Dealer may forward investors' funds on settlement date, they 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. Investors will be entitled to receive income dividends
if their order is received by the close of business on the day prior to the
record date for such dividends and distributions.
Sales personnel of a Selected Broker-Dealer are compensated for shares
of the Fund sold by them by the Distributor or any of its affiliates and/or by
a Selected Broker-Dealer. In addition, some sales personnel of the Selected
Broker-Dealer will receive non-cash compensation in the form of trips to
educational seminars and merchandise as special sales incentives. The Fund and
the Distributor reserve the right to reject any purchase orders.
PLAN OF DISTRIBUTION
The Fund has entered into a Plan of Distribution pursuant to Rule 12b-1
under the Act with the Distributor whereby the Distributor is authorized to
utilize its own resources or those of its affiliates, including InterCapital,
to finance certain services and activities in connection with the distribution
of the Fund's shares. The principal activities and services which may be
provided by the Distributor, DWR, its affiliates and other Selected Broker-
Dealers under the Plan include: (1) compensation to, and expenses of, account
executives and other employees of DWR and other Selected Broker-Dealers,
including overhead and telephone expenses; (2) sales incentives and bonuses to
sales representatives and to marketing personnel in connection with promoting
sales of the Fund's shares; (3) expenses incurred in connection with promoting
sales of the Fund's shares; (4) preparing and distributing sales literature;
and (5) providing advertising and promotional activities, including direct mail
solicitation and television, radio, newspaper, magazine and other media
advertisements.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined once daily at 4:00
p.m., New York time on each day that the New York Stock Exchange is open by
taking the value of all assets of the Fund, subtracting all of its respective
liabilities, dividing by the number of shares outstanding and adjusting to the
nearest cent. The net asset value per share of the Fund 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.
Certain of the Fund's portfolio securities (other than short-term taxable
debt securities, futures and options) may be valued by an outside independent
pricing service approved by the Fund's Trustees. The service utilizes a
computerized grid matrix of tax-exempt securities and evaluations by its staff
in determining what it believes is the fair value of the Fund's portfolio
securities. The Board believes that timely and reliable market quotations are
generally not readily available to the Fund for purposes of valuing tax-exempt
securities and that the valuations supplied by the pricing service are more
likely to approximate the fair value of such securities. A more detailed
discussion of valuation procedures is in the Fund's Statement of Additional
Information.
11
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SHAREHOLDER SERVICES
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Automatic Investment of Dividends and Distributions. All income dividends
and capital gains distributions are automatically paid in full and fractional
shares of the Fund (or, if specified by the shareholder, any other open-end
investment company for which InterCapital serves as investment manager
(collectively, with the Fund, the "Dean Witter Funds")), unless the shareholder
requests that they be paid in cash.
EasyInvestSM. Shareholders may subscribe to EasyInvest, an automatic
purchase plan which provides for any amount from $100 to $5,000 to be
transferred automatically from a checking or savings account, on a semi-
monthly, monthly or quarterly basis, to the Fund's Transfer Agent for
investment in shares of the Fund.
Systematic Withdrawal Plan. A systematic withdrawal plan (the "Withdrawal
Plan") is available for shareholders who own or purchase shares of the Fund
having a minimum value of $10,000 based upon the then current offering price.
The Withdrawal Plan provides for monthly or quarterly (March, June, September
and December) checks in any dollar amount, notless than $25 or in any whole
percentage of the account balance, on an annualized basis. 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 could be correspondingly
reduced and ultimately exhausted.
Each withdrawal constitutes a redemption of shares and any gain or loss
realized must be recognized for federal income, and generally, for state and
local tax purposes.
Shareholders should contact their DWR or other Selected Broker-Dealer account
executive or the Transfer Agent for further information about any of the above
services.
Exchange Privilege. An "Exchange Privilege", that is, the privilege of
exchanging shares of certain Dean Witter Funds for shares of the Fund, exists
whereby shares of various Dean Witter Funds which are open-end investment
companies sold with either a front-end (at time of purchase) sales charge
("FESC funds") or a contingent deferred sales charge ("CDSC funds") may be
redeemed at their next calculated net asset value and the proceeds of the
redemption may be used to purchase shares of the Fund, shares of Dean Witter
Tax-Free Daily Income Trust, Dean Witter U.S. Government Money Market Trust,
Dean Witter Liquid Asset Fund Inc., Dean Witter California Tax-Free Daily
Income Trust and Dean Witter New York Municipal Money Market Trust (which five
funds are hereinafter called "money market funds") and shares of Dean Witter
Short-Term U.S. Treasury Trust and Dean Witter Short-Term Bond Fund
(collectively, the Fund, the money market funds, Dean Witter Short-Term U.S.
Treasury Trust and Dean Witter Short-Term Bond Fund are referred to herein as
the "Exchange Funds"). An exchange from an FESC fund or a CDSC fund to an
Exchange Fund is on the basis of the next calculated net asset value per share
of each fund after the exchange order is received. When exchanging into a money
market fund from an FESC fund or a CDSC fund, shares of the FESC fund or the
CDSC fund are redeemed at their next calculated net asset value and exchanged
for shares of the money market fund at their net asset value determined the
following business day. Subsequently, shares of the Exchange Funds received in
an exchange for shares of an FESC fund (regardless of the type of fund
originally purchased) may be redeemed and exchanged for shares of the other
Exchange Funds, FESC funds or CDSC funds (however, shares of CDSC funds,
including shares acquired in exchange for (i) shares of FESC funds or (ii)
shares of the Exchange Funds which were acquired in exchange for shares of FESC
funds, may not be exchanged for shares of FESC funds). Additionally, shares of
the Exchange Funds received in an exchange for shares of a CDSC fund
(regardless of the type of fund originally purchased) may be redeemed and
exchanged for shares of the otherExchange Funds or CDSC funds. Ultimately, any
applicable contingent deferred sales charge ("CDSC") will have to be paid upon
redemption of shares originally purchased from a CDSC fund. (If shares of the
Exchange Funds received in exchange for shares originally purchased from a CDSC
fund are exchanged for shares of another CDSC fund having a different CDSC
12
<PAGE>
schedule than that of the CDSC fund from which the Exchange Funds shares were
acquired, the shares will be subject to the higher CDSC schedule.) During the
period of time the shares originally purchased from a CDSC fund remain in the
Exchange Funds (calculated from the last day of the month in which the Exchange
Funds shares were acquired), the holding period (for the purpose of determining
the rate of CDSC) is frozen. If those shares are subsequently reexchanged for
shares of a CDSC fund, the holding period previously frozen when the first
exchange was made resumes on the last day of the month in which shares of CDSC
fund are reacquired. Thus, the CDSC is based upon the period of time the
shareholder was invested in a CDSC fund. Exchanges involving FESC funds or CDSC
funds may be made after the shares of the FESC fund or CDSC fund acquired by
purchase (not by exchange or dividend reinvestment) have been held for thirty
days. There is no waiting period for exchanges of shares acquired by exchange
or dividend reinvestment.
Purchases and exchanges should be made for investment purposes only. A
pattern of frequent exchanges may be deemed by the 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 shareholders, investors should be aware
that the Fund and each of the other Dean Witter Funds may in their discretion
limit or otherwise restrict the number of times this Exchange Privilege may be
exercised by any investor. Any such restriction will be made by the Fund on a
prospective basis only, upon notice to the shareholder not later than ten days
following such shareholder's most recent exchange. Also, the Exchange Privilege
may be terminated or revised at any time by the Fund and/or any of such Dean
Witter Funds for which shares of the Fund may be exchanged, upon such notice as
may be required by applicable regulatory agencies. Shareholders maintaining
margin accounts with DWR or another Selected Broker-Dealer are referred to
their account executive regarding restrictions or exchanging of shares of the
Fund pledged in the Margin Account.
The current prospectus for each fund describes its investment objective(s)
and policies, and shareholders should obtain one and read it carefully before
investing. Exchanges are subject to the minimum investment requirement and any
other conditions imposed by each fund. An exchange will be treated for federal
income tax purposes the same as a repurchase or redemption of shares on which
the shareholder has realized a capital gain or loss. However, the ability to
deduct capital losses on an exchange may be limited in situations where there
is an exchange of shares within ninety days after the shares are purchased. The
Exchange Privilege is only available in states where an exchange may legally be
made.
If DWR or another Selected Broker-Dealer is the current dealer of record and
its account numbers are part of the account information, shareholders may
initiate an exchange of shares of the Fund for shares of any of the above Dean
Witter Funds (for which the Exchange Privilege is available) pursuant to this
Exchange Privilege by contacting their DWR or another Selected Broker-Dealer
account executive (no Exchange Privilege Authorization Form is required). Other
shareholders (and those shareholders who are clients of DWR or another Selected
Broker-Dealer but who wish to make exchanges directly by writing or telephoning
the Transfer Agent) must complete and forward to the Transfer Agent an Exchange
Privilege Authorization Form, copies of which may be obtained from the Transfer
Agent, to initiate an exchange. If the Authorization Form is used, exchanges
may be made in writing or by contacting the Transfer Agent at (800) 526-3143
(toll free). The Fund will employ reasonable procedures to confirm that
exchange instructions communicated over the telephone are genuine. Such
procedures may include requiring various forms of personal identification such
as name, mailing address, social security or other tax identification number
and DWR or other Selected Dealer account number (if any). Telephone
instructions may also be recorded. If such procedures are not employed, the
Fund may be liable for any losses due to unauthorized or fraudulent
instructions.
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<PAGE>
Telephone exchange instructions will be accepted if received by the Transfer
Agent between 9:00 a.m. and 4:00 p.m. New York time, on any day the New York
Stock Exchange is open. Any shareholder wishing to make an exchange who has
previously filed an Exchange Privilege Authorization Form and who is unable to
reach the Fund by telephone should contact his or her DWR or other Selected
Broker-Dealer account executive, if appropriate, or make a written exchange
request. Shareholders are advised that during periods of drastic economic or
market changes, it is possible that the telephone exchange procedures may be
difficult to implement, although this has not been the experience of the other
Dean Witter Funds in the past.
For further information regarding the Exchange Privilege, shareholders should
contact their DWR or other Selected Broker-Dealer account executive or the
Transfer Agent.
REDEMPTIONS AND REPURCHASES
- ------------------------------------------------------------------------------
Redemption. Shares of the Fund can be redeemed for cash at any time at its
respective current net asset value per share (without any redemption or other
charge). If shares are held in a shareholder's account without a share
certificate, a written request for redemption is required. If certificates are
held by the shareholder, the shares may be redeemed by surrendering the
certificates with a written request for redemption along with any additional
documentation required by the Transfer Agent, to the Fund's Transfer Agent at
P.O. Box 983, Jersey City, NJ 07303.
Repurchase. DWR and other Selected Broker-Dealers are authorized to
repurchase, shares represented by a share certificate which is delivered to any
of their offices. Shares held in a shareholder's account without a share
certificate may also be repurchased by DWR and other Selected Broker-Dealers
upon the telephonic request of the shareholder. The repurchase price is the net
asset value next determined (see "Purchase of Fund Shares--Determination of Net
Asset Value") after such repurchase order is received by DWR and other Selected
Broker-Dealers.
Payment for Shares Redeemed or Repurchased. Payment for shares presented
for re- purchase or redemption will be made by check within seven days after
receipt by the Transfer Agent of the certificate and/or written request in good
order. Such payment may be postponed or the right of redemption suspended under
unusual circumstances. If the shares to be redeemed have recently been
purchased by check, payment of the redemption proceeds may be delayed for the
minimum time needed to verify that the check used for investment has been
honored (not more than fifteen days from the time of receipt of the check by
the Transfer Agent). Shareholders maintaining margin accounts with DWR or
another Selected Broker-Dealer are referred to their account executive
regarding restrictions on redemption of shares of the Fund pledged in the
margin account.
Involuntary Redemption. The Fund reserves the right to redeem, on 60 days'
notice and at net asset value, the shares (other than shares held in an
Individual Retirement Account or custodial account under Section 403(b)(7) of
the Internal Revenue Code) of any shareholder whose shares have a value of less
than $100 as a result of redemptions or repurchases, or such lesser amount as
may be fixed by the Trustees.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
Dividends and Distributions. The Fund declares dividends on each day the
New York Stock Exchange is open for business. Such dividends are payable
monthly. The Fund intends to distribute substantially all of its daily net
investment income on an annual basis. Dividends from net short-term capital
gains, if any, will be paid at least once each year. Any dividends or dis-
tributions declared in the last quarter of any calendar year which are paid in
the following year prior to February 1 will be deemed received by the
shareholder in the prior year. Shareholders may instruct the Transfer Agent (in
writing) to have their dividends paid out monthly in cash. Processing of
dividend checks begins immediately following the monthly payment date.
14
<PAGE>
Shareholders who have requested to receive dividends in cash will normally be
sent their monthly dividend check during the first ten days of the following
month.
Taxes. Because the Fund intends to distribute substantially all of its net
investment income and net capital gains, if any, to shareholders, and intends
to otherwise comply with all the provisions ofSubchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), to qualify as a regulated
investment company ("RIC"), it is not expected that the Fund will be required
to pay any federal income tax.
The Fund intends to qualify to pay "exempt-interest dividends" to its
shareholders by maintaining, as of the close of each quarter of its taxable
year, at least 50% of the value of its total assets in tax-exempt securities.
If the fund qualifies as a RIC and satisfies such requirement, dividends from
net investment income to shareholders, whether taken in cash or reinvested in
additional Fund shares, will be excludable from gross income for federal income
tax purposes to the extent net interest income is represented by interest on
tax-exempt securities. Exempt-interest dividends are included, however, in
determining what portion, if any, of a person's Social Security benefits are
subject to federal income tax.
The Code subjects interest received on certain otherwise tax-exempt
securities to an alternative minimum tax. This alternative minimum tax applies
to interest received on "private activity bonds" (in general, bonds that
benefit non-governmental entities) issued after August 7, 1986 which, although
tax-exempt, are used for purposes other than those generally performed by
governmental units (e.g., bonds used for commercial or housing purposes).
Income received on such bonds is classified as a "tax preference item", under
the alternative minimum tax, for both individual and corporate investors. There
is no percentage limitation with respect to the Fund's investments in such
"private activity bonds," with the result that a portion of the exempt-interest
dividends paid by the Fund may be an item of tax preference to shareholders
subject to the alternative minimum tax. In addition, certain corporations which
are subject to the alternative minimum tax may have to include a portion of
exempt-interest divi- dends in calculating their alternative minimum taxable
income in situations where the "adjusted current earnings" of the corporation
exceeds its alternative minimum taxable income.
The Fund will mail to shareholders a statement indicating the percentage of
the dividend distributions for each taxable year which constitutes exempt-
interest dividends and the percentage, if any, that is taxable, and the
percentage, if any, of the exempt-interest dividends which constitutes an item
of tax preference.
Shareholders will normally be subject to federal personal income tax on
market discount on certain taxable and tax-exempt fixed-income securities,
dividends paid from interest income derived from taxable securities and on
distributions of net capital gains. For federal income tax purposes,
distributions of long-term capital gains, if any, are taxable to shareholders
as long-term capital gains, regardless of how long a shareholder has held the
Fund's shares and regardless of whether the distribution is received in
additional shares or cash. To avoid being subject to a 31% backup withholding
tax on taxable dividends and capital gains distributions and the proceeds of
redemptions and repurchases, shareholders' taxpayer identification numbers must
be furnished and certified as to accuracy. Interest on indebtedness incurred by
shareholders or related parties to purchase or carry shares of an investment
company paying exempt-interest dividends, such as the Fund, will not be
deductible by the investor for federal income tax purposes.
Under the Revenue Reconciliation Act of 1993, all or a portion of the Fund's
gain from the sale or redemption of tax-exempt obligations purchased at a
market discount after April 30, 1993 will be treated as ordinary income rather
than capital gain. This rule may increase the amount of ordinary income
dividends received by shareholders.
The foregoing relates to federal income taxation as in effect as of the date
of this Prospectus. Distributions from investment income and capital gains,
including exempt-interest dividends, may be subject to state franchise taxes if
received by a corporation doing business in various states, and to state and
local taxes. Shareholders should consult their tax advisers as to the
applicability of the above to their own tax situation.
15
<PAGE>
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
From time to time the Fund advertises its "yield" and "effective yield"
and/or its "total return" in advertisements." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Fund refers to the income generated by an investment in the Fund
over a given seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of income
generated by the 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 the investment. The "effective yield" for a seven-day period is
calculated similarly but, when annualized, the income earned by an investment
in the Fund 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. The Fund may also quote tax-
equivalent yield which is calculated by determining the pre-tax yield which,
after being taxed at a stated rate, would be equivalent to the yield determined
as described above.
The "average annual total return" of the Fund refers to a figure reflecting
the average annualized percentage increase (or decrease) in the value of an
initial investment in the Fund of $1,000 over a period of one year, as well as
the life of the Fund. Average annual total return reflects all income earned by
the Fund, any appreciation or depreciation of the assets of the Fund and all
expenses incurred by the Fund for the stated periods. It also assumes
reinvestment of all dividends and distributions paid by the Fund.
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. The Fund may also advertise the growth of
hypothetical investments of $10,000, $50,000 and $100,000 in shares of the
Fund.The Fund from time to time may also advertise its performance relative to
certain performance rankings (such as Lipper Analytical Services Inc.) and
indices compiled by independent organizations (such as the Lehman Brothers
Municipal Bond Index and Sub-indices).
ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------
Voting Rights. All shares of beneficial interest of the Fund are of $0.01
par value and are equal as to earnings, assets and voting privileges.
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 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
documents 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, the possibility of the Fund
being unable to meet its obligations is remote and in the opinion of
Massachusetts counsel to the Fund, the risk to Fund shareholders of personal
liability is remote.
Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund or the Distributor or to the Transfer Agent at the telephone
numbers or addresses, as are set forth on the front cover of this Prospectus.
16
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THE DEAN WITTER FAMILY OF FUNDS
MONEY MARKET FUNDS
Dean Witter Liquid Asset Fund Inc.
Dean Witter U.S. Government Money
Market Trust
Dean Witter Tax-Free Daily Income Trust
Dean Witter California Tax-Free Daily
Income Trust
Dean Witter New York Municipal Money
Market Trust
EQUITY FUNDS
Dean Witter American Value Fund
Dean Witter Natural Resource Development
Securities Inc.
Dean Witter Dividend Growth Securities Inc.
Dean Witter Developing Growth Securities Trust
Dean Witter World Wide Investment Trust
Dean Witter Value-Added Market Series
Dean Witter Utilities Fund
Dean Witter Capital Growth Securities
Dean Witter European Growth Fund Inc.
Dean Witter Precious Metals and Minerals Trust
Dean Witter Pacific Growth Fund Inc.
Dean Witter Health Sciences Trust
Dean Witter Global Dividend Growth Securities
Dean Witter Global Utilities Fund
Dean Witter National Municipal Trust
FIXED-INCOME FUNDS
Dean Witter High Yield Securities Inc.
Dean Witter Tax-Exempt Securities Trust
Dean Witter U.S. Government Securities Trust
Dean Witter Federal Securities Trust
Dean Witter Convertible Securities Trust
Dean Witter California Tax-Free Income Fund
Dean Witter New York Tax-Free Income Fund
Dean Witter World Wide Income Trust
Dean Witter Intermediate Income Securities
Dean Witter Global Short-Term Income Fund Inc.
Dean Witter Multi-State Municipal Series Trust
Dean Witter Premier Income Trust
Dean Witter Short-Term U.S. Treasury Trust
Dean Witter Diversified Income Trust
Dean Witter Limited Term Municipal Trust
Dean Witter Short-Term Bond Fund
Dean Witter High Income Securities
ASSET ALLOCATION FUNDS
Dean Witter Managed Assets Trust
Dean Witter Strategist Fund
<PAGE>
ACTIVE ASSETS ACCOUNT PROGRAM
Active Assets Money Trust
Active Assets Tax-Free Trust
Active Assets California Tax-Free Trust
Active Assets Government Securities Trust
DEAN WITTER RETIREMENT SERIES
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Stategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Katherine H. Stromberg
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Bank of New York
110 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
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
DEAN WITTER
LIMITED TERM
MUNICIPAL TRUST
PROSPECTUS--MAY 27, 1994
<PAGE>
DEAN WITTER
LIMITED TERM
MUNICIPAL TRUST
STATEMENT OF ADDITIONAL INFORMATION
MAY 27, 1994
===============================================================================
Dean Witter Limited Term Municipal Trust (the "Fund") is an open-end
diversified management investment company whose investment objective is to
provide a high level of current income exempt from federal income tax,
consistent with the preservation of capital and prescribed standards of quality
and maturity. The Fund seeks to achieve its objective by investing
predominately in intermediate term high quality municipal securities with an
anticipated average dollar-weighted maturity range of 7 to 10 years and a
average maximum dollar-weighted maturity of 12 years. (See "Investment
Objective and Policies").
A Prospectus for the Fund dated May 27, 1994, which provides the basic
information you should know before investing in the Fund, may be obtained
without charge from the Fund at its address or telephone number listed below or
from the Fund's Distributor, Dean Witter Distributors Inc., or from Dean Witter
Reynolds Inc. at any of its branch offices. This Statement of Additional
Information is not a Prospectus. It contains information in addition to and
more detailed than that set forth in the Prospectus. It is intended to provide
additional information regarding the activities and operations of the Fund, and
should be read in conjunction with the Prospectus.
Dean Witter
Limited Term Municipal Trust
Two World Trade Center
New York, New York 10048
(212) 392-2550
<PAGE>
TABLE OF CONTENTS
===============================================================================
The Fund and its Management..................................... 3
Trustees and Officers........................................... 6
Investment Practices and Policies............................... 8
Investment Restrictions......................................... 15
Portfolio Transactions and Brokerage............................ 17
Purchase of Fund Shares......................................... 18
Shareholder Services............................................ 20
Redemptions and Repurchases..................................... 24
Dividends, Distributions and Taxes.............................. 25
Performance Information......................................... 27
Shares of the Fund.............................................. 28
Custodian and Transfer Agent.................................... 29
Independent Accountants......................................... 29
Reports to Shareholders......................................... 29
Validity of Shares of Beneficial Interest....................... 29
Legal Counsel................................................... 29
Experts......................................................... 29
Registration Statement.......................................... 29
Appendix........................................................ 40
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 February 25, 1993.
THE INVESTMENT MANAGER
Dean Witter InterCapital Inc. (the "Investment Manager" or
"InterCapital"), 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 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 Fund's portfolio 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 Trustees. In addition, Trustees of the Fund
provide guidance on economic factors and interest rate trends. Information as
to these Trustees and Officers is contained under the caption "Trustees and
Officers".
InterCapital is also the investment manager (or investment adviser and
administrator) of the following management investment companies: Active Assets
Money Trust, Active Assets Tax-Free Trust, Active Assets California Tax-Free
Trust, Active Assets Government Securities Trust, Dean Witter Liquid Asset Fund
Inc., InterCapital Income Securities Inc., InterCapital California Insured
Municipal Income Trust, InterCapital Insured Municipal Income Trust,
InterCapital Quality Municipal Income Trust, InterCapital Quality Municipal
Securities, InterCapital California Quality Municipal Securities, InterCapital
New York Quality Municipal Securities, InterCapital Insured Municipal
Securities, InterCapital Insured California Municipal Securities, Dean Witter
Short-Term Bond Fund, Dean Witter Global Utilities Fund, Dean Witter National
Municipal Trust, Dean Witter High Yield Securities Inc., Dean Witter Tax-Free
Daily Income Trust, Dean Witter Developing Growth Securities Trust, Dean Witter
Tax-Exempt Securities Trust, Dean Witter Natural Resource Development
Securities Inc., Dean Witter Dividend Growth Securities Inc., Dean Witter
American Value Fund, Dean Witter U.S. Government Money Market Trust, Dean
Witter Variable Investment Series, Dean Witter World Wide Investment Trust,
Dean Witter Select Municipal Reinvestment Fund, Dean Witter U.S. Government
Securities Trust, Dean Witter California Tax-Free Income Fund, Dean Witter
Equity Income Trust, Dean Witter New York Tax-Free Income Fund, Dean Witter
Convertible Securities Trust, Dean Witter Federal Securities Trust, Dean Witter
Value-Added Market Series, High Income Advantage Trust, High Income Advantage
Trust II, High Income Advantage Trust III, Dean Witter Government Income Trust,
InterCapital Insured Municipal Bond Trust, InterCapital Quality Municipal
Investment Trust, Dean Witter Utilities Fund, Dean Witter Strategist Fund, Dean
Witter Managed Assets Trust, Dean Witter California Tax-Free Daily Income
Trust, Dean Witter World Wide Income Trust, Dean Witter Intermediated Income
Securities, Dean Witter Capital Growth Securities, Dean Witter European Growth
Fund Inc., Dean Witter Precious Metals and Minerals Trust, Dean Witter New York
Municipal Money Market Trust, Dean Witter Global Short-Term Income Fund Inc.,
Dean Witter Pacific Growth Fund Inc., Dean Witter Premier Income Trust and Dean
Witter Short-Term U.S. Treasury Trust, InterCapital Insured Municipal Trust,
InterCapital Quality Municipal Income Trust, Dean Witter Diversified Income
Trust, Dean Witter Health Sciences Trust, Dean Witter Global DividendGrowth
Securities, and Dean Witter Retirement Series, Municipal Income Trust,
Municipal Income Trust II,Municipal Income Trust III, Municipal Income
Opportunities Trust, Municipal Income Opportunities Trust II, Municipal Income
Opportunities Trust III, Prime Income Trust and Municipal Premium Income Trust.
