AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 25, 1995
REGISTRATION NOS.: 33-81210
811-8610
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
[X]
PRE-EFFECTIVE AMENDMENT NO.
[ ]
POST-EFFECTIVE AMENDMENT NO. 2
[X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
[X]
AMENDMENT NO. 3
[X]
TCW/DW GLOBAL CONVERTIBLE TRUST
(A MASSACHUSETTS BUSINESS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
SHELDON CURTIS, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Copy to:
DAVID M. BUTOWSKY, ESQ.
GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
this effective date of this amendment.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
immediately upon filing pursuant to paragraph (b)
X on August 28, 1995, pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of rule 485
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO SECTION (A)(1) OF RULE 24F-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940. THE REGISTRANT FILED ITS RULE 24F-2 NOTICE
FOR ITS FISCAL PERIOD ENDING JUNE 30, 1995 WITH THE SECURITIES AND EXCHANGE
COMMISSION ON JULY 18, 1995.
TCW/DW GLOBAL CONVERTIBLE TRUST
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A PART
A
ITEM CAPTION PROSPECTUS
-------------- -------------------------------------------------------
<S> <C>
1. Cover Page
2. Summary of Fund Expenses; Prospectus Summary
3. Financial Highlights; Performance Information;
4. Investment Objective and Policies; The Fund and its
Management; Cover Page; Investment Restrictions;
Prospectus Summary
5. The Fund and Its Management; Back Cover; Investment
Objective and Policies
6. Dividends, Distributions and Taxes; Additional
Information
7. Underwriting; Purchase of Fund Shares; Shareholder
Services; Repurchases and Redemptions
8. Repurchases and Redemptions; Shareholder Services
9. Not Applicable
</TABLE>
<TABLE>
<CAPTION>
PART B
ITEM STATEMENT OF ADDITIONAL INFORMATION
-------------- ------------------------------------------------------
<S> <C>
10. Cover Page
11. Table of Contents
12. The Fund and Its Management
13. Investment Practices and Policies; Investment
Restrictions; Portfolio Transactions and Brokerage
14. The Fund and Its Management; Trustees and Officers
15. Trustees and Officers
16. The Fund and Its Management; Custodian and Transfer
Agent; Independent Accountants
17. Portfolio Transactions and Brokerage
18. Description of Shares
19. Repurchases and Redemptions; Shareholder Services
20. Dividends, Distributions and Taxes
21. The Distributor
22. Performance Information
23. Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in
Part C of this Registration Statement.
PROSPECTUS -- AUGUST 28, 1995
-----------------------------------------------------------------------------
TCW/DW Global Convertible Trust (the "Fund") is an open-end, non-diversified
management investment company, whose investment objective is to attain a high
level of total return through a combination of capital appreciation and
current income. The Fund seeks to achieve its investment objective by
investing at least 65% of its total assets in convertible securities of
domestic and foreign issuers rated B or higher by Moody's Investors Service,
Inc. or Standard & Poor's Corporation or, if not rated, determined to be of
comparable quality. There is no assurance that the Fund's investment
objective will be achieved. See "Investment Objective and Policies."
THE FUND MAY INVEST WITHOUT LIMITATION IN CONVERTIBLE AND OTHER FIXED-INCOME
SECURITIES RATED BELOW INVESTMENT GRADE (COMMONLY KNOWN AS "JUNK BONDS").
INVESTMENTS OF THIS TYPE ARE SUBJECT TO GREATER RISK, INCLUDING THE RISK OF
DEFAULT, THAN HIGHER RATED SECURITIES, AND ARE CONSIDERED TO BE SPECULATIVE
WITH REGARD TO THE PAYMENT OF INTEREST AND RETURN OF PRINCIPAL. INVESTORS
SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE FUND.
SEE "INVESTMENT OBJECTIVE AND POLICIES."
Shares of the Fund will be priced at the net asset value per share next
determined following receipt of an order without imposition of a sales
charge. However, repurchases and/or redemptions of shares 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
"Repurchases and Redemptions--Contingent Deferred Sales Charge." In addition,
the Fund pays the Distributor a Rule 12b-1 distribution fee pursuant to a
Plan of Distribution at the annual rate of 1% 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."
On August 24, 1995, the Board of Trustees of the Fund approved an Agreement
and Plan of Reorganization by and between the Fund and Dean Witter
Convertible Securities Trust ("Convertible Trust"), pursuant to which the
assets of the Fund would be combined with those of Convertible Trust and
shareholders of the Fund would become shareholders of Convertible Trust
receiving shares of Convertible Trust equal to the value of their holdings in
the Fund (the "Reorganization"). The Reorganization is subject to the
approval of shareholders of the Fund. See "The Fund and its Management."
TABLE OF CONTENTS
Prospectus Summary .................................................... 2
Summary of Fund Expenses .............................................. 3
Financial Highlights .................................................. 4
The Fund and its Management ........................................... 5
Investment Objective and Policies ..................................... 6
Special Risk Considerations .......................................... 8
Investment Restrictions ............................................... 13
Purchase of Fund Shares ............................................... 14
Shareholder Services .................................................. 16
Repurchases and Redemptions ........................................... 18
Dividends, Distributions and Taxes .................................... 20
Performance Information ............................................... 21
Additional Information ................................................ 22
Appendix .............................................................. 23
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 August 28, 1995, which has been filed with the
Securities and Exchange Commission, and which is available at no charge upon
request of the Fund at the address or telephone numbers listed on this page.
The Statement of Additional Information is incorporated herein by reference.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
TCW/DW GLOBAL CONVERTIBLE TRUST
Two World Trade Center
New York, New York 10048
(212) 392-2550 or (800) 869-6397
Dean Witter Distributors Inc.
Distributor
PROSPECTUS SUMMARY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
THE The Fund is organized as a Trust, commonly known as a Massachusetts business trust, and is an open-end,
FUND non-diversified management investment company investing at least 65% of its total assets in convertible
securities of domestic and foreign issuers. On August 24, 1995, the Board of Trustees of the Fund approved an
Agreement and Plan of Reorganization by and between the Fund and Dean Witter Convertible Securities Trust
pursuant to which the assets of both funds would be combined (see page 5).
------------------ -------------------------------------------------------------------------------------------------------------
OFFERING PRICE At net asset value (see page 14). Shares redeemed within six years of purchase are subject to a contingent
deferred sales charge under most circumstances (see pages 14 and 18).
------------------ -------------------------------------------------------------------------------------------------------------
MINIMUM Minimum initial purchase is $1,000. Minimum subsequent purchase is $100 (see page 14).
PURCHASE
------------------ -------------------------------------------------------------------------------------------------------------
INVESTMENT The investment objective of the Fund is a high level of total return through a combination of capital
OBJECTIVE appreciation and current income.
------------------ -------------------------------------------------------------------------------------------------------------
MANAGER Dean Witter Services Company Inc. (the "Manager"), a wholly-owned subsidiary of Dean Witter InterCapital Inc.
("InterCapital"), is the Fund's manager. The Manager also serves as manager to twelve other investment
companies advised by TCW Funds Management, Inc. (the "TCW/DW Funds"). The Manager and InterCapital serve in
various investment management, advisory, management and administrative capacities to a total of ninety-four
investment companies and other portfolios with assets of approximately $73.2 billion at June 30, 1995.
------------------ -------------------------------------------------------------------------------------------------------------
ADVISER TCW Funds Management, Inc. (the "Adviser") is the Fund's investment adviser. In addition to the Fund, the
Adviser serves as investment adviser to twelve other TCW/DW Funds. As of June 30, 1995, the Adviser and its
affiliates had approximately $50 billion under management or committed to management in various fiduciary or
advisory capacities, primarily to institutional investors.
------------------ -------------------------------------------------------------------------------------------------------------
MANAGEMENT The Manager receives a monthly fee at the annual rate of 0.51% of daily net assets. The Adviser receives a
AND ADVISORY monthly fee at an annual rate of 0.34% of daily net assets. (see page 5).
FEES
------------------ -------------------------------------------------------------------------------------------------------------
DIVIDENDS Income dividends are paid quarterly. Capital gains, if any, will be distributed no less than annually.
Dividends and capital gains distributions are automatically reinvested in additional shares at net asset value
unless the shareholder elects to receive cash.
------------------ -------------------------------------------------------------------------------------------------------------
DISTRIBUTOR Dean Witter Distributors Inc. (the "Distributor"). The Distributor receives from the Fund a distribution fee
accrued daily and payable monthly at the rate of 1% per annum of the lesser of (i) the average daily aggregate
net sales or (ii) the Fund's average daily net assets. This fee compensates the Distributor for 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 14-15).
------------------ -------------------------------------------------------------------------------------------------------------
REDEMPTION-- Shares are redeemable by the shareholder at net asset value. An account may be involuntarily redeemed if the
CONTINGENT total value of the account is less than $100. Although no commission or sales load is imposed upon the purchase
DEFERRED of shares, a contingent deferred sales charge (scaled down from 5% to 1%) is imposed on any redemption of
SALES shares if after such redemption the aggregate current value of an account with the Fund falls below the
CHARGE 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 pages 18-20).
------------------ -------------------------------------------------------------------------------------------------------------
RISK The net asset value of the Fund's shares will fluctuate with changes in the market value of the Fund's
CONSIDERATIONS portfolio securities. The value of the Fund's convertible portfolio securities generally increases or decreases
due to economic and market factors affecting the value of the underlying common stock, as well as changes in
prevailing interest rates. Generally, a rise in interest rates will result in a decrease in value, while a drop
in interest rates will result in an increase in value. The high yield, high risk fixed-income securities in
which the Fund may invest are subject to greater risk of loss of income and principal than higher rated, lower
yielding fixed-income securities. The prices of high yield, high risk securities have been found to be less
sensitive to changes in prevailing interest rates than higher rated investments, but are likely to be more
sensitive to adverse economic changes or individual corporate developments. The Fund is a non-diversified
investment company and, as such, is not subject to the diversification requirements of the Investment Company
Act of 1940, as amended. As a result, a relatively high percentage of the Fund's assets may be invested in a
limited number of issuers. However, the Fund intends to qualify as a regulated investment company under the
federal income tax laws and, as such, is subject to the diversification requirements of the Internal Revenue
Code. The Fund will invest in the securities of foreign issuers which entails certain additional risks. The
Fund may also invest in options and futures transactions and other hedging techniques in connection with its
foreign securities investments and may purchase securities on a when-issued, delayed delivery or "when, as and
if issued" basis, which involve certain special risks (see pages 7-13).
------------------ -------------------------------------------------------------------------------------------------------------
</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
SUMMARY OF FUND EXPENSES
-----------------------------------------------------------------------------
The following table illustrates all expenses and fees that a shareholder
of the Fund will incur. The expenses and fees set forth in the table are for
the fiscal period ending June 30, 1995.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
--------------------------------
<S> <C>
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>
<CAPTION>
<S> <C>
Redemption Fees .......................................................... None
Exchange Fee ............................................................. None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
---------------------------------------------------------------------
<S> <C>
Management and Advisory Fees+ ............................................ 0.85%
12b-1 Fees*+ ............................................................. 1.00%
Other Expenses+ .......................................................... 1.65%
Total Fund Operating Expenses**+ ......................................... 3.50%
</TABLE>
---------------
* The 12b-1 fee is accrued daily and payable monthly, at an annual rate
of 1.00% of the lesser of: (a) the average daily aggregate gross
sales of the Fund's shares since inception (not including
reinvestment 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 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
(see "Purchase of Fund Shares").
** "Total Fund Operating Expenses," as shown above, is based upon the
sum of the 12b-1 Fees, Management and Advisory Fees and estimated
"Other Expenses," incurred by the Fund for the fiscal period ending
June 30, 1995.
+ InterCapital had undertaken to assume all operating expenses (except
for any 12b-1 and/or brokerage fees) and the Manager had agreed to
waive the compensation provided for in its Management Agreement and
the Adviser had undertaken to waive the compensation provided for in
its Advisory Agreement, until such time as the Fund had $50 million
of net assets or until six months from the date of commencement of
the Fund's operations, whichever occurred first. InterCapital
continued to assume all operating expenses (except for 12b-1 and/or
brokerage fees) and the Manager and the Adviser continued to waive
their respective compensation until August 23, 1995. The fees and
expenses disclosed above do not reflect the assumption of any
expenses or the waiver of any compensation other than the assumption
of expenses due to mandatory expense limitation.
<TABLE>
<CAPTION>
Example 1 year 3 years
------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
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: .............. $85 $137
You would pay the following expenses on the same investment, assuming no
redemption: ................................................................... $35 $107
</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 "Repurchases and
Redemptions" in this Prospectus.
Long-term shareholders of the Fund may pay more in sales charges including
distribution fees than the economic equivalent of the maximum front-end sales
charges permitted by the NASD.
3
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------------------
The following ratios and per share data for a share of beneficial interest
outstanding throughout the period have been audited by Price Waterhouse LLP,
independent accountants. The financial highlights should be read in
conjunction with the financial statements, notes thereto and the unqualified
report of independent accountants which are contained in the Statement of
Additional Information. Further unaudited information about the performance
of the Fund is contained in the Fund's Annual Report to Shareholders, which
may be obtained without charge upon request to the Fund.
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 31, 1994*
THROUGH
JUNE 30, 1995
-----------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ... $ 10.00
-----------------
Net investment income ................... 0.27
Net realized and unrealized gain ....... 0.53
-----------------
Total from investment operations ....... 0.80
-----------------
Less dividends from net investment
income ................................. (0.24)
-----------------
Net asset value, end of period .......... $ 10.56
=================
TOTAL INVESTMENT RETURN+ ................ 7.99%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................ 1.00%(2)(3)
Net investment income ................... 4.07%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $18,873
Portfolio turnover rate ................. 61%(1)
</TABLE>
---------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
(3) InterCapital had undertaken to assume all operating expenses (except
for any 12b-1 and/or brokerage fees) and the Manager had agreed to
waive the compensation provided for in its Management Agreement and
the Adviser had undertaken to waive the compensation provided for in
its Advisory Agreement, until such time as the Fund had $50 million
of net assets or until six months from the date of commencement of
the Fund's operations, whichever occurred first. InterCapital will
continue to assume all operating expenses (except for 12b-1 and/or
brokerage fees) and the Manager and the Adviser will continue to
waive their respective compensation until such time as the Fund has
$50 million of net assets or until August 23, 1995, whichever occurs
first. If the Fund had borne all expenses, after application of the
expense limitation, the above annualized expense and net investment
income ratios would have been 3.50% and 1.48%, respectively.
See Notes to Financial Statements
4
THE FUND AND ITS MANAGEMENT
-----------------------------------------------------------------------------
TCW/DW Global Convertible Trust (the "Fund") is an open-end,
non-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 Massachusetts on June 29, 1994.
Dean Witter Services Company Inc. (the "Manager"), whose address is Two
World Trade Center, New York, New York 10048, is the Fund's Manager. The
Manager is a wholly-owned subsidiary of Dean Witter InterCapital Inc.
("InterCapital"). InterCapital 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.
The Manager acts as manager to twelve other TCW/DW Funds. The Manager and
InterCapital serve in various investment management, advisory, management and
administrative capacities to a total of ninety-four investment companies,
thirty of which are listed on the New York Stock Exchange, with combined
assets of approximately $71 billion as of June 30, 1995. InterCapital also
manages and advises portfolios of pension plans, other institutions and
individuals which aggregated approximately $2.2 billion at such date.
The Fund has retained the Manager to manage its business affairs,
supervise its overall day-to-day operations (other than providing investment
advice) and provide all administrative services.
TCW Funds Management, Inc. (the "Adviser"), whose address is 865 South
Figueroa Street, Suite 1800, Los Angeles, California 90017, is the Fund's
investment adviser. The Adviser was organized in 1987 as a wholly-owned
subsidiary of The TCW Group, Inc. ("TCW"), whose subsidiaries, including
Trust Company of the West and TCW Asset Management Company, provide a variety
of trust, investment management and investment advisory services. Robert A.
Day, who is Chairman of the Board of Directors of TCW, may be deemed to be a
control person of the Adviser by virtue of the aggregate ownership by Mr. Day
and his family of more than 25% of the outstanding voting stock of TCW. The
Adviser serves as investment adviser to twelve other TCW/DW Funds in addition
to the Fund. As of June 30, 1995, the Adviser and its affiliated companies
had approximately $50 billion under management or committed to management,
primarily from institutional investors.
The Fund has retained the Adviser to invest the Fund's assets.
The Fund's Trustees review the various services provided by the Manager
and the Adviser 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 Manager, the Fund pays the
Manager monthly compensation calculated daily by applying the annual rate of
0.51% to the Fund's net assets. As compensation for its investment advisory
services, the Fund pays the Adviser monthly compensation calculated daily by
applying an annual rate of 0.34% to the Fund's net assets. The total fees
paid by the Fund to the Manager and the Adviser are higher than the fees paid
by most other investment companies for similar services.
The Fund's expenses include: the fees of the Manager and the Adviser; the
fee pursuant to the Plan of Distribution (see "Purchase of Fund Shares");
taxes; legal, transfer agent, custodian and auditing fees; federal and state
registration fees; and printing and other expenses relating to the Fund's
operations which are not expressly assumed by the Manager or Adviser under
their respective Agreements with the Fund. InterCapital had undertaken to
assume all expenses (except for the Plan of Distribution fee and brokerage
fees) and the Manager had undertaken to waive the compensation provided for
in its Management Agreement, and the Adviser had undertaken to waive the
compensation provided for in its Advisory Agreement, until such time as the
Fund had $50 million of net assets or until six months from the date of
commencement of operations, whichever occurred first. InterCapital continued
to assume all operating expenses (except for 12b-1 and/or brokerage fees) and
the Manager and the Adviser continued to waive their respective compensation
until August 23, 1995.
5
On August 24, 1995, the Board of Trustees of the Fund approved an
Agreement and Plan of Reorganization by and between the Fund and Dean Witter
Convertible Securities Trust ("Convertible Trust"), pursuant to which the
assets of the Fund would be combined with those of Convertible Trust and
shareholders of the Fund would become shareholders of Convertible Trust
receiving shares of Convertible Trust equal to the value of their holdings in
the Fund (the "Reorganization"). The Reorganization is subject to the
approval of shareholders of the Fund. A proxy statement formally detailing
the proposal and the reasons for the Trustees' action, as well as information
concerning Convertible Trust, will be distributed to shareholders of the
Fund.
INVESTMENT OBJECTIVE AND POLICIES
-----------------------------------------------------------------------------
The investment objective of the Fund is to attain a high level of total
return through a combination of capital appreciation and current income. This
objective is fundamental and may not be changed without shareholder approval.
There is no assurance that the objective will be achieved.
The Fund seeks to achieve its investment objective by investing under
normal circumstances at least 65% of its total assets in convertible
securities of domestic and foreign issuers. Under normal circumstances, the
Fund will invest in convertible securities of issuers located in at least
three countries, one of which is the United States. The convertible
securities in which the Fund may invest include bonds, debentures, corporate
notes, preferred stock or other similar securities that may be converted into
or exchanged for a prescribed amount of common stock or other equity of the
same or different issuer within or at a particular period of time at a
specified price or formula. With respect to the Fund's policy of investing at
least 65% of its total assets in convertible securities, any common stock or
other equity security received as a result of a conversion of a convertible
security will not require elimination from the Fund's portfolio.
Up to 35% of the Fund's total assets may be invested in any combination
and quantity of domestic or foreign common stock, non-convertible preferred
stock, non-convertible corporate debt securities, options and warrants on
debt and equity securities, financial futures contracts and related options
thereon, and money market instruments.
The Fund will invest at least 25% of its total assets in securities of
United States issuers at all times. In addition, the Fund may invest, from
time to time, more than 25% of its total assets in securities issued by
issuers located in Japan. Any concentration of the Fund's assets in Japanese
issuers would subject the Fund to the risks of adverse social, political or
economic events which occur in Japan. Specifically, investments in the
Japanese stock market may entail a higher degree of risk than investments in
other markets as, by fundamental measures of corporate valuation, such as its
high price-earnings ratios and low dividend yields, the Japanese market as a
whole may appear expensive relative to other world stock markets (i.e., the
prices of Japanese stocks may be relatively high). In addition, the prices of
securities traded on the Japanese markets may be more volatile than many
other markets.
The Fund's investments in convertible securities generally will be
determined pursuant to a "bottom- up" approach. That is, the Adviser's
principal emphasis will consist of identifying underpriced opportunities
based on currently observable pricing and terms and according secondary
importance to projections regarding appreciation of the common stocks and
equities underlying the convertible securities and to overall economic and
stock market projections.
The Fund may invest in convertible securities and other fixed-income
securities rated below investment grade. Securities below investment grade
are the equivalent of high yield, high risk bonds (commonly known as "junk
bonds"). Investment grade is generally considered to be debt securities rated
BBB or higher by Standard & Poor's Corporation ("S&P") or Baa or higher by
Moody's Investors Service, Inc. ("Moody's").
6
(Convertible and other fixed-income securities rated BBB by S&P or Baa by
Moody's, which generally are regarded as having an adequate capacity to pay
interest and repay principal, have speculative characteristics.) However, the
Fund will not invest in convertible and other fixed-income securities that
are rated lower than B by S&P or Moody's or, if not rated, determined to be
of comparable quality by the Adviser. The Fund will not invest in
fixed-income securities that are in default in payment of principal or
interest. A description of fixed-income securities ratings is contained in
the Appendix to this Prospectus.
Money market instruments in which the Fund may invest are securities
issued or guaranteed by the U.S. Government or its agencies (Treasury bills,
notes and bonds); obligations of banks subject to regulation by the U.S.
Government and having total assets of $1 billion or more; Eurodollar
certificates of deposit; obligations of savings banks and savings and loan
associations having total assets of $1 billion or more; fully insured
certificates of deposit; and commercial paper rated within the two highest
grades by Moody's or S&P or, if not rated, issued by a company having an
outstanding debt issue rated AAA by S&P or Aaa by Moody's.
There may be periods during which, in the opinion of the Adviser, 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 total assets is invested in money
market instruments or cash.
The Fund is classified as a non-diversified investment company under the
Investment Company Act of 1940, as amended (the "Act"), and as such is not
limited by the Act in the proportion of its assets that it may invest in the
obligations of a single issuer. However, the Fund intends to conduct its
operations so as to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code. See "Dividends, Distributions and
Taxes." In order to qualify, among other requirements, the Fund will limit
its investments so that at the close of each quarter of the taxable year, (i)
not more than 25% of the market value of the Fund's total assets will be
invested in the securities of a single issuer, and (ii) with respect to 50%
of the market value of its total assets not more than 5% will be invested in
the securities of a single issuer and the Fund will not own more than 10% of
the outstanding voting securities of a single issuer. To the extent that a
relatively high percentage of the Fund's assets may be invested in the
securities of a limited number of issuers, the Fund's portfolio securities
may be more susceptible to any single economic, political or regulatory
occurrence than the portfolio securities of a diversified investment company.
The limitations described in this paragraph are not fundamental policies and
may be revised to the extent applicable Federal income tax requirements are
revised.
PORTFOLIO CHARACTERISTICS
Convertible Securities. A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged for
a prescribed amount of common stock of the same or a different issuer within
a particular period of time at a specified price or formula. Convertible
securities rank senior to common stocks in a corporation's capital structure
and, therefore, entail less risk than the corporation's common stock. The
value of a convertible security is a function of its "investment value" (its
value as if it did not have a conversion privilege), and its "conversion
value" (the security's worth if it were to be exchanged for the underlying
security, at market value, pursuant to its conversion privilege).
To the extent that a convertible security's investment value is greater
than its conversion value, its price will be primarily a reflection of such
investment value and its price will be likely to increase when interest rates
fall and decrease when interest rates rise, as with a fixed-income security
(the credit standing of the issuer and other factors may also have an effect
on the convertible security's value). If the conversion value exceeds the
investment value, the price of the convertible security will rise above its
investment value and, in addition, will generally sell at some premium over
its conversion value. (This premium represents the price investors are
willing to pay for the privilege of purchasing a fixed-income security with a
7
possibility of capital appreciation due to the conversion privilege.) At such
times the price of the convertible security will tend to fluctuate directly
with the price of the underlying equity security.
Foreign Securities. As noted above, the Fund may invest in securities of
foreign companies. Such investments may also be 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. The Fund's investments in unlisted
foreign securities are subject to the Fund's overall policy limiting its
investment in illiquid securities to 15% or less of its net assets.
SPECIAL RISK CONSIDERATIONS
Convertible Securities. The net asset value of the Fund's shares will
fluctuate with changes in the market value of the Fund's portfolio
securities. The market value of the Fund's convertible securities will
increase or decrease due to a variety of economic, market and political
factors affecting the underlying common shares, as well as changes in
prevailing interest rates, none of which can be predicted. In addition, see
"High Yield, High Risk Securities" below for a discussion of the risks of
investing in convertible and other fixed-income securities below investment
grade.
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, particularly in securities of issuers
located in emerging market or developing countries, will also occasion risks
relating to political and economic developments abroad, including the
possibility of expropriations or confiscatory taxation, restrictions on
foreign investment and repatriation of capital, 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.
Additionally, there may be less investment community research and coverage
with respect to certain foreign convertible securities. Also, aggregate
market indexes to use as benchmarks when comparing performance are generally
not available for foreign convertible securities.
Additionally, many of the emerging market or developing countries in which
the Fund may invest may be subject to a greater degree of economic, political
and social instability than is the case in the United States, Japan and
Western European countries. Such instability may result from, among other
things, the following: (i) authoritarian governments or
8
military involvement in political and economic decision-making, including
changes in government through extra-constitutional means; (ii) popular unrest
associated with demands for improved political, economic and social
conditions; (iii) internal insurgencies; (iv) hostile relations with
neighboring countries; and (v) ethnic, religious and racial disaffection.
Such social, political and economic instability could disrupt the principal
financial markets in which the Fund invests and adversely affect the value of
the Fund's assets.
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 U.S. 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.
High Yield, High Risk Securities. Because of the ability of the Fund to
invest in certain high yield, high risk convertible and other fixed-income
securities (commonly known as "junk bonds"), the Adviser must take into
account the special nature of such securities and certain special
considerations in assessing the risks associated with such investments.
Although the growth of the high yield securities market in the 1980s had
paralleled a long economic expansion, since that time many issuers have been
affected by adverse economic and market conditions. It should be recognized
that an economic downturn or increase in interest rates is likely to have a
negative effect on the high yield bond market and on the value of the high
yield securities held by the Fund, as well as on the ability of the
securities' issuers to repay principal and interest on their borrowings.
The prices of high yield securities have been found to be less sensitive
to changes in prevailing interest rates than higher-rated investments but
more sensitive to adverse economic changes or individual corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress
which would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. If the issuer of a fixed-income security owned
by the Fund defaults, the Fund may incur additional expenses to seek
recovery. In addition, periods of economic uncertainty and change can be
expected to result in an increased volatility of market prices of high yield
securities and a concomitant volatility in the net asset value of a share of
the Fund.
The secondary market for high yield securities may be less liquid than the
markets for higher quality securities and, as such, may have an adverse
effect on the market prices of certain securities. The limited liquidity of
the market may also adversely affect the ability of the Fund's Trustees to
arrive at a fair value for certain high yield securities at certain times and
could make it difficult for the Fund to sell certain securities. In addition,
new laws and potential new laws may have an adverse effect upon the value of
high yield securities and a concomitant negative impact upon the net asset
value of a share of the Fund.
OTHER INVESTMENT POLICIES
Warrants and Stock Rights. The Fund may invest up to 5% of the value of
its net assets in warrants, including not more than 2% in warrants not listed
on
9
either the New York or American Stock Exchange. The Fund may also invest in
stock rights. Warrants are, in effect, an option to purchase equity
securities at a specific price, generally valid for a specific period of
time, and have no voting rights, pay no dividends and have no rights with
respect to the corporations issuing them. The Fund may acquire warrants and
stock rights attached to other securities without reference to the foregoing
limitations.
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 debt securities from a
selling financial institution such as a bank, savings and loan association or
broker-dealer. The agreement provides that the Fund will sell back to the
institution, and that the institution will repurchase, the underlying
security at a specified price and at a fixed time in the future, usually not
more than seven days from the date of purchase. While repurchase agreements
involve certain risks not associated with direct investments in debt
securities, the Fund follows procedures designed to minimize those risks. See
the Statement of Additional Information for a further discussion of such
investments.
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 Adviser, 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.
When-Issued and Delayed Delivery Securities and Forward Commitments. From
time to time, in the ordinary course of business, the Fund may purchase
securities on a when-issued or delayed delivery basis or may purchase or sell
securities on a forward commitment basis. When such transactions are
negotiated, the price is fixed at the time of the commitment, but delivery
and payment can take place a month or more after the date of the commitment.
An increase in the percentage of the Fund's assets committed to the purchase
of securities on a when-issued, delayed delivery or forward commitment basis
may increase the volatility of the Fund's net asset value.
When, As and If Issued Securities. The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security
depends upon the occurrence of a subsequent event, such as approval of a
merger, corporate reorganization, leveraged buyout or debt restructuring. If
the anticipated event does not occur and the securities are not issued, the
Fund will have lost an investment opportunity. 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.
Lending of Portfolio Securities. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities to brokers, dealers
and other financial institutions, provided that such loans are callable at
any time by the Fund (subject to certain notice provisions described in the
Statement of Additional Information), and are at all times secured by cash or
money market instruments, which are maintained in a segregated account
pursuant to applicable regulations and that are equal to at least the market
value, determined daily, of the loaned securities. As
10
with any extensions of credit, there are risks of delay in recovery and in
some cases even loss of rights in the collateral should the borrower of the
securities fail financially. However, loans of portfolio securities will only
be made to firms deemed by the Adviser to be creditworthy and when the income
which can be earned from such loans justifies the attendant risks.
OPTIONS AND FUTURES TRANSACTIONS
The Fund may purchase and sell (write) call and put options on portfolio
securities and on the U.S. dollar or foreign currencies which are or may in
the future be listed on securities exchanges or are written in
over-the-counter transactions ("OTC Options"). Listed options are issued or
guaranteed by the exchange on which they trade or by a clearing corporation
such as the Options Clearing Corporation. 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 or foreign currencies,
without limit, in order to aid it in achieving its investment objective. The
Fund may also write covered put options; however, the aggregate value of the
obligations underlying the puts determined as of the date the options are
sold will not exceed 50% of the Fund's net assets.
The Fund may purchase listed and OTC call and put options on securities
and stock indexes 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. 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. 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 also 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 of the foreign
currencies ("currency futures"), on U.S. or foreign fixed-income securities
("interest rate futures") and on such indexes of U.S. or foreign equity,
fixed-income or convertible securities as may exist or come into being
("index futures"). The Fund will purchase or sell interest rate futures
contracts for the purpose of hedging its fixed-income portfolio (or
anticipated portfolio) against changes in prevailing interest rates. The Fund
may purchase or sell index futures or currency futures 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).
The Fund, for hedging purposes, 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 Fund's portfolio securities are not
speculative in nature, there are risks inherent in the use of
11
such instruments. One such risk is that the Adviser 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 dollar cash prices of the Fund's portfolio securities and their
denominated currencies. See the Statement of Additional Information for a
further discussion of such risks.
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 Adviser believes that the currency
of a particular foreign country may suffer a substantial decline against the
U.S. dollar or some other foreign currency, the 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 Adviser 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 Adviser 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 secu-
12
rities 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 Adviser. 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 related to qualification as a regulated investment company (see
"Dividends, Distributions, and Taxes").
PORTFOLIO MANAGEMENT
The Fund's portfolio is actively managed by its Adviser with a view to
achieving the Fund's investment objective. Robert M. Hanisee, Managing
Director of the Adviser, and Kevin A. Hunter, Senior Vice President of the
Adviser, are the primary portfolio managers of the Fund. Messrs. Hanisee and
Hunter have been primary portfolio managers of the Fund since April, 1995,
and have been portfolio managers with affiliates of The TCW Group, Inc. since
1990 and 1989, respectively.
In determining which securities to purchase for the Fund or hold in the
Fund's portfolio, the Adviser will rely on information from various sources,
including research, analysis and appraisals of brokers and dealers, including
Dean Witter Reynolds Inc. ("DWR"), a broker-dealer affiliate of the Manager,
and others regarding economic developments and interest rate trends, and the
Adviser's own analysis of factors it deems relevant.
Orders for transactions in portfolio securities and commodities are placed
for the Fund with a number of brokers and dealers, including DWR. The Fund
may incur brokerage commissions on transactions conducted through DWR. It is
not anticipated that the portfolio trading will result in the Fund's
portfolio turnover rate exceeding 100% in any one year. The Fund will incur
brokerage costs commensurate with its portfolio turnover rate.
Except as specifically noted, all investment policies and practices
discussed above are not fundamental policies of the Fund and thus may be
changed without shareholder approval.
INVESTMENT RESTRICTIONS
-----------------------------------------------------------------------------
The investment restrictions listed below are among the restrictions which
have been adopted by the Fund as fundamental policies. Under 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. Invest 25% or more of the value of its total assets in securities
of issuers in any one in- dustry. This restriction does not apply to
obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities.
2. 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 does not apply to
obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities.
In addition, as a non-fundamental policy, the Fund may not, as to 75% of
its total assets, pur- chase more than 10% of the voting securities of any
issuer.
13
PURCHASE OF FUND SHARES
-----------------------------------------------------------------------------
The Fund offers its shares to the public on a continuous basis. Pursuant
to a Distribution Agreement between the Fund and Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Manager, shares of the Fund are
distributed by the Distributor and offered by DWR and other dealers (which
may include TCW Brokerage Services, an affiliate of the Adviser) who have
entered into selected broker-dealer agreements with the Distributor
("Selected Broker- Dealers"). The principal executive office of the
Distributor is located at Two World Trade Center, New York, New York 10048.
