<PAGE>
DEAN WITTER
GLOBAL UTILITIES FUND
PROSPECTUS--OCTOBER 7, 1994
- -------------------------------------------------------------------------------
DEAN WITTER GLOBAL UTILITIES FUND (THE "FUND") IS AN OPEN-END, DIVERSIFIED
MANAGEMENT INVESTMENT COMPANY WHOSE INVESTMENT OBJECTIVE IS TO SEEK BOTH CAPITAL
APPRECIATION AND CURRENT INCOME. THE FUND SEEKS TO MEET ITS OBJECTIVE BY
INVESTING IN EQUITY AND FIXED-INCOME SECURITIES OF COMPANIES, ISSUED BY ISSUERS
WORLDWIDE, WHICH ARE PRIMARILY ENGAGED IN THE UTILITIES INDUSTRY. (SEE
"INVESTMENT OBJECTIVE AND POLICIES.")
Shares of the Fund are continuously offered at net asset value. However,
redemptions and/or repurchases are subject in most cases to a contingent
deferred sales charge, scaled down from 5% to 1% of the amount redeemed, if made
within six years of purchase, which charge will be paid to the Fund's
Distributor, Dean Witter Distributors Inc. See "Redemptions and
Repurchases--Contingent Deferred Sales Charge." In addition, the Fund pays the
Distributor a distribution fee pursuant to a Plan of Distribution at the annual
rate of 1.0% of the lesser of the (i) average daily aggregate net sales or (ii)
average daily net assets of the Fund. See "Purchase of Fund Shares--Plan of
Distribution."
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 October 7, 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.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Prospectus Summary................................ 2
Summary of Fund Expenses.......................... 3
The Fund and its Management....................... 5
Investment Objectives and Policies................ 5
Risk Considerations............................... 6
Investment Restrictions........................... 10
Purchase of Fund Shares........................... 10
Shareholder Services.............................. 12
Redemptions and Repurchases....................... 14
Dividends, Distributions and Taxes................ 15
Performance Information........................... 16
Additional Information............................ 16
Financial Statements--
August 31, 1994 (unaudited)..................... 20
</TABLE>
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.
DEAN WITTER
GLOBAL UTILITIES FUND
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 392-2550 or (800) 526-3143
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
DEAN WITTER DISTRIBUTORS INC., DISTRIBUTOR
<PAGE>
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
THE FUND The Fund is organized as a Trust, commonly known as a Massachusetts business trust, and
is an open-end, diversified management investment company. The Fund invests in equity
and fixed-income securities of companies, issued by issuers worldwide, which are
primarily engaged in the utilities industry.
- -------------------------------------------------------------------------------------------------------
SHARES OFFERED Shares of beneficial interest with $.01 par value (see page 16).
- -------------------------------------------------------------------------------------------------------
MINIMUM Minimum initial investment, $1,000; minimum subsequent investments, $100 (see page 10).
PURCHASE
- -------------------------------------------------------------------------------------------------------
INVESTMENT The investment objective of the Fund is to seek both capital appreciation and current
OBJECTIVE income.
- -------------------------------------------------------------------------------------------------------
INVESTMENT Dean Witter InterCapital Inc. ("InterCapital"), the Investment Manager of the Fund, and
MANAGER its wholly-owned subsidiary, Dean Witter Services Company Inc., serve in various
investment management, advisory, management and administrative capacities to
eighty-eight investment companies and other portfolios with assets of approximately
$71.3 billion at August 31, 1994 (see page 5).
- -------------------------------------------------------------------------------------------------------
MANAGEMENT The Investment Manager receives a monthly fee at the annual rate of 0.65% of daily net
FEE assets (see page 5).
- -------------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income are paid quarterly. Capital gains, if any, are
DISTRIBUTIONS distributed at least annually or retained for reinvestment by the Fund. Dividends and
capital gains distributions are automatically reinvested in additional shares at net
asset value unless the shareholder elects to receive cash (see page 15).
- -------------------------------------------------------------------------------------------------------
DISTRIBUTOR Dean Witter Distributors Inc. (the "Distributor"). The Distributor receives from the
AND Fund a distribution fee accrued daily and payable monthly at the rate of 1.0% per annum
DISTRIBUTION of the lesser of (i) the Fund's average daily aggregate net sales or (ii) the Fund's
FEE average daily net assets. This fee compensates the Distributor for the services provided
in distributing shares of the Fund and for sales related expenses. The Distributor also
receives the proceeds of any contingent deferred sales charges (see pages 10-11).
- -------------------------------------------------------------------------------------------------------
REDEMPTION-- Shares are redeemable by the shareholder at net asset value. An account may be
CONTINGENT involuntarily redeemed if the total value of the account is less than $100. Although no
DEFERRED commission or sales load is imposed upon the purchase of shares, a contingent deferred
SALES CHARGE sales charge (scaled down from 5% to 1%) is imposed on any redemption of shares if after
such redemption the aggregate current value of an account with the Fund falls below the
aggregate amount of the investor's purchase payments made during the six years preceding
the redemption. However, there is no charge imposed on redemption of shares purchased
through reinvestment of dividends or distributions (see page 14).
- -------------------------------------------------------------------------------------------------------
RISKS The net asset value of the Fund's shares will fluctuate with changes in market value of
portfolio securities. The utilities industry has certain characteristics and risks, and
developments within that industry will affect the Fund's portfolio (see page 6). The
value of debt securities (and, to a lesser extent, equity securities) issued by
utilities industry issuers tends to have an inverse relationship to movement of interest
rates. It should be recognized that the foreign securities and markets in which the Fund
will invest pose different and greater risks than those customarily associated with
domestic securities and their markets (see page 6).
- -------------------------------------------------------------------------------------------------------
</TABLE>
THE ABOVE IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION APPEARING
ELSEWHERE IN THIS PROSPECTUS
AND IN THE STATEMENT OF ADDITIONAL INFORMATION.
2
<PAGE>
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
The following table illustrates all expenses and fees that a shareholder of the
Fund will incur.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases........................................................ None
Maximum Sales Charge Imposed on Reinvested Dividends............................................. None
Contingent Deferred Sales Charge (as a percentage of the lesser of original purchase price or
redemption proceeds)............................................................................ 5.0%
</TABLE>
A contingent deferred sales charge is imposed at the following declining rates:
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE PAYMENT MADE PERCENTAGE
- --------------------------------------------------------------------------------- --------------
<S> <C>
First............................................................................ 5.0%
Second........................................................................... 4.0%
Third............................................................................ 3.0%
Fourth........................................................................... 2.0%
Fifth............................................................................ 2.0%
Sixth............................................................................ 1.0%
Seventh and thereafter........................................................... None
</TABLE>
<TABLE>
<S> <C>
Redemption Fees................................................................................. None
Exchange Fee.................................................................................... None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees................................................................................. 0.65%
12b-1 Fees*..................................................................................... 1.00%
Other Expenses.................................................................................. 0.54%
Total Fund Operating Expenses**................................................................. 2.19%
Management and 12b-1 Fees are for the current fiscal period of the Fund ending February 28, 1995.
"Other Expenses," as shown above, are based upon estimated amounts of expenses of the Fund for the fiscal
period ending February 28, 1995.
<FN>
- ------------------------
* The 12b-1 fee is accrued daily and payable monthly, at an annual rate of 1.0%
of the lesser of: (a) the average daily aggregate gross sales of the Fund's
shares since the inception of the Fund (not including reinvestments of
dividends or distributions), less the average daily aggregate net asset value
of the Fund's shares redeemed since the Fund's inception upon which a
contingent deferred sales charge has been imposed or waived, or (b) the
Fund's average daily net assets. A portion of the 12b-1 fee equal to 0.25% of
the Fund's average daily net assets is characterized as a service fee within
the meaning of National Association of Securities Dealers, Inc. ("NASD")
guidelines.
** "Total Fund Operating Expenses," as shown above, is based upon the sum of the
12b-1 Fees, Management Fees and estimated "Other Expenses," which may be
incurred by the Fund.
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:.......................... $ 72 $ 99
You would pay the following expenses on the same investment, assuming no
redemption:........................................................................ $ 22 $ 69
</TABLE>
The above example should not be considered a representation of past or future
expenses or performance. Actual expenses of the Fund may be greater 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," "Plan of Distribution" and "Redemption and
Repurchases."
Long-term shareholders of the Fund may pay more in sales charges and
distribution fees than the economic equivalent of the maximum front-end sales
charges permitted by the NASD.
3
<PAGE>
FINANCIAL HIGHLIGHTS (unaudited)
- --------------------------------------------------------------------------------
The following ratios and per share data for a share of beneficial interest
outstanding throughout the period has been taken from the records of the Fund
without examination by independent accountants. The financial highlights should
be read in conjunction with the financial statements and notes thereto. The
related unaudited financial statements are contained in this Prospectus
commencing on page 22.
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 31, 1994*
THROUGH
AUGUST 31,
1994
--------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................................... $10.00
--------------
Net investment income................................................................... 0.04
Net realized and unrealized gain........................................................ 0.22
--------------
Total from investment operations........................................................ 0.26
--------------
Net asset value, end of period.......................................................... $10.26
--------------
--------------
TOTAL INVESTMENT RETURN+.................................................................. 2.60(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................................................ $ 289,007
Ratio of expenses to average net assets................................................. 2.19(2)
Ratio of net investment income to average net assets.................................... 1.86(2)
Portfolio turnover rate................................................................. 0 %
<FN>
- ------------------------
* COMMENCEMENT OF OPERATIONS.
