<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MARILYN K. CRANNEY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES
CORE EQUITY PORTFOLIO
BALANCED PORTFOLIO
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 26, 1998
------------------------
Notice is hereby given that a Special Meeting of Shareholders of the Core
Equity Portfolio and the Balanced Portfolio of DEAN WITTER SELECT DIMENSIONS
INVESTMENT SERIES (the "Fund") will be held in the Career Development Room, 61st
Floor, 2 World Trade Center, New York, New York 10048, on February 26, 1998 (the
"Meeting"), at 1:30 p.m., New York City time, for the following purposes:
1. For the Core Equity Portfolio only, to approve or disapprove a
sub-advisory agreement between Dean Witter InterCapital Inc.
("InterCapital") and Morgan Stanley Asset Management Inc. ("MSAM") (to be
voted on by shareholders of the Core Equity Portfolio only);
2. For the Balanced Portfolio only, to approve or disapprove a change
in the Portfolio's investment objective from high total return through a
combination of income and capital appreciation to capital growth with
reasonable current income (to be voted on by shareholders of the Balanced
Portfolio only);
3. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Shareholders of record as of the close of business on November 14, 1997 are
entitled to notice of and to vote at the Meeting. If you cannot be present in
person, your management would greatly appreciate your filling in, signing and
returning the enclosed proxy promptly in the envelope provided for that purpose.
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Meeting with
respect to the Core Equity Portfolio or the Balanced Portfolio, the persons
named as proxies may propose one or more adjournments of the Meeting for a total
of not more than 60 days in the aggregate to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of the holders
of a majority of the shares of the Core Equity Portfolio and/or the Balanced
Portfolio, as applicable, present in person or by proxy at the Meeting. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of Proposals 1 and 2 and will vote
against any such adjournment those proxies to be voted against Proposals 1 and
2.
BARRY FINK
SECRETARY
December 1, 1997
New York, New York
IMPORTANT
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU
ARE UNABLE TO BE PRESENT IN PERSON, PLEASE FILL IN, SIGN AND RETURN THE
ENCLOSED PROXY IN ORDER THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE
MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU CAST YOUR VOTE:
FOR APPROVAL OF THE SUB-ADVISORY AGREEMENT FOR THE CORE EQUITY PORTFOLIO.
FOR APPROVAL OF THE CHANGE IN THE INVESTMENT OBJECTIVE OF THE BALANCED
PORTFOLIO.
YOUR VOTE IS IMPORTANT
<PAGE>
DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES
CORE EQUITY PORTFOLIO
BALANCED PORTFOLIO
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 26, 1998
This statement is furnished in connection with the solicitation of proxies
by the Board of Trustees (the "Board" or "Trustees") of DEAN WITTER SELECT
DIMENSIONS INVESTMENT SERIES (the "Fund") for use at the Special Meeting of
Shareholders of the Core Equity Portfolio and the Balanced Portfolio of the Fund
to be held on February 26, 1998 (the "Meeting"), and at any adjournments
thereof. The first mailing of this Proxy Statement is expected to be made on or
about December 1, 1997.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon.
Unmarked proxies will be voted in favor of Proposals 1 and 2 set forth in the
attached Notice of Special Meeting of Shareholders. A proxy may be revoked at
any time prior to its exercise by any of the following: written notice of
revocation to the Secretary of the Fund, execution and delivery of a later dated
proxy to the Secretary of the Fund (if returned and received in time to be
voted), or attendance and voting at the Meeting. Attendance at the Meeting will
not in and of itself revoke a proxy.
The table below sets forth each Proposal and those shareholders who are
entitled to vote for each such Proposal.
<TABLE>
<CAPTION>
PORTFOLIO OF THE FUND PROPOSAL
- ------------------------------
<S> <C> <C>
1 2
Core Equity Portfolio......... x
Balanced Portfolio............ x
</TABLE>
The Fund consists of thirteen separate Portfolios. The holders of shares
("Shareholders") of the Core Equity Portfolio and the Balanced Portfolio of the
Fund of record as of the close of business on November 14, 1997, the record date
for the determination of Shareholders entitled to notice of and to vote at the
Meeting (the "Record Date"), are entitled to one vote for each share held and a
fractional vote for a fractional share. The table below sets forth the number of
shares outstanding for Core Equity Portfolio and the Balanced Portfolio as of
the Record
2
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Date. The percentage ownership of shares of the Core Equity Portfolio and the
Balanced Portfolio changes from time to time depending on purchases and
redemptions by Shareholders and the total number of shares outstanding.
<TABLE>
<CAPTION>
NUMBER OF SHARES OUTSTANDING
AS OF NOVEMBER 14, 1997 (RECORD
NAME OF PORTFOLIO DATE)
- ------------------------------------------------------------------------------ -----------------------------------
<S> <C>
Core Equity Portfolio......................................................... 2,344,020
Balanced Portfolio............................................................ 4,547,003
</TABLE>
The shares of the Fund are currently sold only to (1) Hartford Life
Insurance Company for allocation to certain of its separate accounts established
to fund the benefits under certain flexible premium deferred variable annuity
contracts and certain flexible premium variable life insurance policies it
issues, and to (2) ITT Hartford Life and Annuity Insurance Company for
allocation to certain of its separate accounts established to fund the benefits
under certain flexible premium deferred variable annuity contracts and certain
flexible premium variable life insurance policies it issues. Such separate
accounts are sometimes referred to individually as an "Account" and collectively
as the "Accounts." The variable annuity contracts issued by Hartford Life
Insurance Company and ITT Hartford Life and Annuity Insurance Company are
sometimes referred to as the "Variable Annuity Contracts." The variable life
insurance policies issued by Hartford Life Insurance Company and ITT Hartford
Life and Annuity Insurance Company are sometimes referred to as the "Variable
Life Policies." The Variable Annuity Contracts and the Variable Life Policies
are sometimes referred to as the "Contracts."
In accordance with their view of currently applicable law, Hartford Life
Insurance Company and ITT Hartford Life and Annuity Insurance Company will vote
the shares of each of the Core Equity Portfolio and the Balanced Portfolio held
in the applicable Account based on instructions received from the owners of
Contracts ("Contract Owners") having the voting interest in the corresponding
Sub-Accounts of the Account. In connection with the solicitation of such
instructions from such Contract Owners, it is understood and expected that
Hartford Life Insurance Company and ITT Hartford Life and Annuity Insurance
Company will furnish a copy of this Proxy Statement to Contract Owners and that
Hartford Life Insurance Company and ITT Hartford Life and Annuity Insurance
Company will furnish to Contract Owners one or more instruction cards by which
the Contract Owners may provide their instructions to Hartford Life Insurance
Company and ITT Hartford Life and Annuity Insurance Company. Shares for which no
instructions are received in time to be voted will be voted by Hartford Life
Insurance Company and ITT Hartford Life and Annuity Insurance Company in the
same proportion as shares for which instructions have been received in time to
be voted.
The cost of soliciting proxies for the Meeting, which consists principally
of printing and mailing expenses and which is expected to be approximately
$45,400, will be allocated between the Core Equity Portfolio and the Balanced
Portfolio as follows: each Portfolio will pay its own mailing expenses and its
proportionate share of the expenses of printing this Proxy Statement. The
solicitation of proxies will be by mail, which may be supplemented by
solicitation by mail, telephone or otherwise through Trustees and officers of
the Fund and officers and regular employees of certain affiliates of the Fund,
including Dean Witter InterCapital Inc., Dean Witter Trust FSB, Dean Witter
Services Company Inc. and/or Dean Witter Reynolds Inc., without special
compensation.
Dean Witter Trust FSB may call Shareholders to ask if they would be willing
to have their votes recorded by telephone. The telephone voting procedure is
designed to authenticate Shareholders' identities, to allow Shareholders to
authorize the voting of their shares in accordance with their instructions and
to confirm that their instructions have been recorded properly. No
recommendation will be made as to how a Shareholder should vote on a Proposal
other than to refer to the recommendation of the Board. The Fund has been
advised by counsel that
3
<PAGE>
these procedures are consistent with the requirements of applicable law.