The minimum initial purchase is $1,000 and subsequent purchases of $100 or
more may be made by sending a check, payable to TCW/DW Global Convertible
Trust, directly to Dean Witter Trust Company (the "Transfer Agent") at P.O.
Box 1040, Jersey City, NJ 07303, or by contacting an account executive of DWR
or 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.
Shares of the Fund are sold through the Distributor on a normal three
business day settlement basis; that is, payment is due on the third business
day (settlement date) after the order is placed with the Distributor. 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. As noted above, orders placed directly with the Transfer
Agent must be accompanied by payment. Investors will be entitled to receive
income dividends and capital gains distributions if their order is received
by the close of business on the day prior to the record date for such
dividends and distributions.
The offering price will be the net asset value per share next determined
following receipt of an order by the Transfer Agent (see "Determination of
Net Asset Value"). 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 "Repurchases and Redemptions"). Sales personnel of a Selected
Broker-Dealer 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 various
types of non-cash compensation as special sales incentives, including trips,
educational and/or business seminars and merchandise. The Fund and the
Distributor reserve the right to reject any purchase orders.
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% 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. A portion of the fee payable pursuant to
the Plan, equal to 0.25% of the Fund's average daily net assets, is
characterized as a service fee within the meaning of NASD guidelines. The
service fee is a payment made for personal service and/or the maintenance of
shareholder accounts.
Amounts paid under the Plan are paid to the Distributor to compensate it
for the 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
14
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 distribution
expenses. For the fiscal period ended June 30, 1995, the Fund accrued
payments under the Plan amounting to $111,428, which is equal to 1.0% of the
Fund's average daily net assets for the fiscal period. The payments accrued
under the Plan were calculated pursuant to clause (b) of the compensation
formula under the Plan.
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 "Repurchases and Redemptions--
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 the excess
distribution expenses (including the carrying charge described above)
totalled $1,398,806 at June 30, 1995, which was equal to 7.41% 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 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
(or, on days when the New York Stock Exchange closes prior to 4:00 p.m., at
such earlier time), 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 or quoted by NASDAQ is valued at its
latest sale price on that exchange or quotation service (if there were no
sales that day, the security is valued at the latest bid price); 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 Adviser that sale or bid prices are not reflective of a
security's market value, portfolio securities are valued at their fair value
as determined in good faith under procedures established by and under the
general supervision of the 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 prior to the close of the New York
Stock Exchange. 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.
15
Short-term debt securities with remaining maturities of 60 days or less at
the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees. Other short- term debt securities will be valued on a mark-to-
market basis until such time as they reach a remaining maturity of 60 days,
whereupon they will be valued at amortized cost using their value on the 61st
day unless the Trustees determine such does not reflect the securities'
market value, in which case these securities will be valued at their fair
value as determined by the Trustees. All other securities and other assets
are valued at their fair value as determined in good faith under procedures
established by and under the supervision of 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 TCW/DW
Fund), unless the shareholder requests that they be paid in cash.
Investment of Dividends or 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 30 days after the
payment date. Shares so acquired are not subject to the imposition of a
contingent deferred sales charge upon their redemption (see "Repurchases and
Redemptions").
EasyInvest (Service Mark) . Shareholders may subscribe to EasyInvest, an
automatic purchase plan which provides for any amount from $100 to $5,000 to
be transferred automatically from a checking or savings account, on a
semi-monthly, monthly or quarterly basis, to the Fund's Transfer Agent for
investment in shares of the Fund. Shares purchased through EasyInvest will be
added to the shareholder's existing account at the net asset value calculated
the same business day the transfer of funds is effected. For further
information or to subscribe to EasyInvest, shareholders should contact their
DWR or other Selected Broker-Dealer account executive or the Transfer Agent.
Systematic Withdrawal Plan. 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 "Repurchases and
Redemptions--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.
Shareholders should contact their DWR or other Selected Broker-Dealer
account executive or the Transfer Agent for 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.
16
For further information regarding plan administration, custodial fees and
other details, investors should contact their 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 any other TCW/DW
Fund sold with a contingent deferred sales charge ("CDSC Funds"), for shares
of TCW/DW North American Government Income Trust, TCW/DW Income and Growth
Fund and TCW/DW Balanced Fund, TCW/DW North American Intermediate Income
Trust, and for shares of five money market funds for which InterCapital
serves as investment manager: Dean Witter Liquid Asset Fund Inc., Dean Witter
U.S. Government Money Market Trust, Dean Witter Tax-Free Daily Income Trust,
Dean Witter California Tax-Free Daily Income Trust and Dean Witter New York
Municipal Money Market Trust (the foregoing nine 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.
Shareholders utilizing the Fund's Exchange Privilege may subsequently
re-exchange such shares back to the Fund. However, no exchange privilege is
available between the Fund and any other fund managed by the Manager or
InterCapital, other than other TCW/DW Funds and the five money market funds
listed above.
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 or any other TCW/DW 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 day. Subsequent
exchanges between any of the money market funds and any TCW/DW Fund 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. 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 "Repurchases and Redemptions--Contingent
Deferred Sales Charge"). However, in the case of shares of the Fund 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 which are
attributable to those shares. (Exchange Fund 12b-1 distribution fees are
described in the prospectuses for those funds.)
Purchases and exchanges should be made for investment purposes only. A
pattern of frequent exchanges may be deemed by the Manager to be abusive and
contrary to the best interests of the Fund's other shareholders and, at the
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, each of the other TCW/DW Funds and each of the money market funds may
in its discretion limit or otherwise restrict the number of times this
Exchange Privilege may be exercised by any investor. Any such restriction
will be made by the Fund on a prospective basis only,
17
upon notice to the shareholder not later than ten days following such
shareholder's most recent exchange. Also, the Exchange Privilege may be
terminated or revised at any time by the Fund and/or any of such other TCW/DW
Funds or money market funds for which shares of the Fund have been exchanged,
upon such notice as may be required by applicable regulatory agencies.
Shareholders maintaining margin accounts with DWR or another Selected
Broker-Dealer are referred to their account executive regarding restrictions
on exchange of shares of the Fund pledged in the margin account.
The current prospectus for each fund describes its investment objective(s)
and policies, and shareholders should obtain 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 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 money
market funds for which the Exchange Privilege is available pursuant to this
Exchange Privilege by contacting their DWR or other Selected Broker-Dealer
account executive (no Exchange Privilege Authorization Form is required).
Other shareholders (and those shareholders who are clients of DWR or another
Selected Broker-Dealer but who wish to make exchanges directly by writing or
telephoning the Transfer Agent) must complete and forward to the Transfer
Agent an Exchange Privilege Authorization Form, copies of which may be
obtained from the Transfer Agent, to initiate an exchange. If the
Authorization Form is used, exchanges may be made in writing or by contacting
the Transfer Agent at (800) 869-6397 (toll free). The Fund will employ
reasonable procedures to confirm that exchange instructions communicated over
the telephone are genuine. Such procedures include requiring various forms of
personal identification such as name, mailing address, social security or
other tax identification number and DWR or other Selected Broker-Dealer
account number (if any). Telephone instructions will also be recorded. If
such procedures are not employed, the Fund may be liable for any losses due
to unauthorized or fraudulent instructions.
Telephone exchange instructions will be accepted if received by the
Transfer Agent between 9:00 a.m. and 4:00 p.m. New York time, on any day the
New York Stock Exchange is open. Any shareholder wishing to make an exchange
who has previously filed an Exchange Privilege Authorization Form and who is
unable to reach the Fund by telephone should contact his or her DWR or other
Selected Broker-Dealer account executive, if appropriate, or make a written
exchange request. Shareholders are advised that during periods of drastic
economic or market changes, it is possible that the telephone exchange
procedures may be difficult to implement, although this has not been the case
in the past with other funds managed by the the Manager.
Shareholders should contact their DWR or other Selected Broker-Dealer
account executive or the Transfer Agent for further information about the
Exchange Privilege.
REPURCHASES AND REDEMPTIONS
-----------------------------------------------------------------------------
Repurchase. DWR and other Selected 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 or telegraphic request of the shareholder. The repurchase price is
the net asset value per share next
18
computed (see "Purchase of Fund Shares") after such repurchase order is
received by DWR or other Selected Broker-Dealer, reduced by any applicable
CDSC (see below).
The CDSC, if any, will be the only fee imposed by the Fund, the
Distributor, DWR or other Selected Broker-Dealer. The offers by DWR and other
Selected Broker-Dealers to repurchase shares may be suspended without notice
by them at any time. In that event, shareholders may redeem their shares
through the Fund's Transfer Agent as set forth below under "Redemption."
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
will be reduced by the amount of any applicable contingent deferred sales
charge (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, the shares may be redeemed by surrendering the
certificates with a written request for redemption along with any additional
documentation required by the Transfer Agent.
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 AS A
PURCHASE PERCENTAGE OF AMOUNT
PAYMENT MADE 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. 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 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
19
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 investor's
entitlement.
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. 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
repurchased or redeemed and has not previously exercised this reinstatement
privilege may, within thirty days after the date of the repurchase or
redemption, reinstate any portion or all of the proceeds of such repurchase
or redemption in shares of the Fund at the 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 repurchase or redemption.
Involuntary Redemption. The Fund reserves the right, on sixty days'
notice, to redeem, at their 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 quarterly dividends
and to distribute substantially all of the Fund's net investment income. The
Fund intends to distribute net short-term and net long-term capital gains, if
any, at least once each year. The Fund may, however, determine either to
distribute or to retain all or part of any net 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 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.
Shareholders who are required to pay taxes on their income will normally have
to pay federal income taxes, and any state income taxes, on the dividends and
distributions they receive from the Fund. Such dividends and distributions,
to the extent that they are derived from net investment income or short-term
capital gains, are taxable to the shareholder as ordinary income regardless
of whether the shareholder receives such payments in additional shares or in
cash. Any dividends declared with a record date in the last quarter of any
calendar year which are paid in the
20
following year prior to February 1 will be deemed received by the shareholder
in the prior year. Dividend payments will be eligible for the federal
dividends received deduction available to the Fund's corporate shareholders
only to the extent the aggregate dividends received by the Fund would be
eligible for the deduction if the Fund were the shareholder claiming the
dividends received deduction. In this regard, a 46-day holding period
generally must be met.
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 "yield" and/or its "total return"
in advertisements and sales literature. Both the yield and the total return
of the Fund are based on historical earnings and are not intended to indicate
future performance. The yield of the Fund is computed by dividing the Fund's
net investment income over a 30-day period by an average value (using the
average number of shares entitled to receive dividends and the net asset
value per share at the end of the period), all in accordance with applicable
regulatory requirements. Such amount is compounded for six months and then
annualized for a twelve-month period to derive the Fund's yield.
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 one, five and ten
years, or the life of the Fund if less than any of the foregoing. 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 which would be incurred by redeeming shareholders, for the
period. 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. 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 may also advertise the growth
of hypothetical investments of $10,000, $50,000 and $100,000 in shares of the
Fund. The Fund from time to time may also advertise its performance relative
to certain performance rankings and indexes compiled by independent
organizations (such as mutual fund performance rankings of Lipper Analytical
Services, Inc.).
21
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 limitation on shareholder personal liability,
and the nature of the Fund's assets and operations, the possibility of the
Fund being unable to meet its obligations is remote and thus, in the opinion
of Massachusetts counsel to the Fund, the risk to Fund shareholders of
personal liability is remote.
Code of Ethics. The Adviser is subject to a Code of Ethics with respect to
investment transactions in which the Adviser's officers, directors and
certain other persons have a beneficial interest to avoid any actual or
potential conflict or abuse of their fiduciary position. The Code of Ethics,
as it pertains to the TCW/DW Funds, contains several restrictions and
procedures designed to eliminate conflicts of interest including: (a)
pre-clearance of personal investment transactions to ensure that personal
transactions by employees are not being conducted at the same time as the
Adviser's clients; (b) quarterly reporting of personal securities
transactions; (c) a prohibition against personally acquiring securities in an
initial public offering, entering into uncovered short sales and writing
uncovered options; (d) a seven day "black out period" prior or subsequent to
a TCW/DW Fund transaction during which portfolio managers are prohibited from
making certain transactions in securities which are being purchased or sold
by a TCW/DW Fund; (e) a prohibition, with respect to certain investment
personnel, from profiting in the purchase and sale, or sale and purchase, of
the same (or equivalent) securities within 60 calendar days; and (f) a
prohibition against acquiring any security which is subject to firm wide or,
if applicable, a department restriction of the Adviser. The Code of Ethics
provides that exemptive relief may be given from certain of its requirements,
upon application. The Adviser's Code of Ethics complies with regulatory
requirements and, insofar as it relates to persons associated with registered
investment companies, the Report of the Advisory Group on Personal Investing
of the Investment Company Institute.
Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone number or address set forth on the front cover
of this Prospectus.
22
APPENDIX
-----------------------------------------------------------------------------
RATINGS OF CORPORATE DEBT INSTRUMENTS
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
BOND RATINGS
<TABLE>
<CAPTION>
<S> <C>
Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk
and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise
what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium grade obligations; i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements
may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
Bonds rated Aaa, Aa, A and Baa are considered investment grade bonds.
Ba Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be very moderate, and therefore not well safeguarded during
both good and bad times in the future. Uncertainty of position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of
danger with respect to principal or interest.
Ca Bonds which are rated Ca present obligations which are speculative in a high degree. Such issues are often in default
or have other marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
</TABLE>
Rating Refinements: Moody's may apply numerical modifiers, 1, 2, and 3 in
each generic rating classification from Aa through B in its municipal bond
rating system. The modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and a modifier 3 indicates that the issue ranks in the lower end if
its generic rating category.
23
COMMERCIAL PAPER RATINGS
Moody's Commercial Paper ratings are opinions of the ability to repay
punctually promissory obligations not having an original maturity in excess
of nine months. The ratings apply to Municipal Commercial Paper as well as
taxable Commercial Paper. Moody's employs the following three designations,
all judged to be investment grade, to indicate the relative repayment
capacity of rated issuers: Prime-1, Prime-2, Prime-3.
Issuers rated Prime-1 have a superior capacity for repayment of short-term
promissory obligations. Issuers rated Prime-2 have a strong capacity for
repayment of short-term promissory obligations; and Issuers rated Prime-3
have an acceptable capacity for repayment of short-term promissory
obligations. Issuers rated Not Prime do not fall within any of the Prime
rating categories.
STANDARD & POOR'S CORPORATION ("STANDARD & POOR'S")
BOND RATINGS
A Standard & Poor's bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers,
or lessees.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. The
ratings are based, in varying degrees, on the following considerations: (1)
likelihood of default-capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation; (2) nature of and provisions of the obligation; and
(3) protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
Standard & Poor's does not perform an audit in connection with any rating
and may, on occasion, rely on unaudited financial information. The ratings
may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or for other reasons.
<TABLE>
<CAPTION>
<S> <C>
AAA Debt rated "AAA" has the highest rating assigned by Standard & Poor's. Capacity to pay interest and repay principal
is extremely strong.
AA Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest-rated issues
only in small degree.
A Debt rated "A" has a strong capacity to pay interest and repay principal although they are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions than debt in higher-rated categories.
BBB Debt rated "BBB" is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal for debt in this category than for debt in higher-rated
categories.
Bonds rated AAA, AA, A and BBB are considered investment grade bonds.
BB Debt rated "BB" has less near-term vulnerability to default than other speculative grade debt. However, it faces major
ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to inadequate
capacity or willingness to pay interest and repay principal.
B Debt rated "B" has a greater vulnerability to default but presently has the capacity to meet interest payments and
principal repayments. Adverse business, financial or economic conditions would likely impair capacity or willingness
to pay interest and repay principal.
24
CCC Debt rated "CCC" has a current identifiable vulnerability to default, and is dependent upon favorable business, financial
and economic conditions to meet timely payments of interest and repayments of principal. In the event of adverse business,
financial or economic conditions, it is not likely to have the capacity to pay interest and repay principal.
CC The rating "CC" is typically applied to debt subordinated to senior debt which is assigned an actual or implied "CCC"
rating.
C The rating "C" is typically applied to debt subordinated to senior debt which is assigned an actual or implied "CCC-"
debt rating.
Cl The rating "Cl" is reserved for income bonds on which no interest is being paid.
D Debt rated "D" is in payment default. The 'D' rating category is used when interest payments or principal payments
are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The 'D' rating also will be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
NR Indicates that no rating has been requested, that there is insufficient information on which to base a rating or that
Standard & Poor's does not rate a particular type of obligation as a matter of policy.
Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded as having predominantly speculative characteristics with respect
to capacity to pay interest and repay principal. "BB" indicates the least degree of speculation and "C" the highest
degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.
Plus (+) or minus (-): The rating from "AA" to "CCC" may be modified by the addition of a plus or minus sign to show
relative standing with the major ratings categories.
</TABLE>
COMMERCIAL PAPER RATINGS
Standard and Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. The commercial paper rating is not a recommendation to
purchase or sell a security. The ratings are based upon current information
furnished by the issuer or obtained by S&P from other sources it considers
reliable. The ratings may be changed, suspended, or withdrawn as a result of
changes in or unavailability of such information. Ratings are graded into
group categories, ranging from "A" for the highest quality obligations to "D"
for the lowest. Ratings are applicable to both taxable and tax-exempt
commercial paper. The categories are as follows:
Issues assigned A ratings are regarded as having the greatest capacity for
timely payment. Issues in this category are further refined with the
designation 1, 2, and 3 to indicate the relative degree of safety.
<TABLE>
<CAPTION>
<S> <C>
A-1 indicates that the degree of safety regarding timely payment is very strong.
A-2 indicates capacity for timely payment on issues with this designation is strong. However, the relative degree
of safety is not as overwhelming as for issues designated "A-1".
A-3 indicates a satisfactory capacity for timely payment. Obligations carrying this designation are, however, somewhat
more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations.
</TABLE>
25
TCW/DW Global Convertible Trust
Two World Trade Center
New York, New York 10048
TRUSTEES
John C. Argue
Richard M. DeMartini
Charles A. Fiumefreddo
John R. Haire
Manuel H. Johnson
Paul Kolton
Thomas E. Larkin, Jr.
Michael E. Nugent
John L. Schroeder
Marc I. Stern
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Thomas E. Larkin, Jr.
President
Sheldon Curtis
Vice President, Secretary and
General Counsel
Robert M. Hanisee
Vice President
Kevin Hunter
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Chase Manhattan Bank, N.A.
Chase Plaza
New York, New York 10005
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
MANAGER
Dean Witter Services Company Inc.
ADVISER
TCW Funds Management, Inc.
TCW/DW
Global Convertible
Trust
PROSPECTUS
AUGUST 28, 1995
TCW/DW
GLOBAL CONVERTIBLE
TRUST
STATEMENT OF ADDITIONAL INFORMATION
August 28, 1995
-----------------------------------------------------------------------------
TCW/DW Global Convertible Trust (the "Fund") is an open-end,
non-diversified management investment company, whose investment objective is
to attain a high level of total return through a combination of capital
appreciation and current income. The Fund seeks to achieve its investment
objective by investing at least 65% of its total assets in convertible
securities of domestic and foreign issuers rated B or higher by Moody's
Investors Services, Inc. or Standard & Poor's Corporation or if not rated,
determined to be of comparable quality. See "Investment Objective and
Policies."
A Prospectus for the Fund dated August 28, 1995, which provides the basic
information you should know before investing in the Fund, may be obtained
without charge from the Fund at the address or telephone number listed below
or from the Fund's Distributor, Dean Witter Distributors Inc., or from Dean
Witter Reynolds Inc. at any of its branch offices. This Statement of
Additional Information is not a Prospectus. It contains information in
addition to and more detailed than that set forth in the Prospectus. It is
intended to provide additional information regarding the activities and
operations of the Fund, and should be read in conjunction with the
Prospectus.
TCW/DW Global Convertible Trust
Two World Trade Center
New York, New York 10048
(212) 392-2550
(800) 869-6397
TABLE OF CONTENTS
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
The Fund and its Management .......... 3
Trustees and Officers ................ 6
Investment Practices and Policies ... 12
Investment Restrictions .............. 15
Portfolio Transactions and Brokerage 16
The Distributor ...................... 17
Shareholder Services ................. 20
Repurchases and Redemptions .......... 24
Dividends, Distributions and Taxes .. 26
Performance Information .............. 27
Description of Shares ................ 28
Custodian and Transfer Agent ......... 28
Independent Accountants .............. 29
Reports to Shareholders .............. 29
Legal Counsel ........................ 29
Experts .............................. 29
Registration Statement ............... 29
Financial Statements--June 30, 1995 . 30
Report of Independent Accountants ... 44
</TABLE>
2
THE FUND AND ITS MANAGEMENT
-----------------------------------------------------------------------------
THE FUND
The Fund is a trust of the type commonly known as a "Massachusetts
business trust" and was organized under the laws of the Commonwealth of
Massachusetts on June 29, 1994. The Fund is one of the TCW/DW Funds, which
currently consist, in addition to the Fund, of TCW/DW Core Equity Trust,
TCW/DW Small Cap Growth Fund, TCW/DW North American Government Income Trust,
TCW/DW Latin American Growth Fund, TCW/DW Term Trust 2002, TCW/DW Income and
Growth Fund, TCW/DW Term Trust 2003, TCW/DW Balanced Fund, TCW/DW Term Trust
2000, TCW/DW North American Intermediate Income Trust, TCW/DW Total Return
Trust and TCW/DW Emerging Markets Opportunities Trust.
THE MANAGER
Dean Witter Services Company Inc. (the "Manager"), a Delaware corporation,
whose address is Two World Trade Center, New York, New York 10048, is the
Fund's Manager. The Manager is a wholly-owned subsidiary of Dean Witter
InterCapital Inc. ("InterCapital"), a Delaware corporation. InterCapital is a
wholly-owned subsidiary of Dean Witter, Discover & Co. ("DWDC"), a Delaware
corporation. In an internal reorganization which took place in January, 1993,
InterCapital assumed the management, administrative and investment advisory
activities previously performed by the InterCapital Division of Dean Witter
Reynolds Inc. ("DWR"), a broker-dealer affiliate of the Manager. (As
hereinafter used in this Statement of Additional Information, the term
"InterCapital" refers to DWR's InterCapital Division prior to the internal
reorganization and to Dean Witter InterCapital Inc. thereafter). The daily
management of the Fund is conducted by or under the direction of officers of
the Fund and of the Manager and Adviser (see below), subject to review by the
Fund's Board of Trustees. In addition, Trustees of the Fund may provide
guidance on economic factors and interest rate trends. Information as to
these Trustees and officers is contained under the caption "Trustees and
Officers."
Pursuant to a management agreement (the "Management Agreement") with the
Manager, the Fund has retained the Manager to manage the Fund's business
affairs, supervise the overall day-to-day operations of the Fund (other than
rendering investment advice) and provide all administrative services to the
Fund. Under the terms of the Management Agreement, the Manager also maintains
certain of the Fund's books and records and furnishes, at its own expense,
such office space, facilities, equipment, supplies, clerical help and
bookkeeping and certain legal services as the Fund may reasonably require in
the conduct of its business, including the preparation of prospectuses,
statements of additional information, proxy statements and reports required
to be filed with federal and state securities commissions (except insofar as
the participation or assistance of independent accountants and attorneys is,
in the opinion of the Manager, necessary or desirable). In addition, the
Manager pays the salaries of all personnel, including officers of the Fund,
who are employees of the Manager. The Manager also bears the cost of the
Fund's telephone service, heat, light, power and other utilities.
As full compensation for the services and facilities furnished to the Fund
and expenses of the Fund assumed by the Manager, the Fund pays the Manager
monthly compensation calculated daily by applying the annual rate of 0.51% to
the daily net assets of the Fund determined as of the close of each business
day. While the total fees payable under the Management Agreement and the
Advisory Agreement (described below) are higher than that paid by most other
investment companies for similar services, the Board of Trustees determined
that the total fees payable under the Management Agreement and the Advisory
Agreement (described below) are reasonable in relation to the scope and
quality of services to be provided thereunder. In this regard, in evaluating
the Management Agreement and the Advisory Agreement, the Board of Trustees
recognized that the Manager and the Adviser had, pursuant to an agreement
described under the section entitled "The Adviser," agreed to a division as
between themselves of the total fees necessary for the management of the
business affairs of and the furnishing of investment advice to the Fund.
Accordingly, in reviewing the Management Agreement and Advisory Agreement,
the Board viewed as most significant the question as to whether the total
fees payable under the Management and Advisory Agreements were in the
aggregate reasonable in relation to the services to be provided thereunder.
For the fiscal period October 31, 1994 (commencement of operations) through
June 30, 1995, the fee payable under the Management Agreement ($56,828) was
waived by the Manager pursuant to undertakings described below.
The Management Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Manager is not liable to the Fund or any of its
investors for
3
any act or omission by the Manager or for any losses sustained by the Fund or
its investors. The Management Agreement in no way restricts the Manager from
acting as manager to others.
InterCapital had undertaken to assume all Fund expenses (except for the
Plan of Distribution fee and brokerage fees) and the Manager had undertaken
to waive the compensation provided for in the Management Agreement for
services rendered, and the Adviser had undertaken to waive the compensation
provided for in its Advisory Agreement, until such time as the Fund had $50
million of net assets or until six months from the date of commencement of
operations, whichever occurred first. InterCapital continued to assume all
operating expenses (except for the Plan of Distribution fee and brokerage
fees) and the Manager and the Adviser continued to waive their respective
compensation until August 23, 1995.
InterCapital has paid the organizational expenses of the Fund
(approximately $180,000) incurred prior to the offering of the Fund's shares.
The Fund has agreed to reimburse InterCapital for such expenses. These
expenses are being deferred by the Fund and are being amortized on the
straight line method over a period not to exceed five years from the date of
commencement of the Fund's operations.
The Management Agreement was initially approved by the Trustees on April
20, 1995 and became effective on that date. The Management Agreement replaced
a prior management agreement in effect between the Fund and the Manager which
was approved by the Trustees on July 14, 1994. The nature and scope of the
services provided to the Fund, and the formula to determine fees paid by the
Fund under the Management Agreement, are identical to those of the Fund's
previous management agreement. The Management Agreement may be terminated at
any time, without penalty, on thirty days' notice by the Trustees of the
Fund, or by the Manager.
Under its terms, the Management Agreement will continue in effect until
April 30, 1996, and will continue in effect from year to year thereafter,
provided continuance of the Agreement is approved at least annually by the
vote of the Trustees of the Fund, including the vote of a majority of the
Trustees of the Fund who are not parties to the Management or Advisory
Agreement or "interested persons" (as defined in the Investment Company Act
of 1940, as amended (the "Act")) of any such party (the "Independent
Trustees").
THE ADVISER
TCW Funds Management, Inc. (the "Adviser") is a wholly-owned subsidiary of
The TCW Group, Inc. ("TCW"), whose direct and indirect subsidiaries,
including Trust Company of the West and TCW Asset Management Company, provide
a variety of trust, investment management and investment advisory services.
As of June 30, 1995, the Adviser and its affiliates had approximately $50
billion under management or committed to management. Trust Company of the
West and its affiliates have managed equity securities portfolios for
institutional investors since 1971. The Adviser is headquartered at 865 South
Figueroa Street, Suite 1800, Los Angeles, California 90017 and is registered
as an investment adviser under the Investment Advisers Act of 1940. In
addition to the Fund, the Adviser serves as investment adviser to twelve
other TCW/DW Funds: TCW/DW Small Cap Growth Fund, TCW/DW Core Equity Trust,
TCW/DW North American Government Income Trust, TCW/DW Latin American Growth
Fund, TCW/DW Term Trust 2002, TCW/DW Income and Growth Fund, TCW/DW Term
Trust 2003, TCW/DW Balanced Fund, TCW/DW Term Trust 2000, TCW/DW North
American Intermediate Income Trust, TCW/DW Total Return Trust and TCW/DW
Emerging Markets Opportunities Trust. The Adviser also serves as investment
adviser to TCW Convertible Securities Fund, Inc., a closed-end investment
company listed on the New York Stock Exchange, and to TCW Galileo Funds,
Inc., an open-end investment company, and acts as adviser or sub-adviser to
other investment companies.
Robert A. Day, who is Chairman of the Board of Directors of TCW, may be
deemed to be a control person of the Adviser by virtue of the aggregate
ownership of Mr. Day and his family of more than 25% of the outstanding
voting stock of TCW.
Pursuant to an investment advisory agreement (the "Advisory Agreement")
with the Adviser, the Fund has retained the Adviser to invest the Fund's
assets, including the placing of orders for the purchase and sale of
portfolio securities. The Adviser obtains and evaluates such information and
advice relating to the economy, securities markets, and specific securities
as it considers necessary or useful to continuously manage the assets of the
Fund in a manner consistent with its investment objective. In addition, the
Adviser pays the salaries of all personnel, including officers of the Fund,
who are employees of the Adviser.
4
As full compensation for the services and facilities furnished to the Fund
and expenses of the Fund assumed by the Adviser, the Fund pays the Adviser
monthly compensation calculated daily by applying the annual rate of 0.34% to
the daily net assets of the Fund determined as of the close of each business
day. For the fiscal period October 31, 1994 (commencement of operations)
through June 30, 1995, the fee payable under the Advisory Agreement ($37,886)
was waived by the Adviser pursuant to undertakings described above.
The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Adviser is not liable to the Fund or any of its
investors for any act or omission by the Adviser or for any losses sustained
by the Fund or its investors. The Advisory Agreement in no way restricts the
Adviser from acting as investment adviser to others.
The Advisory Agreement was initially approved by the Trustees on July 14,
1994 and by InterCapital as then sole shareholder on July 27, 1994. The
Advisory Agreement may be terminated at any time, without penalty, on thirty
days' notice by the Trustees of the Fund, by the holders of a majority, as
defined in the Act, of the outstanding shares of the Fund, or by the Adviser.
The Agreement will automatically terminate in the event of its assignment (as
defined in the Act).
Under its terms, the Advisory Agreement will continue in effect until
April 30, 1996, and provides that it will continue from year to year
thereafter, provided continuance of the Agreement is approved at least
annually by the vote of the holders of a majority, as defined in the Act, of
the outstanding shares of the Fund, or by the Trustees of the Fund; provided
that in either event such continuance is approved annually by the vote of a
majority of the Independent Trustees of the Fund, which vote must be cast in
person at a meeting called for the purpose of voting on such approval.
Expenses not expressly assumed by the Manager under the Management
Agreement, by the Adviser under the Advisory Agreement or by the Distributor
of the Fund's shares, Dean Witter Distributors Inc. ("Distributors" or the
"Distributor") (see "The Distributor"), will be paid by the Fund. The
expenses borne by the Fund include, but are not limited to: expenses of the
Plan of Distribution pursuant to Rule 12b-1 (see "The Distributor"); charges
and expenses of any registrar; custodian, stock transfer and dividend
disbursing agent; brokerage commissions and securities transaction costs;
taxes; engraving and printing of share certificates; registration costs of
the Fund and its shares under federal and state securities laws; the cost and
expense of printing, including typesetting, and distributing Prospectuses and
Statements of Additional Information of the Fund and supplements thereto to
the Fund's shareholders; all expenses of shareholders' and trustees' meetings
and of preparing, printing and mailing of proxy statements and reports to
shareholders; fees and travel expenses of trustees or members of any advisory
board or committee who are not employees of the Manager or Adviser or any
corporate affiliate of either; all expenses incident to any dividend,
withdrawal or redemption options; charges and expenses of any outside service
used for pricing of the Fund's shares; fees and expenses of legal counsel,
including counsel to the Trustees who are not interested persons of the Fund
or of the Manager or the Adviser (not including compensation or expenses of
attorneys who are employees of the Manager or the Adviser) and independent
accountants; membership dues of industry associations; interest on Fund
borrowings; postage; insurance premiums on property or personnel (including
officers and trustees) of the Fund which inure to its benefit; extraordinary
expenses (including, but not limited to, legal claims and liabilities and
litigation costs and any indemnification relating thereto); and all other
costs of the Fund's operation.
Pursuant to the Management and Advisory Agreements, total operating
expenses of the Fund are subject to applicable limitations under rules and
regulations of states where the Fund is authorized to sell its shares.
Therefore, operating expenses are effectively subject to the most restrictive
of such limitations as the same may be amended from time to time. Presently,
the most restrictive limitation is as follows. If, in any fiscal year, the
Fund's total operating expenses, exclusive of taxes, interest, brokerage
fees, distribution fees and extraordinary expenses (to the extent permitted
by applicable state securities laws and regulations), exceed 2 1/2 % of the
first $30,000,000 of average daily net assets, 2% of the next $70,000,000 and
1 1/2 % of any excess over $100,000,000, the Manager and the Adviser will
reimburse the Fund, on a pro rata basis, for the amount of such excess. Such
amount, if any, will be calculated daily and credited on a monthly basis.
During the fiscal period October 31, 1994 through June 30, 1995, the Fund's
expenses did not exceed the expense limitation.
DWR and TCW have entered into an Agreement for the purpose of creating,
managing, administering and distributing a family of investment companies and
other managed pooled investment vehicles offered on a retail
5
basis within the United States. The Agreement contemplates that, subject to
approval of the board of trustees or directors of a particular investment
entity, DWR or its affiliates will provide management and distribution
services and TCW or its affiliates will provide investment advisory services
for each such investment entity. The Agree- ment sets forth the terms and
conditions of the relationship between TCW and its affiliates and DWR and its
affiliates and the manner in which the parties will implement the creation
and maintenance of the investment entities, including the parties'
expectations as to respective allocation of fees to be paid by an investment
entity to each party for the services to be provided to it by such party.
The Fund has acknowledged that each of DWR and TCW owns its own name,
initials and logo. The Fund has agreed to change its name at the request of
either the Manager or the Adviser, if the Management Agreement between the
Manager and the Fund or the Advisory Agreement between the Adviser and the
Fund is terminated.