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------------
Dean Witter Global Utilities Fund (the "Fund") is an open-end diversified
management investment company. The Fund is a trust of the type commonly known as
a "Massachusetts business trust" and was organized under the laws of The
Commonwealth of Massachusetts on October 22, 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 eighty-eight investment companies (the "Dean Witter
Funds"), thirty of which are listed on the New York Stock Exchange, with
combined assets of approximately $69.3 billion at August 31, 1994. The
Investment Manager also manages portfolios of pension plans, other institutions
and individuals which aggregated approximately $2.0 billion at such date.
The Fund has retained the Investment Manager to provide administrative
services, manage its business affairs and manage the investment of the Fund's
assets, including the placing of orders for the purchase and sale of portfolio
securities. InterCapital has retained Dean Witter Services Company Inc. to
perform the aforementioned administrative services for the Fund. The Fund's
Board of Trustees reviews the various services provided by the Investment
Manager to ensure that the Fund's general investment policies and programs are
being properly carried out and that administrative services are being provided
to the Fund in a satisfactory manner.
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Investment Manager, the Fund pays
the Investment Manager monthly compensation calculated daily by applying the
following annual rate of 0.65% to the Fund's net assets determined as of the
close of each business day. The Fund's expenses include: the fee of the
Investment Manager; the fee pursuant to the Plan of Distribution (see "Purchase
of Fund Shares"); taxes; certain legal, transfer agent, custodian and auditing
fees; and printing and other expenses relating to the Fund's operations which
are not expressly assumed by the Investment Manager under its Investment
Management Agreement with the Fund.
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
The investment objective of the Fund is to seek both capital appreciation and
current income. The objective is a fundamental policy of the Fund and may not be
changed without shareholder approval. There is no assurance that the objective
will be achieved.
The Fund will attempt to meet its investment objective by investing (at
least 65% of its total assets) in equity and fixed-income securities of
companies, issued by issuers worldwide, which are engaged in the utilities
industry. The Fund's investment portfolio will be invested in at least three
separate countries.
The term "utilities industry" consists of companies engaged in the
manufacture, production, generation, transmission, sale and distribution of
water, gas and electric energy, or who manufacture or supply equipment for such
companies, as well as companies engaged in the communications field and the
companies which manufacture or supply equipment for such companies, including
telephone, telegraph, satellite, cable, microwave, radio-telephone, computer,
mobile communication and cellular paging, electronic mail, videotext and
teletext and other new or emerging technology companies. A company will be
considered to be in the utilities industry if, during the most recent twelve
month period, at least 50% of the company's gross revenues, on a consolidated
basis, are derived from the utilities industry. Under ordinary circumstances, at
least 65% of the Fund's total assets will be invested in securities of companies
in the utilities industry.
The principal currencies in which securities held in the Fund's portfolio
will be denominated are: the U.S. dollar; Australian dollar; Deutsche mark;
Japanese yen; French franc; British pound; Canadian dollar; Mexican peso; Swiss
franc; Dutch guilder; Hong Kong dollar; New Zealand dollar; Spanish Peseta;
Swedish Krona; and European Currency Unit.
The Investment Manager believes the Fund's investment policies are suited to
benefit from certain characteristics and historical performance of the
securities of utility companies. Many of these companies have historically set a
pattern of paying regular dividends over time, and the average common stock
dividend yield of utilities historically has substantially exceeded that of
industrial stocks. The Investment Manager believes that these factors may not
only provide current income but also generally tend to moderate risk and thus
may enhance the opportunity for appreciation of securities owned by the Fund,
although the potential for capital appreciation has historically been lower for
many utility stocks compared with most industrial stocks. There
5
<PAGE>
can be no assurance that the historical investment performance of the utilities
industry will be indicative of future events and performance.
The Fund invests in both equity securities (common stock and securities
convertible into common stock) and fixed-income securities (bonds and preferred
stock) in the utilities industry. The Fund will shift its asset allocation
without restriction between types of utilities, among nationalities of issuers
and between equity and fixed-income securities, based upon the Investment
Manager's determination of how to achieve the Fund's investment objective in
light of prevailing market, economic and financial conditions.
Criteria utilized by the Investment Manager in the selection of equity
securities include the following screens: earnings and dividend growth; book
value; dividend discount; and price/earnings relationships. In addition, the
Investment Manager makes continuing assessments of management, the prevailing
regulatory framework and industry trends. The Investment Manager may also
utilize computer-based equity selection models. In keeping with the Fund's
objective, if in the opinion of the Investment Manager favorable conditions for
capital growth of equity securities are not prevalent at a particular time, the
Fund may allocate its assets predominantly or exclusively in debt securities
with the aim of obtaining current income and thus benefitting long term growth
of capital.
The Fund may purchase equity securities sold on the New York, American and
other domestic and foreign stock exchanges and in the over-the-counter market.
Fixed-income securities in which the Fund may invest are debt securities and
preferred stocks which are rated at the time of purchase Baa or better by
Moody's Investors Service, Inc. ("Moody's") or BBB or better by Standard &
Poor's Corporation ("S&P") or which, if unrated, are deemed to be of comparable
quality by the Fund's Investment Manager. Under normal circumstances, the
average weighted maturity of the fixed-income securities held by the Fund is
expected to be in excess of seven years. A description of corporate bond ratings
is contained in the Appendix to the Statement of Additional Information.
Investments in fixed-income securities rated either BBB by S&P or Baa by
Moody's (the lowest credit ratings designated "investment grade") have
speculative characteristics and, therefore, changes in economic conditions or
other circumstances are more likely to weaken their capacity to make principal
and interest payments than would be the case with investments in securities with
higher credit ratings. If a fixed-income security held by the Fund is rated BBB
or Baa and is subsequently downgraded by a rating agency, the Fund will retain
such security in its portfolio until the Investment Manager determines that it
is practicable to sell the security without undue market or tax consequences to
the Fund. In the event that such downgraded securities constitute 5% or more of
the Fund's net assets, the Investment Manager will sell such securities as soon
as is practicable, in sufficient amounts to reduce the total to below 5%.
The Fund may also invest in securities of foreign issuers in the form of
American Depository Receipts (ADRs), European Depository Receipts (EDRs) or
other similar securities convertible into securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically issued
by a United States bank or trust company evidencing ownership of the underlying
securities. EDRs are European receipts evidencing a similar arrangement.
Generally, ADRs, in registered form, are designed for use in the United States
securities markets and EDRs, in bearer form, are designed for use in European
securities markets.
There may be periods during which, in the opinion of the Investment Manager,
market conditions warrant reduction of some or all of the Fund's securities
holdings. During such periods, the Fund may adopt a temporary "defensive"
posture in which greater than 35% of its net assets are invested in cash or
money market instruments. Money market instruments in which the Fund may invest
are securities issued or guaranteed by the U.S. Government (Treasury bills,
notes and bonds, including zero coupon securities); bank obligations (such as
certificates of deposit and bankers' acceptances); Yankee instruments;
Eurodollar certificates of deposit; obligations of savings institutions; fully
insured certificates of deposit; and commercial paper rated within the two
highest grades by Moody's or S&P or, if not rated, are issued by a company
having an outstanding debt issue rated at least AA by S&P or Aa by Moody's.
RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
UTILITIES INDUSTRY
The utilities industry as a whole has certain characteristics and risks
particular to that industry. Unlike industrial companies, the rates which
utility companies may charge their customers generally are subject to review and
limitation by governmental regulatory commissions. Although rate changes of a
utility usually fluctuate in approximate correlation with financing costs, due
to political and regulatory factors, rate changes ordinarily occur only
following a delay after the changes in financing costs. This factor will tend to
favorably affect a utility company's earnings and dividends in times of
decreasing costs, but conversely will tend to adversely affect earnings and
dividends when costs are rising. In addition, the value of utility debt
securities (and, to a lesser extent, equity securities) tends to have an inverse
relationship to the movement of interest rates.
6
<PAGE>
Among the risks affecting the utilities industry are the following: risks of
increases in fuel and other operating costs; the high cost of borrowing to
finance capital construction during inflationary periods; restrictions on
operations and increased costs and delays associated with compliance with
environmental and nuclear safety regulations; the difficulties involved in
obtaining natural gas for resale or fuel for generating electricity at
reasonable prices; the risks in connection with the construction and operation
of nuclear power plants; the effects of energy conservation and the effects of
regulatory changes, such as the possible adverse effects on profits of recent
increased competition among telecommunications companies and the uncertainties
resulting from such companies' diversification into new domestic and
international businesses, as well as agreements by many such companies linking
future rate increases to inflation or other factors not directly related to the
actual operating profits of the enterprise.
FOREIGN SECURITIES
Foreign securities investments may be affected by changes in currency rates or
exchange control regulations, changes in governmental administration or economic
or monetary policy (in the United States and abroad) or changed circumstances in
dealings between nations. Fluctuations in the relative rates of exchange between
the currencies of different nations will affect the value of the Fund's
investments denominated in foreign currency. Changes in foreign currency
exchange rates relative to the U.S. dollar will affect the U.S. dollar value of
the Fund's assets denominated in that currency and thereby impact upon the
Fund's total return on such assets.