The foregoing investment companies, together with the Fund, are collectively
referred to as the Dean Witter Funds. In addition, Dean Witter Services Company
Inc., 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 North American
Intermediate Income Trust,
3
<PAGE>
TCW/DW Term Trust 2000, TWC/DW Emerging Markets Opportunities Trust, TCW/DW
Term Trust 2002, TCW/DW Income and Growth Fund, TCW/DW Small Cap Growth Fund,
TCW/DW Balanced Fund and TCW/DW Term Trust 2003 (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.
The Investment Manager also serves as an investment adviser for Dean Witter
World Wide Investment Fund, an investment company organized under the laws of
Luxembourg, shares of which company may not be offered in the United States or
purchased by American citizens outside of the United States.
Pursuant to an Investment Management Agreement (the "Agreement") with the
Investment Manager, the Fund has retained the Investment Manager to manage the
investment of the Fund's assets, including the placing of orders for the
purchase and sale of portfolio securities. The Investment Manager obtains and
evaluates such information and advice relating to the economy, securities
markets, and specific securities as it considers necessary or useful to
continuously manage the assets of the Fund in a manner consistent with its
investment objective.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, such office space, facilities,
equipment, clerical help and bookkeeping and certain legal services as the Fund
may reasonably require in the conduct of its business, including the
preparation of prospectuses, statements of additional information, proxy
statements and reports required to be filed with federal and state securities
commissions (except insofar as the participation or assistance of independent
accountants and attorneys is, in the opinion of the Investment Manager,
necessary or desirable). In addition, the Investment Manager pays the salaries
of all personnel, including officers of the Fund, who are employees of the
Investment Manager. The Investment Manager also bears the cost of telephone
service, heat, light, power and other utilities provided to the Fund.
Effective December 31, 1993, pursuant to a Services Agreement between
InterCapital and DWSC, DWSC began to provide the administrative services to the
Fund which were previously performed directly by InterCapital. The foregoing
internal reorganization did not result in any change in the nature or scope of
the administrative services being provided to the Fund or any of the fees being
paid by the Fund for the overall services being performed under the terms of
the existing Management Agreement.
The Fund pays all expenses incurred in its operation. Expenses not expressly
assumed by the Investment Manager under the Agreement or by Dean Witter
Distributors Inc., ("Distributors" or the "Distributor"), the Distributor of
the Fund's shares (see "Purchase of Fund Shares") will be paid by the Fund. The
expenses borne by the Fund include, but are not limited to: charges and
expenses of any registrar; custodian, stock transfer and dividend disbursing
agent; brokerage commissions; taxes; engraving and printing of share
certificates; registration costs of the Fund and its shares under federal and
state securities laws; the cost and expense of printing, including typesetting,
and distributing Prospectuses and Statements of Additional Information of the
Fund and supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing of
proxy statements and reports to shareholders; fees and travel expenses of
Trustees or members of any advisory board or committee who are not employees of
the Investment Manager or any corporate affiliate of the Investment Manager;
all expenses incident to any dividend, withdrawal or redemption options;
charges and expenses of any outside service used for pricing of the Fund's
shares; fees and expenses of legal counsel, including counsel to the Trustees
who are not interested persons of the Fund or of the Investment Manager (not
including compensation or expenses of attorneys who are employees of the
Investment Manager) and independent accountants; membership dues of industry
associations; interest on the Fund's borrowings; postage; insurance premiums on
property or personnel (including officers and Trustees) of the Fund which inure
to its benefit; extraordinary expenses including, but not limited to, legal
claims and liabilities and litigation costs and any indemnification relating
thereto (depending upon the nature of the legal claim, liability or lawsuit),
the costs of litigation, payment of legal claims or liabilities or
indemnification relating thereto; and all other costs of the Fund's operations
properly payable by the Fund.
4
<PAGE>
As full compensation for the services and facilities furnished to the Fund
and expenses of the Fund assumed by the Investment Manager, the Fund pays the
Investment Manager monthly compensation calculated daily by applying the annual
rate of 0.50% to the daily net assets of the Fund. For the period July 9, 1993
(commencement of operations) through December 31, 1993, the Fund did not accrue
any compensation to the Investment Manager. The Investment Manager had
undertaken to assume all operating expenses (except for brokerage expenses) and
to waive its compensation until December 31, 1993. If the Investment Manager
had not waived its compensation during this period, the Fund would have accrued
to the Investment Manager a total of $490,519 in fees for the fiscal period
ended March 31, 1994. For the period January 1, 1994 through March 31, 1994
(when fees were actually accrued), the Fund accrued to the Investment Manager
monthly compensation under the Agreement in the amount of $226,830.
Pursuant to the Agreement, total operating expenses of the Fund are
subject to applicable limitations under rules and regulations of states where
the Fund is authorized to sell its shares. Therefore, operating expenses of the
Fund are effectively subject to such limitations as the same may be amended
from time to time. Presently, the most restrictive limitation, applicable only
to shares of the Fund registered to be sold in California, is as follows: If,
in any fiscal year, the total operating expenses of a fund, 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 fund for the amount of such excess. Such amount, if any,
will be calculated daily and credited on a monthly basis. The Fund did not
exceed such limitation for the period July 9, 1993 (commencement of operations)
through March 31, 1994 (fiscal year-end).
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 paid the organizational expenses of the Fund
incurred prior to the offering of the Fund's shares. The Fund agreed to bear
and reimburse the Investment Manager for such expenses which totalled
approximately $140,000. The Fund has deferred and is amortizing these
organizational expenses on the straight line method over a period not to exceed
five years from the date of commencement of the Fund's operations.
The Agreement was initially approved by the Trustees on June 3, 1993
and by InterCapital as the sole shareholder on June 25, 1993. 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 of the outstanding shares of
the Fund, as defined in the Investment Company Act of 1940, as amended (the
"Act"), or by the Investment Manager. The Agreement will automatically
terminate in the event of its assignment (as defined in the Act).
By its terms, the Agreement will continue in effect until April 30,
1995, and provides that it will continue from year to year thereafter, provided
continuance of the Agreement is approved at least annually by the vote of the
holders of a majority of the outstanding shares of the Fund, 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.
The Fund has acknowledged that the name "Dean Witter" is a property
right of DWR. The Fund has agreed that DWR or its parent company may use, or at
any time permit others to use, the name "Dean Witter". The Fund has also agreed
that in the event the investment management contract between the Investment
Manager and the Fund 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.
5
<PAGE>
TRUSTEES AND OFFICERS
===============================================================================
The Trustees and Executive Officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with
InterCapital, and with the Dean Witter Funds and the TCW/DW Funds are shown
below:
NAME, POSITION WITH FUND
AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------- --------------------------------------------
Jack F. Bennett
Trustee
141 Taconic Road
Greenwich, Connecticut
Retired; Director or Trustee of the Dean Witter Funds; formerly
Senior Vice President and Director of Exxon Corporation (1975-January, 1989)
and Under Secretary of the U.S. Treasury for Monetary Affairs (1974-1975);
Director of Philips Electronics N.V., Tandem Computers Inc. and Massachusetts
Mutual Life Insurance Co.; director or trustee of various other not-for-profit
and business organizations.
Michael Bozic
Trustee
c/o Hills Stores Inc.
15 Dan Road
Canton, Massachusetts
President and Chief Executive Officer of Hills Department
Stores (since May, 1991); formerly Chairman and Chief Executive Officer
(January, 1987-August, 1990) and President and Chief Operating Officer (August,
1990-February, 1991) of the Sears Merchandise Group of Sears, Roebuck and Co.;
Director or Trustee of the Dean Witter Funds; Director of Harley Davidson
Credit Inc., the United Negro College Fund and Domain Inc. (home decor
retailer).
Charles A. Fiumefreddo*
Chairman, President
Chief Executive Officer and Trustee
Two World Trade Center
New York, New York
Chairman, Chief Executive Officer and Director of InterCapital,
Dean Witter Distributors Inc. and DWSC; Director and Executive Vice President
of DWR; Chairman, Director or Trustee, President and Chief Executive Officer of
the Dean Witter Funds; Chairman, Chief Executive Officer and Trustee of the
TCW/DW Funds; Chairman and Director of Dean Witter Trust Company ("DWTC")
(since October, 1989); Director and/or officer of various DWDC subsidiaries and
affiliates; formerly Executive Vice President and Director of DWDC (until
February, 1993).
Edwin J. Garn
Trustee
2000 Eagle Gate Tower
Salt Lake City, Utah
Director or Trustee of the Dean Witter Funds; formerly United
States Senator (R-Utah) (1974-1992) and Chairman, Senate Banking Committee
(1980-1986); formerly Mayor of Salt Lake City, Utah (1971-1974); formerly
Astronaut, Space Shuttle Discovery (April 12-19, 1985); Vice Chairman, Huntsman
Chemical Corporation (since January, 1993); Member of the board of various
civic and charitable organizations.
John R. Haire
Trustee
439 East 51st Street
New York, New York
Chairman of the Audit Committee and Chairman of the Committee
of the Independent Directors or Trustees and Director or Trustee of the Dean
Witter Funds; Trustee of the TCW/DW Funds; formerly President, Council for Aid
to Education (1978-October, 1989) and Chairman and Chief Executive Officer of
Anchor Corporation, an Investment Adviser (1964-1978); Director of Washington
National Corporation (insurance) and Bowne & Co., Inc. (printing).
Dr. John E. Jeuck
Trustee
70 East Cedar Street
Chicago, Illinois
Retired; Director or Trustee of the Dean Witter Funds; formerly
Robert Law Professor of Business Administration, Graduate School of Business,
University of Chicago (until July, 1989); Business consultant.
Dr. Manuel H. Johnson
Trustee
7521 Old Dominion Drive
McLean, Virginia
Senior Partner, Johnson Smick International, Inc., a consulting
firm (since June, 1985); Koch Professor of International Economics and Director
of the Center for Global Market Studies at George Mason University (since
September, 1990); Co-Chairman and a founder of the Group of Seven Council
(G7C), an international economic commission (since September, 1990); Director
or Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds; Director of
Greenwich Capital Markets Inc. (broker-dealer); formerly Vice Chairman of the
Board of Governors of the Federal Reserve System (February, 1986-August, 1990)
and Assistant Secretary of the U.S. Treasury (1982-1988).
6
<PAGE>
NAME, POSITION WITH FUND
AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------ --------------------------------------------
Paul Kolton
Trustee
9 Hunting Ridge Road
Stamford, Connecticut
Director or Trustee of the Dean Witter Funds; Chairman of the
Audit Committee and Chairman of the Committee of the Independent Trustees and
Trustee of the TCW/DW Funds; formerly Chairman of the Financial Accounting
Standards Advisory Council; and Chairman and Chief Executive Officer of the
American Stock Exchange; Director of UCC Investors Holding Inc. (Uniroyal
Chemical Company, Inc.); director or trustee of various not-for-profit
organizations.
Michael E. Nugent
Trustee
237 Park Avenue
New York, New York
General Partner, Triumph Capital, L.P., a private investment
partnership (since April, 1988); Director or Trustee of the Dean Witter Funds;
Trustee of the TCW/DW Funds; formerly Vice President, Bankers Trust Company and
BT Capital Corporation (September, 1984-March, 1988); Director of various
business organizations.
Philip J. Purcell*
Trustee
Two World Trade Center
New York, New York
Chairman of the Board of Directors and Chief Executive Officer
of DWDC, DWR and Novus Credit Services Inc.; Director of InterCapital, DWSC and
Distributors; Director or Trustee of the Dean Witter Funds; Director and/or
officer of Various DWDC subsidiaries.
John L. Schroeder
Trustee
Northgate 3A
Alger Court
Bronxville, New York Executive Vice President and Chief Investment
Officer of the Home Insurance Company (since August, 1991); Director or Trustee
of the Dean Witter Funds; Director of Citizens Utilities Company; formerly
Chairman and Chief Investment Officer of Axe-Houghton Management and the Axe-
Houghton Funds (April, 1983-June, 1991) and President of USF&G Financial
Services, Inc. (June 1990-June, 1991).
Edward R. Telling*
Trustee
Sears Tower
Chicago, Illinois
Retired; Director or Trustee of the Dean Witter Funds; formerly
Chairman of the Board of Directors and Chief Executive Officer (until December,
1985) and President (from January, 1981-March, 1982 andfrom February, 1984-
August, 1984) of Sears, Roebuck and Co.; formerly Director of Sears, Roebuck
and Co.
Sheldon Curtis
Vice President, Secretary
and General Counsel
Two World Trade Center
New York, New York Senior Vice President, Secretary and General
Counsel of InterCapital and DWSC; Senior Vice President, Assistant Secretary
and Assistant General Counsel of Dean Witter Distributors Inc.; Senior Vice
President and Secretary of DWTC (since October, 1989); Assistant Secretary of
DWDC and DWR; and Vice President, Secretary and General Counsel of the Dean
Witter Funds and the TCW/DW Funds.
Katherine H. Stromberg
Vice President
Two World Trade Center
New York, New York
Vice President of InterCapital; Vice President of various Dean
Witter Funds, formerly, Vice President of Kidder Peabody Asset Management (from
September, 1985--October, 1991).
Thomas F. Caloia
Treasurer
Two World Trade Center
New York, New York
First Vice President (since May, 1991) and Assistant Treasurer
(since January, 1993) of InterCapital; First Vice President and Assistant
Treasurer of DWSC; Treasurer of the Dean Witter Funds and the TCW/DW Funds.
- ----------
* Denotes Trustees who are "interested persons" of the Fund, as defined in the
Act.
7
<PAGE>
In addition, Robert M. Scanlan, President and Chief Operating Officer of
InterCapital and DWSC, Executive Vice President of Distributors and DWTC and
Director of DWTC, David A. Hughey, Executive Vice President and Chief
Administrative Officer of InterCapital, DWSC and Distributors and President and
Director of DWTC, Edmund C. Puckhaber, Executive Vice President 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 Lawrence S. Lafer, Lou Anne D. McInnis and Ruth Rossi, Vice
Presidents and Assistant General Counsels of InterCapital and DWSC, are
Assistant Secretaries of the Fund.
The Fund pays each Trustee who is not an employee or retired employee
of the Investment Manager or an affiliated company an annual fee of $1,200
($1,600 prior to December 31, 1993) plus $50 for each meeting of the Trustees,
the Audit Committee or of the Committee of the Independent Trustees attended by
the Trustee (the Fund pays the Chairman of the Audit Committee an additional
annual fee of $1,000 ($1,200 prior to December 31, 1993) and pays the Chairman
of the Committee of the Independent Trustees an additional annual fee of
$2,400, in each case inclusive of the Committee meeting fees). The Fund also
reimburses such Trustees for travel and other out-of-pocket expenses incurred
by them in connection with attending such meetings. Trustees and officers of
the Fund who are or have been employed by the Investment Manager or an
affiliated company receive no compensation or expense reimbursement from the
Fund. Effective January, 1994, the Fund has adopted a retirement program under
which an Independent Trustee who retires after a minimum required period of
service would be entitled to retirement payments upon reaching the eligible
retirement age (normally, after attaining age 72) based upon length of service
and computed as a percentage of one-fifth of the total compensation earned by
such Trustee for service to the Fund in the five-year period prior to the date
of the Trustee's retirement. For the fiscal period ended March 31, 1994 (the
period January 1, 1994 through March 31, 1994), the Fund accrued a total of
$7,557 for Trustee's fees' and expenses of which $2,790 was for benefits under
the above described retirement program. As of the date of this Statement of
Additional Information, the aggregate shares of beneficial interest of the Fund
owned by the Fund's officers and trustees as a group was less than 1 percent of
the Fund's shares outstanding.
INVESTMENT PRACTICES AND POLICIES
===============================================================================
PORTFOLIO SECURITIES
Taxable Securities. As discussed in the Prospectus, the Fund may
invest up to 20% of its total assets in taxable money market instruments, under
any one of the following circumstances: (a) pending investment of proceeds of
the sale of the Fund's shares or of portfolio securities, (b) pending
settlement of purchases of portfolio securities and (c) to maintain liquidity
for the purpose of meeting anticipated redemptions.
In addition, the Fund may temporarily invest more than 20% of its total
assets in taxable securities, or in tax-exempt securities subject to the
federal alternative minimum tax for individual shareholders, in order to
maintain a "defensive" posture when, in the opinion of the Investment Manager,
it is advisable to do so because of market conditions. The types of taxable
money market instruments in which the Fund may invest are limited to the
following short-term fixed-income securities (maturing in one year or less from
the time of purchase): (i) obligations of the United States Government, its
agencies, instrumentalities or authorities; (ii) commercial paper rated P-1 by
Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard & Poor's
Corporation ("S&P"); (iii) certificates of deposit of domestic banks with
assets of $1 billion or more; and (iv) repurchase agreements with respect to
the foregoing portfolio securities.
Tax-Exempt Securities. Under normal conditions, at least 80% of the
total assets of the Fund will be invested in securities, the interest on which
is exempt from federal income taxes. The tax-exempt securities in which the
Fund may invest include any or all of the following securities: fixed,
variable, or floating rate general obligation and revenue bonds (including
municipal lease obligations and resource recovery bonds); zero coupon and
asset-backed securities, inverse floaters; tax, revenue, or bond anticipation
notes; and tax-exempt commercial paper. In regard to the Moody's and S&P
ratings discussed in the Prospectus, it should be noted that the ratings
represent the organizations' opinions as to the quality of the securities which
they undertake to rate and that the ratings are general and not absolute
standards of quality. For a description of municipal bond, municipal note and
municipal commercial paper ratings by Moody's and S&P, see the Appendix to this
Statement of Additional Information.
The percentage and rating policies in the Prospectus apply at the time
of acquisition of a security based upon the last previous determination of the
Fund's net asset value; any subsequent change in any
8
<PAGE>
ratings by a rating service or change in percentages resulting from market
fluctuations or other changes in the amount of total assets will not require
elimination of any security from the Fund's portfolio until such time as the
Investment Manager determines that it is practicable to sell the security
without undue market or tax consequences to the Fund. Therefore, the Fund may
hold securities which have been downgraded toratings of Ba or BB or lower by
Moody's or S&P. Such securities are considered to be speculative investments.
Although certain quality standards are applicable at the time of
purchase, the Fund does not have any minimum quality rating standard for its
downgraded investments. As such, the Fund may continue to hold securities rated
as low as Caa, Ca or C by Moody's or CCC, CC, C or CI by S&P. However, such
investments may not exceed more than 5% of the total assets of the Fund. Bonds
rated Caa or Ca by Moody's may already be in default on payment of interest or
principal, while bonds rated C by Moody's, their lowest bond rating, can be
regarded as having extremely poor prospects of ever attaining any real
investment standing. Bonds rated CI by S&P, their lowest Bond rating, are no
longer making interest payments.
The payment of principal and interest by issuers of certain municipal
securities purchased by the Fund 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 municipal securities meet
the investment quality requirements of the Fund. In addition, some issues may
contain provisions which permit the Fund to demand from the issuer repayment of
principal at some specified period(s) prior to maturity.
Municipal Bonds. Municipal bonds, as referred to in the Prospectus,
are debt obligations of a state, its cities, municipalities and municipal
agencies (all of which are generally referred to as "municipalities") which
generally have a maturity at the time of issue of one year or more, and the
interest from which is, in the opinion of bond counsel to the issuer at time of
original issuance, exempt from regular federal income tax. These obligations
are issued to raise funds for various public purposes, such as construction of
a wide range of public facilities, to refund outstanding obligations and to
obtain funds for general operating expenses or to loan to other public
institutions and facilities. In addition, certain types of industrial
development bonds and pollution control bonds are issued by or on behalf of
public authorities to provide funding for various privately operated
facilities.
Municipal Notes. Municipal notes are short-term obligations of
municipalities, generally with a maturity at the time of issuance ranging from
six months to three years, the interest from which is, in the opinion of bond
counsel to the issuer at time of original issuance, exempt from regular federal
income tax. The principal types of municipal notes include tax anticipation
notes, bond anticipation notes, revenue anticipation notes and project notes,
although there are other types of municipal notes, in which the Fund may
invest. Notes sold in anticipation of collection of taxes, a bond sale or
receipt of other revenues are usually general obligations of the issuing
municipality or agency. Project notes are issued by local agencies and are
guaranteed by the United States Department of Housing and Urban Development.
Such notes are secured by the full faith and credit of the United States
Government.
Municipal Commercial Paper. Municipal commercial paper refers to
short-term obligations of municipalities the interest from which is, in the
opinion of bond counsel to the issuer at time of original issuance, exempt from
regular federal income tax. Municipal commercial paper may be issued at a
discount and is sometimes referred to as Short-Term Discount Notes. Municipal
commercial paper is likely to be used to meet seasonal working capital needs of
a municipality or interim construction financing and to be paid from general
revenues of the municipality or refinanced with long-term debt. In most cases
municipal commercial paper is backed by letters of credit, lending agreements,
note repurchase agreements or other credit facility agreements offered by banks
or other institutions.
The two principal classifications of municipal bonds, notes and
commercial paper are "general obligation" and "revenue" bonds, notes or
commercial paper. General obligation bonds, notes or commercial paper are
secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. Issuers of general obligation bonds, notes
or commercial paper include a state, its counties, cities, towns and other
governmental units. Revenue bonds, notes or commercial paper are payable from
the revenues derived from a particular facility or class of facilities or, in
some cases, from specific revenue sources. Revenue bonds, notes or commercial
paper are issued for a wide variety of purposes, including the financing of
electric, gas, water and sewer systems and other public utilities; industrial
development and pollution control facilities; single and multi-family housing
units; public buildings and facilities; air and marine ports; transportation
facilities such as toll roads, bridges and tunnels; and health and educational
facilities such as hospitals and dormitories. They rely primarily on user fees
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to pay debt service, although the principal revenue source is often
supplemented by additional security features which are intended to enhance the
credit worthiness of the issuer's obligations. In some cases, particularly
revenue bonds issued to finance housing and public buildings, a direct or
implied "moral obligation" of a governmental unit may be pledged to the payment
of debt service. In other cases, a special tax or other charge may augment user
fees.
Issuers of municipal securities are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors, such as the Federal Bankruptcy Act, and laws, if any, which may be
enacted by Congress or any state extending the time for payment of principal or
interest, or both, or imposing other constraints upon enforcement of such
obligations or upon municipalities to levy taxes. There is also the possibility
that as a result of litigation or other conditions the power or ability of any
one or more issuers to pay, when due, principal of and interest on its, or
their, municipal bonds, municipal notes and municipal commercial paper may be
materially affected.
Variable Rate Obligations. As stated in the Prospectus, the Fund may
invest in obligations of the type called "variable rate obligations". The
interest rate payable on a variable rate obligation is adjusted either at
predesignated periodic intervals or 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 Fund 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. The
principal benefit to the Fund of purchasing obligations with a demand feature
is that liquidity, and the ability of the Fund to obtain repayment of the full
principal amount of the obligation prior to maturity, is enhanced.
Zero Coupon Securities. The Fund also may invest in zero coupon
securities which are debt securities issued or sold at a discount from their
face value which do not entitle the holder to any periodic payment of interest
prior to maturity or a specified redemption date (or cash payment date). The
amount of the discount varies depending on the time remaining until maturity or
cash payment date, prevailing interest rates, liquidity of the security and
perceived credit quality of the issuer. Zero coupon securities also may take
the form of debt securities that have been stripped of their unmatured interest
coupons, the coupons themselves and receipts or certificates representing
interests in such stripped debt obligations and coupons. The market prices of
zero coupon securities generally are more volatile than the market prices of
interest-bearing securities and are likely to respond to a greater degree to
changes in interest rates than interest-bearing securities having similar
maturities and credit qualities.
