MORGAN STANLEY DEAN WITTER MID-CAP EQUITY TRUST, 497, 2000-02-07

MORGAN STANLEY DEAN WITTER MID-CAP EQUITY TRUST
497, 2000-02-07

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<PAGE>

Filed Pursuant to Rule 497(e)
Registration File No.: 33-63685

PROSPECTUS - JANUARY 28, 2000

MORGAN STANLEY DEAN WITTER

----------------------------------------------------------------

MID-CAP EQUITY TRUST

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A MUTUAL FUND THAT SEEKS LONG-TERM CAPITAL APPRECIATION

The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus.
Any representation to the contrary is a criminal offense.

<PAGE>

CONTENTS

The Fund Investment Objective .............................1

Principal Investment Strategies ..................1

Principal Risks ..................................2

Past Performance .................................3

Fees and Expenses ................................4

Additional Investment Strategy Information .......5

Additional Risk Information ......................6

Fund Management ..................................7

Shareholder Information Pricing Fund Shares ..............................9

How to Buy Shares ................................9

How to Exchange Shares ..........................11

How to Sell Shares ..............................13

Distributions ...................................15

Tax Consequences ................................15

Share Class Arrangements ........................16

Financial Highlights .................................................24

Our Family of Funds ...................................Inside Back Cover

This Prospectus contains important information about
the Fund. Please read it carefully and keep it for
future reference.

<PAGE>

THE FUND

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INVESTMENT OBJECTIVE
- --------------------------------
Morgan Stanley Dean Witter Mid-Cap Equity Trust (the "Fund") seeks long-term
capital appreciation.

[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
- -------------------------------
(side bar)
CAPITAL APPRECIATION
An investment objective having the goal of selecting securities with the
potential to rise in price rather than pay out income.
(end sidebar)

The Fund will normally invest at least 65% of its total assets in a portfolio of
common stocks and convertible securities of medium-sized companies with market
capitalizations, at the time of purchase, within the capitalization range of the
companies comprising the Standard & Poor's Mid-Cap 400 Index, which
capitalization range is approximately between $165 million and $37 billion as of
December 31, 1999. The Fund's "Sub-Advisor," TCW Investment Management Company,
invests the Fund's assets in companies that it believes exhibit superior
earnings growth prospects and attractive stock market valuations. In buying and
selling securities for the Fund's portfolio, the Sub-Advisor uses its
proprietary research in pursuing a "bottom-up" investment philosophy, which
emphasizes individual company selection. Quantitative and qualitative standards
also will be used to screen more than one thousand companies to provide a list
of potential investment securities. The Sub-Advisor then subjects the list of
securities to a fundamental analysis which generally looks for at least some of
the following factors:

o a demonstrated record of consistent earnings growth or the potential to
grow earnings;

o an ability to earn an attractive return on equity;

o a price/earnings ratio which is less than the Sub-Advisor's internally
estimated three-year earnings growth rate;

o a large and growing market share;

o a strong balance sheet; and

o significant ownership by management and a strong management team.

Common stock is a share ownership or equity interest in a corporation. It may or
may not pay dividends, as some companies reinvest all of their profits back into
their businesses, while others pay out some of their profits to shareholders as
dividends. A convertible security is a bond, preferred stock or other security
that may be converted into a prescribed amount of common stock at a particular
time and price.

In addition, the Fund's investments may include equity securities of small or
large companies, foreign securities and investment grade fixed-income
securities.

1
<PAGE>

In pursuing the Fund's investment objective, the Sub-Advisor has considerable
leeway in deciding which investments it buys, holds or sells on a day-to-day
basis -- and which trading strategies it uses. For example, the Sub-Advisor in
its discretion may determine to use some permitted trading strategies while not
using others.

[GRAPHIC OMITTED]
PRINCIPAL RISKS
- ---------------
There is no assurance that the Fund will achieve its investment objective. The
Fund's share price will fluctuate with changes in the market value of the Fund's
portfolio securities. When you sell Fund shares, they may be worth less than
what you paid for them and, accordingly, you can lose money investing in this
Fund.

COMMON STOCKS. A principal risk of investing in the Fund is associated with its
common stock investments of medium-sized companies. In general, stock values
fluctuate in response to activities specific to the company as well as general
market, economic and political conditions. Stock prices can fluctuate widely in
response to these factors.

Investing in securities of medium-sized companies may involve greater risk than
is customarily associated with investing in more established companies. Often,
medium-sized companies and the industries in which they are focused are still
evolving, and they are more sensitive to changing market conditions than larger
companies in more established industries. Their securities may be more volatile
and have returns that vary, sometimes significantly, from the overall stock
market.

CONVERTIBLE SECURITIES. The Fund's investments in convertible securities subject
the Fund to the risks associated with both fixed-income securities and common
stocks. To the extent that a convertible security's investment value is greater
than its conversion value, its price will likely increase when interest rates
fall and decrease when interest rates rise, as with a fixed-income security. If
the conversion value exceeds the investment value, the price of the convertible
security will tend to fluctuate directly with the price of the underlying equity
security.

OTHER RISKS. The performance of the Fund also will depend on whether the
Sub-Advisor is successful in pursuing the Fund's investment strategy. The Fund
is also subject to other risks from its permissible investments including the
risks associated with its investments in equity securities of small or large
companies, foreign securities and its fixed-income investments. For more
information about these risks, see the "Additional Risk Information" section.

Shares of the Fund are not bank deposits and are not guaranteed or insured by
the FDIC or any other government agency.

2
<PAGE>

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PAST PERFORMANCE
- ----------------
The bar chart and table below provide some indication of the risks of investing
in the Fund. The Fund's past performance does not indicate how the Fund will
perform in the future.

(sidebar)
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Fund's Class B shares has varied
from year to year for the past three calendar years.
(end sidebar)

ANNUAL TOTAL RETURNS -- CALENDAR YEARS

10.97% 62.71% 124.60%
------ ------ -------
1997 '98 '99

The bar chart reflects the performance of Class B shares; the performance of the
other Classes will differ because the Classes have different ongoing fees. The
performance information in the bar chart does not reflect the deduction of sales
charges; if these amounts were reflected, returns would be less than shown.

During the periods shown in the bar chart, the highest return for a calendar
quarter was 62.22% (quarter ended December 31, 1999) and the lowest return for a
calendar quarter was -21.17% (quarter ended March 31, 1997).

(sidebar)
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Fund's average annual returns with those of a broad
measure of market performance over time. The Fund's returns include the maximum
applicable sales charge for each Class and assume you sold your shares at the
end of each period.
(end sidebar)

AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999)
- --------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR (SINCE 2/27/96)
- --------------------------------------------------------------------------------
Class A(1) 113.79% --
- --------------------------------------------------------------------------------
Class B 119.60% 45.24%
- --------------------------------------------------------------------------------
Class C(1) 122.93% --
- --------------------------------------------------------------------------------
Class D(1) 125.75% --
- --------------------------------------------------------------------------------
S&P Mid-Cap 400 Index(2) 14.72% 20.42%(3)
- --------------------------------------------------------------------------------

(1) Classes A, C and D commenced operations on July 28, 1997.
(2) The S&P Mid-Cap 400 Index is a market-value weighted Index, the performance
of which is based on the average performance of 400 domestic stocks chosen
for market size, liquidity and industry group representation. The Index
does not include any expenses, fees or charges. The Index is unmanaged and
should not be considered an investment.
(3) For the period February 29, 1996 to December 31, 1999.

3
<PAGE>

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FEES AND EXPENSES
- -----------------
The table below briefly describes the fees and expenses that you may pay if you
buy and hold shares of the Fund. The Fund offers four Classes of shares: Classes
A, B, C and D. Each Class has a different combination of fees, expenses and
other features. The Fund does not charge account or exchange fees. See the
"Share Class Arrangements" section for further fee and expense information.

(sidebar)
SHAREHOLDER FEES
These fees are paid directly from your investment.
(end sidebar)

(sidebar)
ANNUAL FUND OPERATING EXPENSES
These expenses are deducted from the Fund's assets and are based on expenses
paid for the fiscal year ended November 30, 1999.*
(end sidebar)

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES
- --------------------------------------------------------------------------------------------------------
Maximum sales charge (load)
imposed on purchases (as a
percentage of offering price) 5.25%(1) None None None
- --------------------------------------------------------------------------------------------------------
Maximum deferred sales charge
(load) (as a percentage based on
the lesser of the offering price or
net asset value at redemption) None(2) 5.00%(3) 1.00%(4) None
- --------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------------------------------
Management fee* 0.75% 0.75% 0.75% 0.75%
- --------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.24% 0.75% 1.00% None
- --------------------------------------------------------------------------------------------------------
Other expenses 0.18% 0.18% 0.18% 0.18%
- --------------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 1.17% 1.68% 1.93% 0.93%
- --------------------------------------------------------------------------------------------------------
</TABLE>

(1) Reduced for purchases of $25,000 and over.

(2) Investments that are not subject to any sales charge at the time of
purchase are subject to a contingent deferred sales charge ("CDSC") of
1.00% that will be imposed if you sell your shares within one year after
purchase, except for certain specific circumstances.

(3) The CDSC is scaled down to 1.00% during the sixth year, reaching zero
thereafter. See "Share Class Arrangements" for a complete discussion of the
CDSC.

(4) Only applicable if you sell your shares within one year after purchase.

* Restated to reflect a reduction in the aggregate fee payable by the Fund
for management and advisory services from 1.00% of the Fund's daily net
assets to 0.75% of the portion of the Fund's daily net assets not exceeding
$500 million and 0.725% of the portion of the Fund's daily net assets
exceeding $500 million, which took effect when the Fund's management
arrangements were changed effective June 28, 1999.

4
<PAGE>

EXAMPLE

This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a
5% return each year, and the Fund's operating expenses remain the same. Although
your actual costs may be higher or lower, the tables below show your costs at
the end of each period based on these assumptions depending upon whether or not
you sell your shares at the end of each period.

<TABLE>
<CAPTION>
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES:
- ---------------------------------------------------- ----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A $638 $877 $1,135 $1,871 $638 $877 $1,135 $1,871
- ---------------------------------------------------- ----------------------------------------
CLASS B $671 $830 $1,113 $1,987 $171 $530 $913 $1,987
- ---------------------------------------------------- ----------------------------------------
CLASS C $296 $606 $1,042 $2,254 $196 $606 $1,042 $2,254
- ---------------------------------------------------- ----------------------------------------
CLASS D $95 $296 $515 $1,143 $95 $296 $515 $1,143
- ---------------------------------------------------- ----------------------------------------
</TABLE>

Long-term shareholders of Class B and Class C may pay more in sales charges,
including distribution fees, than the economic equivalent of the maximum
front-end sales charges permitted by the NASD.

[GRAPHIC OMITTED]
ADDITIONAL INVESTMENT STRATEGY INFORMATION
- ------------------------------------------
This section provides additional information relating to the Fund's principal
investment strategies.

OTHER INVESTMENTS. The Fund also may invest up to 35% of its assets in equity
securities of small or large companies and investment grade fixed-income
securities. It also may invest up to 25% of its assets in foreign equity
securities (including depository receipts).

DEFENSIVE INVESTING. The Fund may take temporary "defensive" positions in
attempting to respond to adverse market conditions. The Fund may invest any
amount of its assets in cash or money market instruments in a defensive posture
when the Sub-Advisor believes it is advisable to do so. Although taking a
defensive posture is designed to protect the Fund from an anticipated market
downturn, it could have the effect of reducing the benefit from any upswing in
the market. When the Fund takes a defensive position, it may not achieve its
investment objective.

The percentage limitations relating to the composition of the Fund's portfolio
apply at the time the Fund acquires an investment and refer to the Fund's net
assets, unless otherwise noted. Subsequent percentage changes that result from
market fluctuations

5
<PAGE>

will not require the Fund to sell any portfolio security. The Fund may change
its principal investment strategies without shareholder approval; however, you
would be notified of any changes.

[GRAPHIC OMITTED]
ADDITIONAL RISK INFORMATION
- ---------------------------
This section provides additional information relating to the principal risks of
investing in the Fund.

SMALL COMPANIES. As with the Fund's investments in medium-sized companies, its
investments in the securities of small companies may involve greater risk than
is customarily associated with investing in more established companies. Small
companies in particular often have limited product lines, financial resources
and less experienced management. As a consequence, their securities may be more
volatile and have returns that vary, sometimes significantly, from the overall
stock market.

FIXED-INCOME SECURITIES. Principal risks of investing in the Fund are associated
with its fixed-income investments. All fixed-income securities, such as
corporate debt, are subject to two types of risk: credit risk and interest rate
risk. Credit risk refers to the possibility that the issuer of a security will
be unable to make interest payments and/or repay the principal on its debt.

Interest rate risk refers to fluctuations in the value of a fixed-income
security resulting from changes in the general level of interest rates. When the
general level of interest rates goes up, the price of most fixed-income
securities goes down. When the general level of interest rates goes down, the
price of most fixed-income securities goes up.

FOREIGN SECURITIES. The Fund's investments in foreign securities (including
depository receipts) involve risks that are in addition to the risks associated
with domestic securities. One additional risk is currency risk. While the price
of Fund shares is quoted in U.S. dollars, the Fund generally converts U.S.
dollars to a foreign market's local currency to purchase a security in that
market. If the value of that local currency falls relative to the U.S. dollar,
the U.S. dollar value of the foreign security will decrease. This is true even
if the foreign security's local price remains unchanged.

Foreign securities also have risks related to economic and political
developments abroad, including expropriations, confiscatory taxation, exchange
control regulation, limitations on the use or transfer of Fund assets and any
effects of foreign social, economic or political instability. Foreign companies,
in general, are not subject to the regulatory requirements of U.S. companies
and, as such, there may be less publicly available information about these
companies. Moreover, foreign accounting, auditing and financial reporting
standards generally are different from those applicable to U.S.

6
<PAGE>

companies. Finally, in the event of a default of any foreign debt obligations,
it may be more difficult for the Fund to obtain or enforce a judgment against
the issuers of the securities.

Securities of foreign issuers may be less liquid than comparable securities of
U.S. issuers and, as such, their price changes may be more volatile.
Furthermore, foreign exchanges and broker-dealers are generally subject to less
government and exchange scrutiny and regulation than their U.S. counterparts. In
addition, differences in clearance and settlement procedures in foreign markets
may occasion delays in settlements of the Fund's trades effected in those
markets.

Many European countries have adopted or are in the process of adopting a single
European currency, referred to as the "euro." The long-term consequences of the
euro conversion for foreign exchange rates, interest rates and the value of
European securities the Fund may purchase are unclear. The consequences may
adversely affect the value and/or increase the volatility of securities held by
the Fund.

[GRAPHIC OMITTED]
FUND MANAGEMENT
- ---------------

(sidebar)
MORGAN STANLEY DEAN WITTER ADVISORS INC.
The Investment Manager is widely recognized as a leader in the mutual fund
industry and together with Morgan Stanley Dean Witter Services Company Inc.,
its wholly-owned subsidiary, had approximately $145 billion in assets under
management as of December 31, 1999.
(end sidebar)

Effective June 28, 1999, the Fund has retained the Investment Manager - Morgan
Stanley Dean Witter Advisors Inc. - to provide administrative services, manage
its business affairs and supervise the investment of its assets. The Investment
Manager has, in turn, contracted with the Sub-Advisor - TCW Investment
Management Company - to invest the Fund's assets, including the placing of
orders for the purchase and sale of portfolio securities. Prior to June 28,
1999, TCW Investment Management Company acted as the Fund's advisor and Morgan
Stanley Dean Witter Services Company Inc., a wholly-owned subsidiary of the
Investment Manager, served as the Fund's manager. The Investment Manager is a
wholly-owned subsidiary of Morgan Stanley Dean Witter & Co., a preeminent global
financial services firm that maintains leading market positions in each of its
three primary businesses: securities, asset management and credit services. Its
main business office is located at Two World Trade Center, New York, NY 10048.

The Sub-Advisor is a wholly-owned subsidiary of TCW Group, Inc., whose direct
and indirect subsidiaries provide a variety of trust, investment management and
investment advisory services. The Sub-Advisor's main business office is located
at 865 South Figueroa Street, Suite 1800, Los Angeles, CA 90017. The
Sub-Advisor, together with its affiliated companies, manages approximately $70
billion primarily for institutional investors.

7
<PAGE>

Douglas S. Foreman, Chief Investment Officer of U.S. Equities and Group Managing
Director of the Sub-Advisor, is the primary portfolio manager of the Fund. He is
assisted by Christopher J. Ainley, Managing Director of the Sub-Advisor. Mr.
Foreman and Mr. Ainley have been portfolio managers with affiliated companies of
the TCW Group since 1994.

The Fund pays the Investment Manager a monthly management fee as full
compensation for the services and facilities furnished to the Fund, and for Fund
expenses assumed by the Investment Manager. The fee is based on the Fund's
average daily net assets. The Investment Manager pays the Sub-Advisor monthly
compensation equal to 40% of this fee. For the fiscal period December 1, 1998
through June 27, 1999, the Fund accrued total compensation to Morgan Stanley
Dean Witter Services Company Inc. (at the time the Fund's manager) and TCW
Investment Management Company (at the time acting as the Fund's advisor, rather
than sub-advisor) in the amount of 1.00% of the Fund's average daily net assets
(0.60% to Morgan Stanley Dean Witter Services Company Inc. and 0.40% to TCW
Investment Management Company). Upon effectiveness of the change in the Fund's
management arrangements on June 28, 1999, the aggregate fee payable by the Fund
for management and advisory services was lowered from 1.00% of the Fund's daily
net assets to 0.75% of the portion of the Fund's daily net assets not exceeding
$500 million and 0.725% of the portion of the Fund's daily net assets exceeding
$500 million. For the fiscal period June 28, 1999 through November 30, 1999 the
Fund accrued total compensation to the Investment Manager in the amount of 0.74%
of the Fund's daily net assets.

8
<PAGE>

SHAREHOLDER INFORMATION

[GRAPHIC OMITTED]
PRICING FUND SHARES
- -------------------
The price of Fund shares (excluding sales charges), called "net asset value," is
based on the value of the Fund's portfolio securities. The net asset value of
each Class, however, will differ because the Classes have different ongoing
distribution fees.

The net asset value per share of the Fund is determined once daily at 4:00 p.m.
Eastern time on each day that the New York Stock Exchange is open (or, on days
when the New York Stock Exchange closes prior to 4:00 p.m., at such earlier
time). Shares will not be priced on days that the New York Stock Exchange is
closed.

The value of the Fund's portfolio securities is based on the securities' market
price when available. When a market price is not readily available, including
circumstances under which the Investment Manager and/or Sub-Advisor determines
that a security's market price is not accurate, a portfolio security is valued
at its fair value, as determined under procedures established by the Fund's
Board of Trustees. In these cases, the Fund's net asset value will reflect
certain portfolio securities' fair value rather than their market price. With
respect to securities that are listed on foreign exchanges, the value of the
Fund's portfolio securities may change on days when you will not be able to
purchase or sell your shares.

An exception to the Fund's general policy of using market prices concerns its
short-term debt portfolio securities. Debt securities with remaining maturities
of sixty days or less at the time of purchase are valued at amortized cost.
However, if the cost does not reflect the securities' market value, these
securities will be valued at their fair value.

[GRAPHIC OMITTED]
HOW TO BUY SHARES
- -----------------

(sidebar)
CONTACTING A FINANCIAL ADVISOR
If you are new to the Morgan Stanley Dean Witter Family of Funds and would like
to contact a Financial Advisor, call (877) 937-MSDW (toll-free) for the
telephone number of the Morgan Stanley Dean Witter office nearest you. You may
also access our office locator on our Internet site at:
www.msdw.com/individual/funds
(end sidebar)

You may open a new account to buy Fund shares or buy additional Fund shares for
an existing account by contacting your Morgan Stanley Dean Witter Financial
Advisor or other authorized financial representative. Your Financial Advisor
will assist you, step-by-step, with the procedures to invest in the Fund. You
may also purchase shares directly by calling the Fund's transfer agent and
requesting an application.

Because every investor has different immediate financial needs and long-term
investment goals, the Fund offers investors four Classes of shares: Classes A,
B, C and D. Class D shares are only offered to a limited group of investors.
Each Class of shares offers a distinct structure of sales charges, distribution
and service fees, and other features that are designed to address a variety of
needs. Your Financial Advisor or other authorized financial representative can

9
<PAGE>

help you decide which Class may be most appropriate for you. When purchasing
Fund shares, you must specify which Class of shares you wish to purchase.

When you buy Fund shares, the shares are purchased at the next share price
calculated (less any applicable front-end sales charge for Class A shares) after
we receive your purchase order. Your payment is due on the third business day
after you place your purchase order. We reserve the right to reject any order
for the purchase of Fund shares.

(sidebar)
EASYINVEST(SM)
A purchase plan that allows you to transfer money automatically from your
checking or savings account or from a Money Market Fund on a semi-monthly,
monthly or quarterly basis. Contact your Morgan Stanley Dean Witter Financial
Advisor for further information about this service.
(end sidebar)

<TABLE>
<CAPTION>
MINIMUM INVESTMENT AMOUNTS
- ---------------------------------------------------------------------------------------------------------
MINIMUM INVESTMENT
---------------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Regular Account $1,000 $100
- ---------------------------------------------------------------------------------------------------------
Individual Retirement Accounts: Regular IRAs $1,000 $100
Education IRAs $500 $100
- ---------------------------------------------------------------------------------------------------------
EasyInvestSM
(Automatically from your checking or savings account or
Money Market Fund) $100* $100*
- ---------------------------------------------------------------------------------------------------------
</TABLE>

* Provided your schedule of investments totals $1,000 in twelve months.

There is no minimum investment amount if you purchase Fund shares through: (1)
the Investment Manager's mutual fund asset allocation plan, (2) a program,
approved by the Fund's distributor, in which you pay an asset-based fee for
advisory, administrative and/or brokerage services, or (3) employer-sponsored
employee benefit plan accounts.

INVESTMENT OPTIONS FOR CERTAIN INSTITUTIONAL AND OTHER INVESTORS/CLASS D SHARES.
To be eligible to purchase Class D shares, you must qualify under one of the
investor categories specified in the "Share Class Arrangements" section of this
Prospectus.

SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In addition to buying
additional Fund shares for an existing account by contacting your Morgan Stanley
Dean Witter Financial Advisor, you may send a check directly to the Fund. To buy
additional shares in this manner:

o Write a "letter of instruction" to the Fund specifying the name(s) on the
account, the account number, the social security or tax identification
number, the Class of shares you wish to purchase and the investment amount
(which would include any applicable front-end sales charge). The letter
must be signed by the account owner(s).

o Make out a check for the total amount payable to: Morgan Stanley Dean
Witter Mid-Cap Equity Trust.

o Mail the letter and check to Morgan Stanley Dean Witter Trust FSB at P.O.
Box 1040, Jersey City, NJ 07303.

10
<PAGE>

[GRAPHIC OMITTED]
HOW TO EXCHANGE SHARES
- ----------------------
PERMISSIBLE FUND EXCHANGES. You may exchange shares of any Class of the Fund for
the same Class of any other continuously offered Multi-Class Fund, or for shares
of a No-Load Fund, a Money Market Fund, North American Government Income Trust
or Short-Term U.S. Treasury Trust, without the imposition of an exchange fee.
See the inside back cover of this Prospectus for each Morgan Stanley Dean Witter
Fund's designation as a Multi-Class Fund, No-Load Fund or Money Market Fund. If
a Morgan Stanley Dean Witter Fund is not listed, consult the inside back cover
of that Fund's Prospectus for its designation. For purposes of exchanges, shares
of FSC Funds (subject to a front-end sales charge) are treated as Class A shares
of a Multi-Class Fund.

