<PAGE>
Schedule 14A Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Preliminary Additional Materials
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.149-11(c) or
Section 240.14a-12
InterCapital Income Securities Inc.. . . . . . . . . . . . . . .
(Name of Registrant as Specified in its Charter)
Marilyn K. Cranney . . . . . . . . . . . . . . . . . . . . . . .
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(j)(1), or
14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(j)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(j)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2) Aggregate number of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4) Proposed maximum aggregate value of transaction:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2) Form, Schedule or Registration Statement No.:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3) Filing Party:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4) Date Filed:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ce01\14a.94
<PAGE>
[TEXT]
<PAGE>
INTERCAPITAL INCOME SECURITIES INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 22, 1994
The Annual Meeting of Stockholders of INTERCAPITAL INCOME SECURITIES INC.
(the "Fund"), a Maryland corporation, will be held in the Conference Center,
Forty-Fourth Floor, 2 World Trade Center, New York, New York 10048, on
December 22, 1994, at 9:00 a.m., New York City time, for the following
purposes:
1. To elect ten (10) Directors to serve until the next Annual Meeting or
until their successors shall have been elected and qualified;
2. To approve or disapprove the continuance of the Fund's currently
effective Investment Management Agreement with Dean Witter InterCapital Inc.;
3. To ratify or reject the selection of Price Waterhouse LLP as the Fund's
independent accountants for the fiscal year ending September 30, 1995; and
4. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
Stockholders of record as of the close of business on October 20, 1994 are
entitled to notice of and to vote at the Meeting. If you cannot be present in
person, your management would greatly appreciate your filling in, signing and
returning the enclosed proxy promptly in the envelope provided for that
purpose.
In the event that the necessary quorum to transact business at the Meeting
or the vote required to approve or reject any proposal is not obtained, the
persons named as proxies may propose one or more adjournments of the Meeting
for a total of not more than 60 days in the aggregate to permit further
solicitation of proxies. Any such adjournment will require the affirmative
vote of the holders of a majority of the Fund's shares present in person or
by proxy at the meeting. The persons named as proxies will vote in favor of
such adjournment those proxies which have been received by the date of the
Meeting. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of Proposal 2 and will
vote against any such adjournment those proxies required to be voted against
that proposal.
SHELDON CURTIS,
Secretary
November 1, 1994
New York, New York
IMPORTANT
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS
TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE
UNABLE TO BE PRESENT IN PERSON, PLEASE FILL IN, SIGN AND RETURN THE ENCLOSED
PROXY IN ORDER THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING.
THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
1
<PAGE>
<PAGE>
INTERCAPITAL INCOME SECURITIES INC.
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 22, 1994
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors (the "Board") of INTERCAPITAL INCOME SECURITIES
INC. (the "Fund"), for use at the Annual Meeting of Stockholders of the Fund
to be held on December 22, 1994 (the "Meeting"), and at any adjournments
thereof.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon.
Unmarked proxies will be voted for each of the nominees for election as
Director and in favor of Proposals 2 and 3 as set forth in the attached
Notice of Annual Meeting of Stockholders. A proxy may be revoked at any time
prior to its exercise by any of the following: written notice of revocation
to the Secretary of the Fund, execution and delivery of a later dated proxy
to the Secretary of the Fund, or attendance and voting at the Meeting.
Stockholders of record as of the close of business on October 20, 1994,
the record date for the determination of Stockholders entitled to notice of
and to vote at the Meeting, are entitled to one vote for each share held and
a fractional vote for a fractional share. On October 20, 1994, there were
outstanding 12,200,518 shares of common stock of the Fund, all with $.01 par
value. No person was known to own as much as 5% of the outstanding shares of
the Fund on that date. Directors and officers of the Fund, together, owned
less than 1% of the Fund's outstanding shares on that date. The percentage
ownership of shares of the Fund changes from time to time depending on
purchases and sales by stockholders and the total number of shares
outstanding.
The cost of soliciting proxies for the Meeting, consisting principally of
mailing and printing expenses, will be borne by the Fund. The solicitation of
proxies will be by mail, which may be supplemented by solicitation by mail,
telephone or otherwise through Directors and officers of the Fund and
officers and regular employees of Dean Witter InterCapital Inc.
("InterCapital" or the "Investment Manager"), without special compensation
therefor. The first mailing of this proxy statement is expected to be made on
or about November 1, 1994.
(1) ELECTION OF DIRECTORS
The number of Directors has currently been fixed by the Board of Directors
at twelve pursuant to the By-Laws of the Fund. At the Meeting, ten Directors
are to be elected to hold office until the next Annual Meeting of
Stockholders or until their successors shall have been elected and qualified.
There are presently twelve Directors.
Nine of the current twelve Directors (Jack F. Bennett, Michael Bozic,
Edwin J. Garn, John R. Haire, John E. Jeuck, Manuel H. Johnson, Paul Kolton,
Michael E. Nugent and John L. Schroeder) are "Independent Directors", that
is, Directors who are not "interested persons" of the Fund, as that term is
defined in the Investment Company Act of 1940, as amended (the "Act").
Messrs. John E. Jeuck and Edward R. Telling have informed the Fund of their
intention to retire as of the date of the meeting. The nominees for election
as
2
<PAGE>
<PAGE>
Directors have been proposed by the Directors now serving or, in the case of
the nominees for positions as Independent Directors, by the Independent
Directors now serving. Messrs. Bozic, Purcell and Schroeder were elected as
Directors by the other Directors on April 8, 1994. All of the other Directors
have been elected by the Stockholders of the Fund.
The Board has two committees, an Audit Committee and a Committee of the
Independent Directors, consisting, in both cases, of the Independent
Directors. Mr. Haire serves as the Chairman of both Committees. There are no
nominating or compensation committees of the Board.
The functions of the Audit Committee are: recommendation to the Directors
of the engagement or discharge of the Fund's independent accountants;
direction and supervision of investigations into matters within the scope of
the independent accountants' duties, including the power to retain outside
specialists; review with the independent accountants of the audit plan and
results of the auditing engagement; approval of each professional service,
audit and non-audit, provided by the independent accountants and other
accounting firms prior to the performance of such service; review of the
independence of the independent accountants; consideration of the range of
audit and non-audit fees; review of the adequacy of the Fund's system of
internal accounting controls; advice to the independent accountants and
personnel of management that they have direct access to the Committee at all
times; and preparation and submission of Committee meeting minutes to the
full Board.
The functions of the Committee of the Independent Directors are:
recommendation to the full Board of approval of any management, advisory
and/or administration agreements; recommendations to the full Board of any
underwriting and/or distribution agreements; review of the fidelity bond and
premium allocation; review of errors and omissions, uncollectible items of
deposit and any other joint insurance policies and premium allocation; review
of, and monitoring of compliance with, procedures adopted pursuant to certain
rules promulgated under the Act; review of, and monitoring of compliance
with, guidelines and procedures for effecting principal transactions in
certain taxable money market instruments with Dean Witter Reynolds Inc.
("DWR"); and such other duties as the Independent Directors shall, from time
to time, conclude are necessary to carry out their duties under the Act.
It is the intention of the persons named in the enclosed form of proxy to
vote the shares represented by them for the election of the nominees
identified below. Should any of the nominees become unable or unwilling to
accept nomination or election, the persons named in the proxy will exercise
their voting power in favor of such person or persons as the Board may
recommend. All of the nominees have consented to being named in this proxy
statement and to serve if elected. The Fund knows no reason why any of said
nominees would be unable or unwilling to accept nomination or election.
Directors will be elected by a plurality of the votes cast at the Meeting.