Shareholders voting by telephone will be asked for their social security number
or other identifying information and will be given an opportunity to authorize
proxies to vote their shares in accordance with their instructions. To ensure
that the Shareholders' instructions have been recorded correctly they will
receive a confirmation of their instructions in the mail. A special toll-free
number will be available in case the information contained in the confirmation
is incorrect. Although a Shareholder's vote may be taken by telephone, each
Shareholder will receive a copy of this Proxy Statement and may vote by mail
using the enclosed proxy card.
FOR THE CORE EQUITY PORTFOLIO
(1) APPROVAL OR DISAPPROVAL OF SUB-ADVISORY AGREEMENT BETWEEN INTERCAPITAL AND
MORGAN STANLEY ASSET MANAGEMENT INC. WITH RESPECT TO
THE CORE EQUITY PORTFOLIO
BACKGROUND
Dean Witter InterCapital Inc. (the "Investment Manager" or "InterCapital")
currently serves as investment manager of the Fund pursuant to an investment
management agreement entered into by the Fund and InterCapital (the "Management
Agreement"), and in that capacity, subject to the supervision of the Trustees,
supervises the investment activities of the Core Equity Portfolio. InterCapital
is a wholly-owned subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
("MSDWD"). In accordance with the Management Agreement, InterCapital entered
into a sub-advisory agreement with TCW Funds Management, Inc. ("TCW") (the
"Current Sub-Advisory Agreement") pursuant to which TCW has provided the Core
Equity Portfolio with investment advice and portfolio management relating to the
Core Equity Portfolio's investments, subject to the overall supervision of
InterCapital. TCW has advised the Board of Trustees of the Fund and InterCapital
of its intention to resign as sub-adviser. TCW has advised the Board and
InterCapital that in order to ensure an orderly transition to a new sub-adviser,
it would continue serving as sub-adviser to the Core Equity Portfolio until such
time as Shareholders of the Core Equity Portfolio approve a new sub-advisory
agreement with a new sub-adviser and the new agreement is implemented.
Prior to the Special Meeting of the Board of Trustees on November 6, 1997,
InterCapital recommended to the Board the selection of Morgan Stanley Asset
Management Inc. ("MSAM"), an affiliate of InterCapital, to act as the new
sub-adviser to the Fund (see "Morgan Stanley Asset Management Inc." below). MSAM
would perform the same duties previously performed by TCW. InterCapital's
recommendation was based primarily on its favorable view of the organizational
depth, reputation, historical performance, expertise and experience of MSAM. In
addition, InterCapital recommended to the Board that upon the approval and
execution of a new sub-advisory agreement with MSAM (the "New Sub-Advisory
Agreement"), the name of the Core Equity Portfolio be changed to the Growth
Portfolio. In connection therewith, InterCapital also proposed that upon
approval and execution of the New Sub-Advisory Agreement, the Trustees approve
an amendment to the Management Agreement that would reduce the overall annual
management fee InterCapital receives from the Fund with respect to the Core
Equity Portfolio from 0.85% of the daily net assets of the Core Equity Portfolio
to 0.80% of the daily net assets of the Core Equity Portfolio. This would have
the concomitant effect of lowering the fee payable under the New Sub-Advisory
Agreement which, identical to the fee under the Current Sub-Advisory Agreement,
is proposed to amount to 40% of the fee payable to InterCapital pursuant to the
Investment Management Agreement (see "The Current Sub-Advisory Agreement"
below).
4
<PAGE>
THE BOARD'S CONSIDERATION
The Board of the Fund met in person on November 6, 1997 for the purpose of
considering the selection of a new sub-adviser and adoption of the New
Sub-Advisory Agreement for the Core Equity Portfolio (the "New Sub-Advisory
Agreement"). At their meeting in person on November 6, 1997, the Trustees
considered InterCapital's recommendation. In particular, the Trustees considered
the performance of certain similar funds and accounts currently advised by MSAM.
The Trustees also considered the quality and extent of the services proposed to
be provided by MSAM, and the organizational depth, reputation and experience of
MSAM in investing in equity securities. In addition, the Trustees reviewed
material furnished by MSAM regarding MSAM's personnel and operations. Prior to
the meeting, representatives of MSAM reviewed with the Independent Trustees
(that is, the Trustees who are not "interested persons" of the Fund, as that
term is defined in the Investment Company Act of 1940, as amended (the "Act"))
their respective philosophies of management, performance expectations and
methods of operation. The Board was informed that, in managing the portfolio of
the Core Equity Portfolio, MSAM would implement certain changes to the
Portfolio's investment policies that the Board has approved. These changes
relate to implementing MSAM's "equity growth" strategy, which would replace
TCW's "top down sector rotational core equity" philosophy. TCW first considers
market sectors and then focuses on industries and individual companies. In
contrast, MSAM's strategy will emphasize individual security selection and then
consideration of the weighting that selected companies and industries will have
in the portfolio. The Board considered the confluence of all the factors
mentioned above in arriving at its decision to approve the appointment of MSAM
as sub-adviser and no one factor was given any greater weight than any of the
others.
The Board of Trustees found MSAM's experience in investing in equity
securities and historical performance to be well suited for the Core Equity
Portfolio. In addition, the Board of Trustees reviewed and discussed the terms
and provisions of the New Sub-Advisory Agreement. The terms of the New
Sub-Advisory Agreement are identical, in all material respects, to the Current
Sub-Advisory Agreement, except for the identity of the Sub-Adviser and the dates
of effectiveness and termination. The terms of the Current Sub-Advisory
Agreement are described under "The Current Sub-Advisory Agreement" below. A form
of the New Sub-Advisory Agreement is attached as EXHIBIT A. Based on their
consideration of the foregoing and such other factors as they deemed relevant,
the Trustees determined that it would be in the best interests of the Core
Equity Portfolio and its Shareholders to select MSAM to serve as sub-adviser to
the Core Equity Portfolio pursuant to the New Sub-Advisory Agreement.
Based upon the Board's review and evaluations of the materials described
above and its consideration of all factors deemed relevant, the Board determined
that the New Sub-Advisory Agreement is reasonable, fair and in the best
interests of the Core Equity Portfolio and its Shareholders. Accordingly, the
Board, including all of the Independent Trustees, approved the New Sub-Advisory
Agreement and voted to recommend its approval to the Core Equity Portfolio's
Shareholders.
THE CURRENT SUB-ADVISORY AGREEMENT
The Current Sub-Advisory Agreement requires that the sub-adviser provide the
Core Equity Portfolio with investment advisory services for its investments. The
investment advisory services that the sub-adviser is required to provide
include, among other things: obtaining and evaluating such information and
advice relating to the economy, securities markets and securities as it deems
necessary or useful to discharge its duties; continuously managing the assets of
the Core Equity Portfolio in a manner consistent with the investment objective
and policies of the Core Equity Portfolio, making decisions as to foreign
currency matters and making determinations as to forward foreign exchange
contracts and options and futures contracts in foreign currencies; determining
the securities to be purchased, sold or otherwise disposed of by the Core Equity
Portfolio and the timing of such
5
<PAGE>
purchases, sales and dispositions; taking such further action, including the
placing of purchase and sale orders on behalf of the Core Equity Portfolio,
furnishing or placing at the disposal of the Core Equity Portfolio and
InterCapital such of the information, evaluations, analyses and opinions
formulated or obtained by it in the discharge of its duties as the Core Equity
Portfolio and InterCapital may, from time to time, reasonably request.
The Current Sub-Advisory Agreement provides that the sub-adviser shall, at
its own expense, maintain such staff and employ or retain such personnel and
consult with such other persons as it shall, from time to time, determine to be
necessary or useful to the performance of its obligations under the Current
Sub-Advisory Agreement. The sub-adviser also bears other costs of rendering the
investment advisory services performed by it pursuant to the Current
Sub-Advisory Agreement, including such clerical help and bookkeeping services as
it may require.