Lending of Portfolio Securities. The Fund may lend portfolio
securities to brokers, dealers and financial institutions provided that cash
equal to at least 100%, of the market value of the securities loaned is
deposited by the borrower with the Fund and is maintained each business day in
a segregated account pursuant to applicable regulations. The collateral value
of the loaned securities will be marked-to-market daily. While such securities
are on loan, the borrower will pay the Fund any income accruing thereon, and
the Fund may invest, the cash collateral in portfolio securities, thereby
earning additional income. The Fund will not lend the portfolio securities if
such loans are not permitted by the laws or regulations of any state in which
its shares are qualified for sale and will not lend more than 25% of the value
of the total assets of the Fund. Loans will be subject to termination by the
Fund, in the normal settlement time, currently five business days after notice,
or by the borrower on one day's notice. Borrowed securities must be returned
when the loan is terminated. Any gain or loss in the market price of the
borrowed securities which occurs during the term of the loan inures to the Fund
and its shareholders. The Fund may pay reasonable finders, borrowers,
administrative, and custodial fees in connection with a loan. The
creditworthiness of firms to which the Fund lends its portfolio securities will
be monitored on an ongoing basis. During the fiscal period ended March 31,
1994, the Fund did not loan its portfolio securities and it has no current
intention to loan its portfolio securities in the foreseeable future.
When-Issued and Delayed Delivery Securities and Forward Commitments.
As discussed in the Prospectus, from time to time, in the ordinary course of
business, the Fund may purchase securities on a when-issued or delayed delivery
basis and may purchase or sell securities on a forward commitment
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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. The securities so purchased are subject to market
fluctuation and no interest accrues to the purchaser during this period. While
the Fund will only purchase securities on a when-issued, delayed delivery or
forward commitment basis with the intention of acquiring the securities, the
Fund may sell the securities before the settlement date, if it is deemed
advisable. At the time the Fund makes the commitment to purchase securities on
a when-issued or delayed delivery basis, the Fund will record the transaction
and thereafter reflect the value, each day, of such security in determining the
net asset value of the Fund. At the time of delivery of the securities, the
value may be more or less than the purchase price. The Fund will also establish
a segregated account with the Fund's 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 Fund may purchase
securities on such basis without limit. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued or
delayed delivery basis may increase the volatility of the Fund's net asset
value. The Investment Manager and the Trustees do not believe that the Fund's
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,
the Fund 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 in the portfolio of the Fund until the Investment
Manager determines that issuance of the security is probable. At such time, the
Fund will record the transaction and, in determining its net asset value, will
reflect the value of the security daily. At such time, the Fund 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 Fund's commitments to
purchase the securities of any one issuer, together with the value of all
securities of such issuer owned by the Fund, may not exceed 5% of the value of
the Fund's total assets of the time the initial commitment to purchase such
securities is made (see "Investment Restrictions"). Subject to the foregoing
restrictions, the Fund may purchase securities on such basis without limit. An
increase in the percentage of the Fund's 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 the Fund will be adversely affected by its purchase
of securities on such basis. The Fund may also sell securities on a "when, as
and if issued" basis provided that the issuance of the security will result
automatically from the exchange or conversion of a security owned by the Fund
at the time of the sale.
Repurchase Agreements. When cash may be available for only a few
days, it may be invested by the Fund in repurchase agreements until such time
as it may otherwise be invested or used for payments of obligations of the
Fund. These agreements, which may be viewed as a type of secured lending by the
Fund, typically involve the acquisition by the Fund of debt securities from a
selling financial institution such as a bank, savings and loan association or
broker-dealer. The agreement provides that the Fund will, sell back to the
institution, and that the institution will repurchase, the underlying security
("collateral"), which is held by the Fund's Custodian at a specified price and
at a fixed time in the future which is usually not more than seven days from
the date of purchase. The Fund will receive interest from the institution until
the time when the repurchase is to occur. Although such date is deemed by the
Fund 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, 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. In addition, the value of the collateral underlying the repurchase
agreement will always 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
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<PAGE>
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.
It is the current policy of the Fund not to invest in repurchase agreements
that do not mature within seven days if any such investment, together with any
other illiquid assets held by the Fund, amounts to more than 15% of the net
assets of the Fund. During the fiscal period ended March 31, 1994, the Fund did
not enter into repurchase agreements and it is the Fund's current intention not
to invest in repurchase agreements in the foreseeable future.
HEDGING ACTIVITIES
The Fund may enter into financial futures contracts, options on such
futures and municipal bond index futures contracts for hedging purposes.
FUTURES CONTRACT AND OPTIONS ON FUTURES
As discussed in the Prospectus, the Fund may invest in financial
futures contracts ("futures contracts") and related options thereon. These
futures contracts and related options thereon will be used only as a hedge
against anticipated interest rate changes. A futures contract sales creates an
obligation by the Fund, as seller to deliver the specific type of instrument
called for in the contract at a specified future time for a specified price. A
futures contract purchase would create an obligation by the Fund, as purchaser
to take delivery of the specific type of financial instrument at a specified
future time at a specified price. The specific securities delivered or taken,
respectively, at settlement date, would not be determined until or near that
date. The determination would be in accordance with the rules of the exchange
on which the futures contract sale or purchase was effected.
Although the terms of futures contracts specify actual delivery or
receipt of securities, in most instances the contracts are closed out before
the settlement date without the making or taking of delivery of the securities.
Closing out of a futures contract is usually effected by entering into an
offsetting transaction. An offsetting transaction for a futures contract sale
is effected by the Fund entering into a futures contract purchase for the same
aggregate amount of the specific type of financial instrument at the same
delivery date. If the price in the sale exceeds the price in the offsetting
purchase, the Fund is immediately paid the difference and thus realizes a gain.
If the offsetting purchase price exceeds the sale price, the Fund pays the
difference and realizes the loss. Similarly, the closing out of a futures
contract purchase is effected by the Fund entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price, the Fund
realizes a gain, and if the offsetting sale price is less than the purchase
price, the Fund realizes a loss.
Unlike a futures contract which requires the parties to buy and sell a
security on a set date, an option on a futures contract entitles its holder to
decide on or before a future date whether to enter into such a contract. If the
holder decides not to enter into the contract, the premium paid for the option
is lost. Since the value of the option is fixed at the point of sale, there are
no daily payments of cash to reflect the change in the value of the underlying
contract, as discussed below for futures contracts. The value of the option
changes and is reflected in the net asset value of the Fund.
The Fund is required to maintain margin deposits with brokerage firms
through which it effects futures contracts and options thereon. The initial
margin requirements vary according to the type of the underlying security. 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 Fund may be required to make additional margin payments
during the term of the contract.
Currently, 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, Certificates of the Government National Mortgage Association
and Bank Certificates of Deposit. The Fund may invest in interest rate futures
contracts covering these types of financial instruments as well as in new types
of contracts that become available in the future.
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Financial futures contracts are traded in an auction environment on the
floors of several Exchanges--principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. Each Exchange
guarantees performance under contract provisions through a clearing
corporation, a nonprofit organization managed by the Exchange membership which
is also responsible for handling daily accounting of deposits or withdrawals of
margin.
A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities subject to
futures contracts may correlate imperfectly with the behavior of the cash
prices of the Funds' portfolio securities. The correlation may 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. This would reduce their value for hedging
purposes over a short time period. The correlation may be further distorted
since the futures contracts that are being used to hedge are not based on
municipal obligations.
Another risk is that the Fund's Investment Manager 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 the Fund sold 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 Fund would lose money on the sale.
Put and call options on financial futures have similar characteristics
as Exchange-traded options. See below for a further description of options.
In addition to the risks associated in investing in options on
securities, there are particular risks associated with investing in options on
futures. In particular, the ability to establish and close out positions on
such options will be subject to the development and maintenance of a liquid
secondary market. It is not certain that this market will develop.
In order to assure that the Fund is utilizing futures transactions for
hedging purposes only, a substantial majority (i.e., approximately 75%) of all
anticipatory hedge transactions of the Fund (transactions in which the Fund
does not own at the time of the transaction, but expects to acquire, the
securities underlying the relevant futures contract) involving the purchase of
futures contracts or call options thereon will be completed by the purchase of
securities which are the subject of the hedge.
The Fund may not enter into futures contracts or related options
thereon if immediately thereafter the amount committed to margin of all the
Funds' futures contracts plus the amount paid for option premiums exceeds 5% of
the value of the Fund's total assets. In instances involving the purchase of
futures contracts by the Fund the market value of the futures contract will be
deposited in a segregated account containing cash and cash equivalents to
collateralize the position and thereby ensure that the use of such futures is
unleveraged. The Fund may not purchase or sell futures contracts or related
options thereon if immediately thereafter more than one-third of the Fund's net
assets would be hedged.
Municipal Bond Index Futures. The Fund may utilize municipal bond
index futures contracts for hedging purposes. The Fund's strategies in
employing such contracts will be similar to that discussed above with respect
to financial futures and options thereon. A municipal bond index is a method of
reflecting in a single number the market value of many different municipal
bonds and is designed to be representative of the municipal bond market
generally. The index fluctuates in response to changes in the market values of
the bonds included within the index. Unlike futures contracts on particular
financial instruments, transactions in futures on a municipal bond index will
be settled in cash if held until the close of trading in the contract. However,
like any other futures contract, a position in the contract may be closed out
by purchase or sale of an offsetting contract for the same delivery month prior
to expiration of the contract. The Fund's ability to utilize such contracts
will be dependent upon the development and maintenance of a liquid secondary
market for such contracts.
Options. The Fund may purchase or sell (write) options on debt
securities as a means of achieving additional return or hedging the value of
the Fund's portfolio. The Fund would only buy options listed on national
securities exchanges. The Fund, will not purchase options if, as a result, the
aggregate cost of all outstanding options exceeds 10% of the Fund's total
assets.
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A call option is a contract that gives the holder of the option the
right to buy from the writer of the call option, in return for a premium, the
security underlying the option at a specified exercise price at any time during
the term of the option. The writer of the call option has the obligation upon
exercise of the option to deliver the underlying security upon payment of the
exercise price during the option period. A put option is a contract that gives
the holder of the option the right to sell to the writer, in return for a
premium, the underlying security at a specified price during the term of the
option. The writer of the put has the obligation to buy the underlying security
upon exercise, at the exercise price during the option period.
The Fund will only write covered call or covered put options. The Fund
may not write covered options in an amount exceeding 10% of the value of the
total assets of the Fund. A call option is "covered" if the Fund owns the
underlying security subject to the option or has an absolute and immediate
right to acquire that security or futures contract without additional cash
consideration (or for additional cash consideration held in a segregated
account by its custodian) upon conversion or exchange of other securities held
in its portfolio. A call option is also covered if the Fund holds a call on the
same security or futures contract as the call written where the exercise price
of the call held is (i) equal to or less than the exercise price of the call
written or (ii) greater than the exercise price of the call written if the
difference is maintained by the Fund in cash, Treasury bills or other high
grade short-term debt obligations in a segregated account with its custodian. A
put option is "covered" if the Fund maintains cash, Treasury bills or other
high grade short-term obligations with a value equal to the exercise price in a
segregated account with its custodian, or else holds a put on the same security
or futures contract as the put written where the exercise price of the put held
is equal to or greater than the exercise price of the put written.
If the Fund has written an option it may terminate its obligation by
effecting a closing purchase transaction. This is accomplished by purchasing an
option of the same series as the option previously written. However, once the
Fund has been assigned an exercise notice, the Fund will be unable to effect a
closing purchase transaction. Similarly, if the Fund is the holder of an option
it may liquidate its position by effecting a closing sale transaction. This is
accomplished by selling an option of the same series as the option previously
purchased. There can be no assurance that either a closing purchase or sale
transaction can be effected when the Fund so desires.
The Fund will realize a profit from a closing transaction if the price
of the transaction is less than the premium received from writing the option or
is more than the premium paid to purchase the option; the Fund, will realize a
loss from a closing transaction if the price of the transaction is more than
the premium received from writing the option or is less than the premium paid
to purchase the option. Since call option prices generally reflect increases in
the price of the underlying security, any loss resulting from the repurchase of
a call option may also be wholly or partially offset by unrealized appreciation
of the underlying security. Other principal factors affecting the market value
of a put or a call option include supply and demand, interest rates, the
current market price and price volatility of the underlying security and the
time remaining until the expiration date.
An option position may be closed out only on an exchange which provides
a secondary market for an option of the same series. Although the Fund will
generally purchase or write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market
on an exchange will exist for any particular option. In such event it might not
be possible to effect closing transactions in particular options, so that the
Fund would have to exercise its options in order to realize any profit and
would incur brokerage commissions upon the exercise of call options and upon
the subsequent disposition of underlying securities for the exercise of put
options. If the Fund as a covered call option writer is unable to effect a
closing purchase transaction in a secondary market, it will not be able to sell
the underlying security until the option expires or it delivers the underlying
security upon exercise.
PORTFOLIO MANAGEMENT
The Fund's portfolio turnover rate during the fiscal year ended March
31, 1994 was 6%. It is anticipated that the Fund's portfolio turnover rate will
not exceed 50% during the fiscal year ending March 31, 1995. A 50% turnover
rate would occur, for example, if 50% of the securities held in the Fund's
portfolio (excluding all securities whose maturities at acquisition were one
year or less) were sold and replaced within one year. However, the Fund may
engage in short-term trading consistent with its investment
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objective. Securities may be sold in anticipation of a market decline (a rise
in interest rates) or purchased in anticipation of a market rise (a decline in
interest rates). In addition, a security may be sold and another security of
comparable quality purchased at approximately the same time to take advantage
of what the Investment Manager believes to be a temporary disparity in the
normal yield relationship between the two securities. These yield disparities
may occur for reasons not directly related to the investment quality of
particular issues or the general movement of interest rates, such as changes in
the overall demand for, or supply of, various types of tax-exempt securities.
In general, purchases and sales may also be made to restructure the
portfolio in terms of average maturity, quality, coupon yield, or
diversification for any one or more of the following purposes: (a) to increase
income, (b) to improve portfolio quality, (c) to minimize capital depreciation,
(d) to realize gains or losses, or for such other reasons as the Investment
Manager deems relevant in light of economic and market conditions.
The Fund does not generally intend to invest more than 25% of its total
assets in securities of any one governmental unit. Subject to investment
restriction number 3 in the Prospectus, the Fund may invest more than 25% of
the total assets in private activity bonds (a certain type of tax-exempt
municipal security).
The Fund may invest up to 15% of its net assets in obligations
customarily sold to institutional investors in private transactions with the
issuers thereof and other securities which may be deemed to be illiquid. Due to
the limited market for certain of these securities, the Fund may be unable to
dispose of such securities promptly at reasonable prices. It is the current
intention of the Fund not to invest in such obligations.
LOCAL GOVERNMENTAL UNIT AND RELATED AUTHORITY OBLIGATIONS
Various state statutes authorize local units of government (counties,
cities, school districts and the like) to issue general obligations and revenue
obligations, subject to compliance with the requirements of such statutes. In
addition, various statutes permit local government units to organize
authorities having the power to issue obligations which are not subject to debt
limits that may be applicable to the organizing governmental unit and which are
payable from assets of or revenues derived from projects financed by such
authorities. Such authorities include parking authorities, industrial
development authorities, redevelopment authorities, transportation authorities,
water and sewer authorities, and authorities to undertake projects for
institutions of higher education and health care. Such obligations may
generally be affected by adverse changes in the economy of the area in which
such local government units or projects financed by them or by authorities
created by them are located, by changes in applicable federal, state or local
law or regulation, or by changes in levels of federal, state or local
appropriations, grants or subsidies to the extent such appropriations, grants
or subsidies directly or indirectly affect revenues of such issuers.
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, which may not be changed without the vote of a majority
of the outstanding voting securities as defined in the Act. Such a majority is
defined as the lesser of (a) 67% of the shares of the Fund present at a meeting
of shareholders, if the holders of more than 50% of the outstanding shares of
the Fund are present or represented by proxy or (b) more than 50% of the
outstanding shares of the Fund. For purposes of the following restrictions and
those recited in the Prospectus: (a) an "issuer" of a security is the entity
whose assets and revenues are committed to the payment of interest and
principal on that particular security, provided that the securities guaranteed
by separate entities will be considered a separate security and provided
further that a guarantee of a security shall not be deemed to be a security
issued by the guarantor if the value of all securities issued or guaranteed by
the guarantor and owned by the Fund does not exceed 10% of the value of the
total assets of the Fund; (b) a "taxable security" is any security the interest
on which is subject to regular federal income tax; and (c) 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 total or net assets does not require
elimination of any security from the portfolio.
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The Fund may not:
1. Invest in common stock.
2. 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
issuer.
3. Purchase or sell real estate or interests therein (including
limited Partnership interests), although it may purchase securities secured by
real estate or interests therein.
4. Purchase or sell commodities except that the Fund may purchase
financial futures contracts and related options in accordance with procedures
adopted by the Trustees described in its Prospectus and Statement of Additional
Information.
5. Purchase oil, gas or other mineral leases, rights or royalty
contracts, or exploration or development programs.
6. Write, purchase or sell puts, calls, or combinations thereof except
options on futures contracts or options on debt securities.
7. Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets.
8. Borrow money, except that the Fund may borrow from a bank for
temporary or emergency purposes in amounts up to 5% (taken at the lower of cost
or current value) of the value of the total assets of the Fund (including the
amount borrowed) less its liabilities (not including any borrowings but
including the fair market value at the time of computation of any senior
securities then outstanding).
9. Pledge its assets or assign or otherwise encumber them except to
secure permitted borrowings. (For the purpose of this restriction, collateral
arrangements with respect to the writing of options and collateral arrangements
with respect to initial margin for futures are not deemed to be pledges of
assets and neither such arrangements nor the purchase or sale of futures are
deemed to be the issuance of a senior security as set forth in restriction 10.)
10. Issue senior securities as defined in the Act except insofar as the
Fund may be deemed to have issued a senior security by reason of: (a) entering
into any repurchase agreement; (b) purchasing any securities on a when-issued
or delayed delivery basis; or (c) borrowing money in accordance with
restrictions described above.
11. Make loans of money or securities, except: (a) by the purchase of
debt obligations in which the Fund may invest consistent with its investment
objective and policies; (b) by investment in repurchase agreements; and (c) by
lending its portfolio securities.
12. Make short sales of securities.
13. Purchase securities on margin, except for such short-term loans as
are necessary for the clearance of purchases of portfolio securities. The
deposit or payment by the Fund of initial or variation margin in connection
with futures contracts or related options thereon is not considered the
purchase of a security on margin.
14. Engage in the underwriting of securities, except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933 in disposing
of a portfolio security.
15. Invest for the purpose of exercising control or management of any
other issuer.
16. Invest more than 5% of the value of its total assets is securities
of issuers having a record, together with predecessors, of less than three
years of continuing operation. This restriction does not apply to obligations
issued or guaranteed by the United States Government, its agencies or
instrumentalities.
16
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
===============================================================================
The Investment Manager is responsible for decisions to buy and sell
securities and commodities for the Fund, the selection of brokers and dealers
to effect the transactions, and the negotiation of brokerage commissions, if
any. The Fund expects that the primary market for the securities in which it
intends to invest will generally be the over-the-counter market. Securities are
generally traded in the over-the-counter market on a "net" basis with dealers
acting as principal for their own accounts without charging a stated
commission, although the price of the security usually includes a profit to the
dealer. Options and futures transactions will usually be effected through a
broker and a commission will be charged. The Fund also expects that securities
will be purchased at times in underwritten offerings where the price includes a
fixed amount of compensation, generally referred to as the underwriter's
concession or discount. On occasion, the Fund may also purchase certain money
market instruments directly from an issuer, in which case no commissions or
discounts are paid. During the fiscal year ended March 31, 1994, the Fund did
not pay any brokerage commissions.
The Investment Manager currently serves as investment manager to a
number of clients, including other investment companies, and may in the future
act as investment manager or adviser to others. It is the practice of the
Investment Manager to cause purchase and sale transactions to be allocated
among the Fund and others whose assets it manages in such manner as it deems
equitable. In making such allocations among 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 opinion of the persons responsible for managing the
porfolios of the Fund and other client accounts.
The policy of the Fund, regarding purchases and sales of securities is
that primary consideration be given to obtaining the most favorable prices and
efficient execution of transactions. In seeking to implement the Fund's
policies, the Investment Manager effects transactions with those brokers and
dealers who the Investment Manager believes provide the most favorable prices
and are capable of providing efficient executions. If the Investment Manager
believes such price and executions are obtainable from more than one broker or
dealer, it may give consideration to placing portfolio transactions with those
brokers and dealers who also furnish research and other services to the Fund or
the Investment Manager. Although the Fund may purchase securities from brokers
or dealers acting as principal, who also provide research for the advisor, it
will not pay a mark-up in consideration for such services. 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 information and services received by the Investment Manager from
brokers and dealers may be of benefit to the Investment Manager in the
management of accounts of some of its other clients and may not, in every case,
benefit the Fund directly. While the receipt of such information and services
is useful in varying degrees and would generally reduce the amount of research
or services otherwise performed by the Investment Manager and thereby reduce
its expenses, it is of indeterminable value and the Fund will not reduce the
management fee it pays to the Investment Manager by any amount that may be
attributable to the value of such services.
Pursuant to an order of the Securities and Exchange Commission, the
Fund may effect principal transactions in certain money market instruments with
DWR. The Fund will limit its transactions with DWR to U.S. Government and
Government Agency Securities, Bank Money Instruments (i.e. Certificates of
Deposit and Bankers' Acceptances) 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 and commodities listed on exchanges or admitted to unlisted trading
privileges may be effected through DWR. In order for DWR to effect portfolio
transactions for the Fund, the commissions, fees or other remuneration received
by DWR must be reasonable and fair compared to the commissions, fees or other
remuneration paid to other brokers in connection with comparable transactions
involving similar securities being purchased or sold on an exchange during a
comparable period of time. This standard would allow DWR to receive no
17
<PAGE>
more than the remuneration which would be expected to be received by an
unaffiliated broker in a commensurate arms-length transaction. Furthermore, the
Trustees of the Fund, including a majority of the Trustees who are not
"interested" Trustees, have adopted procedures which are reasonably designed to
provide that any commissions, fees or other remuneration paid to DWR are
consistent with the foregoing standard. During the fiscal year ended March 31,
1994, the Fund paid no brokerage commissions to DWR.
PURCHASE OF FUND SHARES
===============================================================================
As discussed in the Prospectus, the Fund offers its shares for sale to the
public through Dean Witter Distributors Inc. (the "Distributor") on a continous
basis at an offering price equal to the net asset - value per share next
determined following receipt of any order without a sales charge. (See the
Prospectus--"Purchase of Fund Shares"). The Distributor is a wholly-owned
subsidiary of DWDC. The Distributor has entered into selected broker-dealer
agreements with DWR and other selected dealers ("Selected Broker-Dealers")
pursuant to which shares of the Fund are sold. The Trustees of the Fund,
including a majority of the Trustees who are not, and were not at the time they
voted, interested persons of the Fund, as defined in the Act (the "Independent
Trustees"), approved, at their meeting held on June 3, 1993, a Distribution
Agreement appointing the Distributor exclusive distributor of the Fund's shares
and providing for the Distributor to bear distribution expenses not borne by
the Fund. At a meeting held on April 8, 1994, the Trustees, including all of
the Independent Trustees, voted to approve the continuance of the Distribution
Agreement until April 30, 1995, and from year to year thereafter if approved by
the Board, in conjunction with the continuance of the Plan of Distribution (see
below).
The Distributor will bear all expenses it may incur in providing
services under the Distribution Agreement. Such expenses include the payment of
commissions for sales of the Fund's shares and incentive compensation to
account executives. The Distributor will also pay certain expenses in
connection with the distribution of the shares of the Fund, including the costs
of preparing, printing and distributing advertising or promotional materials,
and 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 bears the costs of initial typesetting, printing and distribution of
prospectuses and supplements thereto to shareholders. The Fund also will bear
the costs of registering the Fund and its shares under federal and state
securities laws. The Fund and the Distributor have agreed to indemnify each
other against certain liabilities, including liabilities under the Securities
Act of 1933, as amended. Under the Distribution Agreement, 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.
PLAN OF DISTRIBUTION
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1
under the Act (the "Plan") whereby the Distributor or any of its affiliates,
including InterCapital, is authorized to utilize their own resources to finance
certain activities in connection with the distribution of shares of the Fund.
The Plan was approved initially by the Trustees on June 3, 1993, and by
InterCapital as the Fund's sole shareholder on June 25, 1993, whereupon the
Plan went into effect. The vote of the Trustees, which was cast in person at a
meeting called for the purpose of voting on such Plan, included a majority of
the Trustees who are not and were not at the time of their voting 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"). In making their decision to adopt the Plan, the Trustees
requested from the Distributor and received such information as they deemed
necessary to make an informed determination as to whether or not adoption of
the Plan was in the best interests of the shareholders of the Fund. After due
consideration of the information received, the Trustees, including the
Independent 12b-1 Trustees, determined that adoption of the Plan would benefit
the shareholders of the Fund.
