Schedule 14A Information required in proxy statement.
Schedule 14A Information
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High Income Advantage Trust III . . . . . . . . . . . . . . . . .
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HIGH INCOME ADVANTAGE TRUST III
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 22, 1995
The Annual Meeting of Shareholders of HIGH INCOME ADVANTAGE TRUST III (the
"Trust"), an unincorporated business trust organized under the laws of the
Commonwealth of Massachusetts, will be held in the Conference Center,
Forty-Fourth Floor, 2 World Trade Center, New York, New York 10048, on June 22,
1995, at 9:00 a.m., New York City time, for the following purposes:
1. To elect three (3) Trustees to serve until the 1998 Annual Meeting
or until their successors shall have been elected and qualified;
2. To approve or disapprove continuance of the currently effective
Investment Management Agreement with Dean Witter InterCapital Inc.;
3. To ratify or reject the selection of Price Waterhouse LLP as the
Trust's independent accountants for the fiscal year ending January 31, 1996;
and
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Shareholders of record as of the close of business on April 20, 1995 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 is not obtained
at the meeting, 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 Trust'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 the proposal to approve continuance of the Investment Management
Agreement and will vote against any such adjournment those proxies required to
be voted against that proposal.
SHELDON CURTIS,
SECRETARY
April 24, 1995
New York, New York
IMPORTANT
YOU CAN HELP THE TRUST 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.
HIGH INCOME ADVANTAGE TRUST III
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
JUNE 22, 1995
This statement is furnished in connection with the solicitation of proxies
by the Board of Trustees (the "Board") of HIGH INCOME ADVANTAGE TRUST III (the
"Trust"), for use at the Annual Meeting of Shareholders of the Trust to be held
on June 22, 1995 (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 Trustee
and in favor of Proposals 2 and 3 as set forth in the attached Notice of Annual
Meeting of Shareholders. A proxy may be revoked at any time prior to its
exercise by any of the following: written notice of revocation to the Secretary
of the Trust, execution and delivery of a later dated proxy to the Secretary of
the Trust, or attendance and voting at the Meeting.
Shareholders of record as of the close of business on April 20, 1995, the
record date for the determination of shareholders 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 April 20, 1995, there were
outstanding 12,876,779 shares of beneficial interest of the Trust, all with $.01
par value. No person was known to own as much as 5% of the outstanding shares of
the Trust on that date. The Trustees and officers of the Trust, together, owned
less than 1% of the Trust's outstanding shares on that date. The percentage
ownership of shares of the Trust changes from time to time depending on
purchases and sales by shareholders and the total number of shares outstanding.
The cost of soliciting proxies for the Meeting, consisting principally of
printing and mailing expenses, will be borne by the Trust. The solicitation of
proxies will be by mail, which may be supplemented by solicitation by mail,
telephone or otherwise through Trustees and officers of the Trust 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 April 24, 1995.
(1) ELECTION OF TRUSTEES
The number of Trustees has been fixed by the Trustees, pursuant to the
Trust's Declaration of Trust, at ten. At the Meeting, three nominees are to be
elected to the Trust's Board of Trustees. There are presently ten Trustees,
three of whom (Manuel H. Johnson, Paul Kolton and John L. Schroeder) are
standing for election at this Meeting to serve until the 1998 Annual Meeting, in
accordance with the Trust's Declaration of Trust, as amended.
Eight of the current ten Trustees (Jack F. Bennett, Michael Bozic, Edwin J.
Garn, John R. Haire, Manuel H. Johnson, Paul Kolton, Michael E. Nugent and John
L. Schroeder) are "Independent Trustees", that is, Trustees who are not
"interested persons" of the Trust, as that term is defined in the Investment
Company Act of 1940, as
2
amended (the "Act"). The nominees for election as Trustees have been proposed by
the Trustees now serving or, in the case of the nominees for positions as
Independent Trustees, by the Independent Trustees now serving. All of the
Trustees have been elected by the shareholders of the Trust.