The Current Sub-Advisory Agreement was approved by the Board of Trustees
(including a majority of the Independent Trustees) on February 21, 1997 and by
the Shareholders of the Core Equity Portfolio of the Fund at a Special Meeting
of Shareholders on May 21, 1997 in connection with the merger of Dean Witter
Discover & Co. ("DWDC") and Morgan Stanley Group Inc. ("Morgan Stanley"), which
resulted in the formation of MSDWD.
The Current Sub-Advisory Agreement provides that, after its initial period
of effectiveness, it may be continued in effect from year to year, provided that
such continuance is approved by the vote of a majority of the outstanding voting
securities (as defined below) of the Core Equity Portfolio or by the Trustees of
the Fund, and, in either event, by the vote cast in person by a majority of the
Independent Trustees at a meeting called for the purpose of voting on such
approval.
The Current Sub-Advisory Agreement also provides that it may be terminated
at any time by the sub-adviser, InterCapital, the Board (including a majority of
the Independent Trustees) or by a vote of the majority of the outstanding voting
securities of the Core Equity Portfolio (as defined below), in each instance
without the payment of any penalty, on thirty days' notice. The Current
Sub-Advisory Agreement also terminates in the event of the termination of the
Management Agreement or in the event of its assignment.
MORGAN STANLEY ASSET MANAGEMENT INC.
MSAM, like InterCapital, is a wholly-owned subsidiary of MSDWD, a preeminent
global financial services firm that maintains leading market positions in each
of its three primary businesses--securities, asset management and credit
services. As noted above, MSDWD, whose principal office is located at 1585
Broadway, New York, New York 10036, was formed as a result of the merger of DWDC
and Morgan Stanley which was consummated on May 31, 1997. InterCapital has its
principal offices at Two World Trade Center, New York, New York 10048. MSAM has
its principal offices at 1221 Avenue of the Americas, New York, New York 10020
and conducts a worldwide portfolio management business. It provides a broad
range of portfolio management services to customers in the United States and
abroad.
Set forth below is the name and principal occupation of the principal
executive officer and each director of MSAM. The address for each is 1221 Avenue
of the Americas, New York, New York 10020:
<TABLE>
<S> <C>
Barton M. Biggs, Chairman and Managing Director, MSAM; Managing Director of
CHAIRMAN OF THE BOARD OF Morgan Stanley & Co. Incorporated ("MS & Co."); Chairman of
DIRECTORS Morgan Stanley Asset Management Limited; Director of Van
Kampen/American Capital Holdings, Inc. ("VK/AC Holdings,
Inc.")
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Peter A. Nadosy, Vice Chairman, Director and Managing Director, MSAM; Managing
VICE-CHAIRMAN OF THE BOARD OF Director of MS & Co.; Director of Morgan Stanley Asset
DIRECTORS Management Limited
James M. Allwin, President, Director and Managing Director, MSAM; Managing
DIRECTOR AND PRESIDENT Director of MS & Co.; President of Morgan Stanley Realty
Inc.; Director of VK/AC Holdings, Inc.
Gordon S. Gray, Director and Managing Director, MSAM; Managing Director of MS
DIRECTOR & Co.
Dennis G. Serva, Director and Managing Director, MSAM; Managing Director of MS
DIRECTOR & Co.
</TABLE>
MSAM serves in various portfolio management and similar capacities to
investment companies and pension plans and other institutional and individual
investors. APPENDIX I lists the investment companies for which MSAM provides
investment management or investment advisory services and which have similar
investment objectives to those of the Core Equity Portfolio and sets forth the
fees payable to MSAM by such companies and their net assets as of October 31,
1997.
Dean Witter Trust FSB ("DWT"), an affiliate of MSAM and InterCapital and a
wholly-owned subsidiary of MSDWD, serves as transfer agent of the Fund. For the
fiscal year ended December 31, 1996, the Core Equity Portfolio accrued to DWT
transfer agency fees of $917. Once the New Sub-Advisory Agreement is approved,
DWT fully intends to continue to provide the same services to the Fund as are
currently being provided.
MS & Co. became an affiliated broker of the Fund (MS & Co., MSAM and
InterCapital are under the common control of MSDWD) upon the consummation of the
merger of DWDC and Morgan Stanley on May 31, 1997, which date is subsequent to
the Fund's last fiscal year. During the fiscal year ended December 31, 1996, the
Core Equity Portfolio paid brokerage commissions to DWR, an affiliated broker of
the Fund, in the amount of $4,616, which represented 23.11% of aggregate
brokerage commissions of the Core Equity Portfolio during the period.
REQUIRED VOTE
The New Sub-Advisory Agreement cannot be implemented with respect to the
Core Equity Portfolio unless approved at the Meeting, or any adjournment
thereof, by a majority of the outstanding voting securities of the Core Equity
Portfolio. Such a majority means the affirmative vote of the holders of (a) 67%
or more of the shares of the Core Equity Portfolio present, in person or by
proxy, at the Meeting, if the holders of more than 50% of the outstanding shares
are so present, or (b) more than 50% of the outstanding shares of the Core
Equity Portfolio, whichever is less. In the event that Shareholders do not
approve the New Sub-Advisory Agreement by the required majority vote, the Board
will take such action as it deems in the best interests of the Core Equity
Portfolio and its Shareholders, which may include calling a special meeting of
Shareholders to vote on another sub-advisory agreement.
THE TRUSTEES, INCLUDING ALL THE INDEPENDENT TRUSTEES, OF THE FUND RECOMMEND
THAT SHAREHOLDERS OF THE CORE EQUITY PORTFOLIO VOTE FOR APPROVAL OF THE NEW
SUB-ADVISORY AGREEMENT WITH RESPECT TO THE CORE EQUITY PORTFOLIO.
7
<PAGE>
FOR THE BALANCED PORTFOLIO
(2) PROPOSAL TO CHANGE THE INVESTMENT OBJECTIVE OF THE BALANCED PORTFOLIO FROM
HIGH TOTAL RETURN THROUGH A COMBINATION OF INCOME AND CAPITAL APPRECIATION TO
AN INVESTMENT OBJECTIVE OF CAPITAL GROWTH WITH REASONABLE INCOME
BACKGROUND
The Balanced Portfolio is currently managed by InterCapital (the "Investment
Manager") pursuant the investment management agreement entered into by the Fund
and InterCapital (the "Management Agreement") and in that capacity, subject to
the supervision of the Trustees, InterCapital supervises the investment
activities of the Balanced Portfolio. Paragraph 2 of the Management Agreement
provides, in relevant part, that the Investment Manager may, at its own expense,
from time to time and in its discretion, enter into a Sub-Advisory Agreement
with a Sub-Adviser to make determinations as to the securities and commodities
to be purchased, sold or otherwise disposed of by the Balanced Portfolio, and
the timing of such purchases, sales and dispositions and to take such further
action, including the placing of purchase and sale orders on behalf of the
Balanced Portfolio, as the Sub-Adviser in consultation with the Investment
Manager, shall deem necessary or appropriate; provided that the Investment
Manager shall be responsible for monitoring compliance by such Sub-Adviser with
the investment policies and restrictions of the Balanced Portfolio and with such
other limitations or directions as the Trustees of the Fund may from time to
time prescribe. Paragraph 2 of the Management Agreement further provides that
upon termination of any such Sub-Advisory Agreement, the Investment Manager may
assume all of the duties that were the responsibility of the Sub-Adviser under
the Sub-Advisory Agreement.
In accordance with the Management Agreement, InterCapital entered into a
Sub-Advisory Agreement with TCW Funds Management, Inc. ("TCW") (the "TCW
Sub-Advisory Agreement") pursuant to which TCW has provided the Balanced
Portfolio with the services described above. TCW has advised the Board and
InterCapital of its intention to resign as Sub-Adviser.