The Plan provides that the Fund authorizes the Distributor or any of
its affiliates, including InterCapital, to bear the expense of all promotional
and distribution related activities on behalf of the
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<PAGE>
Fund. Among the activities and services which may be provided under the Plan
are: (1) compensation to and expenses of account executives and other employees
of the Distributor and other Selected Broker-Dealers including overhead and
telephone expenses; (2) sales incentives and bonuses to sales representatives
and to marketing personnel in connection with promoting sales of the Fund's
shares; (3) expenses incurred in connection with promoting sales of the Fund's
shares; (4) preparing and distributing sales literature; and (5) providing
advertising and promotional activities, including direct mail solicitation and
television, radio, newspaper, magazine and other media advertisements.
Pursuant to the Selected Broker-Dealer Agreements between the
Distributor and DWR and other Selected Broker-Dealers, the account executives
of DWR and other Selected Broker-Dealers may be paid an annual fee based upon
the current value of the respective accounts for which they are the account
executives of record. The fee also reflects a payment made for expenses
associated with the servicing of shareholder's accounts, including the expenses
of operating branch offices in connection with the servicing of shareholder's
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.
At their meeting held April 8, 1994, the Trustees of the Fund,
including all of the Independent 12b-1 Trustees approved the continuance of the
Plan. The Plan will remain in effect until April 30, 1995, and from year to
year thereafter will continue in effect, provided such continuance is approved
annually by a vote of the Trustees, including a majority of the Independent
12b-1 Trustees. Assumption by the Fund of any distribution expenses under the
Plan must be approved by the shareholders, and all material amendments to the
Plan must be approved by the Trustees in the manner described above. The Plan
may be terminated at any time, without payment of any penalty, by vote of the
holders of a majority of the Independent 12b-1 Trustees or by a vote of a
majority of the outstanding voting securities (as defined in the Act) on not
more than 30 days written notice to any other party to the Plan. So long as the
Plan is in effect, the selection or nomination of the Independent 12b-1
Trustees is committed to the discretion of the Independent 12b-1 Trustees.
Under the Plan, the Distributor provides the Fund, for review by the
Trustees, and the Trustees review, promptly after the end of each fiscal
quarter, a written report regarding the distribution expenses incurred by the
Distributor of the Fund during such fiscal quarter, which report includes (1)
an itemization of the types of expenses and the purposes therefor; (2) the
amounts of such expenses; and (3) a description of the benefits derived by the
Fund. In the Trustees' quarterly review of the Plan they will consider its
continued appropriateness and the level of compensation provided therein.
No interested person of the Fund nor any Trustee of the Fund who is not
an interested person of the Fund, as defined in the Act, has any direct or
indirect financial interest in the operation of the Plan except to the extent
that the Distributor or certain of its employees may be deemed to have such an
interest as a result of benefits derived from the successful operation of the
Plan or as a result of receiving a portion of the amounts expended thereunder
by the Distributor or any of its affiliates, including InterCapital.
DETERMINATION OF NET ASSET VALUE
As discussed in the Prospectus, portfolio securities (other than short-
term debt securities and futures and options) are valued for the Fund by an
outside independent pricing service approved by the Trustees. The pricing
service has informed the Fund that in valuing the portfolio securities, it uses
both a computerized grid matrix of tax-exempt securities and evaluations by its
staff, in each case based on information concerning market transactions and
quotations from dealers which reflect the bid side of the market each day. The
portfolio securities are thus valued for the Fund by reference to a combination
of transactions and quotations for the same or other securities believed to be
comparable in quality, coupon, maturity, type of issue, call provisions,
trading characteristics and other features deemed to be relevant. The Trustees
believe that timely and reliable market quotations are generally not readily
available
19
<PAGE>
to the Fund for purposes of valuing tax-exempt securities and that the
valuations supplied by the pricing service, using the procedures outlined above
and subject to periodic review, are more likely to approximate the fair value
of such securities. Short-term taxable debt securities with remaining
maturities of 60 days or less at the time of purchase are valued at amortized
cost, unless the Trustees determine such does not reflect the securities' fair
value, in which case these securities will be valued at their fair value as
determined by the Trustees. Other short-term taxable debt securities will be
valued on a mark to market basis until such time as they reach a remaining
maturity of 60 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' fair value, in which case these securities will be valued at
their fair value as determined by the Trustees. Listed options are valued at
the latest sale price on the exchange on which they are listed unless no sales
of such options have taken place that day, in which case they will be valued at
the mean between their latest bid and asked prices. Unlisted options are valued
at the mean between their latest bid and asked prices. Futures are valued at
the latest sale price as of the close of the commodities exchange on which they
trade unless the Trustees determine that such price does not reflect their fair
value, in which case they will be valued at their fair value as determined by
the Trustees. All other securities, including illiquid securities, and other
assets are valued at their fair value as determined in good faith under
procedures established by and under the supervision of the Trustees.
The net asset value per share will not be determined on such federal
and non-federal holidays as are observed by the New York Stock Exchange. The
New York Stock Exchange currently observes the following holidays: New Year's
Day; Presidents' Day; Good Friday; Memorial Day; Independence Day; Labor Day;
Thanksgiving Day; and Christmas Day.
SHAREHOLDER SERVICES
===============================================================================
Upon the purchase of shares of the Fund, a Shareholder Investment Account is
opened for the investor on the books of the Fund and maintained by the Fund's
Transfer Agent, Dean Witter Trust Company (the "Transfer Agent"). 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. Whenever a
shareholder instituted transaction takes place in the Shareholder Investment
Account, the shareholder will be mailed a confirmation of the transaction from
the Fund or from DWR or another selected broker-dealer.
Automatic Investment of Dividends and Distributions. 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 distributions on shares owned by the investor. Such dividends and
distributions will be paid 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 in shares of the Fund at net asset value per share. Processing of
dividend or distribution checks begins immediately following the monthly
payment date. Shareholders who have requested to receive dividends in cash will
normally be sent their monthly dividend check during the first ten days of the
following month. 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. In order to provide sufficient time to
process the change, such requests must be received by the Transfer Agent at
least five business days prior to the payment date of the dividend or the
record date of the distribution. In case of recently purchased shares for which
registration instructions have not been received on the payment or record date,
cash payments will be made to the Distributor or the dealer through whom shares
were purchased which payments will be forwarded to the shareholder, upon
receipt of proper instructions.
Investment of Dividends or Distributions Received in Cash. As
discussed in the Prospectus, any shareholder who receives a cash payment
representing a dividend or capital gains distribution may invest such dividend
or distribution at net asset value (without sales charge), next determined by
returning the check or the proceeds to the Transfer Agent within 30 days after
the payment date. If the shareholder returns the proceeds of a dividend or
distribution, such funds must be accompanied by a signed statement indicating
that the proceeds constitute a dividend or distribution to be invested. Such
investment will be made at the net asset value per share next determined after
receipt of the check or proceeds by the Transfer Agent.
20
<PAGE>
EasyInvestSM. Shareholders may subscribe to EasyInvest, an automatic
purchase plan which provides for any amount from $100 to $5,000 to be
transferred automatically from a checking or savings account, on a semi-
monthly, monthly or quarterly basis, to the Transfer Agent for investment in
shares of the Fund. Shares purchased through EasyInvest will be added to the
shareholder's existing account at the net asset value calculated the same
business day the transfer of funds is effected. For further information or to
subscribe to EasyInvest, shareholders should contact their DWR or other
selected broker-dealer account executive or the Transfer Agent.
Systematic Withdrawal Plan. As discussed in the Prospectus, a
withdrawal plan is available for shareholders who own or purchase shares of the
Fund having a minimum value of $10,000 based upon the then current offering
price. The plan provides for monthly or quarterly (March, June, September and
December) checks in any dollar amount, not less than $25, or in any whole
percentage of the account balance, on an annualized basis.
Dividends and capital gains distributions on shares held under the
Systematic Withdrawal Plan will be invested in additional full and fractional
shares at net asset value (without a sales charge). Shares will be credited to
an open account for the investor by the Transfer Agent; no share certificates
will be issued. A shareholder is entitled to a share certificate upon written
request to the Transfer Agent, although in that event the shareholder's
Systematic Withdrawal Plan will be terminated.
The Transfer Agent acts as agent for the shareholder in tendering to
the Fund for redemption sufficient full and fractional shares to provide the
amount of the periodic withdrawal payment designated in the application. The
shares will be redeemed at their net asset value determined, at the
shareholder's option on the tenth or twenty-fifth day (or next following
business day) of the relevant month or quarter and normally a check for the
proceeds will be mailed by the Transfer Agent, or amounts credited to a
shareholder's DWR or other selected broker-dealer brokerage account 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. Each withdrawal
constitutes a redemption of shares and any gain or loss realized must be
recognized for federal income tax purposes.
Any shareholder who wishes to have payments under the Withdrawal Plan
made to a third party or sent to an address other than the one listed on the
account must send complete written instructions to the Transfer Agent to enroll
in the Withdrawal Plan. The shareholder's signature on such instructions must
be guaranteed by an eligible guarantor acceptable to the Transfer Agent
(shareholders should contact the Transfer Agent for a determination as to
whether a particular institution is such an eligible guarantor). A shareholder
may, at any time change the amount and interval of withdrawal payments and the
address to which checks are mailed through his or her account executive or by
written notification to the Transfer Agent. The shareholder's signature on such
notification must be guaranteed by an eligible guarantor as described above.
The shareholder may also terminate the Systematic Withdrawal Plan at any time
by written notice to the Transfer Agent. In the event of such termination, the
account will be continued as a Shareholder Investment Account. The shareholder
may also redeem all or part of the shares held in the Systematic Withdrawal
Plan account (see "Redemptions and Repurchases" in the Prospectus) at any time.
Shareholders wishing to enroll in the Withdrawal Plan should contact their
account executive or the Transfer Agent.
Targeted DividendsSM. In states where it is legally permissible,
shareholders may also have all income dividends and capital gains distributions
automatically invested in shares of any open-end Dean Witter Funds for which
InterCapital serves as investment manager other than Dean Witter Limited Term
Municipal Trust. Such investment will be made at the net asset value per share
(without sales charge) of
21
<PAGE>
the selected Dean Witter Fund as of the close of business on the payment date
of the dividend or distribution, and will begin to earn dividends, if any, in
the selected Dean Witter Fund the next business day. Shareholders of the Fund
must be shareholders of the Dean Witter Fund targeted to receive investments
from dividends and distributions at the time they enter the Targeted Dividend
program. Nevertheless, investors should review the prospectus of the targeted
Dean Witter Fund before entering the program.
Direct Investments through Transfer Agent. As discussed in the
Prospectus, a shareholder may make additional investments in Fund shares at any
time through the Shareholder Investment Account by sending a check in any
amount, not less than $100, payable to Dean Witter Limited Term Municipal
Trust, directly to the Fund's Transfer Agent. The investment proceeds will be
applied to the purchase of shares of the Fund at the net asset value per share
next computed after receipt of the check or purchase payment by the Transfer
Agent. The shares so purchased will be credited to the investor's account.
Tax-Sheltered Retirement Plans. Retirement plans are available for
use by corporations, the self-employed, Individual Retirement Accounts and
Custodial Accounts under Section 403(b)(7) of the Internal Revenue Code.
Adoption of such plans should be on advice of legal counsel or tax adviser.
For further information regarding plan administration, custodial fees
and other details, investors should contact their DWR or other selected broker-
dealer account executive or the Transfer Agent.
Exchange Privilege. As discussed in the Prospectus, an Exchange
Privilege exists whereby investors who have purchased shares of any of the Dean
Witter Funds sold with either a front-end (at time of purchase) sales charge
("FESC funds") or a contingent deferred (at time of redemption) sales charge
("CDSC funds") will be permitted, after the shares of the fund acquired by
purchase (not by exchange or dividend reinvestment) have been held for thirty
days, to redeem all or part of their shares in that fund and have the proceeds
invested in shares of the Fund, in shares of Dean Witter Short-Term Treasury
Trust, Dean Witter Short-Term Bond Fund and in shares of five Dean Witter Funds
which are money market funds (the Fund, Dean Witter Short-Term U.S. Treasury
Trust, Dean Witter Short-Term Bond Fund and the five money market funds
hereinafter referred to as "Exchange Funds"). There is no waiting period for
exchanges of shares acquired by exchange or dividend reinvestment.
Subsequently, shares of the Exchange Funds received in an exchange for shares
of an FESC fund (regardless of the type of fund originally purchased) may be
redeemed and exchanged for shares of the Exchange Funds, FESC funds or CDSC
funds (however, shares of CDSC funds, including shares acquired in exchange of
(i) shares of FESC funds or (ii) shares of the Exchange Funds which were
acquired in exchange for shares of -FESC funds, may not be exchanged for shares
of FESC funds). Additionally, shares of the Exchange Funds received in an
exchange for shares of a CDSC fund (regardless of the type of fund originally
purchased) may be redeemed and exchanged for shares of the Exchange Funds or
CDSC funds. Ultimately, any applicable contingent deferred sales charge
("CDSC") will have to be paid upon redemption of shares originally purchased
from a CDSC fund. An exchange will be treated for federal income tax purposes
and applicable state income tax purposes the same as a repurchase or redemption
of shares, on which the shareholder may realize a capital gain or loss.
Any new account established through the Exchange Privilege will have
the same registration and cash dividend or dividend reinvestment plan as the
present account, unless the Transfer Agent receives written notification to the
contrary. For telephone exchanges, the exact registration of the existing
account and the account number must be provided.
Any shares held in certificate form cannot be exchanged but must be
forwarded to the Transfer Agent and deposited into the shareholder's account
before being eligible for exchange. (Certificates mailed in for deposit should
not be endorsed.)
The current prospectus for each of the Dean Witter Funds describes its
investment objective(s) and policies. Shareholders should obtain a copy and
read it carefully before investing. Exchanges are subject to the minimum
investment requirement and any other conditions imposed by each Fund. In the
case of any shareholder holding a share certificate or certificates, no
exchanges may be made until all applicable share certificates have been
received by the Transfer Agent and deposited in the shareholder's account. An
exchange will be treated for federal income tax purposes the same as a
repurchase or redemption of shares on which the shareholder will realize a
capital gain or loss. However, the ability to deduct capital
22
<PAGE>
losses on an exchange may be limited in situations where there is an exchange
of shares within ninety days after the shares are purchased. The Exchange
Privilege is only available in states where an exchange may legally be made.
When shares of any CDSC fund are exchanged for shares of the Exchange
Funds, the exchange is executed at no charge to the shareholder, without the
imposition of the CDSC at the time of the exchange. During the period of time
the shareholder remains in the Exchange Funds (calculated from the last day of
the month in which the Exchange Funds shares were acquired), the holding period
or "year since purchase payment made" is frozen. When shares are redeemed out
of the Exchange Funds, they will be subject to a CDSC which would be based upon
the period of time the shareholder held shares in a CDSC fund. Shareholders
acquiring shares of the Exchange Funds pursuant to this exchange privilege may
exchange those shares back into a CDSC fund from the Exchange Funds, with no
CDSC being imposed on such exchange. The holding period previously frozen when
shares were first exchanged for shares of the Exchange Funds resumes on the
last day of the month in which shares of a CDSC fund are reacquired. Thus, a
CDSC is imposed only upon an ultimate redemption, based upon the time
(calculated as described above) the shareholder was invested in a CDSC fund.
Shares of a CDSC fund acquired in exchange for shares of an FESC fund (or in
exchange for shares of other Dean Witter Funds for which shares of an FESC fund
have been exchanged) are not subject to any CDSC upon their redemption.
When shares initially purchased in a CDSC fund are exchanged for shares
of another CDSC fund or for shares of the Exchange Funds, the date of purchase
of the shares of the fund exchanged into, for purposes of the CDSC upon
redemption, will be the last day of the month in which the shares being
exchanged were originally purchased. In allocating the purchase payments
between funds for purposes of the CDSC, the amount which represents the current
net asset value of shares at the time of the exchange which were (i) purchased
more than three or six years (depending on the CDSC schedule applicable to the
shares) prior to the exchange, (ii) originally acquired through reinvestment of
dividends or distributions and (iii) acquired in exchange for shares of FESC
funds, or for shares of other Dean Witter Funds for which shares of FESC funds
have been exchanged (all such shares called "Free Shares"), will be exchanged
first. Shares of Dean Witter American Value Fund acquired prior to April 30,
1984, shares of Dean Witter Dividend Growth Securities Inc. and Dean Witter
Natural Resource Development Securities Inc. acquired prior to July 2, 1984,
and shares of Dean Witter Strategist Fund acquired prior to November 8, 1989
are also considered Free Shares and will be the first Free Shares to be
exchanged. After an exchange, all dividends earned on shares in the Fund or the
money market fund will be considered Free Shares. If the exchanged amount
exceeds the value of such Free Shares, an exchange is made, on a block-by-block
basis, of non-Free Shares held for the longest period of time (except that if
shares held for identical periods of time but subject to different CDSC
schedules are held in the same Exchange Privilege Account, the shares of that
block that are subject to a lower CDSC rate will be exchanged prior to the
shares of that block that are subject to a higher CDSC rate). Shares equal to
any appreciation in the value of non-Free Shares exchanged will be treated as
Free Shares, and the amount of the purchase payments for the non-Free Shares of
the fund exchanged into will be equal to the lesser of (a) the purchase
payments for, or (b) the current net asset value of, the exchanged non-Free
Shares. If an exchange between funds would result in exchange of only part of a
particular block of non-Free Shares, then shares equal to any appreciation in
the value of the block (up to the amount of the exchange) will be treated as
Free Shares and exchanged first, and the purchase payment for that block will
be allocated on a pro rata basis between the non-Free Shares of that block to
be retained and the non-Free Shares to be exchanged. The prorated amount of
such purchase payment attributable to the retained non-Free Shares will remain
as the purchase payment for such shares, and the amount of purchase payment for
the exchanged non-Free Shares will be equal to the lesser of (a) the prorated
amount of the purchase payment for, or (b) the current net asset value of,
those exchanged non-Free Shares. Based upon the procedures described in the
CDSC fund Prospectus under the caption "Contingent Deferred Sales Charge", any
applicable CDSC will be imposed upon the ultimate redemption of shares of any
fund, regardless of the number of exchanges since those shares were originally
purchased.
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<PAGE>
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 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 fund and the general administration of the Exchange
Privilege. No commission or discounts will be paid to the Distributor or any
Selected Broker-Dealer for any transactions pursuant to this Exchange
Privilege.
Exchanges are subject to the minimum investment requirement and any
other conditions imposed by each fund. (The minimum initial investment is
$5,000 for Dean Witter Liquid Asset Fund Inc., Dean Witter Tax-Free Daily
Income Trust, Dean Witter New York Municipal Money Market Trust and Dean Witter
California Tax-Free Daily Income Trust, although those funds may, at their
discretion, accept initial investments of as low as $1,000. The minimum initial
investment for Dean Witter Short-Term U.S. Treasury Trust is $10,000, although
that fund, in its discretion, may accept initial investments of as low as
$5,000. The minimum initial investment for all other Dean Witter Funds for
which the Exchange Privilege is available is $1,000.) Upon exchange into an
Exchange Fund, the shares of that fund will be held in a special Exchange
Privilege Account separately from accounts of those shareholders who have
acquired their shares directly from that fund. As a result, certain services
normally available to shareholders of Dean Witter Short-Term U.S. Treasury or
money market funds, including the check writing feature, will not be available
for funds held in that account.
The Fund and each of the other Dean Witter Funds may limit the number
of times this Exchange Privilege may be exercised by any investor within a
specified period of time. Also, the Exchange Privilege may be terminated or
revised at any time by the Fund and/or any of the Dean Witter Funds for which
shares of the Fund have been exchanged, upon such notice as may be required by
applicable regulatory agencies (presently sixty days' prior written notice for
termination or material revision), provided that six months' prior written
notice of termination will be given to the shareholders who hold shares of Dean
Witter Short-Term U.S. Treasury Trust, Dean Witter Short-Term Bond Fund, Dean
Witter Liquid Asset Fund Inc., Dean Witter Tax-Free Daily Income Trust, Dean
Witter New York Municipal Money Market Trust, Dean Witter California Tax-Free
Daily Income Trust or Dean Witter U.S. Government Money Market Trust, pursuant
to this Exchange Privilege and provided further 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 result of which disposal by the Fund of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the Fund fairly
to determine the value of its net assets, (d) during any other period when the
Securities and Exchange Commission by order so permits (provided that
applicable rules and regulations of the Securities and Exchange Commission
shall govern as to whether the conditions prescribed in (b) or (c) exist) or
(e) if the Fund would be unable to invest amounts effectively in accordance
with its investment objective, 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
===============================================================================
Payment for Shares Redeemed or Repurchased. As discussed in the Prospectus,
payment for shares presented for repurchase or redemption will be made by check
within seven days after receipt by the Transfer Agent of the certificate and/or
written request in good order. The term "good order" means
24
<PAGE>
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. Such
payment may be postponed or the right of redemption suspended at times (a) when
the New York Stock Exchange is closed for other than customary weekends and
holidays, (b) when trading on that Exchange is restricted, (c) when an
emergency exists as a result of which disposal by the Fund of securities owned
by it is not reasonably practicable or it is not reasonably practicable for the
Fund fairly to determine the value of its net assets, or (d) during any other
period when the Securities and Exchange Commission by order so permits;
provided that applicable rules and regulations of the Securities and Exchange
Commission shall govern as to whether the conditions prescribed in (b) or (c)
exist. If the shares to be redeemed have recently been purchased by check,
payment of the redemption proceeds may be delayed for the minimum time needed
to verify that the check used for investment has been honored (not more than
fifteen days from the time of receipt of the check by the Transfer Agent).
Shareholders maintaining margin accounts with DWR or another selected broker-
dealer are referred to their account executive regarding restrictions on
redemption of shares of the Fund pledged in the margin account.
Involuntary Redemption. As described in the Prospectus, due to the
relatively high cost of handling small investments, the Fund reserves the right
to redeem, at net asset value, the shares of any shareholder whose shares have
a value of less than $100, or such lesser amount as may be fixed by the Board
of Trustees. However, before the Fund redeems such shares and sends the
proceeds to the shareholder, it will notify the shareholder that the value of
the shares is less than $100 and allow him or her 60 days to make an additional
investment in an amount which will increase the value of his or her account to
$100 or more before the redemption is processed.
DIVIDENDS, DISTRIBUTIONS AND TAXES
===============================================================================
The Fund intends to distribute substantially all of its net investment income
and all of its net short-term capital gains, if any, and will determine whether
to retain all or part of any net long-term capital gains for reinvestment. If
any such gains are retained, the Fund will pay federal income tax thereon, and
will notify shareholders that following such election the shareholders will be
required to include such undistributed gains in determining their taxable
income and may claim their share of the tax paid as a credit against their
individual federal income tax (but not the personal income tax of a particular
state).
As discussed in the Prospectus, the Fund may invest a portion of its
assets in certain "private activity bonds" issued after August 7, 1986. As a
result, a portion of the exempt-interest dividends paid by the Fund may be an
item of tax preference to shareholders subject to the federal alternative
minimum tax. Certain corporations which are subject to the alternative minimum
tax may also have to include exempt-interest dividends in calculating their
alternative minimum taxable income in situations where the "adjusted current
earnings" of the corporation exceeds its alternative minimum taxable income.
Each shareholder will be sent a summary of his or her account, at least
quarterly, including information as to reinvested dividends and capital gains
distributions. Share certificates for dividends or distributions will not be
issued unless a shareholder requests in writing that a certificate be issued
for a specific number of shares.
In computing interest income, the Fund will amortize any premiums and
original issue discounts on securities owned. Additionally, with respect to
market discount on bonds purchased after April 30, 1993, a portion of any
capital gain realized upon disposition is recharacterized as investment income.
Capital gains or losses realized upon sale or maturity of such securities will
be based on their amortized cost.
Gains or losses on the sales of securities by the Fund will be long-
term capital gains or losses if the securities have been held by the Fund for
more than twelve months. Gains or losses on the sale of securities held for
twelve months or less will be short-term capital gains or losses. Gains and
losses on the sale, expiration or other termination of options on securities
will generally be treated as gains and losses from the sale of securities.
Pursuant to present federal income tax laws, futures contracts held by the Fund
at the end of each fiscal year will be required to be "marked to market", that
is, treated as having been sold at their fair market value at such date. Sixty
percent of any gain or loss recognized on these deemed sales will be treated as
long-term capital gain or loss, and the remainder will be treated as
25
<PAGE>
short-term capital gain or loss. Gains or losses from options on futures and
options on debt instruments will also generally be treated as part short-term
and part long-term capital gains or losses, unless such gains or losses were
incurred as part of a securities "straddle," in which case the appropriate
straddle rules of the Internal Revenue Code (the "Code") would apply.
Because the Fund intends to distribute all of its net investment income
and capital gains to shareholders and otherwise continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code,
it is not expected that the Fund will be required to pay any federal income
tax. Shareholders will normally have to pay federal income taxes, and any
applicable state and/or local income taxes, on the dividends and distributions
they receive from the Fund. Such dividends and distributions, to the extent
that they are derived from net investment income or short-term capital gains,
are taxable to the shareholder 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.