The nominees of the Board of Trustees for election as Trustees are listed
below. 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 these nominees: Manuel
H. Johnson, Paul Kolton and John L. Schroeder. 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 Trust knows no reason why any of
said nominees would be unable or unwilling to accept nomination or election.
Trustees 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.
Pursuant to the provisions of the Declaration of Trust, as amended, the
nominees for election as Trustees are divided into three separate classes, each
class having a term of three years. The term of office of one of each of the
three classes will expire each year.
The Board has determined that the nominees for election as Trustee shall be
standing for election as Trustee in each of the three classes of Trustee as
follows: Class I -- Messrs. Bennett, Bozic and Fiumefreddo; Class II -- Messrs.
Johnson, Kolton and Schroeder; and Class III -- Messrs. Garn, Haire, Nugent and
Purcell. Each nominee for Trustee at any Annual Meeting will, if elected, serve
a term of up to approximately three years running for the period assigned to
that class and terminating at the date of the Annual Meeting of Shareholders so
designated by the Board, or any adjournment thereof. As a consequence of this
method of election, the replacement of a majority of the Board could be delayed
for up to two years. As stated above, the Trustees in Class II are standing for
election at this Meeting and, if elected, will serve until the 1998 Annual
Meeting or until their successors shall have been elected and qualified.
The following information regarding each of the nominees for election as
Trustee, and each of the members of the Board includes his principal occupations
and employment for at least the last five years, his age, shares of the Trust
owned, if any, as of April 20, 1995 (shown in parentheses), positions with the
Trust, and directorships or trusteeships in companies which file periodic
reports with the Securities and Exchange Commission, including the 76 investment
companies, including the Trust, for which InterCapital serves as investment
manager or investment adviser (referred to herein as the "Dean Witter Funds")
and the 13 investment companies for which InterCapital's wholly-owned
subsidiary, Dean Witter Services Company Inc. ("DWSC"), serves as manager and
TCW Funds Management, Inc. serves as investment adviser (referred to herein as
the "TCW/DW Funds").
The nominees for Trustee to be elected at this Meeting are:
DR. MANUEL H. JOHNSON, Trustee since July, 1991; age 46; Senior Partner,
Johnson Smick International, Inc., a consulting firm; 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, Trustee since December, 1988; 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
3
the TCW/DW Funds; formerly Chairman of Financial Accounting Standards Advisory
Council; formerly 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.
JOHN L. SCHROEDER, Trustee 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 Witter Funds; Trustee of the
TCW/DW 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 Trustees who are not standing for reelection at this Meeting are:
JACK F. BENNETT, Trustee since December, 1988, age 71; 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 Phillips Electronics N.V., Tandem
Computers Inc. and Massachusetts Mutual Insurance Company; Director or Trustee
of various not-for-profit and business organizations.
MICHAEL BOZIC, Trustee since April, 1994; age 54; 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. ("Sears"); Director or Trustee of
the Dean Witter Funds; Director of Eaglemark Financial Services, Inc., the
United Negro College Fund and Domain Inc. (home decor retailer).
CHARLES A. FIUMEFREDDO,* Trustee since July, 1991; age 61; Chairman, Chief
Executive Officer and Director of InterCapital, DWSC and Dean Witter
Distributors Inc. ("Distributors"); Executive Vice President and Director of
Dean Witter Reynolds Inc. ("DWR"); Chairman, Director or Trustee, President and
Chief Executive Officer of the Dean Witter Funds; Chairman, Chief Executive
Officer and Trustee of the TCW/DW Funds; Chairman and Director of Dean Witter
Trust Company ("DWTC"); Director and/or officer of various Dean Witter, Discover
& Co. ("DWDC") subsidiaries; formerly Executive Vice President and Director of
DWDC (until February, 1993).
EDWIN JACOB (JAKE) GARN, Trustee 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, Trustee since December, 1988; age 70; 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).
MICHAEL E. NUGENT, Trustee 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.