Exchanges may be made after shares of the Fund acquired by purchase have been
held for thirty days. There is no waiting period for exchanges of shares
acquired by exchange or dividend reinvestment. The current Prospectus for each
Fund describes its investment objective, policies and investment minimums and
should be read before investment. Since exchanges are available only into
continuously offered Morgan Stanley Dean Witter Funds, exchanges are not
available into any new Morgan Stanley Dean Witter Fund during its initial
offering period, or when shares of a particular Morgan Stanley Dean Witter Fund
are not being offered for purchase.

EXCHANGE PROCEDURES. You can process an exchange by contacting your Morgan
Stanley Dean Witter Financial Advisor or other authorized financial
representative. Otherwise, you must forward an exchange privilege authorization
form to the Fund's transfer agent -- Morgan Stanley Dean Witter Trust FSB -- and
then write the transfer agent or call (800) 869-NEWS to place an exchange order.
You can obtain an exchange privilege authorization form by contacting your
Financial Advisor or other authorized financial representative or by calling
(800) 869-NEWS. If you hold share certificates, no exchanges may be processed
until we have received all applicable share certificates.

An exchange to any Morgan Stanley Dean Witter Fund (except a Money Market Fund)
is made on the basis of the next calculated net asset values of the Funds
involved after the exchange instructions are accepted. When exchanging into a
Money Market Fund, the Fund's shares are sold at their next calculated net asset
value and the Money Market Fund's shares are purchased at their net asset value
on the following business day.

The Fund may terminate or revise the exchange privilege upon required notice.
The check writing privilege is not available for Money Market Fund shares you
acquire in an exchange.

TELEPHONE EXCHANGES. For your protection when calling Morgan Stanley Dean Witter
Trust FSB, we will employ reasonable procedures to confirm that exchange
instructions communicated over the telephone are genuine. These procedures may
include

11
<PAGE>

requiring various forms of personal identification such as name, mailing
address, social security or other tax identification number. Telephone
instructions also may be recorded.

Telephone instructions will be accepted if received by the Fund's transfer agent
between 9:00 a.m. and 4:00 p.m. Eastern time on any day the New York Stock
Exchange is open for business. During periods of drastic economic or market
changes, it is possible that the telephone exchange procedures may be difficult
to implement, although this has not been the case with the Fund in the past.

MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin account,
contact your Morgan Stanley Dean Witter Financial Advisor or other authorized
financial representative regarding restrictions on the exchange of such shares.

TAX CONSIDERATIONS OF EXCHANGES. If you exchange shares of the Fund for shares
of another Morgan Stanley Dean Witter Fund there are important tax
considerations. For tax purposes, the exchange out of the Fund is considered a
sale of Fund shares -- and the exchange into the other Fund is considered a
purchase. As a result, you may realize a capital gain or loss.

You should review the "Tax Consequences" section and consult your own tax
professional about the tax consequences of an exchange.

LIMITATIONS ON EXCHANGES. Certain patterns of exchanges may result in the Fund
limiting or prohibiting, at its discretion, additional purchases and/or
exchanges. Determinations in this regard may be made based on the frequency or
dollar amount of previous exchanges. The Fund will notify you in advance of
limiting your exchange privileges.

CDSC CALCULATIONS ON EXCHANGES. See the "Share Class Arrangements" section of
this Prospectus for a further discussion of how applicable contingent deferred
sales charges (CDSCs) are calculated for shares of one Fund that are exchanged
for shares of another.

For further information regarding exchange privileges, you should contact your
Morgan Stanley Dean Witter Financial Advisor or call (800) 869-NEWS.

12
<PAGE>

[GRAPHIC OMITTED]
HOW TO SELL SHARES
- ------------------
You can sell some or all of your Fund shares at any time. If you sell Class A,
Class B or Class C shares, your net sale proceeds are reduced by the amount of
any applicable CDSC. Your shares will be sold at the next price calculated after
we receive your order to sell as described below.

<TABLE>
<CAPTION>
OPTIONS PROCEDURES
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Contact Your To sell your shares, simply call your Morgan Stanley Dean Witter Financial Advisor or
Financial Advisor other authorized financial representative.
--------------------------------------------------------------------------------------------
[GRAPHIC OMITTED] Payment will be sent to the address to which the account is registered or deposited in
your brokerage account.
- ------------------------------------------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of instruction" that includes:
o your account number;
[GRAPHIC OMITTED] o the dollar amount or the number of shares you wish to sell;
o the Class of shares you wish to sell; and
o the signature of each owner as it appears on the account.
--------------------------------------------------------------------------------------------
If you are requesting payment to anyone other than the registered owner(s) or that
payment be sent to any address other than the address of the registered owner(s) or
pre-designated bank account, you will need a signature guarantee. You can obtain a
signature guarantee from an eligible guarantor acceptable to Morgan Stanley Dean
Witter Trust FSB. (You should contact Morgan Stanley Dean Witter Trust FSB at
(800) 869-NEWS for a determination as to whether a particular institution is an eligible
guarantor.) A notary public cannot provide a signature guarantee. Additional
documentation may be required for shares held by a corporation, partnership, trustee
or executor.
--------------------------------------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at P.O. Box 983, Jersey City,
NJ 07303. If you hold share certificates, you must return the certificates, along with the
letter and any required additional documentation.
--------------------------------------------------------------------------------------------
A check will be mailed to the name(s) and address in which the account is registered, or
otherwise according to your instructions.
- ------------------------------------------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter Family of Funds has a total
Withdrawal Plan market value of at least $10,000, you may elect to withdraw amounts of $25 or more,
or in any whole percentage of a Fund's balance (provided the amount is at least $25), on
[GRAPHIC OMITTED] a monthly, quarterly, semi-annual or annual basis, from any Fund with a balance of at least
$1,000. Each time you add a Fund to the plan, you must meet the plan requirements.
--------------------------------------------------------------------------------------------
Amounts withdrawn are subject to any applicable CDSC. A CDSC may be waived under
certain circumstances. See the Class B waiver categories listed in the "Share Class
Arrangements" section of this Prospectus.
--------------------------------------------------------------------------------------------
To sign up for the Systematic Withdrawal Plan, contact your Morgan Stanley Dean
Witter Financial Advisor or call (800) 869-NEWS. You may terminate or suspend your
plan at any time. Please remember that withdrawals from the plan are sales of shares,
not Fund "distributions," and ultimately may exhaust your account balance. The Fund
may terminate or revise the plan at any time.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

13
<PAGE>

PAYMENT FOR SOLD SHARES. After we receive your complete instruction to sell as
described above, a check will be mailed to you within seven days, although we
will attempt to make payment within one business day. Payment may also be sent
to your brokerage account.

Payment may be postponed or the right to sell your shares suspended, however,
under unusual circumstances. If you request to sell shares that were recently
purchased by check, your sale will not be effected until it has been verified
that the check has been honored.

TAX CONSIDERATIONS. Normally, your sale of Fund shares is subject to federal and
state income tax. You should review the "Tax Consequences" section of this
Prospectus and consult your own tax professional about the tax consequences of a
sale.

REINSTATEMENT PRIVILEGE. If you sell Fund shares and have not previously
exercised the reinstatement privilege, you may, within 35 days after the date of
sale, invest any portion of the proceeds in the same Class of Fund shares at
their net asset value and receive a pro rata credit for any CDSC paid in
connection with the sale.

INVOLUNTARY SALES. The Fund reserves the right, on sixty days' notice, to sell
the shares of any shareholder (other than shares held in an IRA or 403(b)
Custodial Account) whose shares, due to sales by the shareholder, have a value
below $100, or in the case of an account opened through EasyInvest(SM), if after
12 months the shareholder has invested less than $1,000 in the account.

However, before the Fund sells your shares in this manner, we will notify you
and allow you sixty days to make an additional investment in an amount that will
increase the value of your account to at least the required amount before the
sale is processed. No CDSC will be imposed on any involuntary sale.

14
<PAGE>

[GRAPHIC OMITTED]
DISTRIBUTIONS
- -------------

(sidebar)
TARGETED DIVIDENDS(SM)
You may select to have your Fund distributions automatically invested in other
Classes of Fund shares or Classes of another Morgan Stanley Dean Witter Fund
that you own. Contact your Morgan Stanley Dean Witter Financial Advisor for
further information about this service.
(end sidebar)

The Fund passes substantially all of its earnings from income and capital gains
along to its investors as "distributions." The Fund earns income from stocks and
interest from fixed-income investments. These amounts are passed along to Fund
shareholders as "income dividend distributions." The Fund realizes capital gains
whenever it sells securities for a higher price than it paid for them. These
amounts are passed along as "capital gain distributions."

The Fund declares income dividends separately for each Class. Distributions paid
on Class A and Class D shares will be higher than for Class B and Class C
because distribution fees that Class B and Class C pay are higher. Normally,
income dividends are distributed to shareholders semi-annually. Capital gains,
if any, are usually distributed in June and December. The Fund, however, may
retain and reinvest any long-term capital gains. The Fund may at times make
payments from sources other than income or capital gains that represent a return
of a portion of your investment.

Distributions are reinvested automatically in additional shares of the same
Class and automatically credited to your account, unless you request in writing
that all distributions be paid in cash. If you elect the cash option, the Fund
will mail a check to you no later than seven business days after the
distribution is declared. No interest will accrue on uncashed checks. If you
wish to change how your distributions are paid, your request should be received
by the Fund's transfer agent, Morgan Stanley Dean Witter Trust FSB, at least
five business days prior to the record date of the distributions.

[GRAPHIC OMITTED]
TAX CONSEQUENCES
- ----------------
As with any investment, you should consider how your Fund investment will be
taxed. The tax information in this Prospectus is provided as general
information. You should consult your own tax professional about the tax
consequences of an investment in the Fund.

Unless your investment in the Fund is through a tax-deferred retirement account,
such as a 401(k) plan or IRA, you need to be aware of the possible tax
consequences when:

o The Fund makes distributions; and

o You sell Fund shares, including an exchange to another Morgan Stanley Dean
Witter Fund.

TAXES ON DISTRIBUTIONS. Your distributions are normally subject to federal and
state income tax when they are paid, whether you take them in cash or reinvest
them in

15
<PAGE>

Fund shares. A distribution also may be subject to local income tax. Any income
dividend distributions and any short-term capital gain distributions are taxable
to you as ordinary income. Any long-term capital gain distributions are taxable
as long-term capital gains, no matter how long you have owned shares in the
Fund.

Every January, you will be sent a statement (IRS Form 1099-DIV) showing the
taxable distributions paid to you in the previous year. The statement provides
information on your dividends and capital gains for tax purposes.

TAXES ON SALES. Your sale of Fund shares normally is subject to federal and
state income tax and may result in a taxable gain or loss to you. A sale also
may be subject to local income tax. Your exchange of Fund shares for shares of
another Morgan Stanley Dean Witter Fund is treated for tax purposes like a sale
of your original shares and a purchase of your new shares. Thus, the exchange
may, like a sale, result in a taxable gain or loss to you and will give you a
new tax basis for your new shares.

When you open your Fund account, you should provide your social security or tax
identification number on your investment application. By providing this
information, you will avoid being subject to a federal backup withholding tax of
31% on taxable distributions and redemption proceeds. Any withheld amount would
be sent to the IRS as an advance tax payment.

[GRAPHIC OMITTED]
SHARE CLASS ARRANGEMENTS
- ------------------------
The Fund offers several Classes of shares having different distribution
arrangements designed to provide you with different purchase options according
to your investment needs. Your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative can help you decide which Class may be
appropriate for you.

The general public is offered three Classes: Class A shares, Class B shares and
Class C shares, which differ principally in terms of sales charges and ongoing
expenses. A fourth Class, Class D shares, is offered only to a limited category
of investors. Shares that you acquire through reinvested distributions will not
be subject to any front-end sales charge or CDSC -- contingent deferred sales
charge. Sales personnel may receive different compensation for selling each
Class of shares. The sales charges applicable to each Class provide for the
distribution financing of shares of that Class.

16
<PAGE>
The chart below compares the sales charge and maximum annual 12b-1 fee
applicable to each Class:

<TABLE>
<CAPTION>
MAXIMUM
CLASS SALES CHARGE ANNUAL 12B-1 FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A Maximum 5.25% initial sales charge reduced for purchase of $25,000 or more;
shares sold without an initial sales charge are generally subject to a 1.0% CDSC
during the first year 0.25%
- -------------------------------------------------------------------------------------------------------------
B Maximum 5.0% CDSC during the first year decreasing to 0% after six years 1.0%
- -------------------------------------------------------------------------------------------------------------
C 1.0% CDSC during the first year 1.0%
- -------------------------------------------------------------------------------------------------------------
D None None
- -------------------------------------------------------------------------------------------------------------
</TABLE>

CLASS A SHARES Class A shares are sold at net asset value plus an initial sales
charge of up to 5.25%. The initial sales charge is reduced for purchases of
$25,000 or more according to the schedule below. Investments of $1 million or
more are not subject to an initial sales charge, but are generally subject to a
contingent deferred sales charge, or CDSC, of 1.0% on sales made within one year
after the last day of the month of purchase. The CDSC will be assessed in the
same manner and with the same CDSC waivers as with Class B shares. Class A
shares are also subject to a distribution (12b-1) fee of up to 0.25% of the
average daily net assets of the Class.

The offering price of Class A shares includes a sales charge (expressed as a
percentage of the offering price) on a single transaction as shown in the
following table:

(sidebar)
FRONT-END SALES CHARGE OR FSC
An initial sales charge you pay when purchasing Class A shares that is based on
a percentage of the offering price. The percentage declines based upon the
dollar value of Class A shares you purchase. We offer three ways to reduce your
Class A sales charges -- the Combined Purchase Privilege, Right of Accumulation
and Letter of Intent.
(end sidebar)

FRONT-END SALES CHARGE
--------------------------------------------------
PERCENTAGE OF APPROXIMATE PERCENTAGE
AMOUNT OF SINGLE TRANSACTION PUBLIC OFFERING PRICE OF NET AMOUNT INVESTED
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Less than $25,000 5.25% 5.54%
- ----------------------------------------------------------------------------------------
$25,000 but less than $50,000 4.75% 4.99%
- ----------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.00% 4.17%
- ----------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.00% 3.09%
- ----------------------------------------------------------------------------------------
$250,000 but less than $1 million 2.00% 2.04%
- ----------------------------------------------------------------------------------------
$1 million and over 0 0
- ----------------------------------------------------------------------------------------
</TABLE>

17
<PAGE>

The reduced sales charge schedule is applicable to purchases of Class A shares
in a single transaction by:

o A single account (including an individual, trust or fiduciary account).

o Family member accounts (limited to husband, wife and children under the age
of 21).

o Pension, profit sharing or other employee benefit plans of companies and
their affiliates.

o Tax-exempt organizations.

o Groups organized for a purpose other than to buy mutual fund shares.

COMBINED PURCHASE PRIVILEGE. You also will have the benefit of reduced sales
charges by combining purchases of Class A shares of the Fund in a single
transaction with purchases of Class A shares of other Multi-Class Funds and
shares of FSC Funds.

RIGHT OF ACCUMULATION. You also may benefit from a reduction of sales charges if
the cumulative net asset value of Class A shares of the Fund purchased in a
single transaction, together with shares of other Funds you currently own which
were previously purchased at a price including a front-end sales charge
(including shares acquired through reinvestment of distributions), amounts to
$25,000 or more. Also, if you have a cumulative net asset value of all your
Class A and Class D shares equal to at least $5 million (or $25 million for
certain employee benefit plans), you are eligible to purchase Class D shares of
any Fund subject to the Fund's minimum initial investment requirement.

You must notify your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative (or Morgan Stanley Dean Witter Trust FSB if
you purchase directly through the Fund), at the time a purchase order is placed,
that the purchase qualifies for the reduced charge under the Right of
Accumulation. Similar notification must be made in writing when an order is
placed by mail. The reduced sales charge will not be granted if: (i)
notification is not furnished at the time of the order; or (ii) a review of the
records of Dean Witter Reynolds or other authorized dealer of Fund shares or the
Fund's transfer agent does not confirm your represented holdings.

LETTER OF INTENT. The schedule of reduced sales charges for larger purchases
also will be available to you if you enter into a written "letter of intent." A
letter of intent provides for the purchase of Class A shares of the Fund or
other Multi-Class Funds or shares of FSC Funds within a thirteen month period.
The initial purchase under a letter of intent must be at least 5% of the stated
investment goal. To determine the applicable sales charge reduction, you may
also include: (1) the cost of shares of other Morgan Stanley Dean Witter
Multi-Class Funds which were previously purchased at a price including a
front-end sales charge during the 90-day period prior to the distributor
receiving the letter of intent, and (2) the cost of shares of other Funds you
currently own acquired in exchange for shares of Funds purchased during that
period at a price including a

18
<PAGE>

front-end sales charge. You can obtain a letter of intent by contacting your
Morgan Stanley Dean Witter Financial Advisor or other authorized financial
representative, or by calling (800) 869-NEWS. If you do not achieve the stated
investment goal within the thirteen month period, you are required to pay the
difference between the sales charges otherwise applicable and sales charges
actually paid, which may be deducted from your investment.

OTHER SALES CHARGE WAIVERS. In addition to investments of $1 million or more,
your purchase of Class A shares is not subject to a front-end sales charge (or a
CDSC upon sale) if your account qualifies under one of the following categories:

o A trust for which Morgan Stanley Dean Witter Trust FSB provides
discretionary trustee services.

o Persons participating in a fee-based investment program (subject to all of
its terms and conditions, including termination fees, mandatory sale or
transfer restrictions on termination) approved by the Fund's distributor
pursuant to which they pay an asset-based fee for investment advisory,
administrative and/or brokerage services.

o Employer-sponsored employee benefit plans, whether or not qualified under
the Internal Revenue Code, for which Morgan Stanley Dean Witter Trust FSB
serves as trustee or Dean Witter Reynolds' Retirement Plan Services serves
as recordkeeper under a written Recordkeeping Services Agreement ("MSDW
Eligible Plans") which have at least 200 eligible employees.

o An MSDW Eligible Plan whose Class B shares have converted to Class A
shares, regardless of the plan's asset size or number of eligible
employees.

o A client of a Morgan Stanley Dean Witter Financial Advisor who joined us
from another investment firm within six months prior to the date of
purchase of Fund shares, and you used the proceeds from the sale of shares
of a proprietary mutual fund of that Financial Advisor's previous firm that
imposed either a front-end or deferred sales charge to purchase Class A
shares, provided that: (1) you sold the shares not more than 60 days prior
to the purchase of Fund shares, and (2) the sale proceeds were maintained
in the interim in cash or a money market fund.

o Current or retired Directors/Trustees of the Morgan Stanley Dean Witter
Funds, such persons' spouses and children under the age of 21, and trust
accounts for which any of such persons is a beneficiary.

o Current or retired directors, officers and employees of Morgan Stanley Dean
Witter & Co. and any of its subsidiaries, such persons' spouses and
children under the age of 21 and trust accounts for which any of such
persons is a beneficiary.

<PAGE>
CLASS B SHARES Class B shares are offered at net asset value with no initial
sales charge but are subject to a contingent deferred sales charge, or CDSC, as
set forth in the table below. For the purpose of calculating the CDSC, shares
are deemed to have been purchased on the last day of the month during which they
were purchased.

(sidebar)
CONTINGENT DEFERRED SALES CHARGE OR CDSC
A fee you pay when you sell shares of certain Morgan Stanley Dean Witter Funds
purchased without an initial sales charge. This fee declines the longer you hold
your shares as set forth in the table.
(end sidebar)

CDSC AS A PERCENTAGE OF
YEAR SINCE PURCHASE PAYMENT MADE AMOUNT REDEEMED
- ----------------------------------------------------------------
First 5.0%
- ----------------------------------------------------------------
Second 4.0%
- ----------------------------------------------------------------
Third 3.0%
- ----------------------------------------------------------------
Fourth 2.0%
- ----------------------------------------------------------------
Fifth 2.0%
- ----------------------------------------------------------------
Sixth 1.0%
- ----------------------------------------------------------------
Seventh and thereafter None
- ----------------------------------------------------------------

Each time you place an order to sell or exchange shares, shares with no CDSC
will be sold or exchanged first, then shares with the lowest CDSC will be sold
or exchanged next. For any shares subject to a CDSC, the CDSC will be assessed
on an amount equal to the lesser of the current market value or the cost of the
shares being sold.

CDSC WAIVERS. A CDSC, if otherwise applicable, will be waived in the case of:

o Sales of shares held at the time you die or become disabled (within the
definition in Section 72(m)(7) of the Internal Revenue Code which relates
to the ability to engage in gainful employment), if the shares are: (i)
registered either in your name (not a trust) or in the names of you and
your spouse as joint tenants with right of survivorship; or (ii) held in a
qualified corporate or self-employed retirement plan, IRA or 403(b)
Custodial Account, provided in either case that the sale is requested
within one year of your death or initial determination of disability.

o Sales in connection with the following retirement plan "distributions:" (i)
lump-sum or other distributions from a qualified corporate or self-employed
retirement plan following retirement (or, in the case of a "key employee"
of a "top heavy" plan, following attainment of age 59 1/2); (ii)
distributions from an IRA or 403(b) Custodial Account following attainment
of age 59 1/2; or (iii) a tax-free return of an excess IRA contribution (a
"distribution" does not include a direct transfer of IRA, 403(b) Custodial
Account or retirement plan assets to a successor custodian or trustee).

o Sales of shares held for you as a participant in a MSDW Eligible Plan.

o Sales of shares in connection with the Systematic Withdrawal Plan of up to
12% annually of the value of each Fund from which plan sales are made. The
percentage is determined on the date you establish the Systematic
Withdrawal Plan and based on the next calculated share price. You may have
this CDSC waiver applied in amounts up to 1% per month, 3% per quarter, 6%
semi-annually or 12% annually. Shares with

20
<PAGE>

no CDSC will be sold first, followed by those with the lowest CDSC. As such, the
waiver benefit will be reduced by the amount of your shares that are not subject
to a CDSC. If you suspend your participation in the plan, you may later resume
plan payments without requiring a new determination of the account value for the
12% CDSC waiver.

o Sales of shares if you simultaneously invest the proceeds in the Investment
Manager's mutual fund asset allocation program, pursuant to which investors
pay an asset-based fee. Any shares you acquire in connection with the
Investment Manager's mutual fund asset allocation program are subject to
all of the terms and conditions of that program, including termination
fees, mandatory sale or transfer restrictions on termination.

All waivers will be granted only following the Fund's distributor receiving
confirmation of your entitlement. If you believe you are eligible for a CDSC
waiver, please contact your Financial Advisor or call (800) 869-NEWS.

DISTRIBUTION FEE. Class B shares are subject to an annual 12b-1 fee of 1.0% of
the lesser of: (a) the average daily aggregate gross purchases by all
shareholders of the Fund's Class B shares since the inception of the Fund (not
including reinvestments of dividends or capital gains distributions), less the
average daily aggregate net asset value of the Fund's Class B shares sold by all
shareholders since the Fund's inception upon which a CDSC has been imposed or
waived, or (b) the average daily net assets of Class B.