One of the requirements for regulated investment company status is that
at least 90% of a fund's gross income be derived from dividends, interest,
gains from the sale or other disposition of securities and certain other
related income. Another requirement for regulated investment company status is
that less than 30% of a fund's gross income can be derived from gains from the
sale or other disposition of securities held less than three months.
Accordingly, the Fund 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. The Fund may also be restricted in its ability to
engage in transactions involving futures contracts.
As discussed in the Prospectus, the Fund intends to qualify to pay
"exempt-interest dividends" to its shareholders by maintaining, as of the close
of each quarter of its taxable year, at least 50% of the value of its total
assets in tax-exempt securities. An exempt-interest dividend is that part of
dividend distributions made by the Fund which consists of interest received by
the Fund on tax-exempt securities upon which the shareholder incurs no federal
income taxes (apart from any possible application of the alternative minimum
tax).
Under the Revenue Reconciliation Act of 1993, all or a portion of the
Fund's gain from the sale or redemption of tax-exempt obligations purchased at
a market discount after April 30, 1993 will be treated as ordinary income
rather than capital gain. This rule may increase the amount of ordinary income
dividends received by shareholders.
The Fund will mail to shareholders a statement indicating the
percentage of the dividend distributions for each fiscal year which constitutes
exempt-interest dividends and the percentage, if any, that is taxable, and the
percentage, if any, of the exempt-interest dividends which constitutes an item
of tax preference, and to what extent the taxable portion is long-term capital
gain or ordinary income. These percentages should be applied uniformly to all
monthly distributions made during the fiscal year to determine the proportion
of dividends that is tax-exempt. The percentages may differ from the percentage
of tax-exempt dividend distributions for any particular month.
Shareholders will be subject to federal income tax on dividends paid
from interest income derived from taxable securities and on distributions of
net short-term capital gains. Such dividends and distributions are taxable to
the shareholder as ordinary dividend income regardless of whether the
shareholder receives such distributions in additional shares or in cash.
Distributions of long-term capital gains, if any, are taxable as long-term
gains, regardless of how long the shareholder has held Fund shares and whether
the distribution is received in additional shares or in cash. Since the Fund's
income is expected to be derived entirely from interest rather than dividends,
none of such dividend distributions will be eligible for the 70% dividends
received deduction generally available to corporations. Net long-term capital
gains distributions are not eligible for the dividends received deduction.
Any loss on the sale or exchange of shares of the Fund which are held
for six months or less is disallowed to the extent ofthe amount of any exempt-
interest dividends paid with respect to such shares. Treasury Regulations may
provide for a reduction in such required holding period. If a shareholder
receives a distribution that is taxed as long-term capital gain on shares held
for six months or less and sells those shares at a loss will be treated as a
long-term capital loss to the extent of the capital gains distribution.
26
<PAGE>
Interest on indebtedness incurred or continued by a shareholder to purchase
or carry shares of the Fund is not deductible to the extent allocable to
exempt-interest dividends of the Fund (which allocation does not take into
account capital gain distributions from the Fund). Furthermore, entities or
persons who are "substantial users" (or related persons) of facilities financed
by industrial development bonds should consult their tax advisers before
purchasing shares of the Fund. "Substantial user" is defined generally by
Income Tax Regulation 1.103-11 (b) as including a "non-exempt person" who
regularly uses in a trade or business a part of a facility financed from the
proceeds of industrial development bonds.
Federal Income Tax Status. From time to time, proposals have been
introduced before Congress for the purpose of restricting or eliminating the
federal income tax exemption for interest on municipal securities. It can be
expected that similar proposals may be introduced in the future. If such a
proposal were enacted, the availability of municipal securities for investment
by the Fund could be affected. In such event, the Fund would re-evaluate its
investment objective and policies.
Any dividends or distributions received by a shareholder from any
investment company will have the effect of reducing the net asset value of the
shareholder's stock in that fund by the exact amount of the dividend or
distribution. Furthermore, capital gains distributions are, and some portion of
the dividends may be, subject to income tax. If the net asset value of the
shares should be reduced below a shareholder's cost as a result of the payment
of taxable dividends or the distribution of realized long-term capital gains,
such payment or distribution would be in part a return of capital but
nonetheless taxable to the shareholder. Therefore, an investor should consider
the tax implications of purchasing Fund shares immediately prior to a
distribution record date.
The foregoing relates to federal income taxation in effect as of the
date of the Prospectus.
The Fund is organized as a Massachusetts business trust. Under current
law, so long as it qualifies as a "regulated investment company" under the
Code, the Fund itself is not liable for any income or franchise tax in The
Commonwealth of Massachusetts.
PERFORMANCE INFORMATION
===============================================================================
As discussed in the Prospectus, from time to time the Fund may quote its
"yield" and/or its "total return" in advertisements and sales literature. The
yield is calculated for any 30-day period as follows: the amount of interest
income for each security in the Fund's portfolio is determined in accordance
with regulatory requirements; the total for the entire portfolio constitutes
the Fund's gross income for the period. Expenses accrued during the period are
subtracted to arrive at "net investment income". The resulting amount is
divided by the product of the net asset value per share of the Fund on the last
day of the period multiplied by the average number of 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. Based on the
foregoing calculation, the Fund's annualized yield for the thirty (30) day
period ending March 31, 1994 was 4.51%. Without the waiver of fees and
assumption of expenses by the Investment Manager, the Fund's annualized yield
for the thirty (30) day period ending March 31, 1994 would have been 3.50%.
To determine interest income from debt obligations, a yield-to-
maturity, expressed as a percentage, is determined for obligations held at the
beginning of the period, based on the current market value of the security plus
accrued interest, generally as of the end of the month preceding the 30-day
period, or, for obligations purchased during the period, based on the cost of
the security (including accrued interest). The yield-to-maturity is multiplied
by the market value (plus accrued interest) for each security and the result is
divided by 360 and multiplied by 30 days or the number of days the security was
held during the period, if less. Modifications are made for determining yield-
to-maturity on certain tax-exempt securities.
The Fund may also quote a "tax-equivalent yield" determined by dividing
the tax-exempt portion of the quoted yield by 1 minus the stated income tax
rate and adding the result to the portion of the yield that is not tax-exempt.
Based on the foregoing calculation and a Federal personal income tax bracket of
39.6%, the Fund's annualized tax-equivalent yield for the thirty (30) day
period ending March 31, 1994 was 7.47%.
27
<PAGE>
The Fund's "average annual total return" represents an annualization of the
Fund's total return over a particular period and is computed by finding the
annual percentage rate which will result in the ending redeemable value of a
hypothetical $1,000 investment made at the beginning of a one, five or ten year
period, or for the period from the date of commencement of the Fund's
operations, if shorter than any of the foregoing. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment, taking a root of the quotient (where the root is equivalent to the
number of years in the period) and subtracting 1 from the result. Based on the
foregoing calculation, the Fund's average annual total return for the period
July 9, 1993 (commencement of operations) through March 31, 1994 (fiscal year
end) was -1.53%. Without the waiver of fees and assumption of expenses by the
Investment Manager, the average annual total return would have been -2.06%.
In addition to the foregoing, the Fund may advertise its total return
over different periods of time by means of aggregate, average, year-by-year or
other types of total return figures. In addition, the Fund may also compute its
aggregate total return for specified periods by determining the aggregate
percentage rate which will result in the ending value of a hypothetical $1,000
investment made at the beginning of the period. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing aggregate total return involves a percentage obtained
by dividing the ending value by the initial $1,000 investment and subtracting 1
from the result. Based on the foregoing calculation, the Fund's aggregate total
return for the period July 9, 1993 (commencement of operations) through March
31, 1994 (fiscal year end) was -1.11%. The Fund may also advertise the growth
of hypothetical investments of $10,000, $50,000 and $100,000 in shares of the
Fund by adding 1 to the Fund's aggregate total return (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 the Fund at inception would have been
$9,889, $49,445 and $98,890, respectively at March 31, 1994.
The Fund from time to time may also advertise its performance relative
to certain performance rankings and indices compiled by independent
organizations.
SHARES OF THE FUND
===============================================================================
As discussed in the Prospectus, the shareholders of the Fund are entitled to
a full vote for each full share held. The Trustees, except for Messrs. Bozic,
Purcell and Schroeder, were elected by InterCapital as the sole shareholder of
the Fund. Messrs. Bozic, Purcell and Schroeder were elected by the existing
Trustees. The Trustees themselves have the power to alter the number and the
terms of office of the Trustees (as provided for in the Declaration of Trust),
and they may at any time lengthen or shorten their own terms or make their
terms of unlimited duration and appoint their own successors, provided that
always at least a majority of the Trustees has been elected by the shareholders
of the Fund. Under certain circumstances the Trustees may be removed by action
of the Trustees. The shareholders also have the right under certain
circumstances to remove the Trustees following a meeting called for the
purpose, requested in writing by recordholders of not less than 10% of the
Fund's outstanding shares. 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 Declaration of Trust permits the Trustees to authorize the creation
of additional series of shares (the proceeds of which would be invested in
separate, independently managed portfolios) and additional classes of shares
within any series (which would be used to distinguish among the rights of
different categories of shareholders.) However, the Trustees have not presently
authorized any such additional series or classes of shares.
The Fund is not required to hold Annual Meetings of Shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call Special Meetings of Shareholders for action by shareholder
vote as may be required by the Act or the Declaration of Trust.
The 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.
28
<PAGE>
CUSTODIAN AND TRANSFER AGENT
===============================================================================
The Bank of New York, 110 Washington Street, New York, New York 10286 is the
Custodian of the Fund's assets. Any Fund cash balances with the Custodian in
excess of $100,000 are unprotected by Federal deposit insurance. Such 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; 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 serves as the independent accountants of the Fund. The
independent accountants are responsible for auditing the annual financial
statements of the Fund.
REPORTS TO SHAREHOLDERS
===============================================================================
The Fund will send to shareholders, at least semi-annually, reports showing
the Fund's portfolio and other information. An annual report, containing
financial statements audited by independent accountants, together with their
report thereon, will be sent to shareholders each year.
The Fund's fiscal year ends on March 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.
VALIDITY OF SHARES OF BENEFICIAL INTEREST
===============================================================================
The validity of shares offered by the Prospectus will be passed upon for the
Fund by Sheldon Curtis, Esq., who is an officer and General Counsel of the
Investment Manager and an officer and General Counsel of the Fund.
LEGAL COUNSEL
===============================================================================
Sheldon Curtis, Esq., who is an officer and the General Counsel of the
Investment Manager, is an officer and the General Counsel of the Fund.
EXPERTS
===============================================================================
The financial statements of the Fund included in this Statement of Additional
Information and incorporated in the Prospectus have been so included and
incorporated in reliance on the report of Price Waterhouse, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
REGISTRATION STATEMENT
===============================================================================
This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the Securities and Exchange Commission. The complete Registration
Statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the rules and regulations of the Commission.
29
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
<TABLE>
PORTFOLIO OF INVESTMENTS March 31, 1994
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- --------- ------ ------ -----
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (96.2%)
GENERAL OBLIGATION (17.5%)
$ 5,000 North Slope Borough, Alaska, Ser 1993 B (MBIA Insured) ............... 4.60 % 1/ 1/00 $ 4,830,450
2,000 Wilmington, Delaware, Refg Ser 1993 B (FGIC Insured) ................. 4.60 7/ 1/04 1,825,000
1,000 District of Columbia, Ser 1993 E (FGIC Insured)....................... 4.75 6/ 1/00 973,870
2,000 District of Columbia, Refg Ser 1994 A (MBIA Insured).................. 4.95 6/ 1/05 1,842,940
1,000 Honolulu, Hawaii, Refg Ser 1993 B..................................... 5.00 10/ 1/03 972,380
1,400 Chicago, Illinois, Ser 1993 (FGIC Insured)............................ 5.10 1/ 1/05 1,333,024
2,000 Rosemont, Illinois, Ser 1993 B........................................ 5.30 12/ 1/04 1,934,960
4,000 Massachusetts, Refg Ser 1993 C........................................ 4.80 8/ 1/03 3,775,080
4,600 Atlantic City Board of Education, New Jersey, Ser 1992
(AMBAC Insured)...................................................... 6.00 12/ 1/05 4,805,942
4,800 New York City, New York, Ser 1992 A................................... 6.10 8/ 1/02 4,830,624
1,000 Massillon City School District, Ohio, Refg Ser 1994
(AMBAC Insured)...................................................... 4.70 12/ 1/05 900,520
2,000 Ysleta Independent School District, Texas, Refg Ser 1993.............. 4.50 8/15/04 1,806,580
- -------- -----------
30,800 29,831,370
- -------- -----------
EDUCATIONAL FACILITIES REVENUE (4.8%)
1,500 University of Delaware, Ser 1993...................................... 4.90 11/ 1/02 1,445,955
1,665 Indiana State University, Ser H (AMBAC Insured)....................... 4.70 10/ 1/05 1,484,481
2,000 Massachusetts Health & Educational Facilities Authority,
Boston College Ser K................................................. 4.80 6/ 1/04 1,877,080
1,750 University of Minnesota, Ser 1993 A INFLOS............................ 6.781+ 8/15/03 1,583,750
2,000 New York State Dormitory Authority, State University
Ser 1993 B........................................................... 5.25 5/15/05 1,867,060
- -------- -----------
8,915 8,258,326
- -------- -----------
ELECTRIC FACILITIES REVENUE (6.7%)
1,000 Salt River Project Agricultural Improvement & Power
District, Arizona, Refg Ser 1993 B................................... 4.75 1/ 1/03 940,420
1,000 New York State Power Authority, General Purpose Ser CC................ 4.50 1/ 1/03 923,330
2,000 North Carolina Eastern Municipal Power Agency, Refg
Ser 1993 C........................................................... 5.25 1/ 1/04 1,905,880
5,000 San Antonio,Texas, Electric & Gas Refg Ser 1994....................... 4.70 2/ 1/05 4,528,050
1,000 Lewis County, Public Utility District #1, Washington,
Cowlitz Falls Hydro Refg Ser 1993.................................... 4.875 10/ 1/03 950,680
2,320 Snohomish County Public Utility District #1, Washington,
Generation Ser 1993 B (AMT).......................................... 5.35 1/ 1/05 2,196,274
- -------- -----------
12,320 11,444,634
- -------- -----------
HOSPITAL REVENUE (10.7%)
2,000 California Statewide Communities Development
Authority, Cedars-Sinai Medical Center Ser 1993...................... 4.70 11/ 1/03 1,857,980
1,770 Contra Costa County, California, Merrithew Memorial
Hospital Ser 1992 COPs............................................... 6.40 11/ 1/05 1,828,959
4,000 Massachusetts Health & Educational Facilities Authority,
Massachusetts General Hospital Ser G
(AMBAC Insured)...................................................... 4.90 7/ 1/05 3,752,360
30
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
</TABLE>
<TABLE>
PORTFOLIO OF INVESTMENTS March 31, 1994 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- --------- ------ ------ -----
<C> <S> <C> <C> <C>
$ 1,420 Michigan Hospital Finance Authority, McLaren
Obligated Group Ser 1993 A........................................... 5.00 % 10/15/04 $ 1,312,307
2,000 Missouri Health & Educational Facilities Authority,
Barnes Jewish Inc/Christian Health Services Ser 1993 A............... 4.75 5/15/05 1,806,600
4,000 Tulsa County Industrial Authority, Oklahoma,
St Francis Hospital Ser 1993 B (a)................................... 5.15 12/15/18 3,948,560
1,000 Richland County, South Carolina, Richland Memorial
Hospital Ser 1993 B (MBIA Insured)................................... 4.80 6/ 1/03 944,540
1,000 Murray, Utah, IHC Hospitals Inc Refg Ser 1993
(AMBAC Insured)...................................................... 5.00 5/15/04 957,760
1,000 Fairfax County Industrial Development Authority, Virginia,
Inova Health System Foundation Refg Ser 1993 A....................... 4.70 8/15/04 937,340
1,000 Wisconsin Health & Educational Facilities Authority,
Hospital Sisters Services Ser 1993 (MBIA Insured).................... 5.00 6/ 1/03 956,660
- -------- -----------
19,190 18,303,066
- -------- -----------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL
REVENUE (1.7%)
1,000 Massachusetts Industrial Finance Agency, Eastern
Edison Co Refg Ser 1993.............................................. 5.875 8/ 1/08 924,620
2,000 Greenwood, Wisconsin, Land O'Lakes Inc (AMT).......................... 5.50 9/ 1/03 1,914,880
- -------- -----------
3,000 2,839,500
- -------- -----------
MORTGAGE REVENUE--MULTI-FAMILY (1.2%)
2,130 Wisconsin Housing & Economic Development Authority,
Ser 1993 B (AMT)..................................................... 5.10 11/ 1/03 2,050,189
- -------- -----------
MORTGAGE REVENUE--SINGLE FAMILY (1.1%)
2,000 Connecticut Housing Finance Authority, 1993 Subseries F-1............. 4.90 5/15/04 1,898,740
- -------- -----------
NURSING & HEALTH RELATED FACILITIES REVENUE (1.6%)
3,000 Ohio Public Facilities Commission, Mental Health
Ser II--93B.......................................................... 4.30 6/ 1/03 2,649,990
- -------- -----------
PUBLIC FACILITIES REVENUE (15.5%)
5,000 Los Angeles County Public Works Financing Authority,
California, Multiple Capital Proj IV (MBIA Insured).................. 4.90 12/ 1/05 4,682,350
1,875 San Diego Unified School District, California, Refg
Ser 1993 B COPs............. 4.80 7/ 1/03 1,748,419
3,000 Michigan Building Authority, Refg Ser 1993 I.......................... 6.50 10/ 1/04 3,217,050
St Paul Housing & Redevelopment Authority, Minnesota,
1,400 Civic Center Ser 1993................................................ 4.80 11/ 1/03 1,302,980
1,500 Civic Center Ser 1993................................................ 4.90 11/ 1/04 1,392,015
3,660 Kansas City School District Building Corporation, Missouri,
Elementary Ser 1993 D (FGIC Insured)................................. 4.80 2/ 1/04 3,401,311
1,500 St Louis Municipal Finance Corporation, Missouri,
Refg Ser 1993 A...................................................... 5.60 7/15/05 1,463,130
2,000 Regional Convention & Sports Complex Authority, Missouri,
Refg Ser A 1993...................................................... 4.75 8/15/04 1,801,700
31
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
</TABLE>
<TABLE>
PORTFOLIO OF INVESTMENTS March 31, 1994 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- --------- ------ ------ -----
<C> <S> <C> <C> <C>
$ 2,000 Ohio Building Authority, Correctional Refg 1994 Ser A................. 4.65 % 10/ 1/04 $ 1,816,600
1,945 Pittsburgh Stadium Authority, Pennsylvania, Refg
Ser 1993 (MBIA Insured).............................................. 4.85 10/ 1/04 1,812,798
3,000 Rhode Island Convention Center Authority, Refg Ser 1993 B
(MBIA Insured)....................................................... 5.00 5/15/05 2,826,150
1,000 Virginia Public Building Authority, Ser 1993 A........................ 4.90 8/ 1/02 970,640
- -------- -----------
27,880 26,435,143
- -------- -----------
RESOURCE RECOVERY REVENUE (1.2%)
2,000 Northeast Maryland Waste Disposal Authority,
Montgomery County Ser 1993 A (AMT) .................................. 5.50 7/ 1/01 1,972,820
- -------- -----------
STUDENT LOAN REVENUE (6.7%)
3,000 New England Education Loan Marketing Corporation,
Massachusetts, Ser 1992 G............................................ 5.20 8/ 1/02 2,872,530
3,500 Montana Higher Education Student Assistance Corporation,
Senior Ser 1993 B (AMT).............................................. 5.10 12/ 1/01 3,383,345
4,000 South Carolina Education Assistance Authority,
Ser 1993 A-1 (AMT)................................................... 5.00 9/ 1/03 3,803,480
1,500 Utah Board of Regents, Ser 1993 B (AMT)............................... 5.35 11/ 1/03 1,457,235
- -------- -----------
12,000 11,516,590
- -------- -----------
TAX ALLOCATION REVENUE (3.9%)
1,970 Pleasanton Joint Powers Financing Authority, California,
Reassessment Ser 1993 A.............................................. 5.60 9/ 2/00 1,945,887
3,000 Sacramento Financing Authority, California, Refg
Ser 1993 A (AMBAC Insured)........................................... 4.85 11/ 1/04 2,819,730
2,000 Santa Maria Redevelopment Agency, California,
Town Center & Westside Parking Refg Ser 1993......................... 4.75 6/ 1/03 1,872,420
- -------- -----------
6,970 6,638,037
- -------- -----------
TRANSPORTATION REVENUE (11.0%)
1,000 Alaska, International Airports Refg Ser I (MBIA Insured)
(AMT)................................................................ 5.10 10/ 1/03 958,560
1,000 Delaware River & Bay Authority, Delaware & New Jersey,
Ser 1993............................................................. 4.50 1/ 1/04 907,610
2,000 Washington Metropolitan Area Transit Authority, District
of Columbia, Refg Ser 1993 (FGIC Insured)............................ 4.90 1/ 1/05 1,897,180
3,560 Metropolitan Atlanta Rapid Transit Authority, Georgia,
Sales Tax Refg Ser 1991 M............................................ 6.35 7/ 1/04 3,795,316
4,000 Chicago, Illinois, Chicago--O'Hare Int'l Airport Refg
Ser 1993 A........................................................... 4.80 1/ 1/05 3,664,920
3,000 Harris County, Texas, Toll Road Refg Ser 1994
(AMBAC Insured)...................................................... 4.85 8/15/05 2,795,670
1,250 Texas Turnpike Authority, Dallas North Tollway Refg
Ser 1993 (AMBAC Insured)............................................. 4.60 1/ 1/04 1,148,125
32
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
</TABLE>
<TABLE>
PORTFOLIO OF INVESTMENTS March 31, 1994 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- --------- ------ ------ -----
<C> <S> <C> <C> <C>
Port of Seattle, Washington,
$ 2,000 Refg Ser 1994 C (b).................................................. 4.60 % 7/ 1/04 $ 1,792,000
2,000 Refg Ser 1994 C (b).................................................. 4.70 7/ 1/05 1,786,300
- -------- -----------
19,810 18,745,681
- -------- -----------
WATER AND SEWER REVENUE (10.9%)
1,225 Phoenix Civic Improvement Corporation, Arizona,
Wastewater Refg Ser 1993............................................. 4.625 7/ 1/05 1,083,917
1,000 Atlanta, Georgia, Water & Sewer Ser 1993.............................. 4.50 1/ 1/04 907,610
Massachusetts Water Resources Authority,
1,000 Refg Ser 1992 B...................................................... 5.875 11/ 1/04 1,013,690
1,200 Ser 1993 C........................................................... 5.10 12/ 1/04 1,142,004
2,000 Ser 1993 C........................................................... 5.25 12/ 1/06 1,879,880
4,000 New York City Municipal Water Finance Authority,
New York, Ser 1994 B................................................. 5.125 6/15/04 3,793,840
5,000 Suffolk County Industrial Development Agency,
New York, Suffolk County Southwest Sewer
Ser 1994 (FGIC Insured).............................................. 4.80 2/ 1/05 4,582,700
1,500 Pittsburgh Water & Sewer Authority, Pennsylvania, Refg
Ser 1993 A (FGIC Insured)............................................ 4.60 9/ 1/03 1,394,415
3,000 Southeastern Public Service Authority, Virginia, Regional
Solid Waste Refg Ser 1993 A (MBIA Insured)........................... 4.70 7/ 1/04 2,780,280
- -------- -----------
19,925 18,578,336
- -------- -----------
OTHER REVENUE (1.7%)
1,000 Palm Beach County, Florida, Beach Acquisition Refg
Ser 1993 (FGIC Insured).............................................. 5.125 11/ 1/06 956,580
2,000 Pennsylvania Intergovernmental Cooperation Authority,
Special Tax Ser 1993 (FGIC Insured).................................. 5.05 6/15/04 1,916,660
- -------- -----------
3,000 2,873,240
- -------- -----------
172,940 TOTAL MUNICIPAL BONDS (Identified Cost $173,461,361).................. 164,035,662
- -------- -----------
SHORT-TERM MUNICIPAL OBLIGATIONS (4.1%)
3,000 District of Columbia, General Fund Recovery Ser B-3
(Tender 4/4/94)...................................................... 2.95 * 6/ 1/03 3,000,000
2,000 Louisiana Offshore Terminal Authority, LOOP Inc
Ser 1992 A (Tender 4/4/94)........................................... 2.85 * 9/ 1/08 2,000,000
2,000 Sublette County, Wyoming, Exxon Corp Ser 1987 B
(AMT) (Tender 4/4/94)................................................ 3.00 * 7/ 1/17 2,000,000
- -------- -----------
7,000 TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS
(Identified Cost $7,000,000)......................................... 7,000,000
- -------- -----------
$179,940 TOTAL INVESTMENTS (Identified Cost $180,461,361) (c).................. 100.3% 171,035,662
========
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS........................ (0.3) (446,254)
------ ------------
NET ASSETS............................................................ 100.0% $170,589,408
====== ============
<FN>
- ----------
+ Current coupon rate for residual interest bonds. This rate resets periodically as the auction rate on the related short-term
security fluctuates.