4
PHILIP J. PURCELL,* Trustee 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.
The executive officers of the Trust other than shown above are: Sheldon
Curtis, Vice President, Secretary and General Counsel; David A. Hughey, Vice
President; Robert M. Scanlan, Vice President; Edmund C. Puckhaber, Vice
President; Peter M. Avelar, Vice President; and Thomas F. Caloia, Treasurer. In
addition, Jonathan R. Page and James F. Willison serve as Vice Presidents and
Marilyn K. Cranney, Barry Fink, Lawrence S. Lafer, Lou Anne D. McInnis and Ruth
Rossi serve as Assistant Secretaries. Mr. Curtis is 63 years old and is
currently Senior Vice President, Secretary and General Counsel of InterCapital
and DWSC and Assistant Secretary of DWR; 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 59 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 (November, 1990-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. Mr. Avelar is 35 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. Caloia
is 48 years old and is currently First Vice President of InterCapital and DWSC.
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.
BOARD OF TRUSTEES; RESPONSIBILITIES AND COMPENSATION OF INDEPENDENT TRUSTEES
As mentioned above, the Trust is one of the Dean Witter Funds, a group of
investment companies managed by InterCapital. As noted above, as of the date of
this proxy statement, there are a total of 76 Dean Witter Funds, comprised of
116 portfolios. As of March 31, 1995, the Dean Witter Funds had total net assets
of approximately $62.3 billion and more than five million shareholders.
The Board of Directors or Trustees, consisting of ten (10) directors or
trustees, is the same for each of the Dean Witter Funds. Some of the Funds are
organized as business trusts, others as corporations, but the functions and
duties of directors and trustees are the same. Accordingly, directors and
trustees of the Dean Witter Funds are referred to in this section as Trustees.
Eight Trustees, that is, 80% of the total number, have no affiliation or
business connection with InterCapital or any of its affiliated persons and do
not own any stock or other securities issued by InterCapital's parent
- ------------
* Messrs. Fiumefreddo and Purcell may be deemed "interested persons," as defined
in Section 2(a)(19) of the Act, of the Trust and its Investment Manager, due to
their affiliation with the Investment Manager and/or its affiliated companies.
5
company, DWDC. These are the "disinterested" or "independent" Trustees. Five of
the eight Independent Trustees are also Independent Trustees of the TCW/DW
Funds. As of the date of this proxy statement, there are a total of 13 TCW/DW
Funds. Two of the Funds' Trustees, that is, the management Trustees, are
affiliated with InterCapital.
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 Dean Witter Funds seek as Independent Trustees individuals of
distinction and experience in business and finance, government service 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 Dean Witter Funds have such a
plan, and since all of the Funds' Boards have the same members, the Independent
Trustees effectively control the selection of other Independent Trustees of all
the Dean Witter Funds.
GOVERNANCE STRUCTURE OF THE DEAN WITTER 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 Dean Witter Funds lies between these two
extremes. The Independent Trustees and the Funds' Investment Manager 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 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
6
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.
Committee meetings are sometimes held away from the offices of InterCapital
and sometimes in the Board room of InterCapital. 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.
During the fiscal year ended January 31, 1995, the Board of Trustees of the
Trust held seven meetings, and the Audit Committee, the Committee of the
Independent Trustees and the Derivatives Committee of the Trust held three,
eight and one meetings, respectively. No Trustee attended fewer than 75% of the
meetings of the Board of Trustees, the Audit Committee, the Committee of the
Independent Trustees or the Derivatives Committee held while he served in such
positions.
DUTIES OF CHAIRMAN OF COMMITTEES
The Chairman of the Committees maintains an office at the Funds'
headquarters in New York. He 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 management and other operating
contracts of the Funds and, on behalf of the Committees, conducts negotiations
with the Investment 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 Dean Witter Funds and as an Independent Trustee of
the TCW/DW Funds. The current Committee Chairman has had more than 35 years
experience as a senior executive in the investment company industry.