CONVERSION FEATURE. After ten (10) years, Class B shares will convert
automatically to Class A shares of the Fund with no initial sales charge. The
ten year period runs from the last day of the month in which the shares were
purchased, or in the case of Class B shares acquired through an exchange, from
the last day of the month in which the original Class B shares were purchased;
the shares will convert to Class A shares based on their relative net asset
values in the month following the ten year period. At the same time, an equal
proportion of Class B shares acquired through automatically reinvested
distributions will convert to Class A shares on the same basis. (Class B shares
held before May 1, 1997, however, will convert to Class A shares in May 2007.)

In the case of Class B shares held in a MSDW Eligible Plan, the plan is treated
as a single investor and all Class B shares will convert to Class A shares on
the conversion date of the Class B shares of a Morgan Stanley Dean Witter Fund
purchased by that plan.

Currently, the Class B share conversion is not a taxable event; the conversion
feature may be cancelled if it is deemed a taxable event in the future by the
Internal Revenue Service.

If you exchange your Class B shares for shares of a Money Market Fund, a No-Load
Fund, North American Government Income Trust or Short-Term U.S. Treasury Trust,

21
<PAGE>

the holding period for conversion is frozen as of the last day of the month of
the exchange and resumes on the last day of the month you exchange back into
Class B shares.

EXCHANGING SHARES SUBJECT TO A CDSC. There are special considerations when you
exchange Fund shares that are subject to a CDSC. When determining the length of
time you held the shares and the corresponding CDSC rate, any period (starting
at the end of the month) during which you held shares of a fund that does not
charge a CDSC will not be counted. Thus, in effect the "holding period" for
purposes of calculating the CDSC is frozen upon exchanging into a fund that does
not charge a CDSC.

For example, if you held Class B shares of the Fund in a regular account for one
year, exchanged to Class B of another Morgan Stanley Dean Witter Multi-Class
Fund for another year, then sold your shares, a CDSC rate of 4% would be imposed
on the shares based on a two year holding period -- one year for each Fund.
However, if you had exchanged the shares of the Fund for a Money Market Fund
(which does not charge a CDSC) instead of the Multi-Class Fund, then sold your
shares, a CDSC rate of 5% would be imposed on the shares based on a one year
holding period. The one year in the Money Market Fund would not be counted.
Nevertheless, if shares subject to a CDSC are exchanged for a Fund that does not
charge a CDSC, you will receive a credit when you sell the shares equal to the
distribution (12b-1) fees, if any, you paid on those shares while in that Fund
up to the amount of any applicable CDSC.

In addition, shares that are exchanged into or from a Morgan Stanley Dean Witter
Fund subject to a higher CDSC rate will be subject to the higher rate, even if
the shares are re-exchanged into a Fund with a lower CDSC rate.

CLASS C SHARES Class C shares are sold at net asset value with no initial sales
charge but are subject to a CDSC of 1.0% on sales made within one year after the
last day of the month of purchase. The CDSC will be assessed in the same manner
and with the same CDSC waivers as with Class B shares.

DISTRIBUTION FEE. Class C shares are subject to an annual distribution (12b-1)
fee of up to 1.0% of the average daily net assets of that Class. The Class C
shares' distribution fee may cause that Class to have higher expenses and pay
lower dividends than Class A or Class D shares. Unlike Class B shares, Class C
shares have no conversion feature and, accordingly, an investor that purchases
Class C shares may be subject to distribution (12b-1) fees applicable to Class C
shares for an indefinite period.

22
<PAGE>

CLASS D SHARES Class D shares are offered without any sales charge on purchases
or sales and without any distribution (12b-1) fee. Class D shares are offered
only to investors meeting an initial investment minimum of $5 million ($25
million for MSDW Eligible Plans) and the following investor categories:

o Investors participating in the Investment Manager's mutual fund asset
allocation program (subject to all of its terms and conditions, including
termination fees, mandatory sale or transfer restrictions on termination)
pursuant to which they pay an asset-based fee.
o Persons participating in a fee-based investment program (subject to all of
its terms and conditions, including termination fees, mandatory sale or
transfer restrictions on termination) approved by the Fund's distributor
pursuant to which they pay an asset-based fee for investment advisory,
administrative and/or brokerage services.
o Employee benefit plans maintained by Morgan Stanley Dean Witter & Co. or
any of its subsidiaries for the benefit of certain employees of Morgan
Stanley Dean Witter & Co. and its subsidiaries.
o Certain unit investment trusts sponsored by Dean Witter Reynolds.

o Certain other open-end investment companies whose shares are distributed by
the Fund's distributor.
o Investors who were shareholders of the Dean Witter Retirement Series on
September 11, 1998 for additional purchases for their former Dean Witter
Retirement Series accounts.

MEETING CLASS D ELIGIBILITY MINIMUMS. To meet the $5 million ($25 million for
MSDW Eligible Plans) initial investment to qualify to purchase Class D shares
you may combine: (1) purchases in a single transaction of Class D shares of the
Fund and other Morgan Stanley Dean Witter Multi-Class Funds and/or (2) previous
purchases of Class A and Class D shares of Multi-Class Funds and shares of FSC
Funds you currently own, along with shares of Morgan Stanley Dean Witter Funds
you currently own that you acquired in exchange for those shares.

NO SALES CHARGES FOR REINVESTED CASH DISTRIBUTIONS If you receive a cash payment
representing an income dividend or capital gain and you reinvest that amount in
the applicable Class of shares by returning the check within 30 days of the
payment date, the purchased shares would not be subject to an initial sales
charge or CDSC.

PLAN OF DISTRIBUTION (RULE 12B-1 FEES) The Fund has adopted a Plan of
Distribution in accordance with Rule 12b-1 under the Investment Company Act of
1940 with respect to the distribution of Class A, Class B and Class C shares.
The Plan allows the Fund to pay distribution fees for the sale and distribution
of these shares. It also allows the Fund to pay for services to shareholders of
Class A, Class B and Class C shares. Because these fees are paid out of the
Fund's assets on an ongoing basis, over time these fees will increase the cost
of your investment in these Classes and may cost you more than paying other
types of sales charges.

23
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the life of the Fund. Certain information reflects
financial results for a single Fund share throughout each year. The total
returns in the table represent the rate an investor would have earned or lost
on an investment in the Fund (assuming reinvestment of all dividends and
distributions).

This information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Fund's financial statements, is
included in the annual report, which is available upon request.

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
NOVEMBER 30, 1999 NOVEMBER 30, 1998 NOVEMBER 30, 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A++
- ------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $15.60 $10.88 $10.85
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.34) (0.18) (0.06)
Net realized and unrealized gain 18.57 4.90 0.09
----- ---- ----
Total income from investment operations 18.23 4.72 0.03
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $33.83(4) $15.60 $10.88
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 116.89 % 43.38 % 0.28 %(1)
- ------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
Expenses 1.23 %(3) 1.55 %(3) 1.55 %(2)
- ------------------------------------------------------------------------------------------------------------
Net investment loss (0.93)%(3) (1.40)%(3) (1.46)%(2)
- ------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $19,934 $1,107 $58
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51 % 52 % 49 %
- ------------------------------------------------------------------------------------------------------------
</TABLE>

* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
(4) Includes the effect of a capital gain distribution of $0.004.

24
<PAGE>

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD
NOVEMBER 30 FEBRUARY 27, 1996*
-------------------------------------------------------- THROUGH
1999++ 1998++ 1997**++ NOVEMBER 30, 1996
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS B
- --------------------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $15.46 $10.85 $10.92 $10.00
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:

Net investment loss (0.42) (0.26) (0.22) (0.13)
Net realized and unrealized gain 18.32 4.87 0.15 1.05
----------- --------- ------- -----------
Total income (loss) from investment operations 17.90 4.61 (0.07) 0.92
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $33.36(4) $15.46 $10.85 $10.92
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 115.82 % 42.49 % (0.64)% 9.20 %(1)
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------------
Expenses 1.74 %(3) 2.20 %(3) 2.29 % 2.28 %(2)
- --------------------------------------------------------------------------------------------------------------------------------
Net investment loss (1.44)%(3) (2.05)%(3) (2.16)% (1.79)%(2)
- --------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,315,930 $212,043 $174,412 $205,274
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51 % 52 % 49 % 25 %
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
(4) Includes the effect of a capital gain distribution of $0.004.

25
<PAGE>

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
FOR THE YEAR FOR THE YEAR THROUGH
ENDED NOVEMBER 30, ENDED NOVEMBER 30, NOVEMBER 30,
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS C++
- -----------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $15.45 $10.85 $10.85
- -----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:

Net investment loss (0.52) (0.28) (0.08)
Net realized and unrealized gain 18.31 4.88 0.08
---------- --------- ---------
Total income from investment operations 17.79 4.60 --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $33.24(4) $15.45 $10.85
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 115.18 % 42.27 % 0.09 %(1)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------------------
Expenses 1.99 %(3) 2.30 %(3) 2.32 %(2)
- -----------------------------------------------------------------------------------------------------------
Net investment loss (1.69)%(3) (2.15)%(3) (2.22)%(2)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $34,898 $712 $83
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51 % 52 % 49 %
- -----------------------------------------------------------------------------------------------------------
</TABLE>

26
<PAGE>

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
FOR THE YEAR FOR THE YEAR THROUGH
ENDED NOVEMBER 30, ENDED NOVEMBER 30, NOVEMBER 30,
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS D++
- -----------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $15.66 $10.89 $10.85
- -----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:

Net investment loss (0.21) (0.15) (0.05)
Net realized and unrealized gain 18.52 4.92 0.09
------ ------ ------
Total income from investment operations 18.31 4.77 0.04
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $33.97(4) $15.66 $10.89
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 116.96 % 43.80 % 0.37 %(1)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------------------
Expenses 0.99 %(3) 1.30 %(3) 1.30 %(2)
- -----------------------------------------------------------------------------------------------------------
Net investment loss (0.69)%(3) (1.15)%(3) (1.19)%(2)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $4,384 $15 $10
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51 % 52 % 49 %
- -----------------------------------------------------------------------------------------------------------
</TABLE>

* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
(4) Includes the effect of a capital gain distribution of $0.004.

27
<PAGE>

NOTES

-----------------------------------------------------------------------

28
<PAGE>

MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS
The Morgan Stanley Dean Witter Family of Funds offers
investors a wide range of investment choices. Come on
in and meet the family!
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GROWTH FUNDS GROWTH FUNDS Health Sciences Trust

Aggressive Equity Fund Information Fund

American Opportunities Fund Natural Resource Development Securities

Capital Growth Securities GLOBAL/INTERNATIONAL FUNDS

Developing Growth Securities Competitive Edge Fund - "Best Ideas" Portfolio

Growth Fund European Growth Fund

Market Leader Trust Fund of Funds - International Portfolio

Mid-Cap Equity Trust International Fund

Next Generation Trust International SmallCap Fund

Small Cap Growth Fund Japan Fund

Special Value Fund Latin American Growth Fund

21st Century Trend Fund Pacific Growth Fund

THEME FUNDS

Financial Services Trust

- --------------------------------------------------------------------------------------------------------------------------------
GROWTH & INCOME FUNDS Balanced Growth Fund Total Market Index Fund

Balanced Income Fund Total Return Trust

Convertible Securities Trust Value Fund

Dividend Growth Securities Value/Added Market Series/Equity Portfolio

Equity Fund THEME FUNDS

Fund of Funds - Domestic Portfolio Real Estate Fund

Income Builder Fund Utilities Fund

Mid-Cap Dividend Growth Securities GLOBAL FUNDS

S&P 500 Index Fund Global Dividend Growth Securities

S&P 500 Select Fund Global Utilities Fund

Strategist Fund
- --------------------------------------------------------------------------------------------------------------------------------
INCOME FUNDS GOVERNMENT INCOME FUNDS GLOBAL INCOME FUNDS

Federal Securities Trust North American Government Income Trust

Short-Term U.S. Treasury Trust World Wide Income Trust

U.S. Government Securities Trust TAX-FREE INCOME FUNDS

DIVERSIFIED INCOME FUNDS California Tax-Free Income Fund

Diversified Income Trust Hawaii Municipal Trust(FSC)

CORPORATE INCOME FUNDS Limited Term Municipal Trust(NL)

High Yield Securities Multi-State Municipal Series Trust(FSC)

Intermediate Income Securities New York Tax-Free Income Fund

Short-Term Bond Fund(NL) Tax-Exempt Securities Trust
- --------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS TAXABLE MONEY MARKET FUNDS TAX-FREE MONEY MARKET FUNDS

Liquid Asset Fund(MM) California Tax-Free Daily Income Trust(MM)

U.S. Government Money Market Trust(MM) New York Municipal Money Market Trust(MM)

Tax-Free Daily Income Trust(MM)
</TABLE>

There may be Funds created after this Prospectus was published. Please consult
the inside back cover of a new Fund's prospectus for its designations, e.g.,
Multi-Class Fund or Money Market Fund.

Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund, except for
North American Government Income Trust and Short-Term U.S. Treasury Trust, is a
Multi-Class Fund. A Multi-Class Fund is a mutual fund offering multiple Classes
of shares. The other types of Funds are: NL -- No-Load (Mutual) Fund; MM --
Money Market Fund; FSC -- A mutual fund sold with a front-end sales charge and a
distribution (12b-1) fee.

<PAGE>

PROSPECTUS - JANUARY 28, 2000

Additional information about the Fund's investments is available in the Fund's
Annual and Semi-Annual Reports to Shareholders. In the Fund's Annual Report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. The
Fund's Statement of Additional Information also provides additional information
about the Fund. The Statement of Additional Information is incorporated herein
by reference (legally is part of this Prospectus). For a free copy of any of
these documents, to request other information about the Fund, or to make
shareholder inquiries, please call:

(800) 869-NEWS

You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:

www.msdw.com/individual/funds

Information about the Fund (including the Statement of Additional Information)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (202) 942-8090. Reports and
other information about the Fund are available on the EDGAR Database on the
SEC's Internet site (www.sec.gov) and copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the
following e-mail address: [email protected], or by writing the Public
Reference Section of the SEC, Washington, DC 20549-0102.

TICKER SYMBOLS:

Class A: MCFAX
- -------------------------------
Class B: MCFBX
- -------------------------------
Class C: MCFCX
- -------------------------------
Class D: MCFDX
- -------------------------------

(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-7377)

MORGAN STANLEY DEAN WITTER

---------------------------------------------------------------
MID-CAP EQUITY TRUST

[GRAPHIC OMITTED]

A MUTUAL FUND THAT SEEKS
LONG-TERM CAPITAL APPRECIATION

<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 28, 2000

MORGAN STANLEY DEAN
WITTER
MID-CAP
EQUITY TRUST
- -----------------------------------------------------------------------------

This Statement of Additional Information is not a Prospectus. The
Prospectus dated January 28, 2000 for Morgan Stanley Dean Witter Mid-Cap
Equity Trust may be obtained without charge from the Fund at its address or
telephone number listed below or from Dean Witter Reynolds at any of its
branch offices.

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Two World Trade Center
New York, New York 10048
(800) 869-NEWS

<PAGE>
TABLE OF CONTENTS
- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S> <C> <C>
I. Fund History ...................................................... 4
II. Description of the Fund and Its Investments and Risks ............. 4
A. Classification.................................................. 4
B. Investment Strategies and Risks................................. 4
C. Fund Policies/Investment Restrictions........................... 9
III.Management of the Fund ............................................ 10
A. Board of Trustees............................................... 10
B. Management Information.......................................... 10
C. Compensation.................................................... 15
IV. Control Persons and Principal Holders of Securities ............... 17
V. Management, Investment Advice and Other Services .................. 17
A. Investment Manager and Sub-Advisor.............................. 17
B. Principal Underwriter........................................... 18
C. Services Provided by the Investment Manager and the Sub-Advisor 19
D. Dealer Reallowances............................................. 20
E. Rule 12b-1 Plan................................................. 20
F. Other Service Providers......................................... 24
VI. Brokerage Allocation and Other Practices .......................... 24
A. Brokerage Transactions.......................................... 24
B. Commissions..................................................... 25
C. Brokerage Selection............................................. 25
D. Directed Brokerage.............................................. 26
E. Regular Broker-Dealers.......................................... 26
VII.Capital Stock and Other Securities ................................ 26
VIII.Purchase, Redemption and Pricing of Shares ........................ 27
A. Purchase/Redemption of Shares................................... 27
B. Offering Price.................................................. 28
IX. Taxation of the Fund and Shareholders ............................. 28
X. Underwriters ...................................................... 30
XI. Calculation of Performance Data ................................... 30
XII.Financial Statements .............................................. 32
</TABLE>

<PAGE>
GLOSSARY OF SELECTED DEFINED TERMS

The terms defined in this glossary are frequently used in this Statement
of Additional Information (other terms used occasionally are defined in the
text of the document).

"Custodian" -- The Bank of New York.

"Dean Witter Reynolds" -- Dean Witter Reynolds Inc., a wholly-owned
broker-dealer subsidiary of MSDW.

"Distributor" -- Morgan Stanley Dean Witter Distributors Inc., a
wholly-owned broker-dealer subsidiary of MSDW.

"Financial Advisors" -- Morgan Stanley Dean Witter authorized financial
services representatives.

"Fund" -- Morgan Stanley Dean Witter Mid-Cap Equity Trust, a registered
open-end investment company.

"Investment Manager" -- Morgan Stanley Dean Witter Advisors Inc., a
wholly-owned investment advisor subsidiary of MSDW.

"Independent Trustees" -- Trustees who are not "interested persons" (as
defined by the Investment Company Act) of the Fund.

"Morgan Stanley & Co." -- Morgan Stanley & Co. Incorporated, a
wholly-owned broker-dealer subsidiary of MSDW.

"Morgan Stanley Dean Witter Funds" -- Registered investment companies (i)
for which the Investment Manager serves as the investment advisor; and (ii)
that hold themselves out to investors as related companies for investment and
investor services.

"MSDW" -- Morgan Stanley Dean Witter & Co., a preeminent global financial
services firm.

"MSDW Services Company" -- Morgan Stanley Dean Witter Services Company
Inc., a wholly-owned fund services subsidiary of the Investment Manager.

"Sub-Advisor" -- TCW Investment Management Company, a wholly-owned
subsidiary of TCW.

"TCW" -- The TCW Group, Inc., a preeminent investment management and
investment advisory services firm.

"Transfer Agent" -- Morgan Stanley Dean Witter Trust FSB, a wholly-owned
transfer agent subsidiary of MSDW.

"Trustees" -- The Board of Trustees of the Fund.

<PAGE>
I. FUND HISTORY
- -----------------------------------------------------------------------------

The Fund was organized under the laws of the Commonwealth of Massachusetts
on October 17, 1995 as a Massachusetts business trust under the name "TCW/DW
Mid-Cap Equity Trust." On February 25, 1999 the Fund's Trustees adopted an
Amendment to the Fund's Declaration of Trust changing the name of the Fund to
Morgan Stanley Dean Witter Mid-Cap Equity Trust, effective June 28, 1999.

II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
- -----------------------------------------------------------------------------

A. CLASSIFICATION

The Fund is an open-end, diversified management investment company whose
investment objective is to seek long-term capital appreciation.

B. INVESTMENT STRATEGIES AND RISKS

The following discussion of the Fund's investment strategies and risks
should be read with the sections of the Fund's Prospectus titled "Principal
Investment Strategies," "Principal Risks," "Additional Investment Strategy
Information" and "Additional Risk Information."

CONVERTIBLE SECURITIES. The Fund may invest in fixed-income securities
which are convertible into common stock of the issuer. Convertible securities
rank senior to common stocks in a corporation's capital structure and,
therefore, entail less risk than the corporation's common stock. The value of
a convertible security is a function of its "investment value" (its value as
if it did not have a conversion privilege), and its "conversion value" (the
security's worth if it were to be exchanged for the underlying security, at
market value, pursuant to its conversion privilege).

To the extent that a convertible security's investment value is greater
than its conversion value, its price will be primarily a reflection of such
investment value and its price will be likely to increase when interest rates
fall and decrease when interest rates rise, as with a fixed-income security
(the credit standing of the issuer and other factors may also have an effect
on the convertible security's value). If the conversion value exceeds the
investment value, the price of the convertible security will rise above its
investment value and, in addition, will sell at some premium over its
conversion value. (This premium represents the price investors are willing to
pay for the privilege of purchasing a fixed-income security with a
possibility of capital appreciation due to the conversion privilege.) At such
times the price of the convertible security will tend to fluctuate directly
with the price of the underlying equity security. Convertible securities may
be purchased by the Fund at varying price levels above their investment
values and/or their conversion values in keeping with the Fund's objective.

The Fund may also invest up to 5% of its assets in convertible securities
and other fixed income securities rated below investment grade. Securities
below investment grade are the equivalent of high yield, high risk bonds
(commonly known as "junk bonds"). However, the Fund will not invest in
convertible and other fixed-income securities that are rated lower than B by
S&P or Moody's or, if not rated, determined to be of comparable quality by
the Sub-Advisor.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may enter into
forward foreign currency exchange contracts ("forward contracts") to "lock
in" the price of a security in U.S. dollars or some other foreign currency
which the Fund is holding in its portfolio. By entering into a forward
contract for the purchase or sale, for a fixed amount of dollars or other
currency, of the amount of foreign currency involved in the underlying
security transactions, the Fund may be able to protect itself against a
possible loss resulting from an adverse change in the relationship between
the U.S. dollar or other currency which is being used for the security
purchase and the foreign currency in which the security is denominated during
the period between the date on which the security is purchased or sold and
the date on which payment is made or received. A forward contract involves an
obligation to purchase or sell a specific currency at a future date, which
may be any fixed number of days from the date of the contract agreed upon by
the parties, at a price set at the time of the contract. These contracts are
traded in the interbank market conducted directly between currency traders
(usually large, commercial and investment banks) and their customers. Forward
contracts only will be entered into with United States banks and their

<PAGE>
foreign branches, insurance companies and other dealers or foreign banks
whose assets total $1 billion or more. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage for trades.

Although the Fund values its assets daily in terms of U.S. dollars, it
does not intent to convert the holdings of foreign currencies into U.S.
dollars on a daily basis. It will, however, do so from time to time, and
investors should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize
a profit based on the spread between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to the Fund at one rate, while offering a lesser rate of exchange
should the Fund desire to resell that currency to the dealer.

The Fund may be limited in its ability to enter into hedging transactions
involving forward contracts by the Internal Revenue Code requirements
relating to qualification as a regulated investment company.

Forward currency contracts may limit gains on portfolio securities that
could otherwise be realized had they not been utilized and could result in
losses.