* Variable or floating rate securities. Coupon rate shown reflects current rate.
(a) Mandatory tender 12/15/2003.
(b) Securities purchased on a "when issued" basis.
(c) The aggregate cost for federal income tax purposes is $180,461,361; the aggregate gross and net unrealized depreciation is
$9,425,699.
</TABLE>
33
See Notes to Financial Statements
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
<TABLE>
SUMMARY OF INVESTMENTS BY STATE March 31, 1994
===================================================================================================================================
<CAPTION>
Percent of Percent of Percent of
Net Assets Net Assets Net Assets
----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
AK 3.4% LA 1.2% OK 2.3%
AZ 1.2 MA 10.1 PA 3.0
CA 9.8 MD 1.2 RI 1.7
CT 1.1 MI 2.7 SC 2.8
DC 4.5 MN 2.5 TX 6.0
DE 2.4 MO 5.0 UT 1.4
FL 0.6 MT 2.0 VA 2.6
GA 2.8 NC 1.1 WA 3.9
HI 0.6 NJ 2.8 WI 2.9
IL 4.1 NY 9.4 WY 1.2
IN 0.9 OH 3.1
======
Total 100.3%
======
</TABLE>
===============================================================================
1994 FEDERAL TAX NOTICE (unaudited)
During the fiscal period ended March 31, 1994, the Fund paid to shareholders
$.294235 per share from net investment income. All of the Fund's dividends from
net investment income were exempt interest dividends, excludable from gross
income for Federal income tax purposes.
===============================================================================
34
<PAGE>
<TABLE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
FINANCIAL STATEMENTS
<CAPTION>
===============================================================================
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1994
===============================================================================
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $180,461,361)(Note 1)..................... $171,035,662
Cash........................................................ 287,936
Receivable for:
Interest................................................... 2,790,622
Shares of beneficial interest sold......................... 2,281,408
Deferred organizational expenses (Note 1)................... 131,686
Receivable from investment manager.......................... 20,377
Prepaid expenses and other assets........................... 16,852
-----------
Total Assets............................................... 176,564,543
-----------
LIABILITIES:
Payable for:
Investments purchased...................................... 4,016,067
Shares of beneficial interest repurchased.................. 1,790,979
Dividends to shareholders................................... 42,906
Investment management fee payable (Note 2).................. 77,026
Accrued expenses (Note 3)................................... 48,157
-----------
Total Liabilities........................................ 5,975,135
-----------
NET ASSETS:
Paid-in-capital............................................. 180,098,554
Accumulated net realized loss on
investments................................................ (83,447)
Net unrealized depreciation on investments.................. (9,425,699)
------------
Net Assets................................................. $170,589,408
============
Net Asset Value Per Share, 17,746,706
shares outstanding (unlimited shares
authorized of $.01 par value).............................. $9.61
=====
<CAPTION>
===============================================================================
STATEMENT OF OPERATIONS For the period
July 12, 1993 through March 31, 1994 (Note 1)
===============================================================================
<S> <C>
INVESTMENT INCOME:
Interest Income............................................ $4,153,560
----------
Expenses
Investment management fee (Note 2)........................ 226,830
Professional fees......................................... 23,496
Transfer agent fees and expenses
(Note 3)................................................. 18,055
Shareholder reports and notices........................... 9,900
Organizational expenses (Note 1).......................... 7,886
Trustees' fees and expenses (Note 3)...................... 7,557
Registration fees......................................... 7,079
Other..................................................... 3,814
----------
Total Expenses............................................. 304,617
----------
Net Investment Income..................................... 3,848,943
----------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (Note 1):
Net realized loss on investments.......................... (83,447)
Unrealized depreciation on investments.................... (9,425,699)
----------
Net Loss on Investments.................................. (9,509,146)
----------
Net Decrease in Net Assets
Resulting from Operations............................... ($5,660,203)
==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
For the period July 12, 1993 through March 31, 1994 (Note 1)
===================================================================================================================================
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income..................................... $ 3,848,943
Net realized loss on investments.......................... (83,447)
Net unrealized depreciation on investments................ (9,425,699)
-------------
Net decrease in net assets resulting from operations..... (5,660,203)
Dividends to shareholders from net investment income....... (3,848,943)
Net increase from transactions in shares of
beneficial interest (Note 4).............................. 179,998,554
-------------
Total increase........................................... 170,489,408
NET ASSETS:
Beginning of period........................................ 100,000
-------------
END OF PERIOD.............................................. $170,589,408
=============
See Notes to Financial Statements
</TABLE>
35
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. ORGANIZATION AND ACCOUNTING POLICIES--Dean Witter Limited Term Municipal
Trust (the "Fund") is registered under the Investment Company Act of 1940, as
amended (the "Act"), as a no-load, diversified, open-end management investment
company. It was organized on February 25, 1993 as a Massachusetts business
trust and had no operations until July 12, 1993 other than matters relating to
the sale and issuance of 10,000 shares of beneficial interest for $100,000 to
Dean Witter InterCapital Inc. (the "Investment Manager").
The following is a summary of significant accounting policies:
A. Valuation of Investments--Portfolio securities are valued for the
Fund by an outside independent pricing service approved by the Fund's Trustees.
The pricing service has informed the Fund that in valuing the Fund's portfolio
securities, it uses both a computerized grid matrix of tax-exempt securities
and evaluations by its staff, in each case based on information concerning
market transactions and quotations from dealers which reflect the bid side of
the market each day. The Fund's portfolio securities are thus valued by
reference to a combination of transactions and quotations for the same or other
securities believed to be comparable in quality, coupon, maturity, type of
issue, call provisions, trading characteristics and other features deemed to be
relevant.
B. Accounting for Investments--Security transactions are accounted for
on the trade date (date the order to buy or sell is executed). In computing net
investment income, the Fund amortizes premiums and original issue discounts on
fixed income securities. Additionally, with respect to market discount on bonds
purchased after April 30, 1993, a portion of any capital gain realized upon
disposition is recharacterized as taxable investment income. Realized gains and
losses on security transactions are determined on the identified cost method.
Interest income is accrued daily.
C. Federal Income Tax Status--It is the Fund's policy to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable and non-taxable
income to its shareholders. Accordingly, no federal income tax provision is
required.
D. Dividends and Distributions to Shareholders--The Fund records
dividends and distributions to its shareholders on the 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 reclassifications. Dividends
and distributions which exceed net investment income and net realized capital
gains for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
E. Organizational Expenses--The Fund's Investment Manager paid the
organizational expenses of the Fund in the amount of $154,180 of which the Fund
reimbursed $139,572 and the remaining amount of $14,608 was assumed by the
Investment Manager through December 31, 1993. The Fund deferred and is
amortizing these organizational expenses by the straight-line method over a
period not to exceed five years from the commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT--Pursuant to an Investment Management
Agreement (the "Agreement") with Dean Witter InterCapital Inc., the Fund pays
its Investment Manager a management fee, calculated daily and payable monthly,
at an annual rate of 0.50% of the Fund's net assets determined as of the close
of each business day.
36
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
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 office space and 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 waived the compensation provided for in the
Investment Management Agreement and assumed all other expenses until December
31, 1993. The management fee waived and the other expenses assumed by the
Investment Manager, through December 31, 1993 approximated $264,000 and
$168,000, respectively.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES--The cost of
purchases and the proceeds from sales of portfolio securities for the period
July 12, 1993 (commencement of operations) through March 31, 1994, excluding
short-term investments, aggregated $180,105,966 and $6,533,125, respectively.
Effective January 1, 1994, the Fund adopted an unfunded noncontributory
defined pension plan covering all independent Trustees of the Fund who will
have served as an independent Trustee for at least five years at the time of
retirement. Benefits under this plan are based on years of service and
compensation during the last five years of service. Aggregate pension cost for
the fiscal period ended March 31, 1994, included in Trustees' fees and expenses
in the Statement of Operations, amounted to $2,790. At March 31, 1994, the Fund
had an accrued pension liability of $2,787 which is included in accrued
expenses in the Statement of Assets and Liabilities.
Dean Witter Trust Company, an affiliate of the Investment Manager, is
the Fund's transfer agent. At March 31, 1994, the Fund had transfer agent fees
and expenses payable of $7,623.
4. SHARES OF BENEFICIAL INTEREST--Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
For the period July 12, 1993
through March 31, 1994 (Note 1)
-------------------------------
Shares Amount
------ ------
<S> <C> <C>
Sold.................................. 30,407,994 $308,424,328
Reinvestment of dividends............. 301,685 3,050,020
---------- ------------
30,709,679 311,474,348
Repurchased........................... (12,972,973) (131,475,794)
---------- ------------
Net increase.......................... 17,736,706 $179,998,554
========== =============
</TABLE>
5. FEDERAL INCOME TAX STATUS--Any net capital losses incurred after October 31
("Post-October losses") within the taxable year are deemed to arise on the
first business day of the Fund's next taxable year. The Fund incurred and will
elect to defer net capital losses of approximately $83,400 during fiscal period
1994. To the extent that these losses are used to offset future capital gains,
it is probable that the gains so offset will not be distributed to
shareholders. The Fund has temporary book/tax differences primarily
attributable to Post-October losses.
37
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
<TABLE>
FINANCIAL HIGHLIGHTS
===================================================================================================================================
Selected ratios and per share data for a share of beneficial interest outstanding throughout the period:
<CAPTION>
For the period
July 12, 1993*
through
March 31, 1994
-------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period......................... $10.00
-----
Net investment income....................................... 0.29
Net realized and unrealized loss on investments............. (0.39)
-----
Total from investment operations............................. (0.10)
-----
Dividends from net investment income......................... (0.29)
-----
Net asset value, end of period............................... $ 9.61
-----
-----
Total Investment Return....................................... (1.11)%(1)
Ratios/Supplemental Data:
Net assets, end of period (in thousands)..................... $170,589
Ratio of expenses to average net assets...................... 0.31%(2)(3)
Ratio of net investment income to average net assets......... 3.92%(2)(3)
Portfolio turnover rate...................................... 6%
<FN>
- ------------
* Commencement of operations.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were assumed or waived by the Investment Manager, the above annualized
ratios of expenses and net investment income to average net assets would have been 0.75% and 3.48%, respectively.
See Notes to Financial Statements
</TABLE>
38
<PAGE>
Report of Independent Accountants
===============================================================================
To the Shareholders and Trustees of Dean Witter Limited Term Municipal Trust
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Dean Witter Limited Term Municipal
Trust (the "Fund") at March 31, 1994, the results of its operations, the
changes in its net assets and the financial highlights for the period July 12,
1993 (commencement of operations) through March 31, 1994, 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 audit. We conducted our
audit 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 audit, which included confirmation of securities owned at March 31, 1994 by
correspondence with the custodian and broker, provides a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE
1177 Avenue of the Americas
New York, New York
May 10, 1994
39
<PAGE>
APPENDIX
===============================================================================
RATINGS OF INVESTMENTS
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
MUNICIPAL BOND RATINGS
Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation 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
securities.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium grade obligation;
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Bonds rated Aaa, Aa, A and Baa are considered investment grade bonds.
Ba Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and therefore not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca Bonds which are rated Ca present obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Conditional Rating: Bonds for which the security depends upon the completion
of some act of the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
Rating Refinements: Moody's may apply numerical modifiers, 1, 2 and 3
in each generic rating classification from Aa through B in its municipal bond
rating system. The modifier 1 indicates a mid-range ranking; and a modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
40
<PAGE>
MUNICIPAL NOTE RATINGS
Moody's ratings for state and municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). MIG 1 denotes best quality and means
there is present strong protection from established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing. MIG 2 denotes high quality and means that margins of protection
are ample although not as large as in MIG 1. MIG 3 denotes favorable quality
and means that all security elements are accounted for but that the undeniabale
strength of theprevious grades, MIG 1 and MIG 2, is lacking. MIG 4 denotes
adequate quality and means that the protection commonly regarded as required of
an investment security is present and that while the notes are not distinctly
or predominantly speculative, there is specific risk.
VARIABLE RATE DEMAND OBLIGATIONS
A short-term rating, in addition to the Bond or MIG ratings, designated VMIG
may also be assigned to an issue having a demand feature. The assignment of the
VMIG symbol reflects such characteristics as payment upon periodic demand
rather than fixed maturity dates and payment relying on external liquidity. The
VMIG rating criteria are identical to the MIG criteria discussed above.
COMMERCIAL PAPER RATINGS
Moody's Commercial Paper ratings are opinions of the ability to repay
punctually promissory obligations not having an original maturity in excess of
nine months. These ratings apply to Municipal commercial Paper as well as
taxable Commercial Paper. Moody's employs the following three designations, all
judged to be investment grade, to indicate the relative repayment capacity of
rated issuers: Prime-1, Prime-2, Prime-3.
Issuers rated Prime-1 have a superior capacity for repayment of short-term
promissory obligations. Issuers rated Prime-2 have a strong capacity for
repayment of short-term promissory obligations; and Issuers rated Prime-3 have
an acceptable capacity for repayment of short-term promissory obligations.
Issuers rated Not Prime do not fall within any of the Prime rating categories.
STANDARD & POOR'S CORPORATION ("STANDARD & POOR'S)
MUNICIPAL BOND RATINGS
A Standard & Poor's municipal rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers,
or lessees.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. The
ratings are based, in varying degrees, on the follow- -ing considerations: (1)
likelihood of default-capacity and willingness of the obligor as to the timely
payment of interest and repayment of principal in accordance with the terms of
the obligation; (2) nature of and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event
of bankruptcy, reorganization or other arrangement under the laws of bankruptcy
and other laws affecting creditors' rights.
Standard & Poor's does not perform an audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may be
changed, suspended or withdrawn as a result of changes in, or unavailability
of, such information, or for other reasons.
AAA Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest-rated issues only in small degree.
41
<PAGE>
A Debt rated "A" has a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher-rated
categories.
BBB Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher-rated categories.
Bonds rated AAA, AA, A and BBB are considered investment grade bonds.
BB Debt rated "BB" has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payment.
B Debt rated "B" has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC Debt rated "CCC" has a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payments of interest and repayments of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have
the capacity to pay interest and repay principal.
CC The rating "CC" is typically applied to debt subordinated to senior
debt which is assigned an - actual or implied "CCC" rating.
C The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC" debt rating.
Cl The rating "Cl" is reserved for income bonds on which no interest is
being paid.
D Debt rated "D" is in payment default. The `D' rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The `D' rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
NR Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.
Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. "BB" indicates the least degree of speculation
and "C" the highest degree of speculation. While such debt will likely have
some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
Plus (+) or minus(-): The ratings from "AA" to "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major ratings categories.
The foregoing ratings are sometimes followed by a "p" which indicates
that the rating is provisional. A provisional rating assumes the successful
completion of the project being financed by the bonds being rated and indicates
that payment of debt service requirements is largely or entirely dependent upon
the successful and timely completion of the project. This rating, however,
while addressing credit quality subsequent to completion of the project, makes
no comment on the likelihood or risk of default upon failure of such
completion.
42
<PAGE>
MUNICIPAL NOTE RATINGS
Commencing on July 27, 1984, Standard & Poor's instituted a new rating
category with respect to certain municipal note issues with a maturity of less
than three years. The new note ratings denote the following:
SP-1 denotes a very strong or strong capacity to pay principal and
interest. Issues determined to possess overwhelming safety characteristics are
given a plus (+) designation (SP-1+).
SP-2 denotes a satisfactory capacity to pay principal and interest.
SP-3 denotes a speculative capacity to pay principal and interest.
COMMERICAL PAPER RATINGS
Standard and Poor's commerical paper rating is a current assessment of
the likelihood of timely payment of debt having an original maturity of no more
than 365 days. The commercial paper rating is not a recommendation to purchase
or sell a security. The ratings are based upon current information furnished by
the issuer or obtained by S&P from other sources it considers reliable. The
ratings may be changed, suspended, or withdrawn as a result of changes in or
unavailability of such information. Ratings are graded into group categories,
ranging from "A" for the highest quality obligations to "D" for the lowest.
Ratings are applicable to both taxable and tax-exempt commercial paper. The
categories are as follows:
Issues assigned A ratings are regarded as having the greatest capacity
for timely payment. Issues in this category are further refined with the
designation 1, 2 and 3 to indicate the relative degree of safety.
A-1 indicates that the degree of safety regarding timely payments is very
strong.
A-2 indicates capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as overwhelming as for
issues designated "A-1".
A-3 indicates a satisfactory capacity for timely payment. Obligations carrying
this designation are, however, somewhat more vulnerable to the adverse effects
of changes in circumstances than obligations carrying the higher designations.
43
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial statements and schedules, included
in Prospectus (Part A): Page in Prospectus
Financial highlights for the period July 12, 1993
through March 31, 1994 ........................... 04
(2) Financial statements included in the Statement of
Additional Information (Part B): Page in SAI
Portfolio of Investments at March 31,, 1994 ...... 34
Summary of Investments by State at March 31, 1994. 38
Statement of assets and liabilities at
March 31, 1994 ................................... 39
Statement of operations for the period July 12,
1993 through March 31, 1994 ...................... 39
Statement of changes in net assets for the period
July 12, 1993 through March 31, 1994 .............. 39
Notes to Financial Statements ..................... 40
Financial highlights for the year ended March 31,
1994 .............................................. 42
(3) Financial statements included in Part C:
None
(b) Exhibits:
6.(b) - Forms of Selected Dealers Agreement
9. - Form of Services Agreement between Dean Witter
InterCapital Inc. and Dean Witter Services Inc.
11. - Consent of Independent Accountants
16. - Schedules for Computation of Performance
Quotations
Other - Powers of Attorney
1
<PAGE>
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 May 13, 1994
Shares of Beneficial Interest 4,989
Item 27. Indemnification
Pursuant to Section 5.3 of the Registrant's Declaration of
Trust and under Section 4.8 of the Registrant's By-Laws, the
indemnification of the Registrant's trustees, officers, employees
and agents is permitted if it is determined that they acted under
the belief that their actions were in or not opposed to the best
interest of the Registrant, and, with respect to any criminal
proceeding, they had reasonable cause to believe their conduct
was not unlawful. In addition, indemnification is permitted only
if it is determined that the actions in question did not render
them liable by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of
reckless disregard of their obligations and duties to the
Registrant. Trustees, officers, employees and agents will be
indemnified for the expense of litigation if it is determined
that they are entitled to indemnification against any liability
established in such litigation. The Registrant may also advance
money for these expenses provided that they give their
undertakings to repay the Registrant unless their conduct is
later determined to permit indemnification.
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
2
<PAGE>
as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a trustee, officer, or controlling person of the
Registrant in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by
such trustee, officer or controlling person in connection with
the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act, and will be governed by the final
adjudication of such issue.
The Registrant hereby undertakes that it will apply the
indemnification provision of its by-laws in a manner consistent
with Release 11330 of the Securities and Exchange Commission
under the Investment Company Act of 1940, so long as the
interpretation of Sections 17(h) and 17(i) of such Act remains in
effect.
Registrant, in conjunction with the Investment Manager,
Registrant's Trustees, and other registered investment management
companies managed by the Investment Manager, maintains insurance
on behalf of any person who is or was a Trustee, officer,
employee, or agent of Registrant, or who is or was serving at the
request of Registrant as a trustee, director, officer, employee
or agent of another trust or corporation, against any liability
asserted against him and incurred by him or arising out of his
position. However, in no event will Registrant maintain
insurance to indemnify any such person for any act for which
Registrant itself is not permitted to indemnify him.
Item 28. Business and Other Connections of Investment Adviser.
See "The Fund and Its Management" in the Prospectus
regarding the business of the investment adviser. The following
information is given regarding officers of Dean Witter
InterCapital Inc. Information regarding the other officers of
InterCapital is included in Item 29(b) below. The term "Dean
Witter Funds" used below refers to the following Funds: (1)
InterCapital Income Securities Inc., (2) High Income Advantage
Trust, (3) High Income Advantage Trust II, (4) High Income
Advantage Trust III, (5) Municipal Income Trust, (6) Municipal
Income Trust II, (7) Municipal Income Trust III, (8) Dean Witter
Government Income Trust, (9) Municipal Premium Income Trust, (10)
Municipal Income Opportunities Trust, (11) Municipal Income
Opportunities Trust II, (12) Municipal Income Opportunities Trust
III, (13) Prime Income Trust, (14) InterCapital Insured Municipal
Bond Trust, (15) InterCapital Quality Municipal Income Trust,
(16) InterCapital Quality Municipal Investment Trust, (17)
InterCapital Insured Municipal Income Trust, (18) InterCapital
3
<PAGE>
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 Municipal Securities,
(23) InterCapital Insured California Municipal Securities and
(24) InterCapital Insured Municipal Securities, registered
closed-end investment companies, and (1) Dean Witter Short-Term
Bond Fund, (2) Dean Witter Tax-Exempt Securities Trust, (3) Dean
Witter Tax-Free Daily Income Trust, (4) Dean Witter Dividend
Growth Securities Inc., (5) Dean Witter Convertible Securities
Trust, (6) Dean Witter Liquid Asset Fund Inc., (7) Dean Witter
Developing Growth Securities Trust, (8) Dean Witter Retirement
Series, (9) Dean Witter Federal Securities Trust, (10) Dean
Witter World Wide Investment Trust, (11) Dean Witter U.S.
Government Securities Trust, (12) Dean Witter Select Municipal
Reinvestment Fund, (13) Dean Witter High Yield Securities Inc.,
(14) Dean Witter Intermediate Income Securities, (15) Dean Witter
New York Tax-Free Income Fund, (16) Dean Witter California Tax-
Free Income Fund, (17) Dean Witter Health Sciences Trust, (18)
Dean Witter California Tax-Free Daily Income Trust, (19) Dean
Witter Managed Assets Trust, (20) Dean Witter American Value
Fund, (21) Dean Witter Strategist Fund, (22) Dean Witter
Utilities Fund, (23) Dean Witter World Wide Income Trust, (24)
Dean Witter New York Municipal Money Market Trust, (25) Dean
Witter Capital Growth Securities, (26) Dean Witter Precious
Metals and Minerals Trust, (27) Dean Witter European Growth Fund
Inc., (28) Dean Witter Global Short-Term Income Fund Inc., (29)
Dean Witter Pacific Growth Fund Inc., (30) Dean Witter Multi-
State Municipal Series Trust, (31) Dean Witter Premier Income
Trust, (32) Dean Witter Short-Term U.S. Treasury Trust, (33) Dean
Witter Diversified Income Trust, (34) Dean Witter U.S. Government
Money Market Trust, (35) Dean Witter Global Dividend Growth
Securities, (36) Active Assets California Tax-Free Trust, (37)
Dean Witter Natural Resource Development Securities Inc., (38)
Active Assets Government Securities Trust, (39) Active Assets
Money Trust, (40) Active Assets Tax-Free Trust, (41) Dean Witter
Limited Term Municipal Trust, (42) Dean Witter Variable
Investment Series, (43) Dean Witter Value-Added Market Series and
(44) Dean Witter Global Utilities Fund, (45) Dean Witter High
Income Securities, (46) Dean Witter National Municipal Trust,
registered open-end investment companies. InterCapital is a
wholly-owned subsidiary of Dean Witter, Discover & Co. The
principal address of the Dean Witter Funds is Two World Trade
Center, New York, New York 10048. The term "TCW/DW Funds" refers
to the following Funds: (1) TCW/DW Core Equity Trust, (2) TCW/DW
North American Government Income Trust, (3) TCW/DW Latin American
Growth Fund, (4) TCW/DW Income and Growth Fund, (5) TCW/DW Small
Cap Growth Fund, (6) TCW/DW Balanced Fund, (7) TCW/DW North
American Intermediate Income Trust, registered open-end
investment companies and (8) TCW/DW Term Trust 2002, (9) TCW/DW
Term Trust 2003 (10) TCW/DW Term Trust 2000, and (11) TCW/DW
Emerging Markets Opportunities Trust, registered closed-end
investment companies.
4
<PAGE>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
Charles A. Chairman, Chief Executive Vice
Fiumefreddo Executive Officer President and Director
and Director of Dean Witter
Reynolds Inc.
("DWR"); Chairman,
Director or Trustee,
President and
Chief Executive
Officer of the
Dean Witter Funds;
Chairman, Chief
Executive Officer and
Trustee of the TCW/DW
Funds; Chairman and
Director of Dean
Witter Trust Company
("DWTC"); Chairman,
Chief Executive
Officer and Director
of Dean Witter
Distributors Inc.