Abstentions and broker "non-votes" will have the same effect as a vote
against the proposal.
The following information regarding each of the nominees for election as
Director, and each of the other members of the Board, includes his principal
occupations and employment for at least the last five years, his age, shares
of the Fund owned, if any, as of October 20, 1994 (shown in parentheses),
positions with the Fund, and directorships (or trusteeships) in other
companies which file periodic reports with the Securities and Exchange
Commission, including other investment companies for which InterCapital
serves as investment manager or investment adviser, namely, InterCapital
Quality Municipal Investment Trust, InterCapital Insured Municipal Trust,
InterCapital Quality Municipal Income Trust, InterCapital Quality Municipal
Securities, InterCapital California Quality Municipal Securities,
InterCapital New York Quality Municipal Securities, InterCapital Insured
Municipal Bond Trust, InterCapital Insured Municipal Income Trust,
InterCapital California Insured Municipal Income Trust, InterCapital Insured
Municipal Securities, InterCapital Insured California Municipal Securities,
Dean Witter Government Income Trust, Dean Witter High Yield Securities
3
<PAGE>
<PAGE>
Inc., Dean Witter Liquid Asset Fund Inc., Dean Witter Variable Investment
Series, Dean Witter Select Municipal Reinvestment Fund, Dean Witter U.S.
Government Money Market Trust, Dean Witter U.S. Government Securities Trust,
Dean Witter Tax-Exempt Securities Trust, Dean Witter Tax-Free Daily Income
Trust, Dean Witter American Value Fund, Dean Witter Convertible Securities
Trust, Dean Witter Dividend Growth Securities Inc., Dean Witter Global
Short-Term Income Fund Inc., Dean Witter Natural Resource Development
Securities Inc., Dean Witter Pacific Growth Fund Inc., Dean Witter Federal
Securities Trust, Dean Witter World Wide Investment Trust, Dean Witter
Developing Growth Securities Trust, Dean Witter California Tax-Free Income
Fund, Dean Witter New York Tax-Free Income Fund, Dean Witter Strategist Fund,
Dean Witter Managed Assets Trust, Dean Witter Value-Added Market Series, Dean
Witter Utilities Fund, Dean Witter California Tax-Free Daily Income Trust,
High Income Advantage Trust, High Income Advantage Trust II, High Income
Advantage Trust III, Dean Witter World Wide Income Trust, Dean Witter
Intermediate Income Securities, Dean Witter European Growth Fund Inc., Dean
Witter Precious Metals and Minerals Trust, Dean Witter Capital Growth
Securities, Dean Witter New York Municipal Money Market Trust, Dean Witter
Multi-State Municipal Series Trust, Dean Witter Short-Term U.S. Treasury
Trust, Active Assets California Tax-Free Trust, Active Assets Money Trust,
Active Assets Tax-Free Trust, Active Assets Government Securities Trust, Dean
Witter Diversified Income Trust, Dean Witter Premier Income Trust, Dean
Witter Health Sciences Trust, Dean Witter Retirement Series, Dean Witter
Global Dividend Growth Securities, Dean Witter Limited Term Municipal Trust,
Dean Witter Short-Term Bond Fund, Dean Witter Global Utilities Fund, Dean
Witter National Municipal Trust, Dean Witter High Income Securities, Dean
Witter International SmallCap Fund, Dean Witter Mid-Cap Growth Fund, Dean
Witter Select Dimensions Investment Series, Municipal Income Trust, Municipal
Income Trust II, Municipal Income Trust III, Municipal Income Opportunities
Trust, Municipal Income Opportunities Trust II, Municipal Income
Opportunities Trust III, Prime Income Trust and Municipal Premium Income Tust
(these investment companies, together with the Fund, are referred to herein
collectively as the "Dean Witter Funds"), and investment companies for which
Dean Witter Services Company Inc. ("DWSC"), a wholly-owned subsidiary of
InterCapital, serves as manager and TCW Funds Management, Inc., serves as
investment adviser, namely, TCW/DW Core Equity Trust, TCW/DW North American
Government Income Trust, TCW/DW Latin American Growth Fund, TCW/DW Income and
Growth Fund, TCW/DW SmallCap Growth Fund, TCW/DW North American Intermediate
Income Fund, TCW/DW Balanced Fund, TCW/DW Emerging Markets Opportunities
Trust, TCW/DW Global Convertible Trust, TCW/DW Total Return Trust, TCW/DW
Term Trust 2000, TCW/DW Term Trust 2002 and TCW/DW Term Trust 2003 (the
"TCW/DW Funds").
The nominees for Directors to be elected at the Meeting are:
JACK F. BENNETT, Director since January, 1988; age 70; Retired; Director
or Trustee of the Dean Witter Funds; formerly Senior Vice President and
Director of Exxon Corporation (1975-1989) and Under Secretary of the U.S.
Treasury for Monetary Affairs (1974-1975); Director of Philips Electronics
N.V., Tandem Computers Inc. and Massachusetts Mutual Insurance Co.; Director
or Trustee of various not-for-profit and business organizations.
MICHAEL BOZIC, Director since April, 1994; age 53; President and Chief
Executive Officer of Hills Department Stores (since May, 1991); formerly
Chairman and Chief Executive Officer (January, 1987-August, 1990) and
President and Chief Operating Officer (August, 1990-February, 1991) of the
Sears Merchandise Group of Sears, Roebuck and Co.; Director or Trustee of the
Dean Witter Funds; Director of Harley Davidson Credit Inc., the United Negro
College Fund and Domain Inc. (home decor retailer).
CHARLES A. FIUMEFREDDO,* Director since July, 1991; age 61; Chairman,
Chief Executive Officer and Director of Dean Witter InterCapital Inc.
("InterCapital"), Dean Witter Services Company Inc. ("DWSC") and Dean Witter
Distributors Inc. ("Distributors"); Executive Vice President and Director of
Dean
4
<PAGE>
<PAGE>
Witter Reynolds Inc. ("DWR"); Chairman, Director or Trustee, President and
Chief Executive Officer of the Dean Witter Funds; Chairman, Chief Executive
Officer and Trustee of the TCW/DW Funds; Chairman and Director of Dean Witter
Trust Company ("DWTC"); Director and/or officer of various DWDC subsidiaries;
formerly Executive Vice President and Director of Dean Witter, Discover & Co.
("DWDC") (until February, 1993).
EDWIN JACOB (JAKE) GARN, Director since January, 1993; age 62; Director or
Trustee of the Dean Witter Funds; formerly United States Senator (R-Utah)
(1974-1992) and Chairman, Senate Banking Committee (1980-1986); formerly
Mayor of Salt Lake City, Utah (1971-1974); formerly Astronaut, Space Shuttle
Discovery (April 12-19, 1985); Vice Chairman, Huntsman Chemical Corporation
(since January, 1993); Member of the board of various civic and charitable
organizations.
JOHN R. HAIRE, Director since January, 1983; age 69; Chairman of the Audit
Committee and Chairman of the Committee of the Independent Directors or
Trustees and Director or Trustee of the Dean Witter Funds; Trustee of the
TCW/DW Funds; formerly President, Council for Aid to Education (1978-October,
1989) and Chairman and Chief Executive Officer of Anchor Corporation, an
investment adviser (1964-1978); Director of Washington National Corporation
(insurance) and Bowne & Co., Inc. (printing).
MANUEL H. JOHNSON, Director since July, 1991; age 45; Senior Partner,
Johnson Smick International, Inc., a consulting firm (since June, 1985); Koch
Professor of International Economics and Director of the Center for Global
Market Studies at George Mason University (since September, 1990);
Co-Chairman and a founder of the Group of Seven Council (G7C), an
international economic commission (since September, 1990); Director or
Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds; Director of
Greenwich Capital Markets Inc. (broker-dealer); formerly Vice Chairman of the
Board of Governors of the Federal Reserve System (February, 1986-August,
1990) and Assistant Secretary of the U.S. Treasury (1982-1986).