7
VALUE OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL DEAN WITTER
FUNDS
The Independent Trustees and the Funds' management believe that having the
same Independent Trustees for each of the Dean Witter 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 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 Dean Witter Funds.
COMPENSATION OF INDEPENDENT TRUSTEES
The Trust pays each Independent Trustee an annual fee of $1,200 plus a per
meeting fee of $50 for meetings of the Board of Trustees or committees of the
Board of Trustees attended by the Trustee (the Trust pays the Chairman of the
Audit Committee an annual fee of $1,000 and pays the Chairman of the Committee
of the Independent Trustees an additional annual fee of $2,400, in each case
inclusive of the Committee meeting fees). The Trust also reimburses such
Trustees for travel and other out-of-pocket expenses incurred by them in
connection with attending such meetings. Trustees and officers of the Trust who
are or have been employed by the Investment Manager or an affiliated company
receive no compensation or expense reimbursement from the Trust.
The following table illustrates the compensation paid to the Trust's
Independent Trustees by the Trust for the fiscal year ended January 31, 1995.
TRUST COMPENSATION
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE TRUST
- ----------------------------------------------------------------------------------------------- ---------------
Jack F. Bennett................................................................................ $ 1,950
Michael Bozic.................................................................................. 1,627
Edwin J. Garn.................................................................................. 1,900
John R. Haire.................................................................................. 4,950*
Dr. Manuel H. Johnson.......................................................................... 1,850
Paul Kolton.................................................................................... 1,950
Michael E. Nugent.............................................................................. 1,750
John L. Schroeder.............................................................................. 1,677
<FN>
- ------------
* Of Mr. Haire's compensation from the Trust, $3,400 is paid to him as
Chairman of the Committee of the Independent Trustees ($2,400) and as
Chairman of the Audit Committee ($1,000).
The following table illustrates the compensation paid to the Trust's
Independent Trustees for the calendar year ended December 31, 1994 for services
to the 73 Dean Witter Funds and, in the case of Messrs. Haire, Johnson, Kolton
and Nugent, the 13 TCW/DW Funds that were in operation at December 31, 1994.
With respect
8
to Messrs. Haire, Johnson, Kolton and Nugent, the TCW/DW Funds are included
solely because of a limited exchange privilege between those Funds and five Dean
Witter Money Market Funds. Mr. Schroeder was elected as a Trustee of the TCW/DW
Funds on April 20, 1995.
CASH COMPENSATION FROM DEAN WITTER FUNDS AND TCW/DW FUNDS
FOR SERVICE FOR SERVICE AS TOTAL CASH
AS DIRECTOR OR CHAIRMAN OF COMPENSATION
TRUSTEE AND FOR SERVICE AS COMMITTEES OF FOR SERVICES TO
COMMITTEE MEMBER TRUSTEE AND INDEPENDENT 73 DEAN WITTER
OF 73 DEAN COMMITTEE MEMBER DIRECTORS/ FUNDS
WITTER OF 13 TCW/DW TRUSTEES AND AND 13
NAME OF INDEPENDENT TRUSTEE FUNDS FUNDS AUDIT COMMITTEES TCW/DW FUNDS
- ---------------------------------------- ---------------- ----------------- ------------------ ------------------
Jack F. Bennett......................... $125,761 -- -- $125,761
Michael Bozic........................... 82,637 -- -- 82,637
Edwin J. Garn........................... 125,711 -- -- 125,711
John R. Haire........................... 101,061 $66,950 $225,563** 393,574
Dr. Manuel H. Johnson................... 122,461 60,750 -- 183,211
Paul Kolton............................. 128,961 51,850 34,200*** 215,011
Michael E. Nugent....................... 115,761 52,650 -- 168,411
John L. Schroeder....................... 85,938 -- -- 85,938
<FN>
- ------------
** For the 73 Dean Witter Funds.
*** For the 13 TCW/DW Funds.
As of the date of this proxy statement, the aggregate number of shares of
beneficial interest of the Trust owned by the Trust's officers and Trustees as a
group was less than 1 percent of the Trust's shares of beneficial interest
outstanding.