("Distributors") and
Dean Witter Services
Company Inc. ("DWSC");
Formerly Executive
Vice President and
Director of Dean
Witter, Discover & Co.
("DWDC"); Director
and/or officer of DWDC
subsidiaries.
Philip J. Director Chairman, Chief
Purcell Executive Officer and
Director of DWDC and
DWR; Director of DWSC
and Distributors;
Director or Trustee
of the Dean Witter
Funds; Director and/
or officer of various
DWDC subsidiaries.
Richard M. Director President and Chief
DeMartini Operating Officer of
Dean Witter Capital
and Director of DWR,
5
<PAGE>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
DWSC and Distibutors;
Trustee of the TCW/DW
Funds.
James F. Director President and Chief
Higgins Operating Officer of
Dean Witter Financial;
Director of DWR, DWSC
and Distributors.
Thomas C. Executive Vice Executive Vice
Schneider President, Chief President, Chief
Financial Officer Financial Officer
and Director and Director of
DWSC, DWR and
Distributors.
Christine A. Director Executive Vice
Edwards President, Secretary,
General Counsel and
Director of DWR, DWR
DWSC and Distributors.
Robert M. Scanlan President and Vice President of
Chief Operating the Dean Witter Funds
Officer and the TCW/DW Funds;
President of DWSC;
Executive Vice
President of
Distributors;
Executive Vice
President and
Director of DWTC.
David A. Hughey Executive Vice Vice President of the
President and Dean Witter Funds and
Chief Administrative the TCW/DW Funds;
Officer Executive Vice
President, Chief
Administrative Officer
and Director of DWTC;
Executive Vice
President and Chief
Administrative Officer
of DWSC and
Distributors.
6
<PAGE>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
Edmund C. Executive Vice Vice President of the
Puckhaber President Dean Witter Funds.
John Van Heuvelen Executive Vice President and Chief
President Executive Officer of
DWTC.
Sheldon Curtis Senior Vice Vice President,
President, Secretary and
General Counsel General Counsel of the
and Secretary Dean Witter Funds and
the TCW/DW Funds;
Senior Vice
President and
Secretary of
DWTC; Assistant
Secretary
of DWR and DWDC;
Senior Vice
President, General
Counsel and Secretary
of DWSC; Senior Vice
President, Assistant
General Counsel and
Assistant Secretary
of Distributors.
Peter M. Avelar Senior Vice Vice President of
President various Dean Witter
Funds.
Mark Bavoso Senior Vice Vice President of
President various Dean Witter
Funds.
Thomas H. Connelly Senior Vice Vice President of
President various Dean Witter
Funds.
Edward Gaylor Senior Vice Vice President of
President various Dean Witter
Funds.
Rajesh K. Gupta Senior Vice Vice President of
President various Dean Witter
Funds.
Kenton J. Senior Vice Vice President of
Hinchliffe President various Dean Witter
Funds.
7
<PAGE>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
John B. Kemp, III Senior Vice Director of the
President Provident Savings
Bank, Jersey City,
New Jersey.
Anita Kolleeny Senior Vice Vice President of
President various Dean Witter
Funds.
Jonathan R. Page Senior Vice Vice President of
President various Dean Witter
Funds.
Ira Ross Senior Vice Vice President of
President various Dean Witter
Funds.
Rochelle G. Siegel Senior Vice Vice President of
President various Dean Witter
Funds.
Paul D. Vance Senior Vice Vice President of
President various Dean Witter
Funds.
Elizabeth A. Senior Vice
Vetell President
James F. Willison Senior Vice Vice President of
President various Dean Witter
Funds.
Ronald Worobel Senior Vice Vice President of
President various Dean Witter
Funds.
Thomas F. Caloia First Vice Treasurer of the
President and Dean Witter Funds
Assistant Treasurer and the TCW/DW Funds;
Assistant Treasurer
of DWSC; Assistant
Treasurer of
Distributors.
Marilyn K. Cranney First Vice Assistant Secretary
President and of the Dean Witter
Assistant Funds and the TCW/DW
Secretary Funds; Vice President
and Assistant
Secretary of DWSC;
Assistant Secretary
of DWR and DWDC.
8
<PAGE>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
Barry Fink First Vice Assistant Secretary
President of the Dean Witter
Funds and TCW/DW
Funds; First Vice
President and
Assistant Secretary
of DWSC.
Michael First Vice First Vice President
Interrante President and and Controller of
Controller DWSC; Assistant
Treasurer of
Distributors.
Robert Zimmerman First Vice
President
Joan G. Allman Vice President
Joseph Arcieri Vice President
Terence P. Brennan, II Vice President
Douglas Brown Vice President
Rosalie Clough Vice President
B. Catherine Vice President
Connelly
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
June Ewers Vice President
Geoffrey D. Flynn Vice President Vice President of
DWSC.
Bette Freedman Vice President
Jeffrey D. Geffen Vice President
Deborah Genovese Vice President
Peter W. Gurman Vice President
9
<PAGE>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
Shant Harootunian Vice President
John Hechtlinger Vice President
Jack C. Henry Vice President
David T. Hoffman Vice President
David Johnson Vice President
Christopher Jones Vice President
Stanley Kapica Vice President
Konrad J. Krill Vice President
Paula LaCosta Vice President Vice President of
various Dean Witter
Funds.
Lawrence S. Lafer Vice President Assistant Secretary
and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
Assistant Secretary
of DWSC.
Thomas Lawlor Vice President
Lou Anne D. McInnis Vice President Assistant Secretary
and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
of DWSC.
Sharon K. Milligan Vice President
James Mulcahy Vice President
James Nash Vice President
Hugh Rose Vice President
Ruth Rossi Vice President Assistant Secretary
and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Assistant
Secretary of DWSC.
Carl F. Sadler Vice President
Rafael Scolari Vice President
10
<PAGE>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
Rose Simpson Vice President
Stuart Smith Vice President
Diane Lisa Sobin Vice President Vice President of
various Dean Witter
Funds.
Susanne Stager Vice President
Kathleen Stromberg Vice President Vice President of
various Dean Witter
Funds.
Vinh Q. Tran Vice President Vice President of
various Dean Witter
Funds.
Alice Weiss Vice President Vice President
of various Dean
Witter Funds.
Jayne M. Wolff Vice President
Marianne Zalys Vice President
Item 29. Principal Underwriters
(a) Dean Witter Distributors Inc. ("Distributors"), a Delaware
corporation, is the principal underwriter of the Registrant.
Distributors is also the principal underwriter of the following
investment companies:
(1) Dean Witter Liquid Asset Fund Inc.
(2) Dean Witter Tax-Free Daily Income Trust
(3) Dean Witter California Tax-Free Daily Income Trust
(4) Dean Witter Retirement Series
(5) Dean Witter Dividend Growth Securities Inc.
(6) Dean Witter Natural Resource Development Securities Inc.
(7) Dean Witter World Wide Investment Trust
(8) Dean Witter Capital Growth Securities
(9) Dean Witter Convertible Securities Trust
(10) Active Assets Tax-Free Trust
(11) Active Assets Money Trust
(12) Active Assets California Tax-Free Trust
(13) Active Assets Government Securities Trust
(14) Dean Witter Short-Term Bond Fund
(15) Dean Witter Federal Securities Trust
(16) Dean Witter U.S. Government Securities Trust
(17) Dean Witter High Yield Securities Inc.
(18) Dean Witter New York Tax-Free Income Fund
(19) Dean Witter Tax-Exempt Securities Trust
11
<PAGE>
(20) Dean Witter California Tax-Free Income Fund
(21) Dean Witter Managed Assets Trust
(22) Dean Witter Limited Term Municipal Trust
(23) Dean Witter World Wide Income Trust
(24) Dean Witter Utilities Fund
(25) Dean Witter Strategist Fund
(26) Dean Witter New York Municipal Money Market Trust
(27) Dean Witter Intermediate Income Securities
(28) Prime Income Trust
(29) Dean Witter European Growth Fund Inc.
(30) Dean Witter Developing Growth Securities Trust
(31) Dean Witter Precious Metals and Minerals Trust
(32) Dean Witter Pacific Growth Fund Inc.
(33) Dean Witter Multi-State Municipal Series Trust
(34) Dean Witter Premier Income Trust
(35) Dean Witter Short-Term U.S. Treasury Trust
(36) Dean Witter Diversified Income Trust
(37) Dean Witter Health Sciences Trust
(38) Dean Witter Global Dividend Growth Securities
(39) Dean Witter American Value Fund
(40) Dean Witter U.S. Government Money Market Trust
(41) Dean Witter Global Short-Term Income Fund Inc.
(42) Dean Witter Variable Investment Series
(43) Dean Witter Value-Added Market Series
(44) Dean Witter Global Utilities Fund
(45) Dean Witter High Income Securities
(46) Dean Witter National Municipal Trust
(1) TCW/DW Core Equity Trust
(2) TCW/DW North American Government Income Trust
(3) TCW/DW Latin American Growth Fund
(4) TCW/DW Income and Growth Fund
(5) TCW/DW Small Cap Growth Fund
(6) TCW/DW Balanced Fund
(7) TCW/DW North American Intermediate Income Trust
(8) TCW/DW Emerging Markets Opportunities 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.
Edward C. Oelsner III Vice President of Distributors.
Samuel Wolcott III Vice President of Distributors.
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
12
<PAGE>
thereunder are maintained by the Investment Manager at its offices,
except records relating to holders of shares issued by the Registrant,
which are maintained by the Registrant's Transfer Agent, at its place
of business as shown in the prospectus.
Item 31. Management Services
Registrant is not a party to any such management-related service
contract.
Item 32. Undertakings
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York and State of New York on the 20th day of May, 1994.
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
By /s/ Sheldon Curtis
----------------------
Sheldon Curtis
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 2 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 05/20/94
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By /s/ Thomas F. Caloia 05/20/94
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman)
Edward R. Telling
Philip J. Purcell
By /s/ Sheldon Curtis 05/20/94
Sheldon Curtis
Attorney-in-Fact
Jack F. Bennett Manuel H. Johnson
Michael Bozic Paul Kolton
Edwin J. Garn Michael E. Nugent
John R. Haire John L. Schroeder
John E. Jeuck
By /s/ David M. Butowsky 05/20/94
David M. Butowsky
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
6.(b) - Forms of Selected Dealers Agreement
9. - Form of Services Agreement between Dean Witter
InterCapital Inc. and Dean Witter Services Inc.
11. - Consent of Independent Accountants
16. - Schedules for Computation of Performance
Quotations
Other - Powers of Attorney
DEAN WITTER DISTRIBUTORS INC.
Gentlemen:
Dean Witter Distributors Inc. (the "Distributor") has a distribution
agreement (the "Distribution Agreement") with Dean Witter Limited Term
Municipal Trust, a Massachusetts business trust (the "Fund"), pursuant to which
it acts as the Distributor for the sale of the Fund's shares of beneficial
interest, par value $0.01 per share (the "Shares"). Under the Distribution
Agreement, the Distributor has the right to distribute Shares for resale.
The Fund is an open-end management investment company registered under
the Investment Company Act of 1940, as amended, and the Shares being offered to
the public are registered under the Securities Act of 1933, as amended. You
have received a copy of the Distribution Agreement between us and the Fund and
reference is made herein to certain provisions of such Distribution Agreement.
The terms used herein, including "Prospectus" and "Registration Statement" of
the Fund and "Selected Dealer" shall have the same meaning in this Agreement as
in the Distribution Agreement. As principal, we offer to sell shares to your
customers, upon the following terms and conditions:
1. In all sales of Shares to the public you shall act on behalf of your
customers, and in no transaction shall you have any authority to act as agent
for the Fund, for us or for any Selected Dealer.
2. Orders received from you will be accepted through us or on our
behalf only at the net asset value applicable to each order, as set forth in
the current Prospectus. The procedure relating to the handling of orders shall
be subject to instructions which we or the Fund shall forward from time to time
to you. All orders are subject to acceptance or rejection by the Distributor or
the Fund in the sole discretion of either.
3. You shall not place orders for any Shares unless you have already
received purchase orders for such Shares at the applicable net asset values and
subject to the terms hereof and of the Distribution Agreement and the
Prospectus. You agree that you will not offer or sell any of the Shares except
under circumstances that will result in compliance with the applicable Federal
and state securities laws and that in connection with sales and offers to sell
Shares you will furnish to each person to whom any such sale or offer is made a
copy of the Prospectus (as then amended or supplemented) and will not furnish
to any person any information relating to the Shares, which is inconsistent in
any respect with the information contained in the Prospectus (as then amended
or supplemented) or cause any advertisement to be published by radio or
television or in any newspaper or posted in any public place or use any sales
promotional material without our consent and the consent of the Fund.
4. The Distributor will compensate you for sales of shares of the Fund
and personal services to Fund shareholders by paying you a sales charge and/or
other commission (which may be in the form of a gross sales credit and/or an
annual residual commission) and/or a service fee, under the terms as are set
forth in the Fund's Prospectus.
5. If any Shares sold to your customers under the terms of this
Agreement are repurchased by us for the account of the Fund or are tendered for
redemption within seven business days after the date of the confirmation of the
original purchase by you, it is agreed that you shall forfeit your right to,
and refund to us, any commission received by you with respect to such Shares.
6. No person is authorized to make any representations concerning the
Shares or the Fund except those contained in the current Prospectus and in such
printed information subsequently issued by us or the Fund as information
supplemental to such Prospectus. In selling Shares, you shall rely solely on
the representations contained in the Prospectus and supplemental information
mentioned above. Any printed information which we furnish you other than the
Prospectus and the Fund's periodic reports and proxy solicitation material are
our sole responsibility and not the responsibility of the Fund, and you agree
that the Fund shall have no liability or responsibility to you in these
respects unless expressly assumed in connection therewith.
7. You agree to deliver to each of the purchasers making purchases a
copy of the then current Prospectus at or prior to the time of offering or
sale, and you agree thereafter to deliver to such purchasers copies of the
annual and interim reports and proxy solicitation materials of the Fund. You
further agree to endeavor to obtain proxies from such purchasers. Additional
copies of the Prospectus, annual or interim reports and proxy solicitation
materials of the Fund will be supplied to you in reasonable quantities upon
request.
8. You are hereby authorized (i) to place orders directly with the Fund
or its agent for shares of the Fund to be sold by us subject to the applicable
terms and conditions governing the placement of orders for the purchase of Fund
shares, as set forth in the Distribution Agreement, and (ii) to tender shares
directly to the Fund or its agent for redemption subject to the applicable
terms and conditions set forth in the Distribution Agreement.
9. We reserve the right in our discretion, without notice, to suspend
sales or withdraw the offering of Shares entirely. Each party hereto has the
right to cancel this agreement upon notice to the other party.
<PAGE>
10. I. You shall indemnify and hold harmless the Distributor, from and
against any claims, damages and liabilities which arise as a result of action
taken pursuant to instructions from you, or on your behalf to: a)(i) place
orders for Shares of the Fund with the Fund's transfer agent or direct the
transfer agent to receive instructions for the order of Shares, and (ii) accept
monies or direct that the transfer agent accept monies as payment for the order
of such Shares, all as contemplated by and in accordance with Section 3 of the
Distribution Agreement; b)(i) place orders for the redemption of Shares of the
Fund with the Fund's transfer agent or direct the transfer agent to receive
instruction for the redemption of Shares and (ii) to pay redemption proceeds or
to direct that the transfer agent pay redemption proceeds in connection with
orders for the redemption of Shares, all as contemplated by and in accordance
with Section 4 of the Distribution Agreement; provided, however, that in no
case, (i) is this indemnity in favor of the Distributor and any such
controlling persons to be deemed to protect the Distributor or any such
controlling persons thereof against any liability to which the Distributor or
any such controlling persons would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under this
Agreement or the Distribution Agreement; or (ii) are you to be liable under the
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor or any such controlling persons, unless the Distributor
or any such controlling persons, as the case may be, shall have notified you in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon the
Distributor or such controlling persons (or after the Distributor or such
controlling persons shall have received notice of such service on any
designated agent), but failure to notify you of any such claim shall not
relieve you from any liability which you may have to the person against whom
such action is brought otherwise than on account of the indemnity agreement
contained in this paragraph. You will be entitled to participate at your own
expense in the defense, or, if you so elect, to assume the defense, of any suit
brought to enforce any such liability, but if you elect to assume the defense,
such defense shall be conducted by counsel chosen by you and satisfactory to
the Distributor or such controlling person or persons, defendant or defendants
in the suit. In the event you elect to assume the defense of any such suit and
retain such counsel, the Distributor or such controlling person or persons,
defendant or defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them, but, in case you do not elect to assume
the defense of any such suit, you will reimburse the Distributor or such
controlling person or persons, defendant or defendants in the suit, for the
reasonable fees and expenses of any counsel retained by them. You shall
promptly notify the Distributor of the commencement of any litigation or
proceedings against it or any of its officers or directors in connection with
the issuance or sale of the Shares.
II. If the indemnification provided for in this Section 10 is
unavailable or insufficient to hold harmless the Distributor, as provided above
in respect of any losses, claims, damages, liabilities or expenses (or actions
in respect thereof) referred to herein, then you shall contribute to the amount
paid or payable by the Distributor as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by you on the one hand
and the Distributor on the other from the offering of the Shares. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law, then you shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also your relative fault on the one hand and the
relative fault of the Distributor on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. You and the Distributor agree that it would
not be just and equitable if contribution were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to above. The amount paid or
payable by the Distributor as a result of the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to above shall
be deemed to include any legal or other expenses reasonably incurred by the
Distributor in connection with investigating or defending any such claim.
Notwithstanding the provisions of this subsection (II), you shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Shares distributed by it to the public were offered to the
public exceeds the amount of any damages which it has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act of 1933 Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
<PAGE>
11. We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the distribution and
redemption of Fund shares. We shall be under no liability to you except for
lack of good faith and for obligations expressly assumed by us herein. Nothing
contained in this paragraph is intended to operate as, and the provisions of
this paragraph shall not in any way whatsoever constitute, a waiver by you of
compliance with any provision of the Securities Act of 1933, as amended, or of
the rules and regulations of the Securities and Exchange Commission issued
thereunder.
12. You represent that you are a member of the National Association of
Securities Dealers, Inc. and, with respect to any sales in the United States,
we both hereby agree to abide by the Rules of Fair Practice of such
Association.
13. Upon application to us, we will inform you as to the states in
which we believe the Shares have been qualified for sale under, or are exempt
from the requirements of, the respective securities laws of such states, but we
assume no responsibility or obligation as to your right to sell Shares in any
jurisdiction.
14. All communications to us should be sent to the address shown below.
Any notice to you shall be duly given if mailed or telegraphed to you at the
address specified by you below.
15. This Agreement shall become effective as of the date of your
acceptance hereof, provided that you return to us promptly a signed and dated
copy.
DEAN WITTER DISTRIBUTORS INC.
By ....................................
(Authorized Signature)
Please return one signed copy
of this agreement to:
Dean Witter Distributors Inc.
Two World Trade Center
New York, New York 10048
Accepted:
Firm Name: ............................
By: ...................................
Address: ..............................
.......................................
Date: .................................
<PAGE>
Dean Witter Limited Term Municipal Trust
SELECTED DEALERS AGREEMENT
Gentlemen:
Dean Witter Distributors Inc. (the "Distributor") has a distribution
agreement (the "Distribution Agreement") with Dean Witter Limited Term
Municipal Trust, a Massachusetts business trust (the "Fund"), pursuant to which
it acts as the Distributor for the sale of the Fund's shares of common stock,
par value $0.01 per share (the "Shares"). Under the Distribution Agreement, the
Distributor has the right to distribute Shares for resale.
The Fund is an open-end management investment company registered under
the Investment Company Act of 1940, as amended, and the Shares being offered to
the public are registered under the Securities Act of 1933, as amended. You
have received a copy of the Distribution Agreement between us and the Fund and
reference is made herein to certain provisions of such Distribution Agreement.
The terms used herein, including "Prospectus" and "Registration Statement" of
the Fund and "Selected Dealer" shall have the same meaning in this Agreement as
in the Distribution Agreement. As principal, we offer to sell shares to you, as
a Selected Dealer, upon the following terms and conditions:
1. In all sales of Shares to the public you shall act as dealer for your
own account, and in no transaction shall you have any authority to act as agent
for the Fund, for us or for any Selected Dealer.
2. Orders received from you will be accepted through us or on our behalf
only at the net asset value applicable to each order, as set forth in the
current Prospectus. The procedure relating to the handling of orders shall be
subject to instructions which we or the Fund shall forward from time to time to
you. All orders are subject to acceptance or rejection by the Distributor or
the Fund in the sole discretion of either.
3. You shall not place orders for any Shares unless you have already
received purchase orders for such Shares at the applicable net asset values and
subject to the terms hereof and of the Distribution Agreement and the
Prospectus. You agree that you will not offer or sell any of the Shares except
under circumstances that will result in compliance with the applicable Federal
and state securities laws and that in connection with sales and offers to sell
Shares you will furnish to each person to whom any such sale or offer is made a
copy of the Prospectus (as then amended or supplemented) and will not furnish
to any person any information relating to the Shares, which is inconsistent in
any respect with the information contained in the Prospectus (as then amended
or supplemented) or cause any advertisement to be published by radio or
television or in any newspaper or posted in any public place or use any sales
promotional material without our consent and the consent of the Fund.
4. The Distributor will compensate you for sales of shares of the Fund
and personal services to Fund shareholders by paying you a sales charge and/or
other commissions, which may be in the form of a gross sales credit and/or an
annual residual commission) and/or a service fee, under the terms and in the
percentage amounts as may be in effect from time to time by the Distributor.
5. You shall not withhold placing orders received from your customers so
as to profit yourself as a result of such withholding; e.g., by a change in the
"net asset value" from that used in determining the offering price to your
customers.
6. If any Shares sold to you under the terms of this Agreement are
repurchased by us for the account of the Fund or are tendered for redemption
within seven business days after the date of the confirmation of the original
purchase by you, it is agreed that you shall forfeit your right to, and refund
to us, any commission received by you with respect to such Shares.
7. No person is authorized to make any representations concerning the
Shares or the Fund except those contained in the current Prospectus and in such
printed information subsequently issued by us or the Fund as information
supplemental to such Prospectus. In purchasing Shares through us you shall rely
solely on the representations contained in the Prospectus and supplemental
information above mentioned. Any printed information which we furnish you other
than the Prospectus and the Fund's periodic reports and proxy
1
<PAGE>
solicitation material are our sole responsibility and not the responsibility of
the Fund, and you agree that the Fund shall have no liability or responsibility
to you in these respects unless expressly assumed in connection therewith.
8. You agree to deliver to each of the purchasers from you a copy of the
then current Prospectus at or prior to the time of offering or sale and you
agree thereafter to deliver to such purchasers copies of the annual and interim
reports and proxy solicitation materials of the Fund. You further agree to
endeavor to obtain proxies from such purchasers. Additional copies of the
Prospectus, annual or interim reports and proxy solicitation materials of the
Fund will be supplied to you in reasonable quantities upon request.
9. You are hereby authorized (i) to place orders directly with the Fund
or its agent for shares of the Fund to be sold by us subject to the applicable
terms and conditions governing the placement of orders for the purchase of Fund
shares, as set forth in the Distribution Agreement, and (ii) to tender shares
directly to the Fund or its agent for redemption subject to the applicable
terms and conditions set forth in the Distribution Agreement.
10. We reserve the right in our discretion, without notice, to suspend
sales or withdraw the offering of Shares entirely. Each party hereto has the
right to cancel this agreement upon notice to the other party.
11. We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the distribution and
redemption of Fund shares. We shall be under no liability to you except for
lack of good faith and for obligations expressly assumed by us herein. Nothing
contained in this paragraph is intended to operate as, and the provisions of
this paragraph shall not in any way whatsoever constitute, a waiver by you of
compliance with any provision of the Securities Act of 1933, as amended, or of
the rules and regulations of the Securities and Exchange Commission issued
thereunder.
12. You represent that you are a member of the National Association of
Securities Dealers, Inc. and, with respect to any sales in the United States,
we both hereby agree to abide by the Rules of Fair Practice of such
Association.
13. Upon application to us, we will inform you as to the states in which
we believe the Shares have been qualified for sale under, or are exempt from
the requirements of, the respective securities laws of such states, but we
assume no responsibility or obligation as to your right to sell Shares in any
jurisdiction.
14. All communications to us should be sent to the address shown below.
Any notice to you shall be duly given if mailed or telegraphed to you at the
address specified by you below.
15. This Agreement shall become effective as of the date of your
acceptance hereof, provided that you return to us promptly a signed and dated
copy.
Dean Witter Distributors Inc.
By . . . . . . . . . . . . . . . .
(Authorized Signature)
Please return one signed copy
of this agreement to:
Dean Witter Distributors Inc.