Prior to the Special Meeting of the Board of Trustees on November 6, 1997,
InterCapital advised the Board of its intent to assume the duties previously
performed by TCW for the Balanced Portfolio in accordance with Paragraph 2 of
the Management Agreement. In connection therewith, InterCapital also proposed
that the management fee be reduced from 0.75% of the daily net assets of the
Balanced Portfolio to 0.60% of the daily net assets of the Balanced Portfolio,
which is the same fee charged by InterCapital for management of another open-end
investment company with substantially similar investment objective and
investment policies (Dean Witter Balanced Growth Fund).
InterCapital also recommended to the Board a change in the investment
objective of the Balanced Portfolio from its current investment objective of
high total return through a combination of income and capital appreciation, to
an investment objective of capital growth with reasonable current income.
Implementation of the change in objective would require Shareholder approval.
InterCapital believes that the new investment objective would be in the best
interests of the Portfolio and its Shareholders because it would potentially
permit greater emphasis on capital growth under conditions perceived by
InterCapital to be favorable for such investments, than would the current
objective, while at the same time retaining a significant income component.
Consistent with the foregoing, InterCapital also recommended that the name of
the Portfolio be changed to the Balanced Growth Portfolio.
InterCapital also proposed various changes in non-fundamental practices and
policies of the Portfolio. Among other things, these changes would conform more
closely the investment practices and policies of the
8
<PAGE>
Portfolio to the investment practices and policies pursued by InterCapital on
behalf of the Dean Witter Balanced Growth Fund noted above. Currently, the
prospectus of the Fund states that the Balanced Portfolio may invest in equity
and fixed income securities to varying degrees although the Portfolio is
expected to invest under normal conditions 60-70% of its assets in common stocks
and that common stocks for the Balanced Portfolio are selected pursuant to a
"top down" investment process ranging from the overall economic outlook, to the
development of industry/sector preferences, and, lastly, to specific stock
selections. At least 95% of the issuers in whose common stocks the Balanced
Portfolio invests will have minimum market capitalizations at the time of
purchase in excess of $1 billion. InterCapital proposes instead that the
Portfolio have a stated policy of investing at least 60% of its total assets in
common stocks or securities convertible into common stocks which have a record
of paying dividends and in the opinion of InterCapital have the potential for
increasing dividends. In addition, the Fund's prospectus currently states that
the Balanced Portfolio is authorized to engage in transactions involving options
and futures contracts but does not presently intend to engage in such
transactions. InterCapital proposes instead that the Portfolio engage to a
limited extent in futures contracts and options transactions for the purpose of
hedging the Portfolio's portfolio securities (I.E., write covered options on
portfolio securities in an amount not to exceed 5% of the value of its total
assets and purchase put and call options on securities and stock indexes in an
amount not to exceed 5% of the value of its total assets).
The only matter regarding the Balanced Portfolio on which Shareholders are
being asked to vote is the change in investment objective. All of the other
matters discussed above may be implemented without Shareholder approval.
THE BOARD'S CONSIDERATION
The Board of the Fund met in person on November 6, 1997 for the purpose of
considering the proposed change in the Balanced Portfolio's investment
objective, as well as InterCapital's other recommendations regarding the
Balanced Portfolio as previously described above. At their meeting in person on
November 6, 1997, the Trustees considered each of InterCapital's
recommendations. Prior to and during the meeting the Trustees requested
information they deemed necessary to enable them to determine whether the
recommendations are in the best interests of the Balanced Portfolio and its
Shareholders.
Based upon its review of the nature and quality of services proposed to be
provided by InterCapital at a reduced fee, the Board determined that
InterCapital's assumption of the duties previously performed by the Portfolio's
Sub-Adviser is in the best interests of the Balanced Portfolio and its
Shareholders. In particular, the Board found InterCapital's expertise in equity
and fixed income investing to be well suited for the Balanced Portfolio. The
Board also determined that the change in investment objective was in the best
interests of the Balanced Portfolio and its Shareholders because it would
potentially permit a greater emphasis on capital growth under conditions
perceived by the Investment Manager to be favorable for such investments than
would the current objective while at the same time retaining a significant
income component. Accordingly, the Board, including all of the Independent
Trustees, voted to recommend approval of the change in investment objective to
the Balanced Portfolio's Shareholders.
REQUIRED VOTE
The Balanced Portfolio's investment objective is fundamental and cannot be
changed unless such change is approved at the Meeting, or any adjournments
thereof, by a majority of the outstanding voting securities of the Balanced
Portfolio. Such a majority means the affirmative vote of the holders of (a) 67%
of more of the shares of
9
<PAGE>
the Balanced Portfolio present, in person or by proxy, at the Meeting, if the
holders of more than 50% of the outstanding shares are so present, or (b) more
than 50% of the outstanding shares of the Balanced Portfolio, whichever is less.
THE TRUSTEES, INCLUDING ALL THE INDEPENDENT TRUSTEES, OF THE FUND RECOMMEND
THAT SHAREHOLDERS OF THE BALANCED PORTFOLIO VOTE FOR APPROVAL OF THE CHANGE IN
THE BALANCED PORTFOLIO'S INVESTMENT OBJECTIVE.
INTEREST OF CERTAIN PERSONS
MSDWD, InterCapital, MSAM, MS & Co., DWSC and certain of their respective
Directors, officers, and employees, including persons who are Trustees or
officers of the Fund, may be deemed to have an interest in the proposals
described in this Proxy Statement to the extent that certain of such companies
and their affiliates have contractual and other arrangements, described
elsewhere in this Proxy Statement, pursuant to which they are paid fees by the
Fund, and certain of those individuals are compensated for performing services
relating to the Fund and may also own shares of MSDWD. Such companies and
persons may thus be deemed to derive benefits from the approvals by Shareholders
of such proposals.
ADDITIONAL INFORMATION
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Meeting with
respect to Core Equity Portfolio or the Balanced Portfolio, the persons named as
proxies may propose one or more adjournments of the Meeting for a total of not
more than 60 days in the aggregate, to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of the holders of a
majority of the Core Equity Portfolio's shares and/or the Balanced Portfolio
shares, as the case may be, present in person or by proxy at the Meeting. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of Proposals 1 and 2 and will vote
against any such adjournment those proxies required to be voted against those
proposals.
Abstentions and, if applicable, broker "non-votes" will not count as votes
in favor of any of the proposals, and broker "non-votes" will not be deemed to
be present at the Meeting for purposes of determining whether a particular
proposal to be voted upon has been approved. Broker "non-votes" are shares held
in street name for which the broker indicates that instructions have not been
received from the beneficial owners or other persons entitled to vote and for
which the broker does not have discretionary voting authority.
SHAREHOLDER PROPOSALS
The Fund does not hold regular Shareholders' meetings. Proposals of
Shareholders intended to be presented at the next meeting of Shareholders must
be received a reasonable time prior to the mailing of the proxy materials sent
in connection with the meeting, for inclusion in the proxy statement for that
meeting.
REPORTS TO SHAREHOLDERS
THE FUND'S MOST RECENT ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
1996, AND ITS MOST RECENT SEMI-ANNUAL REPORT, ARE AVAILABLE WITHOUT CHARGE UPON
REQUEST FROM NINA MACEDA AT DEAN WITTER TRUST FSB, HARBORSIDE FINANCIAL CENTER,
PLAZA TWO, JERSEY CITY, NEW JERSEY 07311 (TELEPHONE 1-800-869-NEWS (TOLL-FREE)).
10
<PAGE>
OTHER BUSINESS
The management of the Fund knows of no other matters which may be presented
at the Meeting. However, if any matters not now known properly come before the
Meeting, it is the intention of the persons named in the enclosed form of proxy
to vote all shares that they are entitled to vote on any such matter, utilizing
such proxy in accordance with their best judgment on such matters.
By Order of the Board of Trustees
BARRY FINK
SECRETARY
11
<PAGE>
APPENDIX I
Morgan Stanley Asset Management Inc. serves as investment adviser or
sub-adviser to the open-end investment companies listed below which have similar
investment objectives to that of the Core Equity Portfolio, with the net assets
shown as of October 31, 1997.