Foreign currency exchange rates are determined by forces of supply and
demand on the foreign exchange markets. These forces are themselves affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. Moreover,
foreign currency exchange rates may be affected by the regulatory control of the
exchanges on which the currencies trade. The foreign currency transactions of
the Fund will be conducted on a spot basis or through forward foreign currency
exchange contracts (described below). The Fund will incur certain costs in
connection with these currency transactions.
Investments in foreign securities will also occasion risks relating to
political and economic developments abroad, including the possibility of
expropriations or confiscatory taxation, limitations on the use or transfer of
Fund assets and any effects of foreign social, economic or political
instability. Foreign companies are not subject to the regulatory requirements of
U.S. companies and, as such, there may be less publicly available information
about such companies. Moreover, foreign companies are not subject to uniform
accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies.
Securities of foreign issuers may be less liquid than comparable securities
of U.S. issuers and, as such, their price changes may be more volatile.
Furthermore, foreign exchanges and broker-dealers are generally subject to less
government and exchange scrutiny and regulation than their American
counterparts. Brokerage commissions, dealer concessions and other transaction
costs may be higher on foreign markets than in the U.S. In addition, differences
in clearance and settlement procedures on foreign markets may occasion delays in
settlements of the Fund's trades effected in such markets. As such, the
inability to dispose of portfolio securities due to settlement delays could
result in losses to the Fund due to subsequent declines in value of such
securities and the inability of the Fund to make intended security purchases due
to settlement problems could result in a failure of the Fund to make potentially
advantageous investments. To the extent the Fund purchases Eurodollar
certificates of deposit issued by foreign branches of domestic United States
banks, consideration will be given to their domestic marketability, the lower
reserve requirements normally mandated for overseas banking operations, the
possible impact of interruptions in the flow of international currency
transactions and future international political and economic developments which
might adversely affect the payment of principal or interest.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may enter into forward
foreign currency exchange contracts ("forward contracts") in connection with its
foreign securities investments.
A forward contract involves an obligation to purchase or sell a currency at
a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
The Fund may enter into forward contracts as a hedge against fluctuations in
future foreign exchange rates.
The Fund will enter into forward contracts under various circumstances. When
the Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may, for example, desire to "lock in" the
price of the security in U.S. dollars or some other foreign currency which the
Fund is temporarily holding in its portfolio. By entering into a forward
contract for the purchase or sale, for a fixed amount of dollars or other
currency, of the amount of foreign currency involved in the underlying security
transactions, the Fund will be able to protect itself against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar or
other currency which is being used for the security purchase (by the Fund or the
counterparty) and the foreign currency in which the security is denominated
during the period between the date on which the security is purchased or sold
and the date on which payment is made or received.
At other times, when, for example, the Fund's Investment Manager believes
that the currency of a particular foreign country may suffer a substantial
decline against the
7
<PAGE>
U.S. dollar or some other foreign currency, the Fund may enter into a forward
contract to sell, for a fixed amount of dollars or other currency, the amount of
foreign currency approximating the value of some or all of the Fund's securities
holdings (or securities which the Fund has purchased for its portfolio)
denominated in such foreign currency. Under identical circumstances, the Fund
may enter into a forward contract to sell, for a fixed amount of U.S. dollars or
other currency, an amount of foreign currency other than the currency in which
the securities to be hedged are denominated approximating the value of some or
all of the portfolio securities to be hedged. This method of hedging, called
"cross-hedging," will be selected by the Investment Manager when it is
determined that the foreign currency in which the portfolio securities are
denominated has insufficient liquidity or is trading at a discount as compared
with some other foreign currency with which it tends to move in tandem.
In addition, when the Fund's Investment Manager anticipates purchasing
securities at some time in the future, and wishes to lock in the current
exchange rate of the currency in which those securities are denominated against
the U.S. dollar or some other foreign currency, the Fund may enter into a
forward contract to purchase an amount of currency equal to some or all of the
value of the anticipated purchase, for a fixed amount of U.S. dollars or other
currency.
In all of the above circumstances, if the currency in which the Fund
securities holdings (or anticipated portfolio securities) are denominated rises
in value with respect to the currency which is being purchased (or sold), then
the Fund will have realized fewer gains than had the Fund not entered into the
forward contracts. Moreover, the precise matching of the forward contract
amounts and the value of the securities involved will not generally be possible,
since the future value of such securities in foreign currencies will change as a
consequence of market movements in the value of those securities between the
date the forward contract is entered into and the date it matures. The Fund is
not required to enter into such transactions with regard to its foreign
currency-denominated securities and will not do so unless deemed appropriate by
the Investment Manager. The Fund generally will not enter into a forward
contract with a term of greater than one year, although it may enter into
forward contracts for periods of up to five years. The Fund may be limited in
its ability to enter into hedging transactions involving forward contracts by
the Internal Revenue Code requirements relating to qualification as a regulated
investment company (see "Dividends, Distributions and Taxes").
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements, which may be viewed as a type of
secured lending by the Fund, and which typically involve the acquisition by the
Fund of government securities or other 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 at a specified price and at
a fixed time in the future, usually not more than seven days from the date of
purchase. While repurchase agreements involve certain risks not associated with
direct investments in debt securities, including the risks of default or
bankruptcy of the selling financial institution, the Fund follows procedures to
minimize such risks. These procedures include effecting repurchase transactions
only with large, well-capitalized and well-established financial institutions
and maintaining adequate collateralization.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Fund may purchase securities
on a when-issued or delayed delivery basis; i.e., delivery and payment can take
place a month or more after the date of the transaction. These securities are
subject to market fluctuation and no interest accrues to the purchaser prior to
settlement. 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.
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.
REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. The Fund may also use reverse
repurchase agreements and dollar rolls as part of its investment strategy.
Reverse repurchase agreements involve sales by the Fund of portfolio assets
concurrently with an agreement by the Fund to repurchase the same assets at a
later date at a fixed price. The Fund may enter into dollar rolls in which the
Fund sells securities and simultaneously contracts to repurchase substantially
similar (same type and coupon) securities on a specified future date. Reverse
repurchase agreements and dollar rolls involve the risk that the market value of
the securities the Fund is obligated to repurchase under the agreement may
decline below the repurchase price. In the event the buyer of securities under a
reverse repurchase agreement or dollar roll files for bankruptcy or becomes
insolvent, the Fund's use of proceeds of the agreement may be restricted pending
a determination by the other party, or its trustee or receiver, whether to
enforce the Fund's obligation to repurchase the securities.
8
<PAGE>
PRIVATE PLACEMENTS. The Fund may invest up to 5% of its total assets in
securities which are subject to restrictions on resale because they have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), or which are otherwise not readily marketable. (Securities eligible for
resale pursuant to Rule 144A under the Securities Act, and determined to be
liquid pursuant to the procedures discussed in the following paragraph, are not
subject to the foregoing restriction.) These securities are generally referred
to as private placements or restricted securities. Limitations on the resale of
such securities may have an adverse effect on their marketability, and may
prevent the Fund from disposing of them promptly at reasonable prices. The Fund
may have to bear the expense of registering such securities for resale and the
risk of substantial delays in effecting such registration.
The Securities and Exchange Commission has adopted Rule 144A under the
Securities Act, which permits the Fund to sell restricted securities to
qualified institutional buyers without limitation. The Investment Manager,
pursuant to procedures adopted by the Trustees of the Fund, will make a
determination as to the liquidity of each restricted security purchased by the
Fund. If a restricted security is determined to be "liquid," such security will
not be included within the category "illiquid securities," which under current
policy may not exceed 15% of the Fund's net assets.
OPTIONS AND FUTURES TRANSACTIONS
The Fund may purchase and sell (write) call and put options on portfolio
securities which are denominated in either U.S. dollars or foreign currencies
and on the U.S. dollar and foreign currencies, which are or may in the future be
listed on several U.S. and foreign securities exchanges or are written in
over-the-counter transactions ("OTC options"). OTC options are purchased from or
sold (written) to dealers or financial institutions which have entered into
direct agreements with the Fund.
The Fund is permitted to write covered call options on portfolio securities
and the U.S. dollar and foreign currencies, without limit, in order to hedge
against the decline in the value of a security or currency in which such
security is denominated and to close out long call option positions. The Fund
may write covered put options, under which the Fund incurs an obligation to buy
the security (or currency) underlying the option from the purchaser of the put
at the option's exercise price at any time during the option period, at the
purchaser's election.
The Fund may purchase listed and OTC call and put options in amounts
equalling up to 5% of its total assets. The Fund may purchase call options to
close out a covered call position or to protect against an increase in the price
of a security it anticipates purchasing or, in the case of call options on a
foreign currency, to hedge against an adverse exchange rate change of the
currency in which the security it anticipates purchasing is denominated
vis-a-vis the currency in which the exercise price is denominated. The Fund may
purchase put options on securities which it holds in its portfolio only to
protect itself against a decline in the value of the security. The Fund may also
purchase put options to close out written put positions in a manner similar to
call option closing purchase transactions. There are no other limits on the
Fund's ability to purchase call and put options.