TRUSTEES AND OFFICERS
-----------------------------------------------------------------------------
The Trustees and Executive Officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with
the Manager or the Adviser, and the affiliated companies of either, and with
the 13 TCW/DW Funds and with 77 investment companies of which InterCapital
serves as investment manager or investment adviser (the "Dean Witter Funds"),
are shown below.
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
---------------------------------------------------- -------------------------------------------------------------
<S> <C>
John C. Argue (63) Of Counsel, Argue Pearson Harbison & Myers (law firm); Director,
Trustee Avery Dennison Corporation (manufacturer of self-adhesive products
c/o Argue Pearson Harbison & Myers and office supplies) and CalMat Company (producer of aggregates,
801 South Flower Street asphalt and ready mixed concrete); Chairman, Rose Hills Memorial
Los Angeles, California Park (cemetery); advisory director, LAACO Ltd. (owner and operator
of private clubs and real estate); director or trustee of various
business and not-for-profit corporations; Director, TCW Galileo
Funds, Inc.; Trustee, University of Southern California, Occidental
College and Pomona College; Trustee of the TCW/DW Funds.
Richard M. DeMartini* (42) President and Chief Operating Officer of Dean Witter Capital, a
Trustee division of DWR; Director of DWR, the Manager, InterCapital,
Two World Trade Center Distributors and Dean Witter Trust Company ("DWTC"); Executive
New York, New York Vice President of DWDC; Member of the DWDC Management Committee;
Trustee of the TCW/DW Funds.
Charles A. Fiumefreddo* (62) Chairman, Chief Executive Officer and Director of the Manager,
Chairman of the Board, Chief InterCapital and Distributors; Executive Vice President and Director
Executive Officer and Trustee of DWR; Chairman of the Board, Chief Executive Officer and Trustee
Two World Trade Center of the TCW/DW Funds; Chairman of the Board, Director or Trustee,
New York, New York President and Chief Executive Officer of the Dean Witter Funds;
formerly Executive Vice President and Director of DWDC (until
February, 1993); Chairman and Director of DWTC; Director and/or
officer of various DWDC subsidiaries.
6
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
---------------------------------------------------- -------------------------------------------------------------
John R. Haire (70) Chairman of the Audit Committee and Chairman of the Committee of
Trustee Independent Directors or Trustees and Director or Trustee of each
Two World Trade Center of the Dean Witter Funds; formerly President, Council for Aid to
New York, New York Education (1978-October, 1989) and Chairman and Chief Executive
Officer of Anchor Corporation, an Investment Adviser (1964-1978);
Director of Washington National Corporation (insurance); Trustee
of the TCW/DW Funds.
Dr. Manuel H. Johnson (46) Senior Partner, Johnson Smick International, Inc., a consulting
Trustee firm; Koch Professor of International Economics and Director of
c/o Johnson Smick International Inc. the Center for Global Market Studies at George Mason University
1133 Connecticut Avenue, N.W. (since September, 1990); Co-Chairman and a founder of the Group
Washington, D.C. of Seven Council (G7C), an international economic commission (since
September, 1990); Director of NASDAQ (since June, 1995); Director
of Greenwich Capital Markets, Inc. (broker-dealer); formerly Vice
Chairman of the Board of Governors of the Federal Reserve System
(February, 1986-August, 1990) and Assistant Secretary of the U.S.
Treasury (1982-1986); Trustee of the TCW/DW Funds; Director or
Trustee of the Dean Witter Funds.
Paul Kolton (71) Chairman of the Audit Committee and Chairman of the Committee of
Trustee Independent Trustees of the TCW/DW Funds; formerly Chairman of
c/o Gordon Altman Butowsky Weitzen Shalov & Wein the Financial Accounting Standards Advisory Council and Chairman
Counsel to the Independent Trustees and Chief Executive Officer of the American Stock Exchange; Director
114 West 47th Street of UCC Investors Holding Inc. (Uniroyal Chemical Company Inc.);
New York, New York director or trustee of various not-for-profit organizations;
Director or Trustee of the Dean Witter Funds.
Thomas E. Larkin, Jr.* (55) Executive Vice President, The TCW Group, Inc.; President and Director
President and Trustee of Trust Company of the West; Vice Chairman and Director of TCW
865 South Figueroa Street Asset Manage- ment Company; Chairman of the Adviser; President
Los Angeles, California and Director of TCW Funds, Inc.; Senior Vice President of TCW
Convertible Securities Fund, Inc.; Vice Chairman of the Advisory
Council for the College of Business Administration of the University
of Notre Dame; Director of the California Pediatric and Family
Medicine Center; President and Trustee of the TCW/DW Funds.
Michael E. Nugent (59) General Partner, Triumph Capital, L.P., a private investment
Trustee partnership; formerly Vice President, Bankers Trust Company and
c/o Triumph Capital, L.P. BT Capital Corporation (September, 1984-March 1988); Director of
237 Park Avenue various business organizations; Trustee of the TCW/DW Funds; Director
New York, New York or Trustee of the Dean Witter Funds.
7
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
---------------------------------------------------- -------------------------------------------------------------
Marc I. Stern* (51) President, The TCW Group, Inc. (since May, 1992); President and
Trustee Director of the Adviser (since May, 1992); Vice Chairman and Director
865 South Figueroa Street of TCW Asset Mangement Company (since May, 1992); Executive Vice
Los Angeles, California President and Director of Trust Company of the West; Chairman and
Director of The TCW Galileo Funds, Inc.; Trustee of the TCW/DW
Funds; Chairman of TCW Americas Development, Inc. (since November,
1990); Chairman of TCW Asia, Limited (since January, 1993); Chairman
of TCW London International, Limited (since March, 1993); formerly
President of SunAmerica, Inc. (financial services company; Director
of Qualcomm, Incorporated (wireless communications); Director or
Trustee of various not-for-profit organizations.
John L. Schroeder (65) Executive Vice President and Chief Investment Officer of the Home
Trustee Insurance Company (since August, 1991); Director or Trustee of
c/o The Home Insurance Company the Dean Witter Funds; Director of Citizens Utilities Company;
59 Maiden Lane formerly Chairman and Chief Investment Officer of Axe-Houghton
New York, New York Manage- ment and the Axe-Houghton Funds (April, 1983-June, 1991)
and President of USF&G Financial Services, Inc. (June, 1990-June,
1991).
Sheldon Curtis (63) Senior Vice President, Secretary and General Counsel of the Manager
Vice President, Secretary and General Counsel and InterCapital; Senior Vice President and Secretary of DWTC;
Two World Trade Center Senior Vice President, Assistant Secretary and Assistant General
New York, New York Counsel of Distributors; Assistant Secretary of DWR and Vice
President, Secretary and General Counsel of the TCW/DW Funds and
the Dean Witter Funds.
Robert M. Hanisee (56) Managing Director of the Adviser (since April, 1990); Managing
Vice President Director, Director of Research and Chairman of the Equity Policy
865 South Figueroa Street Committee of Trust Company of the West and TCW Asset Management
Los Angeles, California Company; Vice President of TCW/DW Income and Growth Fund and TCW/DW
Global Convertible Trust.
Kevin A. Hunter (37) Senior Vice President of the Adviser, Trust Company of the West
Vice President and TCW Asset Management Company.
865 South Figueroa Street
Los Angeles, California
Thomas F. Caloia (48) First Vice President and Assistant Treasurer of the Manager,
Treasurer InterCapital and Treasurer of the TCW/DW Funds and the Dean Witter
Two World Trade Center Funds.
New York, New York
<FN>
---------------
* Denotes Trustees who are "interested persons" of the Fund, as defined
in the Act.
</TABLE>
In addition, Robert M. Scanlan, President and Chief Operating Officer of
the Manager and InterCapital and DWSC, Executive Vice President of
Distributors and DWTC and Director of DWTC, and David A. Hughey, Executive
Vice President and Chief Administrative Officer of the Manager, InterCapital
and DWSC, Distributors
8
and DWTC and Director of DWTC and Robert S. Giambrone, Senior Vice President
of InterCapital, DWSC, Distributors and DWTC, are Vice Presidents of the
Fund, and Marilyn K. Cranney and Barry Fink, First Vice Presidents and
Assistant General Counsels of the Manager and InterCapital and DWSC, and Lou
Anne D. McInnis and Ruth Rossi, Vice Presidents and Assistant General
Counsels of InterCapital, are Assistant Secretaries of the Fund.
BOARD OF TRUSTEES; RESPONSIBILITIES AND COMPENSATION OF INDEPENDENT TRUSTEES
As mentioned above under the caption "The Fund and its Management," the
Fund is one of the TCW/DW Funds, a group of investment companies for which
TCW Funds Management, Inc. serves as Investment Adviser and InterCapital as
Manager. As of the date of this Statement of Additional Information, there
are a total of 13 TCW/DW Funds. As of June 30, 1995, the TCW/DW Funds had
total net assets of approximately $4.1 billion and approximately a quarter of
a million shareholders.
The Board of Trustees of each TCW/DW Fund has ten (10) members. Six
Trustees, that is, a majority of the total number, have no affiliation or
business connection with TCW Funds Management, Inc. or Dean Witter Services
Company Inc. or any of their affiliated persons and do not own any stock or
other securities issued by DWDC or TCW, the parent companies of Dean Witter
Services Company Inc. and TCW Funds Management, Inc., respectively. These are
the "disinterested" or "independent" Trustees. Five of the six Independent
Trustees are also Independent Trustees of the Dean Witter Funds. As of the
date of this Statement of Additional Information, there are a total of 77
Dean Witter Funds. Four of the TCW/DW Funds' Trustees, that is, the
management Trustees, are affiliated with either InterCapital or TCW.
As noted in a federal court ruling, "[T]he independent directors . . . are
expected to look after the interests of shareholders by 'furnishing an
independent check upon management,' especially with respect to fees paid to
the investment company's sponsor." In addition to their general "watchdog"
duties, the Independent Trustees are charged with a wide variety of
responsibilities under the Act. In order to perform their duties effectively,
the Independent Trustees are required to review and understand large amounts
of material, often of a highly technical and legal nature.
The TCW/DW Funds seek as Independent Trustees individuals of distinction
and experience in business and finance, government service, law or academia;
that is, people whose advice and counsel are valuable and in demand by others
and for whom there is often competition. To accept a position on the Funds'
Boards, such individuals may reject other attractive assignments because of
the demands made on their time by the Funds. Indeed, to serve on the Funds'
Boards, certain Trustees who would be qualified and in demand to serve on
bank boards would be prohibited by law from serving at the same time as a
director of a national bank and as a Trustee of a Fund.
The Independent Trustees are required to select and nominate individuals
to fill any Independent Trustee vacancy on the Board of any Fund that has a
Rule 12b-1 plan of distribution. Since most of the TCW/DW Funds have such a
plan, and since all of the Funds' Boards have the same independent members,
who comprise a majority of each Board, the Independent Trustees effectively
control the selection of other Independent Trustees of all the TCW/DW Funds.
GOVERNANCE STRUCTURE OF THE TCW/DW FUNDS
While the regulatory system establishes both general guidelines and
specific duties for the Independent Trustees, the governance arrangements
from one investment company group to another vary significantly. In some
groups the Independent Trustees perform their role by attendance at periodic
meetings of the board of directors with study of materials furnished to them
between meetings. At the other extreme, an investment company complex may
employ a full-time staff to assist the Independent Trustees in the
performance of their duties.
The governance structure of the TCW/DW Funds lies between these two
extremes. The Independent Trustees, the Funds' Manager and the Adviser alike
believe that these arrangements are effective and serve the interests of the
Funds' shareholders. All of the Independent Trustees serve as members of the
Audit Committee and the Committee of the Independent Trustees. Three of them
also serve as members of the Derivatives Committee.
The Committee of the Independent Trustees is charged with recommending to
the full Board approval of management, advisory and administration contracts,
Rule 12b-1 plans and distribution and underwriting
9
agreements, continually reviewing Fund performance, checking on the pricing
of portfolio securities, brokerage commissions, transfer agent costs and
performance, and trading among Funds in the same complex, and approving
fidelity bond and related insurance coverage and allocations, as well as
other matters that arise from time to time.
The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing
engagement; approving professional services provided by the independent
accountants and other accounting firms prior to the performance of such
services; reviewing the independence of the independent accountants;
considering the range of audit and non-audit fees; reviewing the adequacy of
the Fund's system of internal controls; advising the independent accountants
and Management personnel that they have direct access to the Committee at all
times; and preparing and submitting Committee meeting minutes to the full
Board.
Finally, the Board of each Fund has established a Derivatives Committee to
establish parameters for and oversee the activities of the Fund with respect
to derivative investments, if any, made by the Fund.
During the calendar year ended December 31, 1994, the three Committees
held a combined total of eight meetings. Committee meetings are sometimes
held away from the offices of the Adviser and the Manager and sometimes in
the Board room of the Manager. These meetings are held without management
directors or officers being present, unless and until they may be invited to
the meeting for purposes of furnishing information or making a report. These
separate meetings provide the Independent Trustees an opportunity to explore
in depth with their own independent legal counsel, independent auditors and
other independent consultants, as needed, the issues they believe should be
addressed and resolved in the interests of the Funds' shareholders.
DUTIES OF CHAIRMAN OF COMMITTEES
The Chairman of the Committees is responsible for keeping abreast of
regulatory and industry developments and the Funds' operations and
management. He screens and/or prepares written materials and identifies
critical issues for the Independent Trustees to consider, develops agendas
for Committee meetings, determines the type and amount of information that
the Committees will need to form a judgment on the issues, and arranges to
have the information furnished. He also arranges for the services of
independent experts to be provided to the Committees and consults with them
in advance of meetings to help refine reports and to focus on critical
issues. Members of the Committees believe that the person who serves as
Chairman of all three Committees and guides their efforts is pivotal to the
effective functioning of the Committees.
The Chairman of the Committees also maintains continuous contact with the
Funds' management, with independent counsel to the Independent Trustees and
with the Funds' independent auditors. He arranges for a series of special
meetings involving the annual review of investment advisory, management and
other operating contracts of the Funds and, on behalf of the Committees,
conducts negotiations with the Adviser and the Manager and other service
providers. In effect, the Chairman of the Committees serves as a combination
of chief executive and support staff of the Independent Trustees.
The Chairman of the Committees is not employed by any other organization
and devotes his time primarily to the services he performs as Committee
Chairman and Independent Trustee of the TCW/DW Funds and as an Independent
Trustee of the Dean Witter Funds. The current Committee Chairman has had a
combined total of more than 35 years experience in the securities, financial
and investment company industries. He has served as Chairman and Chief
Executive of the American Stock Exchange, Inc. and Chairman of the Financial
Accounting Standards Advisory Council.
VALUE OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL TCW/DW FUNDS
The Independent Trustees and the Funds' management believe that having the
same Independent Trustees for each of the TCW/DW Funds is in the best
interests of all the Funds' shareholders. This arrangement avoids the
duplication of effort that would arise from having different groups of
individuals serving as Independent Trustees for each of the Funds or even of
sub-groups of Funds. It is believed that having the same individuals serve as
Independent Trustees of all the Funds tends to increase their knowledge and
expertise regarding matters which
10
affect the Fund complex generally and enhances their ability to negotiate on
behalf of each Fund with the Fund's service providers. This arrangement also
precludes the likelihood of separate groups of Independent Trustees arriving
at conflicting decisions regarding operations and management of the Funds and
avoids the cost and confusion that would likely ensue. Finally, it is
believed that having the same Independent Trustees serve on all Fund Boards
enhances the ability of each Fund to obtain, at modest cost to each separate
Fund, the services of Independent Trustees, and a Chairman of their
Committees, of the caliber, experience and business acumen of the individuals
who serve as Independent Trustees of the TCW/DW Funds.
COMPENSATION OF INDEPENDENT TRUSTEES
The Fund will pay each Independent Trustee an annual fee of $3,500 plus a
per meeting fee of $350 for meetings of the Board of Trustees or committees
of the Board of Trustees attended by the Trustee (the Fund will pay the
Chairman of the Audit Committee an annual fee of $1,200 and will pay the
Chairman of the Committee of the Independent Trustees an additional annual
fee of $2,400, in each case inclusive of the Committee meeting fees). The
Fund will also reimburse such Trustees for travel and other out-of-pocket
expenses incurred by them in connection with attending such meetings.
Trustees and officers of the Fund who are or have been employed by the
Manager or the Adviser or an affiliated company of either will not receive
any compensation or expense reimbursement from the Fund. The Fund commenced
operations on October 31, 1994 and paid no compensation to the Independent
Trustees for the fiscal period ended June 30, 1995. Payments commenced as of
August 23, 1995, the date in which the Fund began paying management and
advisory fees and bearing certain expenses.
At such time as the Fund has been in operation, and has paid fees to the
Independent Trustees, for a full fiscal year, and assuming the same number of
Board and committee meetings as were held by the other TCW/DW Funds during
the calendar year ended December 31, 1994, it is estimated that compensation
paid to each Independent Trustee during such fiscal year will be the amount
shown in the following table.
FUND COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
--------------------------- ---------------
<S> <C>
John C. Argue .............. $ 7,050
John R. Haire .............. 7,050
Dr. Manuel H. Johnson ..... 7,050
Paul Kolton ................ 9,050*
Michael E. Nugent .......... 7,050
John L. Schroeder .......... 7,050
<FN>
---------------
* Of Mr. Kolton's compensation from the Fund, $3,600 is paid to him as
Chairman of the Committee of the Independent Trustees ($2,400) and as
Chairman of the Audit Committee ($1,200).
</TABLE>
The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1994 for
services to the 13 TCW/DW Funds and, in the case of Messrs. Haire, Johnson,
Kolton and Nugent, the 73 Dean Witter Funds that were in operation at
December 31, 1994, and, in the case of Mr. Argue, TCW Galileo Funds, Inc.
With respect to Messrs. Haire, Johnson, Kolton and Nugent, the Dean Witter
Funds are included solely because of a limited exchange privilege between
various TCW/DW Funds and five Dean Witter Money Market Funds. With respect to
Mr. Argue, TCW Galileo Funds, Inc. is included solely because the Fund's
Adviser, TCW Funds Management, Inc., also serves as Adviser to that
investment company.
11
CASH COMPENSATION FROM FUND GROUPS
<TABLE>
<CAPTION>
FOR SERVICE AS TOTAL CASH
FOR SERVICE AS CHAIRMAN OF COMPENSATION FOR
FOR SERVICE AS DIRECTOR OR COMMITTEES OF SERVICES TO 73 DEAN
TRUSTEE AND TRUSTEE AND FOR SERVICE AS INDEPENDENT WITTER FUNDS, 13
COMMITTEE MEMBER COMMITTEE MEMBER DIRECTOR OF DIRECTORS/ TCW/DW FUNDS AND
NAME OF INDEPENDENT OF 13 TCW/DW OF 73 DEAN WITTER TCW GALILEO TRUSTEES AND TCW GALILEO FUNDS,
TRUSTEE FUNDS FUNDS FUNDS, INC. AUDIT COMMITTEES INC.
-------------------------- ---------------- ----------------- -------------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
John C. Argue ............. $63,250 -- $37,000 -- $100,250
John R. Haire ............. 66,950 $101,061 -- $225,563** 393,574
Dr. Manuel H. Johnson .... 60,750 122,461 -- -- 183,211
Paul Kolton ............... 51,850 128,961 -- 34,200*** 215,011
Michael E. Nugent ......... 52,650 115,761 -- -- 168,411
John L. Schroeder ......... -- 85,938 -- -- 85,938
<FN>
---------------
** For the 73 Dean Witter Funds.
*** For the 13 TCW/DW Funds.
</TABLE>
As of the date of this Statement of Additional Information, the aggregate
number of shares of beneficial interest of the Fund owned by the Fund's
officers and Trustees as a group was less than 1 percent of the Fund's shares
of beneficial interest outstanding.
INVESTMENT PRACTICES AND POLICIES
-----------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES
As discussed in the Prospectus, the Fund may invest in, among other
securities, securities issued by the U.S. Government, its agencies or
instrumentalities. Such securities include:
(1) U.S. Treasury bills (maturities of one year or less), U.S.
Treasury notes (maturities of one to ten years) and U.S. Treasury bonds
(generally maturities of greater than ten years), all of which are direct
obligations of the U.S. Government and, as such, are backed by the "full
faith and credit" of the United States.
(2) Securities issued by agencies and instrumentalities of the U.S.
Government which are backed by the full faith and credit of the United
States. Among the agencies and instrumentalities issuing such obligations
are the Federal Housing Administration, the Government National Mortgage
Association ("GNMA"), the Department of Housing and Urban Development, the
Export-Import Bank, the Farmers Home Administration, the General Services
Administration, the Maritime Administration and the Small Business
Administration. The maturities of such obligations range from three months
to 30 years.
(3) Securities issued by agencies and instrumentalities which are not
backed by the full faith and credit of the United States, but whose
issuing agency or instrumentality has the right to borrow, to meet its
obligations, from an existing line of credit with the U.S. Treasury. Among
the agencies and instrumentalities issuing such obligations are the
Tennessee Valley Authority, the Federal National Mortgage Association
("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") and the
U.S. Postal Service.
(4) Securities issued by agencies and instrumentalities which are not
backed by the full faith and credit of the United States, but which are
backed by the credit of the issuing agency or instrumentality. Among the
agencies and instrumentalities issuing such obligations are the Federal
Farm Credit System and the Federal Home Loan Banks.
Neither the value nor the yield of the U.S. Government securities which
may be invested in by the Fund are guaranteed by the U.S. Government. Such
values and yield will fluctuate with changes in prevailing interest rates and
other factors. Generally, as prevailing interest rates rise, the value of any
U.S. Government securities held by the Fund will fall. Such securities with
longer maturities generally tend to produce higher yields and are subject to
greater market fluctuation as a result of changes in interest rates than debt
securities with shorter maturities. The Fund is not limited as to the
maturities of the U.S. Government securities in which it may invest.
12
MONEY MARKET SECURITIES
As stated in the Prospectus, the money market instruments which the Fund
may purchase include U.S. Government securities, bank obligations, Eurodollar
certificates of deposit, obligations of savings institutions, fully insured
certificates of deposit and commercial paper. Such securities are limited to:
U.S. Government Securities. Obligations issued or guaranteed as to
principal and interest by the United States or its agencies (such as the
Export-Import Bank of the United States, Federal Housing Administration and
Government National Mortgage Association) or its instrumentalities (such as
the Federal Home Loan Bank), including Treasury bills, notes and bonds;
Bank Obligations. Obligations (including certificates of deposit, bankers'
acceptances, commercial paper (see below) and other debt obligations) of
banks subject to regulation by the U.S. Government and having total assets of
$1 billion or more, and instruments secured by such obligations, not
including obligations of foreign branches of domestic banks except as
permitted below;
Eurodollar Certificates of Deposit. Eurodollar certificates of deposit
issued by foreign branches of domestic banks having total assets of $1
billion or more (investments in Eurodollar certificates may be affected by
changes in currency rates or exchange control regulations, or changes in
governmental administration or economic or monetary policy in the United
States and abroad);
Obligations of Savings Institutions. Certificates of deposit of savings
banks and savings and loan associations, having total assets of $1 billion or
more (investments in savings institutions above $100,000 in principal amount
are not protected by Federal deposit insurance);
Fully Insured Certificates of Deposit. Certificates of deposit of banks
and savings institutions, having total assets of less than $1 billion, if the
principal amount of the obligation is insured by the Bank Insurance Fund or
the Savings Association Insurance Fund (each of which is administered by the
Federal Deposit Insurance Corporation), limited to $100,000 principal amount
per certificate and to 15% or less of the Fund's total assets in all such
obligations and in all illiquid assets, in the aggregate; and
Commercial Paper. Commercial paper rated within the two highest grades by
Standard & Poor's Corporation or the highest grade by Moody's Investors
Service, Inc. or, if not rated, issued by a company having an outstanding
debt issue rated at least AAA by Standard & Poor's or Aaa by Moody's.
LENDING OF PORTFOLIO SECURITIES
Consistent with applicable regulatory requirements, the Fund may lend its
portfolio securities to brokers, dealers and other financial institutions,
provided that such loans are callable at any time by the Fund (subject to
notice provisions described below), and are at all times secured by cash or
money market instruments, which are maintained in a segregated account
pursuant to applicable regulations and that are equal to at least the market
value, determined daily, of the loaned securities. The advantage of such
loans is that the Fund continues to receive the income on the loaned
securities while at the same time earning interest on the cash amounts
deposited as collateral, which will be invested in short-term obligations.
The Fund will not lend its portfolio securities if such loans are not
permitted by the laws or regulations of any state in which its shares are
qualified for sale and will not lend more than 25% of the value of its total
assets. A loan may be terminated by the borrower on one business day's
notice, or by the Fund on two business days' notice. If the borrower fails to
deliver the loaned securities within two days after receipt of notice, the
Fund could use the collateral to replace the securities while holding the
borrower liable for any excess of replacement cost over collateral. As with
any extensions of credit, there are risks of delay in recovery and in some
cases even loss of rights in the collateral should the borrower of the
securities fail financially. However, these loans of portfolio securities
will only be made to firms deemed by the Adviser to be creditworthy and when
the income which can be earned from such loans justifies the attendant risks.
Upon termination of the loan, the borrower is required to return the
securities to the Fund. Any gain or loss in the market price during the loan
period would inure to the Fund. The creditworthiness of firms to which the
Fund lends its portfolio securities will be monitored on an ongoing basis by
the Adviser pursuant to procedures adopted and reviewed, on an ongoing basis,
by the Board of Trustees of the Fund.
When voting or consent rights which accompany loaned securities pass to
the borrower, the Fund will follow the policy of calling the loaned
securities, to be delivered within one day after notice, to permit the
exercise of such
13
rights if the matters involved would have a material effect on the Fund's
investment in such loaned securities. The Fund will pay reasonable finder's,
administrative and custodial fees in connection with a loan of its
securities.
REPURCHASE AGREEMENTS
When cash may be available for only a few days, it may be invested by the
Fund in repurchase agreements until such time as it may otherwise be invested
or used for payments of obligations of the Fund. These agreements, which may
be viewed as a type of secured lending by the Fund, typically involve the
acquisition by the Fund of debt securities from a selling financial
institution such as a bank, savings and loan association or broker-dealer.
The agreement provides that the Fund will sell back to the institution, and
that the institution will repurchase, the underlying security ("collateral")
at a specified price and at a fixed time in the future, usually not more than
seven days from the date of purchase. The collateral will be maintained in a
segregated account and will be marked to market daily to determine that the
value of the collateral, as specified in the agreement, does not decrease
below the purchase price plus accrued interest. If such decrease occurs,
additional collateral will be requested and, when received, added to the
account to maintain full collateralization. The Fund will accrue interest
from the institution until the time when the repurchase is to occur. Although
such date is deemed by the Fund to be the maturity date of a repurchase
agreement, the maturities of securities subject to repurchase agreements are
not subject to any limits.
While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed
to minimize such risks. These procedures include effecting repurchase
transactions only with large, well-capitalized and well-established financial
institutions whose financial condition will be continually monitored by the
Adviser subject to procedures established by the Board of Trustees of the
Fund. In addition, as described above, the value of the collateral underlying
the repurchase agreement will be at least equal to the repurchase price,
including any accrued interest earned on the repurchase agreement. In the
event of a default or bankruptcy by a selling financial institution, the Fund
will seek to liquidate such collateral. However, the exercising of the Fund's
right to liquidate such collateral could involve certain costs or delays and,
to the extent that proceeds from any sale upon a default of the obligation to
repurchase were less than the repurchase price, the Fund could suffer a loss.
It is the current policy of the Fund not to invest in repurchase agreements
that do not mature within seven days if any such investment, together with
any other illiquid assets held by the Fund, amounts to more than 15% of its
net assets.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS
From time to time, in the ordinary course of business, the Fund may
purchase securities on a when-issued or delayed delivery basis and may
purchase or sell securities on a forward commitment basis. When such
transactions are negotiated, the price is fixed at the time of the
commitment, but delivery and payment can take place a month or more after the
date of the commitment. The securities so purchased or sold are subject to
market fluctuation and no interest or dividends accrue to the purchaser prior
to the settlement date. While the Fund will only purchase securities on a
when-issued, delayed delivery or forward commitment basis with the intention
of acquiring the securities, the Fund may sell the securities before the
settlement date, if it is deemed advisable. At the time the Fund makes the
commitment to purchase or sell securities on a when-issued, delayed delivery
or forward commitment basis, the Fund will record the transaction and
thereafter reflect the value, each day, of such security purchased or, if a
sale, the proceeds to be received, in determining its net asset value. At the
time of delivery of the securities, the value may be more or less than the
purchase or sale price. The Fund will also establish a segregated account
with the Fund's custodian bank in which it will continuously maintain cash or
U.S. Government securities or other high grade liquid debt portfolio
securities equal in value to commitments to purchase securities on a
when-issued, delayed delivery or forward commitment basis; subject to this
requirement, the Fund may purchase securities on such basis without limit. An
increase in the percentage of the Fund's assets committed to the purchase of
securities on a when-issued or delayed delivery basis may increase the
volatility of the Fund's net asset value. The Adviser does not believe that
the Fund's net asset value or income will be adversely affected by its
purchase of securities on such basis.
WHEN, AS AND IF ISSUED SECURITIES
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,
14
leveraged buyout or debt restructuring. The commitment for the purchase of
any such security will not be recognized in the portfolio of the Fund until
the Adviser determines that issuance of the security is probable. At such
time, the Fund will record the transaction and, in determining its net asset
value, will reflect the value of the security daily. At such time, the Fund
will also establish a segregated account with its custodian bank in which it
will continuously maintain cash or U.S. Government securities or other high
grade liquid debt portfolio securities equal in value to recognized
commitments for such securities. Settlement of the trade will occur within
five business days of the occurrence of the subsequent event. Once a
segregated account has been established, if the anticipated event does not
occur and the securities are not issued the Fund will have lost an investment
opportunity. The Fund may purchase securities on such basis without limit. An
increase in the percentage of the Fund's assets committed to the purchase of
securities on a "when, as and if issued" basis may increase the volatility of
its net asset value. The Adviser does not believe that the net asset value of
the Fund will be adversely affected by its purchase of securities on such
basis. The Fund may also sell securities on a "when, as and if issued" basis
provided that the issuance of the security will result automatically from the
exchange or conversion of a security owned by the Fund at the time of the
sale.
PORTFOLIO TURNOVER
It is anticipated that the Fund's portfolio turnover rate generally will
not exceed 100%. A 100% turnover rate would occur, for example, if 100% of
the securities held in the Fund's portfolio (excluding all securities whose
maturities at acquisition were one year or less) were sold and replaced
within one year.
INVESTMENT RESTRICTIONS
-----------------------------------------------------------------------------
In addition to the investment restrictions enumerated in the Prospectus,
the investment restrictions listed below have been adopted by the Fund as
fundamental policies, except as otherwise indicated. Under 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. Such a
majority is defined as the lesser of (a) 67% or more of the shares present at
a meeting of shareholders, if the holders of 50% of the outstanding shares of
the Fund are present or represented by proxy or (b) more than 50% of the
outstanding shares of the Fund.
The Fund may not:
1. Purchase or sell real estate or interests therein (including
limited partnership interests), although the Fund may purchase securities
of issuers which engage in real estate operations and securities secured
by real estate or interests therein.
2. Purchase oil, gas or other mineral leases, rights or royalty
contracts or exploration or development programs, except that the Fund
may invest in the securities of companies which operate, invest in, or
sponsor such programs.
3. Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets.
4. Borrow money, except that the Fund may borrow from a bank for
temporary or emergency purposes in amounts not exceeding 5% (taken at the
lower of cost or current value) of its total assets (not including the
amount borrowed).
5. Pledge its assets or assign or otherwise encumber them except to
secure borrowings effected within the limitations set forth in
restriction (4). For the purpose of this restriction, collateral
arrangements with respect to initial or variation margin for futures are
not deemed to be pledges of assets.
6. Issue senior securities as defined in the Act except insofar as
the Fund may be deemed to have issued a senior security by reason of (a)
entering into any repurchase agreement; (b) purchasing any securities on
a when-issued or delayed delivery basis; (c) purchasing or selling any
financial futures contracts; (d) borrowing money in accordance with
restrictions described above; or (e) lending portfolio securities.
7. Make loans of money or securities, except: (a) by the purchase of
portfolio securities in which the Fund may invest consistent with its
investment objective and policies; (b) by investment in repurchase
agreements; or (c) by lending its portfolio securities.
15
8. Purchase or sell commodities or commodities contracts except that
the Fund may purchase or sell financial or stock index futures contracts
or options thereon.
9. Make short sales of securities.
10. Purchase securities on margin, except for such short-term loans
as are necessary for the clearance of portfolio securities. The deposit
or payment by the Fund of initial or variation margin in connection with
futures contracts is not considered the purchase of a security on margin.
11. Engage in the underwriting of securities, except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security.
12. Invest for the purpose of exercising control or management of any
other issuer.
In addition, as a nonfundamental policy, the Fund may not invest in
securities of any issuer if, to the knowledge of the Fund, any officer or
trustee of the Fund or any officer or director of the Adviser or the Manager
owns more than 1/2 of 1% of the outstanding securities of such issuer, and
such officers, trustees and directors who own more than 1/2 of 1% own in the
aggregate more than 5% of the outstanding securities of such issuers.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of total or net assets will not be considered
a violation of any of the foregoing restrictions.
PORTFOLIO TRANSACTIONS AND BROKERAGE
-----------------------------------------------------------------------------
Subject to the general supervision of the Trustees, the Adviser is
responsible for decisions to buy and sell securities for the Fund, the
selection of brokers and dealers to effect the transactions, and the
negotiation of brokerage commissions, if any. Purchases and sales of
securities on a stock exchange are effected through brokers who charge a
commission for their services. In the over-the-counter market, securities are
generally traded on a "net" basis with dealers acting as principal for their
own accounts without a stated commission, although the price of the security
usually includes a profit to the dealer. In addition, securities may be
purchased at times in underwritten offerings where the price includes a fixed
amount of compensation, generally referred to as the underwriter's concession
or discount. Futures transactions will usually be effected through a broker
and a commission will be charged. On occasion, the Fund may also purchase
certain money market instruments directly from an issuer, in which case no
commissions or discounts are paid. During the fiscal period October 31, 1994
through June 30, 1995, the Fund paid $1,790 in brokerage commissions.