PAUL KOLTON, Director since July, 1986 (2,410 shares); age 71; Director or
Trustee of the Dean Witter Funds; Chairman of the Audit Committee and Chairman
of the Committee of the Independent Trustees and Trustee of the TCW/DW Funds;
formerly Chairman of Financial Accounting Standards Advisory Council and
Chairman and Chief Executive Officer of the American Stock Exchange; Director
of UCC Investors Holding Inc. (Uniroyal Chemical Company, Inc.); Director or
Trustee of various not-for-profit organizations.
MICHAEL E. NUGENT, Director since July, 1991; age 58; General Partner,
Triumph Capital, L.P., a private investment partnership (since April, 1988);
Director or Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds;
formerly Vice President, Bankers Trust Company and BT Capital Corporation
(September, 1984-March, 1988); Director of various business organizations.
PHILIP J. PURCELL,* Director since April, 1994; age 51; Chairman of the
Board of Directors and Chief Executive Officer of DWDC, DWR and Novus Credit
Services Inc.; Director of InterCapital, DWSC and Distributors; Director or
Trustee of the Dean Witter Funds; Director and/or officer of various DWDC
subsidiaries.
JOHN L. SCHROEDER, Director since April, 1994; age 64; Executive Vice
President and Chief Investment Officer of the Home Insurance Company (since
August, 1991); Director or Trustee of the Dean
- - ----------
* Messrs. Fiumefreddo and Purcell may be deemed "interested persons" as
defined in Section 2(a)(19) of the Act, of the Fund and its Investment
Manager due to their affiliation with the Investment Manager and/or its
affiliated companies.
5
<PAGE>
<PAGE>
Witter Funds; Director of Citizens Utilities Company; formerly Chairman and
Chief Investment Officer of Axe-Houghton Management and the Axe-Houghton
Funds (April, 1983-June, 1991) and President of USF&G Financial Services,
Inc. (June, 1990-June, 1991).
The executive officers of the Fund other than shown above are: Sheldon
Curtis, Vice President, Secretary and General Counsel; Robert M. Scanlan,
Vice President; David A. Hughey, Vice President; Edmund C. Puckhaber, Vice
President; Rochelle G. Siegel, Vice President; and Thomas F. Caloia,
Treasurer. In addition, Peter M. Avelar, Jonathan R. Page and James F.
Willison are Vice Presidents of the Fund and Marilyn K. Cranney, Barry Fink,
Lawrence S. Lafer, Lou Anne D. McInnis and Ruth Rossi serve as Assistant
Secretaries. Mr. Curtis is 62 years old and is currently Senior Vice
President and General Counsel of InterCapital and DWSC and Assistant
Secretary of DWR and DWDC; he is also Senior Vice President, Assistant
Secretary and Assistant General Counsel of Distributors and Senior Vice
President and Secretary of DWTC. Mr. Scanlan is 58 years old and is currently
President and Chief Operating Officer of InterCapital (since March, 1993) and
DWSC; he is also Executive Vice President of Distributors and Executive Vice
President and Director of DWTC. He was previously Executive Vice President of
InterCapital (July, 1992-March, 1993) and prior thereto was Chairman of
Harborview Group Inc. Mr. Hughey is 63 years old and is currently Executive
Vice President and Chief Administrative Officer of InterCapital and DWSC; he
is also Executive Vice President and Chief Administrative Officer of
Distributors and DWTC as well as a Director of DWTC. He was previously
President of DWTC (October, 1989-March, 1993). Mr. Puckhaber is 55 years old
and is currently Executive Vice President of InterCapital (since January,
1991) and Director of DWTC. Ms. Siegel is 46 years old and is currently
Senior Vice President of InterCapital. Mr. Caloia is 48 years old and is
currently First Vice President of InterCapital and Assistant Treasurer of
InterCapital and DWSC. Mr. Avelar is 36 years old and is currently Senior
Vice President of InterCapital. He was previously employed by PaineWebber
Asset Management as a senior portfolio manager (March, 1989-December, 1990).
Mr. Page is 48 years old and is currently Senior Vice President of
InterCapital. Mr. Willison is 51 years old and is currently Senior Vice
President of InterCapital. Other than Messrs. Scanlan and Avelar, each of the
above officers has been an employee of InterCapital or DWR (formerly the
corporate parent of InterCapital) for over five years.
Messrs. Fiumefreddo, Purcell and Telling, who serve as Directors of the
Fund, and certain other officers of the Fund own securities of DWDC which in
the aggregate, constitute less than 1% of the securities of each class
outstanding.
Each of the Independent Directors is paid by the Fund an annual retainer
fee of $1,200 plus $50 for each meeting of the Board of Directors or any
committee of the Board of Directors attended by the Director in person (the
Fund pays the Chairman of the Audit Committee an additional annual fee of
$1,000 and pays the Chairman of the Committee of the Independent Directors an
additional annual fee of $2,400, in each case inclusive of the Committee
meeting fees), together with any out-of-pocket expenses incurred by them in
connection with attendance at any such meetings. The Fund pays no
remuneration to any Director who is not an Independent Director or to any of
the Fund's officers. The Fund has adopted a retirement program under which an
Independent Director who retires after a minimum required period of service
would be entitled to retirement payments upon reaching the eligible
retirement date (normally, after attaining age 72) based upon length of
service and computed as a percentage of one-fifth of the total compensation
earned by such Director for service to the Fund in the five-year period prior
to the date of the Director's retirement. For the fiscal year ended September
30, 1994, the Fund accrued a total of $24,200 for Directors' fees and
expenses and $9,180 for benefits under the retirement program. During the
fiscal year ended September 30, 1994, the Board held seven meetings, and the
Audit Committee and the Committee of the Independent Directors, which are
both presently comprised of the nine Independent Directors, held three
meetings and ten meetings, respectively. During the fiscal year ended
September 30, 1994, no Director attended fewer than 75% of the meetings of
the Board, the Audit Committee and the Committee of the Independent Directors
held while he served in such positions.
6
<PAGE>
<PAGE>
(2) APPROVAL OR DISAPPROVAL OF CURRENTLY EFFECTIVE
INVESTMENT MANAGEMENT AGREEMENT
The Fund's investments are managed by Dean Witter InterCapital Inc.
(referred to herein as the "Investment Manager" or "InterCapital"), pursuant
to an Investment Management Agreement dated June 30, 1993 (referred to herein
as the "Management Agreement") which took effect upon the distribution by
Sears, Roebuck and Co. ("Sears") to its shareholders of all the common shares
of DWDC (the parent company of InterCapital and DWR) then owned by Sears.
The Management Agreement was approved by the Board of Directors on October
30, 1992, and by the stockholders of the Fund at the Annual Meeting of
Stockholders held on January 13, 1993. The present Management Agreement
supersedes an earlier management agreement originally entered into by the
Fund with DWR, through its InterCapital Division, and initially approved by
the Board, including a majority of the Independent Directors, on January 18,
1983 and last approved by the Stockholders of the Fund at their Annual
Meeting of Stockholders on December 30, 1991. In an internal reorganization
which took place in January, 1993, InterCapital assumed the investment
management activities previously performed by the InterCapital Division of
DWR. The assumption by InterCapital of DWR's rights and obligations under
this earlier management agreement in connection with the reorganization was
approved by the Directors at a meeting held on October 30, 1992 and also by
the Stockholders of the Fund at the Annual Meeting of Stockholders on January
13, 1993.