MONEY MARKET SECURITIES. The Fund may invest in various money market
securities for cash management purposes or when assuming a temporary
defensive position, which among others may include commercial paper, bank
acceptances, bank obligations, corporate debt securities, certificates of
deposit, U.S. Government securities and obligations of savings institutions
and repurchase agreements. Such securities are limited to:

U.S. Government Securities. Obligations issued or guaranteed as to
principal and interest by the United States or its agencies (such as the
Export-Import Bank of the United States, Federal Housing Administration and
Government National Mortgage Association) or its instrumentalities (such as
the Federal Home Loan Bank), including Treasury bills, notes and bonds;

Bank Obligations. Obligations (including certificates of deposit and
bankers' acceptances) of banks subject to regulation by the U.S. Government
and having total assets of $1 billion or more, and instruments secured by
such obligations, not including obligations of foreign branches of domestic
banks except to the extent below;

Eurodollar Certificates of Deposit. Eurodollar certificates of deposit
issued by foreign branches of domestic banks having total assets of $1
billion or more;

Obligations of Savings Institutions. Certificates of deposit of savings
banks and savings and loan associations, having total assets of $1 billion or
more;

Fully Insured Certificates of Deposit. Certificates of deposit of banks
and savings institutions having total assets of less than $1 billion, if the
principal amount of the obligation is federally insured by the Bank Insurance
Fund or the Savings Association Insurance Fund (each of which is administered
by the FDIC), limited to $100,000 principal amount per certificate and to 10%
or less of the Fund's total assets in all such obligations and in all
illiquid assets, in the aggregate; and

Commercial Paper. Commercial paper rated within the two highest grades by
Standard & Poor's Corporation ("S&P") or the two highest grade by Moody's
Investor's Service, Inc. ("Moody's") or, if not rated, issued by a company
having an outstanding debt issue rated at least AA by S&P or Aa by Moody's;
and

Repurchase Agreements. The Fund may invest in repurchase agreements. When
cash may be available for only a few days, it may be invested by the Fund in
repurchase agreements until such time as it may otherwise be invested or used
for payments of obligations of the Fund. These agreements, which may be
viewed as a type of secured lending by the Fund, typically involve the
acquisition, by the Fund, of debt securities from a selling financial
institution such as a bank, savings and loan association or broker-dealer.
The agreement provides that the Fund will sell back to the institution, and
that the institution will repurchase, the underlying security serving as
collateral at a specified price and at a fixed time in the future, usually
not more than seven days from the date of purchase. The collateral will be

<PAGE>
marked-to-market daily to determine that the value of the collateral, as
specified in the agreement, does not decrease below the purchase price plus
accrued interest. If such decrease occurs, additional collateral will be
requested and, when received, added to the account to maintain full
collateralization. The Fund will accrue interest from the institution until
the time when the repurchase is to occur. Although this date is deemed by the
Fund to be the maturity date of a repurchase agreement, the maturities of
securities subject to repurchase agreements are not subject to any limits.

While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed
to minimize such risks. These procedures include effecting repurchase
transactions only with large, well-capitalized and well-established financial
institutions whose financial condition will be continually monitored by the
Investment Manager and/or Sub-Advisor subject to procedures established by
the Trustees. In addition, as described above, the value of the collateral
underlying the repurchase agreement will be at least equal to the repurchase
price, including any accrued interest earned on the repurchase agreement. In
the event of a default or bankruptcy by a selling financial institution, the
Fund will seek to liquidate such collateral. However, the exercising of the
Fund's right to liquidate such collateral could involve certain costs or
delays and, to the extent that proceeds from any sale upon a default of the
obligation to repurchase were less than the repurchase price, the Fund could
suffer a loss. It is the current policy of the Fund not to invest in
repurchase agreements that do not mature within seven days if any such
investment, together with any other illiquid assets held by the Fund, amounts
to more than 15% of its net assets.

ZERO COUPON SECURITIES. A portion of the fixed-income securities purchased
by the Fund may be zero coupon securities. Such securities are purchased at a
discount from their face amount, giving the purchaser the right to receive
their full value at maturity. The interest earned on such securities is,
implicitly, automatically compounded and paid out at maturity. While such
compounding at a constant rate eliminates the risk of receiving lower yields
upon reinvestment of interest if prevailing interest rates decline, the owner
of a zero coupon security will be unable to participate in higher yields upon
reinvestment of interest received on interest-paying securities if prevailing
interest rates rise.

A zero coupon security pays no interest to its holder during its life.
Therefore, to the extent the Fund invests in zero coupon securities, it will
not receive current cash available for distribution to shareholders. In
addition, zero coupon securities are subject to substantially greater price
fluctuations during periods of changing prevailing interest rates than are
comparable securities which pay interest on a current basis. Current federal
tax law requires that a holder (such as the Fund) of a zero coupon security
accrue a portion of the discount at which the security was purchased as
income each year even though the Fund receives no interest payments in cash
on the security during the year.

INVESTMENT IN REAL ESTATE INVESTMENT TRUSTS. The Fund may invest in real
estate investment trusts, which pool investors' funds for investments
primarily in commercial real estate properties. Investment in real estate
investment trusts may be the most practical available means for the Fund to
invest in the real estate industry (the Fund is prohibited from investing in
real estate directly). As a shareholder in a real estate investment trust,
the Fund would bear its ratable share of the real estate investment trust's
expenses, including its advisory and administration fees. At the same time
the Fund would continue to pay its own management fees, investment advisory
fees and other expenses, as a result of which the Fund and its shareholders
in effect will be absorbing duplicate levels of fees with respect to
investments in real estate investment trusts.

LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities
to brokers, dealers and other financial institutions, provided that the loans
are callable at any time by the Fund, and are at all times secured by cash or
cash equivalents, which are maintained in a segregated account pursuant to
applicable regulations and that are equal to at least 100% of the market
value, determined daily, of the loaned securities. The advantage of these
loans is that the Fund continues to receive the income on the loaned
securities while at the same time earning interest on the cash amounts
deposited as collateral, which will be invested in short-term obligations.
The Fund will not lend more than 25% of the value of its total assets.

<PAGE>
As with any extensions of credit, there are risks of delay in recovery
and, in some cases, even loss of rights in the collateral should the borrower
of the securities fail financially. However, these loans of portfolio
securities will only be made to firms deemed by the Fund's management to be
creditworthy and when the income which can be earned from such loans
justifies the attendant risks. Upon termination of the loan, the borrower is
required to return the securities to the Fund. Any gain or loss in the market
price during the loan period would inure to the Fund.

When voting or consent rights which accompany loaned securities pass to
the borrower, the Fund will follow the policy of calling the loaned
securities, to be delivered within one day after notice, to permit the
exercise of the rights if the matters involved would have a material effect
on the Fund's investment in the loaned securities. The Fund will pay
reasonable finder's, administrative and custodial fees in connection with a
loan of its securities.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS. The
Fund may purchase securities on a when-issued or delayed delivery basis or
may purchase or sell securities on a forward commitment basis. When these
transactions are negotiated, the price is fixed at the time of the
commitment, but delivery and payment can take place a month or more after the
date of commitment. While the Fund will only purchase securities on a
when-issued, delayed delivery or forward commitment basis with the intention
of acquiring the securities, the Fund may sell the securities before the
settlement date, if it is deemed advisable. The securities so purchased or
sold are subject to market fluctuation and no interest or dividends accrue to
the purchaser prior to the settlement date.

At the time the Fund makes the commitment to purchase or sell securities
on a when-issued, delayed delivery or forward commitment basis, it will
record the transaction and thereafter reflect the value, each day, of such
security purchased, or if a sale, the proceeds to be received, in determining
its net asset value. At the time of delivery of the securities, their value
may be more or less than the purchase or sale price. An increase in the
percentage of the Fund's assets committed to the purchase of securities on a
when-issued, delayed delivery or forward commitment basis may increase the
volatility of its net asset value. The Fund will also establish a segregated
account on the Fund's books in which it will continually maintain cash or
cash equivalents or other liquid portfolio securities equal in value to
commitments to purchase securities on a when-issued, delayed delivery or
forward commitment basis.

WHEN, AS AND IF ISSUED SECURITIES. The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security
depends upon the occurrence of a subsequent event, such as approval of a
merger, corporate reorganization or debt restructuring. The commitment for
the purchase of any such security will not be recognized in the portfolio of
the Fund until the Investment Manager and/or Sub-Advisor determines that
issuance of the security is probable. At that time, the Fund will record the
transaction and, in determining its net asset value, will reflect the value
of the security daily. At that time, the Fund will also establish a
segregated account on the Fund's books in which it will maintain cash or cash
equivalents or other liquid portfolio securities equal in value to recognized
commitments for such securities.

An increase in the percentage of the Fund's assets committed to the
purchase of securities on a "when, as and if issued" basis may increase the
volatility of its net asset value. The Fund may also sell securities on a
"when, as and if issued" basis provided that the issuance of the security
will result automatically from the exchange or conversion of a security owned
by the Fund at the time of sale.

PRIVATE PLACEMENTS AND RESTRICTED SECURITIES. The Fund may invest up to
15% of its net assets in securities which are subject to restrictions on
resale because they have not been registered under the Securities Act of 1933
(the "Securities Act"), or which are otherwise not readily marketable.
(Securities eligible for resale pursuant to Rule 144A under the Securities
Act, and determined to be liquid pursuant to the procedures discussed in the
following paragraph, are not subject to the foregoing restriction.) These
securities are generally referred to as "private placements" or "restricted
securities." Limitations on the resale of these securities may have an
adverse effect on their marketability, and may prevent the Fund from
disposing of them promptly at reasonable prices. The Fund may have to bear
the expense of registering the securities for resale and the risk of
substantial delays in effecting the registration.

<PAGE>
Rule 144A permits the Fund to sell restricted securities to qualified
institutional buyers without limitation. The Investment Manager and/or
Sub-Advisor, pursuant to procedures adopted by the Trustees, will make a
determination as to the liquidity of each restricted security purchased by
the Fund. If a restricted security is determined to be "liquid," the security
will not be included within the category "illiquid securities," which may not
exceed 15% of the Fund's net assets. However, investing in Rule 144A
securities could have the effect of increasing the level of Fund illiquidity
to the extent the Fund, at a particular point in time, may be unable to find
qualified institutional buyers interested in purchasing such securities.

WARRANTS AND SUBSCRIPTION RIGHTS. The Fund may acquire warrants and
subscription rights attached to other securities. The Fund may invest up to
5% of the value of its net assets in warrants, including not more than 2% in
warrants not listed on either the New York or American Stock Exchange. A
warrant is, in effect, an option to purchase equity securities at a specific
price, generally valid for a specific period of time, and has no voting
rights, pays no dividends and has no rights with respect to the corporation
issuing it.

A subscription right is a privilege granted to existing shareholders of a
corporation to subscribe to shares of a new issue of common stock before it
is offered to the public. A subscription right normally has a life of two to
four weeks and a subscription price lower than the current market value of
the common stock. The Fund may invest up to 5% of the value of its net assets
in rights.

HIGH YIELD, HIGH RISK SECURITIES. Because of the ability of the Fund to
invest in certain high yield, high risk convertible and other fixed-income
securities (commonly known as "junk bonds"), the Investment Manager and/or
Sub-Advisor must take into account the special nature of such securities and
certain special considerations in assessing the risks associated with such
investments. Although the growth of the high yield securities market in the
1980s had paralleled a long economic expansion, since that time many issuers
have been affected by adverse economic and market conditions. It should be
recognized that an economic downturn or increase in interest rates is likely
to have a negative effect on the high yield bond market and on the value of
the high yield securities held by the Fund, as well as on the ability of the
securities' issuers to repay principal and interest on their borrowings.

The prices of high yield securities have been found to be less sensitive
to changes in prevailing interest rates than higher-rated investments but
more sensitive to adverse economic changes or individual corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress
which would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. If the issuer of a fixed-income security owned
by the Fund defaults, the Fund may incur additional expenses to seek
recovery. In addition, periods of economic uncertainty and change can be
expected to result in an increased volatility of market prices of high yield
securities and a corresponding volatility in the net asset value of a share
of the Fund.

The secondary market for high yield securities may be less liquid than the
markets for higher quality securities and, as such, may have an adverse
effect on the market prices of certain securities. The limited liquidity of
the market may also adversely affect the ability of the Trustees to arrive at
a fair value for certain high yield securities at certain times and could
make it difficult for the Fund to sell certain securities. In addition, new
laws and potential new laws may have an adverse effect upon the value of high
yield securities and a corresponding negative impact upon the net asset value
of a share of the Fund.

YEAR 2000. The investment management services provided to the Fund by the
Investment Manager and the Sub-Advisor and the services provided to
shareholders by the Distributor and the Transfer Agent depend on the smooth
functioning of their computer systems. Many computer software systems in use
today were designed in such a way that they may not be able to recognize the
year 2000, but revert to 1900 or some other date, due to the manner in which
dates were encoded and calculated. That failure could have a negative impact
on the handling of securities trades, pricing and account services.

<PAGE>

Improperly functioning trading systems may result in settlement problems
and liquidity issues. Corporate and governmental data processing errors could
result in production problems for individual issuers and overall economic
uncertainties. Operations ran smoothly from the last week in December through
the first few weeks of January, but the year 2000 issue may yet have an
adverse impact on financial market participants and other entities, including
the issuers whose securities are contained in the Fund's portfolios.

C. FUND POLICIES/INVESTMENT RESTRICTIONS

The investment objective, policies and restrictions listed below have been
adopted by the Fund as fundamental policies. Under the Investment Company Act
of 1940 (the "Investment Company Act"), a fundamental policy may not be
changed without the vote of a majority of the outstanding voting securities
of the Fund. The Investment Company Act defines a majority as the lesser of
(a) 67% or more of the shares present at a meeting of shareholders, if the
holders of 50% of the outstanding shares of the Fund are present or
represented by proxy; or (b) more than 50% of the outstanding shares of the
Fund. For purposes of the following restrictions: (i) all percentage
limitations apply immediately after a purchase or initial investment; and
(ii) any subsequent change in any applicable percentage resulting from market
fluctuations or other changes in total or net assets does not require
elimination of any security from the portfolio.

The Fund will:

1. Seek long-term capital appreciation.

The Fund may not:

1. As to 75% of its assets, invest more than 5% of the value of its total
assets in the securities of any one issuer (other than obligations
issued, or guaranteed by, the United States Government, its agencies
or instrumentalities).

2. As to 75% of its assets, purchase more than 10% of all outstanding
voting securities or any class of securities of any one issuer.

3. Invest 25% or more of the value of its total assets in securities of
issuers in any one industry. This restriction does not apply to
obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities or to cash equivalents.

4. Invest more than 5% of the value of its total assets in securities of
issuers having a record, together with predecessors, of less than 3
years of continuous operation. This restriction does not apply to any
obligation of the United States Government, its agencies or
instrumentalities.

5. Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition
of assets.

6. Purchase or sell real estate or interests therein (including limited
partnership interests), although the Fund may purchase securities of
issuers which engage in real estate operations and securities secured
by real estate or interests therein.

7. Purchase oil, gas or other mineral leases, rights or royalty
contracts, or exploration or development programs, except that the
Fund may invest in the securities of companies which operate, invest
in, or sponsor these programs.

8. Purchase or sell commodities or commodities contracts.

9. Borrow money, except that the Fund may borrow from a bank for
temporary or emergency purposes, in amounts not exceeding 5% of its
total assets (not including the amount borrowed).

10. Pledge its assets or assign or otherwise encumber them except to
secure permitted borrowings.

<PAGE>
11. Issue senior securities as defined in the Investment Company Act,
except insofar as the Fund may be deemed to have issued a senior
security by reason of: (a) entering into any repurchase agreement; (b)
purchasing any securities on a when-issued or delayed delivery basis;
(c) borrowing money; or (d) lending portfolio securities.

12. Make loans of money or securities, except: (a) by the purchase of
portfolio securities; (b) by investment in repurchase agreements; or
(c) by lending its portfolio securities.

13. Make short sales of securities.

14. Purchase securities on margin, except for short-term loans as are
necessary for the clearance of portfolio securities.

15. Engage in the underwriting of securities, except insofar as the Fund
may be deemed an underwriter under the Securities Act in disposing of
a portfolio security.

16. Invest for the purpose of exercising control or management of any
other issuer.

17. Purchase warrants if, as a result, the Fund would then have either
more than 5% of its net assets invested in warrants or more than 2% of
its net assets invested in warrants not listed on the New York or
American Stock Exchange.

18. Invest in options or futures contracts.

If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of total or net assets will not be considered
a violation of any of the foregoing restrictions.

III. MANAGEMENT OF THE FUND
- -----------------------------------------------------------------------------

A. BOARD OF TRUSTEES

The Board of Trustees of the Fund oversees the management of the Fund but
does not itself manage the Fund. The Trustees review various services
provided by or under the direction of the Investment Manager to ensure that
the Fund's general investment policies and programs are properly carried out.
The Trustees also conduct their review to ensure that administrative services
are provided to the Fund in a satisfactory manner.

Under state law, the duties of the Trustees are generally characterized as
a duty of loyalty and a duty of care. The duty of loyalty requires a Trustee
to exercise his or her powers in the interest of the Fund and not the
Trustee's own interest or the interest of another person or organization. A
Trustee satisfies his or her duty of care by acting in good faith with the
care of an ordinarily prudent person and in a manner the Trustee reasonably
believes to be in the best interest of the Fund and its shareholders.

B. MANAGEMENT INFORMATION

TRUSTEES AND OFFICERS. The Board of the Fund consists of eight (8)
Trustees. These same individuals also serve as directors or trustees for all
of the Morgan Stanley Dean Witter Funds. Six Trustees (75% of the total
number) have no affiliation or business connection with the Investment
Manager or any of its affiliated persons and do not own any stock or other
securities issued by the Investment Manager's parent company, MSDW or the
Sub-Advisor's parent company, TCW. These are the "disinterested" or
"independent" Trustees. The other two Trustees (the "management Trustees")
are affiliated with the Investment Manager.

The Trustees and executive officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with
the Investment Manager or the Sub-Advisor, and with the 93 Morgan Stanley
Dean Witter Funds are shown below.

<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- -------------------------------------------- -------------------------------------------------------
<S> <C>
Michael Bozic (59).......................... Vice Chairman of Kmart Corporation (since December
Trustee 1998); Director or Trustee of the Morgan Stanley Dean
c/o Kmart Corporation Witter Funds; formerly Chairman and Chief Executive
3100 West Big Beaver Road Officer of Levitz Furniture Corporation (November
Troy, Michigan 1995-November 1998) and President and Chief Executive
Officer of Hills Department Stores (May 1991-July
1995); formerly variously Chairman, Chief Executive
Officer, President and Chief Operating Officer
(1987-1991) of the Sears Merchandise Group of Sears,
Roebuck and Co.; Director of Weirton Steel Corporation.

Charles A. Fiumefreddo* (66)................ Chairman, Director or Trustee and Chief Executive
Chairman of the Board, Officer of the Morgan Stanley Dean Witter Funds;
Chief Executive Officer and Trustee formerly Chairman, Chief Executive Officer and Director
Two World Trade Center of the Investment Manager, the Distributor and MSDW
New York, New York Services Company; Executive Vice President and Director
of Dean Witter Reynolds; Chairman and Director of the
Transfer Agent; formerly Director and/or officer of
various MSDW subsidiaries (until June 1998).

Edwin J. Garn (67).......................... Director or Trustee of the Morgan Stanley Dean Witter
Trustee Funds; formerly United States Senator
c/o Huntsman Corporation (R-Utah)(1974-1992) and Chairman, Senate Banking
500 Huntsman Way Committee (1980-1986); formerly Mayor of Salt Lake
Salt Lake City, Utah City, Utah (1971-1974); formerly Astronaut, Space
Shuttle Discovery (April 12-19, 1985); Vice Chairman,
Huntsman Corporation (chemical company); Director of
Franklin Covey (time management systems), BMW Bank of
North America, Inc. (industrial loan corporation),
United Space Alliance (joint venture between Lockheed
Martin and the Boeing Company) and Nuskin Asia Pacific
(multilevel marketing); member of the board of various
civic and charitable organizations.

Wayne E. Hedien (65)........................ Retired; Director or Trustee of the Morgan Stanley Dean
Trustee Witter Funds; Director of The PMI Group, Inc. (private
c/o Mayer, Brown & Platt mortgage insurance); Trustee and Vice Chairman of The
Counsel to the Independent Trustees Field Museum of Natural History; formerly associated
1675 Broadway with the Allstate Companies (1966-1994), most recently
New York, New York as Chairman of The Allstate Corporation (March
1993-December 1994) and Chairman and Chief Executive
Officer of its wholly-owned subsidiary, Allstate
Insurance Company (July 1989-December 1994); director
of various other business and charitable organizations.

<PAGE>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- -------------------------------------------- -------------------------------------------------------

Dr. Manuel H. Johnson (50).................. Senior Partner, Johnson Smick International, Inc., a
Trustee consulting firm; Co-Chairman and a founder of the Group
c/o Johnson Smick International, Inc. of Seven Council (G7C), an international economic
1133 Connecticut Avenue, N.W. commission; Chairman of the Audit Committee and
Washington, D.C. Director or Trustee of the Morgan Stanely Dean Witter
Funds; Director of Greenwich Capital Markets, Inc.
(broker-dealer) and NVR, Inc. (home construction);
Chairman and Trustee of the Financial Accounting
Foundation (oversight organization of the Financial
Accounting Standards Board); formerly Vice Chairman of
the Board of Governors of the Federal Reserve System
(1986-1990) and Assistant Secretary of the U.S.
Treasury.

Michael E. Nugent (63)...................... General Partner, Triumph Capital, L.P., a private
Trustee investment partnership; Chairman of the Insurance
c/o Triumph Capital, L.P. Committee and Director or Trustee of the Morgan Stanley
237 Park Avenue Dean Witter Funds; formerly Vice President, Bankers
New York, New York Trust Company and BT Capital Corporation (1984-1988);
director of various business organizations.

Philip J. Purcell* (56)..................... Chairman of the Board of Directors and Chief Executive
Trustee Officer of MSDW, Dean Witter Reynolds and Novus Credit
1585 Broadway Services Inc.; Director of the Distributor; Director or
New York, New York Trustee of the Morgan Stanley Dean Witter Funds;
Director of American Airlines, Inc. and its parent
company, AMR Corporation; Director and/or officer of
various MSDW subsidiaries.

John L. Schroeder (69)...................... Retired; Chairman of the Derivatives Committee and
Trustee Director or Trustee of the Morgan Stanley Dean Witter
c/o Mayer, Brown & Platt Funds; Director of Citizens Utilities Company
Counsel to the Independent Trustees (telecommunications, gas, electric and water utilities
1675 Broadway company); formerly Executive Vice President and Chief
New York, New York Investment Officer of Home Insurance Company (August
1991-September 1995).

<PAGE>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- -------------------------------------------- -------------------------------------------------------

Mitchell M. Merin (46)...................... President and Chief Operating Officer of Asset
President Management of MSDW (since December 1998); President and
Two World Trade Center Director (since April 1997) and Chief Executive Officer
New York, New York (since June 1998) of the Investment Manager and MSDW
Services Company; Chairman, Chief Executive Officer and
Director of the Distributor (since June 1998); Chairman
and Chief Executive Officer (since June 1998) and
Director (since January 1998) of the Transfer Agent;
Director of various MSDW subsidiaries; President of the
Morgan Stanley Dean Witter Funds (since May 1999);
Trustee of various Van Kampen investment companies
(since December 1999); previously Chief Strategic
Officer of the Investment Manager and MSDW Services
Company and Executive Vice President of the Distributor
(April 1997-June 1998), Vice President of the Morgan
Stanley Dean Witter Funds (May 1997-April 1999), and
Executive Vice President of Dean Witter, Discover & Co.