(2) APPROVAL OR DISAPPROVAL OF CURRENTLY EFFECTIVE
INVESTMENT MANAGEMENT AGREEMENT
The Trust'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 to
its shareholders of all the common shares of DWDC (the parent company of
InterCapital) then owned by Sears.
The Management Agreement was initially approved by the Board of Trustees on
October 30, 1992, and by the shareholders of the Trust at a Special Meeting of
Shareholders held on January 13, 1993. The present Management Agreement
supersedes an earlier management agreement originally entered into by the Trust
with DWR, through its InterCapital Division, and initially approved by the
Board, including a majority of the Independent Trustees, on December 7, 1988 and
last approved by the shareholders of the Trust at their Annual Meeting of
Shareholders held on June 25, 1992. 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
Trustees at a meeting held on October 30, 1992. The terms of the Management
Agreement, including fees payable by the Trust 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
9
the Investment Manager. The terms of the Management Agreement are described
below. The Management Agreement was last approved by the shareholders of the
Trust as a routine matter at their Annual Meeting held on June 15, 1994. The
Management Agreement's continuation until April 30, 1996 was approved by the
Trustees, including a majority of the Independent Trustees, at a meeting of the
Board held on April 20, 1995. In the event shareholders do not approve
continuance of the Management Agreement by the required majority vote at the
forthcoming meeting or any adjournment thereof, the Board of Trustees of the
Trust will take such action as it deems to be in the best interests of the Trust
and its shareholders, which may include calling a special meeting of
shareholders to vote on a new investment management agreement.
In considering whether or not to approve the Management Agreement, the Board
of Trustees 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 Trustees, including all of the Independent Trustees, determined that the
approval of the Management Agreement was in the best interests of the Trust and
its shareholders.
The favorable vote of a majority of the outstanding voting securities of the
Trust 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
Trust 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 INDEPENDENT TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS 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 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 Trust in a manner
consistent with the investment objectives and policies of the Trust and subject
to such other limitations and directions as the Board may, from time to time,
prescribe.
The Management Agreement provides that the Investment Manager shall
continuously manage the assets of the Trust in a manner consistent with the
Trust's investment objectives. The Investment Manager has authority to place
orders for the purchase and sale of portfolio securities on behalf of the Trust
without prior approval of its Trustees. The Trustees review the investment
portfolio at their regular meetings. In addition, the Investment Manager pays
the compensation of the officers of the Trust and provides the Trust with office
space and equipment and such clerical help 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 Trust's shares and the preparation of prospectuses, proxy statements and
reports required to be filed with the 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 investment services and the expenses which the
Investment Manager assumes under the Management Agreement, the Trust pays the
Investment Manager compensation which is computed weekly and payable monthly and
which is determined by applying the following annual rates to the Trust's weekly
net assets: 0.75% of the portion of the average weekly net assets
10
not exceeding $250 million; 0.60% of the portion of average weekly net assets
exceeding $250 million and not exceeding $500 million; 0.50% of the portion of
average weekly net assets exceeding $500 million and not exceeding $750 million;
0.40% of the portion of average weekly net assets exceeding $750 million and not
exceeding $1 billion; and 0.30% of the portion of average weekly net assets
exceeding $1 billion. This fee is higher than that paid by most other investment
companies. Pursuant to the Management Agreement, the Trust accrued to the
Investment Manager total compensation of $653,507 during the fiscal year ended
January 31, 1995. The net assets of the Trust totalled $78,764,635 at January
31, 1995.