Two World Trade Center
New York, New York 10048
Accepted:
Firm Name: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
By: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Address: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Date: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
SERVICES AGREEMENT
AGREEMENT made as of the 31st day of December, 1993 by and between Dean
Witter InterCapital Inc., a Delaware corporation (herein referred to as
"InterCapital"), and Dean Witter Services Company Inc., a New Jersey
corporation (herein referred to as "DWS").
WHEREAS, InterCapital has entered into separate agreements (each such
agreement being herein referred to as an "Investment Management Agreement")
with certain investment companies as set forth on Schedule A (each such
investment company being herein referred to as a "Fund" and, collectively, as
the "Funds") pursuant to which InterCapital is to perform, or supervise the
performance of, among other services, administrative services for the Funds
(and, in the case of Funds with multiple portfolios, the Series or Portfolios
of the Funds (such Series and Portfolio being herein individually referred to
as "a Series" and, collectively, as "the Series"));
WHEREAS, InterCapital desires to retain DWS to perform the administrative
services as described below; and
WHEREAS, DWS desires to be retained by InterCapital to perform such
administrative services:
Now, therefore, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. DWS agrees to provide administrative services to each Fund as hereinafter
set forth. Without limiting the generality of the foregoing, DWS shall (i)
administer the Fund's business affairs and supervise the overall day-to-day
operations of the Fund (other than rendering investment advice); (ii) provide
the Fund with full administrative services, including the maintenance of
certain books and records, such as journals, ledger accounts and other records
required under the Investment Company Act of 1940, as amended (the"Act"), the
notification to the Fund and InterCapital of available funds for investment,
the reconciliation of account information and balances among the Fund's
custodian, transfer agent and dividend disbursing agent and InterCapital, and
the calculation of the net asset value of the Fund's shares; (iii) provide the
Fund with the services of persons competent to perform such supervisory,
administrative and clerical functions as are necessary to provide effective
operation of the Fund; (iv) oversee the performance of administrative and
professional services rendered to the Fund by others, including its custodian,
transfer agent and dividend disbursing agent, as well as accounting, auditing
and other services; (v) provide the Fund with adequate general office space and
facilities; (vi) assist in the preparation and the printing of the periodic
updating of the Fund's registration statement and prospectus (and, in the case
of an open-end Fund, the statement of additional information), tax returns,
proxy statements, and reports to its shareholders and the Securities and
Exchange Commission; and (vii) monitor the compliance of the Fund's investment
policies and restrictions.
In the event that InterCapital enters into an Investment Management Agreement
with another investment company, and wishes to retain DWS to perform
administrative services hereunder, it shall notify DWS in writing. If DWS is
willing to render such services, it shall notify InterCapital in writing,
whereupon such other Fund shall become a Fund as defined herein.
2. DWS shall, at its own expense, maintain such staff and employ or retain
such personnel and consult with such other persons as it shall from time to
time determine to be necessary or useful to the performance of its obligations
under this Agreement. Without limiting the generality of the foregoing, the
staff and personnel of DWS shall be deemed to include officers of DWS and
persons employed or otherwise retained by DWS (including officers and employees
of InterCapital, with the consent of InterCapital) to furnish services,
statistical and other factual data, information with respect to technical and
scientific developments, and such other information, advice and assistance as
DWS may desire. DWS shall maintain each Fund's records and books of account
(other than those maintained by the Fund's transfer agent, registrar, custodian
and other agencies). All such books and records so maintained shall be the
property of the Fund and, upon request therefor, DWS shall surrender to
InterCapital or to the Fund such of the books and records so requested.
3. InterCapital will, from time to time, furnish or otherwise make available
to DWS such financial reports, proxy statements and other information relating
to the business and affairs of the Fund as DWS may
1
<PAGE>
reasonably require in order to discharge its duties and obligations to the Fund
under this Agreement or to comply with any applicable law and regulation or
request of the Board of Directors/Trustees of the Fund.
4. For the services to be rendered, the facilities furnished, and the
expenses assumed by DWS, InterCapital shall pay to DWS monthly compensation
calculated daily (in the case of an open-end Fund) or weekly (in the case of a
closed-end Fund) by applying the annual rate or rates set forth on Schedule B
to the net assets of each Fund. Except as hereinafter set forth, (i) in the
case of an open-end Fund, compensation under this Agreement shall be calculated
by applying 1/365th of the annual rate or rates to the Fund's or the Series'
daily net assets determined as of the close of business on that day or the last
previous business day and (ii) in the case of a closed-end Fund, compensation
under this Agreement shall be calculated by applying the annual rate or rates
to the Fund's average weekly net assets determined as of the close of the last
business day of each week. If this Agreement becomes effective subsequent to
the first day of a month or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
on Schedule B. Subject to the provisions of paragraph 5 hereof, payment of DWS'
compensation for the preceding month shall be made as promptly as possible
after completion of the computations contemplated by paragraph 5 hereof.
5. In the event the operating expenses of any open-end Fund and/or any Series
thereof, or of InterCapital Income Securities Inc., including amounts payable
to InterCapital pursuant to the Investment Management Agreement, for any fiscal
year ending on a date on which this Agreement is in effect, exceed the expense
limitations applicable to the Fund and/or any Series thereof imposed by state
securities laws or regulations thereunder, as such limitations may be raised or
lowered from time to time, or, in the case of InterCapital Income Securities
Inc. or Dean Witter Variable Investment Series or any Series thereof, the
expense limitation specified in the Fund's Investment Management Agreement, the
fee payable hereunder shall be reduced on a pro rata basis in the same
proportion as the fee payable by the Fund under the Investment Management
Agreement is reduced.
6. DWS shall bear the cost of rendering the administrative services to be
performed by it under this Agreement, and shall, at its own expense, pay the
compensation of the officers and employees, if any, of the Fund employed by
DWS, and such clerical help and bookkeeping services as DWS shall reasonably
require in performing its duties hereunder.
7. DWS will use its best efforts in the performance of administrative
activitives on behalf of each Fund, but in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations hereunder,
DWS shall not be liable to the Fund or any of its investors for any error of
judgment or mistake of law or for any act or omission by DWS or for any losses
sustained by the Fund or its investors. It is understood that, subject to the
terms and conditions of the Investment Management Agreement between each Fund
and InterCapital, InterCapital shall retain ultimate responsibility for all
services to be performed hereunder by DWS. DWS shall indemnify InterCapital and
hold it harmless from any liability that InterCapital may incur arising out of
any act or failure to act by DWS in carrying out its responsibilities
hereunder.
8. It is understood that any of the shareholders, Directors/Trustees,
officers and employees of the Fund may be a shareholder, director, officer or
employee of, or be otherwise interested in, DWS, and in any person controlling,
controlled by or under common control with DWS, and that DWS and any person
controlling, controlled by or under common control with DWS may have an
interest in the Fund. It is also understood that DWS and any affiliated persons
thereof or any persons controlling, controlled by or under common control with
DWS have and may have advisory, management, administration service or other
contracts with other organizations and persons, and may have other interests
and businesses, and further may purchase, sell or trade any securities or
commodities for their own accounts or for the account of others for whom they
may be acting.
9. This Agreement shall continue until April 30, 1994, and thereafter shall
continue automatically for successive periods of one year unless terminated by
either party by written notice delivered to the other party within 30 days of
the expiration of the then-existing period. Notwithstanding the foregoing, this
Agreement may be terminated at any time, by either party on 30 days' written
notice delivered to the other party. In the
2
<PAGE>
event that the Investment Management Agreement between any Fund and
InterCapital is terminated, this Agreement will automatically terminate with
respect to such Fund.
10. This Agreement may be amended or modified by the parties in any manner by
mutual written agreement executed by each of the parties hereto.
11. This Agreement shall be construed and interpreted in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written in New York, New York.
DEAN WITTER INTERCAPITAL INC.
By: .....................
Attest:
.....................
DEAN WITTER SERVICES COMPANY INC.
By: .....................
Attest:
.....................
3
<PAGE>
SCHEDULE A
DEAN WITTER FUNDS
AT DECEMBER 31, 1993
OPEN-END FUNDS
1. Active Assets California Tax-Free Trust
2. Active Assets Government Securities Trust
3. Active Assets Money Trust
4. Active Assets Tax-Free Trust
5. Dean Witter American Value Fund
6. Dean Witter California Tax-Free Daily Income Trust
7. Dean Witter California Tax-Free Income Fund
8. Dean Witter Capital Growth Securities
9. Dean Witter Convertible Securities Trust
10. Dean Witter Developing Growth Securities Trust
11. Dean Witter Diversified Income Trust
12. Dean Witter Dividend Growth Securities Inc.
13. Dean Witter Equity Income Trust
14. Dean Witter European Growth Fund Inc.
15. Dean Witter Federal Securities Trust
16. Dean Witter Global Dividend Growth Securities
17. Dean Witter Global Short-Term Income Fund Inc.
18. Dean Witter Health Sciences Trust
19. Dean Witter High Yield Securities Inc.
20. Dean Witter Intermediate Income Securities
21. Dean Witter Limited Term Municipal Trust
22. Dean Witter Liquid Asset Fund Inc.
23. Dean Witter Managed Assets Trust
24. Dean Witter Multi-State Municipal Series Trust
25. Dean Witter Natural Resource Development Securities Inc.
26. Dean Witter New York Municipal Money Market Trust
27. Dean Witter New York Tax-Free Income Fund
28. Dean Witter Pacific Growth Fund Inc.
29. Dean Witter Precious Metals and Minerals Trust
30. Dean Witter Premier Income Trust
31. Dean Witter Retirement Series
32. Dean Witter Select Municipal Reinvestment Fund
33. Dean Witter Short-Term U.S. Treasury Trust
34. Dean Witter Strategist Fund
35. Dean Witter Tax-Exempt Securities Trust
36. Dean Witter Tax-Free Daily Income Trust
37. Dean Witter U.S. Government Money Market Trust
38. Dean Witter U.S. Government Securities Trust
39. Dean Witter Utilities Fund
40. Dean Witter Value-Added Market Series
41. Dean Witter Variable Investment Series
42. Dean Witter World Wide Income Trust
43. Dean Witter World Wide Investment Trust
CLOSED-END FUNDS
44. High Income Advantage Trust
45. High Income Advantage Trust II
46. High Income Advantage Trust III
47. InterCapital Income Securities Inc.
48. Dean Witter Government Income Trust
49. InterCapital Insured Municipal Bond Trust
50. InterCapital Insured Municipal Trust
51. InterCapital Insured Municipal Income Trust
52. InterCapital California Insured Municipal Income Trust
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. InterCapital Quality Municipal Securities
56. InterCapital California Quality Municipal Securities
57. InterCapital New York Quality Municipal Securities
4
<PAGE>
SCHEDULE B
DEAN WITTER SERVICES COMPANY
SCHEDULE OF ADMINISTRATIVE FEES - JANUARY 1, 1994
Monthly compensation calculated daily by applying the following annual
rates to a fund's net assets.
Dean Witter Limited Term 0.050% to the net assets.
Municipal Trust
5
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 2 to the Registration
Statement on Form N-1A (the "Registration Statement") of our report dated May
10, 1994, relating to the financial statements and financial highlights of Dean
Witter Limited Term Municipal Trust, which appears in such Statement of
Additional Information, and to the incorporation by reference of our report
into the Prospectus which constitutes part of this Registration Statement. We
also consent to the reference to us under the heading "Financial Highlights" in
the Prospectus and under the headings "Independent Accountants" and "Experts"
in the Statement of Additional Information.
PRICE WATERHOUSE
1177 Avenue of the Americas
New York, New York
May 17, 1994
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
<TABLE>
<CAPTION>
<S> <C>
(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
<CAPTION>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Mar-94 RETURN -TR YEARS - n COMPOUND RETURN - t
- ------------ ----------- ---------- ----------- -----------------
<S> <C> <C> <C> <C>
09-Jul-93 $988.90 -1.11% 0.73 -1.53%
</TABLE>
(C) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
<TABLE>
<CAPTION>
<S> <C>
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | ------------- | - 1
| \ | P |
| \| |
|_ _|
tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT
<CAPTION>
(C)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Mar-94 YEARS - n COMPOUND RETURN - tb
- ------------ ----------- ---------- --------------------
<S> <C> <C> <C>
09-Jul-93 $985.00 0.7255 -2.06%
</TABLE>
(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000
FORMULA:
G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION
<TABLE>
<CAPTION>
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>
09-Jul-93 -1.11 $9,889 $49,445 $98,890
</TABLE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of CHARLES A. FIUMEFREDDO and
EDWARD R. TELLING, whose signatures appear below, constitues and appoints
Sheldon Curtis, Marilyn K. Cranney and Barry Fink, or any of them, his true and
lawful attorneys-in-fact and agent, with full power of substitution among
himself and each of the persons appointed herein, for him and in his name,
place and stead, in any and all capacities, to sign any amendments to any
registration statement of ANY OF THE DEAN WITTER FUNDS SET FORTH ON SCHEDULE A
ATTACHED HERETO, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
Dated: May 10, 1994
CHARLES A. FIUMEFREDDO
EDWARD R. TELLING
<PAGE>
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
ASSET ALLOCATION FUNDS
24. Dean Witter Managed Assets Trust
25. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
26. Dean Witter High Yield Securities Inc.
27. Dean Witter Convertible Securities Trust
28. Dean Witter Intermediate Income Securities
29. Dean Witter World Wide Income Trust
30. Dean Witter Global Short-Term Income Fund Inc.
31. Dean Witter Diversified Income Trust
32. Dean Witter Premier Income Trust
33. Dean Witter U.S. Government Securities Trust
34. Dean Witter Federal Securities Trust
35. Dean Witter Short-Term U.S. Treasury Trust
36. Dean Witter Tax-Exempt Securities Trust
37. Dean Witter California Tax-Free Income Fund
38. Dean Witter New York Tax-Free Income Fund
39. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
40. Dean Witter Select Municipal Reinvestment Fund
41. Dean Witter Limited Term Municipal Trust
<PAGE>
SPECIAL PURPOSE FUNDS
42. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
43. Dean Witter Retirement Series
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
CLOSED-END FUNDS
44. High Income Advantage Trust
45. High Income Advantage Trust II
46. High Income Advantage Trust III
47. InterCapital Income Securities Inc.
48. Dean Witter Government Income Trust
49. InterCapital Insured Municipal Bond Trust
50. InterCapital Insured Municipal Trust
51. InterCapital Quality Municipal Investment Trust
52. InterCapital Quality Municipal Income Trust
53. Municipal Income Trust
54. Municipal Income Trust II
55. Municipal Income Trust III
56. Municipal Income Opportunities Trust
57. Municipal Income Opportunities Trust II
58. Municipal Income Opportunities Trust III
59. Municipal Premium Income Trust
60. Prime Income Trust
61. InterCapital Insured Municipal Income Trust
62. InterCapital California Insured Municipal Income Trust
63. InterCapital Quality Municipal Securities
64. InterCapital California Quality Municipal Securities
65. InterCapital New York Quality Municipal Securities
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of JACK F. BENNETT, EDWIN J.
GARN, JOHN R. HAIRE, JOHN E. JEUCK, MANUEL H. JOHNSON, PAUL KOLTON and MICHAEL
E. NUGENT, whose signatures appear below, constitues and appoints David M.
Butowsky, Ronald Feiman and Stuart Strauss, or any of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution among himself and
each of the persons appointed herein, for him and in his name, place and stead,
in any and all capacities, to sign any amendments to any registration statement
of ANY OF THE DEAN WITTER FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
Dated: May 10, 1994
- ---------------------- -----------------------
JACK F. BENNETT MANUEL H. JOHNSON
- ---------------------- -----------------------
EDWIN J. GARN PAUL KOLTON
- ---------------------- -----------------------
JOHN R. HAIRE MICHAEL E. NUGENT
- ----------------------
JOHN E. JEUCK
<PAGE>
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
ASSET ALLOCATION FUNDS
24. Dean Witter Managed Assets Trust
25. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
26. Dean Witter High Yield Securities Inc.
27. Dean Witter Convertible Securities Trust
28. Dean Witter Intermediate Income Securities
29. Dean Witter World Wide Income Trust
30. Dean Witter Global Short-Term Income Fund Inc.
31. Dean Witter Diversified Income Trust
32. Dean Witter Premier Income Trust
33. Dean Witter U.S. Government Securities Trust
34. Dean Witter Federal Securities Trust
35. Dean Witter Short-Term U.S. Treasury Trust
36. Dean Witter Tax-Exempt Securities Trust
37. Dean Witter California Tax-Free Income Fund
38. Dean Witter New York Tax-Free Income Fund
39. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
40. Dean Witter Select Municipal Reinvestment Fund
41. Dean Witter Limited Term Municipal Trust
<PAGE>
SPECIAL PURPOSE FUNDS
42. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
43. Dean Witter Retirement Series
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
CLOSED-END FUNDS
44. High Income Advantage Trust
45. High Income Advantage Trust II
46. High Income Advantage Trust III
47. InterCapital Income Securities Inc.
48. Dean Witter Government Income Trust
49. InterCapital Insured Municipal Bond Trust
50. InterCapital Insured Municipal Trust
51. InterCapital Quality Municipal Investment Trust
52. InterCapital Quality Municipal Income Trust
53. Municipal Income Trust
54. Municipal Income Trust II
55. Municipal Income Trust III
56. Municipal Income Opportunities Trust
57. Municipal Income Opportunities Trust II
58. Municipal Income Opportunities Trust III
59. Municipal Premium Income Trust
60. Prime Income Trust
61. InterCapital Insured Municipal Income Trust
62. InterCapital California Insured Municipal Income Trust
63. InterCapital Quality Municipal Securities
64. InterCapital California Quality Municipal Securities
65. InterCapital New York Quality Municipal Securities
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that MICHAEL BOZIC, whose signature
appears below, constitues and appoints David M. Butowsky, Ronald Feiman and
Stuart Strauss, or any of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution among himself and each of the persons
appointed herein, for him and in his name, place and stead, in any and all
capacities, to sign any amendments to any registration statement of ANY OF THE
DEAN WITTER FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
Dated: April 15, 1994
- ------------------------
Michael Bozic
<PAGE>
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
24. Dean Witter Global Utilities Fund
ASSET ALLOCATION FUNDS
25. Dean Witter Managed Assets Trust
26. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
27. Dean Witter High Yield Securities Inc.
28. Dean Witter Convertible Securities Trust
29. Dean Witter Intermediate Income Securities
30. Dean Witter World Wide Income Trust
31. Dean Witter Global Short-Term Income Fund Inc.
32. Dean Witter Diversified Income Trust
33. Dean Witter Premier Income Trust
34. Dean Witter U.S. Government Securities Trust
35. Dean Witter Federal Securities Trust
36. Dean Witter Short-Term U.S. Treasury Trust
37. Dean Witter Tax-Exempt Securities Trust
38. Dean Witter California Tax-Free Income Fund
39. Dean Witter New York Tax-Free Income Fund
40. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
41. Dean Witter Select Municipal Reinvestment Fund
42. Dean Witter Limited Term Municipal Trust
43. Dean Witter Short-Term Bond Fund
<PAGE>
SPECIAL PURPOSE FUNDS
44. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
45. Dean Witter Retirement Series
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
CLOSED-END FUNDS
46. High Income Advantage Trust
47. High Income Advantage Trust II
48. High Income Advantage Trust III
49. InterCapital Income Securities Inc.
50. Dean Witter Government Income Trust
51. InterCapital Insured Municipal Bond Trust
52. InterCapital Insured Municipal Trust
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. Municipal Income Trust
56. Municipal Income Trust II
57. Municipal Income Trust III
58. Municipal Income Opportunities Trust
59. Municipal Income Opportunities Trust II
60. Municipal Income Opportunities Trust III
61. Municipal Premium Income Trust
62. Prime Income Trust
63. InterCapital Insured Municipal Income Trust
64. InterCapital California Insured Municipal Income Trust
65. InterCapital Quality Municipal Securities
66. InterCapital California Quality Municipal Securities
67. InterCapital New York Quality Municipal Securities
68. InterCapital California Insured Municipal Securities
69. InterCapital Insured Municipal Securities
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that PHILIP J. PURCELL, whose signature
appears below, constitutes and appoints Sheldon Curtis, Marilyn K. Cranney and
Barry Fink, or any of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution among himself and each of the persons appointed
herein, for him and in his name, place and stead, in any and all capacities, to
sign any amendments to any registration statement OF ANY OF THE DEAN WITTER
FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
Dated: April 8, 1994
- -------------------------------
Philip J. Purcell
<PAGE>
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
24. Dean Witter Global Utilities Fund
ASSET ALLOCATION FUNDS
25. Dean Witter Managed Assets Trust
26. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
27. Dean Witter High Yield Securities Inc.
28. Dean Witter Convertible Securities Trust
29. Dean Witter Intermediate Income Securities
30. Dean Witter World Wide Income Trust
31. Dean Witter Global Short-Term Income Fund Inc.
32. Dean Witter Diversified Income Trust
33. Dean Witter Premier Income Trust
34. Dean Witter U.S. Government Securities Trust
35. Dean Witter Federal Securities Trust
36. Dean Witter Short-Term U.S. Treasury Trust
37. Dean Witter Tax-Exempt Securities Trust
38. Dean Witter California Tax-Free Income Fund
39. Dean Witter New York Tax-Free Income Fund
40. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
41. Dean Witter Select Municipal Reinvestment Fund
42. Dean Witter Limited Term Municipal Trust
43. Dean Witter Short-Term Bond Fund
<PAGE>
SPECIAL PURPOSE FUNDS
44. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
45. Dean Witter Retirement Series
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
CLOSED-END FUNDS
46. High Income Advantage Trust
47. High Income Advantage Trust II
48. High Income Advantage Trust III
49. InterCapital Income Securities Inc.
50. Dean Witter Government Income Trust
51. InterCapital Insured Municipal Bond Trust
52. InterCapital Insured Municipal Trust
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. Municipal Income Trust
56. Municipal Income Trust II
57. Municipal Income Trust III
58. Municipal Income Opportunities Trust
59. Municipal Income Opportunities Trust II
60. Municipal Income Opportunities Trust III
61. Municipal Premium Income Trust
62. Prime Income Trust
63. InterCapital Insured Municipal Income Trust
64. InterCapital California Insured Municipal Income Trust
65. InterCapital Quality Municipal Securities
66. InterCapital California Quality Municipal Securities
67. InterCapital New York Quality Municipal Securities
68. InterCapital California Insured Municipal Securities
69. InterCapital Insured Municipal Securities
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that JOHN L. SCHROEDER, whose signature
appears below, constitues and appoints David M. Butowsky, Ronald Feiman and
Stuart Strauss, or any of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution among himself and each of the persons
appointed herein, for him and in his name, place and stead, in any and all
capacities, to sign any amendments to any registration statement of ANY OF THE
DEAN WITTER FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
Dated: April 13, 1994
- ------------------------
John L. Schroeder
<PAGE>
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
24. Dean Witter Global Utilities Fund
ASSET ALLOCATION FUNDS
25. Dean Witter Managed Assets Trust
26. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
27. Dean Witter High Yield Securities Inc.
28. Dean Witter Convertible Securities Trust
29. Dean Witter Intermediate Income Securities
30. Dean Witter World Wide Income Trust
31. Dean Witter Global Short-Term Income Fund Inc.
32. Dean Witter Diversified Income Trust
33. Dean Witter Premier Income Trust
34. Dean Witter U.S. Government Securities Trust
35. Dean Witter Federal Securities Trust
36. Dean Witter Short-Term U.S. Treasury Trust
37. Dean Witter Tax-Exempt Securities Trust
38. Dean Witter California Tax-Free Income Fund
39. Dean Witter New York Tax-Free Income Fund
40. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
41. Dean Witter Select Municipal Reinvestment Fund
42. Dean Witter Limited Term Municipal Trust
43. Dean Witter Short-Term Bond Fund
<PAGE>
SPECIAL PURPOSE FUNDS
44. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
45. Dean Witter Retirement Series
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
CLOSED-END FUNDS
46. High Income Advantage Trust
47. High Income Advantage Trust II
48. High Income Advantage Trust III
49. InterCapital Income Securities Inc.
50. Dean Witter Government Income Trust
51. InterCapital Insured Municipal Bond Trust
52. InterCapital Insured Municipal Trust
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. Municipal Income Trust
56. Municipal Income Trust II
57. Municipal Income Trust III
58. Municipal Income Opportunities Trust
59. Municipal Income Opportunities Trust II
60. Municipal Income Opportunities Trust III
61. Municipal Premium Income Trust
62. Prime Income Trust
63. InterCapital Insured Municipal Income Trust
64. InterCapital California Insured Municipal Income Trust
65. InterCapital Quality Municipal Securities
66. InterCapital California Quality Municipal Securities
67. InterCapital New York Quality Municipal Securities
68. InterCapital California Insured Municipal Securities
69. InterCapital Insured Municipal Securities