Barry Fink (45)............................. Executive Vice President (since December 1999) and
Vice President, Secretary and General Counsel (since February 1997) and
Secretary and General Counsel Director (since July 1998) of the Investment Manager
Two World Trade Center and MSDW Services Company; Executive Vice President
New York, New York (since December 1999) and Assistant Secretary and
Assistant General Counsel (since February 1997) of the
Distributor; Assistant Secretary of Dean Witter
Reynolds (since August 1996); Vice President, Secretary
and General Counsel of the Morgan Stanley Dean Witter
Funds (since February 1997); previously Senior Vice
President (March 1997-December 1999), First Vice
President (June 1993-February 1997), Vice President and
Assistant Secretary and Assistant General Counsel of
the Investment Manager and MSDW Services Company,
Senior Vice President of the Distributor (March
1997-December 1999); and Assistant Secretary of the
Morgan Stanley Dean Witter Funds.

Douglas S. Foreman (42) .................... Chief Investment Officer of U.S. Equities and Group
Vice President Managing Director of the Sub-Advisor, Trust Company of
865 South Figueroa Street the West and TCW Asset Management Company; previously
Los Angeles, California portfolio manager with Putnam Investments.

Christopher J. Ainley (41) ................. Managing Director of the Sub-Advisor, Trust Company of
Vice President the West and TCW Asset Management Company (since
865 South Figueroa Street February 1996); formerly Senior Vice President of the
Los Angeles, California Sub-Advisor, Trust Company of the West and TCW Asset
Management Company (May 1994-February 1996).

<PAGE>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- -------------------------------------------- -------------------------------------------------------

Thomas F. Caloia (53) ...................... First Vice President and Assistant Treasurer of the
Treasurer Investment Manager, the Distributor and MSDW Services
Two World Trade Center Company; Treasurer of the Morgan Stanley Dean Witter
New York, New York Funds.
</TABLE>

- ------------

* Denotes Trustees who are "interested persons" of the Fund as defined by the
Investment Company Act.

In addition, Ronald E. Robison, Executive Vice President, Chief
Administrative Officer and Director of the Investment Manager and MSDW
Services Company, Robert S. Giambrone, Senior Vice President of the
Investment Manager, MSDW Services Company, the Distributor and the Transfer
Agent and Director of the Transfer Agent, and Joseph J. McAlinden, Executive
Vice President and Chief Investment Officer of the Investment Manager and
Director of the Transfer Agent, are Vice Presidents of the Fund.

In addition, Marilyn K. Cranney, Todd Lebo, Lou Anne D. McInnis, Carsten
Otto and Ruth Rossi, First Vice Presidents and Assistant General Counsels of
the Investment Manager and MSDW Services Company, and Natasha Kassian,
Assistant Vice President and Assistant General Counsel of the Investment
Manager and MSDW Services Company, are Assistant Secretaries of the Fund.

INDEPENDENT DIRECTORS/TRUSTEES AND THE COMMITTEES. Law and regulation
establish both general guidelines and specific duties for the independent
directors/trustees. The Morgan Stanley Dean Witter Funds seek as independent
directors/trustees individuals of distinction and experience in business and
finance, government service or academia; these are people whose advice and
counsel are 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 the Funds make substantial demands on their
time. All of the independent directors/trustees serve as members of the Audit
Committee. In addition, three of the directors/trustees, including two
independent director/trustees, serve as members of the Derivatives Committee
and the Insurance Committee.

The independent directors/trustees are 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 independent directors/trustees are required to select and
nominate individuals to fill any independent director/trustee vacancy on the
board of any Fund that has a Rule 12b-1 plan of distribution. Most of the
Morgan Stanley Dean Witter Funds have a Rule 12b-1 plan.

The Audit Committee is charged with recommending to the full board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing
engagement; approving professional services provided by the independent
accountants and other accounting firms prior to the performance of the
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; and preparing and submitting
Committee meeting minutes to the full board.

The board of each Fund has a Derivatives Committee to approve parameters
for and monitor the activities of the Fund with respect to derivative
investments, if any, made by the Fund.

Finally, the board of each Fund has formed an Insurance Committee to
review and monitor the insurance coverage maintained by the Fund.

ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT DIRECTORS/TRUSTEES
FOR ALL MORGAN STANLEY DEAN WITTER FUNDS. The independent directors/trustees
and the Funds' management believe that having the same independent
directors/trustees for each of the Morgan Stanley Dean Witter Funds avoids
the duplication of effort that would arise from having different groups of
individuals serving as independent directors/trustees for each of the Funds
or even of sub-groups of Funds. They believe that

<PAGE>
having the same individuals serve as independent directors/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 possibility of separate groups of independent
directors/trustees arriving at conflicting decisions regarding operations and
management of the Funds and avoids the cost and confusion that would likely
ensue. Finally, having the same independent directors/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 directors/trustees, of the
caliber, experience and business acumen of the individuals who serve as
independent directors/trustees of the Morgan Stanley Dean Witter Funds.

TRUSTEE AND OFFICER INDEMNIFICATION. The Fund's Declaration of Trust
provides that no Trustee, officer, employee or agent of the Fund is liable to
the Fund or to a shareholder, nor is any Trustee, officer, employee or agent
liable to any third persons in connection with the affairs of the Fund,
except as such liability may arise from his/her or its own bad faith, willful
misfeasance, gross negligence or reckless disregard of his/her or its duties.
It also provides that all third persons shall look solely to the Fund
property for satisfaction of claims arising in connection with the affairs of
the Fund. With the exceptions stated, the Declaration of Trust provides that
a Trustee, officer, employee or agent is entitled to be indemnified against
all liability in connection with the affairs of the Fund.

C. COMPENSATION

The Fund pays each Independent Trustee an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Trustees, the Independent
Trustees or Committees of the Board of Trustees attended by the Trustee (the
Fund pays the Chairman of the Audit Committee an additional annual fee of
$750, and the Chairmen of the Derivatives and Insurance Committees additional
annual fees of $500). If a Board meeting and a meeting of the Independent
Trustees or a Committee meeting, or a meeting of the Independent Trustees
and/or more than one Committee meeting, take place on a single day, the
Trustees are paid a single meeting fee by the Fund. The Fund 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 Fund
who are or have been employed by the Investment Manager or an affiliated
company receive no compensation or expense reimbursement from the Fund for
their services as Trustee.

At their June 8, 1999 meeting, shareholders elected or re-elected, as
appropriate, the following eight individuals to the Fund's Board of Trustees
to serve for indefinite terms: Michael Bozic, Charles A. Fiumefreddo, Edwin
Jacob (Jake) Garn, Wayne E. Hedien, Dr. Manuel H. Johnson, Michael E. Nugent,
Philip J. Purcell and John L. Schroeder. Messrs. Fiumefreddo, Johnson, Nugent
and Schroeder previously served as Trustees of the Fund and were previously
elected by shareholders. Messrs. Bozic, Garn, Hedien and Purcell previously
held directorships or trusteeships with the other Morgan Stanley Dean Witter
Funds and were elected to replace Messrs. Argue, DeMartini, Larkin and Stern
who resigned as Trustees. Messrs. Bozic, Garn, Hedien and Purcell commenced
service at the time the new Investment Management Agreement took effect on
June 28, 1999. Prior to the effectiveness of the election of Messrs. Bozic,
Garn, Hedien and Purcell and the resignation of Messrs. Argue, DeMartini,
Larkin and Stern, the Fund paid each Independent Trustee an annual fee of
$2,225 plus a per meeting fee of $200 for meetings of the Board of Trustees
or committees of the Board attended by the Trustee.

The following table illustrates the compensation that the Fund paid to its
Independent Trustees for the fiscal year ended November 30, 1999.

<PAGE>
FUND COMPENSATION

<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
- ----------------------------------------------------- ---------------
<S> <C>
Michael Bozic........................................ $ 750
Edwin J. Garn........................................ 750
Wayne E. Hedien...................................... 750
Dr. Manuel H. Johnson................................ 4,250
Michael E. Nugent.................................... 4,083
John L. Schroeder.................................... 4,083
</TABLE>

At such time as the Fund has paid fees to the Independent Trustees for a
full fiscal year at the lower current compensation rates set forth above, and
assuming that during such fiscal year the Fund holds the same number of
meetings of the Board, the Independent Trustees and the Committees as were
held by the other Morgan Stanley Dean Witter Funds during the calendar year
ended December 31, 1999, it is estimated that the compensation paid to each
Independent Trustee during such fiscal year will be $1,550 and an additional
$750 to Dr. Johnson who serves as Chairman of the Audit Committee and an
additional $500 to each of Messrs. Nugent and Schroeder, who serve as
Chairman of the Insurance Committee and the Derivatives Committee,
respectively.

The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1999 for
services to the 93 Morgan Stanley Dean Witter Funds that were in operation at
December 31, 1999.

CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS

<TABLE>
<CAPTION>
TOTAL CASH COMPENSATION
NAME OF FOR SERVICES TO 93 MORGAN
INDEPENDENT TRUSTEE STANLEY DEAN WITTER FUNDS
- ----------------------------------------------------- -------------------------
<S> <C>
Michael Bozic........................................ $134,600
Edwin J. Garn........................................ 138,700
Wayne E. Hedien...................................... 138,700
Dr. Manuel H. Johnson................................ 208,638
Michael E. Nugent.................................... 193,324
John L. Schroeder.................................... 193,324
</TABLE>

As of the date of this Statement of Additional Information, 55 of the
Morgan Stanley Dean Witter Funds, not including the Fund, have adopted a
retirement program under which an independent director/trustee who retires
after serving for at least five years (or such lesser period as may be
determined by the Board) as an independent director/trustee of any Morgan
Stanley Dean Witter Fund that has adopted the retirement program (each such
Fund referred to as an "Adopting Fund" and each such trustee referred to as
an "Eligible Trustee") is entitled to retirement payments upon reaching the
eligible retirement age (normally, after attaining age 72), Annual payments
are based upon length of service.

Currently, upon retirement, each Eligible Trustee is entitled to receive
from the Adopting Fund, commencing as of his or her retirement date and
continuing for the remainder of his or her life, an annual retirement benefit
(the "Regular Benefit") equal to 30.22% of his or her Eligible Compensation
plus 0.5036667% of such Eligible Compensation for each full month of service
as an independent director/trustee of any Adopting Fund in excess of five
years up to a maximum of 60.44% after ten years of service. The foregoing
percentages may be changed by the Board(1). "Eligible Compensation" is
- ------------

(1) An Eligible Trustee may elect alternative payments of his or her
retirement benefits based upon the combined life expectancy of the
Eligible Trustee and his or her spouse on the date of such Eligible
Trustee's retirement. In addition, the Eligible Trustee may elect that
the surviving spouse's periodic payment of benefits will be equal to a
lower percentage of the periodic amount when both spouses were alive.
The amount estimated to be payable under this method, through the
remainder of the later of the lives of the Eligible Trustee and spouse,
will be the actuarial equivalent of the Regular Benefit.

<PAGE>
one-fifth of the total compensation earned by such Eligible Trustee for
service to the Adopting Fund in the five year period prior to the date of the
Eligible Trustee's retirement. Benefits under the retirement program are
accrued as expenses on the books of the Adopting Funds. Such benefits are not
secured or funded by the Adopting Funds.

The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees by the 55 Morgan Stanley Dean Witter Funds (not
including the Fund) for the year ended December 31, 1999, and the estimated
retirement benefits for the Independent Trustees, to commence upon their
retirement, from the 55 Morgan Stanley Dean Witter Funds as of December 31,
1999.

RETIREMENT BENEFITS FROM ALL MORGAN STANLEY DEAN WITTER FUNDS

<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS
--------------------------------
ESTIMATED
CREDITED
YEARS ESTIMATED RETIREMENT BENEFITS ESTIMATED ANNUAL
OF SERVICE AT PERCENTAGE OF ACCRUED AS EXPENSES BENEFITS UPON RETIREMENT
NAME OF RETIREMENT ELIGIBLE BY ALL FROM ALL
INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION ADOPTING FUNDS ADOPTING FUNDS(2)
- --------------------- --------------- --------------- ------------------- ------------------------
<S> <C> <C> <C> <C>
Michael Bozic ........ 10 60.44% $20,933 $50,588
Edwin J. Garn......... 10 60.44 31,737 50,675
Wayne E. Hedien....... 9 51.37 39,566 43,000
Dr. Manuel H.
Johnson.............. 10 60.44 13,129 75,520
Michael E. Nugent ... 10 60.44 23,175 67,209
John L. Schroeder ... 8 50.37 41,558 52,994
</TABLE>

- ------------

(2) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in Footnote (1)
above.

IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- -----------------------------------------------------------------------------

The following owned 5% or more of the outstanding shares of Class D of the
Fund on January 25, 2000: Mark A. Susz rev trust dtd 5/1/97, Mark A. Susz
Trustee, 400 West 49th Terr Unit 2188, Kansas City, MO 64112-2303 -39.29%.

As of the date of this Statement of Additional Information, the aggregate
number of shares of beneficial interest of the Fund owned by the Fund's
officers and Trustees as a group was less than 1% of the Fund's shares of
beneficial interest outstanding.

V. MANAGEMENT, INVESTMENT ADVICE AND OTHER SERVICES
- -----------------------------------------------------------------------------

A. INVESTMENT MANAGER AND SUB-ADVISOR

The Investment Manager to the Fund is Morgan Stanley Dean Witter Advisors
Inc., a Delaware corporation, whose address is Two World Trade Center, New
York, NY 10048. The Investment Manager is a wholly-owned subsidiary of MSDW,
a Delaware corporation. MSDW is a preeminent global financial services firm
that maintains leading market positions in each of its three primary
businesses: securities, asset management and credit services.

The Sub-Advisor is TCW Investment Management Company, a wholly-owned
subsidiary of TCW, whose direct and indirect subsidiaries provide a variety
of trust, investment management and investment advisory services. The
Sub-Advisor is headquartered at 865 South Figueroa Street, Suite 1800, Los
Angeles, CA 90017. Robert A. Day, who is Chairman of the Board of Directors
of TCW, may be deemed to be a control person of the Sub-Advisor by virtue of
the aggregate ownership by Mr. Day and his family of more than 25% of the
outstanding voting stock of TCW. The Sub-Advisor was retained to provide
sub-advisory services to the Fund effective June 28, 1999.

Pursuant to an Investment Management Agreement (the "Management
Agreement") with the Investment Manager, the Fund has retained the Investment
Manager to provide administrative services, manage its business affairs and
supervise the investment of the Fund's assets. The Fund pays the

<PAGE>
Investment Manager monthly compensation calculated daily by applying the
following annual rates to the net assets of the Fund determined as of the
close of each business day: 0.75% to the portion of daily net assets not
exceeding $500 million; and 0.725% to the portion of daily net assets
exceeding $500 million. The management fee is allocated among the Classes pro
rata based on the net assets of the Fund attributable to each Class. The
Investment Manager has retained its wholly-owned subsidiary, MSDW Services
Company, to perform administrative services for the Fund.

Under a Sub-Advisory Agreement (the "Sub-Advisory Agreement") between the
Sub-Advisor and the Investment Manager, the Sub-Advisor provides the Fund
with investment advice and portfolio management relating to the Fund's
investments in securities, subject to the overall supervision of the
Investment Manager. The Investment Manager pays the Sub-Advisor monthly
compensation equal to 40% of the Investment Manager's fee.

Prior to June 28, 1999, the Fund was managed by MSDW Services Company,
pursuant to a management agreement between the Fund and MSDW Services Company
and was advised by TCW Investment Management Company pursuant to an advisory
agreement between the Fund and TCW Investment Management Company. As part of
an overall consolidation of the TCW/DW Family of Funds and the Morgan Stanley
Dean Witter Family of Funds, the Fund's Board of Trustees recommended on
February 25, 1999 and shareholders of the Fund approved on June 8, 1999 the
Investment Management Agreement between the Fund and the Investment Manager.
The Board also recommended and shareholders also approved the Sub-Advisory
Agreement between the Investment Manager and TCW Investment Management
Company. The fee rate under the Management Agreement with the Investment
Manager with respect to the portion of the Fund's average daily net assets
not exceeding $500 million is 0.25% lower and with respect to the portion of
the Fund's average daily net assets exceeding $500 million is 0.275% lower
than the total aggregate fee rate that was in effect under the previous
management agreement and advisory agreement combined. For the fiscal years
ended November 30, 1997 and 1998 and the period December 1, 1998 through June
27, 1999, MSDW Services Company accrued total compensation under the former
management agreement in the amounts of $1,081,715, $1,085,682 and $1,034,415,
respectively. For the same periods, TCW Investment Management Company accrued
total compensation in its former capacity of advisor to the Fund in the
amounts of $721,143, $723,788 and $689,610, respectively. For the fiscal
period June 28, 1999 through November 30, 1999, the Investment Manager
accrued total compensation under the new Investment Management Agreement in
the amount of $3,257,327, of which $1,302,930 was paid to the sub-advisor.

B. PRINCIPAL UNDERWRITER

The Fund's principal underwriter is the Distributor (which has the same
address as the Investment Manager). In this capacity, the Fund's shares are
distributed by the Distributor. The Distributor has entered into a Selected
Dealer Agreement with Dean Witter Reynolds, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into similar agreements with other selected broker-dealers. The Distributor,
a Delaware corporation, is a wholly-owned subsidiary of MSDW.

The Distributor bears all expenses it may incur in providing services
under the Distribution Agreement. These expenses include the payment of
commissions for sales of the Fund's shares and incentive compensation to
Financial Advisors, the costs of educational and/or business related trips
and educational and/or promotional and business-related expenses. The
Distributor also pays certain expenses in connection with the distribution of
the Fund's shares, including the costs of preparing, printing and
distributing advertising or promotional materials, and the costs of printing
and distributing prospectuses and supplements thereto used in connection with
the offering and sale of the Fund's shares. The Fund bears the costs of
initial typesetting, printing and distribution of prospectuses and
supplements thereto to shareholders. The Fund also bears the costs of
registering the Fund and its shares under federal and state securities laws
and pays filing fees in accordance with state securities laws.

The Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. Under
the Distribution Agreement, the Distributor uses its

<PAGE>
best efforts in rendering services to the Fund, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations, the Distributor is not liable to the Fund or any of its
shareholders for any error of judgment or mistake of law or for any act or
omission or for any losses sustained by the Fund or its shareholders.

C. SERVICES PROVIDED BY THE INVESTMENT MANAGER AND THE SUB-ADVISOR

The Investment Manager supervises the investment of the Fund's assets. The
Investment Manager obtains and evaluates the information and advice relating
to the economy, securities markets, and specific securities as it considers
necessary or useful to continuously oversee the management of the assets of
the Fund in a manner consistent with its investment objective.

Under the terms of the Management Agreement, the Investment Manager also
maintains certain of the Fund's books and records and furnishes, at its own
expense, the office space, facilities, equipment, clerical help, bookkeeping
and certain legal services as the Fund may reasonably require in the conduct
of its business, including 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 addition, the Investment Manager pays the
salaries of all personnel, including officers of the Fund, who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone service, heat, light, power and other utilities provided to the
Fund.

Pursuant to the Sub-Advisory Agreement, the Sub-Advisor has been retained,
subject to the overall supervision of the Investment Manager, to continuously
furnish investment advice concerning individual security selections, asset
allocations and overall economic trends.

Expenses not expressly assumed by the Investment Manager or the
Sub-Advisor under the Management Agreement and the Sub-Advisory Agreement or
by the Distributor, will be paid by the Fund. These expenses will be
allocated among the four Classes of shares pro rata based on the net assets
of the Fund attributable to each Class, except as described below. Such
expenses include, but are not limited to: expenses of the Plan of
Distribution pursuant to Rule 12b-1; charges and expenses of any registrar,
custodian, stock transfer and dividend disbursing agent; brokerage
commissions; taxes; engraving and printing share certificates; registration
costs of the Fund and its shares under federal and state securities laws; the
cost and expense of printing, including typesetting, and distributing
prospectuses of the Fund and supplements thereto to the Fund's shareholders;
all expenses of shareholders' and Trustees' meetings and of preparing,
printing and mailing of proxy statements and reports to shareholders; fees
and travel expenses of Trustees or members of any advisory board or committee
who are not employees of the Investment Manager or any corporate affiliate of
the Investment Manager or the Sub-Advisor; all expenses incident to any
dividend, withdrawal or redemption options; charges and expenses of any
outside service used for pricing of the Fund's shares; fees and expenses of
legal counsel, including counsel to the Trustees who are not interested
persons of the Fund or of the Investment Manager or the Sub-Advisor (not
including compensation or expenses of attorneys who are employees of the
Investment Manager or the Sub-Advisor); fees and expenses of the Fund's
independent accountants; membership dues of industry associations; interest
on Fund borrowings; postage; insurance premiums on property or personnel
(including officers and Trustees) of the Fund which inure to its benefit;
extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification relating thereto);
and all other costs of the Fund's operation. The 12b-1 fees relating to a
particular Class will be allocated directly to that Class. In addition, other
expenses associated with a particular Class (except advisory or custodial
fees) may be allocated directly to that Class, provided that such expenses
are reasonably identified as specifically attributable to that Class and the
direct allocation to that Class is approved by the Trustees.

The Management Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Investment Manager is not liable to the Fund or
any of its investors for any act or omission by the Investment Manager or for
any losses sustained by the Fund or its investors.

<PAGE>
The Management Agreement will remain in effect from year to year, provided
continuance of the Management Agreement is approved at least annually by the
vote of the holders of a majority, as defined in the Investment Company Act,
of the outstanding shares of the Fund, or by the Trustees; provided that in
either event such continuance is approved annually by the vote of a majority
of the Trustees, including a majority of the Independent Trustees.

D. DEALER REALLOWANCES

Upon notice to selected broker-dealers, the Distributor may reallow up to
the full applicable front-end sales charge during periods specified in such
notice. During periods when 90% or more of the sales charge is reallowed,
such selected broker-dealers may be deemed to be underwriters as that term is
defined in the Securities Act.

E. RULE 12B-1 PLAN

The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under
the Investment Company Act (the "Plan") pursuant to which each Class, other
than Class D, pays the Distributor compensation accrued daily and payable
monthly at the following annual rates: 0.25% and 1.0% of the average daily
net assets of Class A and Class C, respectively, and, with respect to Class
B, 1.0% of the lesser of: (a) the average daily aggregate gross sales of the
Fund's Class B shares since the inception of the Fund (not including
reinvestment of dividends or capital gains distributions), less the average
daily aggregate net asset value of the Fund's Class B shares redeemed since
the Fund's inception upon which a contingent deferred sales charge has been
imposed or upon which such charge has been waived; or (b) the average daily
net assets of Class B shares.

The Distributor also receives the proceeds of front-end sales charges
("FSCs") and of contingent deferred sales charges ("CDSCs") imposed on
certain redemptions of shares, which are separate and apart from payments
made pursuant to the Plan. The Distributor has informed the Fund that it
and/or Dean Witter Reynolds received the proceeds of CDSCs and FSCs, for the
last three fiscal years ended November 30, in approximate amounts as provided
in the table below (the Distributor did not retain any of these amounts).

<TABLE>
<CAPTION>
1999 1998 1997
----------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Class A... FSCs:(1) $154,526 FSCs:(1) $ 15,552 FSCs:(1) $ 3,000
CDSCs: $ 3,082 CDSCs: $ 0 CDSCs: $ 0
Class B... CDSCs: $693,550 CDSCs: $679,862 CDSCs: $946,000
Class C... CDSCs: $ 10,375 CDSCs: $ 372 CDSCs: $ 0
</TABLE>

- ------------

(1) FSCs apply to Class A only.