The Adviser currently serves as investment adviser to a number of clients,
including other investment companies, and may in the future act as investment
adviser to others. It is the practice of the Adviser to cause purchase and
sale transactions to be allocated among the Fund and others whose assets it
manages in such manner as it deems equitable. In making such allocations
among the Fund and other client accounts, the main factors considered are the
respective investment objectives, the relative size of portfolio holdings of
the same or comparable securities, the availability of cash for investment,
the size of investments generally held and the opinions of the persons
responsible for managing the portfolios of the Fund and other client
accounts.
The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with
this policy, when securities transactions are effected on a stock exchange,
the Fund's policy is to pay commissions which are considered fair and
reasonable without necessarily determining that the lowest possible
commissions are paid in all circumstances. The Fund believes that a
requirement always to seek the lowest possible commission cost could impede
effective portfolio management and preclude the Fund and the Adviser from
obtaining a high quality of brokerage and research services. In seeking to
determine the reasonableness of brokerage commissions paid in any
transaction, the Adviser relies upon its experience and knowledge regarding
commissions generally charged by various brokers and on its judgment in
evaluating the brokerage and research services received from the broker
effecting the transaction. Such determinations are necessarily subjective and
imprecise, as in most cases an exact dollar value for those services is not
ascertainable.
In seeking to implement the Fund's policies, the Adviser effects
transactions with those brokers and dealers who the Adviser believes provide
the most favorable prices and are capable of providing efficient executions.
If the
16
Adviser believes such prices and executions are obtainable from more than one
broker or dealer, it may give consideration to placing portfolio transactions
with those brokers and dealers who also furnish research and other services
to the Fund or the Adviser. Such services may include, but are not limited
to, any one or more of the following: reports on industries and companies,
economic analyses and review of business conditions, portfolio strategy,
analytic computer software, account performance services, computer terminals
and various trading and/or quotation equipment. They also include advice from
broker-dealers as to the value of securities, availability of securities,
availability of buyers, and availability of sellers. In addition, they
include recommendations as to purchase and sale of individual securities and
timing of such transactions. The Fund will not purchase at a higher price or
sell at a lower price in connection with transactions effected with a dealer,
acting as principal, who furnishes research services to the Fund than would
be the case if no weight were given by the Fund to the dealer's furnishing of
such services. During the period October 31, 1994 through June 30, 1995, the
Fund did not direct the payment of any brokerage commissions because of
research services provided.
The information and services received by the Adviser from brokers and
dealers may be of benefit to the Adviser in the management of accounts of
some of its other clients and may not in all cases benefit the Fund directly.
While the receipt of such information and services is useful in varying
degrees and would generally reduce the amount of research or services
otherwise performed by the Adviser and thereby reduce its expenses, it is of
indeterminable value and the advisory fee paid to the Adviser is not reduced
by any amount that may be attributable to the value of such services.
Consistent with the policy described above, brokerage transactions in
securities listed on exchanges or admitted to unlisted trading privileges may
be effected through DWR. In order for DWR to effect any portfolio
transactions for the Fund, the commissions, fees or other remuneration
received by DWR must be reasonable and fair compared to the commissions, fees
or other remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on an
exchange during a comparable period of time. This standard would allow DWR to
receive no more than the remuneration which would be expected to be received
by an unaffiliated broker in a commensurate arm's-length transaction.
Furthermore, the Board of Trustees of the Fund, including a majority of the
Trustees who are not "interested" persons of the Fund, as defined in the Act,
have adopted procedures which are reasonably designed to provide that any
commissions, fees or other remuneration paid to DWR are consistent with the
foregoing standard. During the period October 31, 1994 through June 30, 1995,
the Fund paid no brokerage commissions to DWR.
THE DISTRIBUTOR
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As discussed in the Prospectus, during the continuous offering shares of
the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"). The Distributor has entered into a selected dealer agreement
with DWR, which through its own sales organization sells shares of the Fund.
In addition, the Distributor may enter into selected dealer agreements with
other selected broker-dealers. The Distributor, a Delaware corporation, is a
wholly-owned subsidiary of DWDC. As part of an internal reorganization that
took place in January, 1993, the Distributor assumed the investment company
share distribution activities previously performed by DWR. The Trustees of
the Fund, including a majority of the Independent Trustees, approved, at
their meeting held on July 14, 1994, a Distribution Agreement appointing the
Distributor as exclusive distributor of the Fund's shares and providing for
the Distributor to bear distribution expenses not borne by the Fund. By its
terms, the Distribution Agreement had an initial term ending April 30, 1995,
and provides that it will remain in effect from year to year thereafter if
approved by the Board. At their meeting held on April 20, 1995, the Trustees,
including a majority of the Independent Trustees, approved the continuance of
the Distribution Agreement until April 30, 1996.
The Distributor bears all expenses it may incur in providing services
under the Distribution Agreement. Such expenses include the payment of
commissions for sales of the Fund's shares and incentive compensation to
account executives. The Distributor also pays certain expenses in connection
with the distribution of the Fund's shares, including the costs of preparing,
printing and distributing advertising or promotional materials, and the costs
of printing and distributing prospectuses and supplements thereto used in
connection with the offering and sale of the Fund's shares. The Fund bears
the costs of initial typesetting, printing and distribution of prospectuses
and supplements thereto to shareholders. The Fund also bears the costs of
registering the Fund and its shares under federal and state securities laws.
The Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended. Under the Distribution Agreement,
17
the Distributor uses its best efforts in rendering services to the Fund, but
in the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations, the Distributor is not liable to the
Fund or any of its shareholders for any error of judgment or mistake of law
or for any act or omission or for any losses sustained by the Fund or its
shareholders.
PLAN OF DISTRIBUTION
To compensate the Distributor for the services it or any selected dealer
provides and for the expenses it bears under the Distribution Agreement, the
Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the Act
(the "Plan") pursuant to which the Fund pays the Distributor compensation
accrued daily and payable monthly at the 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 upon which such charge
has been waived; or (b) the Fund's average daily net assets. The Distributor
receives the proceeds of contingent deferred sales charges imposed on certain
redemptions of shares, which are separate and apart from payments made
pursuant to the Plan. The Distributor has informed the Fund that it and/or DWR
received approximately $38,226 in contingent deferred sales charges for the
period October 31, 1994 through June 30, 1995.
The Distributor has informed the Fund that a portion of the fees payable
by the Fund each year under the Plan of Distribution, equal to 0.25% of the
Fund's average daily net assets, is characterized as a "service fee" under
the Rules of Fair Practice of the National Association of Securities Dealers
(of which the Distributor is a member). Such fee is payments made for
personal service and/or the maintenance of shareholder accounts. The
remaining portions of the Plan of Distribution fee payments made by the Fund
are characterized as "asset-based sales charges" pursuant to the
aforementioned Rules of Fair Practice.
Under the Plan and as required by Rule 12b-1, the Trustees receive and
review promptly after the end of each fiscal quarter a written report
provided by the Distributor of the amounts expended under the Plan and the
purpose for which such expenditures were made. In the Trustees' quarterly
reviews of the Plan, they will consider its continued appropriateness and the
level of compensation provided therein. The Fund accrued $111,428 payable to
the Distributor, under the Plan, for the fiscal period October 31, 1994
through June 30, 1995. This is an accrual at an annual rate of 1.0% of the
average daily net assets of the Fund for the fiscal year and was calculated
pursuant to clause (b) under the Plan. This 12b-1 fee is treated by the Fund
as an expense in the year it is accrued.
The Plan was adopted in order to permit the implementation of the Fund's
method of distribution. Under this distribution method shares of the Fund are
sold without a sales load being deducted at the time of purchase, so that the
full amount of an investor's purchase payment will be invested in shares
without any deduction for sales charges. Shares of the Fund may be subject to
a contingent deferred sales charge, payable to the Distributor, if redeemed
during the six years after their purchase. DWR compensates its account
executives by paying them, from its own funds, commissions for the sale of
the Fund's shares, currently a gross sales credit of up to 5% of the amount
sold and an annual residual commission of up to 0.25 of 1% of the current
value of the amount sold. The gross sales credit is a charge which reflects
commissions paid by DWR to its account executives and DWR's Fund associated
distribution-related expenses, including sales compensation, and overhead and
other branch office distribution-related expenses including: (a) the expenses
of operating DWR's branch offices in connection with the sale of Fund shares,
including lease costs, the salaries and employee benefits of operations and
sales support personnel, utility costs, communications costs and the costs of
stationery and supplies; (b) the costs of client sales seminars; (c) travel
expenses of mutual fund sales coordinators to promote the sale of Fund
shares; and (d) other expenses relating to branch promotion of Fund share
sales. The distribution fee that the Distributor receives from the Fund under
the Plan, in effect, offsets distribution expenses incurred under the Plan on
behalf of the Fund and opportunity costs, such as the gross sales credit and
an assumed interest charge thereon ("carrying charge"). In the Distributor's
reporting of distribution expenses to the Fund, such assumed interest
(computed at the "broker's call rate") has been calculated on the gross sales
credit as it is reduced by amounts received by the Distributor under the Plan
and any contingent deferred sales charges received by the Distributor upon
redemption of shares of the Fund. No other interest charge is included as a
distribution expense in the Distributor's calculation of distribution costs
for this purpose. The broker's call rate is the interest rate charged to
securities brokers on loans secured by exchange-listed securities.
18
The Fund paid 100% of the $111,428 accrued under the Plan for the fiscal
period ended June 30, 1995 to the Distributor. The Distributor estimates it
has spent, pursuant to the Plan, $1,548,772 on behalf of the Fund since the
inception of the Plan. It is estimated that this amount was spent in
approximately the following ways: (i) 32.55% ($504,105)--advertising and
promotional expenses; (ii) 6.71% ($103,884)--printing of prospectuses for
distribution to other than current stockholders; and (iii) 60.74%
($940,733)--other expenses, including the gross sales credit and the carrying
charges of which 3.31% ($31,146) represents carrying charges, 38.58%
($362,925) represents commission credits to DWR branch offices for payments
of commissions to account executives and 58.11% ($546,662) represents
overhead and other branch office distribution-related expenses. The term
"overhead and other branch office distribution-related expenses" represents
(a) the expenses of operating DWR's branch offices in connection with the
sale of the Fund shares, including lease costs, the salaries and employee
benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies; (b) the costs
of client sales seminars; (c) travel expenses of Mutual Fund sales
coordinators to promote the sale of Fund shares; and (d) other expenses
relating to branch promotion of Fund share sales.
At any given time, the expenses in distributing shares of the Fund may be
more or less than 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 redemption of shares. The Distributor has advised the Fund
that the excess distribution expenses, including the carrying charge designed
to approximate the opportunity costs incurred by DWR which arise from it
having advanced monies without having received the amount of any sales
charges imposed at the time of the sale of the Fund's shares totalled
$1,398,806 at June 30, 1995. Because there is no requirement under the Plan
that the Distributor be reimbursed for all expenses or any requirement that
the Plan be continued from year to year, this excess amount does not
constitute a liability of the Fund. Although there is no legal obligation for
the Fund to pay distribution expenses in excess of payments made under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the 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.
Under the Plan, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment
or mistake of law or for any act or omission or for any losses sustained by
the Fund or its shareholders.
The Plan remained in effect until April 30, 1995, and will continue from
year to year thereafter, provided such continuance is approved annually by a
vote of the Trustees, including a majority of the Independent 12b-1 Trustees.
At their meeting held on April 20, 1995, the Board of Trustees of the
Fund, including a majority of the Independent 12b-1 Trustees approved the
continuance of the Plan until April 30, 1996. Prior to approving the
continuation of the Plan, the Board requested and received from the
Distributor and reviewed all the information which it deemed necessary to
arrive at an informed determination. In making their determination to
continue the Plan, the Trustees considered: (1) the Fund's experience under
the Plan and whether such experience indicates that the Plan is operating as
anticipated; (2) the benefits the Fund had obtained, was obtaining and would
be likely to obtain under the Plan; and (3) what services had been provided
and were continuing to be provided under the Plan by the Distributor, DWR and
other selected broker-dealers to the Fund and its shareholders. Based upon
their review, the Trustees of the Fund, including each of the Independent
12b-1 Trustees, determined that continuation of the Plan would be in the best
interest of the Fund and would have a reasonable likelihood of continuing to
benefit the Fund and its shareholders. This determination was based upon the
conclusion of the Trustees that the Plan provides an effective means of
stimulating sales of shares of the Fund and of reducing or avoiding net
redemptions and the potentially adverse effects that may occur therefrom. In
the Trustees' quarterly review of the Plan, they will consider its continued
appropriateness and the level of compensation provided therein.
Any amendment to increase materially the maximum amount authorized to be
spent under the Plan must be approved by the shareholders of the Fund, and
all material amendments to the Plan must be approved by the Trustees in the
manner described above. The Plan may be terminated at any time, without
payment of any penalty,
19
by vote of a majority of the Independent 12b-1 Trustees or by a vote of the
holders of a majority of the outstanding voting securities of the Fund (as
defined in the Act) on not more than 30 days written notice to any other
party to the Plan. So long as the Plan is in effect, the selection or
nomination of the Independent Trustees is committed to the discretion of the
Independent Trustees.
No interested person of the Fund, nor any Trustee of the Fund who is not
an interested person of the Fund, as defined in the Act, has any direct or
indirect financial interest in the operation of the Plan except to the extent
that DWR, InterCapital, the Distributor or the Manager or certain of their
employees, may be deemed to have such an interest as a result of benefits
derived from the successful operation of the Plan or as a result of receiving
a portion of the amounts expended thereunder by the Fund.
DETERMINATION OF NET ASSET VALUE
As stated in the Prospectus, short-term securities with remaining
maturities of sixty days or less at the time of purchase are valued at
amortized cost, unless the Trustees determine such does not reflect the
securities' market value, in which case these securities will be valued at
their fair value as determined by the Trustees. Other short-term debt
securities will be valued on a mark-to-market basis until such time as they
reach a remaining maturity of sixty days, whereupon they will be valued at
amortized cost using their value on the 61st day unless the Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees. All other securities and other assets are valued at their fair
value as determined in good faith under procedures established by and under
the supervision of the Trustees.
The net asset value per share 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
(or, on days when the New York Stock Exchange closes prior to 4:00 p.m., at
such earlier time), by taking the value of all assets of the Fund,
subtracting its liabilities, dividing by the number of shares outstanding and
adjusting to the nearest cent. The New York Stock Exchange currently observes
the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day.
SHAREHOLDER SERVICES
-----------------------------------------------------------------------------
Upon the purchase of shares of the Fund, a Shareholder Investment Account
is opened for the investor on the books of the Fund and maintained by Dean
Witter Trust Company (the "Transfer Agent"). This is an open account in which
shares owned by the investor are credited by the Transfer Agent in lieu of
issuance of a share certificate. If a share certificate is desired, it must
be requested in writing for each transaction. Certificates are issued only
for full shares and may be redeposited in the account at any time. There is
no charge to the investor for issuance of a certificate. Whenever a
shareholder-instituted transaction takes place in the Shareholder Investment
Account, the shareholder will be mailed a confirmation of the transaction
from the Fund or from DWR or other selected broker-dealer.
Automatic Investment of Dividends and Distributions. As stated in the
Prospectus, all income dividends and capital gains distributions are
automatically paid in full and fractional shares of the Fund, unless the
shareholder requests that they be paid in cash. Each purchase of shares of
the Fund is made upon the condition that the Transfer Agent is thereby
automatically appointed as agent of the investor to receive all dividends and
capital gains distributions on shares owned by the investor. Such dividends
and distributions will be paid, at the net asset value per share, in shares
of the Fund (or in cash if the shareholder so requests) as of the close of
business on the record date. At any time an investor may request the Transfer
Agent, in writing, to have subsequent dividends and/or capital gains
distributions paid to him or her in cash rather than shares. To assure
sufficient time to process the change, such request should be received by the
Transfer Agent at least five business days prior to the record date of the
dividend or distribution. In the case of recently purchased shares for which
registration instructions have not been received on the record date, cash
payments will be made to DWR or the other selected broker-dealer, and which
will be forwarded to the shareholder, upon the receipt of proper
instructions.
Targeted Dividends.sm In states where it is legally permissible,
shareholders may also have all income dividends and capital gains
distributions automatically invested in shares of a TCW/DW Fund other than
TCW/DW Global Convertible Trust. Such investment will be made as described
above for automatic investment in shares of the Fund, at the net asset value
per share of the selected TCW/DW Fund as of the close of business
20
on the payment date of the dividend or distribution and will begin to earn
dividends, if any, in the selected TCW/DW Fund the next business day. To
participate in the Targeted Dividends program, shareholders should contact
their DWR or other selected broker-dealer account executive or the Transfer
Agent. Shareholders of the Fund must be shareholders of the TCW/DW Fund
targeted to receive investments from dividends at the time they enter the
Targeted Dividends program. Investors should review the prospectus of the
targeted TCW/DW Fund before entering the program.
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. Shares purchased through EasyInvest will be
added to the shareholder's existing account at the net asset value calculated
the same business day the transfer of funds is effected. For further
information or to subscribe to EasyInvest, shareholders should contact their
DWR or other selected broker-dealer account executive or the Transfer Agent.
Investment of Dividends or Distributions Received in Cash. As discussed in
the Prospectus, any shareholder who receives a cash payment representing a
dividend or distribution may invest such dividend or distribution at the net
asset value per share, without the imposition of a contingent deferred sales
charge upon redemption, by returning the check or the proceeds to the
Transfer Agent within 30 days after the payment date. If the shareholder
returns the proceeds of a dividend or distribution, such funds must be
accompanied by a signed statement indicating that the proceeds constitute a
dividend or distribution to be invested. Such investment will be made at the
net asset value per share next determined after receipt of the check or
proceeds by the Transfer Agent.
Systematic Withdrawal Plan. As discussed in the Prospectus, a systematic
withdrawal plan (the "Withdrawal Plan") is available for shareholders who own
or purchase shares of the Fund having a minimum value of $10,000 based upon
the then current 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 "Repurchases and
Redemptions--Contingent Deferred Sales Charge" in the Prospectus). 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.
The Transfer Agent acts as agent for the shareholder in tendering to the
Fund for redemption sufficient full and fractional shares to provide the
amount of the periodic withdrawal payment designated in the application. The
shares will be redeemed at their net asset value determined, at the
shareholder's option, on the tenth or twenty-fifth day (or next following
business day) of the relevant month or quarter and normally a check for the
proceeds will be mailed by the Transfer Agent, or amounts credited to a
shareholder's DWR or other selected broker-dealer brokerage account, within
five business days after the date of redemption. The Withdrawal Plan may be
terminated at any time by the Fund.
Withdrawal Plan payments should not be considered as dividends, yields or
income. If periodic withdrawal plan payments continuously exceed net
investment income and net capital gains, the shareholder's original
investment will be correspondingly reduced and ultimately exhausted.
Each withdrawal constitutes a redemption of shares and any gain or loss
realized must be recognized for federal income tax purposes. Although the
shareholder may make additional investments of $2,500 or more under the
Withdrawal Plan, withdrawals made concurrently with purchases of additional
shares may be inadvisable because of the contingent deferred sales charge
applicable to the redemption of shares purchased during the preceding six
years (see "Repurchases and Redemptions--Contingent Deferred Sales Charge").
Any shareholder who wishes to have payments under the Withdrawal Plan made
to a third party or sent to an address other than the one listed on the
account must send complete written instructions to the Transfer Agent to
enroll in the Withdrawal Plan. The shareholder's signature on such
instructions must be guaranteed by an eligible guarantor acceptable to the
Transfer Agent (shareholders should contact the Transfer Agent for a
determination as to whether a particular institution is such an eligible
guarantor). A shareholder may, at any time, change the amount and interval of
withdrawal payments through his or her DWR or other selected broker-dealer
account executive or by written notification to the Transfer Agent. In
addition, the party and/or the address to
21
which checks are mailed may be changed by written notification to the
Transfer Agent, with signature guarantees required in the manner described
above. The shareholder may also terminate the Withdrawal Plan at any time by
written notice to the Transfer Agent. In the event of such termination, the
account will be continued as a regular shareholder investment account. The
shareholder may also redeem all or part of the shares held in the Withdrawal
Plan account (see "Repurchases and Redemptions" in the Prospectus) at any
time. Shareholders wishing to enroll in the Withdrawal Plan should contact
their account executive or the Transfer Agent.
Direct Investments through Transfer Agent. As discussed in the Prospectus,
a shareholder may make additional investments in Fund shares at any time by
sending a check in any amount, not less than $100, payable to TCW/DW Global
Convertible Trust, directly to the Fund's Transfer Agent. Such amounts will
be applied to the purchase of Fund shares at the net asset value per share
next computed after receipt of the check or purchase payment by the Transfer
Agent. The shares so purchased will be credited to the investor's account.
EXCHANGE PRIVILEGE
As discussed in the Prospectus, the Fund makes available to its
shareholders an Exchange Privilege whereby shareholders of the Fund may
exchange their shares for shares of other TCW/DW Funds sold with a contingent
deferred sales charge ("CDSC Funds"), TCW/DW North American Government Income
Trust, TCW/DW Income and Growth Fund, TCW/DW Balanced Fund, TCW/DW North
American Intermediate Income Trust and five money market funds for which
InterCapital serves as investment manager (the foregoing nine 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 will be treated for federal income tax purposes the
same as a repurchase or redemption of shares, on which the shareholder may
realize a capital gain or loss.
Shareholders utilizing the Fund's Exchange Privilege may subsequently
re-exchange such shares back to the Fund. However, no exchange privilege is
available between the Fund and any other fund managed by the Manager or
InterCapital, except for other TCW/DW Funds and the five money market funds
listed in the Prospectus.
Any new account established through the Exchange Privilege will have the
same registration and cash dividend or dividend reinvestment plan as the
present account, unless the Transfer Agent receives written notification to
the contrary. For telephone exchanges, the exact registration of the existing
account and the account number must be provided.
Any shares held in certificate form cannot be exchanged but must be
forwarded to the Transfer Agent and deposited into the shareholder's account
before being eligible for exchange. (Certificates mailed in for deposit
should not be endorsed.)
As described below, and in the Prospectus under the captions "Exchange
Privilege" and "Contingent Deferred Sales Charge," a contingent deferred
sales charge ("CDSC") may be imposed upon a redemption, depending on a number
of factors, including the number of years from the time of purchase until the
time of redemption or exchange ("holding period"). When shares of the Fund or
any other CDSC Fund are exchanged for shares of an Exchange Fund, the
exchange is executed at no charge to the shareholder, without the imposition
of the CDSC at the time of the exchange. During the period of time the
shareholder remains in the Exchange Fund (calculated from the last day of the
month in which the Exchange Fund shares were acquired), the holding period or
"year since purchase payment made" is frozen. When shares are redeemed out of
the Exchange Fund, they will be subject to a CDSC which would be based upon
the period of time the shareholder held shares in the Fund. 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 which are attributable to those shares. Shareholders
acquiring shares of an Exchange Fund pursuant to this exchange privilege may
exchange those shares back into the Fund from the Exchange Fund, with no
charge being imposed on such exchange. The holding period previously frozen
when shares were first exchanged for shares of an Exchange Fund resumes on
the last day of the month in which shares of a CDSC Fund are reacquired. A
CDSC is imposed only upon an ultimate redemption, based upon the time
(calculated as described above) the shareholder was invested in a CDSC Fund.
22
When shares initially purchased in a CDSC Fund are exchanged for shares of
an Exchange Fund, the date of purchase of the shares of the fund exchanged
into, for purposes of the CDSC upon redemption, will be the last day of the
month in which the shares being exchanged were originally purchased. In
allocating the purchase payments between funds for purposes of the CDSC the
amount which represents the current net asset value of shares at the time of
the exchange which were (i) purchased more than six years prior to the
exchange and (ii) originally acquired through reinvestment of dividends or
distributions (all such shares called "Free Shares") will be exchanged first.
After an exchange, all dividends earned on shares in the Exchange Fund will
be considered Free Shares. If the exchanged amount exceeds the value of such
Free Shares, an exchange is made, on a block-by-block basis, of non-Free
Shares held for the longest period of time. Shares equal to any appreciation
in the value of non-Free Shares exchanged will be treated as Free Shares, and
the amount of the purchase payments for the non-Free Shares of the fund
exchanged into will be equal to the lesser of (a) the purchase payments for,
or (b) the current net asset value of, the exchanged non-Free Shares. If an
exchange between funds would result in exchange of only part of a particular
block of non-Free Shares, then shares equal to any appreciation in the value
of the block (up to the amount of the exchange) will be treated as Free
Shares and exchanged first, and the purchase payment for that block will be
allocated on a pro rata basis between the non-Free Shares of that block to be
retained and the non-Free Shares to be exchanged. The prorated amount of such
purchase payment attributable to the retained non-Free Shares will remain as
the purchase payment for such shares, and the amount of purchase payment for
the exchanged non-Free Shares will be equal to the lesser of (a) the prorated
amount of the purchase payment for, or (b) the current net asset value of,
those exchanged non-Free Shares. Based upon the procedures described in the
Prospectus under the caption "Contingent Deferred Sales Charge," any
applicable CDSC will be imposed upon the ultimate redemption of shares of any
fund, regardless of the number of exchanges since those shares were
originally purchased.
The Transfer Agent acts as agent for shareholders of the Fund in effecting
redemptions of Fund shares and in applying the proceeds to the purchase of
other fund shares. In the absence of negligence on its part, neither the
Transfer Agent nor the Fund shall be liable for any redemption of Fund shares
caused by unauthorized telephone or telegraph instructions. Accordingly, in
such event the investor shall bear the risk of loss. The staff of the
Securities and Exchange Commission is currently considering the propriety of
such a policy.
With respect to the redemption or repurchase of shares of the Fund, the
application of proceeds to the purchase of new shares in the Fund or any
other of the funds and the general administration of the Exchange Privilege,
the Transfer Agent acts as agent for the Distributor and for the
shareholder's selected broker-dealer, if any, in the performance of such
functions.
With respect to exchanges, redemptions or repurchases, the Transfer Agent
shall be liable for its own negligence and not for the default or negligence
of its correspondents or for losses in transit. The Fund shall not be liable
for any default or negligence of the Transfer Agent, the Distributor or any
selected broker-dealer.
The Distributor and any selected broker-dealer have authorized and
appointed the Transfer Agent to act as their agent in connection with the
application of proceeds of any redemption of Fund shares to the purchase of
shares of any other fund and the general administration of the Exchange
Privilege. No commission or discounts will be paid to the Distributor or any
selected broker-dealer for any transactions pursuant to this Exchange
Privilege.
Exchanges are subject to the minimum investment requirement and any other
conditions imposed by each fund. (The minimum initial investment is $5,000
for Dean Witter Liquid Asset Fund Inc., Dean Witter Tax-Free Daily Income
Trust, Dean Witter New York Municipal Money Market Trust and Dean Witter
California Tax-Free Daily Income Trust, although those funds may, at their
discretion, accept initial investments of as low as $1,000. The minimum
initial investment for Dean Witter U.S. Government Money Market Trust and for
all TCW/DW Funds is $1,000.) Upon exchange into an Exchange Fund, the shares
of that fund will be held in a special Exchange Privilege Account separately
from accounts of those shareholders who have acquired their shares directly
from that fund. As a result, certain services normally available to
shareholders of money market funds, including the check writing feature, will
not be available for funds held in that account.
The Fund, each of the other TCW/DW Funds and each of the money market
funds may limit the number of times this Exchange Privilege may be exercised
by any investor within a specified period of time. Also, the Exchange
Privilege may be terminated or revised at any time by the Fund and/or any of
the funds for which shares
23
of the Fund have been exchanged, upon such notice as may be required by
applicable regulatory agencies (presently sixty days for termination or
material revision), provided that six months prior written notice of
termination will be given to the shareholders who hold shares of Exchange
Funds pursuant to this Exchange Privilege, and provided further that the
Exchange Privilege may be terminated or materially revised without notice at
times (a) when the New York Stock Exchange is closed for other than customary
weekends and holidays, (b) when trading on that Exchange is restricted, (c)
when an emergency exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets, (d)
during any other period when the Securities and Exchange Commission by order
so permits (provided that applicable rules and regulations of the Securities
and Exchange Commission shall govern as to whether the conditions prescribed
in (b) or (c) exist) or (e) if the Fund would be unable to invest amounts
effectively in accordance with its investment objective, policies and
restrictions.
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. An exchange will be treated for federal income tax purposes
the same as a repurchase or redemption of shares, on which the shareholder
may realize a capital gain or loss. 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.
For further information regarding the Exchange Privilege, shareholders
should contact their DWR or other selected broker-dealer account executive or
the Transfer Agent.
REPURCHASES AND REDEMPTIONS
-----------------------------------------------------------------------------
Redemption. As stated in the Prospectus, 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, the
shares may be redeemed by surrendering the certificates with a written
request for redemption. The share certificate, or an accompanying stock
power, and the request for redemption, must be signed by the shareholder or
shareholders exactly as the shares are registered. Each request for
redemption, whether or not accompanied by a share certificate, must be sent
to the Fund's Transfer Agent, which will redeem the shares at their net asset
value next computed (see "Purchase of Fund Shares") after it receives the
request, and certificate, if any, in good order. Any redemption request
received after such computation will be redeemed at the next determined net
asset value. The term "good order" means that the share certificate, if any,
and request for redemption are properly signed, accompanied by any
documentation required by the Transfer Agent, and bear signature guarantees
when required by the Fund or the Transfer Agent. If redemption is requested
by a corporation, partnership, trust or fiduciary, the Transfer Agent may
require that written evidence of authority acceptable to the Transfer Agent
be submitted before such request is accepted.
Whether certificates are held by the shareholder or shares are held in a
shareholder's account, if the proceeds are to be paid to any person other
than the record owner, or if the proceeds are to be paid to a corporation
(other than the Distributor or a selected broker-dealer for the account of
the shareholder), partnership, trust or fiduciary, or sent to the shareholder
at an address other than the registered address, signatures must be
guaranteed by an eligible guarantor acceptable to the Transfer Agent
(shareholders should contact the Transfer Agent for a determination as to
whether a particular institution is such an eligible guarantor). A stock
power may be obtained from any dealer or commercial bank. The Fund may change
the signature guarantee requirements from time to time upon notice to
shareholders, which may be by means of a revised prospectus.
Contingent Deferred Sales Charge. As stated in the Prospectus, a
contingent deferred sales charge ("CDSC") will be imposed on any redemption
by an investor if after such redemption the current value of the investor's
shares of the Fund is less than the dollar amount of all payments by the
shareholder for the purchase of Fund shares during the preceding six years.
However, no CDSC will be imposed to the extent that the net asset value of
the shares redeemed does not exceed: (a) the current net asset value of
shares purchased more than six years prior to the redemption, plus (b) the
current net asset value of shares purchased through reinvestment of dividends
or distributions of the Fund or another TCW/DW Fund (see "Shareholder
Services--Targeted Dividends"), plus (c)
24
increases in the net asset value of the investor's shares above the total
amount of payments for the purchase of Fund shares made during the preceding
six years. The CDSC will be paid to the Distributor.
In determining the applicability of a CDSC to each redemption, the amount
which represents an increase in the net asset value of the investor's shares
above the amount of the total payments for the purchase of shares within the
last six years will be redeemed first. In the event the redemption amount
exceeds such increase in value, the next portion of the amount redeemed will
be the amount which represents the net asset value of the investor's shares
purchased more than six years prior to the redemption and/or shares purchased
through reinvestment of dividends or distributions. A portion of the amount
redeemed which exceeds an amount which represents both such increase in value
and the value of shares purchased more than six years prior to the redemption
and/or shares purchased through reinvestment of dividends or distributions
will be subject to a CDSC.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of Fund shares until the time of
redemption of such shares. For purposes of determining the number of years
from the time of any payment for the purchase of shares, all payments made
during a month will be aggregated and deemed to have been made on the last
day of the month. The following table sets forth the rates of the CDSC:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
YEAR SINCE SALES CHARGE AS A
PURCHASE PERCENTAGE OF AMOUNT
PAYMENT MADE 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>
In determining the rate of the CDSC, it will be assumed that a redemption
is made of shares held by the investor for the longest period of time within
the applicable six-year period. This will result in any such CDSC being
imposed at the lowest possible rate. Accordingly, shareholders may redeem,
without incurring any CDSC, amounts equal to any net increase in the value of
their shares above the amount of their purchase payments made within the past
six years and amounts equal to the current value of shares purchased more
than six years prior to the redemption and shares purchased through
reinvestment of dividends or distributions. The CDSC will be imposed, in
accordance with the table shown above, on any redemptions within six years of
purchase which are in excess of these amounts and which redemptions are not
(a) requested within one year of death or initial determination of disability
of a shareholder, or (b) made pursuant to certain taxable distributions from
retirement plans or retirement accounts, as described in the Prospectus.
Payment for Shares Repurchased or Redeemed. As discussed in the
Prospectus, payment for shares presented for repurchase or redemption will be
made by check within seven days after receipt by the Transfer Agent of the
certificate and/or written request in good order. The term good order means
that the share certificate, if any, and request for redemption are properly
signed, accompanied by any documentation required by the Transfer Agent, and
bear signature guarantees when required by the Fund or the Transfer Agent.
Such payment may be postponed or the right of redemption suspended at times
(a) when the New York Stock Exchange is closed for other than customary
weekends and holidays, (b) when trading on that Exchange is restricted, (c)
when an emergency exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets, or
(d) during any other period when the Securities and Exchange Commission by
order so permits; provided that applicable rules and regulations of the
Securities and Exchange Commission shall govern as to whether the conditions
prescribed in (b) or (c) exist. If the shares to be redeemed have recently
been purchased by check, payment of the redemption proceeds may be delayed
for the minimum time needed to verify that the check used for investment has
been honored (not more than fifteen days from the time of receipt of the
check by the Transfer Agent). Shareholders maintaining margin accounts with
DWR or another selected broker-dealer are referred to their account executive
regarding restrictions on redemption of shares of the Fund pledged in the
margin account.
25
Transfers of Shares. In the event a shareholder requests a transfer of any
shares to a new registration, such shares will be transferred without sales
charge at the time of transfer. With regard to the status of shares which are
either subject to the contingent deferred sales charge or free of such charge
(and with regard to the length of time shares subject to the charge have been
held), any transfer involving less than all of the shares in an account will
be made on a pro-rata basis (that is, by transferring shares in the same
proportion that the transferred shares bear to the total shares in the
account immediately prior to the transfer). The transferred shares will
continue to be subject to any applicable contingent deferred sales charge as
if they had not been so transferred.
Reinstatement Privilege. As discussed in the Prospectus, 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 redemption or repurchase reinstate any portion or all of the proceeds of
such redemption or repurchase in shares of the Fund at the net asset value
next determined after a reinstatement request, together with such proceeds,
is received by the Transfer Agent.
Exercise of the reinstatement privilege will not affect the federal income
tax treatment of any gain or loss realized upon the redemption or repurchase,
except that if the redemption or repurchase resulted in a loss and
reinstatement is made in shares of the Fund, some or all of the loss,
depending on the amount reinstated, will not be allowed as a deduction for
federal income tax purposes, but will be applied to adjust the cost basis of
the shares acquired upon reinstatement.
DIVIDENDS, DISTRIBUTIONS AND TAXES
-----------------------------------------------------------------------------
As discussed in the Prospectus, the Fund will determine either to
distribute or to retain all or part of any net long-term capital gains in any
year for reinvestment. If any such gains are retained, the Fund will pay
federal income tax thereon, and shareholders will be required to include such
undistributed gains in their taxable income and will be able to claim their
share of the tax paid by the Fund as a credit against their individual
federal income tax.
Gains or losses on sales of securities by the Fund will be long-term
capital gains or losses if the securities have been held by the Fund for more
than twelve months. Gains or losses on the sale of securities held for twelve
months or less will be short-term gains or losses.
Any dividend or capital gains distribution received by a shareholder from
any investment company will have the effect of reducing the net asset value
of the shareholder's stock in that company by the exact amount of the
dividend or capital gains distribution. Furthermore, capital gains
distributions and dividends are subject to federal income taxes. If the net
asset value of the shares should be reduced below a shareholder's cost as a
result of the payment of dividends or the distribution of realized net
long-term capital gains, such payment or distribution would be in part a
return of the shareholder's investment to the extent of such reduction below
the shareholder's cost, but nonetheless would be fully taxable at either
ordinary or capital gain rates. Therefore, an investor should consider the
tax implications of purchasing Fund shares immediately prior to a dividend or
distribution record date.
Dividends, interest and capital gains received by the Fund may give rise
to withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes. Investors may be entitled to claim United States foreign tax credits
or deductions with respect to such taxes, subject to certain provisions and
limitations contained in the Code. If more than 50% of the Fund's total
assets at the close of its fiscal year consist of securities of foreign
corporations, the Fund would be eligible and would determine whether or not
to file an election with the Internal Revenue Service pursuant to which
shareholders of the Fund will be required to include their respective pro
rata portions of such withholding taxes in their United States income tax
returns as gross income, treat such respective pro rata portions as taxes
paid by them, and deduct such respective pro rata portions in computing their
taxable income or, alternatively, use them as foreign tax credits against
their United States income taxes. If the Fund does elect to file the election
with the Internal Revenue Service, the Fund will report annually to its
shareholders the amount per share of such withholding.
Special Rules for Certain Foreign Currency Transactions. In general, gains
from foreign currencies and from foreign currency options, foreign currency
futures and forward foreign exchange contracts relating to investments in
stock, securities or foreign currencies are currently considered to be
qualifying income for purposes of
26
determining whether the Fund qualifies as a regulated investment company. It
is currently unclear, however, who will be treated as the issuer of certain
foreign currency instruments or how foreign currency options, futures, or
forward foreign currency contracts will be valued for purposes of the
regulated investment company diversification requirements applicable to the
Fund.
Under Code Section 988, special rules are provided for certain
transactions in a foreign currency other than the taxpayer's functional
currency (i.e., unless certain special rules apply, currencies other than the
U.S. dollar). In general, foreign currency gains or losses from forward
contracts, from futures contracts that are not "regulated futures contracts",
and from unlisted options will be treated as ordinary income or loss under
Code Section 988. Also, certain foreign exchange gains or losses derived with
respect to foreign fixed-income securities are also subject to Section 988
treatment. In general, therefore, Code Section 988 gains or losses will
increase or decrease the amount of the Fund's investment company taxable
income available to be distributed to shareholders as ordinary income, rather
than increasing or decreasing the amount of the Fund's net capital gain.
Additionally, if Code Section 988 losses exceed other investment company
taxable income during a taxable year, the Fund would not be able to make any
ordinary dividend distributions.
If the Fund invests in an entity which is classified as a "passive foreign
investment company" ("PFIC") for U.S. tax purposes, the application of
certain technical tax provisions applying to such companies could result in
the imposition of federal income tax with respect to such investments at the
Fund level which could not be eliminated by distributions to shareholders.
The U.S. Treasury issued proposed regulation section 1.1291-8 which
establishes a mark-to-market regime which allows investment companies
investing in PFIC's to avoid most, if not all, of the difficulties posed by
the PFIC rules. In any event, it is not anticipated that any taxes on the
Fund with respect to investments in PFIC's would be significant.
Shareholders are urged to consult their attorneys or tax advisers
regarding specific questions as to federal, state or local taxes.
PERFORMANCE INFORMATION
-----------------------------------------------------------------------------
As discussed in the Prospectus, from time to time the Fund may quote its
"yield" and/or its "total return" in advertisements and sales literature.
Yield is calculated for any 30-day period as follows: the amount of interest
and/or dividend income for each security in the Fund's portfolio is
determined in accordance with regulatory requirements; the total for the
entire portfolio constitutes the Fund's gross income for the period. Expenses
accrued during the period are subtracted to arrive at "net investment
income". The resulting amount is divided by the product of the net asset
value per share on the last day of the period multiplied by the average
number of Fund shares outstanding during the period that were entitled to
dividends. This amount is added to 1 and raised to the sixth power. 1 is then
subtracted from the result and the difference is multiplied by 2 to arrive at
the annualized yield. For the 30-day period ended June 30, 1995, the Fund's
yield, calculated pursuant to the formula described above, was 3.76%.
During the period, InterCapital assumed certain expenses of the Fund and
the Manager and the Adviser waived their respective management and advisory
fees. Had the Fund borne these expenses and paid these fees during the stated
period, the yield for the 30-day period would have been 1.58%.
The Fund's "average annual total return" represents an annualization of
the Fund's total return over a particular period (of a year or more) and is
computed by finding the annual percentage rate which will result in the
ending redeemable value of a hypothetical $1,000 investment made at the
beginning of a one, five or ten year period, or for the period from the date
of commencement of the Fund's operations, if shorter than any of the
foregoing. The ending redeemable value is reduced by any contingent deferred
sales charge at the end of the one, five or ten year or other period. For the
purpose of this calculation, it is assumed that all dividends and
distributions are reinvested. The formula for computing the average annual
total return involves a percentage obtained by dividing the ending redeemable
value by the amount of the initial investment, taking a root of the quotient
(where the root is equivalent to the number of years in the period) and
subtracting 1 from the result.
The total return of the Fund for the period from October 31, 1994
(commencement of operations) through June 30, 1995 was 2.99%. During this
period, InterCapital assumed certain expenses of the Fund and the Manager and
the Adviser waived their management and advisory fees, respectively. Had the
Fund borne these expenses and paid these fees during the stated period, the
total return for the period would have been 1.269%.
27
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, year-by-year or other types
of total return figures. Such calculations may or may not reflect the
deduction of the contingent deferred sales charge which, if reflected, would
reduce the performance quoted. For example, the total return of the Fund may
be calculated in the manner described above, but without deduction for any
applicable contingent deferred sales charge. Based on the foregoing, the
Fund's total return for the period October 31, 1994 through June 30, 1995 was
7.99%.
The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in shares of the Fund by adding 1 to the Fund's
aggregate total return to date (expressed as a decimal and without taking
into account the effect of any applicable CDSC) and multiplying by $10,000,
$50,000 or $100,000, as the case may be. Investments of $10,000, $50,000 and
$100,000 in the Fund at inception would have grown to $10,799, $53,995 and
$107,990, respectively, at June 30, 1995.
The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by independent
organizations.
DESCRIPTION OF SHARES
-----------------------------------------------------------------------------
The shareholders of the Fund are entitled to a full vote for each full
share held. The Trustees have been elected by InterCapital as the sole
shareholder of the Fund. Mr. Schroeder was elected by the other Trustees of
the Fund on April 20, 1995. The Trustees themselves have the power to alter
the number and the terms of office of the Trustees, and they may at any time
lengthen their own terms or make their terms of unlimited duration and
appoint their own successors, provided that always at least a majority of the
Trustees has been elected by the shareholders of the Fund. Under certain
circumstances the Trustees may be removed by action of the Trustees. The
shareholders also have the right to remove the Trustees following a meeting
called for that purpose requested in writing by the record holders of not
less than ten percent of the Fund's outstanding shares. The voting rights of
shareholders are not cumulative, so that holders of more than 50 percent of
the shares voting can, if they choose, elect all Trustees being selected,
while the holders of the remaining shares would be unable to elect any
Trustees.
The Declaration of Trust permits the Trustees to authorize the creation of
additional series of shares (the proceeds of which would be invested in
separate, independently managed portfolios) and additional classes of shares
within any series (which would be used to distinguish among the rights of
different categories of shareholders, as might be required by future
regulations or other unforeseen circumstances). However, the Trustees have
not authorized any such additional series or classes of shares.
The Declaration of Trust provides that no Trustee, officer, employee or
agent of the Fund is liable to the Fund or to a shareholder, nor is any
Trustee, officer, employee or agent liable to any third persons in connection
with the affairs of the Fund, except as such liability may arise from his own
bad faith, willful misfeasance, gross negligence, or reckless disregard of
his duties. It also provides that all third persons shall look solely to the
Fund's property for satisfaction of claims arising in connection with the
affairs of the Fund. With the exceptions stated, the Declaration of Trust
provides that a Trustee, officer, employee or agent is entitled to be
indemnified against all liabilities in connection with the affairs of the
Fund.
The Fund is authorized to issue an unlimited number of shares of
beneficial interest. The Fund shall be of unlimited duration subject to the
provisions of the Declaration of Trust concerning termination by action of
the shareholders.
CUSTODIAN AND TRANSFER AGENT
-----------------------------------------------------------------------------
The Chase Manhattan Bank, NA., Chase Plaza, New York, New York, 10005, is
the Custodian of the Fund's assets. Any of the Fund's cash balances with the
Custodian in excess of $100,000 are unprotected by federal deposit insurance.
Such balances may, at times, be substantial.
Dean Witter Trust Company, Harborside Financial Center, Plaza Two, Jersey
City, New Jersey 07311 is the Transfer Agent of the Fund's shares and
Dividend Disbursing Agent for payment of dividends and distributions on Fund
shares and Agent for shareholders under various investment plans described
herein. Dean Witter Trust Company is an affiliate of Dean Witter Services
Company Inc., the Fund's Manager, and of Dean Witter
28
Distributors Inc., the Fund's Distributor. As Transfer Agent and Dividend
Disbursing Agent, Dean Witter Trust Company's responsibilities include
maintaining shareholder accounts, including providing subaccounting and
recordkeeping services for certain retirement accounts; disbursing cash
dividends and reinvesting dividends; processing account registration changes;
handling purchase and redemption transactions; mailing prospectuses and
reports; mailing and tabulating proxies; processing share certificate
transactions; and maintaining shareholder records and lists. For these
services Dean Witter Trust Company receives a per shareholder account fee.
INDEPENDENT ACCOUNTANTS
-----------------------------------------------------------------------------
Price Waterhouse LLP serves as the independent accountants of the Fund.
The independent accountants are responsible for auditing the annual financial
statements of the Fund.
REPORTS TO SHAREHOLDERS
-----------------------------------------------------------------------------
The Fund will send to shareholders, at least semi-annually, reports
showing the Fund's portfolio and other information. An annual report
containing financial statements audited by independent accountants will be
sent to shareholders each year.
The Fund's fiscal year ends on June 30. The financial statements of the
Fund must be audited at least once a year by independent accountants whose
selection is made annually by the Fund's Board of Trustees.
LEGAL COUNSEL
-----------------------------------------------------------------------------
Sheldon Curtis, Esq., who is an officer and the General Counsel of the
Manager, is an officer and the General Counsel of the Fund.
EXPERTS
-----------------------------------------------------------------------------
The financial statements of the Fund for the fiscal period ended June 30,
1995 included in this Statement of Additional Information and incorporated by
reference in the Prospectus have been so included and incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
REGISTRATION STATEMENT
-----------------------------------------------------------------------------
This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the Securities and Exchange Commission. The complete Registration
Statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the rules and regulations of the Commission.
29
TCW/DW GLOBAL CONVERTIBLE TRUST
Portfolio of Investments June 30, 1995
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES/PRINCIPAL COUPON MATURITY
AMOUNT RATE DATES VALUE
---------------- -------------------------------------------- --------- ---------- -------------
<C> <S> <C> <C> <C>
CONVERTIBLE BONDS AND PREFERRED STOCKS (90.8%)
ARGENTINA (1.2%)
BANKING
US$ 340,000 Banco de Galicia y Buenos Aires S.A. ....... 7.00% 08/01/02 $ 233,556
-------------
AUSTRALIA (1.2%)
FINANCIAL SERVICES
US$ 200,000 Lend Lease Finance International Ltd. ...... 4.75 06/01/03 222,000
-------------
BERMUDA (0.5%)
FINANCIAL SERVICES
US$ 105,000 SwissRe Finance - 144A** .................... 2.00 07/06/00 94,566
-------------
CANADA (2.5%)
POLLUTION CONTROL ...........................
US$ 200,000 Laidlaw Inc. - 144A** ....................... 6.00 01/15/99 225,000
BASIC CYCLICALS
CAD 350,000 Magna International, Inc.* .................. 7.25 07/05/05 255,120
-------------
TOTAL CANADA ............................................... 480,120
-------------
CAYMAN ISLANDS (3.0%)
FINANCIAL SERVICES
US$ 175,000 HSH Overseas Finance Ltd. ................... 5.00 01/06/01 155,969
-------------
OIL & GAS
2,100 Parker & Parsley Capital LLC - 144A** $3.12 92,663
REAL ESTATE
US$ 310,000 HD Finance Cayman Ltd. - 144A** ............. 6.75 06/01/00 308,063
-------------
TOTAL CAYMAN ISLANDS ....................................... 556,695
-------------
FINLAND (0.5%)
LEISURE
US$ 100,000 Amer Group Ltd. - 144A** .................... 6.25 06/15/03 92,000
-------------
FRANCE (7.1%)
AUTOMOTIVE
FRF 1,089,000 Peugeot S.A. ................................ 2.00 01/01/01 211,726
-------------
BANKING
ECU 125,000 BCP Bank & Trust ............................ 8.75 05/21/02 173,108
-------------
FINANCIAL SERVICES
FRF 321,250 AXA Midi Assurances S.A. .................... 6.00 01/01/01 77,229
FRF 548,000 Finaxa ...................................... 3.00 01/01/01 113,152
FRF 791,940 Unibail ..................................... 3.75 01/01/04 151,063
-------------
341,444
-------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
FRF 157,500 Saint Louis ................................. 7.00 01/01/00 37,100
-------------
INDUSTRIALS
FRF 289,800 Danone ...................................... 6.60 01/01/00 69,496
-------------
MEDIA GROUP
FRF 373,800 Euro Rscg Worldwide ......................... 2.75 01/01/01 75,419
FRF 475,000 Havas S.A. .................................. 3.00 12/31/97 113,148
-------------
188,567
-------------
30
TCW/DW GLOBAL CONVERTIBLE TRUST
Portfolio of Investments June 30, 1995 (continued)
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
SHARES/PRINCIPAL COUPON MATURITY
AMOUNT RATE DATES VALUE
---------------- -------------------------------------------- --------- ---------- -------------
<C> <S> <C> <C> <C>
MULTI-INDUSTRY
FRF 607,050 CIE Generale des Eaux ....................... 6.00 % 01/01/98 $ 137,870
-------------
TIRE & RUBBER GOODS
FRF 841,500 Michelin France ............................. 2.50 01/01/01 172,859
-------------
TOTAL FRANCE ............................................... 1,332,170
-------------
HONG KONG (4.5%)
CONSTRUCTION PLANT & EQUIPMENT
US$ 125,000 Kumagai Gumi Finance ........................ 4.875 12/08/98 108,750
-------------
ELECTRICAL EQUIPMENT
US$ 120,000 Johnson Electric Holdings, Ltd. ............. 4.50 11/05/00 104,400
-------------
HOTELS/MOTELS
US$ 225,000 Shangri-La Asia Capital ..................... 2.875 12/16/00 176,625
-------------
REAL ESTATE
US$ 80,000 Guangzhou Investment Co. .................... 4.50 10/08/98 69,000
US$ 160,000 Hong Kong Land Co. .......................... 4.00 02/23/01 130,600
US$ 290,000 New World Development ....................... 4.375 12/11/00 258,463
-------------
458,063
-------------
TOTAL HONG KONG ............................................ 847,838
-------------
INDONESIA (0.3%)
PAPER & FOREST PRODUCTS
US$ 50,000 PT International Indorayon Utama ............ 5.50 10/01/02 58,875
-------------
ITALY (0.3%)
COMPUTER SERVICES
ITL 100,000,000 Olivetti International N.V. ................. 3.75 12/31/99 48,466
-------------
JAPAN (5.7%)
AUTOMOTIVE
yen 11,000,000 Toyota Motor Corp. .......................... 1.20 01/28/98 131,323
-------------
BANKING
US$ 125,000 Yasuda Trust & Banking ...................... 2.875 09/30/03 95,000
-------------
COMPUTERS
yen 4,000,000 NEC Corporation ............................. 1.70 03/31/99 49,882
yen 5,000,000 NEC Corporation ............................. 1.90 03/30/01 61,643
-------------
111,525
-------------
CONSUMER PRODUCTS
yen 10,000,000 Sekisui House ............................... 0.80 07/31/01 107,565
-------------
HEALTHCARE
yen 2,000,000 Eisai Co., Ltd. ............................. 4.20 03/31/98 25,531
-------------
INDUSTRIALS
yen 6,000,000 Fujitsu Ltd. ................................ 1.90 03/29/02 71,418
yen 10,000,000 Kawasaki Heavy Industries Ltd. .............. 0.80 09/28/01 107,683
yen 12,000,000 Matsushita Electric Industries .............. 1.40 03/31/04 136,454
yen 5,000,000 Shin-Etsu Chemical Co. ...................... 1.30 03/31/99 59,043
-------------
374,598
-------------
31
TCW/DW GLOBAL CONVERTIBLE TRUST
Portfolio of Investments June 30, 1995 (continued)
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
SHARES/PRINCIPAL COUPON MATURITY
AMOUNT RATE DATES VALUE
---------------- -------------------------------------------- --------- ---------- -------------
<C> <S> <C> <C> <C>
OIL RELATED
yen 10,000,000 Mitsubishi Oil Co., Ltd. .................... 2.00 % 09/29/00 $ 117,021
-------------
TRANSPORTATION
yen 10,000,000 Keihin Electric Express Railway ............. 1.50 03/29/02 113,593
-------------
TOTAL JAPAN ................................................ 1,076,156
-------------
LUXEMBOURG (0.4%)
METALS
ECU 70,000 Arbed S.A. .................................. 5.50 07/07/99 84,822
-------------
MALAYSIA (0.7%)
CONGLOMERATES
US$ 90,000 Renong Berhad - 144A** ...................... 2.00 07/15/05 89,550
-------------
ENTERTAINMENT & LEISURE TIME
US$ 50,000 Technology Resources Industries Berhad ..... 2.75 11/28/04 51,500
-------------
TOTAL MALAYSIA ............................................. 141,050
-------------
MEXICO (0.9%)
BUILDING MATERIALS
US$ 220,000 Cemex S.A. .................................. 4.25 11/01/97 166,650
-------------
NETHERLANDS (0.5%)
INSURANCE
US$ 75,000 Aegon N.V. - 144A** ......................... 4.75 11/01/04 93,892
-------------
TAIWAN (3.3%)
CHEMICALS
US$ 125,000 Formosa Chem & Fibre Corp. .................. 1.75 07/19/01 117,500
-------------
CONSUMER PRODUCTS
US$ 150,000 President Enterprises Corp. ................. 0.00 07/22/01 181,313
-------------
INDUSTRIALS
US$ 100,000 Sampo Corp. ................................. 2.625 11/23/01 108,250
-------------
TEXTILES
US$ 200,000 Far Eastern Textile ......................... 4.00 10/07/06 224,000
-------------
TOTAL TAIWAN ............................................... 631,063
-------------
THAILAND (1.5%)
BANKING
US$ 130,000 Bangkok Bank Public Co. ..................... 3.25 03/03/04 131,950
-------------
INDUSTRIALS
US$ 120,000 Banpu Public Company Ltd. ................... 3.50 08/25/04 146,100
-------------
TOTAL THAILAND ............................................. 278,050
-------------
UNITED KINGDOM (7.6%)
AUTOMOTIVE
ECU 130,000 Investor International PLC .................. 7.25 06/21/01 181,547
-------------
CHEMICALS
pounds sterling
150,000 Cookson Group ............................... 7.00 11/02/04 230,433
-------------
FINANCIAL SERVICES
pounds sterling
100,000 Lonhro Finance Public ....................... 6.00 02/27/04 140,073
-------------
32
TCW/DW GLOBAL CONVERTIBLE TRUST
Portfolio of Investments June 30, 1995 (continued)
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
SHARES/PRINCIPAL COUPON MATURITY
AMOUNT RATE DATES VALUE
---------------- -------------------------------------------- --------- ---------- -------------
<C> <S> <C> <C> <C>
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
pounds sterling
70,000 Allied Domecq PLC ........................... 6.75% 07/07/08 $ 109,488
US$ 250,000 Burns, Philp Treasury ....................... 5.50 04/30/04 214,375
US$ 60,000 Grand Metropolitan PLC ...................... 6.50 01/31/00 63,900
pounds sterling
100,000 Tate & Lyle International Finance PLC ...... 5.75 03/21/01 133,298
-------------
521,061
-------------
INDUSTRIALS
pounds sterling
80,000 Coats Viyella PLC ........................... 6.25 08/09/03 111,102
-------------
MULTI-INDUSTRY
pounds sterling
150,000 Hanson PLC .................................. 9.50 01/31/06 243,284
-------------
TOTAL UNITED KINGDOM ....................................... 1,427,500
-------------
UNITED STATES (49.1%)
BUILDING MATERIALS
1,800 Owens-Corning Capital LLC - 144A** $3.25 ... 92,250
-------------
BUSINESS SERVICES
US$ 145,000 Danka Business Systems - 144A** ............. 6.75 04/01/02 147,552
US$ 190,000 Omnicom Group, Inc. - 144A** ................ 4.50 09/01/00 217,550
-------------
365,102
-------------
COMPUTER EQUIPMENT
US$ 105,000 3Com Corp. - 144A** ......................... 10.25 11/01/01 134,007
US$ 145,000 EMC Corp. ................................... 4.25 01/01/01 195,750
US$ 150,000 Storage Technology Corp. .................... 8.00 05/31/15 146,250
US$ 160,000 Unisys Corp. ................................ 8.25 08/01/00 177,600
-------------
653,607
-------------
COMPUTER SERVICES
US$ 350,000 Automatic Data Processing, Inc. ............. 0.00 02/20/12 154,875
US$ 285,000 First Financial Management Corp. ............ 5.00 12/15/99 386,175
4,300 General Motors Corp. $3.25 (Series C) (1) .. 270,900
-------------
811,950
-------------
ELECTRONICS - SEMICONDUCTORS
US$ 90,000 Integrated Device Technology ................ 5.50 06/01/02 93,833
-------------
FINANCIAL SERVICES
1,200 Allstate Corp. (The) $2.30 (2) .............. 48,900
US$ 160,000 Merrill Lynch & Co., Inc. - 144A** (3) ..... 0.00 06/30/99 201,600
2,700 St. Paul Capital LLC $3.00 .................. 141,075
-------------
391,575
-------------
FUNERAL SERVICES
3,300 SCI Finance LLC $3.125 (Series A) ........... 200,475
-------------
HEALTHCARE
US$ 215,000 Elan International Finance Ltd. ............. 0.00 10/16/12 99,975
US$ 130,000 Healthsouth Rehabilitation Corp. ............ 5.00 04/01/01 141,288
US$ 90,000 Multicare Companies, Inc. ................... 7.00 03/15/03 86,850
US$ 105,000 Quantum Health Resources Inc. ............... 4.75 10/01/00 90,300
US$ 130,000 Theratx Inc. - 144A** ....................... 8.00 02/01/02 116,288
-------------
534,701
-------------
HOUSEHOLD PRODUCTS ..........................
US$ 110,000 McKesson Corp. .............................. 4.50 03/01/04 99,000
-------------
33
TCW/DW GLOBAL CONVERTIBLE TRUST
Portfolio of Investments June 30, 1995 (continued)
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
SHARES/PRINCIPAL COUPON MATURITY
AMOUNT RATE DATES VALUE
---------------- -------------------------------------------- --------- ---------- -------------
<C> <S> <C> <C> <C>
HOTELS/MOTELS
US$ 150,000 Hospitality Franchise Systems, Inc. ........ 4.50 % 10/01/99 $ 169,550
-------------
INDUSTRIALS
2,900 Westinghouse Electric Corp. - 144A** $1.30
(Series C) ................................. 43,138
-------------
INSURANCE
1,800 American General Delaware $3.00 (Series A) . 93,375
US$ 90,000 Chubb Capital Corp. ......................... 6.00 05/15/98 92,813
US$ 120,000 Fremont General Corp. ....................... 0.00 10/12/13 45,300
US$ 240,000 USF&G Corp. ................................. 0.00 03/03/09 132,000
-------------
363,488
-------------
LEISURE
US$ 600,000 Coleman Worldwide Corp. ..................... 0.00 05/27/13 174,000
-------------
MACHINERY - DIVERSIFIED
US$ 199,000 Cooper Industries, Inc. ..................... 7.05 01/01/15 205,965
-------------
MEDIA GROUP
US$ 210,000 Comcast Corp. ............................... 3.375 09/09/05 193,200
US$ 655,000 News America Holdings, Inc. ................. 0.00 03/11/13 311,125
US$ 265,000 Time Warner, Inc. ........................... 8.75 01/10/15 275,931
-------------
780,256
-------------
MEDICAL SERVICES
4,000 FHP International Corp. $1.25 (Series A) ... 94,000
US$ 170,000 Integrated Health Services, Inc. ............ 5.75 01/01/01 183,175
-------------
277,175
-------------
METALS
US$ 155,000 Allegheny Ludlum Corp. ...................... 5.875 03/15/02 165,416
-------------
OIL & GAS
US$ 145,000 Apache Corp. ................................ 6.00 01/15/02 161,494
3,000 Occidental Petroleum Corp. $3.00 (Series A) 177,750
2,800 Occidental Petroleum Corp. - 144A** $3.875 . 159,600
US$ 235,000 Pennzoil Co. (4) ............................ 4.75 10/01/03 221,206
US$ 70,000 SFP Pipeline Holdings, Inc. ................. 11.16 08/15/10 89,600
-------------
809,650
-------------
PAPER & FOREST PRODUCTS
US$ 120,000 Riverwood International Corp. ............... 6.75 09/15/03 160,279
-------------
POLLUTION CONTROL
US$ 295,000 Thermo Electron Corp. ....................... 5.00 04/15/01 400,463
US$ 165,000 U.S. Filter Corp. ........................... 5.00 10/15/00 173,250
US$ 213,000 WMX Technologies, Inc. ...................... 2.00 01/24/05 179,186
-------------
752,899
-------------
PUBLISHING
US$ 90,000 Nelson (Thomas), Inc. - 144A** .............. 5.75 11/30/99 103,536
-------------
RESTAURANTS
US$ 430,000 Boston Chicken Inc. ......................... 0.00 06/01/15 97,825
-------------
34
TCW/DW GLOBAL CONVERTIBLE TRUST
Portfolio of Investments June 30, 1995 (continued)
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
SHARES/PRINCIPAL COUPON MATURITY
AMOUNT RATE DATES VALUE
---------------- -------------------------------------------- --------- ---------- -------------
<C> <S> <C> <C> <C>
RETAIL
US$ 300,000 Office Depot, Inc. .......................... 0.00 % 11/01/08 $ 196,500
US$ 85,000 Pep Boys-Manny, Moe & Jack .................. 4.00 09/01/99 78,382
-------------
274,882
-------------
SCIENTIFIC INSTRUMENTS
US$ 175,000 Fisher Scientific International, Inc. ...... 4.75 03/01/03 188,248
-------------
TELECOMMUNICATIONS
1,800 Corning Delaware, L.P. $3.00 ................ 92,025
US$ 135,000 LDDS Communications, Inc. ................... 5.00 08/15/03 130,275
2,100 MFS Communications Company, Inc. $2.68 ..... 72,450
US$ 365,000 Motorola, Inc. .............................. 0.00 09/27/13 298,388
US$ 90,000 U.S. Cellular Corp. ......................... 0.00 06/15/15 27,900
-------------
621,038
-------------
TRANSPORTATION
US$ 305,000 AMR Corp. ................................... 6.125 11/01/24 317,377
US$ 305,000 Delta Air Lines, Inc. ....................... 3.23 06/15/03 293,761
-------------
611,138
-------------
WASTE MANAGEMENT
6,200 Browning-Ferris Industries, Inc. $2.583 .... 226,300
-------------
TOTAL UNITED STATES ........................................ 9,267,276
-------------
TOTAL INVESTMENTS (IDENTIFIED COST $15,844,627) (A) . . 90.8% 17,132,745
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES ........................................ 9.2 1,740,631
----- -------------
NET ASSETS ............................................. 100.0% $18,873,376
===== =============
</TABLE>
---------------
* Security was purchased on a when issued basis.
** Resale is restricted to qualified institutional investors.
(1) Exchangeable into General Motors Corp. Class E Common Stock.
(2) Exchangeable into PMI Group Inc. Common Stock.
(3) Exchangeable into Microsoft Corp. Common Stock.
(4) Exchangeable into Chevron Corp. Common Stock.
(a) The aggregate cost for federal income tax purposes is $15,845,477;
the aggregate gross unrealized appreciation is $1,389,124 and the
aggregate gross unrealized depreciation is $101,856, resulting in net
unrealized appreciation of $1,287,268.
See Notes to Financial Statements
35
TCW/DW GLOBAL CONVERTIBLE TRUST
Portfolio of Investments June 30, 1995 (continued)
-----------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JUNE 30, 1995:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS DELIVERY APPRECIATION/
TO RECEIVE IN EXCHANGE FOR DATE (DEPRECIATION)
------------------ ------------------- ---------- ---------------
<S> <C> <C> <C>
CAD 200,000 US$ 145,751 07/05/95 $ 32
CAD 150,000 US$ 109,067 07/05/95 270
US$ 147,992 ECU 112,192 07/18/95 (1,388)
pounds
US$ 1,053,807 sterling 650,097 07/18/95 17,964
US$ 51,627 ITL 83,333,333 07/18/95 (2,429)
US$ 125,043 yen 10,634,907 07/18/95 (1,022)
US$ 107,789 yen 8,920,600 07/18/95 2,045
US$ 300,720 ECU 224,142 08/18/95 2,365
US$ 1,149,893 FRF 5,526,730 10/18/95 10,827
US$ 783,929 yen 62,777,032 10/18/95 30,516
---------------
Net unrealized appreciation ..... $59,180
===============
</TABLE>
See Notes to Financial Statements
36
TCW/DW GLOBAL CONVERTIBLE TRUST
Summary of Investments by Industry Classification June 30, 1995
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
--------------------------------------------- ------------- ------------
<S> <C> <C>
Automotive ................................... $ 524,596 2.78%
Banking ...................................... 633,614 3.36
Basic Cyclicals .............................. 255,120 1.35
Building Materials ........................... 258,900 1.37
Business Services ............................ 365,102 1.94
Chemicals .................................... 347,933 1.84
Computers .................................... 111,525 0.59
Computer Equipment ........................... 653,607 3.46
Computer Services ............................ 860,416 4.56
Conglomerates ................................ 89,550 0.47
Consumer Products ............................ 288,878 1.53
Construction Plant & Equipment ............... 108,750 0.58
Electronics-Semiconductors ................... 93,833 0.50
Electrical Equipment ......................... 104,400 0.55
Entertainment & Leisure Time ................. 51,500 0.27
Financial Services ........................... 1,345,627 7.13
Food, Beverage, Tobacco & Household Products 558,161 2.96
Funeral Services ............................. 200,475 1.06
Healthcare ................................... 560,232 2.97
Hotels/Motels ................................ 346,175 1.83
Household Products ........................... 99,000 0.52
Industrials .................................. 852,684 4.52
Insurance .................................... 457,380 2.42
Leisure ...................................... 266,000 1.41
Machinery-Diversified ........................ 205,965 1.09
Media Group .................................. 968,823 5.13
Medical Services ............................. 277,175 1.47
Metals ....................................... 250,238 1.33
Multi-Industry ............................... 381,154 2.02
Oil & Gas .................................... 902,313 4.78
Oil Related .................................. 117,021 0.62
Paper & Forest Products ...................... 219,154 1.16
Pollution Control ............................ 977,899 5.18
Publishing ................................... 103,536 0.55
Real Estate .................................. 766,126 4.06
Restaurants .................................. 97,825 0.52
Retail ....................................... 274,882 1.46
Scientific Instruments ....................... 188,248 1.00
Telecommunications ........................... 621,038 3.29
Tire & Rubber Goods .......................... 172,859 0.92
Textiles ..................................... 224,000 1.19
Transportation ............................... 724,731 3.84
Waste Management ............................. 226,300 1.20
------------- ------------
$17,132,745 90.78%
============= ============
</TABLE>
SUMMARY OF INVESTMENTS BY TYPE
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
---------------------------- ------------- ------------
<S> <C> <C>
Convertible Bonds ........... $15,327,844 81.22%
Convertible Preferred Stocks 1,804,901 9.56
------------- ------------
$17,132,745 90.78%
============= ============
</TABLE>
37
TCW/DW GLOBAL CONVERTIBLE TRUST
Financial Statements
-----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $15,844,627) ............. $17,132,745
Unrealized appreciation on foreign currency
contracts ................................. 64,019
Cash (including $12,550 in foreign
currency) ................................. 2,186,598
Receivable for:
Interest .................................. 188,547
Investments sold .......................... 20,799
Shares of beneficial interest sold ....... 10,409
Dividends ................................. 8,845
Deferred organizational expenses ........... 156,132
Receivable from investment manager ........ 110,941
Prepaid expenses and other assets .......... 31,583
-------------
TOTAL ASSETS ............................ 19,910,618
-------------
LIABILITIES:
Unrealized depreciation on foreign currency
contracts ................................. 4,839
Payable for:
Investments purchased ..................... 718,992
Plan of distribution fee .................. 14,880
Accrued expenses and other payables ....... 142,399
Organizational expenses .................... 156,132
-------------
TOTAL LIABILITIES ....................... 1,037,242
-------------
NET ASSETS:
Paid-in-capital ............................ 17,938,587
Net unrealized appreciation ................ 1,346,040
Undistributed net investment income ....... 47,052
Net realized loss .......................... (458,303)
-------------
NET ASSETS .............................. $18,873,376
=============
NET ASSET VALUE PER SHARE, 1,787,684 shares
outstanding (unlimited shares authorized
of $.01 par value) ........................ $10.56
=============
</TABLE>
STATEMENT OF OPERATIONS
For the period October 31, 1994* through June 30, 1995
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest (net of $398 foreign
withholding tax) ...................... $ 523,560
Dividends .............................. 41,940
-----------
TOTAL INCOME .......................... 565,500
-----------
EXPENSES
Plan of distribution fee ............... 111,428
Transfer agent fees and expenses ...... 64,014
Management fee ......................... 56,828
Professional fees ...................... 47,665
Investment advisory fee ................ 37,886
Organizational expenses ................ 23,868
Trustees' fees and expenses ............ 21,786
Custodian fees ......................... 20,536
Shareholder reports and notices ....... 7,957
Registration fees ...................... 6,079
Other .................................. 1,993
-----------
Total Expenses Before Amounts
Waived/Assumed ....................... 400,040
Less: Amounts Waived/Assumed .......... (288,612)
-----------
Total Expenses After Amounts
Waived/Assumed ....................... 111,428
-----------
NET INVESTMENT INCOME ................. 454,072
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on:
Investments ............................ (2,922)
Foreign exchange transactions .......... (455,381)
-----------
TOTAL LOSS ............................ (458,303)
-----------
Net unrealized appreciation on:
Investments ............................ 1,288,118
Translation of foreign exchange forward
contracts, other assets and
liabilities denominated in foreign
currencies .............................. 57,922
-----------
TOTAL APPRECIATION .................... 1,346,040
-----------
NET GAIN .............................. 887,737
-----------
NET INCREASE .......................... $1,341,809
===========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD OCTOBER 31,
1994* THROUGH JUNE 30, 1995
-------------------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ............................................... $ 454,072
Net realized loss ................................................... (458,303)
Net unrealized appreciation ......................................... 1,346,040
-------------------------------
Net increase ....................................................... 1,341,809
-------------------------------
Dividends to shareholders from net investment income ................... (407,020)
Net increase from transactions in shares of beneficial interest ....... 17,838,587
-------------------------------
Total increase ...................................................... 18,773,376
NET ASSETS:
Beginning of period ................................................... 100,000
-------------------------------
END OF PERIOD (including undistributed net investment income of
$47,052) ............................................................... $18,873,376
===============================
</TABLE>
* Commencement of operations.
See Notes to Financial Statements
38
TCW/DW GLOBAL CONVERTIBLE TRUST
Notes to Financial Statements
-----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- TCW/DW Global Convertible Trust
(the "Fund") is registered under the Investment Company Act of 1940, as
amended (the "Act"), as a non-diversified, open-end management investment
company. The Fund was organized as a Massachusetts business trust on June 29,
1994 and on July 21, 1994 issued 10,000 shares of beneficial interest for
$100,000 to Dean Witter InterCapital Inc. ("InterCapital"), an affiliate of
Dean Witter Services Company Inc. (the "Manager"), to effect the Fund's
initial capitalization. The Fund commenced operations on October 31, 1994.
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; (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 Adviser that sale or bid prices are not
reflective of a security's market value, portfolio securities are valued
at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trustees; (4)
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 evaluation by its staff, including
review of broker-dealer market price quotations, if available, in
determining what it believes is the fair valuation of the portfolio
securities valued by such pricing service; and (5) short-term debt
securities having a maturity date of more than sixty days at time of
purchase are valued on a mark-to-market basis until sixty days prior to
maturity and thereafter at amortized cost based on their value on the 61st
day. Short-term debt securities having a maturity date of sixty days or
less at the time of purchase are valued at amortized cost.
B. Accounting for Investments -- Security transactions are accounted for
on the trade date (date the order to buy or sell is executed). Realized
gains and losses on security transactions are determined by the identified
cost method. Discounts on securities purchased are amortized over the life
of the respective securities. Dividend income is recorded on the
ex-dividend date except for certain dividends from foreign securities
which are recorded as soon as the Fund is informed after the ex-dividend
date. Interest income is accrued daily.
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 rates prevailing on the respective dates of such
transactions. The resultant exchange gains and losses are included in the
Statement of Operations as realized and unrealized gain/loss on foreign
exchange transactions. Pursuant to U.S. Federal income tax regulations,
certain foreign exchange gains/losses included in realized and unrealized
gain/loss are included in or are a reduction of ordinary income for
federal income tax purposes. 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 Contracts -- The Fund may enter into forward
foreign currency contracts which are valued daily at the appropriate
exchange rates. The resultant exchange gains and losses are
39
TCW/DW GLOBAL CONVERTIBLE TRUST
Notes to Financial Statements (continued)
--------------------------------------------------------------------------
included in the Statement of Operations as unrealized gain/loss on foreign
exchange transactions. 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. 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.
F. Dividends and Distributions to Shareholders -- The Fund records
dividends and distributions to its shareholders on the ex-dividend date.
The amount of dividends and distributions from net investment income and
net realized capital gains are determined in accordance with federal
income tax regulations which may differ from generally accepted accounting
principles. These "book/tax" differences are either considered temporary
or permanent in nature. To the extent these differences are permanent in
nature, such amounts are reclassified within the capital accounts based on
their federal tax-basis treatment; temporary differences do not require
reclassification. Dividends and distributions which exceed net investment
income and net realized capital gains for financial reporting purposes but
not for tax purposes are reported as dividends in excess of net investment
income or distributions in excess of net realized capital gains. To the
extent they exceed net investment income and net realized capital gains
for tax purposes, they are reported as distributions of paid-in-capital.
G. Organizational Expenses -- InterCapital paid the organizational
expenses of the Fund in the amount of approximately $180,000 which will be
reimbursed for the full amount thereof, exclusive of amounts assumed. Such
costs have been deferred and are being amortized on the straight line
method over a period not to exceed five years from the commencement of
operations.
2. MANAGEMENT AGREEMENT -- Pursuant to a Management Agreement, the Fund pays
its Manager a management fee, accrued daily and payable monthly, by applying
the annual rate of 0.51% to the net assets of the Fund determined as of the
close of each business day.
Under the terms of the Management Agreement, the 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 Manager. The Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Fund.
3. INVESTMENT ADVISORY AGREEMENT -- Pursuant to an Investment Advisory
Agreement with TCW Funds Management, Inc. (the "Adviser"), the Fund pays the
Adviser an advisory fee, accrued daily and payable monthly, by applying the
annual rate of 0.34% to the net assets of the Fund determined as of the close
of each business day.
Under the terms of the Investment Advisory Agreement, the Fund has
retained the Adviser to invest the Fund's assets, including placing orders
for the purchase and sale of portfolio securities. The Adviser obtains and
evaluates such information and advice relating to the economy, securities
markets, and specific securities as it considers necessary or useful to
continuously manage the assets of the Fund in a manner consistent with its
investment objective. In addition, the Adviser pays the salaries of all
personnel, including officers of the Fund, who are employees of the Adviser.
40
TCW/DW GLOBAL CONVERTIBLE TRUST
Notes to Financial Statements (continued)
-----------------------------------------------------------------------------
InterCapital had undertaken to assume all operating expenses (except for
any 12b-1 and/or brokerage fees) and the Manager had agreed to waive the
compensation provided for in its Management Agreement and the Adviser had
undertaken to waive the compensation provided for in its Advisory Agreement,
until such time as the Fund had $50 million of net assets or until six months
from the date of commencement of the Fund's operations, whichever occurred
first. InterCapital will continue to assume all operating expenses (except
for 12b-1 and/or brokerage fees) and the Manager and the Adviser will
continue to waive their respective compensation until such time as the Fund
has $50 million of net assets or until August 23, 1995, whichever occurs
first.
4. PLAN OF DISTRIBUTION -- Shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the 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 Fund's
inception (not including reinvestment of dividend 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 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, account executives of Dean Witter
Reynolds Inc., an affiliate of the Manager and Distributor, and other
employees and selected broker-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 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 June 30,
1995, it received approximately $38,000 in contingent 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.
5. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the period ended June 30, 1995 aggregated
$24,687,787 and $8,880,708, respectively.
Dean Witter Trust Company, an affiliate of the Manager and Distributor, is
the Fund's transfer agent.
41
TCW/DW GLOBAL CONVERTIBLE TRUST
Notes to Financial Statements (continued)
-----------------------------------------------------------------------------
6. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD OCTOBER 31,
1994*
THROUGH JUNE 30, 1995
--------------------------
SHARES AMOUNT
----------- -------------
<S> <C> <C>
Sold ...................... 1,939,734 $19,459,412
Reinvestment of dividends 30,636 310,550
----------- -------------
1,970,370 19,769,962
Repurchased ............... (192,686) (1,931,375)
----------- -------------
Net increase .............. 1,777,684 $17,838,587
=========== =============
<FN>
---------------
* Commencement of operations.
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS -- The
Fund may enter into forward foreign currency contracts ("forward contracts")
to facilitate settlement of foreign currency denominated portfolio
transactions or to manage foreign currency exposure associated with foreign
currency denominated securities. Additionally, as a hedge against adverse
foreign currency and market risk, the Fund may purchase and write options on
foreign currency ("derivative instruments").
At June 30, 1995, there were open forward contracts used to facilitate
settlement of foreign currency denominated portfolio transactions and manage
foreign currency exposure.
Derivative instruments involve elements of market risk in excess of the
amounts reflected in the Statement of Assets and Liabilities. The Fund bears
the risk of an unfavorable change in the foreign exchange rates underlying
the forward contracts. Risks may also arise upon entering into these
contracts from the potential inability of the counterparties to meet the
terms of their contracts.
8. FEDERAL INCOME TAX STATUS -- Capital and foreign currency losses incurred
after October 31 ("post-October losses") within the taxable year are deemed
to arise on the first business day of the Fund's next taxable year. The Fund
incurred and will elect to defer net capital and foreign currency losses of
approximately $182,000 and $214,000, respectively, during fiscal 1995. As of
June 30, 1995, the Fund had temporary book/tax differences primarily
attributable to post-October losses and the mark-to-market of open forward
foreign currency exchange contracts.
42
TCW/DW GLOBAL CONVERTIBLE TRUST
Financial Highlights
-----------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout the period:
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 31, 1994*
THROUGH
JUNE 30, 1995
-----------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .... $ 10.00
-----------------
Net investment income .................... 0.27
Net realized and unrealized gain ........ 0.53
-----------------
Total from investment operations ........ 0.80
-----------------
Less dividends from net investment income (0.24)
-----------------
Net asset value, end of period ........... $ 10.56
=================
TOTAL INVESTMENT RETURN+ ................. 7.99%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................. 1.00%(2)(3)
Net investment income .................... 4.07%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $18,873
Portfolio turnover rate .................. 61%(1)
</TABLE>
---------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
(3) InterCapital had undertaken to assume all operating expenses (except
for any 12b-1 and/or brokerage fees) and the Manager had agreed to
waive the compensation provided for in its Management Agreement and
the Adviser had undertaken to waive the compensation provided for in
its Advisory Agreement, until such time as the Fund had $50 million
of net assets or until six months from the date of commencement of
the Fund's operations, whichever occurred first. InterCapital will
continue to assume all operating expenses (except for 12b-1 and/or
brokerage fees) and the Manager and the Adviser will continue to
waive their respective compensation until such time as the Fund has
$50 million of net assets or until August 23, 1995, whichever occurs
first. If the Fund had borne all expenses, after application of the
expense limitation, the above annualized expense and net investment
income ratios would have been 3.50% and 1.48%, respectively.
See Notes to Financial Statements
43
TCW/DW GLOBAL CONVERTIBLE TRUST
Report of Independent Accountants
-----------------------------------------------------------------------------
To the Shareholders and Trustees of TCW/DW Global Convertible Trust
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of TCW/DW Global
Convertible Trust (the "Fund") at June 30, 1995, and the results of its
operations, the changes in its net assets and the financial highlights for
the period October 31, 1994 (commencement of operations) through June 30,
1995, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit, which included
confirmation of securities owned at June 30, 1995 by correspondence with the
custodian and brokers, provides a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
New York, New York
August 14, 1995
44
[TEXT]
TCW/DW GLOBAL CONVERTIBLE TRUST
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial statements and schedules, included
in Prospectus (Part A):
Page in
Prospectus
Financial Highlights for the period October 31,
1994 through June 30, 1995............................ 4
(2) Financial statements included in the Statement of
Additional Information (Part B):
Portfolio of Investments at June 30, 1995 ............ 30
Summary of Investments by Industry Classification
at June 30, 1995...................................... 37
Summary of Investments by Type at June 30, 1995 ...... 37
Statement of Assets and Liabilities at June 30, 1995.. 38
Statement of operations for the period October 31,
1994 through December 31, 1994........................ 38
Statement of changes in net assets for the period
October 31, 1994 through December 31, 1994............ 38
Notes to Financial Statements......................... 39
None.
(3) Financial statements included in Part C:
None.
(b) Exhibits:
1. - Declaration of Trust of Registrant
8. - Custody Agreement between Registrant and The Chase Manhattan
Bank, N. A.
11. - Consent of Independent Accountants
16. - Schedule for Computation of Performance Quotations
27. - Financial Data Schedule
--------------------
All other exhibits previously filed and incorporated
by reference.
1
Item 25. Persons Controlled by or Under Common Control With Registrant.
None
Item 26. Number of Holders of Securities.
(1) (2)
Number of Record Holders
Title of Class at July 31, 1995
Shares of Beneficial Interest 1,724
Item 27. Indemnification.
Pursuant to Section 5.3 of the Registrant's Declaration of Trust and
under Section 4.8 of the Registrant's By-Laws, the indemnification of the
Registrant's trustees, officers, employees and agents is permitted if it is
determined that they acted under the belief that their actions were in or
not opposed to the best interest of the Registrant, and, with respect to
any criminal proceeding, they had reasonable cause to believe their conduct
was not unlawful. In addition, indemnification is permitted only if it is
determined that the actions in question did not render them liable by
reason of willful misfeasance, bad faith or gross negligence in the
performance of their duties or by reason of reckless disregard of their
obligations and duties to the Registrant. Trustees, officers, employees
and agents will be indemnified for the expense of litigation if it is
determined that they are entitled to indemnification against any liability
established in such litigation. The Registrant may also advance money for
these expenses provided that they give their undertakings to repay the
Registrant unless their conduct is later determined to permit
indemnification.
Pursuant to Section 5.2 of the Registrant's Declaration of Trust and
paragraph 8 of the Registrant's Management and Advisory Agreements, none of
the Manager, the Adviser or any trustee, officer, employee or agent of the
Registrant shall be liable for any action or failure to act, except in the
case of bad faith, willful misfeasance, gross negligence or reckless
disregard of duties to the Registrant.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to trustees, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a trustee, officer, or controlling person of
the Registrant in connection with the successful defense of any action,
suit or proceeding) is asserted against the Registrant by such trustee,
officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act, and will be governed by the
final adjudication of such issue.
2
The Registrant hereby undertakes that it will apply the
indemnification provision of its by-laws in a manner consistent with
Release 11330 of the Securities and Exchange Commission under the
Investment Company Act of 1940, so long as the interpretation of Sections
17(h) and 17(i) of such Act remains in effect.
Registrant, in conjunction with the Manager, Registrant's Trustees,
and other registered investment management companies managed by the
Manager, maintains insurance on behalf of any person who is or was a
Trustee, officer, employee, or agent of Registrant, or who is or was
serving at the request of Registrant as a trustee, director, officer,
employee or agent of another trust or corporation, against any liability
asserted against him and incurred by him or arising out of his position.
However, in no event will Registrant maintain insurance to indemnify any
such person for any act for which Registrant itself is not permitted to
indemnify him.
Item 28. Business and Other Connections of Investment Adviser.
The TCW Funds Management, Inc. (the "Adviser") is a 100% owned
subsidiary of The TCW Group, Inc., a Nevada corporation. The Adviser
presently serves as investment adviser to: (1) TCW Funds, Inc., a
diversified open-end management investment company, (2) TCW Convertible
Securities Fund, Inc., a diversified closed-end management investment
company; (3) TCW/DW Core Equity Trust, an open-end, non-diversified
management company, (4) TCW/DW North American Government Income Trust, an
open-end, non-diversified management company, (5) TCW/DW Income and Growth
Fund, an open-end non-diversified management company, (6) TCW/DW Latin
American Growth Fund, an open-end non-diversified management company, (7)
TCW/DW Small Cap Growth Fund, an open-end non-diversified management
company, (8) TCW/DW Term Trust 2000, a closed-end, diversified management
company, (9) TCW/DW Term Trust 2002, a closed-end diversified management
company, (10) TCW/DW Term Trust 2003, a closed-end diversified management
company, (11) TCW/DW Balanced Fund, an open-end, diversified management
company, (12) TCW/DW Emerging Markets Opportunities Trust, a closed-end,
non-diversified management company, (13) TCW/DW North American Intermediate
Income Trust, an open-end, non-diversified management company, (14) TCW/DW
Global Convertible Trust, an open-end non-diversified management investment
company, and (15) TCW/DW Total Return Trust, an open-end non-diversified
management investment company. The Adviser also serves as investment
adviser or sub-adviser to other investment companies, including foreign
investment companies. The list required by this Item 28 of the officers and
directors of the Adviser together with information as to any other
business, profession, vocation or employment of a substantive nature
engaged in by the Adviser and such officers and directors during the past
two years, is incorporated by reference to Form ADV (File No. 801-29075)
filed by the Adviser pursuant to the Investment Advisers Act.
Item 29. Principal Underwriters.
(a) Dean Witter Distributors Inc. ("Distributors"), a Delaware
corporation, is the principal underwriter of the Registrant.
Distributors is also the principal underwriter of the following
investment companies:
3
(1) Dean Witter Liquid Asset Fund Inc.
(2) Dean Witter Tax-Free Daily Income Trust
(3) Dean Witter California Tax-Free Daily Income Trust
(4) Dean Witter Retirement Series
(5) Dean Witter Dividend Growth Securities Inc.
(6) Dean Witter Natural Resource Development Securities Inc.
(7) Dean Witter World Wide Investment Trust
(8) Dean Witter Capital Growth Securities
(9) Dean Witter Convertible Securities Trust
(10) Active Assets Tax-Free Trust
(11) Active Assets Money Trust
(12) Active Assets California Tax-Free Trust
(13) Active Assets Government Securities Trust
(14) Dean Witter Global Utilities Fund
(15) Dean Witter Federal Securities Trust
(16) Dean Witter U.S. Government Securities Trust
(17) Dean Witter High Yield Securities Inc.
(18) Dean Witter New York Tax-Free Income Fund
(19) Dean Witter Tax-Exempt Securities Trust
(20) Dean Witter California Tax-Free Income Fund
(21) Dean Witter Managed Assets Trust
(22) Dean Witter Limited Term Municipal Trust
(23) Dean Witter World Wide Income Trust
(24) Dean Witter Utilities Fund
(25) Dean Witter Strategist Fund
(26) Dean Witter New York Municipal Money Market Trust
(27) Dean Witter Intermediate Income Securities
(28) Prime Income Trust
(29) Dean Witter European Growth Fund Inc.
(30) Dean Witter Developing Growth Securities Trust
(31) Dean Witter Precious Metals and Minerals Trust
(32) Dean Witter Pacific Growth Fund Inc.
(33) Dean Witter Multi-State Municipal Series Trust
(34) Dean Witter Premier Income Trust
(35) Dean Witter Short-Term U.S. Treasury Trust
(36) Dean Witter Diversified Income Trust
(37) Dean Witter Health Sciences Trust
(38) Dean Witter Global Dividend Growth Securities
(39) Dean Witter American Value Fund
(40) Dean Witter U.S. Government Money Market Trust
(41) Dean Witter Global Short-Term Income Fund Inc.
(42) Dean Witter Variable Investment Series
(43) Dean Witter Value-Added Market Series
(44) Dean Witter Short-Term Bond Fund
(45) Dean Witter National Municipal Trust
(46) Dean Witter High Income Securities
(47) Dean Witter International SmallCap Fund
(48) Dean Witter Hawaii Municipal Trust
(49) Dean Witter Balanced Growth Fund
(50) Dean Witter Balanced Income Fund
(51) Dean Witter Select Dimensions Investment Series
(52) Dean Witter Capital Appreciation Fund
(53) Dean Witter Global Asset Allocation Fund
(54) Dean Witter Mid-Cap Growth Fund
(1) TCW/DW Core Equity Trust
(2) TCW/DW North American Government Income Trust
(3) TCW/DW Latin American Growth Fund
(4) TCW/DW Income and Growth Fund
4
(5) TCW/DW Small Cap Growth Fund
(6) TCW/DW Balanced Fund
(7) TCW/DW North American Intermediate Income Trust
(8) TCW/DW Global Convertible Trust
(b) The following information is given regarding directors and
officers of Dean Witter Distributors Inc. ("Distributors"). The
principal address of Distributors is Two World Trade Center, New
York, New York 10048.
Positions and
Office with Distributors
Name and the Registrant
---- --------------------------
Charles A. Fiumefreddo Chairman, Chief Executive
Officer and Director of
Distributors and Chairman,
Chief Executive Officer
and Trustee of the
Registrant.
Philip J. Purcell Director of Distributors.
Richard M. DeMartini Director of Distributors.
James F. Higgins Director of Distributors.
Thomas C. Schneider Executive Vice President, Chief
Financial Officer and Director
of Distributors.
Christine A. Edwards Executive Vice President,
Secretary, Chief Legal Officer
and Director of Distributors.
David A. Hughey Executive Vice President and
Chief Administrative Officer
of Distributors and Vice
President of the Registrant.
Robert Scanlan Executive Vice President of
Distributors and Vice President
of the Registrant.
Sheldon Curtis Senior Vice President,
Assistant General Counsel and
Assistant Secretary of
Distributors and Vice President,
Secretary and General Counsel of
the Registrant.
Frederick K. Kubler Senior Vice President,
Assistant Secretary and Chief
Compliance Officer of
Distributors.
5
Positions and Office
with Distributors
Name and the Registrant
---- --------------------------
Michael T. Gregg Vice President and Assistant
Secretary of Distributors.
Edward C. Oelsner III Vice President of Distributors.
Samuel Wolcott III Vice President of Distributors.
Thomas F. Caloia Assistant Treasurer of
Distributors and Treasurer of
the Registrant.
Michael Interrante Assistant Treasurer of
Distributors.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder are maintained by the Manager at its offices,
except records relating to holders of shares issued by the
Registrant, which are maintained by the Registrant's Transfer Agent,
at its place of business as shown in the prospectus.
Item 31. Management Services
Registrant is not a party to any such management-related
service contract.
Item 32. Undertakings
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to stockholders, upon request and without charge.
6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York and State
of New York on the 25th day of August, 1995.
TCW/DW GLOBAL CONVERTIBLE TRUST
By /s/ Sheldon Curtis
----------------------------
Sheldon Curtis
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 2 has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
(1) Principal Executive Officer President, Chief
Executive Officer,
Trustee and Chairman
By /s/ Charles A. Fiumefreddo 08/25/95
--------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By /s/ Thomas F. Caloia 08/25/95
--------------------------
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman) Richard M. DeMartini
Thomas E. Larkin Marc I. Stern
By /s/ Sheldon Curtis 08/25/95
--------------------------
Sheldon Curtis
Attorney-in-Fact
John C. Argue Michael E. Nugent
Paul Kolton Manuel H. Johnson
John R. Haire John L. Schroeder
By /s/ David M. Butowsky 08/25/95
--------------------------
David M. Butowsky
Attorney-in-Fact
EXHIBIT INDEX
1. -- Declaration of Trust of Registrant
8. -- Form of Custodian Agreement between Registrant and The
Chase Manhattan Bank, N.A.
11. -- Consent of Independent Accountants
16. -- Schedules for Computation of Performance Quotations
27. -- Financial Data Schedule
TCW/DW GLOBAL CONVERTIBLE TRUST
TWO WORLD TRADE CENTER
NEW YORK, NY 10048
DECLARATION OF TRUST
DATED: JUNE 29, 1994
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I -- Name and Definitions............................................... 2
Section 1.1 Name ......................................................... 2
Section 1.2 Definitions .................................................. 2
ARTICLE II -- Trustees.......................................................... 3
Section 2.1 Number of Trustees ........................................... 3
Section 2.2 Election and Term ............................................ 3
Section 2.3 Resignation and Removal ...................................... 3
Section 2.4 Vacancies .................................................... 3
Section 2.5 Delegation of Power to Other Trustees ........................ 4
ARTICLE III -- Powers of Trustees............................................... 4
Section 3.1 General ...................................................... 4
Section 3.2 Investments .................................................. 4
Section 3.3 Legal Title .................................................. 5
Section 3.4 Issuance and Repurchase of Securities ........................ 5
Section 3.5 Borrowing Money; Lending Trust Assets ........................ 5
Section 3.6 Delegation; Committees ....................................... 5
Section 3.7 Collection and Payment ....................................... 5
Section 3.8 Expenses ..................................................... 5
Section 3.9 Manner of Acting; By-Laws .................................... 5
Section 3.10 Miscellaneous Powers ......................................... 6
Section 3.11 Principal Transactions ....................................... 6
Section 3.12 Litigation ................................................... 6
ARTICLE IV -- Investment Adviser, Distributor, Custodian and Transfer Agent .... 6
Section 4.1 Investment Adviser and Manager ............................... 6
Section 4.2 Administrative Services ...................................... 7
Section 4.3 Distributor .................................................. 7
Section 4.4 Transfer Agent ............................................... 7
Section 4.5 Custodian .................................................... 7
Section 4.6 Parties to Contract .......................................... 7
ARTICLE V -- Limitations of Liability of Shareholders, Trustees and Others ..... 8
Section 5.1 No Personal Liability of Shareholders, Trustees, etc. ........ 8
Section 5.2 Non-Liability of Trustees, etc. .............................. 8
Section 5.3 Indemnification .............................................. 8
Section 5.4 No Bond Required of Trustees ................................. 8
Section 5.5 No Duty of Investigation; Notice in Trust Instruments, etc. .. 8
Section 5.6 Reliance on Experts, etc. .................................... 9
i
PAGE
--------
ARTICLE VI -- Shares of Beneficial Interest..................................... 9
Section 6.1 Beneficial Interest ........................................... 9
Section 6.2 Rights of Shareholders ........................................ 9
Section 6.3 Trust Only .................................................... 9
Section 6.4 Issuance of Shares ............................................ 10
Section 6.5 Register of Shares ............................................ 10
Section 6.6 Transfer of Shares ............................................ 10
Section 6.7 Notices ....................................................... 10
Section 6.8 Voting Powers ................................................. 10
Section 6.9 Series or Classes of Shares ................................... 11
ARTICLE VII --Redemptions....................................................... 13
Section 7.1 Redemptions ................................................... 13
Section 7.2 Redemption at the Option of the Trust ......................... 13
Section 7.3 Effect of Suspension of Determination of Net Asset Value ..... 13
Section 7.4 Suspension of Right of Redemption ............................. 13
ARTICLE VIII -- Determination of Net Asset Value, Net Income and Distributions . 14
Section 8.1 Net Asset Value ............................................... 14
Section 8.2 Distributions to Shareholders ................................. 14
Section 8.3 Determination of Net Income ................................... 14
Section 8.4 Power to Modify Foregoing Procedures .......................... 15
ARTICLE IX -- Duration; Termination of Trust; Amendment; Mergers, etc. ......... 15
Section 9.1 Duration ...................................................... 15
Section 9.2 Termination of Trust or a Series .............................. 15
Section 9.3 Amendment Procedure ........................................... 15
Section 9.4 Merger, Consolidation and Sale of Assets ...................... 16
Section 9.5 Incorporation ................................................. 16
ARTICLE X -- Reports to Shareholders............................................ 17
ARTICLE XI --Miscellaneous...................................................... 17
Section 11.1 Filing ........................................................ 17
Section 11.2 Resident Agent ................................................ 17
Section 11.3 Governing Law ................................................. 17
Section 11.4 Counterparts .................................................. 17
Section 11.5 Reliance by Third Parties ..................................... 17
Section 11.6 Provisions in Conflict with Law or Regulations ................ 17
Section 11.7 Use of the Name "TCW/DW" ...................................... 18
Section 11.8 Principal Place of Business ................................... 18
SIGNATURE PAGE.................................................................. 19
</TABLE>
ii
DECLARATION OF TRUST
OF
TCW/DW GLOBAL CONVERTIBLE TRUST
DATED: JUNE 29, 1994
THE DECLARATION OF TRUST of TCW/DW Global Convertible Trust is made the
29th day of June, 1994 by the parties signatory hereto, as trustees (such
persons, so long as they shall continue in office in accordance with the
terms of this Declaration of Trust, and all other persons who at the time in
question have been duly elected or appointed as trustees in accordance with
the provisions of this Declaration of Trust and are then in office, being
hereinafter called the "Trustees").
W I T N E S S E T H:
WHEREAS, the Trustees desire to form a trust fund under the laws of
Massachusetts for the investment and reinvestment of funds contributed
thereto; and
WHEREAS, it is provided that the beneficial interest in the trust assets
be divided into transferable shares of beneficial interest as hereinafter
provided;
NOW, THEREFORE, the Trustees hereby declare that they will hold in trust,
all money and property contributed to the trust fund to manage and dispose of
the same for the benefit of the holders from time to time of the shares of
beneficial interest issued hereunder and subject to the provisions hereof, to
wit:
1
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is the "TCW/DW
Global Convertible Trust," and so far as may be practicable the Trustees
shall conduct the Trust's activities, execute all documents and sue or be
sued under that name, which name (and the word "Trust" wherever herein used)
shall refer to the Trustees as Trustees, and not as individuals, or
personally, and shall not refer to the officers, agents, employees or
Shareholders of the Trust. Should the Trustees determine that the use of such
name is not advisable, they may use such other name for the Trust as they
deem proper and the Trust may hold its property and conduct its activities
under such other name.
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "By-Laws" means the By-Laws referred to in Section 3.9 hereof, as
from time to time amended.
(b) the terms "Commission," "Affiliated Person" and "Interested
Person," have the meanings given them in the 1940 Act.
(c) "Declaration" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "Declaration,"
"hereof," "herein" and "hereunder" shall be deemed to refer to this
Declaration rather than the article or section in which such words appear.
(d) "Distributor" means the party, other than the Trust, to a contract
described in Section 4.3 hereof.
(e) "Fundamental Policies" shall mean the investment policies and
restrictions set forth in the Prospectus and Statement of Additional
Information and designated as fundamental policies therein.
(f) "Investment Adviser" means any party, other than the Trust, to an
investment advisory contract described in Section 4.1 hereof.
(g) "Majority Shareholder Vote" means the vote of the holders of a
majority of Shares, which shall consist of: (i) a majority of Shares
represented in person or by proxy and entitled to vote at a meeting of
Shareholders at which a quorum, as determined in accordance with the
By-Laws, is present; (ii) a majority of Shares issued and outstanding and
entitled to vote when action is taken by written consent of Shareholders;
and (iii) a "majority of the outstanding voting securities," as the phrase
is defined in the 1940 Act, when any action is required by the 1940 Act by
such majority as so defined.
(h) "Manager" means any party, other than the Trust, to a management
contract described in Section 4.1 hereof.
(i) "1940 Act" means the Investment Company Act of 1940 and the rules
and regulations thereunder as amended from time to time.
(j) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
(k) "Prospectus" means the Prospectus and Statement of Additional
Information constituting parts of the Registration Statement of the Trust
under the Securities Act of 1933 as such Prospectus and Statement of
Additional Information may be amended or supplemented and filed with the
Commission from time to time.
(l) "Series" means one of the separately managed components of the
Trust (or, if the Trust shall have only one such component, then that one)
as set forth in Section 6.1 hereof or as may be established and designated
from time to time by the Trustees pursuant to that section.
(m) "Shareholder" means a record owner of outstanding Shares.
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(n) "Shares" means the units of interest into which the beneficial
interest in the Trust shall be divided from time to time, including the
shares of any and all series or classes which may be established by the
Trustees, and includes fractions of Shares as well as whole Shares.
(o) "Transfer Agent" means the party, other than the Trust, to the
contract described in Section 4.4 hereof.
(p) "Trust" means the TCW/DW Global Convertible Trust.
(q) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of
the Trust or the Trustees.
(r) "Trustees" means the persons who have signed the Declaration, so
long as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly elected or
appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and reference herein to a Trustee or the Trustees shall
refer to such person or persons in their capacity as trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by
a majority of the Trustees, provided, however, that the number of Trustees
shall in no event be less than three (3) nor more than fifteen (15).
Section 2.2. Election and Term. The Trustees shall be elected by a vote of
a majority of the outstanding voting securities, as defined by the 1940 Act,
held by the initial shareholder(s) (i.e., the person(s) that supplied the
seed capital required under Section 14(a) of the 1940 Act). The Trustees
shall have the power to set and alter the terms of office of the Trustees,
and they may at any time lengthen or lessen their own terms or make their
terms of unlimited duration, subject to the resignation and removal
provisions of Section 2.3 hereof. Subject to Section 16(a) of the 1940 Act,
the Trustees may elect their own successors and may, pursuant to Section 2.4
hereof, appoint Trustees to fill vacancies. The Trustees shall adopt By-Laws
not inconsistent with this Declaration or any provision of law to provide for
election of Trustees by Shareholders at such time or times as the Trustees
shall determine to be necessary or advisable.
Section 2.3. Resignation and Removal. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the other Trustees and such resignation shall
be effective upon such delivery, or at a later date according to the terms of
the instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than the number
required by Section 2.1 hereof) by the action of two- thirds of the remaining
Trustees or by the action of the Shareholders of record of not less than
two-thirds of the Shares outstanding (for purposes of determining the
circumstances and procedures under which such removal by the Shareholders may
take place, the provisions of Section 16(c) of the 1940 Act or of the
corporate or business statute of any state in which shares of the Trust are
sold, shall be applicable to the same extent as if the Trust were subject to
the provisions of that Section). Upon the resignation or removal of a
Trustee, or his otherwise ceasing to be a Trustee, he shall execute and
deliver such documents as the remaining Trustees shall require for the
purpose of conveying to the Trust or the remaining Trustees any Trust
Property held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his legal representative shall execute
and deliver on his behalf such documents as the remaining Trustees shall
require as provided in the preceding sentence.
Section 2.4. Vacancies. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the
duties of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy existing by reason of an
increase in the number of Trustees, subject to the provisions of Section
16(a) of the 1940 Act, the remaining Trustees shall fill such vacancy by the
appointment of
3
such other person as they or he, in their or his discretion, shall see fit,
made by a written instrument signed by a majority of the remaining Trustees.
Any such appointment shall not become effective, however, until the person
named in the written instrument of appointment shall have accepted in writing
such appointment and agreed in writing to be bound by the terms of the
Declaration. An appointment of a Trustee may be made in anticipation of a
vacancy to occur at a later date by reason of retirement, resignation or
increase in the number of Trustees, provided that such appointment shall not
become effective prior to such retirement, resignation or increase in the
number of Trustees. Whenever a vacancy in the number of Trustees shall occur,
until such vacancy is filled as provided in this Section 2.4, the Trustees in
office, regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by the
Declaration. A written instrument certifying the existence of such vacancy
signed by a majority of the Trustees shall be conclusive evidence of the
existence of such vacancy.
Section 2.5. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; provided that in no
case shall less than two (2) Trustees personally exercise the powers granted
to the Trustees under the Declaration except as herein otherwise expressly
provided.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the
same extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its
branches and maintain offices both within and without the Commonwealth of
Massachusetts, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities
wheresoever in the world they may be located as they deem necessary, proper
or desirable in order to promote the interests of the Trust although such
things are not herein specifically mentioned. Any determination as to what is
in the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of the Declaration, the presumption
shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 3.2. Investments. The Trustees shall have the power to:
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute, lend
or otherwise deal in or dispose of negotiable or nonnegotiable
instruments, obligations, evidences of indebtedness, certificates of
deposit or indebtedness, commercial paper, repurchase agreements, reverse
repurchase agreements, options, commodities, commodity futures contracts
and related options, currencies, currency futures and forward contracts,
and other securities, investment contracts and other instruments of any
kind, including, without limitation, those issued, guaranteed or sponsored
by any and all Persons including, without limitation, states, territories
and possessions of the United States, the District of Columbia and any of
the political subdivisions, agencies or instrumentalities thereof, and by
the United States Government or its agencies or instrumentalities, foreign
or international instrumentalities, or by any bank or savings institution,
or by any corporation or organization organized under the laws of the
United States or of any state, territory or possession thereof, and of
corporations or organizations organized under foreign laws, or in "when
issued" contracts for any such securities, or retain Trust assets in cash
and from time to time change the investments of the assets of the Trust;
and to exercise any and all rights, powers and privileges of ownership or
interest in respect of any and all such investments of every kind and
description, including, without limitation, the right
4
to consent and otherwise act with respect thereto, with power to designate
one or more persons, firms, associations or corporations to exercise any
of said rights, powers and privileges in respect of any of said
instruments; and the Trustees shall be deemed to have the foregoing powers
with respect to any additional securities in which the Trust may invest
should the Fundamental Policies be amended.
The Trustees shall not be limited to investing in obligations maturing before
the possible termination of the Trust, nor shall the Trustees be limited by
any law limiting the investments which may be made by fiduciaries.
Section 3.3. Legal Title. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name
of one or more of the Trustees, or in the name of the Trust, or in the name
of any other Person as nominee, on such terms as the Trustees may determine,
provided that the interest of the Trust therein is appropriately protected.
The right, title and interest of the Trustees in the Trust Property shall
vest automatically in each Person who may hereafter become a Trustee. Upon
the resignation, removal or death of a Trustee he shall automatically cease
to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed
and delivered.
Section 3.4. Issuance and Repurchase of Securities. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares
and, subject to the provisions set forth in Articles VII, VIII and IX and
Section 6.9 hereof, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the Trust,
whether capital or surplus or otherwise, to the full extent now or hereafter
permitted by the laws of the Commonwealth of Massachusetts governing business
corporations.
Section 3.5. Borrowing Money; Lending Trust Assets. Subject to the
Fundamental Policies, the Trustee shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, to endorse,
guarantee, or undertake the performance of any obligation, contract or
engagement of any other Person and to lend Trust assets.
Section 3.6. Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of
the Trust and the Trust Property, to delegate from time to time to such of
their number or to officers, employees or agents of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Trustees or otherwise as the Trustees may deem
expedient.
Section 3.7. Collection and Payment. Subject to Section 6.9 hereof, the
Trustees shall have power to collect all property due to the Trust; to pay
all claims, including taxes, against the Trust Property; to prosecute,
defend, compromise or abandon any claims relating to the Trust Property; to
foreclose any security interest securing any obligations, by virtue of which
any property is owed to the Trust; and to enter into releases, agreements and
other instruments.
Section 3.8. Expenses. Subject to Section 6.9 hereof, the Trustees shall
have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of the
Declaration, and to pay reasonable compensation from the funds of the Trust
to themselves as Trustees. The Trustees shall fix the compensation of all
officers, employees and Trustees.
Section 3.9. Manner of Acting; By-Laws. Except as otherwise provided
herein or in the By-Laws or by any provision of law, any action to be taken
by the Trustees may be taken by a majority of the Trustees present at a
meeting of Trustees (a quorum being present), including any meeting held by
means of a conference telephone circuit or similar communications equipment
by means of which all
5
persons participating in the meeting can hear each other, or by written
consents of all the Trustees. The Trustees may adopt By-Laws not inconsistent
with this Declaration to provide for the conduct of the business of the Trust
and may amend or repeal such By-Laws to the extent such power is not reserved
to the Shareholders.
Section 3.10. Miscellaneous Powers. The Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust or any Series thereof; (b)
enter into joint ventures, partnerships and any other combinations or
associations; (c) remove Trustees or fill vacancies in or add to their
number, elect and remove such officers and appoint and terminate such agents
or employees as they consider appropriate, and appoint from their own number,
and terminate, any one or more committees which may exercise some or all of
the power and authority of the Trustees as the Trustees may determine; (d)
purchase, and pay for out of Trust Property or the property of the
appropriate Series of the Trust, insurance policies insuring the
Shareholders, Trustees, officers, employees, agents, investment advisers,
distributors, selected dealers or independent contractors of the Trust
against all claims arising by reason of holding any such position or by
reason of any action taken or omitted to be taken by any such Person in such
capacity, whether or not constituting negligence, or whether or not the Trust
would have the power to indemnify such Person against such liability; (e)
establish pension, profit-sharing, Share purchase, and other retirement,
incentive and benefit plans for any Trustees, officers, employees and agents
of the Trust; (f) to the extent permitted by law, indemnify any person with
whom the Trust or any Series thereof has dealings, including any Investment
Adviser, Distributor, Transfer Agent and selected dealers, to such extent as
the Trustees shall determine; (g) guarantee indebtedness or contractual
obligations of others; (h) determine and change the fiscal year of the Trust
or any Series thereof and the method by which its accounts shall be kept; and
(i) adopt a seal for the Trust but the absence of such seal shall not impair
the validity of any instrument executed on behalf of the Trust.
Section 3.11. Principal Transactions. Except in transactions permitted by
the 1940 Act or any rule or regulation thereunder, or any order of exemption
issued by the Commission, or effected to implement the provisions of any
agreement to which the Trust is a party, the Trustees shall not, on behalf of
the Trust, buy any securities (other than Shares) from or sell any securities
(other than Shares) to, or lend any assets of the Trust or any Series thereof
to, any Trustee or officer of the Trust or any firm of which any such Trustee
or officer is a member acting as principal, or have any such dealings with
any Investment Adviser, Distributor or Transfer Agent or with any Affiliated
Person of such Person; but the Trust or any Series thereof may employ any
such Person, or firm or company in which such Person is an Interested Person,
as broker, legal counsel, registrar, transfer agent, dividend disbursing
agent or custodian upon customary terms.
Section 3.12. Litigation. The Trustees shall have the power to engage in
and to prosecute, defend, compromise, abandon, or adjust, by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust, and out of the assets of the Trust or any Series
thereof to pay or to satisfy any debts, claims or expenses incurred in
connection therewith, including those of litigation, and such power shall
include without limitation the power of the Trustees or any appropriate
committee thereof, in the exercise of their or its good faith business
judgment, to dismiss any action, suit, proceeding, dispute, claim, or demand,
derivative or otherwise, brought by any person, including a Shareholder in
its own name or the name of the Trust, whether or not the Trust or any of the
Trustees may be named individually therein or the subject matter arises by
reason of business for or on behalf of the Trust.
ARTICLE IV
INVESTMENT ADVISER, MANAGER, DISTRIBUTOR, CUSTODIAN AND TRANSFER AGENT
Section 4.1. Investment Adviser and Manager. Subject to approval by a
Majority Shareholder Vote, the Trustees may in their discretion from time to
time enter into one or more investment advisory and management contracts or,
if the Trustees establish multiple Series, separate investment advisory and
management contracts with respect to one or more Series whereby the other
party or parties to any such contracts shall undertake to furnish the Trust
or such Series such management, investment
6
advisory, administration, accounting, legal, statistical and research
facilities and services, promotional or marketing activities, and such other
facilities and services, if any, as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may
in their discretion determine. The vote of the initial shareholder(s) shall
constitute "majority shareholder vote" if such agreements are entered into
prior to a public offering of Shares of the Trust. Notwithstanding any
provisions of the Declaration, the Trustees may authorize the Investment
Advisers, or any of them, under any such contracts (subject to such general
or specific instructions as the Trustees may from time to time adopt) to
effect purchases, sales, loans or exchanges of portfolio securities and other
investments of the Trust on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or
exchanges pursuant to recommendations of such Investment Advisers, or any of
them (and all without further action by the Trustees). Any such purchases,
sales, loans and exchanges shall be deemed to have been authorized by all of
the Trustees. The Trustees may, in their sole discretion, call a meeting of
Shareholders in order to submit to a vote of Shareholders at such meeting the
approval or continuance of any such investment advisory or management
contract. If the Shareholders of any one or more of the Series of the Trust
should fail to approve any such investment advisory or management contract,
the Investment Adviser may nonetheless serve as Investment Adviser with
respect to any Series whose Shareholders approve such contract.
Section 4.2. Administrative Services. The Trustees may in their discretion
from time to time contract for administrative personnel and services whereby
the other party shall agree to provide the Trustees or the Trust
administrative personnel and services to operate the Trust on a daily or
other basis, on such terms and conditions as the Trustees may in their
discretion determine. Such services may be provided by one or more persons or
entities.
Section 4.3. Distributor. The Trustees may in their discretion from time
to time enter into one or more contracts, providing for the sale of Shares to
net the Trust or the applicable Series of the Trust not less than the net
asset value per Share (as described in Article VIII hereof) and pursuant to
which the Trust may either agree to sell the Shares to the other parties to
the contracts, or any of them, or appoint any such other party its sales
agent for such Shares. In either case, any such contract shall be on such
terms and conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Article IV, including, without
limitation, the provision for the repurchase or sale of shares of the Trust
by such other party as principal or as agent of the Trust.
Section 4.4. Transfer Agent. The Trustees may in their discretion from
time to time enter into a transfer agency and shareholder service contract
whereby the other party to such contract shall undertake to furnish transfer
agency and shareholder services to the Trust. The contract shall have such
terms and conditions as the Trustees may in their discretion determine not
inconsistent with the Declaration. Such services may be provided by one or
more Persons.
Section 4.5. Custodian. The Trustees may appoint or otherwise engage one
or more banks or trust companies, each having an aggregate capital, surplus
and undivided profits (as shown in its last published report) of at least
five million dollars ($5,000,000) to serve as Custodian with authority as its
agent, but subject to such restrictions, limitations and other requirements,
if any, as may be contained in the By-Laws of the Trust.
Section 4.6. Parties to Contract. Any contract of the character described
in Sections 4.1, 4.2, 4.3, 4.4 or 4.5 of this Article IV and any other
contract may be entered into with any Person, although one or more of the
Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such
contract shall be invalidated or rendered voidable by reason of the existence
of any such relationship; nor shall any Person holding such relationship be
liable merely by reason of such relationship for any loss or expense to the
Trust under or by reason of said contract or accountable for any profit
realized directly or indirectly therefrom, provided that the contract when
entered into was not inconsistent with the provisions of this Article IV. The
same Person may be the other party to any contracts entered into pursuant to
Sections 4.1, 4.2, 4.3, 4.4 or 4.5 above or otherwise, and any individual may
be financially interested or otherwise affiliated with Persons who are
parties to any or all of the contracts mentioned in this Section 4.6.
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ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 5.1. No Personal Liability of Shareholders, Trustees, etc. No
Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or affairs
of the Trust. No Trustee, officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever to any Person, other than the
Trust or its Shareholders, in connection with the Trust Property or the
affairs of the Trust, save only that arising from bad faith, willful
misfeasance, gross negligence or reckless disregard for his duty to such
Person; and all such Persons shall look solely to the Trust Property, or to
the Property of one or more specific Series of the Trust if the claim arises
from the conduct of such Trustee,(3) officer, employee or agent with respect
to only such Series, for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder, Trustee,
officer, employee or agent, as such, of the Trust is made a party to any suit
or proceeding to enforce any such liability, he shall not, on account
thereof, be held to any personal liability. The Trust shall indemnify out of
the property of the Trust and hold each Shareholder harmless from and against
all claims and liabilities, to which such Shareholder may become subject by
reason of his being or having been a Shareholder, and shall reimburse such
Shareholder for all legal and other expenses reasonably incurred by him in
connection with any such claim or liability; provided that, in the event the
Trust shall consist of more than one Series, Shareholders of a particular
Series who are faced with claims or liabilities solely by reason of their
status as Shareholders of that Series shall be limited to the assets of that
Series for recovery of such loss and related expenses. The rights accruing to
a Shareholder under this Section 5.1 shall not exclude any other right to
which such Shareholder may be lawfully entitled, nor shall anything herein
contained restrict the right of the Trust to indemnify or reimburse a
Shareholder in any appropriate situation even though not specifically
provided herein.
Section 5.2. Non-Liability of Trustees, etc. No Trustee, officer, employee
or agent of the Trust shall be liable to the Trust, its Shareholders, or to
any Shareholder, Trustee, officer, employee, or agent thereof for any action
or failure to act (including without limitation the failure to compel in any
way any former or acting Trustee to redress any breach of trust) except for
his own bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties.
Section 5.3. Indemnification. (a) The Trustees shall provide for
indemnification by the Trust, or by one or more Series thereof if the claim
arises from his or her conduct with respect to only such Series, of any
person who is, or has been, a Trustee, officer, employee or agent of the
Trust against all liability and against all expenses reasonably incurred or
paid by him in connection with any claim, action, suit or proceeding in which
he becomes involved as a party or otherwise by virtue of his being or having
been a Trustee, officer, employee or agent and against amounts paid or
incurred by him in the settlement thereof, in such manner as the Trustees may
provide from time to time in the By-Laws.
(b) The words "claim," "action," "suit," or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal, or other,
including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
Section 5.4. No Bond Required of Trustees. No Trustee shall be obligated
to give any bond or other security for the performance of any of his duties
hereunder.
Section 5.5. No Duty of Investigation; Notice in Trust Instruments,
etc. No purchaser, lender, transfer agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust or a Series thereof
shall be bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by said officer, employee or agent
or be liable for the application of money or property paid, loaned or
delivered to or on the order of the Trustees or of said officer, employee or
agent. Every obligation, contract, instrument, certificate, Share, other
security of the Trust or a Series thereof or undertaking, and every other act
or thing whatsoever executed in connection with the Trust shall be
conclusively presumed to have been executed or done by the executors thereof
only
8
in their capacity as officers, employees or agents of the Trust or a Series
thereof. Every written obligation, contract, instrument, certificate, Share,
other security of the Trust or undertaking made or issued by the Trustees
shall recite that the same is executed or made by them not individually, but
as Trustees under the Declaration, and that the obligations of the Trust or a
Series thereof under any such instrument are not binding upon any of the
Trustees or Shareholders, individually, but bind only the Trust Estate (or,
in the event the Trust shall consist of more than one Series, in the case of
any such obligation which relates to a specific Series, only the Series which
is a party thereto), and may contain any further recital which they or he may
deem appropriate, but the omission of such recital shall not affect the
validity of such obligation, contract instrument, certificate, Share,
security or undertaking and shall not operate to bind the Trustees or
Shareholders individually. The Trustees shall at all times maintain insurance
for the protection of the Trust Property, its Shareholders, Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
Section 5.6. Reliance on Experts, etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to
act resulting from reliance in good faith upon the books of account or other
records of the Trust, upon an opinion of counsel, or upon reports made to the
Trust by any of its officers or employees or by any Manager, Investment
Adviser, Distributor, Transfer Agent, selected dealers, accountants,
appraisers or other experts or consultants selected with reasonable care by
the Trustees, officers or employees of the Trust, regardless of whether such
counsel or expert may also be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest of
$.01 par value. The number of such shares of beneficial interest authorized
hereunder is unlimited. The Trustees shall have the authority to establish
and designate one or more Series of classes or shares. Each share of any
Series shall represent an equal proportionate share in the assets of that
Series with each other Share in that Series. The Trustees may divide or
combine the shares of any Series into a greater or lesser number of shares in
that Series without thereby changing the proportionate interests in the
assets of that Series. Subject to the provisions of Section 6.9 hereof, the
Trustees may also authorize the creation of additional series of shares (the
proceeds of which may be invested in separate, independently managed
portfolios) and additional classes of shares within any series. All Shares
issued hereunder including, without limitation, Shares issued in connection
with a dividend in Shares or a split in Shares, shall be fully paid and
nonassessable.
Section 6.2. Rights of Shareholders. The ownership of the Trust Property
of every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by
their Shares, and they shall have no right to call for any partition of
division of any property, profits, rights or interests of the Trust nor can
they be called upon to assume any losses of the Trust or suffer an assessment
of any kind by virtue of their ownership of Shares. The Shares shall be
personal property giving only the rights in the Declaration specifically set
forth. The Shares shall not entitle the holder to preference, preemptive,
appraisal, conversion or exchange rights, except as the Trustees may
determine with respect to any series of Shares.
Section 6.3. Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and
each Shareholder from time to time. It is not the intention of the Trustees
to create a general partnership, limited partnership, joint stock
association, corporation, bailment or any form of legal relationship other
than a trust. Nothing in the Declaration shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or members
of a joint stock association.
9
Section 6.4. Issuance of Shares. The Trustees, in their discretion may,
from time to time without vote of the Shareholders, issue Shares of any
Series, in addition to the then issued and outstanding Shares and Shares held
in the treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times and on such
terms as the Trustees may deem best, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection
with the assumption of liabilities) and businesses. In connection with any
issuance of Shares, the Trustees may issue fractional Shares. The Trustees
may from time to time divide or combine the Shares of any Series into a
greater or lesser number without thereby changing the proportionate
beneficial interests in that Series. Contributions to the Trust may be
accepted for, and Shares shall be redeemed as, whole Shares and/or fractions
of a Share as described in the Prospectus.
Section 6.5. Register of Shares. A register shall be kept in respect of
each Series at the principal office of the Trust or at an office of the
Transfer Agent which shall contain the names and addresses of the
Shareholders and the number of Shares of each Series held by them
respectively and a record of all transfers thereof. Such register may be in
written form or any other form capable of being converted into written form
within a reasonable time for visual inspection. Such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled
to receive dividends or distributions or otherwise to exercise or enjoy the
rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or distribution, nor to have notice given to him as herein or
in the By-Laws provided, until he has given his address to the Transfer Agent
or such other officer or agent of the Trustees as shall keep the said
register for entry thereon. It is not contemplated that certificates will be
issued for the Shares; however, the Trustees, in their discretion, may
authorize the issuance of Share certificates and promulgate appropriate rules
and regulations as to their use.
Section 6.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder or by his agent thereunto duly
authorized in writing, upon delivery to the Trustees or the Transfer Agent of
a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as
may reasonably be required. Upon such delivery the transfer shall be recorded
on the register of the Trust. Until such record is made, the Shareholder of
record shall be deemed to be the holder of such Shares for all purposes
hereunder and neither the Trustees nor any Transfer Agent or registrar nor
any officer, employee or agent of the Trust shall be affected by any notice
of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the
Transfer Agent, but until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder
and neither the Trustees nor any Transfer Agent or registrar nor any officer
or agent of the Trust shall be affected by any notice of such death,
bankruptcy or incompetence, or other operation of law, except as may
otherwise be provided by the laws of the Commonwealth of Massachusetts.
Section 6.7. Notices. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his
last known address as recorded on the register of the Trust. Annual reports
and proxy statements need not be sent to a shareholder if: (i) an annual
report and proxy statement for two consecutive annual meetings, or (ii) all,
and at least two, checks (if sent by first class mail) in payment of
dividends or interest and shares during a twelve month period have been
mailed to such shareholder's address and have been returned undelivered.
However, delivery of such annual reports and proxy statements shall resume
once a Shareholder's current address is determined.
Section 6.8. Voting Powers. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Section 2.2 hereof, (ii) for
the removal of Trustees as provided in Section 2.3 hereof, (iii) with respect
to any investment advisory or management contract as provided in Section 4.1,
(iv) with respect to termination of the Trust as provided in Section 9.2, (v)
with respect to any amendment of the Declaration to the extent and as
provided in Section 9.3, (vi) with respect to any merger,
10
consolidation or sale of assets as provided in Section 9.4, (vii) with
respect to incorporation of the Trust to the extent and as provided in
Section 9.5, (viii) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders (provided that Shareholders
of a Series are not entitled to vote in connection with the bringing of a
derivative or class action with respect to any matter which only affects
another Series or its Shareholders), (ix) with respect to any plan adopted
pursuant to Rule 12b-1 (or any successor rule) under the 1940 Act and (x)
with respect to such additional matters relating to the Trust as may be
required by law, the Declaration, the By-Laws or any registration of the
Trust with the Commission (or any successor agency) or any state, or as and
when the Trustees may consider necessary or desirable. Each whole Share shall
be entitled to one vote as to any matter on which it is entitled to vote and
each fractional Share shall be entitled to a proportionate fractional vote,
except that Shares held in the treasury of the Trust as of the record date,
as determined in accordance with the By-Laws, shall not be voted. On any
matter submitted to a vote of Shareholders, all Shares shall be voted by
individual Series except (1) when required by the 1940 Act, Shares shall be
voted in the aggregate and not by individual Series; and (2) when the
Trustees have determined that the matter affects only the interests of one or
more Series, then only the Shareholders of such Series shall be entitled to
vote thereon. The Trustees may, in conjunction with the establishment of any
further Series or any classes of Shares, establish conditions under which the
several series or classes of Shares shall have separate voting rights or no
voting rights. There shall be no cumulative voting in the election of
Trustees. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, the Declaration or the
By-Laws to be taken by Shareholders. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
Section 6.9. Series or Classes of Shares. The following provisions are
applicable regarding the Series of Shares of the Trust established in Section
6.1 hereof and shall be applicable if the Trustees shall establish additional
Series or shall divide the shares of any Series into two or more classes,
also as provided in Section 6.1 hereof, and all provisions relating to the
Trust shall apply equally to each Series thereof except as the context
requires:
(a) The number of authorized shares and the number of shares of each
Series or of each class that may be issued shall be unlimited. The
Trustees may classify or reclassify any unissued shares or any shares
previously issued and reacquired of any Series or class into one or more
Series or one or more classes that may be established and designated from
time to time. The Trustees may hold as treasury shares (of the same or
some other Series or class), reissue for such consideration and on such
terms as they may determine, or cancel any shares of any Series or any
class reacquired by the Trust at their discretion from time to time.
(b) The power of the Trustees to invest and reinvest the Trust
Property shall be governed by Section 3.2 of this Declaration with respect
to any one or more Series which represents the interests in the assets of
the Trust immediately prior to the establishment of any additional Series
and the power of the Trustees to invest and reinvest assets applicable to
any other Series shall be as set forth in the instrument of the Trustees
establishing such series which is hereinafter described.
(c) All consideration received by the Trust for the issue or sale of
shares of a particular Series or class together with all assets in which
such consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to that Series or class for all purposes,
subject only to the rights of creditors, and shall be so recorded upon the
books of account of the Trust. In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any particular Series or
class, the Trustees shall allocate them among any one or more of the
Series or classes established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and
binding upon the shareholders of all Series or classes for all purposes.
No holder of Shares of any Series shall have any claim on or right to any
assets allocated or belonging to any other Series.
11
(d) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series and all
expenses, costs, charges and reserves attributable to that Series. All
expenses and liabilities incurred or arising in connection with a
particular Series, or in connection with the management thereof, shall be
payable solely out of the assets of that Series and creditors of a
particular Series shall be entitled to look solely to the property of such
Series for satisfaction of their claims. Any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series shall be allocated and
charged by the Trustees to and among any one or more of the Series
established and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and equitable.
Each allocation of liabilities, expenses, costs, charges and reserves by
the Trus- tees shall be conclusive and binding upon the holders of all
Series for all purposes. The Trustees shall have full discretion, to the
extent not inconsistent with the 1940 Act, to determine which items shall
be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
shareholders.
(e) The power of the Trustees to pay dividends and make distributions
shall be governed by Section 8.2 of this Declaration with respect to any
one or more Series or classes which represents the interests in the assets
of the Trust immediately prior to the establishment of any additional
Series or classes. With respect to any other Series or class, dividends
and distributions on shares of a particular Series or class may be paid
with such frequency as the Trustees may determine, which may be daily or
otherwise, pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, to the holders
of shares of that Series or class, from such of the income and capital
gains, accrued or realized, from the assets belonging to that Series or
class, as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that Series or class. All dividends and
distributions on shares of a particular Series or class shall be
distributed pro rata to the holders of that Series or class in proportion
to the number of shares of that Series or class held by such holders at
the date and time of record established for the payment of such dividends
or distributions.
(f) The Trustees shall have the power to determine the designations,
preferences, privileges, limitations and rights, including voting and
dividend rights, of each class and Series of Shares.
(g) Subject to compliance with the requirements of the 1940 Act, the
Trustees shall have the authority to provide that the holders of Shares of
any Series or class shall have the right to convert or exchange said
Shares into Shares of one or more Series of Shares in accordance with such
requirements and procedures as may be established by the Trustees.
(h) The establishment and designation of any Series or class of shares
in addition to those established in Section 6.1 hereof shall be effective
upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights,
preferences, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of such Series or
class, or as otherwise provided in such instrument. At any time that there
are no shares outstanding of any particular Series or class previously
established and designated, the Trustees may by an instrument executed by
a majority of their number abolish that Series or class and the
establishment and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration.
(i) Shareholders of a Series shall not be entitled to participate in a
derivative or class action with respect to any matter which only affects
another Series or its Shareholders.
(j) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a
Series shall be entitled to receive his pro rata share of distributions of
income and capital gains made with respect to such Series. In the event of
the liquidation of a particular Series, the Shareholders of that Series
which has been established and designated and which is being liquidated
shall be entitled to receive, when and as declared by the Trustees, the
excess of the assets belonging to that Series over the liabilities
belonging to that Series. The holders of Shares of any Series shall not be
entitled hereby to any distribution upon
12
liquidation of any other Series. The assets so distributable to the
Shareholders of any Series shall be distributed among such Shareholders in
proportion to the number of Shares of that Series held by them and
recorded on the books of the Trust. The liquidation of any particular
Series in which there are Shares then outstanding may be authorized by an
instrument in writing, without a meeting, signed by a majority of the
Trustees then in office, subject to the approval of a majority of the
outstanding voting securities of that Series, as that phrase is defined in
the 1940 Act.
ARTICLE VII
REDEMPTIONS
Section 7.1. Redemptions. Each Shareholder of a particular Series shall
have the right at such times as may be permitted by the Trust to require the
Trust to redeem all or any part of his Shares of that Series, upon and
subject to the terms and conditions provided in this Article VII. The Trust
shall, upon application of any Shareholder or pursuant to authorization from
any Shareholder, redeem or repurchase from such Shareholder outstanding
shares for an amount per share determined by the Trustees in accordance with
any applicable laws and regulations; provided that (a) such amount per share
shall not exceed the cash equivalent of the proportionate interest of each
share or of any class or Series of shares in the assets of the Trust at the
time of the redemption or repurchase and (b) if so authorized by the
Trustees, the Trust may, at any time and from time to time charge fees for
effecting such redemption or repurchase, at such rates as the Trustees may
establish, as and to the extent permitted under the 1940 Act and the rules
and regulations promulgated thereunder, and may, at any time and from time to
time, pursuant to such Act and such rules and regulations, suspend such right
of redemption. The procedures for effecting and suspending redemption shall
be as set forth in the Prospectus from time to time. Payment will be made in
such manner as described in the Prospectus.
Section 7.2. Redemption at the Option of the Trust. Each Share of the
Trust or any Series of the Trust shall be subject to redemption at the option
of the Trust at the redemption price which would be applicable if such Share
were then being redeemed by the Shareholder pursuant to Section 7.1: (i) at
any time, if the Trustees determine in their sole discretion that failure to
so redeem may have materially adverse consequences to the holders of the
Shares of the Trust or of any Series, or (ii) upon such other conditions with
respect to maintenance of Shareholder accounts of a minimum amount as may
from time to time be determined by the Trustees and set forth in the then
current Prospectus of the Trust. Upon such redemption the holders of the
Shares so redeemed shall have no further right with respect thereto other
than to receive payment of such redemption price.
Section 7.3. Effect of Suspension of Determination of Net Asset Value. If,
pursuant to Section 7.4 hereof, the Trustees shall declare a suspension of
the determination of net asset value with respect to Shares of the Trust or
of any Series thereof, the rights of Shareholders (including those who shall
have applied for redemption pursuant to Section 7.1 hereof but who shall not
yet have received payment) to have Shares redeemed and paid for by the Trust
or a Series thereof shall be suspended until the termination of such
suspension is declared. Any record holder who shall have his redemption right
so suspended may, during the period of such suspension, by appropriate
written notice of revocation at the office or agency where application was
made, revoke any application for redemption not honored and withdraw any
certificates on deposit. The redemption price of Shares for which redemption
applications have not been revoked shall be the net asset value of such
Shares next determined as set forth in Section 8.1 after the termination of
such suspension, and payment shall be made within seven (7) days after the
date upon which the application was made plus the period after such
application during which the determination of net asset value was suspended.
Section 7.4. Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New
York Stock Exchange is closed other than customary weekend and holiday
closings, (ii) during which trading on the New York Stock Exchange is
restricted, (iii) during which an emergency exists as a result of which
disposal by the Trust or a Series thereof of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the Trust or a
Series thereof fairly to determine the value of its net assets, or (iv)
during any other period when the Commission may for the
13
protection of security holders of the Trust by order permit suspension of the
rights of redemption or postponement of the date of payment or redemption;
provided that applicable rules and regulations of the Commission shall govern
as to whether the conditions prescribed in (ii), (iii) or (iv) exist. Such
suspension shall take effect at such time as the Trust shall specify but not
later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of
redemption or payment on redemption until the Trust shall declare the
suspension at an end, except that the suspension shall terminate in any event
on the first day on which said stock exchange shall have reopened or the
period specified in (ii) or (iii) shall have expired (as to which in the
absence of an official ruling by the Commission, the determination of the
Trust shall be conclusive). In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the net asset value existing after the termination
of the suspension.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
Section 8.1. Net Asset Value. The net asset value of each outstanding
Share of each Series of the Trust shall be determined on such days and at
such time or times as the Trustees may determine. The method of determination
of net asset value shall be determined by the Trustees and shall be as set
forth in the Prospectus. The power and duty to make the daily calculations
may be delegated by the Trustees to any Investment Adviser, Manager, the
Custodian, the Transfer Agent or such other person as the Trustees by
resolution may determine. The Trustees may suspend the daily determination of
net asset value to the extent permitted by the 1940 Act.
Section 8.2. Distributions to Shareholders. The Trustees shall from time
to time distribute ratably among the Shareholders of the Trust or of any
Series such proportion of the net income, earnings, profits, gains, surplus
(including paid-in surplus), capital, or assets of the Trust or of such
Series held by the Trustees as they may deem proper. Such distribution may be
made in cash or property (including without limitation any type of
obligations of the Trust or of such Series or any assets thereof), and the
Trustees may distribute ratably among the Shareholders of the Trust or of
that Series additional Shares issuable hereunder in such manner, at such
times, and on such terms as the Trustees may deem proper. Such distributions
may be among the Shareholders of record (determined in accordance with the
Prospectus) of the Trust or of such Series at the time of declaring a
distribution or among the Shareholders of record of the Trust or of such
Series at such later date as the Trustees shall determine. The Trustees may
always retain from the net income, earnings, profits or gains of the Trust or
of such Series such amount as they may deem necessary to pay the debts or
expenses of the Trust or of such Series or to meet obligations of the Trust
or of such Series, or as they may deem desirable to use in the conduct of its
affairs or to retain for future requirements or extensions of the business.
The Trustees may adopt and offer to Shareholders of the Trust or of any
Series such dividend reinvestment plans, cash dividend payout plans or
related plans as the Trustees deem appropriate.
Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
Section 8.3. Determination of Net Income. The Trustees shall have the
power to determine the net income of any Series of the Trust and from time to
time to distribute such net income ratably among the Shareholders as
dividends in cash or additional Shares of such Series issuable hereunder. The
determination of net income and the resultant declaration of dividends shall
be as set forth in the Prospectus. The Trustees shall have full discretion to
determine whether any cash or property received by any Series of the Trust
shall be treated as income or as principal and whether any item of expense
shall be charged to the income or the principal account, and their
determination made in good faith shall
14
be conclusive upon the Shareholders. In the case of stock dividends received,
the Trustees shall have full discretion to determine, in the light of the
particular circumstances, how much, if any, of the value thereof shall be
treated as income, the balance, if any, to be treated as principal.
Section 8.4. Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value of the Shares or net income, or the declaration and
payment of dividends and distributions, as they may deem necessary or
desirable to enable the Trust to comply with any provision of the 1940 Act,
or any rule or regulation thereunder, including any rule or regulation
adopted pursuant to Section 22 of the 1940 Act by the Commission or any
securities association registered under the Securities Exchange Act of 1934,
or any order of exemption issued by said Commission, all as in effect now or
hereafter amended or modified. Without limiting the generality of the
foregoing, the Trustees may establish classes or additional Series of Shares
in accordance with Section 6.9.
ARTICLE IX
DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.
Section 9.1. Duration. The Trust shall continue without limitation of time
but subject to the provisions of this Article IX.
Section 9.2. Termination of Trust. (a) The Trust or any Series may be
terminated (i) by a Majority Shareholder Vote at any meeting of Shareholders
of the Trust or the appropriate Series thereof, (ii) by an instrument in
writing, without a meeting, signed by a majority of the Trustees and
consented to by a Majority Shareholder Vote of the Trust or the appropriate
Series thereof, or by such other vote as may be established by the Trustees
with respect to any class or Series of Shares, or (iii) with respect to a
Series as provided in Section 6.9(h). Upon the termination of the Trust or
the Series:
(i) The Trust or the Series shall carry on no business except for the
purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust or
the Series and all of the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust or
the Series, collect its assets, sell, convey, assign, exchange, transfer
or otherwise dispose of all or any part of the remaining Trust Property or
Trust Property allocated or belonging to such Series to one or more
persons at public or private sale for consideration which may consist in
whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and to do all other acts appropriate to
liquidate its business; provided that any sale, conveyance, assignment,
exchange, transfer or other disposition of all or substantially all the
Trust Property or Trust Property allocated or belonging to such Series
shall require Shareholder approval in accordance with Section 9.4 hereof.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property or Trust Property allocated or
belonging to such Series, in cash or in kind or partly each, among the
Shareholders of the Trust according to their respective rights.
Section 9.3. Amendment Procedure. (a) This Declaration may be amended by a
Majority Shareholder Vote, at a meeting of Shareholders, or by written
consent without a meeting. The Trustees may also amend this Declaration
without the vote or consent of Shareholders (i) to change the name of the
Trust or any Series or classes of Shares, (ii) to supply any omission, or
cure, correct or supplement any ambiguous, defective or inconsistent
provision hereof, (iii) if they deem it necessary to conform this Declaration
to the requirements of applicable federal or state laws or regulations or the
requirements of the Internal Revenue Code, or to eliminate or reduce any
federal, state or local taxes which are or may be payable by the Trust or the
Shareholders, but the Trustees shall not be liable for failing to do so, or
15
(iv) for any other purpose which does not adversely affect the rights of any
Shareholder with respect to which the amendment is or purports to be
applicable.
(b) No amendment may be made under this Section 9.3 which would change any
rights with respect to any Shares of the Trust or of any Series of the Trust
by reducing the amount payable thereon upon liquidation of the Trust or of
such Series of the Trust or by diminishing or eliminating any voting rights
pertaining thereto, except with the vote or consent of the holders of
two-thirds of the Shares of the Trust or of such Series outstanding and
entitled to vote, or by such other vote as may be established by the Trustees
with respect to any Series or class of Shares. Nothing contained in this
Declaration shall permit the amendment of this Declaration to impair the
exemption from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon Shareholders.
(c) A certificate signed by a majority of the Trustees or by the Secretary
or any Assistant Secretary of the Trust, setting forth an amendment and
reciting that it was duly adopted by the Shareholders or by the Trustees as
aforesaid or a copy of the Declaration, as amended, and executed by a
majority of the Trustees or certified by the Secretary or any Assistant
Secretary of the Trust, shall be conclusive evidence of such amendment when
lodged among the records of the Trust. Unless such amendment or such
certificate sets forth some later time for the effectiveness of such
amendment, such amendment shall be effective when lodged among the records of
the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by
the affirmative vote of a majority of the Trustees or by an instrument signed
by a majority of the Trustees.
Section 9.4. Merger, Consolidation and Sale of Assets. The Trust or any
Series thereof may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all
or substantially all of the Trust Property or Trust Property allocated or
belonging to such Series, including its good will, upon such terms and
conditions and for such consideration when and as authorized, at any meeting
of Shareholders called for the purpose, by the affirmative vote of the
holders of not less than two-thirds of the Shares of the Trust or such Series
outstanding and entitled to vote, or by an instrument or instruments in
writing without a meeting, consented to by the holders of not less than
two-thirds of such Shares, or by such other vote as may be established by the
Trustees with respect to any series or class of Shares; provided, however,
that, if such merger, consolidation, sale, lease or exchange is recommended
by the Trustees, a Majority Shareholder Vote shall be sufficient
authorization; and any such merger, consolidation, sale, lease or exchange
shall be deemed for all purposes to have been accomplished under and pursuant
to the laws of the Commonwealth of Massachusetts.
Section 9.5. Incorporation. With approval of a Majority Shareholder Vote,
or by such other vote as may be established by the Trustees with respect to
any Series or class of Shares, the Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other
organization to take over all of the Trust Property or the Trust Property
allocated or belonging to such Series or to carry on any business in which
the Trust shall directly or indirectly have any interest, and to sell, convey
and transfer the Trust Property or the Trust Property allocated or belonging
to such Series to any such corporation, trust, partnership, association or
organization in exchange for the shares or securities thereof or otherwise,
and to lend money to, subscribe for the shares or securities of, and enter
into any contracts with any such corporation, trust, partnership, association
or organization in which the Trust or such Series holds or is about to
acquire shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to
the extent permitted by law, as provided under the law then in effect.
Nothing contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to such
organization or entities.
16
ARTICLE X
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit or cause the officers of
the Trust to submit to the Shareholders a written financial report of each
Series of the Trust, including financial statements which shall at least
annually be certified by independent public accountants.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Filing. This Declaration and any amendment hereto shall be
filed in the office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of Massachusetts and
may also be filed or recorded in such other places as the Trustees deem
appropriate. Each amendment so filed shall be accompanied by a certificate
signed and acknowledged by a Trustee or by the Secretary or any Assistant
Secretary of the Trust stating that such action was duly taken in a manner
provided herein. A restated Declaration, integrating into a single instrument
all of the provisions of the Declaration which are then in effect and
operative, may be executed from time to time by a majority of the Trustees
and shall, upon filing with the Secretary of the Commonwealth of
Massachusetts, be conclusive evidence of all amendments contained therein and
may thereafter be referred to in lieu of the original Declaration and the
various amendments thereto.
Section 11.2. Resident Agent. The Prentice-Hall Corporation System, Inc.,
84 State Street, Boston, Massachusetts 02109 is the resident agent of the
Trust in the Commonwealth of Massachusetts.
Section 11.3. Governing Law. This Declaration is executed by the Trustees
and delivered in the Commonwealth of Massachusetts and with reference to the
laws thereof and the rights of all parties and the validity and construction
of every provision hereof shall be subject to and construed according to the
laws of said State.
Section 11.4. Counterparts. The Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument,
which shall be sufficiently evidenced by any such original counterpart.
Section 11.5. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, appears to be a
Trustee hereunder, or Secretary or Assistant Secretary of the Trust,
certifying to: (a) the number or identity of Trustees or Shareholders, (b)
the due authorization of the execution of any instrument or writing, (c) the
form of any vote passed at a meeting of Trustees or Shareholders, (d) the
fact that the number of Trustees or Shareholders present at any meeting or
executing any written instrument satisfies the requirements of this
Declaration, (e) the form of any By-Laws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with
the Trustees and their successors.
Section 11.6. Provisions in Conflict with Law or Regulations. (a) The
provisions of the Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of
the Internal Revenue Code or with other applicable laws and regulations, the
conflicting provisions shall be deemed superseded by such law or regulation
to the extent necessary to eliminate such conflict; provided, however, that
such determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior
to such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
pertain only to such provision in such jurisdiction and shall not in any
manner affect such provision in any other jurisdiction or any other provision
of the Declaration in any jurisdiction.
17
Section 11.7. Use of the name "TCW/DW." Dean Witter Reynolds Inc. ("DWR")
and Trust Company of the West ("TCW") have consented to the use by the Trust
of the identifying name "TCW/DW," which is a property right of DWR and TCW.
The Trust will only use the name "TCW/DW" as a component of its name and for
no other purpose, and will not purport to grant to any third party the right
to use the name "TCW/DW" for any purpose. DWR and TCW, acting jointly, may
use or grant to others the right to use the name "TCW/DW," or any combination
or abbreviation thereof, as all or a portion of a corporate or business name
or for any commercial purpose, including a grant of such right to any other
investment company. At the request of DWR or TCW or their respective parents
or affiliates, the Trust will take such action as may be required to provide
its consent to the use by DWR or TCW or their respective parents or
affiliates, or any corporate affiliate of such parents or affiliates, or by
any person to whom DWR or TCW or their respective parents or affiliates,
shall have granted the right to the use, of the name "TCW/DW," or any
combination or abbreviation thereof. Upon the termination of (i) any
management agreement into which DWR, or any of its affiliates, and the Trust
may enter, (ii) any investment advisory agreement into which TCW and the Fund
may enter, or (iii) the alliance agreement between DWR and TCW under which
DWR and TCW, or affiliates of either, have agreed to provide their respective
services pursuant to contracts with the Trust, the Trust shall, upon request
by DWR or TCW or their respective parents or affiliates, cease to use the
name "TCW/DW" as a component of its name, and shall not use the name, or any
combination or abbreviation thereof, as a part of its name or for any other
commercial purpose, and shall cause its officers, trustees and shareholders
to take any and all actions which DWR or TCW or their respective parents or
affiliates, may request to effect the foregoing and to reconvey to DWR or TCW
or their respective parents or affiliates, any and all rights to such name.
Section 11.8. Principal Place of Business. The principal place of business
of the Trust shall be Two World Trade Center, New York, New York 10048, or
such other location as the Trustees may designate from time to time.
18
IN WITNESS WHEREOF, the undersigned have executed this Declaration of
Trust this day of , 199
/s/ Charles A. Fiumefreddo /s/ Richard M. DeMartini
-------------------------------- --------------------------------
Charles A. Fiumefreddo, as Richard M. DeMartini, as
Trustee and not individually Trustee and not individually
Two World Trade Center Two World Trade Center
New York, New York 10048 New York, New York 10048
/s/ Sheldon Curtis
--------------------------------
Sheldon Curtis, as Trustee
and not individually
Two World Trade Center
New York, New York 10048
STATE OF NEW YORK
} ss:
COUNTY OF NEW YORK
On this 29th day of 1994, RICHARD M. DEMARTINI, CHARLES A. FIUMEFREDDO and
SHELDON CURTIS, known to me and known to be the individuals described in and
who executed the foregoing instrument, personally appeared before me and they
severally acknowledged the foregoing instrument to be their free act and
deed.
/s/ Ruth Rossi
-----------------------------------
Notary Public
Ruth Rossi
Notary Public, State of New York
No. 4978116
Qualified in Westchester County
Certificate Filed in New York County
My commission expires: 2/25, 1995
19
IN WITNESS WHEREOF, the undersigned has executed this instrument this 29th
day of June, 1994.
/s/ Joseph F. Mazzella
-----------------------------------
Joseph F. Mazzella, as Trustee
and not individually
101 Federal Street
Boston, MA 02110
COMMONWEALTH OF MASSACHUSETTS
Suffolk, SS. Boston, MA
June 29, 1994
Then personally appeared before me the above-named Joseph F. Mazzella
who acknowledged the foregoing instrument to be his free act and deed.
/s/ S.M. McCarty
-----------------------------------
Notary Public
My commission expires: 5/31, 1996
20
GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective 08/24/1994, and is between THE CHASE MANHATTAN
BANK, N.A.(the "Bank") and TCW/DW Global Convertible Trust (the "Customer").
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) One or more custody accounts singly, a ("Custody Account") and
collectively, the ("Custody Accounts")for any and all stocks, shares, bonds,
debentures, notes, mortgages or other obligations for the payment of money,
bullion, coin and any certificates, receipts, warrants or other instruments
representing rights to receive, purchase or subscribe for the same or evidencing
or representing any other rights or interests therein and other similar property
whether certificated or uncertificated as may be received by the Bank or its
Subcustodian (as defined in Section 3) for the account of the Customer's
portfolios ("Securities"); and
(b) One or more deposit accounts singly, a ("Deposit Account") and
collectively, the ("Deposit Accounts") for any and all cash in any currency
received by the Bank or its Subcustodian for the account of the Customer's
portfolios, which cash shall not be subject to withdrawal by draft or check.
The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or non-
interest bearing accounts as may be available for the particular currency. To
the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed in
Schedule A of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians"). The Customer authorizes the Bank to hold Assets in
the Accounts in accounts which the Bank has established with one or more of its
branches or Subcustodians. The Bank and Subcustodians are authorized to hold any
of the Securities in their account with any securities depository in which they
participate.
1
The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule A. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
4. Use of Subcustodian.
With respect to Assets credited to the Accounts in the custody of a
Subcustodian:
(a) The Bank will identify such Assets on its books as belonging to
the Customer.
(b) A Subcustodian will hold such Assets together with assets
belonging to other customers of the Bank in accounts identified on such
Subcustodian's books as special custody accounts for the exclusive benefit of
customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only to
the instructions of such Subcustodian acting in accordance with instructions of
the Bank.
(d) Any agreement the Bank enters into with a Subcustodian for
holding its customer's assets shall provide that such assets will not be subject
to any right, charge, security interest, lien or claim of any kind in favor of
such Subcustodian or its creditors including a receiver or trustee in bankruptcy
except for safe custody or administration, and that the beneficial ownership of
such assets will be freely transferable without the payment of money or value
other than for safe custody or administration.
5. Deposit Account Transactions.
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required by
the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its discretion,
may advance the Customer such excess amount which shall be deemed a loan payable
on demand, bearing interest at the rate customarily charged by the Bank on
similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the Deposit Account,
with interest, dividends, redemptions or any other amount due, the Customer will
promptly return any such amount upon oral or written notification: (i) that such
amount has not been received in the ordinary course of business or (ii) that
such amount was incorrectly credited. If the Customer does not promptly return
any amount upon such notification, the Bank shall be entitled, upon oral or
written notification to the Customer, to reverse such credit by debiting the
Deposit Account for the amount previously credited. The Bank or its Subcustodian
shall have no duty or obligation to institute legal proceedings, file a claim or
a proof of claim in any insolvency proceeding or take any other action with
respect to the collection of such amount, but may act for the Customer upon
Instructions after consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the
Bank or its Subcustodian upon receipt by the Bank of Instructions which include
all information required by the Bank. Settlement and payment for Securities
received for, and delivery of Securities out of, the Custody Account may be made
in accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the expectation of
receiving later payment and free delivery. Delivery of Securities out of the
Custody Account may also be made in any manner specifically required by
Instructions acceptable to the Bank.
2
(b) The Bank, in its discretion, may credit or debit the Accounts on
a contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in
its discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related action.
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the credits and debits
of the particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank will
wire instruct each subcustodian to:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items which
call for payment upon presentation, to the extent that the Bank or Subcustodian
is actually aware of such opportunities and hold monies received upon such
presentations for credit to a Deposit Account.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(i) Exchange interim receipts or temporary Securities for definitive
Securities.
(j) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian.
(k) At least monthly and from time to time, issue statements to the
Customer identifying the Assets in the Accounts.
Promptly after the close of business each day, the Bank will send the
Customer an advice or notification of any transfers of Assets to or from the
Accounts during the said day. Such statements, advices or notifications shall
indicate the identity of the entity having custody of the Assets. Unless the
Customer sends the Bank a written exception or objection to any Bank statement
within sixty (60) days of receipt, the Customer shall be deemed to have approved
such statement. In such event, or where the Customer has otherwise approved any
such statement, the Bank shall, to the extent permitted by law, be released,
relieved and discharged with respect to all matters set forth in such statement
or reasonably implied therefrom as though it had been settled by the decree of a
court of competent jurisdiction in an action where the Customer and all persons
having or claiming an interest in the Customer or the Customer's Accounts were
parties.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Customer. The Bank shall have no liability for any loss occasioned by delay in
the actual receipt of notice by the Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which the Bank has agreed to take any action under this Agreement.
8. Corporate Actions; Proxies.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase plans
and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer notice of such Corporate Actions to the extent that the Bank's central
corporate actions department has actual knowledge of a Corporate Action in time
to notify its customers.
3
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person, but if Instructions are
not received in time for the Bank to take timely action, or actual notice of
such Corporate Action was received too late to seek Instructions, the Bank is
authorized to sell such rights entitlement or fractional interest and to credit
the Deposit Account with the proceeds or take any other action it deems, in good
faith, to be appropriate in which case it shall be held harmless for any such
action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing. Such
proxies shall be executed in the appropriate nominee name relating to Securities
in the Custody Account registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted; and where bearer
Securities are involved, proxies will be delivered in accordance with
Instructions.
9. Nominees.
Securities which are ordinarily held in registered form may be registered
in a nominee name of the Bank, Subcustodian or securities depository, as the
case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Securities in the Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated in resolutions
of the Board of Trustees of the Customer, certified to the Bank from time to
time by the Customer's Secretary or Assistant Secretary, to act on behalf of the
Customer under this Agreement. Such persons shall continue to be Authorized
Persons until such time as the Bank receives Instructions from the Customer or
its designated agent that any such employee or agent is no longer an Authorized
Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold the
Bank harmless for the failure of an Authorized Person to send such confirmation
in writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in Instructions
which are consistent with the provisions of this Agreement as follows:
(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank shall be liable to
the Customer for any loss which shall occur as the result of the failure of a
Subcustodian to exercise reasonable care with respect to the safekeeping of such
Assets to the same
4
extent that the Bank would be liable to the Customer if the Bank were holding
such Assets in New York. In the event of any loss to the Customer by reason of
the failure of the Bank or its Subcustodian to utilize reasonable care, the Bank
shall be liable to the Customer only to the extent of the Customer's direct
damages plus interest at the Fed Funds rate of interest from the date of the
loss, to be determined based on the market value of the property which is the
subject of the loss at the date of discovery of such loss and without reference
to any special conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission, default
or for the solvency of any broker or agent which it or a Subcustodian appoints
unless such appointment was made negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without liability to the
Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise within the scope of this Agreement if such act or
omission was in good faith, without negligence. In performing its obligations
under this Agreement, the Bank may rely on the genuineness of any document which
it believes in good faith to have been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes or
other governmental charges, and any related expenses with respect to income from
or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice
of counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
(vi) The Bank need not maintain any insurance for the benefit of the
Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable for
any loss which results from: 1) the general risk of investing, or 2) investing
or holding Assets in a particular country including, but not limited to, losses
resulting from nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear fusion,
fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to the Customer or
an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or
the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any default
in the payment of principal or income of any security other than as provided in
Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person
regarding the financial condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this Agreement;
(v) review or reconcile trade confirmations received from brokers.
The Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations against
Instructions issued to and statements issued by the Bank.
5
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any of
the activities listed herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision of
this Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration of
the Customer's trading and investment activity, the Bank is authorized, at the
request of the Customer, which may include standing instructions, to enter into
spot or forward foreign exchange contracts with the Customer or an Authorized
Person for the Customer and may also provide foreign exchange through its
subsidiaries, affiliates or Subcustodians. Instructions, including standing
instructions, may be issued with respect to such contracts but the Bank may
establish rules or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates or
Subcustodians enter into a foreign exchange contract related to Accounts, the
terms and conditions of the then current foreign exchange contract of the Bank,
its subsidiary, affiliate or Subcustodian and, to the extent not inconsistent,
this Agreement shall apply to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it is a
resident of the United States and agrees to notify the Bank of any changes in
residency. The Bank may rely upon this certification or the certification of
such other facts as may be required to administer the Bank's obligations under
this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. The Bank shall allow the Customer's independent
public accountant reasonable access to the records of the Bank relating to the
Assets as is required in connection with their examination of books and records
pertaining to the Customer's affairs. Subject to restrictions under applicable
law, the Bank shall also obtain an undertaking to permit the Customer's
independent public accountants reasonable access to the records of any
Subcustodian which has physical possession of any Assets as may be required in
connection with the examination of the Customer's books and records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the
Assets deposited in the Accounts are (Check one):
_ Employee Benefit Plan or other assets subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and Exchange
Commission ("SEC") rules and regulations;
6
_ Neither of the above.
This Agreement consists exclusively of this document together with
Schedule A, Exhibits I - and the following Rider(s) [Check applicable
rider(s)]:
__ ERISA
X MUTUAL FUND
__ SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of such provision or provisions under other circumstances or
in other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no failure
or delay on the part of either party in exercising any power or right under this
Agreement operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party of any provision of this Agreement,
or waiver of any breach or default, is effective unless in writing and signed by
the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses or
such other addresses as may subsequently be given to the other party in writing:
Bank: The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center, 18th Fl.
Brooklyn, NY 11245
Attention: Global Custody Division
or telex: ________________________
Customer: Dean Witter InterCapital
2 World Trade Center, 72nd Floor
New York, NY 10048
Attn: Lagal Counsel
or telex: __________________
7
Termination. This Agreement may be terminated by the Customer or the
Bank by giving sixty (60) days written notice to the other, provided that such
notice to the Bank shall specify the names of the persons to whom the Bank will
deliver the Assets in the Accounts. If notice of termination is given by the
Bank, the Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of the persons to
whom the Bank shall deliver the Assets. In either case the Bank will deliver the
Assets to the persons so specified, after deducting any amounts which the Bank
determines in good faith to be owed to it under Section 13. If within sixty (60)
days following receipt of a notice of termination by the Bank, the Bank does not
receive Instructions from the Customer specifying the names of the persons to
whom the Bank shall deliver the Assets, the Bank, at its election, may deliver
the Assets to a bank or trust company doing business in the State of New York to
be held and disposed of pursuant to the provisions of this Agreement, or to
Authorized Persons, or may continue to hold the Assets until Instructions are
provided to the Bank. The obligations of the parties hereto regarding
indemnities shall survive the termination of this Agreement.
CUSTOMER
By
------------------------------
Title
THE CHASE MANHATTAN BANK, N.A.
By
------------------------------
Title
8
STATE OF NEW YORK)
: ss.
COUNTY OF NEW YORK)
On this 24th day of August, 1994, before me personally came David Hughey,
to me known, who being by me duly sworn, did depose and say that he resides in
at New Jersey; that he is Vice President of TCW/DW Global Convertible
Trust, the entity described in and which executed the foregoing instrument; that
he knows the seal of said entity, that the seal affixed to said instrument is
such seal, that it was so affixed by order of said entity, and that he/she
signed his name thereto by like order.
Sworn to before me this 24th day of August, 1994
/s/ Janet A. Herbert
---------------------------
Notary
JANET A. HERBERT
Notrary Public, State of New York
No. 03HE4842266
Qualified in New York County
Commission Expires November 30, 1995
9
STATE OF NEW YORK)
: ss.
COUNTY OF NEW YORK)
On this day of , 19 , before me personally
came , to me known, who being by me duly sworn, did depose and say
that he/she resides in at ;
that he/she is a Vice President of THE CHASE MANHATTAN BANK, (National
Association), the corporation described in and which executed the foregoing
instrument; that he/she knows the seal of said corporation, that the seal
affixed to said instrument is such corporate seal, that it was so affixed by
order of the Board of Directors of said corporation, and that he/she signed
his/her name thereto by like order.
Sworn to before me this __________day of , 19 .
----------------------------------------------------------------------------
Notary
-----------------------------------
10
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
TCW/DW Global Convertible Trust
effective July 14, 1994
Customer represents that the Assets being placed in the Bank's custody
are subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.
Except to the extent that the Bank has specifically agreed to comply
with a condition of a rule, regulation, interpretation promulgated by or under
the authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that the maintenance
of Assets under this Agreement complies with such rules, regulations,
interpretations or exemptive order promulgated by or under the authority of the
Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible foreign
custodian or an eligible foreign securities depository, which are further
defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined in
Rule 17f-5(c)(3) under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution or
trust company incorporated or organized under the laws of a country other than
the United States that is regulated as such by that country's government or
an agency thereof and that has shareholders' equity in excess of $200 million in
U.S. currency (or a foreign currency equivalent thereof), (ii) a majority owned
direct or indirect subsidiary of a qualified U.S. bank or bank holding company
that is incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100 million in
U.S. currency (or a foreign currency equivalent thereof) (iii) a banking
institution or trust company incorporated or organized under the laws of a
country other than the United States or a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is incorporated
or organized under the laws of a country other than the United States which has
such other qualifications as shall be specified in Instructions and approved by
the Bank; or (iv) any other entity that shall have been so qualified by
exemptive order, rule or other appropriate action of the SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws of a
country other than the United States, which operates (i) the central system for
11
handling securities or equivalent book-entries in that country, (ii) a
transnational system for the central handling of securities or equivalent book-
entries, or (iii) any entity that shall have been so qualified by exemptive
order, rule or other appropriate action of the SEC.
The Customer represents that its Board of Directors has approved each of
the Subcustodians listed in Schedule A to this Agreement and the terms of the
standard form of subcustody agreement between the Bank and its Subcustodians and
further represents that its Board has determined that the use of each
Subcustodian and the terms of the standard form of subcustody agreement are
consistent with the best interests of the Customer and its shareholders. The
Bank will supply the Customer with any amendment to Schedule A for approval. The
Customer has supplied or will supply the Bank with certified copies of its Board
of Directors resolution(s) with respect to the foregoing prior to placing Assets
with any Subcustodian so approved.
Section 11. Instructions.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant
to Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is to be
made and Customer shall be solely responsible to assure that Instructions are in
accord with any limitations or restrictions applicable to the Customer by law or
as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise become
payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of Interest, taxes, management or supervisory fees,
distributions or operating expenses on behalf of the Customer;
(g) In connection with any borrowings by the Customer requiring a pledge
of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the Bank, its
Subcustodian or the Customer's transfer agent, such shares to be purchased or
redeemed;
12
(j) For the purpose of redeeming in kind shares of the Customer against
delivery to the Bank, its Subcustodian or the Customer's transfer agent of such
shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement
among the Customer, the Bank and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the Securities previously
deposited. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due other
than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;
(n) For other proper purposes as may be specified in Instructions issued
by an officer of the Customer which shall include a statement of the purpose for
which the delivery or payment is to be made, the amount of the payment or
specific Securities to be delivered, the name of the person or persons to whom
delivery or payment is to be made, and a certification that the purpose is a
proper purpose under the instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section
14(i).
Section 12. Standard of Care; Liabilities.
Add the following subsection (c) to Section 12:
(c) The Bank hereby warrants to the Customer that in its opinion, after
due inquiry, the established procedures to be followed by each of its branches,
each branch of a qualified U.S. bank, each eligible foreign custodian and each
eligible foreign securities depository holding the Customer's Securities
pursuant to this Agreement afford protection for such Securities at least equal
to that afforded by the Bank's established procedures with respect to similar
securities held by the Bank and its securities depositories in New York.
13
Section 14. Access to Records.
Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of internal
accounting controls applicable to the Bank's duties under this Agreement. The
Bank shall endeavor to obtain and furnish the Customer with such similar reports
as it may reasonably request with respect to each Subcustodian and securities
depository holding the Customer's assets.
14
GLOBAL CUSTODY AGREEMENT
with TCW/DW Global Convertible Trust
--------------------------------
(Customer)
dated July 14, 1994
SPECIAL TERMS AND CONDITIONS
15
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 2 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated August
14, 1995, relating to the financial statements and financial highlights of
TCW/DW Global Convertible Trust, which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Financial Highlights" in such
Prospectus and to the references to us under the headings "Independent
Accountants" and "Experts" in such Statement of Additional Information.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
August 14, 1995
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
TCW/DW GLOBAL CONVERTIBLE TRUST
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
_ _
| ______________________ |
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL TOTAL RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
<TABLE>
<CAPTION>
(A)
$1,000 ERV AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED - P 30-Jun-95 TOTAL RETURN YEARS - n TOTAL RETURN - T
----------- ------------- ------------- ---------- -------------------
<S> <C> <C> <C> <C>
31-Oct-94 $1,029.90 2.99% 0.66 NA
</TABLE>
(B) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT
<TABLE>
<CAPTION>
(B)
$1,000 EVb AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Dec-94 TOTAL RETURN YEARS - n COMPOUND RETURN - t
----------- ------------- ------------- ---------- --------------------
<S> <C> <C> <C> <C>
31-Oct-94 $1,012.60 1.26% 0.66 NA
</TABLE>
(C) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(D) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL TOTAL RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
<TABLE>
<CAPTION>
(D) (C)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 30-JUNE-1995 RETURN - TR YEARS - n TOTAL RETURN - t
----------- --------- ------------------- ----------- -----------------
<S> <C> <C> <C> <C>
31-Oct-94 $1,079.90 7.99% 0.66 NA
</TABLE>
(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000
FORMULA: G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION
<TABLE>
<CAPTION>
$10,000 TOTAL (D) GROWTH OF (E) GROWTH OF (F) GROWTH OF
INVESTED - P RETURN - TR $10,000 INVESTMENT - G $50,000 INVESTMENT- G $100,000 INVESTMENT- G
------------ ------------ ----------------------- --------------------- -----------------------
<S> <C> <C> <C> <C>
31-Oct-94 7.99 $10,799 $53,995 $107,990
</TABLE>
TCW\DW GLOBAL CONVERTIBLE TRUST
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
WITH WAIVERS
JUNE 30, 1995
6
YIELD = 2 { [ ((a-b) /cd) +1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2 { [ ((71,162.80 - 14,862.48) / 1,720,849.939 X 10.56) +1] -1}
= 3.76%
TCW\DW GLOBAL CONVERTIBLE TRUST
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
WITHOUT WAIVERS
JUNE 30, 1995
6
YIELD = 2 { [ ((a-b) /cd) +1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2 { [ ((71,162.80 - 47,255.18) / 1,720,849.939 X 10.56) +1] -1}
= 1.58%
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] 8 Months
[FISCAL-YEAR-END] JUN-30-1995
[PERIOD-END] JUN-30-1995
[INVESTMENTS-AT-COST] 15,844,627
[INVESTMENTS-AT-VALUE] 17,132,745
[RECEIVABLES] 339,541
[ASSETS-OTHER] 2,438,332
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 19,910,618
[PAYABLE-FOR-SECURITIES] 718,992
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 318,250
[TOTAL-LIABILITIES] 1,031,242
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 17,938,587
[SHARES-COMMON-STOCK] 1,787,684
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 47,052
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (458,303)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1,346,040
[NET-ASSETS] 18,873,376
[DIVIDEND-INCOME] 41,940
[INTEREST-INCOME] 523,560
[OTHER-INCOME] 0
[EXPENSES-NET] 111,428
[NET-INVESTMENT-INCOME] 454,072
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 1,346,040
[NET-CHANGE-FROM-OPS] 1,341,809
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (407,020)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1,939,734
[NUMBER-OF-SHARES-REDEEMED] (192,686)
[SHARES-REINVESTED] 30,636
[NET-CHANGE-IN-ASSETS] 0
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 0
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 111,428
[AVERAGE-NET-ASSETS] 16,737,513
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] .26
[PER-SHARE-GAIN-APPREC] .54
[PER-SHARE-DIVIDEND] (.24)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.56
[EXPENSE-RATIO] 1.00%
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