The terms of the Management Agreement, including fees payable by the Fund
thereunder, are substantially identical in all respects to those of the
earlier management agreement except for the dates of effectiveness and
expiration and the name of the Investment Manager. The terms of the
Management Agreement are described below. The Management Agreement's
continuation until April 30, 1995 was approved by the Directors, including a
majority of the Independent Directors, at a meeting of the Board held on
April 8, 1994. In the event Stockholders do not approve continuance of the
Management Agreement by the required majority vote at the forthcoming meeting
or any adjournment thereof, the Board of Directors of the Fund will take such
action as it deems to be in the best interest of the Fund and its
Stockholders, which may include calling a special meeting of Stockholders to
vote on a new investment management agreement.
In considering whether or not to approve the Management Agreement, the
Board of Directors reviewed the terms of the agreement and considered all
materials and information deemed relevant to its determination. Among other
things, the Board considered the nature and scope of services to be rendered,
the quality of the Investment Manager's services and personnel, and the
appropriateness of the fees that are paid under the Management Agreement.
Based upon its review, the Board of Directors, including all of the
Independent Directors, determined that the approval of the Management
Agreement was in the best interests of the Fund and its Stockholders.
The favorable vote of a majority of the outstanding voting securities of
the Fund is required for the approval of the Management Agreement. Such a
majority is defined in the Act as the lesser of: (a) 67% or more of the
shares present at the Meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (b)
more than 50% of the outstanding shares. Abstentions and broker "non-votes"
will have the same effect as a vote against the proposal.
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT THE STOCKHOLDERS APPROVE THE
MANAGEMENT AGREEMENT.
THE MANAGEMENT AGREEMENT
The Management Agreement provides that the Investment Manager shall obtain
and evaluate such information and advice relating to the economy, securities
and commodity markets and securities and
7
<PAGE>
<PAGE>
commodities as it deems necessary or useful to discharge its duties under the
Management Agreement, and that it shall continuously supervise the management
of the assets of the Fund in a manner consistent with the investment
objectives and policies of the Fund and subject to such other limitations and
directions as the Board may, from time to time, prescribe.
Under the Management Agreement, the Fund is obligated to bear all of the
costs and expenses of its operation, except those specifically assumed by the
Investment Manager, including, without limitation: charges and expenses of
any registrar, custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities or commodities and other
property, and any stock transfer or dividend agent or agents appointed by the
Fund; brokers' commissions chargeable to the Fund in connection with
portfolio securities transactions to which the Fund is a party; all taxes,
including securities or commodities issuance and transfer taxes, and
corporate fees payable by the Fund to federal, state or other governmental
agencies; all costs and expenses of engraving or printing of certificates
representing shares of the Fund; all costs and expenses in connection with
registration and maintenance of registration of the Fund and of its shares
with the Securities and Exchange Commission and various states and other
jurisdictions (including filing fees and legal fees and disbursements of
counsel); the cost and expense of printing, including typesetting, and
distributing prospectuses of the Fund to its Stockholders; all expenses of
Stockholders' and Directors' meetings and of preparing, printing and mailing
proxy statements and reports to Stockholders; fees and travel expenses of
Directors or members of any advisory board or committee, who are not
employees of the Investment Manager or any corporate affiliate of the
Investment Manager; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or in cash, charges
and expenses of any outside service used for the pricing of the Fund's
shares, charges and expenses of legal counsel, including counsel to the
Independent Directors of the Fund, and independent accountants in connection
with any matter relating to the Fund (not including compensation or expenses
of attorneys employed by the Investment Manager); association dues; interest
payable on the Fund's borrowings; fees and expenses incident to the listing
of the Fund's shares on any stock exchange; postage; insurance premiums on
property or personnel (including officers and Directors) of the Fund which
inure to its benefit; and extraordinary expenses (including, but not limited
to, legal claims and liabilities and litigation costs and any indemnification
related thereto); and all other charges and costs to the Fund's operations
unless otherwise explicitly provided in the Management Agreement.
The Management Agreement provides that the Investment Manager shall
continuously manage the assets of the Fund in a manner consistent with the
Fund's investment objectives. The Investment Manager has authority to place
orders for the purchase and sale of portfolio securities on behalf of the
Fund without prior approval of its Directors. The Directors review the
investment portfolio at their regular meetings. In addition, the Investment
Manager pays the compensation of the officers of the Fund and provides the
Fund with office space and equipment, and clerical and bookkeeping services
and telephone service, heat, light, power and other utilities. The Investment
Manager also pays for the services of personnel in connection with the
pricing of the Fund's shares and the preparation of prospectuses, proxy
statements and reports required to be filed with federal and state securities
commissions (except insofar as the participation or assistance of independent
accountants and attorneys is, in the opinion of the Investment Manager,
necessary or desirable). In return for its services and the expenses the
Investment Manager assumes under the Management Agreement, the Fund pays the
Investment Manager compensation which is computed and accrued weekly and
payable monthly and which is determined by applying the annual rate of 1/2 of
1% to the Fund's average weekly net assets. The Management Agreement provides
that if operating expenses, including the management fee but excluding
interest, taxes, brokerage commissions and extraordinary expenses (to the
extent permitted by state securities laws or regulations), paid or payable by
the Fund in any fiscal year exceed (a) 1 1/2 % of the first $30 million of
the average weekly net assets of the Fund during such year and 1% of such
average net assets in excess of $30 million; or (b) 25% of the Fund's gross
income for such year the Investment Manager will pay the Fund the
8
<PAGE>
<PAGE>
greater of the excess as computed under (a) or (b). Any such payments will be
made on a monthly basis either by direct payment or by offset against the
monthly fee payable to the Investment Manager. During the fiscal year ended
September 30, 1994, the Fund's expenses did not exceed the limitations noted
above. For the fiscal year ended September 30, 1994, the Fund accrued to the
Investment Manager total compensation of $1,102,842. The net assets of the
Fund totalled $206,525,502 at September 30, 1994.
The Management Agreement had an initial term ending April 30, 1994 and
provides that, after the initial period of effectiveness, it will continue in
effect from year to year thereafter provided such continuance is approved at
least annually by vote of a majority, as defined in the act, of the
outstanding voting securities of the Fund or by the Directors of the Fund,
and, in either event, by the vote cast in person by a majority of the
Directors who are not parties to the Management Agreement or "interested
persons" of any such party (as defined in the Act) at a meeting called for
the purpose of voting on such approval. The Management Agreement's
continuation until April 30, 1995 was approved by the Directors, including a
majority of the Independent Directors, at a Meeting of the Directors held on
April 8, 1994, called for the purpose of approving the Management Agreement.
The Management Agreement also provides that it may be terminated at any
time by the Investment Manager, the Directors or by a vote of a majority of
the outstanding voting securities of the Fund, in each instance without the
payment of any penalty, on thirty days' notice and provides for its automatic
termination in the event of its assignment.
Effective December 31, 1993, pursuant to a Services Agreement between
InterCapital and DWSC, a wholly-owned subsidiary of InterCapital, DWSC began
to provide the administrative services to the Fund which were previously
performed directly by InterCapital. The foregoing internal reorganization did
not result in any change in the nature or scope of the administrative
services being provided to the Fund or any of the fees paid by the Fund for
the overall services being performed under the terms of the Management
Agreement.
THE INVESTMENT MANAGER
Dean Witter InterCapital Inc. is the Fund's investment manager.