The Distributor has informed the Fund that the entire fee payable by Class
A and a portion of the fees payable by each of Class B and Class C each year
pursuant to the Plan equal to 0.25% of such Class' average daily net assets
are currently each characterized as a "service fee" under the Rules of the
National Association of Securities Dealers, Inc. (of which the Distributor is
a member). The "service fee" is a payment made for personal service and/or
the maintenance of shareholder accounts. The remaining portion of the Plan
fees payable by a Class, if any, is characterized as an "asset-based sales
charge" as such is defined by the Rules of the Association.

Under the Plan and as required by Rule 12b-1, the Trustees receive and
review promptly after the end of each calendar quarter a written report
provided by the Distributor of the amounts expended under the Plan and the
purpose for which such expenditures were made. Class B shares of the Fund
accrued amounts payable to the Distributor under the Plan, during the fiscal
year ended November 30, 1999, of $4,436,240. This amount is equal to 0.75% of
the average daily net assets of Class B for the fiscal year and was
calculated pursuant to clause (a) of the compensation formula under the Plan.
For the fiscal year ended November 30, 1999, Class A and Class C shares of
the Fund accrued payments under the Plan amounting to $16,178 and $109,805,
respectively, which amounts are equal to 0.24% and 1.00% of the average daily
net assets of Class A and Class C, respectively, for the fiscal year.

<PAGE>
The Plan was adopted in order to permit the implementation of the Fund's
method of distribution. Under this distribution method the Fund offers four
Classes, each with a different distribution arrangement.

With respect to Class A shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from proceeds of the FSC, commissions for
the sale of Class A shares, currently a gross sales credit of up to 5.0% of
the amount sold (except as provided in the following sentence) and an annual
residual commission, currently a residual of up to 0.25% of the current value
of the respective accounts for which they are the Financial Advisors or
dealers of record in all cases. On orders of $1 million or more (for which no
sales charge was paid) or net asset value purchases by employer-sponsored
employee benefit plans, whether or not qualified under the Internal Revenue
Code, for which the Transfer Agent serves as Trustee or Dean Witter Reynolds
Retirement Plan Services serves as recordkeeper pursuant to a written
Recordkeeping Services Agreement ("MSDW Eligible Plans"), MSDW Advisors
compensates Financial Advisors by paying them, from its own funds, a gross
sales credit of 1.0% of the amount sold.

With respect to Class B shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the
sale of Class B shares, currently a gross sales credit of up to 5.0% of the
amount sold (except as provided in the following sentence) and an annual
residual commission, currently a residual of up to 0.25% of the current value
(not including reinvested dividends or distributions) of the amount sold in
all cases. In the case of Class B shares purchased on or after July 28, 1997
by MSDW Eligible Plans, Dean Witter Reynolds compensates its Financial
Advisors by paying them, from its own funds, a gross sales credit of 3.0% of
the amount sold.

With respect to Class C shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the
sale of Class C shares, currently a gross sales credit of up to 1.0% of the
amount sold and an annual residual commission, currently up to 1.0% of the
current value of the respective accounts for which they are the Financial
Advisors of record.

With respect to Class D shares other than shares held by participants in
MSDW Advisor's mutual fund asset allocation program, MSDW Advisors
compensates Dean Witter Reynolds' Financial Advisors by paying them, from its
own funds, commissions for the sale of Class D shares, currently a gross
sales credit of up to 1.0% of the amount sold. There is a chargeback of 100%
of the amount paid if the Class D shares are redeemed in the first year and a
chargeback of 50% of the amount paid if the Class D shares are redeemed in
the second year after purchase. The Manager also compensates Dean Witter
Reynolds' Financial Advisors by paying them, from its own funds, an annual
residual commission, currently up to 0.10% of the current value of the
respective accounts for which they are the Financial Advisors of record (not
including accounts of participants in the Investment Manager's mutual fund
asset allocation program).

The gross sales credit is a charge which reflects commissions paid by Dean
Witter Reynolds to its Financial Advisors and Dean Witter Reynolds'
Fund-associated distribution-related expenses, including sales compensation,
and overhead and other branch office distribution-related expenses including
(a) the expenses of operating Dean Witter Reynolds' branch offices in
connection with the sale of Fund shares, including lease costs, the salaries
and employee benefits of operations and sales support personnel, utility
costs, communications costs and the costs of stationery and supplies; (b) the
costs of client sales seminars; (c) travel expenses of mutual fund sales
coordinators to promote the sale of Fund shares; and (d) other expenses
relating to branch promotion of Fund sales.

The Investment Manager pays a retention fee to Financial Advisors at an
annual rate of 0.05% of the value of shares of the Fund sold after January 1,
2000 and held for at least one year. Shares purchased through the
reinvestment of dividends will be eligible for a retention fee, provided that
such dividends were earned on shares otherwise eligible for a retention fee
payment. Shares owned in variable annuities, closed-end fund shares and
shares held in 401(k) plans where the Transfer Agent or Dean Witter
Reynolds's Retirement Plan Services is either recordkeeper or trustee are not
eligible for a retention fee.

<PAGE>
For the first year only, the retention fee is paid on any shares of the
Fund sold after January 1, 2000 and held by shareholders on December 31,
2000.

The retention fees are paid by the Investment Manager from its own assets,
which may include profits from investment management fees payable under the
Management Agreement, as well as from borrowed funds.

The distribution fee that the Distributor receives from the Fund under the
Plan, in effect, offsets distribution expenses incurred under the Plan on
behalf of the Fund and, in the case of Class B shares, opportunity costs,
such as the gross sales credit and an assumed interest charge thereon
("carrying charge"). These expenses may include the cost of Fund-related
educational and/or business-related trips or payment of Fund-related
educational and/or promotional expenses of Financial Advisors. In the
Distributor's reporting of the distribution expenses to the Fund, in the case
of Class B shares, such assumed interest (computed at the "broker's call
rate") has been calculated on the gross credit as it is reduced by amounts
received by the Distributor under the Plan and any contingent deferred sales
charges received by the Distributor upon redemption of shares of the Fund. No
other interest charge is included as a distribution expense in the
Distributor's calculation of its distribution costs for this purpose. The
broker's call rate is the interest rate charged to securities brokers on
loans secured by exchange-listed securities.

The Fund is authorized to reimburse expenses incurred or to be incurred in
promoting the distribution of the Fund's Class A and Class C shares and in
servicing shareholder accounts. Reimbursement will be made through payments
at the end of each month. The amount of each monthly payment may in no event
exceed an amount equal to a payment at the annual rate of 0.25%, in the case
of Class A, and 1.0%, in the case of Class C, of the average net assets of
the respective Class during the month. No interest or other financing
charges, if any, incurred on any distribution expenses on behalf of Class A
and Class C will be reimbursable under the Plan. With respect to Class A, in
the case of all expenses other than expenses representing the service fee,
and, with respect to Class C, in the case of all expenses other than expenses
representing a gross sales credit or a residual to Financial Advisors and
other authorized financial representatives, such amounts shall be determined
at the beginning of each calendar quarter by the Trustees, including, a
majority of the Independent Trustees. Expenses representing the service fee
(for Class A) or a gross sales credit or a residual to Financial Advisors and
other authorized financial representatives (for Class C) may be reimbursed
without prior determination. In the event that the Distributor proposes that
monies shall be reimbursed for other than such expenses, then in making
quarterly determinations of the amounts that may be reimbursed by the Fund,
the Distributor will provide and the Trustees will review a quarterly budget
of projected distribution expenses to be incurred on behalf of the Fund,
together with a report explaining the purposes and anticipated benefits of
incurring such expenses. The Trustees will determine which particular
expenses, and the portions thereof, that may be borne by the Fund, and in
making such a determination shall consider the scope of the Distributor's
commitment to promoting the distribution of the Fund's Class A and Class C
shares.

Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the fiscal year ended November 30, 1999 to the Distributor.
The Distributor and Dean Witter Reynolds estimate that they have spent,
pursuant to the Plan, $37,540,306 on behalf of Class B since the inception of
the Plan. It is estimated that this amount was spent in approximately the
following ways: (i) 6.18% ($2,321,741)--advertising and promotional expenses;
(ii) 0.41% ($155,295)--printing and mailing of prospectuses for distribution
to other than current shareholders; and (iii) 93.40% ($35,063,270)--other
expenses, including the gross sales credit and the carrying charge, of which
4.48% ($1,572,317) represents carrying charges, 25.25% ($8,855,201)
represents commission credits to Dean Witter Reynolds branch offices and
other selected broker-dealers for payments of commissions to Financial
Advisors and other authorized financial representatives, and 35.75%
($12,534,174) represents overhead and other branch office
distribution-related expenses and 34.52% ($12,101,578) represents excess
distribution expenses of Morgan Stanley Dean Witter Mid-Cap Growth Fund, the
net assets of which were combined with those of the Fund on June 28, 1999
pursuant to an Agreement and Plan of

<PAGE>
Reorganization. The amounts accrued by Class A and a portion of the amounts
accrued by Class C under the Plan during the fiscal year ended November 30,
1999 were service fees. The remainder of the amount accrued by Class C were
for expenses which relate to compensation of sales personnel and associated
overhead expenses.

In the case of Class B shares, at any given time, the expenses of
distributing shares of the Fund may be more or less than the total of (i) the
payments made by the Fund pursuant to the Plan; and (ii) the proceeds of
CDSCs paid by investors upon redemption of shares. For example, if $1 million
in expenses in distributing Class B shares of the Fund had been incurred and
$750,000 had been received as described in (i) and (ii) above, the excess
expense would amount to $250,000. The Distributor has advised the Fund that
in the case of Class B shares the excess distribution expenses, including the
carrying charge designed to approximate the opportunity costs incurred by
Dean Witter Reynolds which arise from it having advanced monies without
having received the amount of any sales charges imposed at the time of sale
of the Fund's Class B shares, totaled $25,765,238 as of November 30, 1999
(the end of the Fund's fiscal year), which was equal to 1.96% of the net
assets of Class B on such date. Because there is no requirement under the
Plan that the Distributor be reimbursed for all distribution expenses with
respect to Class B shares or any requirement that the Plan be continued from
year to year, this excess amount does not constitute a liability of the Fund.
Although there is no legal obligation for the Fund to pay expenses incurred
in excess of payments made to the Distributor under the Plan and the proceeds
of CDSCs paid by investors upon redemption of shares, if for any reason the
Plan is terminated, the Trustees will consider at that time the manner in
which to treat such expenses. Any cumulative expenses incurred, but not yet
recovered through distribution fees or CDSCs, may or may not be recovered
through future distribution fees or CDSCs.

In the case of Class A and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses
representing a gross sales commission credited to Morgan Stanley Dean Witter
Financial Advisors and other authorized financial representatives at the time
of sale may be reimbursed in the subsequent calendar year. The Distributor
has advised the Fund that unreimbursed expenses representing a gross sales
commission credited to Morgan Stanley Dean Witter Financial Advisors and
other authorized financial representatives at the time of sale totaled
$128,662 in the case of Class C at December 31, 1999 (end of the calendar
year), which amount was equal to 0.25% of the net assets of Class C on such
date, and that there were no such expenses that may be reimbursed in the
subsequent year in the case of Class A on such date. No interest or other
financing charges will be incurred on any Class A or Class C distribution
expenses incurred by the Distributor under the Plan or on any unreimbursed
expenses due to the Distributor pursuant to the Plan.

No interested person of the Fund nor any Independent Trustee has any
direct financial interest in the operation of the Plan except to the extent
that the Distributor, the Manager, Dean Witter Reynolds, MSDW Advisors or
certain of their employees may be deemed to have such an interest as a result
of benefits derived from the successful operation of the Plan or as a result
of receiving a portion of the amounts expended thereunder by the Fund.

On an annual basis, the Trustees, including a majority of the Independent
Trustees, consider whether the Plan should be continued. Prior to approving
the last continuation of the Plan, the Trustees requested and received from
the Distributor and reviewed all the information which they deemed necessary
to arrive at an informed determination. In making their determination to
continue the Plan, the Trustees considered: (1) the Fund's experience under
the Plan and whether such experience indicates that the Plan is operating as
anticipated; (2) the benefits the Fund had obtained, was obtaining and would
be likely to obtain under the Plan, including that: (a) the Plan is essential
in order to give Fund investors a choice of alternatives for payment of
distribution and service charges and to enable the Fund to continue to grow
and avoid a pattern of net redemptions which, in turn, are essential for
effective investment management; and (b) without the compensation to
individual brokers and the reimbursement of distribution and account
maintenance expenses of Dean Witter Reynolds' branch offices made possible by
the 12b-1 fees, Dean Witter Reynolds could not establish and maintain an
effective system

<PAGE>
for distribution, servicing of Fund shareholders and maintenance of
shareholder accounts; and (3) what services had been provided and were
continuing to be provided under the Plan to the Fund and its shareholders.
Based upon their review, the Trustees, including each of the Independent
Trustees, determined that continuation of the Plan would be in the best
interest of the Fund and would have a reasonable likelihood of continuing to
benefit the Fund and its shareholders. In the Trustees' quarterly review of
the Plan, they will consider its continued appropriateness and the level of
compensation provided therein.

The Plan may not be amended to increase materially the amount to be spent
for the services described therein without approval by the shareholders of
the affected Class or Classes of the Fund, and all material amendments to the
Plan must also be approved by the Trustees in the manner described above. The
Plan may be terminated at any time, without payment of any penalty, by vote
of a majority of the Independent Trustees or by a vote of a majority of the
outstanding voting securities of the Fund (as defined in the Investment
Company Act) on not more than thirty days' written notice to any other party
to the Plan. So long as the Plan is in effect, the election and nomination of
Independent Trustees shall be committed to the discretion of the Independent
Trustees.

F. OTHER SERVICE PROVIDERS

(1) TRANSFER AGENT/DIVIDEND-PAYING AGENT

Morgan Stanley Dean Witter Trust FSB is the Transfer Agent for the Fund's
shares and the Dividend Disbursing Agent for payment of dividends and
distributions on Fund shares and Agent for shareholders under various
investment plans. The principal business address of the Transfer Agent is
Harborside Financial Center, Plaza Two, Jersey City, NJ 07311.

(2) CUSTODIAN AND INDEPENDENT ACCOUNTANTS

The Bank of New York, 100 Church Street, New York, NY 10007, is the
Custodian of the Fund's assets. Any of the Fund's cash balances with the
Custodian in excess of $100,000 are unprotected by federal deposit insurance.
These balances may, at times, be substantial.

PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, NY
10036, serves as the independent accountants of the Fund. The independent
accountants are responsible for auditing the annual financial statements of
the Fund.

(3) AFFILIATED PERSONS

The Transfer Agent is an affiliate of the Investment Manager, and of the
Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer
Agent's responsibilities include maintaining shareholder accounts, disbursing
cash dividends and reinvesting dividends, processing account registration
changes, handling purchase and redemption transactions, mailing prospectuses
and reports, mailing and tabulating proxies, processing share certificate
transactions, and maintaining shareholder records and lists. For these
services, the Transfer Agent receives a per shareholder account fee from the
Fund and is reimbursed for its out-of-pocket expenses in connection with such
services.

VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
- -----------------------------------------------------------------------------

A. BROKERAGE TRANSACTIONS

Subject to the general supervision of the Trustees, the Investment Manager
and/or Sub-Advisor are responsible for decisions to buy and sell securities
for the Fund, the selection of brokers and dealers to effect the
transactions, and the negotiation of brokerage commissions, if any. Purchases
and sales of securities on a stock exchange are effected through brokers who
charge a commission for their services. In the over-the-counter market,
securities are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the
price of the security usually includes a profit to the dealer. The Fund also
expects that securities will be purchased at times in underwritten offerings
where the price includes a fixed amount of compensation, generally referred
to as the underwriter's concession or discount. On occasion, the Fund may
also purchase certain money market instruments directly from an issuer, in
which case no commissions or discounts are paid.

<PAGE>
For the fiscal years ended November 30, 1997, 1998 and 1999, the Fund paid
a total of $170,759, $88,027 and $336,574, respectively, in brokerage
commissions.

B. COMMISSIONS

Pursuant to an order of the SEC, the Fund may effect principal
transactions in certain money market instruments with Dean Witter Reynolds.
The Fund will limit its transactions with Dean Witter Reynolds to U.S.
Government and government agency securities, bank money instruments (i.e.,
certificates of deposit and bankers' acceptances) and commercial paper. The
transactions will be effected with Dean Witter Reynolds only when the price
available from Dean Witter Reynolds is better than that available from other
dealers.

During the fiscal years ended November 30, 1997, 1998 and 1999, the Fund
did not effect any principal transactions with Dean Witter Reynolds.

Brokerage transactions in securities listed on exchanges or admitted to
unlisted trading privileges may be effected through Dean Witter Reynolds,
Morgan Stanley & Co. and other affiliated brokers and dealers. In order for
an affiliated broker or dealer to effect any portfolio transactions on an
exchange for the Fund, the commissions, fees or other remuneration received
by the affiliated broker or dealer 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 the affiliated broker or dealer 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 Trustees,
including the Independent Trustees, have adopted procedures which are
reasonably designed to provide that any commissions, fees or other
remuneration paid to an affiliated broker or dealer are consistent with the
foregoing standard. The Fund does not reduce the management fee it pays to
the Investment Manager by any amount of the brokerage commissions it may pay
to an affiliated broker or dealer.

During the fiscal years ended November 30, 1997, 1998 and 1999 there were
no brokerage fees paid to Dean Witter Reynolds. During the period June 1
through November 30, 1997 and during the fiscal years ended November 30, 1998
and 1999, the Fund paid a total of $1,235, $645, and $9,005, respectively, in
brokerage commissions to Morgan Stanley & Co., which broker-dealer became an
affiliate of the Investment Manager on May 31, 1997 upon consummation of the
merger of Dean Witter, Discover & Co. with Morgan Stanley Group Inc. During
the fiscal year ended November 30, 1999, the brokerage commissions paid to
Morgan Stanley & Co. represented approximately 2.68% of the total brokerage
commissions paid by the Fund for this period and were paid on account of
transactions having an aggregate dollar value equal to approximately 0.74% of
the aggregate dollar value of all portfolio transactions of the Fund during
the year for which commissions were paid.

C. BROKERAGE SELECTION

The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with
this policy, when securities transactions are effected on a stock exchange,
the Fund's policy is to pay commissions which are considered fair and
reasonable without necessarily determining that the lowest possible
commissions are paid in all circumstances. The Fund believes that a
requirement always to seek the lowest possible commission cost could impede
effective portfolio management and preclude the Fund and the Investment
Manager and/or Sub-Advisor from obtaining a high quality of brokerage and
research services. In seeking to determine the reasonableness of brokerage
commissions paid in any transaction, the Investment Manager and/or
Sub-Advisor relies upon its experience and knowledge regarding commissions
generally charged by various brokers and on its judgment in evaluating the
brokerage and research services received from the broker effecting the
transaction. These determinations are necessarily subjective and imprecise,
as in most cases an exact dollar value for those services is not
ascertainable. The Fund anticipates that certain of its transactions
involving foreign securities will be effected on foreign securities
exchanges. Fixed commissions on such

<PAGE>
transactions are generally higher than negotiated commissions on domestic
transactions. There is also generally less government supervision and
regulation of foreign securities exchanges and brokers than in the United
States.

In seeking to implement the Fund's policies, the Investment Manager and
the Sub-Advisor effect transactions with those brokers and dealers who the
Investment Manager and/or Sub-Advisor believes provide the most favorable
prices and are capable of providing efficient executions. If the Investment
Manager and/or Sub-Advisor believes the prices and executions are obtainable
from more than one broker or dealer, it may give consideration to placing
portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or the Investment Manager and the
Sub-Advisor. The 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 investment; wire services; and appraisals or evaluations of portfolio
securities. The information and services received by the Investment Manager
and/or Sub-Advisor from brokers and dealers may be of benefit to the
Investment Manager and/or Sub-Advisor in the management of accounts of some
of their other clients and may not in all cases benefit the Fund directly.

The Investment Manager and the Sub-Advisor currently serve as investment
advisors 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 and the Sub-Advisor to cause purchase and
sale transactions to be allocated among the Fund and others whose assets they
manage in such manner as they deem equitable. In making such allocations
among the Fund and other client accounts, various factors may be considered,
including 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. In the case of certain initial and secondary
public offerings, the Investment Manager utilizes a pro rata allocation
process based on the size of the funds involved and the number of shares
available from the public offering.

D. DIRECTED BROKERAGE

During the fiscal year ended November 30, 1999, the Fund paid $335,564 in
brokerage commissions in connection with transactions in the aggregate amount
of $233,461,835 to brokers because of research services provided.

E. REGULAR BROKER-DEALERS

During the fiscal year ended November 30, 1999, the Fund did not purchase
securities issued by brokers or dealers that were among the ten brokers or
the ten dealers that executed transactions for or with the Fund in the
largest dollar amounts during the year.

VII. CAPITAL STOCK AND OTHER SECURITIES
- -----------------------------------------------------------------------------

The shareholders of the Fund are entitled to a full vote for each full
share of beneficial interest held. The Fund is authorized to issue an
unlimited number of shares of beneficial interest. All shares of beneficial
interest of the Fund are of $0.01 par value and are equal as to earnings,
assets and voting privileges except that each Class will have exclusive
voting privileges with respect to matters relating to distribution expenses
borne solely by such Class or any other matter in which the interests of one
Class differ from the interests of any other Class. In addition, Class B
shareholders will have the right to vote on any proposed material increase in
Class A's expenses, if such proposal is submitted separately to Class A
shareholders. Also, Class A, Class B and Class C bear expenses related to the
distribution of their respective shares.

The Fund's Declaration of Trust permits the Trustees to authorize the
creation of additional series of shares (the proceeds of which would be
invested in separate, independently managed portfolios) and additional
Classes of shares within any series. The Trustees have not presently
authorized any such additional series or Classes of shares other than as set
forth in the Prospectus.

<PAGE>
The Fund is not required to hold annual meetings of shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the Investment Company Act or the Declaration of
Trust. Under certain circumstances the Trustees may be removed by action of
the Trustees. In addition, under certain circumstances the shareholders may
call a meeting to remove Trustees and the Fund is required to provide
assistance in communicating with shareholders about such a meeting. The
voting rights of shareholders are not cumulative, so that holders of more
than 50 percent of the shares voting can, if they choose, elect all Trustees
being selected, while the holders of the remaining shares would be unable to
elect any Trustees.

Under Massachusetts law, shareholders of a business trust may, under
certain limited circumstances, be held personally liable as partners for the
obligations of the Fund. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the
Fund, requires that notice of such Fund obligations include such disclaimer,
and provides for indemnification out of the Fund's property for any
shareholder held personally liable for the obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund itself would be
unable to meet its obligations. Given the above limitations on shareholder
personal liability, and the nature of the Fund's assets and operations, the
possibility of the Fund being unable to meet its obligations is remote and
thus, in the opinion of Massachusetts counsel to the Fund, the risk to Fund
shareholders of personal liability is remote.

All of the Trustees have been elected by the shareholders of the Fund,
most recently at a Special Meeting of Shareholders held on June 8, 1999. The
Trustees themselves have the power to alter the number and the terms of
office of the Trustees (as provided for in the Declaration of Trust), and
they may at any time lengthen or shorten their own terms or make their terms
of unlimited duration and appoint their own successors, provided that always
at least a majority of the Trustees has been elected by the shareholders of
the Fund.

VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
- -----------------------------------------------------------------------------

A. PURCHASE/REDEMPTION OF SHARES

Information concerning how Fund shares are offered to the public (and how
they are redeemed and exchanged) is provided in the Fund's Prospectus.

TRANSFER AGENT AS AGENT. With respect to the redemption or repurchase of
Fund shares, the application of proceeds to the purchase of new shares in the
Fund or any other Morgan Stanley Dean Witter Fund and the general
administration of the exchange privilege, the Transfer Agent acts as agent
for the Distributor and for the shareholder's authorized broker-dealer, if
any, in the performance of such functions. With respect to exchanges,
redemptions or repurchases, the Transfer Agent shall be liable for its own
negligence and not for the default or negligence of its correspondents or for
losses in transit. The Fund shall not be liable for any default or negligence
of the Transfer Agent, the Distributor or any authorized broker-dealer.

The Distributor and any authorized broker-dealer have appointed the
Transfer Agent to act as their agent in connection with the application of
proceeds of any redemption of Fund shares to the purchase of shares of any
other continuously offered Morgan Stanley Dean Witter Fund and the general
administration of the exchange privilege. No commission or discounts will be
paid to the Distributor or any authorized broker-dealer for any transaction
pursuant to the exchange privilege.

TRANSFERS OF SHARES. In the event a shareholder requests a transfer of
Fund shares to a new registration, the shares will be transferred without
sales charge at the time of transfer. With regard to the status of shares
which are either subject to the CDSC or free of such charge (and with regard
to the length of time shares subject to the charge have been held), any
transfer involving less than all of the shares in an account will be made on
a pro rata basis (that is, by transferring shares in the same proportion that
the transferred shares bear to the total shares in the account immediately
prior to the transfer). The transferred shares will continue to be subject to
any applicable CDSC as if they had not been so transferred.

<PAGE>
B. OFFERING PRICE

The Fund's Class B, Class C and Class D shares are offered at net asset
value per share and the Class A shares are offered at net asset value per
share plus any applicable FSC which is distributed among the Fund's
Distributor, Dean Witter Reynolds and other authorized dealers as described
in Section "V. Management, Investment Advice and Other Services--F. Rule
12b-1 Plan."

The price of Fund shares, called "net asset value," is based on the value
of the Fund's portfolio securities. Net asset value per share of each Class
is calculated by dividing the value of the portion of the Fund's securities
and other assets attributable to that Class, less the liabilities
attributable to that Class, by the number of shares of that Class
outstanding. The assets of each Class of shares are invested in a single
portfolio. The net asset value of each Class, however, will differ because
the Classes have different ongoing fees.

In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
stock exchange is valued at its latest sale price on that exchange, prior to
the time when assets are valued; if there were no sales that day, the
security is valued at the latest bid price (in cases where a security is
traded on more than one exchange, the security is valued on the exchange
designated as the primary market pursuant to procedures adopted by the
Trustees); and (2) all other portfolio securities for which over-the-counter
market quotations are readily available are valued at the latest bid price.
When market quotations are not readily available, including circumstances
under which it is determined by the Investment Manager or the Sub-Advisor
that sale or bid prices are not reflective of a security's market value,
portfolio securities are valued at their fair value as determined in good
faith under procedures established by and under the general supervision of
the Fund's Trustees. For valuation purposes, quotations of foreign portfolio
securities, other assets and liabilities and forward contracts stated in
foreign currency are translated into U.S. dollar equivalents at the
prevailing market rates prior to the close of the New York Stock Exchange.

Short-term debt securities with remaining maturities of sixty days or less
at the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees.

Certain of the Fund's portfolio securities may be valued by an outside
pricing service approved by the Fund's Trustees. The pricing service may
utilize a matrix system incorporating security quality, maturity and coupon
as the evaluation model parameters, and/or research evaluations by its staff,
including review of broker-dealer market price quotations in determining what
it believes is the fair valuation of the portfolio securities valued by such
pricing service.

Generally, trading in foreign securities, as well as corporate bonds, U.S.
Government securities and money market instruments, is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of the New
York Stock Exchange. Occasionally, events which may affect the values of such
securities and such exchange rates may occur between the times at which they
are determined and the close of the New York Stock Exchange and will
therefore not be reflected in the computation of the Fund's net asset value.
If events that may affect the value of such securities occur during such
period, then these securities may be valued at their fair value as determined
in good faith under procedures established by and under the supervision of
the Trustees.

IX. TAXATION OF THE FUND AND SHAREHOLDERS
- -----------------------------------------------------------------------------

The Fund generally will make two basic types of distributions: ordinary
dividends and long-term capital gain distributions. These two types of
distributions are reported differently on a shareholder's income tax return
and they are also subject to different rates of tax. The tax treatment of the
investment activities of the Fund will affect the amount and timing and
character of the distributions made by the Fund. Tax issues relating to the
Fund are not generally a consideration for shareholders such as tax

<PAGE>
exempt entities and tax-advantaged retirement vehicles such as an IRA or
401(k) plan. Shareholders are urged to consult their own tax professionals
regarding specific questions as to federal, state or local taxes.

INVESTMENT COMPANY TAXATION. The Fund intends to remain qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code
of 1986. As such, the Fund will not be subject to federal income tax on its
net investment income and capital gains, if any, to the extent that it
distributes such income and capital gains to its shareholders.

The Fund generally intends to distribute sufficient income and gains so
that the Fund will not pay corporate income tax on its earnings. The Fund
also generally intends to distribute to its shareholders in each calendar
year a sufficient amount of ordinary income and capital gains to avoid the
imposition of a 4% excise tax. However, the Fund may instead determine to
retain all or part of any net long-term capital gains in any year for
reinvestment. In such event, the Fund will pay federal income tax (and
possibly excise tax) on such retained gains.

Gains or losses on sales of securities by the Fund will be long-term
capital gains or losses if the securities have a tax holding period of more
than one year. Gains or losses on the sale of securities with a tax holding
period of one year or less will be short-term gains or losses.

Under certain tax rules, the Fund may be required to accrue a portion of
any discount at which certain securities are purchased as income each year
even though the Fund receives no payments in cash on the security during the
year. To the extent that the Fund invests in such securities, it would be
required to pay out such accrued discount as an income distribution in each
year in order to avoid taxation at the Fund level. Such distributions will be
made from the available cash of the Fund or by liquidation of portfolio
securities if necessary. If a distribution of cash necessitates the
liquidation of portfolio securities, the Investment Manager and/or
Sub-Advisor will select which securities to sell. The Fund may realize a gain
or loss from such sales. In the event the Fund realizes net capital gains
from such transactions, its shareholders may receive a larger capital gain
distribution, if any, than they would in the absence of such transactions.

TAXATION OF DIVIDENDS AND DISTRIBUTIONS. Shareholders normally will have
to pay federal income taxes, and any state and/or local income taxes, on the
dividends and other distributions they receive from the Fund. Such dividends
and distributions, to the extent that they are derived from net investment
income or short-term capital gains, are taxable to the shareholder as
ordinary income regardless of whether the shareholder receives such payments
in additional shares or in cash.

Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder
has held the Fund's shares and regardless of whether the distribution is
received in additional shares or in cash. The maximum tax on long-term
capital gains applicable to individuals is 20%.

Shareholders are generally taxed on any ordinary dividend or capital gain
distributions from the Fund in the year they are actually distributed.
However, if any such dividends or distributions are declared in October,
November or December and paid in January then such amounts will be treated
for tax purposes as received by the shareholders on December 31, to
shareholders of record of such month.

Subject to certain exceptions, a corporate shareholder may be eligible for
a 70% dividends received deduction to the extent that the Fund earns and
distributes qualifying dividends from its investments. Distributions of net
capital gains by the Fund will not be eligible for the dividends received
deduction.

Shareholders who are not citizens or residents of the United States and
certain foreign entities may be subject to withholding of United States tax
on distributions made by the Fund of investment income and short term capital
gains.

After the end of each calendar year, shareholders will be sent full
information on their dividends and capital gain distributions for tax
purposes, including the portion taxable as ordinary income, the portion
taxable as long-term capital gains and the amount of any dividends eligible
for the federal dividends received deduction for corporations.

<PAGE>
PURCHASES AND REDEMPTIONS AND EXCHANGES OF FUND SHARES. Any dividend or
capital gains distribution received by a shareholder from any investment
company will have the effect of reducing the net asset value of the
shareholder's stock in that company by the exact amount of the dividend or
capital gains distribution. Furthermore, such dividends and capital gains
distributions are subject to federal income taxes. If the net asset value of
the shares should be reduced below a shareholder's cost as a result of the
payment of dividends or the distribution of realized long-term capital gains,
such payment or distribution would be in part a return of the shareholder's
investment but nonetheless would be taxable to the shareholder. Therefore, an
investor should consider the tax implications of purchasing Fund shares
immediately prior to a distribution record date.

In general, a sale of shares results in capital gain or loss, and for
individual shareholders, is taxable at a federal rate dependent upon the
length of time the shares were held. A redemption of a shareholder's Fund
shares is normally treated as a sale for tax purposes. Fund shares held for a
period of one year or less will, for tax purposes, generally result in
short-term gains or losses and those held for more than one year generally
result in long-term gain or loss. Under current law, the maximum tax on
long-term capital gains is 20%. Any loss realized by shareholders upon a sale
or redemption of shares within six months of the date of their purchase will
be treated as a long-term capital loss to the extent of any distributions of
net long-term capital gains with respect to such shares during the six-month
period.

Gain or loss on the sale or redemption of shares in the Fund is measured
by the difference between the amount received and the tax basis of the
shares. Shareholders should keep records of investments made (including
shares acquired through reinvestment of dividends and distributions) so they
can compute the tax basis of their shares. Under certain circumstances a
shareholder may compute and use an average cost basis in determining the gain
or loss on the sale or redemption of shares.

Exchanges of Fund shares for shares of any other continuously offered
Morgan Stanley Dean Witter Fund are also subject to similar tax treatment.
Such an exchange is treated for tax purposes as a sale of the original shares
in the first fund, followed by the purchase of shares in the second fund.

If a shareholder realizes a loss on the redemption or exchange of a fund's
shares and reinvests in that fund's shares within 30 days before or after the
redemption or exchange, the transactions may be subject to the "wash sale"
rules, resulting in a postponement of the recognition of such loss for tax
purposes.

X. UNDERWRITERS
- -----------------------------------------------------------------------------

The Fund's shares are offered to the public on a continuous basis. The
Distributor, as the principal underwriter of the shares, has certain
obligations under the Distribution Agreement concerning the distribution of
the shares. These obligations and the compensation the Distributor receives
are described above in the sections titled "Principal Underwriter" and "Rule
12b-1 Plans".

XI. CALCULATION OF PERFORMANCE DATA
- -----------------------------------------------------------------------------

From time to time, the Fund may quote its "total return" in advertisements
and sales literature. These figures are computed separately for Class A,
Class B, Class C and Class D shares. The Fund's "average annual total return"
represents an annualization of the Fund's total return over a particular
period and is computed by finding the annual percentage rate which will
result in the ending redeemable value of a hypothetical $1,000 investment
made at the beginning of a one, five or ten year period, or for the period
from the date of commencement of operations, if shorter than any of the
foregoing. The ending redeemable value is reduced by any contingent deferred
sales charge ("CDSC") at the end of the one, five, ten year or other period.
For the purpose of this calculation, it is assumed that all dividends and
distributions are reinvested. The formula for computing the average annual
total return involves a percentage obtained by dividing the ending redeemable
value by the amount of the initial investment (which in the case of Class A
shares is reduced by the Class A initial sales charge), taking a root of the
quotient (where the root is equivalent to the number of years in the period)
and subtracting 1 from the result. Based on this calculation, the average
annual total returns for Class B for the one year period ended November 30,
1999 and for the period February 27, 1996 (inception of the Class) through
November 30, 1999 were 110.82% and 37.60%, respectively. The average annual
total returns of

<PAGE>
Class A for the fiscal year ended November 30, 1999 and for the period July
28, 1997 (inception of the Class) through November 30, 1999 were 105.51% and
58.86%, respectively. The average annual total returns of Class C for the
fiscal year ended November 30, 1999 and for the period July 28, 1997
(inception of the Class) through November 30, 1999 were 114.18% and 61.34%,
respectively. The average annual total returns of Class D for the fiscal year
ended November 30, 1999 and for the period July 28, 1997 (inception of the
Class) through November 30, 1999 were 116.96% and 62.84%, respectively.

In addition, the Fund may advertise its total return for each Class over
different periods of time by means of aggregate, average, year-by-year or
other types of total return figures. These calculations may or may not
reflect the imposition of the maximum front-end sales charge for Class A or
the deduction of the CDSC for each of Class B and Class C which, if
reflected, would reduce the performance quoted. For example, the average
annual total return of the Fund may be calculated in the manner described
above, but without deduction for any applicable sales charge. Based on this
calculation, the average annual total returns of Class B for the one year
period ended November 30, 1999 and for the period February 27, 1996 through
November 30, 1999 were 115.82% and 37.82%, respectively. The average annual
total returns of Class A for the fiscal year ended November 30, 1999 and for
the period July 28, 1997 through November 30, 1999 were 116.89% and 62.56%,
respectively. The average annual total returns of Class C for the fiscal year
ended November 30, 1999 and for the period July 28, 1997 through November 30,
1999 were 115.18% and 61.34%, respectively. The average annual total returns
of Class D for the fiscal year ended November 30, 1999 and for the period
July 28, 1997 through November 30, 1999 were 116.96% and 62.84%,
respectively.

In addition, the Fund may compute its aggregate total return for each
Class for specified periods by determining the aggregate percentage rate
which will result in the ending value of a hypothetical $1,000 investment
made at the beginning of the period. For the purpose of this calculation, it
is assumed that all dividends and distributions are reinvested. The formula
for computing aggregate total return involves a percentage obtained by
dividing the ending value (without reduction for any sales charge) by the
initial $1,000 investment and subtracting 1 from the result. Based on this
calculation, the total returns for Class B for the one year period ended
November 30, 1999 and for the period February 27, 1996 through November 30,
1999 were 115.82% and 233.65%, respectively. The total returns of Class A for
the fiscal year ended November 30, 1999 and for the period July 28, 1997
through November 30, 1999 were 116.89% and 211.85%, respectively. The total
returns of Class C for the fiscal year ended November 30, 1999 and for the
period July 28, 1997 through November 30, 1999 were 115.18% and 206.41%,
respectively. The total returns of Class D for the fiscal year ended November
30, 1999 and for the period July 28, 1997 through November 30, 1999 were
116.96% and 213.14%, respectively.

The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in each Class of shares of the Fund by adding 1
to the Fund's aggregate total return to date (expressed as a decimal and
without taking into account the effect of any applicable CDSC) and
multiplying by $9,475, $48,000 and $97,000 in the case of Class A
(investments of $10,000, $50,000 and $100,000 adjusted for the initial sales
charge) or by $10,000, $50,000 and $100,000 in the case of each of Class B,
Class C and Class D, as the case may be. Investments of $10,000, $50,000 and
$100,000 in each Class at inception of the Class would have grown to the
following amounts at November 30, 1999:

<TABLE>
<CAPTION>
INVESTMENT AT INCEPTION OF:
INCEPTION ---------------------------------
DATE $10,000 $50,000 $100,000
CLASS ---------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Class A.... 7/28/97 $29,547 $149,688 $302,495
Class B .. 2/27/96 33,365 166,825 333,650
Class C .. 7/28/97 30,641 153,205 306,410
Class D .. 7/28/97 31,314 156,570 313,140
</TABLE>

The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by recognized
organizations.

<PAGE>
XII. FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------

EXPERTS. The financial statements of the Fund for the fiscal year ended
November 30, 1999 included in this Statement of Additional Information and
incorporated by reference in the Prospectus have been so included and
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

* * * * *

This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the SEC. The complete Registration Statement may be obtained from
the SEC.

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Portfolio of Investments November 30, 1999

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- -------------------
<S> <C> <C>
COMMON STOCKS (97.1%)
Accident & Health Insurance (0.6%)
175,000 AFLAC, Inc. .......................... $ 8,378,125
--------------
Advertising (1.9%)
85,700 DoubleClick Inc.* .................... 13,712,000
225,000 Lamar Advertising Co. (Class A)*...... 12,867,187
--------------
26,579,187
--------------
Apparel (0.6%)
100,000 Gucci Group N.V. (Netherlands) ....... 8,325,000
--------------
Auto Parts: O.E.M. (0.3%)
200,000 Gentex Corp.* ........................ 3,725,000
--------------
Biotechnology (3.3%)
359,900 Biogen, Inc.* ........................ 26,272,700
139,400 Genentech, Inc.* ..................... 11,970,975
138,900 Gilead Sciences, Inc.* ............... 6,658,519
--------------
44,902,194
--------------
Books/Magazines (0.0%)
24,400 Playboy Enterprises, Inc.
(Class B)* ........................... 507,825
--------------
Broadcasting (5.0%)
359,737 Clear Channel Communications,
Inc.* ................................ 28,913,861
116,100 Hispanic Broadcasting Corp.* ......... 9,556,481
341,200 Univision Communications, Inc.
(Class A)* ........................... 29,855,000
--------------
68,325,342
--------------
Building Materials/DIY
Chains (0.7%)
192,000 Lowe's Companies, Inc. ............... 9,564,000
--------------
Cable Television (3.5%)
279,100 Cablevision Systems Corp.
(Class A)* ........................... 19,135,794
429,700 EchoStar Communications Corp.
(Class A)* ........................... 28,360,200
--------------
47,495,994
--------------
Catalog/Specialty
Distribution (2.4%)
295,200 Amazon.com, Inc.* .................... 25,092,000
186,900 Drugstore.com, Inc.* ................. 7,849,800
--------------
32,941,800
--------------
Clothing/Shoe/Accessory
Stores (1.4%)
100,000 Ann Taylor Stores Corp.* ............. 4,318,750
312,100 Talbot's, Inc. (The) ................. 15,136,850
--------------
19,455,600
--------------

</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- -------------------
<S> <C> <C>
Computer Communications (2.1%)
32,800 Foundry Networks, Inc.* .............. $ 7,714,150
78,600 Juniper Networks, Inc.* .............. 21,762,375
--------------
29,476,525
--------------
Computer Software (8.0%)
77,900 Citrix Systems, Inc.* ................ 7,405,369
110,000 Mercury Interactive Corp.* ........... 9,123,125
91,550 Phone.com, Inc.* ..................... 13,228,975
411,000 Rational Software Corp.* ............. 20,961,000
845,400 Siebel Systems, Inc.* ................ 59,283,675
--------------
110,002,144
--------------
Computer/Video Chains (0.7%)
200,000 Circuit City Stores, Inc. - Circuit
City Group ........................... 9,700,000
--------------
Diversified Commercial
Services (4.7%)
324,325 Paychex, Inc. ........................ 12,932,459
275,900 Scient Corp.* ........................ 39,971,012
142,000 Viant Corp.* ......................... 11,786,000
--------------
64,689,471
--------------
Diversified Electronic
Products (5.8%)
360,000 Gemstar International Group Ltd.
(Virgin Islands)* .................... 40,590,000
170,000 JDS Uniphase Corp.* .................. 38,876,875
--------------
79,466,875
--------------
Diversified Financial
Services (0.2%)
35,000 Providian Financial Corp. ............ 2,769,375
--------------
E.D.P. Peripherals (0.4%)
66,100 Lexmark International Group, Inc.
(Class A)* ........................... 5,486,300
--------------
Electronic Components (1.3%)
75,000 Rambus Inc.* ......................... 5,268,750
160,000 Solectron Corp.* ..................... 13,180,000
--------------
18,448,750
--------------
Electronic Production
Equipment (0.5%)
116,000 Jabil Circuit, Inc.* ................. 7,416,750
--------------
Engineering & Construction (0.9%)
312,400 Metromedia Fiber Network, Inc.
(Class A)* ........................... 12,085,975
--------------
Generic Drugs (0.3%)
86,200 Andrx Corp.* ......................... 4,433,913
--------------
</TABLE>

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Portfolio of Investments November 30, 1999, continued

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- -------------------
<S> <C> <C>
Internet Services (18.3%)
130,500 Ariba Inc.* ........................... $ 23,522,625
163,000 At Home Corp. (Series A)* ............. 7,915,687
21,900 Commerce One, Inc.* ................... 7,183,200
151,400 Exodus Communications, Inc.* .......... 16,313,350
41,400 Kana Communications, Inc.* ............ 6,080,625
209,500 Portal Software, Inc.* ................ 24,511,500
232,500 Starmedia Network Inc.* ............... 6,873,281
267,200 VeriSign, Inc.* ....................... 49,632,400
205,500 Vignette Corp.* ....................... 42,512,813
315,915 Yahoo! Inc.* .......................... 67,250,406
---------------
251,795,887
---------------
Investment Bankers/Brokers/
Services (3.0%)
1,374,300 E*TRADE Group, Inc.* .................. 41,229,000
---------------
Investment Managers (1.2%)
441,700 Price (T.) Rowe Associates, Inc. ...... 15,873,594
---------------
Life Insurance (1.0%)
298,400 Hartford Life, Inc. (Class A) ......... 13,353,400
---------------
Medical Equipment &
Supplies (0.6%)
103,700 VISX, Inc.* ........................... 8,043,231
---------------
Medical Specialties (1.5%)
200,000 Bard (C.R.), Inc. ..................... 10,862,500
136,700 Minimed, Inc.* ........................ 10,004,731
---------------
20,867,231
---------------
Mid-Sized Banks (0.2%)
100,000 First Tennessee National Corp. ........ 3,287,500
---------------
Motor Vehicles (0.5%)
115,000 Harley-Davidson, Inc. ................. 7,015,000
---------------
Movies/Entertainment (1.0%)
250,000 Westwood One, Inc.* ................... 14,312,500
---------------
Other Consumer Services (4.6%)
295,300 eBay Inc.* ............................ 48,724,500
217,400 Homestore.Com Inc.* ................... 14,144,588
---------------
62,869,088
---------------
Other Pharmaceuticals (0.8%)
109,000 Sepracor, Inc.* ....................... 10,573,000
---------------
Other Specialty Stores (0.4%)
187,500 Bed Bath & Beyond, Inc.* .............. 5,859,375
---------------
Other Telecommunications (3.7%)
307,600 AT&T Canada Inc. (Canada)* ............ 11,573,450
325,000 Broadwing Inc. ........................ 9,465,625
555,516 Global Crossing Ltd. (Bermuda)*........ 24,164,946
128,200 McLeodUSA, Inc. (Class A)* ............ 5,512,600
---------------
50,716,621
---------------

</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- -------------------
<S> <C> <C>
Precision Instruments (0.4%)
100,000 Waters Corp.* ......................... $ 4,900,000
---------------
Semiconductors (7.0%)
394,400 Altera Corp.* ......................... 21,248,300
452,700 Maxim Integrated Products, Inc.*....... 36,329,175
425,000 Xilinx, Inc.* ......................... 38,010,938
---------------
95,588,413
---------------
Services to the Health Industry (1.2%)
135,000 Express Scripts, Inc. (Class A)* ...... 6,851,250
343,300 MedQuist Inc.* ........................ 9,784,050
---------------
16,635,300
---------------
Smaller Banks (0.6%)
125,000 Zions Bancorporation .................. 8,062,500
---------------
Telecommunications
Equipment (6.5%)
450,500 American Tower Corp. (Class A)*........ 11,769,313
200,000 QUALCOMM Inc.* ........................ 72,450,000
25,000 Sycamore Networks Inc.* ............... 5,568,750
---------------
89,788,063
---------------
TOTAL COMMON STOCKS
(Identified Cost $723,344,313)......... 1,334,945,848
---------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- -----------
<S> <C> <C>
SHORT-TERM INVESTMENT (2.7%)
REPURCHASE AGREEMENT
$ 36,810 The Bank of New York 5.375%
due 12/01/99 (dated 11/30/99;
proceeds $36,815,163) (a)
(Identified Cost $36,809,667).......... 36,809,667
--------------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $760,153,980) (b)......... 99.8% 1,371,755,515
OTHER ASSETS IN EXCESS OF
LIABILITIES ............................... 0.2 3,390,153
----- -------------
NET ASSETS ................................ 100.0% $1,375,145,668
=====
</TABLE>

- --------------------------------
* Non-income producing security.
(a) Collateralized by $37,078,056 U.S. Treasury Note 6.125% due
09/30/00 valued at $37,539,730.
(b) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$628,876,349 and the aggregate gross unrealized depreciation is
$17,274,814, resulting in net unrealized appreciation of
$611,601,535.