The Fund may purchase and sell futures contracts that are currently traded,
or may in the future be traded, on U.S. and foreign commodity exchanges on
underlying portfolio securities, on any currency ("currency" futures), on U.S.
and foreign fixed-income securities ("interest rate" futures) and on such
indexes of U.S. or foreign equity or fixed-income securities as may exist or
come into being ("index" futures). The Fund may purchase or sell interest rate
futures contracts for the purpose of hedging some or all of the value of its
portfolio securities (or anticipated portfolio securities) against changes in
prevailing interest rates. The Fund may purchase or sell index futures contracts
for the purpose of hedging some or all of its portfolio (or anticipated
portfolio) securities against changes in their prices (or the currency in which
they are denominated.) As a futures contract purchaser, the Fund incurs an
obligation to take delivery of a specified amount of the obligation underlying
the contract at a specified time in the future for a specified price. As a
seller of a futures contract, the Fund incurs an obligation to deliver the
specified amount of the underlying obligation at a specified time in return for
an agreed upon price.
The Fund also may purchase and write call and put options on futures
contracts which are traded on an exchange and enter into closing transactions
with respect to such options to terminate an existing position.
New futures contracts, options and other financial products and various
combinations thereof continue to be developed. The Fund may invest in any such
futures, options or products as may be developed, to the extent consistent with
its investment objective and applicable regulatory requirements.
RISKS OF OPTIONS AND FUTURES TRANSACTIONS. The Fund may close out its position
as writer of an option, or as a buyer or seller of a futures contract, only if a
liquid secondary market exists for options or futures contracts of that series.
There is no assurance that such a market will exist, particularly in the case of
OTC options, as such options may generally only be closed out by entering into a
closing purchase transaction with the purchasing dealer. Also, exchanges may
limit the amount by which the price of many futures contracts may move on any
day. If the price moves equal the daily limit on successive days, then it may
prove impossible to liquidate a futures position until the daily limit moves
have ceased.
While the futures contracts and options transactions to be engaged in by the
Fund for the purpose of hedging the
9
<PAGE>
Fund's portfolio securities are not speculative in nature, there are risks
inherent in the use of such instruments. One such risk is that the Investment
Manager could be incorrect in its expectations as to the direction or extent of
various interest rate or price 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. Another risk which will arise in employing futures
contracts to protect against the price volatility of portfolio securities is
that the prices of securities, currencies and indexes subject to futures
contracts (and thereby the futures contract prices) may correlate imperfectly
with the behavior of the U.S. dollar cash prices of the Fund's portfolio
securities and their denominated currencies. See the Statement of Additional
Information for a further discussion of risks.
PORTFOLIO MANAGEMENT
The Fund's portfolio is actively managed by its Investment Manager with a view
to achieving the Fund's investment objective. In determining which securities to
purchase for the Fund or hold in the Fund's portfolio, the Investment Manager
will rely on information from various sources, including research, analysis and
appraisals of brokers and dealers, including Dean Witter Reynolds Inc. ("DWR"),
a broker-dealer affiliate of InterCapital, the views of Trustees of the Fund and
others regarding economic developments and interest rate trends, and the
Investment Manager's own analysis of factors it deems relevant. The Fund's
portfolio is managed within InterCapital's Large Capitalization Equity Group,
which manages twenty-seven funds and fund portfolios with approximately $19.4
billion in assets as of August 31, 1994. Edward F. Gaylor, Senior Vice President
of InterCapital and a member of InterCapital's Large Capitalization Equities
Group, has been the primary portfolio manager of the Fund since its inception.
Mr. Gaylor has been managing portfolios comprised of equity and fixed-income
securities at InterCapital for over five years.
Although the Fund does not engage in substantial short-term trading as a
means of achieving its investment objective, it may sell portfolio securities
without regard to the length of time they have been held, in accordance with the
investment policies described earlier. Pursuant to an order of the Securities
and Exchange Commission, the Fund may effect principal transactions in certain
money market instruments with DWR. In addition, the Fund may incur brokerage
commissions on transactions conducted through DWR. Under normal circumstances,
it is not anticipated that the portfolio trading will result in the Fund's
portfolio turnover rate exceeding 100% in any one year.
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
The investment restrictions listed below are among the restrictions 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 limitations: (i) all
percentage limitations apply immediately after a purchase or initial investment,
and (ii) any subsequent change in any applicable percentage resulting from
market fluctuations or other changes in total or net assets does not require
elimination of any security from the portfolio.
The Fund may not:
1. As to 75% of its total assets, invest more than 5% of the value of
its total assets in the securities of any one issuer (other than obligations
issued or guaranteed by the United States Government, its agencies or
instrumentalities).
2. Invest 25% or more of the value of its total assets in securities of
issuers in any one industry, with the exception of the utilities industry.
This restriction does not apply to obligations issued or guaranteed by the
United States Government, its agencies or instrumentalities.
3. Invest more than 5% of the value of its total assets in securities of
issuers having a record, together with predecessors, of less than three
years of continuous operation. This restriction shall not apply to any
obligation issued or guaranteed by the United States Government, its
agencies or instrumentalities.
4. As to 75% of its total assets, purchase more than 10% of the voting
securities, or more than 10% of any class of securities, of any issuer.
PURCHASE OF FUND SHARES
- --------------------------------------------------------------------------------
The Fund offers its shares for sale to the public on a continuous basis.
Pursuant to a Distribution Agreement between the Fund and Dean Witter
Distributors Inc. (the "Distributors"), an affiliate of the Investment Manager,
shares of the Fund are distributed by the Distributor and offered by DWR and
other dealers who have entered into selected dealer agreements with the
Distributor ("Selected Broker-Dealers"). The principal executive office of the
Distributor is
10
<PAGE>
located at Two World Trade Center, New York, New York 10048.
The minimum initial purchase is $1,000. Minimum subsequent purchases of $100
or more may be made by sending a check, payable to Dean Witter Global Utilities
Fund, 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
other Selected Broker-Dealer. In the case of investments pursuant to Systematic
Payroll Deduction Plans (including Individual Retirement Plans), the Fund, in
its discretion, may accept investments without regard to any minimum amounts
which would otherwise be required if the Fund has reason to believe that
additional investments will increase the investment in all accounts under such
Plans to at least $1,000. Certificates for shares purchased will not be issued
unless a request is made by the shareholder in writing to the Transfer Agent.
The offering price will be the net asset value per share next determined
following receipt of an order (see "Determination of Net Asset Value").
Shares of the Fund are sold through the Distributor on a normal five
business day settlement basis; that is, payment is due on the fifth business day
(settlement date) after the order is placed with the Distributor. Shares of the
Fund purchased through the Distributor are entitled to any dividends declared
beginning on the next business day following settlement date. Since DWR and
other Selected Broker-Dealers forward investors' funds on settlement date, they
will benefit from the temporary use of the funds if payment is made prior
thereto. Shares purchased through the Transfer Agent are entitled to any
dividends declared beginning on the next business day following receipt of an
order. As noted above, orders placed directly with the Transfer Agent must be
accompanied by payment. While no sales charge is imposed at the time shares are
purchased, a contingent deferred sales charge may be imposed at the time of
redemption (see "Redemptions and Repurchases"). Sales personnel are compensated
for selling shares of the Fund at the time of their sale by the Distributor
and/or 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 and/or business 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 adopted a Plan of Distribution pursuant to Rule 12b-1 under the Act
(the "Plan"), under which the Fund pays the Distributor a fee, which is accrued
daily and payable monthly, at an annual rate of 1.0% of the lesser of: (a) the
average daily aggregate gross sales of the Fund's shares since the inception of
the Fund (not including reinvestments of dividends or capital gains
distributions), less the average daily aggregate net asset value of the Fund's
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or waived; or (b) the Fund's average daily net
assets. This fee is treated by the Fund as an expense in the year it is accrued.
Amounts paid under the Plan are paid to the Distributor for services
provided and the expenses borne by the Distributor and others in the
distribution of the Fund's shares, including the payment of commissions for
sales of the Fund's shares and incentive compensation to and expenses of DWR's
account executives and others who engage in or support distribution of shares or
who service shareholder accounts, including overhead and telephone expenses;
printing and distribution of prospectuses and reports used in connection with
the offering of the Fund's shares to other than current shareholders; and
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may utilize fees paid pursuant to the
Plan to compensate DWR and other Selected Broker-Dealers for their opportunity
costs in advancing such amounts, which compensation would be in the form of a
carrying charge on any unreimbursed expenses.
For the period May 31, 1994 (commencement of the Fund's operations) through
August 31, 1994, the Fund accrued payments under the Plan amounting to $595,832,
which amount is equal to 1.0% of the Fund's average daily net assets for the
period. These payments accrued under the Plan were calculated pursuant to clause
(b) of the compensation formula under the Plan. Of the amount accrued under the
Plan, 0.25% of the Fund's average daily net assets is characterized as a service
fee within the meaning of NASD guidelines.