InterCapital maintains its offices at Two World Trade Center, New York, New
York 10048. InterCapital, which was incorporated in July, 1992, is a
wholly-owned subsidiary of DWDC, a balanced financial services organization
providing a broad range of nationally marketed credit and investment
products. As noted above, in an internal reorganization which took place in
January, 1993, InterCapital assumed the investment advisory, management and
administrative activities previously performed by the InterCapital Division
of DWR. InterCapital also manages and advises or administers portfolios of
other investment companies and pension plans and other institutional and
individual investors.
The Principal Executive Officers and Directors of InterCapital, and their
principal occupations, are:
Philip J. Purcell, Chairman of the Board of Directors and Chief Executive
Officer of DWDC and DWR and Director of InterCapital, DWSC and Distributors;
Richard M. DeMartini, President and Chief Operating Officer of Dean Witter
Capital, Executive Vice President of DWDC and Director of DWR, Distributors,
DWSC, DWTC and InterCapital; James F. Higgins, President and Chief Operating
Officer of Dean Witter Financial, Executive Vice President of DWDC and
Director of DWR, Distributors, InterCapital, DWTC and DWSC; Charles A.
Fiumefreddo, Executive Vice President and Director of DWR, Chairman of the
Board of Directors, Chief Executive Officer and Director of InterCapital,
DWSC and Distributors and Chairman of the Board of Directors and Director of
DWTC; Christine A. Edwards, Executive Vice President, Secretary and General
Counsel of DWDC, Executive Vice President, Secretary, General Counsel and
Director of DWR, Executive Vice President, Secretary, Chief Legal Officer and
Director of Distributors and a Director of
9
<PAGE>
<PAGE>
InterCapital and DWSC; and Thomas C. Schneider, Executive Vice President and
Chief Financial Officer of DWDC and Executive Vice President, Chief Financial
Officer and Director of DWR, Distributors, InterCapital and DWSC.
The business address of the foregoing Directors and Executive Officers is
Two World Trade Center, New York, New York 10048.
InterCapital and its wholly-owned subsidiary, DWSC, serve in various
investment management, advisory, management and administrative capacities to
investment companies and pension plans and other institutional and individual
investors. The Appendix lists the investment companies for which InterCapital
provides investment management or investment advisory services and sets forth
the net assets and fees payable by such companies.
DWDC has its offices at Two World Trade Center, New York, New York 10048.
There are various lawsuits pending against DWDC involving material amounts
which, in the opinion of its management, will be resolved with no material
effect on the consolidated financial position of the company.
During the fiscal year ended September 30, 1994, the Fund accrued to Dean
Witter Trust Company, the Fund's Transfer Agent and an affiliate of the
Investment Manager, transfer agency fees of $200,528.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Investment Manager currently serves as investment manager to a number
of clients, including other investment companies, and may in the future act
as investment manager or advisor to others. It is the practice of the
Investment Manager to cause purchase and sale transactions to be allocated
among the Fund and others whose assets it manages in such manner as it deems
equitable. In making such allocations among the Fund and other client
accounts, the main factors considered are the respective investment
objectives, the relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of investment
commitments generally held and the opinions of the persons responsible for
managing the portfolios of the Fund and other client accounts.
Subject to the general supervision of the Board, the Investment Manager 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. The Fund expects that the
primary market for the securities in which it invests will generally be the
over-the-counter market. Securities are generally traded on the
over-the-counter market on a "net" basis with non-affiliated 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. Options and
futures transactions will usually be effected through a broker and a
commission will be charged. Purchases of money market instruments are made
from dealers, underwriters and issuers; sales, if any, prior to maturity, are
made to dealers and issuers and the Fund does not normally incur any
brokerage commission expense on such transactions. Money market instruments
are generally traded on a "net" basis with dealers acting as principal for
their own accounts without a stated commission, although the price of the
security usually includes a profit to the dealer. The Fund also expects that
securities will be purchased at times in underwritten offerings where the
price includes a fixed amount of compensation to the underwriter, generally
referred to as the underwriter's concession or discount. When securities are
purchased or sold directly from or to an issuer no commissions or discounts
are paid. On occasion, the Fund may also purchase certain money market
instruments directly from an issuer, in which case no commissions or
discounts are paid.
The policy of the Fund, regarding purchases and sales of securities for
its portfolio is that primary consideration be given to obtaining the most
favorable price and efficient execution of transactions. In seeking to
implement the Fund's policy, the Investment Manager will effect transactions
with those brokers and dealers
10
<PAGE>
<PAGE>
who the Investment Manager believes provide the most favorable prices and are
capable of providing efficient executions. If the Investment Manager believes
such price and execution are obtainable from more than one broker or dealer,
it may give consideration to placing portfolio transactions with those
brokers and dealers who also furnish research and other services to the Fund
or the Investment Manager. Such services may include, but are not limited to,
any one or more of the following: information as to the availability of
securities for purchase or sale, statistical or factual information or
opinions pertaining to investments, wire services and appraisals or
evaluations of portfolio securities. In transactions effected with a dealer,
acting as principal, who furnishes research services to the Fund, the Fund
will not purchase securities at a higher price, or sell securities at a lower
price, than would be the case if the dealer had not furnished such services.
Such information and services received by the Investment Manager from
brokers and dealers may be of benefit to the Investment Manager in the
management of accounts of some or all of their other clients and may not in
all cases benefit the Fund directly. While such services are useful and
important in supplementing its own research facilities, the Investment
Manager believes the value of such services is not determinable and does not
significantly reduce its expenses. The Fund does not reduce the management
fees it pays to the Investment Manager by any amount that may be attributable
to the value of such services. During the fiscal period ended September 30,
1994, the Fund paid no brokerage commissions. During the same period, the
portfolio turnover rate of the Fund was 82%.
Pursuant to an Order of the Securities and Exchange Commission, the Fund
may effect principal transactions in certain money market instruments with
DWR. The Fund will limit its transactions with DWR to U.S. Government and
government agency securities, bank money instruments (i.e., certificates of
deposit and banker's acceptances) and commercial paper. Such transactions
will be effected with DWR only when the price available from DWR is better
than that available from other dealers.
Consistent with the policies 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, including a majority of its Independent Directors,
have adopted procedures which are reasonably designed to provide that any
commissions, fees or other remuneration paid to DWR are consistent with the
foregoing standard. During the fiscal year ended September 30, 1994, the Fund
did not pay any brokerage commissions to DWR.
(3) RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Directors have unanimously selected the firm of Price Waterhouse LLP
as the Fund's independent accountants for the fiscal year ending September
30, 1995. Price Waterhouse LLP has been the independent accountants for the
Fund since its inception, and has no direct or indirect financial interest in
the Fund.
A representative of Price Waterhouse LLP is expected to be present at the
Meeting and will be available to make a statement, if he or she so desires,
and to respond to appropriate questions of Stockholders.
The affirmative vote of the holders of a majority of the shares
represented and entitled to vote at the Annual Meeting is required for
ratification of the selection of Price Waterhouse LLP as the independent
accountants for the Fund. Abstentions and broker "non-votes" will have the
same effect as a vote against the proposal.
11
<PAGE>
<PAGE>
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT STOCKHOLDERS RATIFY THE SELECTION
OF PRICE WATERHOUSE LLP AS THE INDEPENDENT ACCOUNTANTS FOR THE FUND.
ADDITIONAL INFORMATION
In the event that the necessary quorum to transact business at the Meeting
or the vote required to approve or reject any proposal is not obtained, the
persons named as proxies may propose one or more adjournments of the Meeting
for a total of not more than 60 days in the aggregate to permit further
solicitation of proxies. Any such adjournment will require the affirmative
vote of the holders of a majority of the Fund's shares present in person or
by proxy at the meeting. The persons named as proxies will vote in favor of
such adjournment those proxies which they are entitled to vote in favor of
Proposal 2 and will vote against any such adjournment those proxies required
to be voted against that proposal.
SHAREHOLDERS PROPOSALS
Proposals of security holders intended to be presented at the next Annual
Meeting of Stockholders must be received no later than July 17, 1995, for
inclusion in the proxy statement for that meeting.
OTHER BUSINESS
The management knows of no other matters which may be presented at the
Meeting. However, if any matters not now known properly come before the
Meeting, it is the intention of the persons named in the enclosed form of
proxy, or their substitutes, to vote all shares that they are entitled to
vote on any such matter, utilizing such proxy in accordance with their best
judgment on such matters.
FINANCIAL STATEMENTS OF THE INVESTMENT MANAGER
The balance sheet of InterCapital, annexed hereto as an Exhibit, is
required by Rule 20a-2 under the Act. THIS IS NOT A FINANCIAL STATEMENT OF
THE FUND. The Fund's financial statements are set forth in its Annual Report
for the fiscal year ended September 30, 1994, copies of which were previously
sent to Stockholders.
By Order of the Board of Directors
SHELDON CURTIS
Secretary
12
<PAGE>
<PAGE>
APPENDIX
InterCapital serves as investment manager or investment adviser to the
following investment companies, with the net assets shown as of October 20,
1994:
(1) Dean Witter High Yield Securities Inc., with assets of approximately
$460 million, for an investment management fee at an annual rate of 0.50% on
assets up to $500 million, scaled down at various asset levels to 0.30% on
assets over $3 billion; (2) Dean Witter Liquid Asset Fund Inc., with assets
of approximately $8.8 billion, for an investment management fee at an annual
rate of 0.50% on assets up to $500 million, scaled down at various asset
levels to 0.248% on assets over $17.5 billion; (3) Dean Witter Tax-Exempt
Securities Trust, with assets of approximately $1.4 billion, for an
investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various assets levels to 0.325% on assets over $1.25
billion; (4) Dean Witter Tax-Free Daily Income Trust, with assets of
approximately $604 million, for an investment management fee at an annual
rate of 0.50% on assets up to $500 million, scaled down at various asset
levels to 0.25% on assets over $3 billion; (5) Dean Witter American Value
Fund, with assets of approximately $1.5 billion, for an investment management
fee at an annual rate of 0.625% on assets up to $250 million and 0.50% on
assets over $250 million; (6) Dean Witter Dividend Growth Securities Inc.,
with assets of approximately $6.9 billion, for an investment management fee
at an annual rate of 0.625% on assets up to $250 million, scaled down at
various asset levels to 0.325% on assets over $8 billion; (7) Dean Witter
Variable Investment Series, with assets of approximately $2.6 billion, for an
investment management fee at an annual rate of 1.0% (of which 40% is paid to
a Sub-Adviser) of the net assets of each of the European Growth Portfolio and
the Pacific Growth Portfolio, 0.75% of the net assets of the Global Dividend
Growth Portfolio, 0.65% of the net assets of the Capital Growth Portfolio,
0.65% of the net assets of the Utilities Portfolio up to $500 million and
0.55% of the net assets of the Portfolio over $500 million, 0.625% of the net
assets of the Dividend Growth Portfolio up to $500 million and 0.50% of the
net assets of the Portfolio over $500 million, and 0.50% of the net assets of
each of the other five Portfolios; (8) Dean Witter Select Municipal
Reinvestment Fund, with assets of approximately $90 million, for an
investment management fee at an annual rate of 0.50%; (9) Active Assets Money
Trust, with assets of approximately $4.6 billion, for an investment
management fee at an annual rate of 0.50% on assets up to $500 million,
scaled down at various asset levels to 0.25% on assets over $3 billion; (10)
Active Assets Tax-Free Trust, with assets of approximately $1.5 billion, for
an investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3
billion; (11) Active Assets California Tax-Free Trust, with assets of
approximately $300 million, for an investment management fee of 0.50% on
assets up to $500 million, scaled down at various levels to 0.25% on assets
over $3 billion; (12) Active Assets Government Securities Trust, with assets
of approximately $505 million, for an investment management fee at an annual
rate of 0.50% on assets up to $500 million, scaled down at various asset
levels to 0.25% on assets over $3 billion; (13) Dean Witter Natural Resource
Development Securities Inc., with assets of approximately $148 million, for
an investment management fee at an annual rate of 0.625% on assets up to $250
million and 0.50% on assets over $250 million; (14) Dean Witter U.S.
Government Money Market Trust, with assets of approximately $755 million, for
an investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3
billion; (15) Dean Witter Developing Growth Securities Trust, with assets of
approximately $338 million, for an investment management fee at an annual
rate of 0.50% on assets up to $500 million and 0.475% on assets over $500
million; (16) Dean Witter U.S. Government Securities Trust, with assets of
approximately $9.0 billion, for an investment management fee at an annual
rate of 0.50% on assets up to $1 billion, scaled down at various asset levels
to 0.30% on assets over $12.5 billion; (17) Dean Witter California Tax-Free
Income Fund, with assets of approximately $1.1 billion, for an investment
management fee at an annual rate of 0.55% on assets up to $500 million,
scaled down at various asset levels to 0.475% on assets over $1 billion; (18)
Dean Witter New York Tax-Free Income Fund, with assets of approximately $221
million, for an investment management fee at an annual rate of 0.55% on
assets up to
I-1
<PAGE>
<PAGE>
$500 million and 0.525% on assets over $500 million; (19) Dean Witter
Convertible Securities Trust, with assets of approximately $189 million, for
an investment management fee at an annual rate of 0.60% on assets up to $750
million, scaled down at various asset levels to 0.425% on assets over $3
billion; (20) Dean Witter Federal Securities Trust, with assets of
approximately $846 million, for an investment management fee at an annual
rate of 0.55% on assets up to $1 billion, scaled down at various asset levels
to 0.35% on assets over $12.5 billion; (21) InterCapital Income Securities
Inc., with assets of approximately $206 million, for an investment management
fee at an annual rate of 0.50%; (22) Dean Witter Value-Added Market Series,
with assets of approximately $496 million, for an investment management fee
at an annual rate of 0.50% on assets up to $500 million and 0.45% on assets
over $500 million; (23) Dean Witter Utilities Fund, with assets of
approximately $3.0 billion, for an investment management fee at an annual
rate of 0.65% on assets up to $500 million, scaled down at various asset
levels to 0.425% on assets over $5 billion; (24) Dean Witter California
Tax-Free Daily Income Trust, with assets of approximately $250 million, for
an investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3
billion; (25) Dean Witter Managed Assets Trust, with assets of approximately
$361 million, for an investment management fee at an annual rate of 0.60% on
assets up to $500 million and 0.55% on assets over $500 million; (26) High
Income Advantage Trust, with assets of approximately $158 million, for an
investment management fee at an annual rate of 0.75% on assets up to $250
million, scaled down at various asset levels to 0.30% on assets over $1
billion; (27) High Income Advantage Trust II, with assets of approximately
$213 million, for an investment management fee at an annual rate of 0.75% on
assets up to $250 million, scaled down at various asset levels to 0.30% on
assets over $1 billion; (28) High Income Advantage Trust III, with assets of
approximately $82 million, for an investment management fee at an annual rate
of 0.75% on assets up to $250 million, scaled down at various asset levels to
0.30% on assets over $1 billion; (29) Dean Witter Strategist Fund, with
assets of approximately $794 million, for an investment management fee at an
annual rate of 0.60% on assets up to $500 million, scaled down at various
asset levels to 0.50% on assets over $1 billion; (30) Dean Witter
Intermediate Income Securities, with assets of approximately $235 million,
for an investment management fee at an annual rate of 0.60% on assets up to
$500 million, scaled down at various asset levels to 0.30% on assets over $1
billion; (31) Dean Witter World Wide Income Trust, with assets of
approximately $182 million, for an investment management fee at an annual
rate of 0.75% on assets up to $250 million, scaled down at various asset
levels to 0.30% on assets over $1 billion; (32) Dean Witter Government Income
Trust, with assets of approximately $480 million, for an investment
management fee at an annual rate of 0.60%; (33) Dean Witter New York
Municipal Money Market Trust, with assets of approximately $42 million, for
an investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3
billion; (34) Dean Witter European Growth Fund Inc., with assets of
approximately $756 million, for an investment management fee at an annual
rate of 1.0% on assets up to $500 million and 0.95% on assets over $500
million (of which 40% is paid to a Sub-Adviser); (35) Dean Witter Capital
Growth Securities, with assets of approximately $460 million, for an
investment management fee at an annual rate of 0.65% on assets up to $500
million, scaled down at various asset levels to 0.475% on assets over $1.5
billion; (36) Dean Witter Precious Metals and Minerals Trust, with assets of
approximately $79 million, for an investment management fee at an annual rate
of 0.80%; (37) Dean Witter Global Short-Term Income Fund Inc., with assets of
approximately $173 million, for an investment management fee at an annual
rate of 0.55% on assets up to $500 million and 0.50% on assets over $500
million; (38) Dean Witter Pacific Growth Fund Inc., with assets of
approximately $1.5 billion, for an investment management fee at an annual
rate of 1.0% on assets up to $1 billion and 0.95% on assets over $1 billion
(of which 40% is paid to a Sub-Adviser); (39) InterCapital Insured Municipal
Bond Trust, with assets of approximately $116 million, for an investment
management fee at an annual rate of 0.35%; (40) InterCapital Quality
Municipal Investment Trust, with assets of approximately $405 million, for an
investment management fee at an annual rate of 0.35%; (41) InterCapital
Insured Municipal Trust, with assets of approximately $519 million, for an
investment management fee at an annual rate of 0.35%; (42) InterCapital
Quality Municipal
I-2
<PAGE>
<PAGE>
Income Trust, with assets of approximately $807 million, for an investment
management fee at an annual rate of 0.35%; (43) Dean Witter Multi-State
Municipal Series Trust, with assets of approximately $436 million, for an
investment management fee at an annual rate of 0.35% of the net assets of
each Series; (44) Dean Witter Premier Income Trust, with assets of
approximately $45 million, for an investment management fee at an annual rate
of 0.50% (of which 40% is paid to a Sub-Adviser); (45) Dean Witter Short-Term
U.S. Treasury Trust, with assets of approximately $401 million, for an
investment management fee at an annual rate of 0.35%; (46) Dean Witter
Diversified Income Trust, with assets of approximately $405 million, for an
investment management fee at an annual rate of 0.40%; (47) Dean Witter Health
Sciences Trust, with assets of approximately $249 million, for an investment
management fee at an annual rate of 1.0%; (48) Dean Witter Retirement Series,
with assets of approximately $56 million, for an investment management fee at
an annual rate of 1.0% of the net assets of the Global Equity Series, 0.85%
of the net assets of each of the American Value Series, the Capital Growth
Series and the Strategist Series, 0.75% of the net assets of each of the
Dividend Growth Series and the Utilities Series, 0.65% of the net assets of
each of the U.S. Government Securities Series and the Intermediate Income
Securities Series, and 0.50% of the net assets of each of the Liquid Asset
Series, the U.S. Government Money Market Series and the Value-Added Market
Series; (49) InterCapital Insured Municipal Income Trust, with assets of
approximately $652 million, for an investment management fee at an annual
rate of 0.35%; (50) InterCapital California Insured Municipal Income Trust,
with assets of approximately $259 million, for an investment management fee
at an annual rate of 0.35%; (51) Dean Witter Global Dividend Growth
Securities, with assets of approximately $1.7 billion, for an investment
management fee at an annual rate of 0.75%; (52) InterCapital Quality
Municipal Securities, with assets of approximately $408 million, for an
investment management fee at an annual rate of 0.35%; (53) InterCapital
California Quality Municipal Securities, with assets of approximately $215
million, for an investment management fee at an annual rate of 0.35%; (54)
InterCapital New York Quality Municipal Securities, with assets of
approximately $98 million, for an investment management fee at an annual rate
of 0.35%; (55) Dean Witter Limited Term Municipal Trust, with assets of
approximately $114 million, for an investment management fee at an annual
rate of 0.50%; (56) Dean Witter Short-Term Bond Fund, with assets of
approximately $43 million, for an investment management fee at an annual rate
of 0.70%; (57) InterCapital Insured Municipal Securities, with assets of
approximately $135 million, for an investment management fee at an annual
rate of 0.35%; (58) InterCapital Insured California Municipal Securities,
with assets of approximately $60 million, for an investment management fee at
an annual rate of 0.35%; (59) Municipal Income Trust, with assets of
approximately $323 million, for an investment advisory fee at an annual rate
of 0.35% on assets up to $250 million and 0.25% on assets over $250 million;
(60) Municipal Income Trust II, with assets of approximately $279 million,
for an investment advisory fee at an annual rate of 0.40% on assets up to
$250 million and 0.30% on assets over $250 million; (61) Municipal Income
Trust III, with assets of approximately $62 million, for an investment
advisory fee at an annual rate of 0.40% on assets up to $250 million and
0.30% on assets over $250 million; (62) Municipal Income Opportunities Trust,
with assets of approximately $178 million, for an investment advisory fee at
an annual rate of 0.50%; (63) Municipal Income Opportunities Trust II, with
assets of approximately $173 million, for an investment advisory fee at an
annual rate of 0.50%; (64) Municipal Income Opportunities Trust III, with
assets of approximately $104 million, for an investment advisory fee at an
annual rate of 0.50%; (65) Municipal Premium Income Trust, with assets of
approximately $382 million, for an investment advisory fee at an annual rate
of 0.40%; (66) Prime Income Trust, with assets of approximately $316 million,
for an investment advisory fee at an annual rate of 0.90% on assets up to
$500 million and 0.85% on assets over $500 million; (67) Dean Witter Global
Utilities Fund, with assets of approximately $326 million, for an investment
management fee at an annual rate of 0.65%; (68) Dean Witter National
Municipal Securities, with assets of approximately $32 million, for an
investment management fee at an annual rate of 0.35%; (69) Dean Witter High
Income Securities, with assets of approximately $93 million, for an
investment management fee at an annual rate of 0.50%; (70) Dean Witter
International SmallCap Fund, with assets of approximately $99 million, for an
investment management fee at
I-3
<PAGE>
<PAGE>
an annual rate of 1.25%; (71) Dean Witter Mid-Cap Growth Fund, with assets of
approximately $78 million, for an investment management fee at an annual rate
of 0.75% and (72) Dean Witter Select Dimensions Investment Series, a new
investment company, for an investment management fee at an annual rate of
0.625% of the net assets of each of the Dividend Growth Portfolio and the
American Value Portfolio, 0.40% of the net assets of the Diversified Income
Portfolio, 0.50% of the net assets of each of the Money Market Portfolio, the
Value-Added Market Series Portfolio and the Developing Growth Portfolio,
0.65% of the net assets of each of the North American Government Securities
Portfolio and the Utilities Portfolio, 0.75% of the net assets of the
Balanced Portfolio, 0.85% of the net assets of Core Equity Portfolio, 1.00%
of the net assets of the Global Equity Portfolio and 1.25% of the net assets
of the Emerging Markets Portfolio. InterCapital also serves as Investment
Adviser of Dean Witter World Wide Investment Trust and Dean Witter World Wide
Investment Fund, along with Daiwa International Capital Management Corp. and
NatWest Investment Management Limited. Dean Witter World Wide Investment
Trust had assets of approximately $624 million and InterCapital receives an
Investment Adviser's fee at an annual rate of 0.55% of the Trust's daily net
assets up to $500 million and 0.5225% of the Trust's daily net assets over
$500 million. Shares of Dean Witter World Wide Investment Fund, an investment
company organized under the laws of Luxembourg, are not offered for purchase
in the United States or to American citizens outside of the United States.