Under the Management Agreement, the Trust 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 Trust 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 Trust; brokers'
commissions chargeable to the Trust in connection with portfolio securities
transactions to which the Trust is a party; all taxes, including securities or
commodities issuance and transfer taxes, and fees payable by the Trust to
Federal, state or other governmental agencies; costs and expenses of engraving
or printing certificates representing shares of the Trust; all costs and
expenses in connection with registration and maintenance of registration of the
Trust 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) and the costs and expense of preparing, printing
(including typesetting) and distributing prospectuses for such purposes; all
expenses of shareholders' and Trustees' meetings and of preparing, printing and
mailing proxy statements and reports to shareholders; fees and travel expenses
of Trustees or members of any advisory board or committee who are not employees
of the Investment Manager or any corporate affiliate of the Investment Manager;
all expenses incident to the payment of any dividend or distribution program;
charges and expenses of any outside pricing services; charges and expenses of
legal counsel, including counsel to the Independent Trustees of the Trust, and
independent accountants in connection with any matter relating to the Trust (not
including compensation or expenses of attorneys employed by the Investment
Manager); membership dues of industry associations; interest payable on Trust
borrowings; fees and expenses incident to the listing of the Trust's shares on
any stock exchange; postage; insurance premiums on property or personnel
(including officers and Trustees) of the Trust which inure to its benefit;
extraordinary expenses (including, but not limited to, legal claims,
liabilities, litigation costs and any indemnification related thereto); and all
other charges and costs of the Trust's operations unless otherwise explicitly
provided in the Management Agreement.
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 Trust or by the Trustees of the Trust, and, in either
event, by the vote cast in person by a majority of the Trustees 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, 1996 was
approved by the Trustees, including a majority of the Independent Trustees, at a
Meeting of the Trustees held on April 20, 1995, called for the purpose of
approving the Management Agreement.
The Management Agreement also provides that it may be terminated at a any
time by the Investment Manager, the Trustees of the Trust or by a vote of a
majority of the outstanding voting securities of the Trust, in each instance
without the payment of any penalty, on thirty days' notice and will
automatically terminate upon any assignment.
11
Effective December 31, 1993, pursuant to a Services Agreement between
InterCapital and its wholly-owned subsidiary, DWSC, DWSC began to provide the
administrative services to the Trust 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
Trust or any of the fees being paid by the Trust for the overall services being
performed under the terms of the Management Agreement.
THE INVESTMENT MANAGER
Dean Witter InterCapital Inc. is the Trust'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 Dean Witter, Discover & Co. ("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.
The Principal Executive Officer 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,
InterCapital, DWSC and DWTC; James F. Higgins, President and Chief Operating
Officer of Dean Witter Financial, Executive Vice President of DWDC and Director
of DWR, Distributors, InterCapital, DWSC and DWTC; 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 Director of InterCapital and DWSC; and Thomas C. Schneider,
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 which have
similar investment objectives to that of the Trust, and sets forth the net
assets of and the fees payable by such companies, including the Trust.
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 January 31, 1995, the Trust accrued to Dean
Witter Trust Company, the Trust's Transfer Agent and an affiliate of the
Investment Manager, transfer agency fees of $57,999.
AFFILIATED BROKER
Because DWR and InterCapital are under the common control of DWDC, DWR is an
affiliated broker of InterCapital. For the fiscal year ended January 31, 1995,
the Trust paid no brokerage commissions to DWR.
12
(3) RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Trustees have unanimously selected the firm of Price Waterhouse LLP as
the Trust's independent accountants for the fiscal year ending January 31, 1996.
Price Waterhouse LLP has been the independent accountants for the Trust since
its inception, and has no direct or indirect financial interest in the Trust.
A representative of Price Waterhouse LLP is expected to be present at the
Annual Meeting of Shareholders and will be available to make a statement, if he
or she so desires, and to respond to appropriate questions of shareholders.
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 Trust.
Abstentions and broker "non-votes" will have the same effect as a vote against
the proposal.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS RATIFY THE
SELECTION OF PRICE WATERHOUSE LLP AS THE INDEPENDENT ACCOUNTANTS FOR THE TRUST.
ADDITIONAL INFORMATION
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Meeting, 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 Trust'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 Two 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 Shareholders must be received no later than December 22, 1995 for
inclusion in the proxy statement for that meeting.