See Notes to Financial Statements
<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Financial Statements

STATEMENT OF ASSETS AND LIABILITIES
November 30, 1999

<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value
(identified cost $760,153,980) .................................. $ 1,371,755,515
Receivable for:
Shares of beneficial interest sold ............................. 6,788,582
Investments sold ............................................... 755,711
Dividends ...................................................... 41,731
Deferred organizational expenses .................................. 41,081
Prepaid expenses and other assets ................................. 121,603
---------------
TOTAL ASSETS ................................................... 1,379,504,223
===============
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased ...................... 2,629,665
Plan of distribution fee ....................................... 795,036
Investment management fee ...................................... 829,199
Accrued expenses and other payables ............................... 104,655
---------------
TOTAL LIABILITIES .............................................. 4,358,555
---------------
NET ASSETS ..................................................... $ 1,375,145,668
===============
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................................... $ 743,256,860
Net unrealized appreciation ....................................... 611,601,535
Accumulated undistributed net realized gain ....................... 20,287,273
---------------
NET ASSETS ..................................................... $ 1,375,145,668
===============
CLASS A SHARES:
Net Assets ........................................................ $ 19,934,043
Shares Outstanding (unlimited authorized, $.01 par value) ......... 589,256
NET ASSET VALUE PER SHARE ...................................... $ 33.83
===============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) ................ $ 35.70
===============
CLASS B SHARES:
Net Assets ........................................................ $ 1,315,929,755
Shares Outstanding (unlimited authorized, $.01 par value) ......... 39,445,753
NET ASSET VALUE PER SHARE ...................................... $ 33.36
===============
CLASS C SHARES:
Net Assets ........................................................ $ 34,897,583
Shares Outstanding (unlimited authorized, $.01 par value) ......... 1,049,821
NET ASSET VALUE PER SHARE ...................................... $ 33.24
===============
CLASS D SHARES:
Net Assets ........................................................ $ 4,384,287
Shares Outstanding (unlimited authorized, $.01 par value) ......... 129,081
NET ASSET VALUE PER SHARE ...................................... $ 33.97
===============
</TABLE>

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Financial Statements, continued

STATEMENT OF OPERATIONS
For the year ended November 30, 1999

<TABLE>
<CAPTION>
NET INVESTMENT LOSS:
<S> <C>
INCOME
Interest .................................................. $ 1,334,422
Dividends (net of $6,000 foreign withholding tax) ......... 534,042
------------
TOTAL INCOME ........................................... 1,868,464
------------
EXPENSES
Plan of distribution fee (Class A shares) ................. 16,178
Plan of distribution fee (Class B shares) ................. 4,436,240
Plan of distribution fee (Class C shares) ................. 109,805
Investment management fee ................................. 3,257,327
Management fee ............................................ 1,034,415
Investment advisory fee ................................... 689,610
Transfer agent fees and expenses .......................... 656,717
Shareholder reports and notices ........................... 154,252
Registration fees ......................................... 92,140
Professional fees ......................................... 69,781
Organizational expenses ................................... 33,034
Custodian fees ............................................ 26,780
Trustees' fees and expenses ............................... 21,565
Other ..................................................... 19,200
------------
TOTAL EXPENSES ......................................... 10,617,044
------------
NET INVESTMENT LOSS .................................... (8,748,580)
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ......................................... 44,590,626
Net change in unrealized appreciation ..................... 422,052,427
------------
NET GAIN ............................................... 466,643,053
------------
NET INCREASE .............................................. $457,894,473
============
</TABLE>

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Financial Statements, continued

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
NOVEMBER 30, 1999 NOVEMBER 30, 1998
------------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss .................................. $ (8,748,580) $ (3,698,987)
Net realized gain .................................... 44,590,626 31,236,102
Net change in unrealized appreciation ................ 422,052,427 37,809,903
--------------- -------------
NET INCREASE ...................................... $ 457,894,473 65,347,018
--------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN:
Class A shares ....................................... (707) -
Class B shares ....................................... (54,653) -
Class C shares ....................................... (1,211) -
Class D shares ....................................... (4) -
---------------- -------------
TOTAL DISTRIBUTIONS ............................... (56,575) -
--------------- -------------
Net increase (decrease) from transactions in shares of
beneficial interest ................................ 703,430,965 (26,033,572)
--------------- -------------
NET INCREASE ...................................... 1,161,268,863 39,313,446
NET ASSETS:
Beginning of period .................................. 213,876,805 174,563,359
--------------- -------------
END OF PERIOD ..................................... $1,375,145,668 $ 213,876,805
=============== =============
</TABLE>

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Notes to Financial Statements November 30, 1999

1. ORGANIZATION AND ACCOUNTING POLICIES

Morgan Stanley Dean Witter Mid-Cap Equity Trust (the "Fund"), formerly TCW/DW
Mid-Cap Equity Trust, is registered under the Investment Company Act of 1940,
as amended (the "Act"), as a diversified, open-end management investment
company. The Fund's investment objective is to seek long-term capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
equity securities, including common stocks and securities convertible into
common stock, issued by medium-sized companies. The Fund was organized as a
Massachusetts business trust on October 17, 1995 and commenced operations on
February 27, 1996. On July 28, 1997, the Fund converted to a multiple class
share structure.

The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year,
six years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates.

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS - (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price
(in cases where securities are traded on more than one exchange; the securities
are valued on the exchange designated as the primary market pursuant to
procedures adopted by the Trustees); (2) all other portfolio securities for
which over-the-counter market quotations are readily available are valued at
the latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by Morgan Stanley Dean Witter Advisors Inc. (the "Investment
Manager") or TCW Investment Management Company (the "Sub-Advisor") that sale or
bid prices are not reflective of a security's market value, portfolio
securities are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Trustees
(valuation of debt securities for which market quotations are not readily
available may be based upon current market prices of securities which are
comparable in coupon, rating and maturity or an appropriate matrix utilizing
similar factors); and (4) short-term debt securities having a maturity date of

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Notes to Financial Statements November 30, 1999, continued

more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.

B. ACCOUNTING FOR INVESTMENTS - Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date
except for certain dividends from foreign securities which are recorded as soon
as the Fund is informed after the ex-dividend date. Discounts are accreted over
the life of the respective securities. Interest income is accrued daily.

C. MULTIPLE CLASS ALLOCATIONS - Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date
such items are recognized. Distribution fees are charged directly to the
respective class.

D. FEDERAL INCOME TAX STATUS - It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.

E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - The Fund records dividends and
distributions to its shareholders on the record date. The amount of dividends
and distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in excess
of net investment income or distributions in excess of net realized capital
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of paid-in-capital.

F. ORGANIZATIONAL EXPENSES - The Investment Manager paid the organizational
expenses of the Fund in the amount of approximately $165,000 which have been
reimbursed for the full amount thereof. Such expenses have been deferred and
are being amortized on the straight-line method over a period not to exceed
five years from the commencement of operations.

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Notes to Financial Statements November 30, 1999, continued

2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS

Pursuant to a new Investment Management Agreement that took effect June 28,
1999, the Fund pays the Investment Manager a management fee, accrued daily and
payable monthly, by applying the annual rate of 0.75% to the portion of net
assets not exceeding $500 million and 0.725% to the portion of the daily net
assets exceeding $500 million.

Under the terms of the Agreement, in addition to managing the Fund's
Investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services,
heat, light, power and other utilities provided to the Fund.

Under a new Sub-Advisory Agreement that took effect June 28, 1999 between the
Investment Manager and the Sub-Advisor, the Sub-Advisor provides the Fund with
investment advice and portfolio management relating to the Fund's investments
in securities, subject to the overall supervision of the Investment Manager. As
compensation for its services provided pursuant to the Sub-Advisory Agreement,
the Investment Manager pays the Sub-Advisor compensation equal to 40% of its
monthly compensation.

Prior to June 28, 1999, pursuant to a Management Agreement with Morgan Stanley
Dean Witter Services Company Inc. (the "Former Manager"), the Fund paid the
Former Manager a management fee, accrued daily and payable monthly, by applying
the annual rate of 0.60% to the net assets of the Fund determined as of the
close of each business day.

Under the terms of the Management Agreement, the Manager maintained certain of
the Fund's books and records and furnished, at its own expense, office space,
facilities, equipment, clerical, bookkeeping and certain legal services and
paid the salaries of all personnel, including officers of the Fund who were
employees of the Manager. The Manager also bore the cost of telephone services,
heat, light, power and other utilities provided to the Fund.

Prior to June 28, 1999, pursuant to an Investment Advisory Agreement with the
current Sub-Advisor, the Fund paid an advisory fee, accrued daily and payable
monthly, by applying the annual rate of 0.40% to the net assets of the Fund
determined as of the close of each business day.

Under the terms of the Investment Advisory Agreement, the Fund had retained the
current Sub-Advisor to invest the Fund's assets, including placing orders for
the purchase and sale of portfolio securities. The current Sub-Advisor obtained
and evaluated such information and advice relating to the economy,

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Notes to Financial Statements November 30, 1999, continued

securities markets, and specific securities as it considered necessary or
useful to continuously manage the assets of the Fund in a manner consistent
with its investment objective. In addition, the current Sub-Advisor paid the
salaries of all personnel, including officers of the Fund, who were employees
of the current Sub-Advisor.

3. PLAN OF DISTRIBUTION

Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund will pay the Distributor a fee which is
accrued daily and paid monthly at the following annual rates: (i) Class A - up
to 0.25% of the average daily net assets of Class A; (ii) Class B - 1.0% of the
lesser of: (a) the average daily aggregate gross sales of the Class B shares
since inception of the Fund (not including reinvestment of dividend or capital
gain distributions) less the average net asset value of the Class B shares
redeemed since the Fund's inception upon which a contingent deferred sales
charge has been imposed or waived; or (b) the average daily net assets of Class
B; and (iii) Class C - up to 1.0% of the average daily net assets of Class C.
In the case of Class A shares, amounts paid under the Plan are paid to the
Distributor for services provided. In the case of Class B and Class C shares,
amounts paid under the Plan are paid to the Distributor for (1) services
provided and the expenses borne by it and others in the distribution of the
shares of these Classes, including the payment of commissions for sales of
these Classes and incentive compensation to, and expenses of, Morgan Stanley
Dean Witter Financial Advisors and others who engage in or support distribution
of the shares or who service shareholder accounts, including overhead and
telephone expenses; (2) printing and distribution of prospectuses and reports
used in connection with the offering of these shares to other than current
shareholders; and (3) preparation, printing and distribution of sales
literature and advertising materials. In addition, the Distributor may utilize
fees paid pursuant to the Plan, in the case of Class B shares, to compensate
Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
Distributor and other selected broker-dealers for their opportunity costs in
advancing such amounts, which compensation would be in the form of a carrying
charge on any unreimbursed expenses.

In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. Although there is no legal obligation for
the Fund to pay expenses incurred in excess of payments made to the Distributor
under the Plan and the proceeds of contingent deferred

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Notes to Financial Statements November 30, 1999, continued

sales charges paid by investors upon redemption of shares, if for any reason
the Plan is terminated, the Trustees will consider at that time the manner in
which to treat such expenses. The Distributor has advised the Fund that such
excess amounts, including carrying charges, totaled $25,765,238 at November 30,
1999.

In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended November 30, 1999, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.24% and
1.0%, respectively.

The Distributor has informed the Fund that for the year ended November 30,
1999, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A shares, Class B shares and Class C shares of $3,082,
$693,550 and $10,375, respectively and received $154,526 in front-end sales
charges from sales of the Fund's Class A shares. The respective shareholders
pay such charges which are not an expense of the Fund.

4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES

The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the year ended November 30, 1999
aggregated $512,599,322 and $310,931,925, respectively.

For the year ended November 30, 1999, the Fund incurred brokerage commissions
of $9,005 with Morgan Stanley & Co., Inc., an affiliate of the Investment
Manager and Distributor, for portfolio transactions executed on behalf of the
Fund.

Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager
and Distributor, is the Fund's transfer agent. At November 30, 1999, the Fund
had transfer agent fees and expenses payable of approximately $4,000.

5. FEDERAL INCOME TAX STATUS

As part of the Fund's acquisition of the assets of Morgan Stanley Dean Witter
Mid-Cap Growth Fund ("Mid-Cap Growth"), the Fund obtained a net capital loss
carryover of approximately $18,137,000 from Mid-Cap Growth. Utilization of this
carryover is subject to limitations imposed by the Internal Revenue Code and
Treasury Regulations. During the year ended November 30, 1999, the Fund
utilized

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Notes to Financial Statements November 30, 1999, continued

approximately $7,851,000 of this carryover. At November 30, 1999, the Fund had
a net capital loss carryover remaining of approximately $10,286,000 which will
be available through November 30, 2005 to offset future capital gains to the
extent provided by regulations.

As of November 30, 1999, the Fund had temporary book/tax differences
attributable to unused capital loss carryover and capital loss deferrals on
wash sales and permanent book/tax differences primarily attributable to a net
operating loss. To reflect reclassifications arising from the permanent
differences, paid-in-capital was charged and net investment loss was credited
$8,748,580.

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Notes to Financial Statements November 30, 1999, continued

6. SHARES OF BENEFICIAL INTEREST

Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
NOVEMBER 30, 1999 NOVEMBER 30, 1998
--------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ................................................ 634,895 $ 17,175,647 70,760 $ 975,219
Reinvestment of distributions ....................... 23 593 - -
Acquisition of Morgan Stanley Dean Witter Mid-Cap
Growth Fund ....................................... 137,952 3,450,632 - -
Repurchased ......................................... (254,595) (6,451,822) (5,127) (68,294)
-------- -------------- ------ -------------
Net increase - Class A .............................. 518,275 14,175,050 65,633 906,925
-------- -------------- ------ -------------
CLASS B SHARES
Sold ................................................ 11,267,017 301,595,088 2,515,413 32,751,132
Reinvestment of distributions ....................... 1,986 50,366 - -
Acquisition of Morgan Stanley Dean Witter Mid-Cap
Growth Fund ....................................... 20,363,981 503,472,815 - -
Repurchased ......................................... (5,905,022) (145,463,060) (4,871,632) (60,224,693)
---------- -------------- ---------- -------------
Net increase (decrease) - Class B ................... 25,727,962 659,655,209 (2,356,219) (27,473,561)
---------- -------------- ---------- -------------
CLASS C SHARES
Sold ................................................ 849,493 22,720,952 41,665 574,086
Reinvestment of distributions ....................... 44 1,113 - -
Acquisition of Morgan Stanley Dean Witter Mid-Cap
Growth Fund ....................................... 264,929 6,532,755 - -
Repurchased ......................................... (110,763) (2,910,576) (3,216) (41,022)
---------- -------------- ---------- -------------
Net increase - Class C .............................. 1,003,703 26,344,244 38,449 533,064
---------- -------------- ---------- -------------
CLASS D SHARES
Sold ................................................ 688,208 18,792,852 - -
Reinvestment of distributions ....................... - 4 - -
Acquisition of Morgan Stanley Dean Witter Mid-Cap
Growth Fund ....................................... 11,712 294,460 - -
Repurchased ......................................... (571,762) (15,830,854) - -
---------- -------------- ---------- -------------
Net increase - Class D .............................. 128,158 3,256,462 - -
---------- -------------- ---------- -------------
Net increase (decrease) in Fund ..................... 27,378,098 $ 703,430,965 (2,252,137) $ (26,033,572)
========== ============== ========== =============
</TABLE>

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Notes to Financial Statements November 30, 1999, continued

7. ACQUISITION OF MORGAN STANLEY DEAN WITTER MID-CAP GROWTH FUND

On June 28, 1999, the Fund acquired all the net assets of the Morgan Stanley
Dean Witter Mid-Cap Growth Fund ("Mid-Cap Growth") based on the respective
valuations as of the close of business on June 25, 1999, pursuant to a plan of
reorganization approved by the shareholders of Mid-Cap Growth on June 8, 1999.
The acquisition was accomplished by a tax-free exchange of 137,952 Class A
shares of the Fund at a net asset value of $25.02 per share for 223,982 Class A
shares of Mid-Cap Growth; 20,363,981 Class B shares of the Fund at a net asset
value of $24.73 per share for 33,262,962 Class B shares of Mid-Cap Growth;
264,929 Class C shares of the Fund at a net asset value of $24.66 per share for
431,232 Class C shares of Mid-Cap Growth; and 11,712 Class D shares of the Fund
at a net asset value of $25.14 per share for 19,083 Class D shares of Mid-Cap
Growth. The net assets of the Fund and Mid-Cap Growth immediately before the
acquisition were $355,933,256 and $513,750,663, respectively, including
unrealized appreciation of $102,903,526 for Mid-Cap Growth. Immediately after
the acquisition, the combined net assets of the Fund amounted to $869,683,919.

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Financial Highlights

Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
NOVEMBER 30, 1999 NOVEMBER 30, 1998 NOVEMBER 30, 1997
------------------- ------------------- ------------------
<S> <C> <C> <C>
CLASS A SHARES ++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $15.60 $10.88 $10.85
------- ------- -------
Income (loss) from investment operations:
Net investment loss ............................ (0.34) (0.18) (0.06)
Net realized and unrealized gain ............... 18.57 4.90 0.09
------- ------- -------
Total income from investment operations ......... 18.23 4.72 0.03
------- ------- -------
Net asset value, end of period .................. $ 33.83(4) $ 15.60 $ 10.88
========= ======= =======
TOTAL RETURN+.................................... 116.89 % 43.38 % 0.28 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 1.23 %(3) 1.55 %(3) 1.55 %(2)
Net investment loss ............................. (0.93)%(3) (1.40)%(3) (1.46)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $19,934 $1,107 $ 58
Portfolio turnover rate ......................... 51 % 52 % 49 %
</TABLE>

- -------------

* The date shares were first issued.

++ The per share amounts were computed using an average number of shares
outstanding during the period.

+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.

(1) Not annualized.

(2) Annualized.

(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

(4) Includes the effect of a capital gain distribution of $0.004.

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Financial Highlights, continued

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED NOVEMBER 30 FEBRUARY 27, 1996*
--------------------------------------------------- THROUGH
1999++ 1998++ 1997**++ NOVEMBER 30, 1996
------------------ ------------------ ------------- -------------------
<S> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period .................. $ 15.46 $ 10.85 $ 10.92 $ 10.00
---------- -------- -------- --------
Income (loss) from investment operations:
Net investment loss .................................. (0.42) (0.26) (0.22) (0.13)
Net realized and unrealized gain ..................... 18.32 4.87 0.15 1.05
---------- -------- -------- --------
Total income (loss) from investment operations ........ 17.90 4.61 (0.07) 0.92
---------- -------- -------- --------
Net asset value, end of period ........................ $ 33.36(4) $ 15.46 $ 10.85 $ 10.92
============ ======== ======== ========
TOTAL RETURN+ ........................................ 115.82 % 42.49 % (0.64)% 9.20 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .............................................. 1.74 %(3) 2.20 %(3) 2.29 % 2.28 %(2)
Net investment loss ................................... (1.44)%(3) (2.05)%(3) (2.16)% (1.79)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ............... $1,315,930 $212,043 $174,412 $205,274
Portfolio turnover rate ............................... 51 % 52 % 49 % 25 %(1)
</TABLE>

- -------------

* Commencement of operations.

** Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.

++ The per share amounts were computed using an average number of shares
outstanding during the period.

+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.

(1) Not annualized.

(2) Annualized.

(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

(4) Includes the effect of a capital gain distribution of $0.004.

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Financial Highlights, continued

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
NOVEMBER 30, 1999 NOVEMBER 30, 1998 NOVEMBER 30, 1997
------------------- ------------------- ------------------
<S> <C> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $ 15.45 $ 10.85 $ 10.85
------- ------- -------
Income (loss) from investment operations:
Net investment loss ............................ (0.52) (0.28) (0.08)
Net realized and unrealized gain ............... 18.31 4.88 0.08
------- ------- -------
Total income from investment operations ......... 17.79 4.60 -
------- ------- -------
Net asset value, end of period .................. $ 33.24(4) $ 15.45 $ 10.85
========= ======= =======
TOTAL RETURN+ .................................. 115.18 % 42.27 % 0.09 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 1.99 %(3) 2.30 %(3) 2.32 %(2)
Net investment loss ............................. (1.69)%(3) (2.15)%(3) (2.22)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $34,898 $ 712 $ 83
Portfolio turnover rate ......................... 51 % 52 % 49 %
</TABLE>

- -------------

* The date shares were first issued.

++ The per share amounts were computed using an average number of shares
outstanding during the period.

+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.

(1) Not annualized.

(2) Annualized.

(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

(4) Includes the effect of a capital gain distribution of $0.004.

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Financial Highlights, continued

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
NOVEMBER 30, 1999 NOVEMBER 30, 1998 NOVEMBER 30, 1997
------------------- ------------------- ------------------
<S> <C> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $ 15.66 $ 10.89 $ 10.85
------- ------- -------
Income (loss) from investment operations:
Net investment loss ............................ (0.21) (0.15) (0.05)
Net realized and unrealized gain ............... 18.52 4.92 0.09
------- ------- -------
Total income from investment operations ......... 18.31 4.77 0.04
------- ------- -------
Net asset value, end of period .................. $ 33.97(4) $ 15.66 $ 10.89
========= ======= =======
TOTAL RETURN+ .................................. 116.96 % 43.80 % 0.37 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 0.99 %(3) 1.30 %(3) 1.30 %(2)
Net investment loss ............................. (0.69)%(3) (1.15)%(3) (1.19)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $4,384 $ 15 $ 10
Portfolio turnover rate ......................... 51 % 52 % 49 %
</TABLE>

- -------------

* The date shares were first issued.

++ The per share amounts were computed using an average number of shares
outstanding during the period.

+ Calculated based on the net asset value as of the last business day of the
period.

(1) Not annualized.

(2) Annualized.

(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

(4) Includes the effect of a capital gain distribution of $0.004.

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter Mid-Cap Equity Trust
Report of Independent Accountants

TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER MID-CAP EQUITY TRUST

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter Mid-Cap
Equity Trust (the "Fund"), formerly TCW/DW Mid-Cap Equity Trust, at November
30, 1999, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at November 30, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
January 11, 2000

1999 FEDERAL TAX NOTICE (unaudited)

During the year ended November 30, 1999, the Fund paid shareholders
$.004 per share from long-term capital gains.