At any given time, the expenses in distributing shares of the Fund may be in
excess of the total of (i) the payments made by the Fund pursuant to the Plan,
and (ii) the proceeds of contingent deferred sales charges paid by investors
upon the redemption of shares (see "Redemptions and Repurchases--Contingent
Deferred Sales Charge"). For example, if $1 million in expenses in distributing
shares of the Fund had been incurred and $750,000 had been received as described
in (i) and (ii) above, the excess expense would amount to $250,000. The
Distributor has advised the Fund that such excess amounts, including the
carrying charge described above, totalled $12,122,672 at August 31, 1994, which
was equal to 4.19% of the Fund's net assets on such date.
Because there is no requirement under the Plan that the Distributor be
reimbursed for all distribution expenses or any requirement that the Plan be
continued from year to year, such excess amount, if any, does not constitute a
liability of the Fund. Although there is no legal obligation for the Fund to pay
expenses incurred in excess of payments made to the Distributor under the Plan,
and the proceeds of contingent deferred sales charges paid by investors upon
redemption of shares, if for any reason the
11
<PAGE>
Plan is terminated the Trustees will consider at that time the manner in which
to treat such expenses. Any cumulative expenses incurred, but not yet recovered
through distribution fees or contingent deferred sales charges, may or may not
be recovered through future distribution fees or contingent deferred sales
charges.
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 its liabilities, dividing
by the number of shares outstanding and adjusting to the nearest cent. The net
asset value per share will not be determined on Good Friday and on such other
federal and non-federal holidays as are observed by the New York Stock Exchange.
In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
domestic or foreign stock exchange is valued at its latest sale price on that
exchange; if there were no sales that day, the security is valued at the latest
bid price (in cases where a security is traded on more than one exchange, the
security is valued on the exchange designated as the primary market by the
Trustees); and (2) all other portfolio securities for which over-the-counter
market quotations are readily available are valued at the latest bid price. When
market quotations are not readily available, including circumstances under which
it is determined by the Investment Manager that sale and bid prices are not
reflective of a security's market value, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the Board of Trustees. For valuation purposes,
quotations of foreign portfolio securities, other assets and liabilities and
forward contracts stated in foreign currency are translated into U.S. dollar
equivalents at the prevailing market rates as of the morning of valuation.
Dividends receivable are accrued as of the ex-dividend date or as of the time
that the relevant ex-dividend date and amounts become known.
Short-term debt securities with remaining maturities of sixty days or less
at the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' fair value, in which case these
securities will be valued at their fair value as determined by the Trustees.
Certain of the Fund's portfolio securities may be valued by an outside
pricing service approved by the Fund's Trustees. The pricing service utilizes a
matrix system incorporating security quality, maturity and coupon as the
evaluation model parameters, and/or research evaluations by its staff, including
review of broker-dealer market price quotations, in determining what it believes
is the fair valuation of the portfolio securities valued by such pricing
service.
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. All income dividends and
capital gains distributions are automatically paid in full and fractional shares
of the 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. Shares as acquired are not subject to the imposition of a
contingent deferred sales charge upon their redemption (see "Redemptions and
Repurchases").
INVESTMENT OF DISTRIBUTIONS RECEIVED IN CASH. Any shareholder who receives a
cash payment representing a dividend or capital gains distribution may invest
such dividend or distribution at the net asset value per share next determined
after receipt by the Transfer Agent, by returning the check or the proceeds to
the Transfer Agent within thirty days after the payment date. Shares so acquired
are not subject to the imposition of a contingent deferred sales charge upon
their redemption (see "Redemptions and Repurchases").
EASYINVEST-SM-. 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.
SYSTEMATIC WITHDRAWAL PLAN. A systematic withdrawal plan (the "Withdrawal
Plan") is available for shareholders who own or purchase shares of the Fund
having a minimum value of $10,000 based upon the then current net asset value.
The Withdrawal Plan provides for monthly or quarterly (March, June, September
and December) checks in any dollar amount, not less than $25, or in any whole
percentage of the account balance, on an annualized basis. Any applicable
contingent deferred sales charge will be imposed on shares redeemed under the
Withdrawal Plan (See "Redemptions and Repurchases--Contingent Deferred Sales
Charge"). Therefore, any shareholder participating in the Withdrawal Plan will
have sufficient shares redeemed from his or her account so that the proceeds
(net of any applicable contingent deferred sales charge) to the shareholder will
be the designated monthly or quarterly amount.
Withdrawal Plan payments should not be considered as dividends, yields or
income. If periodic withdrawal plan payments continuously exceed net investment
income and
12
<PAGE>
net capital gains, the shareholder's original investment will be correspondingly
reduced and ultimately exhausted.
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.
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 Dealer
account executive or the Transfer Agent.
EXCHANGE PRIVILEGE
The Fund makes available to its shareholders an "Exchange Privilege" allowing
the exchange of shares of the Fund for shares of other Dean Witter Funds sold
with a contingent deferred sales charge ("CDSC funds"), and for shares of Dean
Witter Short-Term U.S. Treasury Trust, Dean Witter Short-Term Bond Fund, Dean
Witter Limited Term Municipal Trust and five Dean Witter Funds which are money
market funds (the foregoing eight non-CDSC funds are hereinafter collectively
referred to as the "Exchange Funds"). Exchanges may be made after the shares of
the 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.
An exchange to another CDSC fund or to any Exchange Fund that is not a money
market fund is on the basis of the next calculated net asset value per share of
each fund after the exchange order is received. When exchanging into a money
market fund from the Fund, shares of the Fund are redeemed out of the Fund at
their next calculated net asset value and the proceeds of the redemption are
used to purchase shares of the money market fund at their net asset value
determined the following business day. Subsequent exchanges between any of the
money market funds and any of the CDSC funds can be effected on the same basis.
No contingent deferred sales charge ("CDSC") is imposed at the time of any
exchange, although any applicable CDSC will be imposed upon ultimate redemption.
Shares of the Fund acquired in exchange for shares of another CDSC fund having a
different CDSC schedule than that of this Fund will be subject to the CDSC
schedule of this Fund, even if such shares are subsequently re-exchanged for
shares of the CDSC fund originally purchased. During the period of time the
shareholder remains in the Exchange Fund (calculated from the last day of the
month in which the Exchange Fund shares were acquired), the holding period (for
the purpose of determining the rate of the 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 a CDSC fund are reacquired. Thus, the CDSC is based
upon the time (calculated as described above) the shareholder was invested in a
CDSC fund (see "Redemptions and Repurchases--Contingent Deferred Sales Charge").
However, in the case of shares exchanged into an Exchange Fund, upon a
redemption of shares which results in a CDSC being imposed, a credit (not to
exceed the amount of the CDSC) will be given in an amount equal to the Exchange
Fund 12b-1 distribution fees incurred on or after that date which are
attributable to those shares. (Exchange Fund 12b-1 distribution fees are
described in the prospectuses for those funds.)
In addition, shares of the Fund may be acquired in exchange for shares of
Dean Witter Funds sold with a front-end sales charge ("front-end sales charge
funds"), but shares of the Fund, however acquired, may not be exchanged for
shares of front-end sales charge funds. Shares of a CDSC fund acquired in
exchange for shares of a front-end sales charge fund (or in exchange for shares
of other Dean Witter Funds for which shares of a front-end sales charge fund
have been exchanged) are not subject to any CDSC upon their redemption.
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 of 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 have been exchanged, upon such notice as may
be required by applicable regulatory agencies.
The current prospectus for each fund describes its investment objective(s)
and policies, and shareholders should obtain a copy and examine 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
13
<PAGE>
purposes the same as a repurchase or redemption of shares, on which the
shareholder may realize a capital gain or loss. However, the ability to deduct
capital losses on an exchange may be limited in situations where there is an
exchange of shares within ninety days after the shares are purchased. The
Exchange Privilege is only available in states where an exchange may legally be
made.
If DWR or another Selected Broker-Dealer is the current 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 Dean Witter
Funds (for which the Exchange Privilege is available) pursuant to this Exchange
Privilege by contacting their account executive (no Exchange Privilege
Authorization Form is required). Other shareholders (and those shareholders who
are clients of DWR or other Selected Broker-Dealers 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 Broker-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.
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 with the Dean
Witter Funds in the past.
Shareholders should contact their DWR or other Selected Broker-Dealer
account executive or the Transfer Agent for further information about the
Exchange Privilege.
REDEMPTIONS AND REPURCHASES
- --------------------------------------------------------------------------------
REDEMPTION. Shares of the Fund can be redeemed for cash at any time at the net
asset value per share next determined; however, such redemption proceeds may be
reduced by the amount of any applicable contingent deferred sales charges (see
below). If shares are held in a shareholder's account without a share
certificate, a written request for redemption to the Fund's Transfer Agent at
P.O. Box 983, Jersey City, NJ 07303 is required. If certificates are held by the
shareholder(s), the shares may be redeemed by surrendering the certificates with
a written request for redemption, along with any additional information required
by the Transfer Agent.
CONTINGENT DEFERRED SALES CHARGE. Shares of the Fund which are held for six
years or more after purchase (calculated from the last day of the month in which
the shares were purchased) will not be subject to any charge upon redemption.
Shares redeemed sooner than six years after purchase may, however, be subject to
a charge upon redemption. This charge is called a "contingent deferred sales
charge" ("CDSC"), which will be a percentage of the dollar amount of shares
redeemed and will be assessed on an amount equal to the lesser of the current
market value or the cost of the shares being redeemed. The size of this
percentage will depend upon how long the shares have been held, as set forth in
the table below:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
YEAR SINCE SALES CHARGE
PURCHASE AS A PERCENTAGE OF
PAYMENT MADE AMOUNT REDEEMED
- -------------------------------------- --------------------------
<S> <C>
First................................. 5.0%
Second................................ 4.0%
Third................................. 3.0%
Fourth................................ 2.0%
Fifth................................. 2.0%
Sixth................................. 1.0%
Seventh and thereafter................ None
</TABLE>
A CDSC will not be imposed on: (i) any amount which represents an increase
in value of shares purchased within the six years preceding the redemption; (ii)
the current net asset value of shares purchased more than six years prior to the
redemption; and (iii) the current net asset value of shares purchased through
reinvestment of dividends or distributions and/or shares acquired in exchange
for shares of Dean Witter Funds sold with a front-end sales charge or of other
Dean Witter Funds acquired in exchange for such shares. Moreover, in determining
whether a CDSC is applicable it will be assumed that amounts described in (i),
(ii) and (iii) above (in that order) are redeemed first.
In addition, the CDSC, if otherwise applicable, will be waived in the case
of: (i) redemptions of shares held at the time a shareholder dies or becomes
disabled, only if the shares are (a) registered either in the name of an
individual
14
<PAGE>
shareholder (not a trust), or in the names of such shareholder and his or her
spouse as joint tenants with right of survivorship, or (b) held in a qualified
corporate or self-employed retirement plan, Individual Retirement Account or
Custodial Account under Section 403(b)(7) of the Internal Revenue Code, provided
in either case that the redemption is requested within one year of the death or
initial determination of disability, and (ii) redemptions in connection with the
following retirement plan distributions: (a) lump-sum or other distributions
from a qualified corporate or self-employed retirement plan following retirement
(or in the case of a "key employee" of a "top heavy" plan, following attainment
of age 59 1/2; (b) distributions from an Individual Retirement Account or
Custodial Account under Section 403(b)(7) of the Internal Revenue Code following
attainment of age 59 1/2); and (c) a tax-free return of an excess contribution
to an IRA. For the purpose of determining disability, the Distributor utilizes
the definition of disability contained in Section 72(m)(7) of the Internal
Revenue Code, which relates to the inability to engage in gainful employment.
All waivers will be granted only following receipt by the Distributor of
confirmation of the shareholder's entitlement.
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
computed (see "Purchase of Fund Shares") after such repurchase order is received
by DWR or other Selected Broker-Dealer, reduced by any applicable CDSC.
The CDSC, if any, will be the only fee imposed by either the Fund, the
Distributor or DWR or other Selected Broker-Dealer. The offer by DWR and other
Selected Broker-Dealers to repurchase shares may be suspended without notice by
the Distributor at any time. In that event, shareholders may redeem their shares
through the Fund's Transfer Agent as set forth above under "Redemption."
PAYMENT FOR SHARES REDEEMED OR REPURCHASED. Payment for shares presented for
repurchase or redemption will be made by check within seven days after receipt
by the Transfer Agent of the certificate and/or written request in good order.
Such payment may be postponed or the right of redemption suspended under unusual
circumstances; E.G., when normal trading is not taking place on the New York
Stock Exchange. 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.
REINSTATEMENT PRIVILEGE. A shareholder who has had his or her shares redeemed
or repurchased and has not previously exercised this reinstatement privilege
may, within thirty days after the date of the redemption or repurchase,
reinstate any portion or all of the proceeds of such redemption or repurchase in
shares of the Fund at their net asset value next determined after a
reinstatement request, together with the proceeds, is received by the Transfer
Agent and receive a pro-rata credit for any CDSC paid in connection with such
redemption or repurchase.
INVOLUNTARY REDEMPTION. The Fund reserves the right to redeem, on sixty days'
notice and at net asset value, the shares of any shareholder (other than shares
held in an Individual Retirement Account or custodial account under Section
403(b)(7) of the Internal Revenue Code) whose shares due to redemptions by the
shareholder have a value of less than $100 or such lesser amount as may be fixed
by the 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 sixty 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. No CDSC will be
imposed on any involuntary redemption.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS. The Fund intends to pay dividends and to
distribute substantially all of its net investment income quarterly. The Fund
intends to distribute capital gains, if any, once each year. The Fund may,
however, determine either to distribute or to retain all or part of any
long-term capital gains in any year for reinvestment.
All dividends and any capital gains distributions will be paid in additional
Fund shares and automatically credited to the shareholder's account without
issuance of a share certificate unless the shareholder requests in writing that
all dividends and/or distributions be paid in cash. (See "Shareholder
Services--Automatic Investment of Dividends and Distributions".)
TAXES. Because the Fund intends to distribute all of its net investment income
and net short-term capital gains to shareholders and otherwise 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 on
any such income and capital gains. Shareholders will normally have to pay
Fed-
15
<PAGE>
eral income taxes, and any state and local income taxes, on the dividends and
distributions they receive from the Fund.
Distributions of net investment income and net short-term capital gains are
taxable to the shareholder as ordinary dividend income regardless of whether the
shareholder receives such distributions in additional shares or in cash. Some
part of such dividends and distributions may be eligible for the Federal
dividends received deduction available to the Fund's corporate shareholders.
Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash. Capital gains distributions are not eligible for
the dividends received deduction.
After the end of the calendar year, shareholders will be sent full
information on their dividends and capital gains distributions for tax purposes.
To avoid being subject to a 31% Federal backup withholding tax on taxable
dividends, capital gains distributions and the proceeds of redemptions and
repurchases, shareholders' taxpayer identification numbers must be furnished and
certified as to their accuracy.
Dividends, interest and gains received by the Fund may give rise to
withholding and other taxes imposed by foreign countries. If it qualifies for
and makes the appropriate election with the Internal Revenue Service, the Fund
will report annually to its shareholders the amount per share of such taxes to
enable shareholders to claim United States foreign tax credits or deductions
with respect to such taxes. In the absence of such an election, the Fund would
deduct foreign tax in computing the amount of its distributable income.
Shareholders should consult their tax advisers as to the applicability of
the foregoing to their current situation.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund may quote its "total return" in advertisements and
sales literature. The total return of the Fund is based upon historical earnings
and is not intended to indicate future performance. 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 over the life of the Fund.
Average annual total return reflects all income earned by the Fund, any
appreciation or depreciation of the Fund's assets, all expenses incurred by the
Fund and all sales charges incurred by shareholders, 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, and 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.
Such calculations may or may not reflect the deduction of the contingent
deferred sales charge which, if reflected, would reduce the performance quoted.
The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by independent organizations,
such as mutual fund performance rankings of Lipper Analytical Services, Inc.
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. 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. Under certain
circumstances the Trustees may be removed by action of the Trustees or by the
shareholders.
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
obligations include such disclaimer, and provides for indemnification and
reimbursement of expenses out of the Fund's property for any shareholder held
personally liable for the obligations of the Fund. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund itself would be unable to meet its
obligations. Given the above limitations on shareholder personal liability, and
the nature of the Fund's assets and operations, in the opinion of Massachusetts
counsel to the Fund, the risk to shareholders of personal liability is remote.
SHAREHOLDER INQUIRIES. All inquiries regarding the Fund should be directed to
the Fund at the telephone numbers or address set forth on the front cover of
this Prospectus.
16
<PAGE>
DEAN WITTER GLOBAL UTILITIES FUND
PORTFOLIO OF INVESTMENTS August 31, 1994 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------ -------------
<C> <S> <C>
COMMON STOCKS (40.7%)
ARGENTINA (2.1%)
ELECTRIC UTILITIES
405,000 Central Puerto S.A. (Class B)....... $ 3,037,804
-------------
TELECOMMUNICATIONS
403,300 Telecom De Argentina S.A. (Class
B)................................. 2,944,384
-------------
TOTAL ARGENTINA..................... 5,982,188
-------------
AUSTRALIA (1.5%)
ELECTRIC UTILITIES
1,270,000 Australian Gas Light Company........ 4,355,958
-------------
CHILE (1.4%)
ELECTRIC UTILITIES
114,000 Empresa Nacional de Electridad S.A.