REPORTS TO SHAREHOLDERS
The Trust's most recent Annual Report, for the fiscal year ended January 31,
1995, is available without charge upon request from Adrienne Ryan at Dean Witter
Trust Company, Harborside Financial Center, Plaza Two, Jersey City, New Jersey
07311 (telephone 1-800-526-3143) (toll-free).
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.
By Order of the Board of Trustees
SHELDON CURTIS
SECRETARY
13
APPENDIX
InterCapital serves as investment manager or investment adviser to the Trust
and the other investment companies listed below which have similar investment
objectives to that of the Trust, with the net assets shown as of April 20, 1995:
CURRENT INVESTMENT
NET ASSETS AS OF MANAGEMENT OR
4/20/95 ADVISORY FEE RATE(S)
---------------- ------------------------------
1. DEAN WITTER HIGH YIELD SECURITIES INC.*.......................... $ 438,853,035 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 U.S. GOVERNMENT SECURITIES TRUST*.................... $ 8,154,674,726 0.50% on assets up to $1
billion, scaled down at
various asset levels to 0.30%
on assets over $12.5 billion
3. DEAN WITTER CONVERTIBLE SECURITIES TRUST*........................ $ 175,120,976 0.60% on assets up to $750
million, scaled down at
various asset levels to 0.425%
on assets over $3 billion
4. DEAN WITTER FEDERAL SECURITIES TRUST*............................ $ 826,572,292 0.55% on assets up to $1
billion, scaled down at
various asset levels to 0.35%
on assets over $12.5 billion
5. INTERCAPITAL INCOME SECURITIES INC.**............................ $ 210,167,361 0.50%
6. HIGH INCOME ADVANTAGE TRUST**.................................... $ 154,287,730 0.75% on assets up to $250
million, scaled down at
various asset levels to 0.30%
on assets over $1 billion
7. HIGH INCOME ADVANTAGE TRUST II**................................. $ 206,809,961 0.75% on assets up to $250
million, scaled down at
various asset levels to 0.30%
on assets over $1 billion
8. HIGH INCOME ADVANTAGE TRUST III**................................ $ 79,974,802 0.75% on assets up to $250
million, scaled down at
various asset levels to 0.30%
on assets over $1 billion
9. DEAN WITTER INTERMEDIATE INCOME SECURITIES*...................... $ 230,612,598 0.60% on assets up to $500
million, scaled down at
various asset levels to 0.30%
on assets over $1 billion
10. DEAN WITTER WORLD WIDE INCOME TRUST*............................. $ 159,473,918 0.75% on assets up to $250
million, scaled down at
various asset levels to 0.30%
on assets over $1 billion
11. DEAN WITTER GOVERNMENT INCOME TRUST**............................ $ 476,130,376 0.60%
12. DEAN WITTER GLOBAL SHORT - TERM INCOME FUND INC.*................ $ 129,796,721 0.55% on assets up to $500
million and 0.50% on assets
over $500 million
A-1
CURRENT INVESTMENT
NET ASSETS AS OF MANAGEMENT OR
4/20/95 ADVISORY FEE RATE(S)
---------------- ------------------------------
13. DEAN WITTER PREMIER INCOME TRUST*................................ $ 35,166,458 0.50% (of which 40% is paid to
a Sub-Adviser)
14. DEAN WITTER SHORT - TERM U.S. TREASURY TRUST*.................... $ 277,511,785 0.35%
15. DEAN WITTER DIVERSIFIED INCOME TRUST*............................ $ 466,640,994 0.40%
16. DEAN WITTER SHORT-TERM BOND FUND*................................ $ 29,742,930 0.70%(1)
17. DEAN WITTER HIGH INCOME SECURITIES*.............................. $ 181,832,098 0.50%
18. PRIME INCOME TRUST**............................................. $ 381,155,066 0.90% on assets up to $500
million and 0.85% on assets
over $500 million
19. DEAN WITTER BALANCED INCOME FUND*................................ $ 2,194,981 0.60%(2)
20. DEAN WITTER RETIREMENT SERIES:*
(a) U.S. GOVERNMENT SECURITIES SERIES............................ $ 3,240,085 0.65%(3)
(b) INTERMEDIATE INCOME SECURITIES SERIES........................ $ 671,652 0.65%(3)
21. DEAN WITTER VARIABLE INVESTMENT SERIES:***
(a) QUALITY INCOME PLUS PORTFOLIO................................ $ 441,273,212 0.50% on assets up to
$500 million and 0.45% on
assets over $500 million
(b) HIGH YIELD PORTFOLIO......................................... $ 126,196,148 0.50%
22. DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES:***
(a) DIVERSIFIED INCOME PORTFOLIO................................. $ 1,206,066 0.40%(4)
(b) NORTH AMERICAN GOVERNMENT SECURITIES PORTFOLIO............... $ 226,647 0.65%(4) (of which 40% is paid
to a Sub-Adviser)
<FN>
- -------------
* Open-end investment company.