<TABLE>
<CAPTION>
NET ASSETS
AS OF CURRENT INVESTMENT MANAGEMENT FEE RATE(S)
10/31/97 AS A PERCENTAGE OF NET ASSETS
---------------- --------------------------------------------------
<S> <C> <C>
1. Morgan Stanley Institutional Fund, Inc.* (1)
(A) Active Country Allocation Portfolio......... $ 128,857,432 0.65%
(B) Aggressive Equity Portfolio................. 167,199,717 0.80%
(C) Asian Equity Portfolio...................... 124,603,842 0.80%
(D) Balanced Portfolio.......................... 5,076,974 0.50%
(E) China Growth Portfolio (2).................. 0 1.25%
(F) Emerging Growth Portfolio................... 60,718,382 1.00%
(G) Emerging Markets Portfolio.................. 1,612,645,934 1.25%
(H) Equity Growth Portfolio..................... 571,166,679 0.60%
(I) European Equity Portfolio................... 255,953,013 0.80%
(J) Global Equity Portfolio..................... 110,658,187 0.80%
(K) Gold Portfolio (3).......................... 18,424,001 1.00%
(L) Growth and Income Fund (2).................. 0 0.75%
(M) International Equity Portfolio.............. 2,843,491,490 0.80%
(N) International Magnum Portfolio.............. 183,634,416 0.80%
(O) International Small Cap Portfolio........... 274,143,203 0.95%
(P) Japanese Equity Portfolio................... 157,251,881 0.80%
(Q) Latin American Portfolio.................... 68,495,540 1.10%
(R) MicroCap Portfolio (2)...................... 0 1.00%
(S) Small Cap Value Equity Portfolio............ 43,868,578 0.85%
(T) Technology Portfolio........................ 33,557,723 1.00%
(U) U.S. Real Estate Portfolio.................. 356,555,875 0.80%
(V) Value Equity Portfolio...................... 91,470,670 0.50%
(W) Asian Real Estate Portfolio................. 2,761,464 0.80%
(X) European Real Estate Portfolio.............. 16,939,346 0.80%
(Y) U.S. Equity Plus Portfolio.................. 14,502 0.45%
2. Morgan Stanley Fund, Inc.**.................... (4)
(A) American Value Fund......................... 225,688,869 (4)
(B) Aggressive Equity Fund...................... 87,683,277 (4)
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS
AS OF CURRENT INVESTMENT MANAGEMENT FEE RATE(S)
10/31/97 AS A PERCENTAGE OF NET ASSETS
---------------- --------------------------------------------------
(C) Asian Growth Fund........................... $ 154,667,772 (4)
<S> <C> <C>
(D) Emerging Markets Fund....................... 200,553,538 (4)
(E) Equity Growth Fund (2)...................... 0 (4)
(F) European Equity Fund (2).................... 0 (4)
(G) Global Equity Allocation Fund............... 205,703,329 (4)
(H) Global Equity Fund.......................... 515,695,856 (4)
(I) Growth and Income Fund (2).................. 0 (4)
(J) Japanese Equity Fund (2).................... 0 (4)
(K) International Magnum Fund................... 83,230,901 (4)
(L) Latin America Fund.......................... 100,621,882 (4)
(M) U.S. Real Estate Fund....................... 33,868,928 (4)
3. Morgan Stanley Universal Funds, Inc.*
(A) Asian Equity Portfolio...................... 7,027,587 0.80% on assets up to $500 million, scaled down to
0.70% on assets over $1 billion
(B) Emerging Markets Equity Portfolio........... 29,027,715 1.25% on assets up to $500 million, scaled down to
1.15% on assets over $1 billion
(C) Global Equity Portfolio..................... 10,116,720 0.80% on assets up to $500 million, scaled down to
0.70% on assets over $1 billion
(D) Equity Growth Portfolio..................... 7,204,978 0.55% on assets up to $500 million, scaled down to
0.45% on assets over $1 billion
(E) International Magnum Portfolio.............. 18,623,880 0.80% on assets up to $500 million, scaled down to
0.70% on assets over $1 billion
(F) U.S. Real Estate Portfolio.................. 9,295,611 0.80% on assets up to $500 million, scaled down to
0.70% on assets over $1 billion
4. American Advantage International Equity
Fund**........................................... 256,103,537 (5)
5. EQ Advisors Trust--
Morgan Stanley Emerging Markets Equity
Portfolio**...................................... 15,803,837 (6)
6. Fortis Series Fund, Inc.--
Global Asset Allocation Series**................. 50,135,832 (7)
7. Fountain Square International Equity Fund**.... 138,635,656 (8)
8. The Legends Fund, Inc.--
Morgan Stanley Asian Growth Portfolio**.......... 5,538,138 (9)
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS
AS OF CURRENT INVESTMENT MANAGEMENT FEE RATE(S)
10/31/97 AS A PERCENTAGE OF NET ASSETS
---------------- --------------------------------------------------
9. NASL Series Trust--
Global Equity Trust**............................ $ 832,983,576 (10)
<S> <C> <C>
10. North American Funds--
Global Equity Fund**............................. 124,135,147 (11)
11. New England Zenith Fund--
Morgan Stanley International Magnum Equity
Series**......................................... 52,166,335 (12)
12. Pacific Select Fund--
International Portfolio**........................ 730,034,717 (13)
13. Principal Aggressive Growth Fund, Inc.**...... 130,574,932 (14)
14. Principal Asset Allocation Fund, Inc.**....... 76,471,300 (14)
15. Sun America Series Trust--
International Diversified Equities Portfolio**... 246,024,961 (15)
16. Van Kampen American Capital--
Global Equity Fund**............................. 294,316,087 (16)
17. Van Kampen American Capital Life Investment
Trust--
Global Equity Fund**............................. 3,116,336 (17)
18. Van Kampen American Capital--
Global Managed Assets Fund**..................... 22,933,706 (16)
19. The Latin American Discovery Fund, Inc........ 205,221,210 1.15%
20. The Malaysia Fund, Inc........................ 65,617,828 0.90% on assets up to $50 million, scaled down at
various asset levels to 0.50% on assets over $100
million
21. Morgan Stanley Africa Investment Fund, Inc.... 303,705,879 1.20%
22. Morgan Stanley Asia-Pacific Fund, Inc......... 716,262,236 1.00%
23. Morgan Stanley Emerging Markets Fund, Inc..... 372,246,050 1.25%
24. Morgan Stanley India Investment Fund, Inc..... 370,349,718 1.10%
25. Morgan Stanley Russia & New Europe Fund,
Inc.............................................. 157,034,240 1.60%
26. The Pakistan Investment Fund, Inc............. 72,886,495 1.00%
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS
AS OF CURRENT INVESTMENT MANAGEMENT FEE RATE(S)
10/31/97 AS A PERCENTAGE OF NET ASSETS
---------------- --------------------------------------------------
27. The Thai Fund, Inc............................ $ 72,832,613 0.90% on assets up to $50 million, scaled down at
various asset levels to 0.50% on assets over $100
million
<S> <C> <C>
28. The Turkish Investment Fund, Inc.............. 61,744,722 0.95% on assets up to $50 million, scaled down at
various asset levels to 0.55% on assets over $100
million
</TABLE>
- ------------------------
* With respect to each of Morgan Stanley Institutional Fund, Inc. and Morgan
Stanley Universal Funds, Inc., MSAM has voluntarily agreed to a reduction in
the fees payable to it and to reimburse each Portfolio or Fund, if
necessary, if payment of advisory fees would cause the total annual
operating expenses of such Portfolio or Fund to exceed certain minimums.
** MSAM acts as sub-adviser to this Fund.
(1) Includes Class A and Class B shares.
(2) Currently Inactive.
(3) Management fee includes a 0.40% sub-advisory fee payable by the Manager.
(4) Includes Class A, Class B and Class C shares. Van Kampen American Capital
Investment Advisory Corp. ("VKAC") is the investment adviser and
administrator for each of the Morgan Stanley Fund, Inc. Funds. VKAC charges
an advisory fee of 0.70% (Equity Growth Fund), 0.80% (International Magnum
Fund), 0.85% (American Value Fund), 0.90% (Aggressive Equity Fund), 1.00%
(Asian Growth Fund, European Equity Fund, Global Equity Allocation Fund,
Global Equity Fund, Growth and Income Fund, Japanese Equity Fund, U.S. Real
Estate Fund) and 1.25% (Emerging Markets Fund, Latin American Fund) of
average daily net assets. MSAM serves as sub-adviser. If average daily net
assets of a Fund are less than or equal to $500 million, VKAC will pay MSAM
50% of the total investment advisory fee payable to VKAC (after application
of any fee waivers in effect) for such monthly period. If average daily net
assets of a Fund are greater than $500 million, VKAC will pay MSAM a fee for
such monthly period equal to the greater of (a) 50% of what the total
advisory fee payable to VKAC (after application of any fee waivers in
effect) for such period would have been had the Fund's average daily net
assets been equal to $500 million, or (b) 45% of the total advisory fee
payable to VKAC by the Fund (after application of any fee waivers in effect)
for such monthly period. VKAC has agreed to waive a portion of its advisory
fees and/or to reimburse a portion of the expenses of a Fund, if necessary,
if such fees would cause the total annual operating expenses of such Fund,
as a percentage of average daily net assets, to exceed certain minimums.
(5) AMR Investment Services, Inc. serves as the manager (the "Manager") of the
Fund. MSAM serves as adviser. The Manager pays MSAM a fee computed at an
annual rate equal to 0.80% on assets up to $425 million, scaled down at
various asset levels to 0.40% on assets over $75 million.
(6) EQ Financial Consultants, Inc. serves as the manager (the "Manager") of the
Portfolio. MSAM serves as adviser. The Manager pays MSAM a fee computed at
an annual rate equal to 1.15% on assets up to $100 million, scaled down at
various asset levels to 0.40% on assets over $500 million. In the interest
of limiting expenses of the Portfolio, the Manger has entered into an
expense limitation agreement with the Trust,
I-4
<PAGE>
pursuant to which the Manager has agreed to waive or limit its fees and to
assume other expenses so that the total annual operating expenses of the
Portfolio are limited to 1.75% of the Portfolio's average daily net assets.
(7) Fortis Advisers, Inc. serves as the manager (the "Manager") of the Series.
MSAM serves as sub-adviser. The Manager pays MSAM a fee computed at an
annual rate equal to 0.50% on assets up to $100 million and 0.40% on assets
over $100 million. Out of its advisory fee, but not in excess thereof, the
Manager reimburses the Series for the Series' expenses from the date of the
initial public offering until the date a Series' aggregate net assets first
reach $10,000,000, to the extent that the aggregate expenses of the Series
(including the investment advisory and management fees under the Investment
Advisory and Management Agreement, but excluding interest, taxes, brokerage
fees and commissions) exceed an amount equal, on an annual basis, to 2.00%
of the average daily net assets of the Series.
(8) Fifth Third Bank serves as adviser (the "Adviser") of the Fund. MSAM serves
as sub-adviser. The Adviser pays MSAM a fee computed at an annual rate equal
to 0.50%. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of
the Fund) to the extent that the Fund's expenses exceed such lower expense
limitations and/or for any other reason, as the Adviser may, by notice to
the Fund, voluntarily declare to be effective.
(9) ARM Capital Advisors, Inc. serves as manager of the Portfolio (the
"Manager"). MSAM serves as sub-adviser. The Manager pays MSAM a fee computed
at an annual rate equal to 0.85%. The Manager has agreed to reimburse the
Portfolio on a pro rata basis up to the amount of its fee to the extent that
the total expenses of the Portfolio in a given year (excluding interest,
taxes, brokerage commissions, and extraordinary expenses) exceed any
applicable state expense limitations. The Manager voluntarily limits the
expenses of the Portfolio, other than for brokerage commissions and the
management fee, to 1.00% of average net assets on an annualized basis.
(10) Manufactures Securities Services, LLC serves as the adviser (the "Adviser")
of the Trust. MSAM serves as sub-adviser. The Adviser pays MSAM a fee
computed at an annual rate equal to 0.50% on assets up to $50 million,
scaled down at various asset levels to 0.325% on assets over $500 million.
The Adviser may reduce its advisory fee or reimburse the Trust if the total
of all expenses (excluding advisory fees, taxes, portfolio brokerage
commissions, interest, litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Trust's
business) applicable to the Trust exceeds an annual rate of 0.75% of average
annual net assets of such Portfolio.
(11) CypressTree Asset Management Corporation, Inc. is the Fund's adviser (the
"Adviser"). MSAM serves as sub-adviser. The Adviser pays MSAM a fee computed
at an annual rate equal to 0.50% on assets up to $50 million, scaled down at
various asset levels to 0.325% on assets over $500 million. The Adviser has
agreed to reduce a Fund's advisory fee, or if necessary to reimburse the
Fund, in order to prevent the expenses of a Fund from exceeding either the
most restrictive expense limitation imposed by applicable state law or a
fixed expense limitation contained in the advisory agreement, whichever
results in the lowest expenses to the Fund.
(12) TNE Advisers, Inc. serves as manager (the "Manager") of the Series. MSAM
serves as sub-adviser. The Manager pays MSAM a fee computed at an annual
rate equal to 0.75% on assets up to $30 million, scaled down at various
asset levels to 0.40% on assets over $100 million. Pursuant to an expense
deferral arrangement, which the Manager may terminate at any time, the
Manager has agreed to pay the expenses of the Series' operations (exclusive
of any brokerage costs, interest, taxes, or extraordinary expenses) in
excess of 1.30%, subject to the obligation of the Series to repay the
Manager such expenses in future years, if any, when the Series' expenses
fall below 1.30%; such deferred expenses may be charged to the Series in a
subsequent
I-5
<PAGE>
year to the extent that the charge does not cause the total expenses in such
subsequent year to exceed 1.30%; provided, however, that the Series is not
obligated to repay any expense paid by the Manager more than two years after
the end of the fiscal year in which such expense was incurred. The expense
limits can be prospectively discontinued by the Manager but any expenses
that were deferred while the Series' expense limit was in place can never be
charged to that Series unless the Series' expenses fall below the limit.
(13) Pacific Mutual Life Insurance Company serves as adviser (the "Adviser") of
the Portfolio. MSAM serves as portfolio manager. The Adviser pays MSAM a fee
computed at an annual rate equal to 0.35%. The Adviser has agreed that it
will reimburse the Portfolio, up to the amount of its fees payable under the
Advisory Agreement with respect to the assets of the Portfolio, if and to
the extent that the total expenses of the Portfolio for such year (including
compensation payable pursuant to the Advisory Agreement, but excluding
interest, taxes, brokerage commissions, and extraordinary expenses) exceed
limits applicable to the Portfolio in any state in which shares of the
Portfolio are then registered and qualified for sale.
(14) Princor Management Corporation is the Fund's manager (the "Manager"). MSAM
serves as sub-adviser. The Manager pays MSAM a fee computed at an annual
rate of 0.45% on assets up to $40 million, scaled down at various asset
levels to 0.20% on assets over $300 million. The Manager may, at its option,
waive all or part of its compensation for such period of time as it deems
necessary or appropriate.
(15) Sun America Asset Management Corp. serves as adviser (the "Adviser"). MSAM
serves as sub-adviser. The Adviser pays MSAM a fee computed at an annual
rate equal to 0.65% on assets up to $350 million and 0.60% on assets over
$350 million.
(16) VKAC is the adviser of the Fund. MSAM serves as sub-adviser. MSAM receives
50% of the compensation actually received by VKAC. VKAC charges an advisory
fee of 1.00%. VKAC may voluntarily undertake to reduce expenses by reducing
the fees payable to it to the extent of, or bearing expenses in excess of,
such limitations as it may establish.
(17) VKAC is the adviser of the Fund. MSAM serves as sub-adviser. MSAM receives
50% of the compensation actually received by VKAC. VKAC charges an advisory
fee of 1.00%. VKAC may, from time to time, agree to waive its fee or any
portion thereof or to elect to reimburse the Fund for ordinary business
expenses in excess of an agreed upon amount.
I-6
<PAGE>
EXHIBIT A
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the day of , 1998, by and between Dean
Witter InterCapital Inc., a Delaware corporation (hereinafter called the
"Investment Manager"), and Morgan Stanley Asset Management Inc., a Delaware
corporation (hereinafter called the "Sub-Adviser").
WHEREAS, Dean Witter Select Dimensions Investment Series (hereinafter called
the "Fund") is engaged in business as an open-end management investment company
and is registered as such under the Investment Company Act of 1940, as amended
(the "Act"); and
WHEREAS, the Investment Manager has entered into an Investment Management
Agreement (hereinafter called the "Investment Management Agreement") with the
Fund wherein the Investment Manager has agreed to provide investment management
services to the thirteen current Portfolios of the Fund and may provide such
services to other Portfolios subsequently established by the Fund; and
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as an
investment adviser; and
WHEREAS, the Investment Manager desires to retain the services of the
Sub-Adviser to render investment advisory services for the Growth Portfolio in
the manner and on the terms and conditions hereinafter set forth (this Portfolio
together with all other Portfolios subsequently established by the Fund with
respect to which the Fund will have retained the Investment Manager to render
management and investment advisory services under the Investment Management
Agreement and with respect to which the Investment Manager desires to retain the
Sub-Adviser to render investment advisory services in the manner and on the
terms and conditions hereinafter set forth being collectively referred to as the
"Sub-Advisory Portfolios"); and
WHEREAS, the Sub-Adviser desires to be retained by the Investment Manager to
perform services on said terms and conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Subject to the supervision of the Fund, its officers and Trustees, and
the Investment Manager, and in accordance with the investment objectives,
policies and restrictions set forth in the then current Registration Statement
relating to the Fund, and such investment objectives, policies and restrictions
from time to time prescribed by the Trustees of the Fund and communicated by the
Investment Manager to the Sub-Adviser, the Sub-Adviser agrees to provide each
Sub-Advisory Portfolio with investment advisory services; to obtain and evaluate
such information and advice relating to the economy, securities and commodities
markets and securities or commodities as it deems necessary or useful to
discharge its duties hereunder; to continuously manage the assets of the
Sub-Advisory Portfolio in a manner consistent with the investment objective and
policies of the Sub-Advisory Portfolio; to make decisions as to foreign currency
matters and make determinations as to forward foreign exchange contracts and
options and futures contracts in foreign currencies; to determine the securities
and commodities to be purchased or otherwise acquired, or sold or otherwise
disposed of, by the Sub-Advisory Portfolio and the timing of such purchases,
acquisitions, sales and dispositions; to take such further action, including the
placing of purchase and sale orders on behalf of the Sub-Advisory Portfolio, as
it shall deem necessary or appropriate; to furnish to or place at the disposal
of the Sub-Advisory Portfolio and the Investment Manager such of the
information, evaluations, analyses and opinions formulated or obtained by it in
the discharge of its duties as the Fund and the Investment Manager may, from
time to time, reasonably request. The Investment Manager and the Sub-Adviser
shall each make its officers and employees available to the other from time to
time at reasonable times to review investment policies of the Sub-Advisory
Portfolios and to consult with each other.
A-1
<PAGE>
In the event the Fund establishes another Portfolio other than the current
Sub-Advisory Portfolio with respect to which the Investment Manager desires to
retain the Sub-Adviser to render investment advisory services hereunder, the
Investment Manager shall notify the Sub-Adviser in writing. If the Sub-Adviser
is willing to render such services, it shall notify the Investment Manager in
writing, whereupon such other Portfolio shall become a Sub-Advisory Portfolio
hereunder.
2. The Sub-Adviser shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as it shall
from time to time determine to be necessary or useful to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Sub-Adviser shall be deemed to include
persons employed or otherwise retained by the Sub-Adviser to furnish statistical
and other factual data, advice regarding economic factors and trends,
information with respect to technical and scientific developments, and such
other information, advice and assistance as the Investment Manager may desire.
The Sub-Adviser shall maintain whatever records as may be required to be
maintained by it under the Act. All such records so maintained shall be made
available to the Fund, upon the request of the Investment Manager or the Fund.
3. The Fund will, from time to time, furnish or otherwise make available to
the Sub-Adviser such financial reports, proxy statements and other information
relating to the business and affairs of the Sub-Advisory Portfolios as the
Sub-Adviser may reasonably require in order to discharge its duties and
obligations hereunder or to comply with any applicable law and regulations and
the investment objectives, policies and restrictions from time to time
prescribed by the Trustees of the Fund.
4. The Sub-Adviser shall bear the cost of rendering the investment advisory
services to be performed by it under this Agreement, and shall, at its own
expense, pay the compensation of the officers and employees, if any, of the
Fund, employed by the Sub-Adviser, and such clerical help and bookkeeping
services as the Sub-Adviser shall reasonably require in performing its duties
hereunder.
5. The Fund, on behalf of each Sub-Advisory Portfolio, assumes and shall
pay or cause to be paid all other expenses of the Sub-Advisory Portfolio,
including, without limitation: any fees paid to the Investment Manager; the
charges and expenses of any registrar, any custodian, sub-custodian or
depository appointed by the Fund for the safekeeping of the Sub-Advisory
Portfolio's cash, portfolio securities and other property, and any stock
transfer or dividend agent or agents appointed by the Fund; brokers' commissions
chargeable to the Sub-Advisory Portfolio in connection with portfolio securities
transactions to which the Sub-Advisory Portfolio is a party; all taxes,
including securities issuance and transfer taxes, and fees payable by the
Sub-Advisory Portfolio to federal, state or other governmental agencies or
pursuant to any foreign laws; the cost and expense of engraving or printing
certificates representing shares of the Sub-Advisory Portfolio; all costs and
expenses in connection with the registration and maintenance of registration of
the Sub-Advisory Portfolio and its shares with the Securities and Exchange
Commission and various states and other jurisdictions or pursuant to any foreign
laws (including filing fees and legal fees and disbursements of counsel); the
cost and expense of printing (including typesetting) and distributing
prospectuses of the Fund and supplements thereto to the Sub-Advisory Portfolio's
shareholders; all expenses of shareholders' and Trustees' meetings and of
preparing, printing and mailing proxy statements and reports to shareholders;
fees and travel expenses of Trustees or members of any advisory board or
committee who are not employees of the Investment Manager or Sub-Adviser; all
expenses incident to the payment of any dividend, distribution, withdrawal or
redemption whether in shares or in cash; charges and expenses of any outside
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service used for pricing of the Sub-Advisory Portfolio's shares; charges and
expenses of legal counsel, including counsel to the Trustees of the Fund who are
not interested persons (as defined in the Act) of the Fund, the Investment
Manager or the Sub-Adviser, and of independent accountants, in connection with
any matter relating to the Sub-Advisory Portfolio; membership dues of industry
associations; interest payable on Sub-Advisory Portfolio borrowings; postage;
insurance premiums on property or personnel (including officers and Trustees) of
the Sub-Advisory Portfolio which inure to its benefit; extraordinary expenses
(including but not limited to legal claims and liabilities and litigation costs
and any indemnification related thereto); and all other charges and costs of the
Sub-Advisory Portfolio's operation unless otherwise explicitly provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Sub-Adviser, the Investment Manager shall pay to the
Sub-Adviser monthly compensation equal to 40% of its monthly compensation
receivable pursuant to the Investment Management Agreement in respect of the
Growth Portfolio. Any subsequent change in the Investment Management Agreement
which has the effect of raising or lowering the compensation of the Investment
Manager will have the concomitant effect of raising or lowering the fees payable
to the Sub-Adviser under this Agreement. In addition, if the Investment Manager
has undertaken in the Fund's Registration Statement as filed under the Act or
elsewhere to waive all or part of its fees under the Investment Management
Agreement, the Sub-Adviser's fees payable under this Agreement will be
proportionately waived in whole or in part. The calculation of the fees payable
to the Sub-Adviser pursuant to this Agreement will be made, each month, at the
time designated for the monthly calculation of the fees payable to the
Investment Manager pursuant to the Investment Management Agreement. If this
Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for the part of the month
this Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fees as set forth above. Subject to the provisions of
paragraph 7 hereof, payment of the Sub-Adviser's compensation for the preceding
month shall be made as promptly as possible after completion of the computations
contemplated by paragraph 7 hereof.
7. In the event the operating expenses of the Growth Portfolio, including
amounts payable to the Investment Manager pursuant to the Investment Management
Agreement in respect of this Sub-Advisory Portfolio, for any fiscal year ending
on a date on which this Agreement is in effect, exceed 2.5% of the average daily
net assets of the Sub-Advisory Portfolio up to $30 million, 2.0% of the next $70
million and 1.5% of the average daily net assets of the Sub-Advisory Portfolio
in excess of $100 million (the "expense limitation"), the Sub-Adviser shall
reduce its advisory fee to the extent of 40% of such excess and will reimburse
the Investment Manager for annual operating expenses in the amount of 40% of
such excess of the expense limitation, up to the amount of the Sub-Adviser's fee
which would otherwise be payable under this Agreement for that year, it being
understood that the Investment Manager has agreed to effect a reduction and
reimbursement of 100% of such excess, up to the amount of its management fee in
respect of the Sub-Advisory Portfolio which otherwise would be payable for that
year, in accordance with the terms of the Investment Management Agreement;
provided, however, there shall be excluded from such expenses the amount of any
interest, taxes, brokerage commissions, and extraordinary expenses (including
but not limited to legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the Sub-Advisory Portfolio.
Such reduction, if any, shall be computed and accrued daily, shall be settled on
a monthly basis, and shall be based upon the expense limitation applicable to
the Sub-Advisory Portfolio as at the end of the last business day of the month.
A-3
<PAGE>
8. The Sub-Adviser will use its best efforts in the performance of
investment activities on behalf of the Sub-Advisory Portfolios, but in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations hereunder, the Sub-Adviser shall not be liable to
the Investment Manager or the Fund or any of its investors for any error of
judgment or mistake of law or for any act or omission by the Sub-Adviser or for
any losses sustained by the Sub-Advisory Portfolios or their investors.
9. It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or employee of, or
be otherwise interested in, the Sub-Adviser, and in any person controlled by or
under common control or affiliated with the Sub-Adviser, and that the
Sub-Adviser and any person controlled by or under common control or affiliated
with the Sub-Adviser may have an interest in the Fund. It is also understood
that the Sub-Adviser and any affiliated persons thereof or any persons
controlled by or under common control with the Sub-Adviser have and may have
advisory, management service or other contracts with other organizations and
persons, and may have other interests and businesses, and further may purchase,
sell or trade any securities or commodities for their own accounts or for the
account of others for whom they may be acting. Nothing contained in this
Agreement shall limit or restrict the Sub-Adviser or any affiliated person
thereof from so acting or engaging in any other business.
10. This Agreement shall remain in effect until April 30, 1999 and from year
to year thereafter with respect to each Sub-Advisory Portfolio provided such
continuance with respect to a Sub-Advisory Portfolio is approved at least
annually by the vote of holders of a majority, as defined in the Act, of the
outstanding voting securities of the Sub-Advisory Portfolio or by the Trustees
of the Fund; provided, that in either event such continuance is also approved
annually by the vote of a majority of the Trustees of the Fund who are not
parties to this Agreement or "interested persons" (as defined in the Act) of any
such party, which vote must be cast in person at a meeting called for the
purpose of voting on such approval; provided, however, that (a) the Fund may, at
any time and without the payment of any penalty, terminate this Agreement upon
thirty days' written notice to the Investment Manager and the Sub-Adviser,
either by majority vote of the Trustees of the Fund or, with respect to a Sub-
Advisory Portfolio, by the vote of a majority of the outstanding voting
securities of such Sub-Advisory Portfolio; (b) this Agreement shall immediately
terminate in the event of its assignment (within the meaning of the Act) unless
such automatic termination shall be prevented by an exemptive order of the
Securities and Exchange Commission; (c) this Agreement shall immediately
terminate in the event of the termination of the Investment Management
Agreement; (d) the Investment Manager may terminate this Agreement without
payment of penalty on thirty days' written notice to the Fund and the
Sub-Adviser; and (e) the Sub-Adviser may terminate this Agreement without the
payment of penalty on thirty days' written notice to the Fund and the Investment
Manager. Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed post-paid, to the other party at the principal office
of such party.
11. This Agreement may be amended by the parties without the vote or consent
of the shareholders of any Sub-Advisory Portfolio to supply any omission, to
cure, correct or supplement any ambiguous, defective or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal laws or regulations, but neither the Fund,
the Investment Manager nor the Sub-Adviser shall be liable for failing to do so.
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<PAGE>
12. This Agreement shall be construed in accordance with the law of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflicts with the applicable provisions of the Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
DEAN WITTER INTERCAPITAL INC.
By: ..................................
Attest: ..............................
MORGAN STANLEY ASSET MANAGEMENT INC.
By: ..................................
Attest: ..............................
Accepted and agreed to as of
the day and year first above written:
DEAN WITTER SELECT DIMENSIONS
INVESTMENT SERIES
By: ..................................
Attest: ..............................
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<PAGE>
PORTFOLIO NAME PRINTS HERE ITT HARTFORD VOTING INSTRUCTION CARD
VOTING INSTRUCTIONS FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
FEBRUARY 26, 1998 OF THE DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES.
This Instruction Card is solicited by the ITT Hartford Life Insurance
Companies ("ITT Hartford") from owners of variable annuity contracts and/or
variable life insurance policies issued by ITT Hartford who have specified that
a portion of their investment be allocated to this Portfolio of the Dean Witter
Select Dimensions Investment Series.
The undersigned contract/policy owner hereby instructs that the votes
attributable to the undersigned's interest with respect to the above-referenced
Portfolio be cast as directed on the reverse side at the Special Meeting of
Shareholders of Dean Witter Select Dimensions Investment Series on February 26,
1998 at 1:30 p.m., New York City time. The undersigned, by completing this
form, does hereby authorize ITT Hartford to exercise its discretion in voting
upon such other business as may properly come before the Meeting.
Date: ___________________________, 199_
PLEASE SIGN IN BOX BELOW
---------------------------------------------
---------------------------------------------
SIGNATURE(S) HART/DWSDIS
<PAGE>
THIS INSTRUCTION CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED BY ITT HARTFORD IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THE
VOTES ATTRIBUTABLE TO THIS INSTRUCTION CARD WILL BE VOTED FOR ALL PROPOSALS
LISTED BELOW. INTERESTS IN THE PORTFOLIO FOR WHICH NO INSTRUCTIONS ARE RECEIVED
WILL BE VOTED BY ITT HARTFORD IN THE SAME PROPORTION AS VOTES FOR WHICH
INSRUCTIONS ARE RECEIVED FOR THE PORTFOLIO.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW / / USING BLUE OR
BLACK INK OR DARK PENCIL.
1. FOR THE CORE EQUITY PORTFOLIO ONLY. Approval of a Sub-Advisory Agreement
between Dean Witter InterCapital Inc. and Morgan Stanley Asset Management
Inc. with respect to the Portfolio.
FOR / / AGAINST / / ABSTAIN / /
2. FOR THE BALANCED PORTFOLIO ONLY. Approval of a change in the Portfolio's
investment objective from high total return through a combination of income
and capital appreciation to capital growth with reasonable current income.
FOR / / AGAINST / / ABSTAIN / /
HART/DWSDIS