InterCapital also serves as sub-adviser to Templeton Global Opportunities
Trust, with assets of approximately $517 million, for which it receives a fee
of 0.25% per annum.
I-4
<PAGE>
<PAGE>
EXHIBIT
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders of
Dean Witter InterCapital Inc.:
We have audited the accompanying balance sheet of Dean Witter InterCapital
Inc. (the "Company") (a wholly-owned subsidiary of Dean Witter, Discover &
Co.) as of December 31, 1993. This financial statement is the responsibility
of the Company's management. Our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such balance sheet presents fairly, in all material
respects, the financial position of Dean Witter InterCapital at December 31,
1993 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
February 28, 1994
A-1
<PAGE>
<PAGE>
DEAN WITTER INTERCAPITAL INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
ASSET
Cash and cash equivalents ........................................................... $ 57,810
Management and administration fees receivable ....................................... 27,010
Investments ......................................................................... 7,644
Office facilities, at cost (less accumulated depreciation and amortization of
$5,122) ............................................................................ 3,892
Other assets ........................................................................ 18,176
----------
$114,532
==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Income taxes payable (Note 3) ....................................................... $ 45,545
Dividends payable ................................................................... 12,662
Accrued compensation and employee benefits .......................................... 12,337
Payable to affiliate ................................................................ 4,000
Other liabilities ................................................................... 14,998
----------
Total liabilities ............................................................... 89,532
----------
Stockholder's equity:
Common stock, $.01 par value; 1,000 shares authorized and outstanding ............. --
Additional paid-in capital ......................................................... 10,000
Retained earnings .................................................................. 15,000
----------
Total stockholder's equity ...................................................... 25,000
----------
$114,532
==========
</TABLE>
See notes to consolidated balance sheet.
A-2
<PAGE>
<PAGE>
DEAN WITTER INTERCAPITAL INC.
NOTES TO CONSOLIDATED BALANCE SHEET
1. INTRODUCTION AND BASIS OF PRESENTATION
The consolidated balance sheet includes the accounts of Dean Witter
InterCapital Inc. and its wholly-owned subsidiaries (the "Company"). The
Company is wholly-owned by Dean Witter, Discover & Co. ("DWDC"), which was
formerly a subsidiary of Sears, Roebuck and Co. ("Sears"). All material
intercompany balances and transactions with its subsidiaries have been
eliminated.
On March 1, 1993, DWDC completed an initial public offering of 33.8
million shares of its common stock at $27 per share. This transaction had the
effect of reducing Sears ownership in DWDC to 80.1 percent. On June 30, 1993,
Sears divested its remaining ownership of DWDC's common stock by means of a
special dividend to Sears shareholders.
On December 22, 1993, Dean Witter Reynolds Inc. ("DWR") transferred the
net assets of the Company in the form of a dividend to DWDC. Prior to
December 22, 1993, the Company was wholly-owned by DWR, a wholly-owned
subsidiary of DWDC.
The Company is a registered investment adviser under the Investment
Advisers Act of 1940. The Company sponsors and performs management and
administrative services for mutual funds, principally those sold by DWR ("DWR
funds"). The Company also performs such services for individual,
institutional, trust and estate accounts.
The Company commenced operations in January 1993 and assumed the advisory
business of DWR.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash equivalents consist of highly liquid investments not held for resale
with maturities, when purchased, of three months or less.
Fixed assets are generally depreciated utilizing accelerated methods over
useful lives of five to eight years. Leasehold improvements are amortized
over the lesser of the lease term or useful life.
3. INCOME TAXES
The Company provides deferred income taxes which result from recording
certain transactions in different years for tax and financial reporting
purposes.
Payments for income taxes are limited to those which would result from the
Company filing a separate federal income tax return.
The Company has available net operating loss carryforwards at December 31,
1993 in the amount of $112,200,000 which begin to expire in 2002.
4. RELATED PARTY TRANSACTIONS
Certain administrative services are provided by DWR which are reimbursed
by the Company.
5. EMPLOYEE BENEFIT PLANS
Substantially all employees are covered by a non-contributory defined
benefit pension plan sponsored by DWR. Pension benefits are based on length
of service and average annual compensation.
A-3
<PAGE>
<PAGE>
Certain employees are covered by postretirement plans sponsored by DWR
that provide medical and life insurance for retirees and eligible dependents.
Eligibility for retiree medical and life benefits is generally based on a
combination of age and years of service at retirement.
The Company reimburses DWR for pension and other postretirement benefit
expenses.
6. LITIGATION
The Company has been named as a defendant in various lawsuits. It is the
opinion of management, after consultation with outside counsel, that the
resolution of such suits will not have a material adverse effect on the
consolidated financial condition of the Company.
7. FINANCIAL INSTRUMENTS FAIR VALUE INFORMATION
The estimated fair value amounts of financial instruments have been
determined by the Company using available market information and appropriate
valuation methodologies. Considerable judgment is required to develop
estimates of fair value.
Substantially all financial instruments on the Company's consolidated
balance sheet are carried at fair value or at amounts which approximate fair
value.
A-4
<PAGE>
<PAGE>
INTERCAPITAL INCOME SECURITIES INC.
ANNUAL MEETING OF STOCKHOLDERS--DECEMBER 22, 1994
PROXY
The undersigned hereby appoints SHELDON CURTIS, EDMUND C. PUCKHABER,
ROBERT M. SCANLAN, or any of them, proxies, each with the power of
substitution, to vote on behalf of the undersigned at the Annual Meeting of
Stockholders of INTERCAPITAL INCOME SECURITIES INC. on December 22, 1994 at
9:00 a.m., New York City time, and at any adjournment thereof, on the
proposals set forth in the Notice of Meeting dated November 1, 1994 as
follows:
THIS PROXY IS SOLICITED BY THE DIRECTORS. IF NO SPECIFICATION IS MADE ON
REVERSE SIDE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTORS AND FOR
THE PROPOSALS.
(Continued, and to be dated and signed on reverse side.)
<PAGE>
<PAGE>
PLEASE MARK BOXES [//] OR [X] IN BLUE OR BLACK INK.
1. ELECTION OF DIRECTORS:
[ ] FOR ALL NOMINEES
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
(to vote for all nominees)
Jack F. Bennett, Michael Bozic, Charles A. Fiumefreddo, Edwin J. Garn, John
R. Haire, Manuel H. Johnson, Paul Kolton, Michael E. Nugent, Philip J. Purcell,
John L. Schroeder
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
- - -----------------------------------------------------------------------------
2. APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. RATIFICATION OF APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
098
and in their discretion in the transaction of any other business which may
properly come before the meeting.
Please sign personally. If the share is registered in more than one name,
each joint owner or each fiduciary should sign personally. Only authorized
officers should sign for corporations.
Dated
- - -----------------------------------------------------------------------------
- - -----------------------------------------------------------------------------
Signature
- - -----------------------------------------------------------------------------
Signature
IMPORTANT: PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE.