(ADR).............................. 2,650,500
58,400 Enersis S.A. (ADR).................. 1,423,500
-------------
TOTAL CHILE......................... 4,074,000
-------------
CHINA (0.6%)
ELECTRIC UTILITIES
132,000 Shandong Hueneng Power
(ADR)*............................. 1,749,000
-------------
DENMARK (1.9%)
TELECOMMUNICATIONS
104,900 Tele Denmark A/S (Class B).......... 5,633,456
-------------
FINLAND (1.4%)
TELECOMMUNICATIONS EQUIPMENT
38,400 Nokia AB............................ 4,168,678
-------------
FRANCE (1.0%)
WATER
27,900 Cie Generale des Eaux............... 2,885,052
-------------
GERMANY (3.0%)
ELECTRIC UTILITIES
11,800 Veba AG............................. 4,162,247
-------------
MACHINERY - DIVERSIFIED
16,200 Mannesmann AG....................... 4,500,911
-------------
TOTAL GERMANY....................... 8,663,158
-------------
HONG KONG (0.8%)
ELECTRIC UTILITIES
1,240,000 Consolidated Electric Power......... 2,399,151
-------------
ITALY (1.5%)
TELECOMMUNICATIONS
1,466,000 Telecom Italia SPA.................. 4,258,513
-------------
JAPAN (2.2%)
ELECTRIC EQUIPMENT
132,000 Sumitomo Electric................... 1,977,627
-------------
TELECOMMUNICATIONS EQUIPMENT
58,000 Kyocera Corp. ...................... 4,298,442
-------------
TOTAL JAPAN......................... 6,276,069
-------------
MALAYSIA (0.5%)
TELECOMMUNICATIONS
162,000 Telekom Malaysia.................... 1,354,219
-------------
MEXICO (1.3%)
TELECOMMUNICATIONS
53,000 Grupo Iusacell S.A. (Series L)
(ADR)*............................. 1,669,500
35,000 Telefonos de Mexico S.A. (Series L)
(ADR).............................. 2,196,250
-------------
TOTAL MEXICO........................ 3,865,750
-------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------ -------------
<C> <S> <C>
NETHERLANDS (1.5%)
TELECOMMUNICATIONS
139,000 Koninklijke PTT Nederland NV........ $ 4,246,787
-------------
NEW ZEALAND (1.3%)
TELECOMMUNICATIONS
1,163,000 Telecom Corp. of New Zealand........ 3,637,631
-------------
SPAIN (3.4%)
ELECTRIC UTILITIES
124,600 Empresa Nacional de Electricidad
S.A. (ENDESA)*..................... 5,554,023
-------------
TELECOMMUNICATIONS
302,000 Telefonica de Espana................ 4,176,547
-------------
TOTAL SPAIN......................... 9,730,570
-------------
SWITZERLAND (1.7%)
MULTI-INDUSTRY
5,550 BBC Brown Boveri AG................. 5,032,946
-------------
UNITED KINGDOM (5.6%)
ELECTRIC UTILITIES
315,000 Powergen PLC........................ 2,888,525
135,000 Yorkshire Electricity PLC........... 1,642,291
-------------
4,530,816
-------------
NATURAL GAS
910,000 British Gas PLC..................... 4,249,190
-------------
TELECOMMUNICATIONS
561,000 Cable & Wireless.................... 4,006,886
1,098,000 Vodafone Group PLC.................. 3,499,546
-------------
7,506,432
-------------
TOTAL UNITED KINGDOM................ 16,286,438
-------------
UNITED STATES (8.0%)
ELECTRIC UTILITIES
40,000 CMS Energy Corp. ................... 900,000
60,000 Duke Power Co. ..................... 2,325,000
60,000 Pacific Gas & Electric.............. 1,477,500
100,000 Southern Co. ....................... 1,887,500
-------------
6,590,000
-------------
NATURAL GAS
70,000 Enron Corp. ........................ 2,135,000
-------------
TELECOMMUNICATIONS
45,000 Bell Atlantic Corp. ................ 2,463,750
40,000 BellSouth Corp. .................... 2,375,000
65,000 GTE Corp. .......................... 2,063,750
55,000 U.S. West, Inc. .................... 2,220,625
-------------
9,123,125
-------------
TELECOMMUNICATIONS - LONG DISTANCE
55,000 AT&T Corp. ......................... 3,011,250
90,000 MCI Communications.................. 2,182,500
-------------
5,193,750
-------------
TOTAL UNITED STATES................. 23,041,875
-------------
TOTAL COMMON STOCKS (Identified Cost
$112,007,805)...................... 117,641,439
-------------
<CAPTION>
PRINCIPAL
AMOUNT
(IN
THOUSANDS)
- ------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (62.8%)
COMMERCIAL PAPER (a) (7.4%)
FINANCE (7.4%)
$ 10,000 American Express Credit Corp. 4.712%
due 9/12/94........................ $ 9,985,639
</TABLE>
17
<PAGE>
DEAN WITTER GLOBAL UTILITIES FUND
PORTFOLIO OF INVESTMENTS August 31, 1994 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(IN
THOUSANDS)
- ------------
<C> <S> <C>
$ 11,500 Ciesco Corp. 4.72% due 9/26/94...... $ 11,462,465
-------------
TOTAL COMMERCIAL PAPER (Amortized
Cost $21,448,104).................. 21,448,104
-------------
U.S. GOVERNMENT AGENCIES (a) (55.3%)
21,200 Federal Home Loan Bank 4.406% due
9/7/94............................. 21,184,489
19,000 Federal Home Loan Mortgage 4.701%
due 9/01/94........................ 19,000,000
29,000 Federal Home Loan Mortgage 4.669%
due 9/19/94........................ 28,932,575
24,000 Federal National Mortgage
Association 4.298% due 9/02/94..... 23,997,147
15,165 Federal National Mortgage
Association 4.317% due 9/06/94..... 15,155,943
10,000 Federal National Mortgage
Association 4.422% due 9/19/94..... 9,978,000
28,000 Student Loan Marketing Association
4.419% due 9/15/94................. 27,952,089
13,600 Student Loan Marketing Association
4.44% due 9/15/94.................. 13,576,623
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(Amortized
Cost $159,776,866)................. 159,776,866
-------------
<CAPTION>
PRINCIPAL
AMOUNT
(IN
THOUSANDS) VALUE
- ------------ -------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.1%)
$ 398 The Bank of New York 4.625% due
9/01/94 (dated 8/31/94; proceeds
$397,919; collateralized by
$397,083 U.S. Treasury Note 7.25%
due 5/15/04 valued at $405,825)
(Identified Cost $397,868)......... $ 397,868
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $181,622,838)..... 181,622,838
-------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (Identified
Cost $293,630,643) (b)............... 103.5% 299,264,277
LIABILITIES IN EXCESS OF
OTHER ASSETS......................... (3.5) (10,257,161)
----------- ----------------
NET ASSETS........................... 100.0 % $ 289,007,116
----------- ----------------
----------- ----------------
<FN>
- ------------------------------
* NON-INCOME PRODUCING SECURITY.
ADR AMERICAN DEPOSITORY RECEIPT.
(A) SECURITIES WERE PURCHASED ON A DISCOUNT BASIS. THE INTEREST RATE SHOWN HAS
BEEN ADJUSTED TO REFLECT A BOND EQUIVALENT YIELD.
(B) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $293,630,643; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $6,361,334 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $727,700, RESULTING IN NET UNREALIZED
APPRECIATION OF $5,633,634.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
DEAN WITTER GLOBAL UTILITIES FUND
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION August 31, 1994
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
VALUE NET ASSETS
------------ ------------
<S> <C> <C>
INDUSTRY
- -------------------------------------------------------------------------------
Electric Equipment............................................................. $ 1,977,627 0.7%
Electric Utilities............................................................. 36,452,999 12.6
Finance........................................................................ 21,448,104 7.4
Machinery - Diversified........................................................ 4,500,911 1.6
Multi-Industry................................................................. 5,032,946 1.7
Natural Gas.................................................................... 6,384,190 2.2
Repurchase Agreement........................................................... 397,868 0.1
Telecommunications............................................................. 46,746,844 16.2
Telecommunications Equipment................................................... 8,467,120 2.9
Telecommunications - Long Distance............................................. 5,193,750 1.8
U.S. Government Agencies....................................................... 159,776,866 55.3
Water.......................................................................... 2,885,052 1.0
------------ -----
$299,264,277 103.5%
------------ -----
------------ -----
</TABLE>
SUMMARY OF INVESTMENTS BY TYPE (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
TYPE OF INVESTMENT
- -------------------------------------------------------------------------------
Common Stocks.................................................................. $117,641,439 40.7%
Short-Term Investments......................................................... 181,622,838 62.8
------------ -----
$299,264,277 103.5%
------------ -----
------------ -----
</TABLE>
19
<PAGE>
DEAN WITTER GLOBAL UTILITIES FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
AUGUST 31, 1994 (UNAUDITED)
- -------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $293,630,643) (Note 1)...... $ 299,264,277
Receivable for:
Shares of beneficial interest sold.......... 3,941,321
Dividends................................... 136,411
Foreign withholding tax reclaimed........... 28,765
Interest.................................... 1,200
Deferred organizational expenses (Note 1)..... 151,847
-------------
Total Assets.......................... 303,523,821
-------------
LIABILITIES:
Payable for:
Investments purchased....................... 13,635,317
Plan of distribution fee (Note 3)........... 243,068
Investment management fee (Note 2).......... 157,994
Shares of beneficial interest repurchased... 93,693
Organizational expenses payable (Note 1)...... 160,000
Accrued expenses & other payables (Note 4).... 226,633
-------------
Total Liabilities..................... 14,516,705
-------------
NET ASSETS:
Paid-in-capital............................... 282,266,282
Undistributed net investment income........... 1,105,951
Undistributed net realized gains.............. 1,164
Net unrealized appreciation................... 5,633,719
-------------
Net Assets............................ $ 289,007,116
-------------
-------------
Net Asset Value Per Share, 28,156,969 shares
outstanding (unlimited shares authorized of
$.01 par value).............................. $10.26
-------------
-------------
</TABLE>
Statement of Operations FOR THE PERIOD
MAY 31, 1994 THROUGH AUGUST 31, 1994 (NOTE 1) (UNAUDITED)
- -------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income
Interest.................................... $ 2,001,764
Dividends (net of $58,456 foreign
withholding tax)........................... 409,277
-----------
Total Income............................ 2,411,041
-----------
Expenses
Plan of distribution fee (Note 3)........... 595,832
Investment management fee (Note 2).......... 387,290
Transfer agent fees and expenses (Note 4)... 119,619
Registration fees........................... 96,793
Custodian fees.............................. 55,149
Professional fees........................... 27,261
Shareholder reports and notices............. 9,998
Organizational expenses (Note 1)............ 8,153
Trustees' fees and expenses................. 4,900
Other expenses.............................. 95
-----------
Total Expenses.......................... 1,305,090
-----------
Net Investment Income............... 1,105,951
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) (Note 1):
Net realized gain (loss) on:
Investments................................. 1,384
Foreign exchange transactions............... (220)
-----------
1,164
-----------
Net unrealized appreciation on:
Investments................................. 5,633,634
Translation of other assets and liabilities
denominated in foreign currencies.......... 85
-----------
5,633,719
-----------
Net Gain................................ 5,634,883
-----------
Net Increase in Net Assets Resulting
from Operations.................... $ 6,740,834
-----------
-----------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD MAY
31, 1994 THROUGH
AUGUST 31, 1994
(NOTE 1)
-------------------
<S> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income........................................................ $ 1,105,951
Net realized gain............................................................ 1,164
Net unrealized appreciation.................................................. 5,633,719
-------------------
Net increase in net assets resulting from operations....................... 6,740,834
Net increase from transactions in shares of beneficial interest (Note 5)......... 282,166,282
-------------------
Total increase............................................................. 288,907,116
NET ASSETS:
Beginning of period.............................................................. 100,000
-------------------
End of period (including undistributed net investment income of $1,105,951)...... $ 289,007,116
-------------------
-------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
DEAN WITTER GLOBAL UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
1. Organization and Accounting Policies--Dean Witter Global Utilities Fund (the
"Fund") is registered under the Investment Company Act of 1940, as amended (the
"Act"), as a diversified, open-end management investment company. The Fund was
organized as a Massachusetts business trust on October 22, 1993 and commenced
operations on May 31, 1994. On February 24, 1994, the Fund issued 10,000 shares
of beneficial interest to Dean Witter InterCapital Inc., (the "Investment
Manager"), for $100,000 to effect the Fund's initial capitalization.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS--(1) an equity security listed or traded on the
New York or American Stock Exchange or other domestic or foreign stock
exchange is valued at its latest sale price on that exchange prior to the
time when assets are valued; if there were no sales that day, the security
is valued at the latest bid price (in cases where securities are traded on
more than one exchange, the securities are valued on the exchange designated
as the primary market by the Trustees); (2) all other portfolio securities
for which over-the-counter market quotations are readily available are
valued at the latest available bid price prior to the time of valuation; (3)
when market quotations are not readily available, including circumstances
under which it is determined by the Investment Manager that sale and bid
prices are not reflective of a security's market value, portfolio securities
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trustees; (4)
certain of the Fund's portfolio securities may be valued by an outside
pricing service approved by the Trustees. The pricing service utilizes a
matrix system incorporating security quality, maturity and coupon as the
evaluation model parameters, and/or research and evaluations by its staff,
including review of broker-dealer market price quotations, in determining
what it believes is the fair valuation of the securities valued by such
pricing service; and (5) short-term debt securities having a maturity date
of more than sixty days are valued on a mark-to-market basis, that is, at
prices based on market quotations for securities of a similar type, yield,
quality and maturity, until sixty days prior to maturity and thereafter at
amortized cost using their value on the 61st day. Short-term debt securities
having a maturity date of sixty days or less at the time of purchase are
valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS--Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined on the identified cost
method. Dividend income is recorded on the ex-dividend date except with
respect for certain dividends on foreign securities which are recorded as
soon as the Fund is informed after the ex-dividend date. Interest income is
accrued daily and includes amortization of discounts of certain short-term
securities.
C. FOREIGN CURRENCY TRANSLATION--The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value
of investment securities, other assets and liabilities and forward contracts
are translated at the exchange rates prevailing at the end of the period;
and (2) purchases, sales, income and expenses are translated at the exchange
rate prevailing on the respective dates of such transactions. The resultant
exchange gains and losses are included in the Statement of Operations as
realized and unrealized gain/loss on foreign exchange transactions. Pursuant
to U.S. Federal income tax regulations, certain foreign exchange
gains/losses included in realized and unrealized gain/ loss are included in
or are a reduction of ordinary income for federal income tax purposes. The
Fund does not isolate that portion of the results of operations arising as a
result of changes in the foreign exchange rates from the changes in the
market prices of the securities.
D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--The Fund may enter into
forward foreign currency exchange contracts as a hedge against fluctuations
in foreign exchange rates. Forward contracts are valued daily at the
appropriate exchange rates and any resulting unrealized currency gains or
losses are reflected in the Fund's accounts. The Fund records realized gains
or losses on delivery of the currency or at the time the forward contract is
extinguished (compensated) by entering into a closing transaction prior to
delivery.
E. REPURCHASE AGREEMENTS--The Fund's custodian takes possession on behalf of
the Fund of the collateral pledged for investments in repurchase agreements.
It is the policy of the Fund to value the underlying collateral daily on a
mark-to-market basis to determine that the value, including accrued
interest, is at least equal to the repurchase price plus accrued interest.
In the event of default of the obligation to repurchase, the Fund has the
right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation.
F. FEDERAL INCOME TAX STATUS--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
21
<PAGE>
DEAN WITTER GLOBAL UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS--The Fund records dividends
and distributions to its shareholders on the record date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net
realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they
exceed net investment income and net realized capital gains for tax
purposes, they are reported as distributions of paid-in-capital.
H. ORGANIZATIONAL EXPENSES--The Fund's Investment Manager paid the
organizational expenses of the Fund in the amount of approximately $160,000.
The Fund will reimburse the Investment Manager for such expenses which have
been deferred and are being amortized by the Fund on the straight line
method over a period not to exceed five years from the commencement of
operations.
2. Investment Management Agreement--Pursuant to an Investment Management
Agreement with Dean Witter InterCapital Inc. the Investment Manager, the Fund
pays its Investment Manager a monthly management fee, calculated and accrued
daily, by applying the annual rate of 0.65% to the net assets of the Fund
determined as of the close of each business day.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. Plan of Distribution--Shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager.
The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1
under the Act pursuant to which the Fund pays the Distributor compensation
accrued daily and payable monthly at an annual rate of 1.0% of the lesser of:
(a) the average daily aggregate gross sales of the Fund's shares since the
inception of the Fund (not including reinvestment of dividend or capital gain
distributions), less the average daily aggregate net asset value of the Fund's
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or upon which such charge has been waived; or (b)
the Fund's average daily net assets. Amounts paid under the Plan are paid to the
Distributor to compensate it for the services provided and the expenses borne by
it and others in the distribution of the Fund's shares, including the payment of
commissions for sales of the Fund's shares and incentive compensation to and
expenses of the account executives of Dean Witter Reynolds Inc., an affiliate of
the Investment Manager and Distributor, and other employees or selected dealers
who engage in or support distribution of the Fund's shares or who service
shareholder accounts, including overhead and telephone expenses, printing and
distribution of prospectuses and reports used in connection with the offering of
the Fund's shares to other than current shareholders and preparation, printing
and distribution of sales literature and advertising materials. In addition, the
Distributor may be compensated under the Plan for its opportunity costs in
advancing such amounts, which compensation would be in the form of a carrying
charge on any unreimbursed expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred
but not yet recovered may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the period ended August 31,
1994, it received approximately $53,000 in deferred sales charges from certain
redemptions of the Fund's shares. The Fund's shareholders pay such charges which
are not an expense of the Fund.
4. Security Transactions and Transactions with Affiliates--The cost of
purchases and proceeds from sales of portfolio securities, excluding short-term
investments, for the period May 31, 1994 (commencement of operations) through
August 31, 1994 aggregated $112,207,275 and $200,854, respectively.
For the same period, the Fund incurred brokerage commissions of
approximately $12,000 with Dean Witter Reynolds Inc. for transactions executed
on behalf of the Fund.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At August 31, 1994, the Fund had
transfer agent fees and expenses payable of approximately $49,000.
22
<PAGE>
DEAN WITTER GLOBAL UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
5. Shares of Beneficial Interest--Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD MAY 31,
1994*
THROUGH AUGUST 31, 1994
------------------------
SHARES AMOUNT
---------- ------------
<S> <C> <C>
Shares sold................................................................. 28,811,330 $288,883,405
Repurchased................................................................. (664,361) (6,717,123)
---------- ------------
Net increase................................................................ 28,146,969 $282,166,282
---------- ------------
---------- ------------
<FN>
- ------------------------
* Commencement of Operations.
</TABLE>
6. Selected Per Share Data and Ratios--See the "Financial Highlights" table on
page 4 of this Prospectus.
23
<PAGE>
DEAN WITTER
GLOBAL UTILITIES FUND
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive
Officer
Sheldon Curtis
Vice President, Secretary and
General Counsel
Edward F. Gaylor
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Bank of New York
90 Washington Street
New York, New York 10286
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
Dean Witter Trust Company
Harborside Financial Center,
Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