** Closed-end investment company.
*** Open-end investment company offered only to life insurance companies in
connection with variable annuity and/or variable life insurance contracts.
(1) InterCapital has undertaken to assume all operating expenses of Dean Witter
Short-Term Bond Fund (except for any brokerage fees) and to waive the
compensation provided for in its investment management agreement with that
company until June 30, 1995.
(2) InterCapital has undertaken to assume all operating expenses of Dean Witter
Balanced Income Fund (except for any brokerage fees) and to waive the
compensation provided for in its investment management agreement with that
company until such time as that company has $50 million of net assets or
until September 27, 1995, whichever occurs first.
(3) InterCapital has undertaken to assume all operating expenses of the Series
of Dean Witter Retirement Series (except for any brokerage fees and a
portion of organizational expenses) and to waive the compensation provided
for in its investment management agreement with that company in respect of
each Series until such time as the pertinent Series has $50 million of net
assets or until July 31, 1995, whichever occurs first.
(4) InterCapital has undertaken to assume all operating expenses of the
Portfolios of Dean Witter Select Dimensions Investment Series (except for
any brokerage fees and a portion of organizational expenses) and to waive
the compensation provided for in its investment management agreement with
that company in respect of each Portfolio until such time as the pertinent
Portfolio has $50 million of net assets or until December 31, 1995,
whichever occurs first.
A-2
HIGH INCOME ADVANTAGE TRUST III
ANNUAL MEETING OF SHAREHOLDERS -- JUNE 22, 1995
PROXY
The undersigned hereby appoints ROBERT M. SCANLAN, EDMUND C. PUCKHABER,
SHELDON CURTIS, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Annual Meeting of Shareholders of High
Income Advantage Trust III on June 22, 1995 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 April 24, 1995 as follows:
THIS PROXY IS SOLICITED BY THE TRUSTEES. IF NO SPECIFICATION IS MADE ON
REVERSE SIDE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR TRUSTEE AND FOR THE
PROPOSALS.
(Continued, and to be dated and signed on reverse side.)
PLEASE MARK BOXES / / OR /X/ IN BLUE OR BLACK INK.
1 ELECTION OF TRUSTEES: / / FOR ALL NOMINEES / / WITHHOLD AUTHORITY
(except as marked to the (to vote for all nominees
contrary below) listed below)
Manuel H. Johnson, Paul Kolton and 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 3 RATIFICATION OF APPOINTMENT
MANAGEMENT AGREEMENT: OF PRICE WATERHOUSE LLP
AS INDEPENDENT ACCOUNTANTS:
/ / FOR / / AGAINST / / / / FOR / / AGAINST / /
ABSTAIN ABSTAIN
and in their discretion in the transaction of any other business
which may properly come before the meeting.
096
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
Incorporations.
Dated
---------------------------------
---------------------------------
Signature
---------------------------------
Signature
IMPORTANT: PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE.