<PAGE>
Filed Pursuant to Rule 497(b)
Registration File No.: 333-02419
TCW/DW GLOBAL TELECOM TRUST
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(800) 869-NEWS
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 8, 1999
TO THE SHAREHOLDERS OF TCW/DW GLOBAL TELECOM TRUST:
Notice is hereby given of a Special Meeting of the Shareholders of TCW/DW
Global Telecom Trust ("Global Telecom") to be held in Conference Room A,
Forty-Fourth Floor, Two World Trade Center, New York, New York 10048, at 11:00
A.M., New York time, on June 8, 1999, and any adjournments thereof (the
"Meeting"), for the following purposes:
1. To consider and vote upon an Agreement and Plan of Reorganization, dated
February 25, 1999 (the "Reorganization Agreement"), between Global Telecom
and Morgan Stanley Dean Witter Global Utilities Fund ("Global Utilities"),
pursuant to which substantially all of the assets of Global Telecom would
be combined with those of Global Utilities and shareholders of Global
Telecom would become shareholders of Global Utilities receiving shares of
Global Utilities with a value equal to the value of their holdings in
Global Telecom (the "Reorganization"); and
2. To act upon such other matters as may properly come before the Meeting.
The Reorganization is more fully described in the accompanying Proxy
Statement and Prospectus and a copy of the Reorganization Agreement is attached
as Exhibit A thereto. Shareholders of record at the close of business on March
26, 1999 are entitled to notice of, and to vote at, the Meeting. Please read
the Proxy Statement and Prospectus carefully before telling us, through your
proxy or in person, how you wish your shares to be voted. Alternatively, if you
are eligible to vote telephonically by touchtone telephone or electronically on
the Internet (as discussed in the enclosed Proxy Statement) you may do so in
lieu of attending the Meeting in person. THE BOARD OF TRUSTEES OF GLOBAL
TELECOM RECOMMENDS YOU VOTE IN FAVOR OF THE REORGANIZATION. WE URGE YOU TO
SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Trustees,
BARRY FINK,
Secretary
April 12, 1999
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO
ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE
TO BE PRESENT IN PERSON, PLEASE FILL IN, SIGN AND RETURN THE ENCLOSED PROXY
IN ORDER THAT THE NECESSARY QUORUM BE REPRESENTED AT THE MEETING. THE
ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
CERTAIN SHAREHOLDERS WILL BE ABLE TO VOTE TELEPHONICALLY BY TOUCHTONE
TELEPHONE OR ELECTRONICALLY ON THE INTERNET BY FOLLOWING INSTRUCTIONS ON
THEIR PROXY CARDS OR ON THE ENCLOSED VOTING INFORMATION CARD.
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL UTILITIES FUND
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
(800) 869-NEWS
ACQUISITION OF THE ASSETS OF
TCW/DW GLOBAL TELECOM TRUST
BY AND IN EXCHANGE FOR SHARES OF
MORGAN STANLEY DEAN WITTER GLOBAL UTILITIES FUND
This Proxy Statement and Prospectus is being furnished to shareholders of
TCW/DW Global Telecom Trust ("Global Telecom") in connection with an Agreement
and Plan of Reorganization, dated February 25, 1999 (the "Reorganization
Agreement"), pursuant to which substantially all the assets of Global Telecom
will be combined with those of Morgan Stanley Dean Witter Global Utilities Fund
("Global Utilities") in exchange for shares of Global Utilities (the
"Reorganization"). As a result of this transaction, shareholders of Global
Telecom will become shareholders of Global Utilities and will receive shares of
Global Utilities with a value equal to the value of their holdings in Global
Telecom. The terms and conditions of this transaction are more fully described
in this Proxy Statement and Prospectus and in the Reorganization Agreement
between Global Telecom and Global Utilities, attached hereto as Exhibit A. The
address of Global Telecom is that of Global Utilities set forth above. This
Proxy Statement also constitutes a Prospectus of Global Utilities, which is
dated April 12, 1999, filed by Global Utilities with the Securities and
Exchange Commission (the "Commission") as part of its Registration Statement on
Form N-14 (the "Registration Statement").
Global Utilities is an open-end diversified management investment company
whose investment objective is to seek both capital appreciation and current
income. The fund seeks to achieve its objective by investing in equity and
fixed-income securities of issuers worldwide which are primarily engaged in the
utilities industry.
This Proxy Statement and Prospectus sets forth concisely information about
Global Utilities that shareholders of Global Telecom should know before voting
on the Reorganization Agreement. A copy of the Prospectus for Global Utilities
dated June 26, 1998, is attached as Exhibit B and incorporated herein by
reference. Also enclosed and incorporated herein by reference is Global
Utilities's Annual Report for the fiscal year ended February 28, 1999. A
Statement of Additional Information relating to the Reorganization, described
in this Proxy Statement and Prospectus (the "Additional Statement"), dated
April 12, 1999, has been filed with the Commission and is also incorporated
herein by reference. Also incorporated herein by reference are Global Telecom's
Prospectus, dated July 31, 1998, and Annual Report for its fiscal year ended
May 31, 1998 and the succeeding unaudited Semi-Annual Report for the six months
ended November 30, 1998. Such documents are available without charge by calling
(800) 869-NEWS (TOLL FREE).
Investors are advised to read and retain this Proxy Statement and Prospectus
for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THIS PROXY STATEMENT AND PROSPECTUS IS DATED APRIL 12, 1999.
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
INTRODUCTION ............................................................................. 1
General ................................................................................ 1
Record Date; Share Information ......................................................... 1
Proxies ................................................................................ 2
Expenses of Solicitation ............................................................... 3
Vote Required .......................................................................... 3
SYNOPSIS ................................................................................. 4
The Reorganization ..................................................................... 4
Fee Table .............................................................................. 4
Tax Consequences of the Reorganization ................................................. 8
Comparison of Global Telecom and Global Utilities ...................................... 8
PRINCIPAL RISK FACTORS ................................................................... 11
THE REORGANIZATION ....................................................................... 13
The Proposal ........................................................................... 13
The Board's Consideration .............................................................. 13
The Reorganization Agreement ........................................................... 14
Tax Aspects of the Reorganization ...................................................... 16
Description of Shares .................................................................. 17
Capitalization Table (unaudited) ....................................................... 17
Appraisal Rights ....................................................................... 18
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS ........................... 18
Investment Objectives and Policies ..................................................... 18
Investment Restrictions ................................................................ 20
ADDITIONAL INFORMATION ABOUT GLOBAL TELECOM AND GLOBAL
UTILITIES ............................................................................... 20
General ................................................................................ 20
Financial Information .................................................................. 20
Management ............................................................................. 20
Description of Securities and Shareholder Inquiries .................................... 20
Dividends, Distributions and Taxes ..................................................... 20
Purchases, Repurchases and Redemptions ................................................. 21
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE .............................................. 21
FINANCIAL STATEMENTS AND EXPERTS ......................................................... 21
LEGAL MATTERS ............................................................................ 21
AVAILABLE INFORMATION .................................................................... 21
OTHER BUSINESS ........................................................................... 22
Exhibit A - Agreement and Plan of Reorganization, dated February 25, 1999, by and between
Global Telecom and Global Utilities ..................................................... A-1
Exhibit B - Prospectus of Global Utilities dated June 26, 1998 ........................... B-1
</TABLE>
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(800) 869-NEWS
--------------------
PROXY STATEMENT AND PROSPECTUS
--------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 8, 1999
INTRODUCTION
GENERAL
This Proxy Statement and Prospectus is being furnished to the shareholders
of TCW/DW Global Telecom Trust ("Global Telecom"), an open-end diversified
management investment company, in connection with the solicitation by the Board
of Trustees of Global Telecom (the "Board") of proxies to be used at the
Special Meeting of Shareholders of Global Telecom to be held in Conference Room
A, Forty-Fourth Floor, Two World Trade Center, New York, New York 10048 at
11:00 A.M., New York time, on June 8, 1999, and any adjournments thereof (the
"Meeting"). It is expected that the mailing of this Proxy Statement and
Prospectus will be made on or about April 14, 1999.
At the Meeting, Global Telecom shareholders ("Shareholders") will consider
and vote upon an Agreement and Plan of Reorganization, dated February 25, 1999
(the "Reorganization Agreement"), between Global Telecom and Morgan Stanley
Dean Witter Global Utilities Fund ("Global Utilities") pursuant to which
substantially all of the assets of Global Telecom will be combined with those
of Global Utilities in exchange for shares of Global Utilities. As a result of
this transaction, Shareholders will become shareholders of Global Utilities and
will receive shares of Global Utilities equal to the value of their holdings in
Global Telecom on the date of such transaction (the "Reorganization"). Pursuant
to the Reorganization, each Shareholder will receive the class of shares of
Global Utilities that corresponds to the class of shares of Global Telecom
currently held by that Shareholder. Accordingly, as a result of the
Reorganization, each Class A, Class B, Class C and Class D Shareholder of
Global Telecom will receive Class A, Class B, Class C and Class D shares of
Global Utilities, respectively. The shares to be issued by Global Utilities
pursuant to the Reorganization (the "Global Utilities Shares") will be issued
at net asset value without an initial sales charge. Further information
relating to Global Utilities is set forth herein and in Global Utilities'
current Prospectus, dated June 26, 1998 ("Global Utilities' Prospectus"),
attached to this Proxy Statement and Prospectus and incorporated herein by
reference.
The information concerning Global Telecom contained herein has been
supplied by Global Telecom and the information concerning Global Utilities
contained herein has been supplied by Global Utilities.
RECORD DATE; SHARE INFORMATION
The Board has fixed the close of business on March 26, 1999 as the record
date (the "Record Date") for the determination of the Shareholders entitled to
notice of, and to vote at, the Meeting. As of the Record Date, there were
13,253,675.517 shares of Global Telecom issued and outstanding. Shareholders on
the Record Date are entitled to one vote per share on each matter submitted to
a vote at the Meeting. A majority of the outstanding shares entitled to vote,
represented in person or by proxy, will constitute a quorum at the Meeting.
1
<PAGE>
The following persons were known to own of record or beneficially 5% or
more of the outstanding shares of a Class of Global Telecom as of the Record
Date: Class A -- James P. Rogers, 4628 IDS Center, 80 South Eighth Street,
Minneapolis, MN 55402-2100 (39.5%) and Morgan Stanley Dean Witter Trust FSB,
TTEE, Murray Companies Savings & Investment Plan Profit Sharing, Harborside
Financial Center, Plaza 2, 7th Fl., Jersey City, NJ 07311 (5.2%). Class C --
Michael J. Griffin & Joyce A. Bertoldo, JTTEN, 28 Spring Hill Rd., Cold Spring
Harbor, NY 11724-1303 (6.2%). Class D -- Morgan Stanley Dean Witter Advisors
Inc., Attn: Maurice Bendrihem, 2 World Trade Center, New York, NY 10048-0203
(99.8%). As of the Record Date, the trustees and officers of Global Telecom, as
a group, owned less than 1% of the outstanding shares of Global Telecom.
The following persons were known to own of record or beneficially 5% or
more of the outstanding shares of a Class of Global Utilities as of the Record
Date: Class A -- Private Scavengers Health & Welfare Fund, Local Union #731,
I.B. of T., Attn: William Woldman, 1100 E. 31st St., P.O. Box 1407, LaGrange
Park, IL 60526-9507 (8.4%), Local 731 IBT, Health & Welfare Fund, Attn: William
Woldman, 1100 E. 31st St., P.O. Box 1407, LaGrange Park, IL 60526-9507 (5.5%)
and Morgan Stanley Dean Witter Trust FSB (MSDW Trust), TTEE, Healthview Euro
RSCG 401(k) Plan, P.O. Box 957, Jersey City, NJ 07303-0957 (23.3%). Class D --
Morgan Stanley Dean Witter Advisors Inc., Attn: Maurice Bendrihem, 2 World
Trade Center, 70th Fl., New York, NY 10048-0203 (11.5%), MSDW Trust Cust. IRA
Regular, Gary A. Medvigy, 2133 Schaeffer Rd., Sebastopol, CA 95472-5554 (6.8%),
Faye Lambdin, 108 Clyde St., West Sayville, NY 11796-1905 (9.1%), James J. &
Nancy C. Papandrea, TTEES, James J. & Nancy C. Papandrea Trust, dated 3/10/93,
2947 S. Root River Parkway, Milwaukee, WI 53227-2923 (9.3%), Dean Witter
Reynolds (DWR) Cust. for Tom G. Gallop, IRA Rollover, dated 03/17/94, 3318
Lakeside Dr., Rockwall, TX 75087-5323 (22.5%), DWR Cust. for Robert L. Borys,
IRA Standard dated 06/27/85, 304 Arctic Ave., Ocean City, MD 21842-5066 (8.4%),
DWR Cust. for Sandra Meyers, IRA Rollover, dated 04/30/97, 9821 Summerbrook
Terr. Building 17 Apt. B, Boynton Beach, FL 33437-3835 (7.0%), DWR Cust. for
Thomas E. Soland, IRA Rollover dated 5/10/94, 759 Stone Canyon Dr., Las Cruces,
NM 88011-0984 (7.6%) and Howard C. Reese, 5550 Tuckerman Lane, Apt. 221, North
Bethesda, MD 20852-6615 (8.0%). As of the Record Date, the trustees and
officers of Global Utilities, as a group, owned less than 1% of the outstanding
shares of Global Utilities.
PROXIES
The enclosed form of proxy, if properly executed and returned, will be
voted in accordance with the choice specified thereon. The proxy will be voted
in favor of the Reorganization Agreement unless a choice is indicated to vote
against or to abstain from voting on the Reorganization Agreement. The Board
knows of no business, other than that set forth in the Notice of Special
Meeting of Shareholders, to be presented for consideration at the Meeting.
However, the proxy confers discretionary authority upon the persons named
therein to vote as they determine on other business, not currently
contemplated, which may come before the Meeting. Abstentions and, if
applicable, broker "non-votes" will not count as votes in favor of the
Reorganization Agreement, and broker "non-votes" will not be deemed to be
present at the meeting for purposes of determining whether the Reorganization
Agreement has been approved. Broker "non-votes" are shares held in street name
for which the broker indicates that instructions have not been received from
the beneficial owners or other persons entitled to vote and for which the
broker does not have discretionary voting authority. If a Shareholder executes
and returns a proxy but fails to indicate how the votes should be cast, the
proxy will be voted in favor of the Reorganization Agreement. The proxy may be
revoked at any time prior to the voting thereof by: (i) delivering written
notice of revocation to the Secretary of Global Telecom at Two World Trade
Center, New York, New York 10048; (ii) attending the Meeting and voting in
person; or (iii) completing and returning a new proxy (whether by mail or, as
discussed below, by touchtone telephone or the Internet) (if returned and
received in time to be voted). Attendance at the Meeting will not in and of
itself revoke a proxy.
2
<PAGE>
In the event that the necessary quorum to transact business or the vote
required to approve or reject the Reorganization Agreement is not obtained at
the Meeting, the persons named as proxies may propose one or more adjournments
of the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of the holders of a majority of shares of
Global Telecom present in person or by proxy at the Meeting. The persons named
as proxies will vote in favor of such adjournment those proxies which they are
entitled to vote in favor of the Reorganization Agreement and will vote against
any such adjournment those proxies required to be voted against the
Reorganization Agreement.
EXPENSES OF SOLICITATION
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement and Prospectus, will be borne by Global Telecom
which expenses are expected to approximate $145,000. Global Telecom and Global
Utilities will bear all of their respective other expenses associated with the
Reorganization. In addition to the solicitation of proxies by mail, proxies may
be solicited by officers of Global Telecom, and officers and regular employees
of Morgan Stanley Dean Witter Services Company Inc. ("MSDW Services" or the
"Manager") or its parent company Morgan Stanley Dean Witter Advisors Inc.
("MSDW Advisors") and Morgan Stanley Dean Witter Trust FSB ("MSDW Trust"), an
affiliate of MSDW Advisors, personally or by mail, telephone, telegraph or
otherwise, without compensation therefor. Brokerage houses, banks and other
fiduciaries may be requested to forward soliciting material to the beneficial
owners of shares and to obtain authorization for the execution of proxies.
Shareholders whose shares are registered with MSDW Trust will be able to
vote their shares by touchtone telephone or by Internet by following the
instructions on the proxy card or on the Voting Information Card accompanying
this Proxy Statement. To vote by touchtone telephone, Shareholders can call the
toll-free number 1-800-690-6903. To vote by Internet, Shareholders can access
the websites www.msdwt.com or www.proxyvote.com. Telephonic and Internet voting
with MSDW Trust presently are not available to Shareholders whose shares are
held in street name.
In certain instances, MSDW Trust, an affiliate of MSDW Advisors, may call
Shareholders to ask if they would be willing to have their votes recorded by
telephone. The telephone voting procedure is designed to authenticate
Shareholders' identities, to allow Shareholders to authorize the voting of
their shares in accordance with their instructions and to confirm that their
instructions have been recorded properly. No recommendation will be made as to
how a Shareholder should vote on the Reorganization Agreement other than to
refer to the recommendation of the Board. Global Telecom has been advised by
counsel that these procedures are consistent with the requirements of
applicable law. Shareholders voting by telephone in this manner will be asked
for their social security number or other identifying information and will be
given an opportunity to authorize proxies to vote their shares in accordance
with their instructions. To ensure that the Shareholders' instructions have
been recorded correctly, they will receive a confirmation of their instructions
in the mail. A special toll-free number will be available in case the
information contained in the confirmation is incorrect. Although a
Shareholder's vote may be taken by telephone, each Shareholder will receive a
copy of this Proxy Statement and Prospectus and may vote by mail using the
enclosed proxy card or by touchtone telephone or the Internet as set forth
above. The last proxy vote received in time to be voted, whether by proxy card,
touchtone telephone or Internet, will be the vote that is counted and will
revoke all previous votes by the Shareholder.
VOTE REQUIRED
Approval of the Reorganization Agreement by the Shareholders requires the
affirmative vote of a majority (i.e., more than 50%) of the shares of Global
Telecom represented in person or by proxy and entitled to vote at the Meeting,
provided a quorum is present at the Meeting. If the Reorganization Agreement is
not approved by Shareholders, Global Telecom will continue in existence and the
Board will consider alternative actions.
3
<PAGE>
SYNOPSIS
The following is a synopsis of certain information contained in or
incorporated by reference in this Proxy Statement and Prospectus. This synopsis
is only a summary and is qualified in its entirety by the more detailed
information contained or incorporated by reference in this Proxy Statement and
Prospectus and the Reorganization Agreement. Shareholders should carefully
review this Proxy Statement and Prospectus and Reorganization Agreement in
their entirety and, in particular, Global Utilities' Prospectus, which is
attached to this Proxy Statement and incorporated herein by reference.
THE REORGANIZATION
The Reorganization Agreement provides for the transfer of substantially
all the assets of Global Telecom, subject to stated liabilities, to Global
Utilities in exchange for the Global Utilities Shares. The aggregate net asset
value of the Global Utilities Shares issued in the exchange will equal the
aggregate value of the net assets of Global Telecom received by Global
Utilities. On or after the closing date scheduled for the Reorganization (the
"Closing Date"), Global Telecom will distribute the Global Utilities Shares
received by Global Telecom to Shareholders as of the Valuation Date (as defined
below under "The Reorganization Agreement") in complete liquidation of Global
Telecom and Global Telecom will thereafter be dissolved and deregistered under
the Investment Company Act of 1940, as amended (the "1940 Act"). As a result of
the Reorganization, each Shareholder will receive that number of full and
fractional Global Utilities Shares equal in value to such Shareholder's pro
rata interest in the net assets of Global Telecom transferred to Global
Utilities. Pursuant to the Reorganization, each Shareholder will receive the
class of shares of Global Utilities that corresponds to the class of shares of
Global Telecom currently held by that Shareholder. Accordingly, as a result of
the Reorganization, each Class A, Class B, Class C and Class D Shareholder of
Global Telecom will become holders of Class A, Class B, Class C and Class D
shares of Global Utilities, respectively. Shareholders holding their shares of
Global Telecom in certificate form will be asked to surrender their
certificates in connection with the Reorganization. Shareholders who do not
surrender their certificates prior to the Closing Date will still receive their
shares of Global Utilities; however, such Shareholders will not be able to
redeem, transfer or exchange the Global Utilities Shares received until the old
certificates have been surrendered. The Board has determined that the interests
of Shareholders will not be diluted as a result of the Reorganization.
FOR THE REASONS SET FORTH BELOW UNDER "THE REORGANIZATION -- THE BOARD'S
CONSIDERATION," THE BOARD, INCLUDING THE TRUSTEES WHO ARE NOT "INTERESTED
PERSONS" OF GLOBAL TELECOM ("INDEPENDENT TRUSTEES"), AS THAT TERM IS DEFINED IN
THE 1940 ACT, HAS CONCLUDED THAT THE REORGANIZATION IS IN THE BEST INTERESTS OF
GLOBAL TELECOM AND ITS SHAREHOLDERS AND RECOMMENDS APPROVAL OF THE
REORGANIZATION AGREEMENT.
FEE TABLE
Global Telecom and Global Utilities each pay expenses for management of
their assets, distribution of their shares and other services, and those
expenses are reflected in the net asset value per share of each fund. The
following table illustrates expenses and fees that each class of shares of
Global Telecom incurred during the fund's fiscal year ended May 31, 1998. With
respect to Global Utilities, the table sets forth expenses and fees based on
the fund's February 28, 1999 fiscal year end. The table also sets forth pro
forma fees for the surviving combined fund (Global Utilities) reflecting what
the fee schedule would have been on February 28, 1999, if the Reorganization
had been consummated twelve (12) months prior to that date.
4
<PAGE>
Shareholder Transaction Expenses
- --------------------------------
<TABLE>
<CAPTION>
GLOBAL GLOBAL PRO FORMA
TELECOM UTILITIES COMBINED
------- --------- ---------
<S> <C> <C> <C>
MAXIMUM SALES CHARGE IMPOSED ON PURCHASES
(AS A PERCENTAGE OF OFFERING PRICE)
Class A ............................................... 5.25%(1) 5.25%(1) 5.25%(1)
Class B ............................................... none none none
Class C ............................................... none none none
Class D ............................................... none none none
MAXIMUM SALES CHARGE IMPOSED ON REINVESTED DIVIDENDS
Class A ............................................... none none none
Class B ............................................... none none none
Class C ............................................... none none none
Class D ............................................... none none none
MAXIMUM CONTINGENT DEFERRED SALES CHARGE (AS A
PERCENTAGE OF THE LESSER OF ORIGINAL PURCHASE PRICE OR
REDEMPTION PROCEEDS)
Class A ............................................... none(2) none(2) none(2)
Class B ............................................... 5.00%(3) 5.00%(3) 5.00%(3)
Class C ............................................... 1.00%(4) 1.00%(4) 1.00%(4)
Class D ............................................... none none none
REDEMPTION FEES
Class A ............................................... none none none
Class B ............................................... none none none
Class C ............................................... none none none
Class D ............................................... none none none
EXCHANGE FEE
Class A ............................................... none none none
Class B ............................................... none none none
Class C ............................................... none none none
Class D ............................................... none none none
</TABLE>
Annual Fund Operating Expenses As a Percentage of Average Net Assets
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL GLOBAL PRO FORMA
TELECOM UTILITIES COMBINED
------- --------- ---------
<S> <C> <C> <C>
MANAGEMENT AND ADVISORY FEE(5)
Class A ...................... 1.00% 0.65% 0.64%(6)
Class B ...................... 1.00% 0.65% 0.64%(6)
Class C ...................... 1.00% 0.65% 0.64%(6)
Class D ...................... 1.00% 0.65% 0.64%(6)
12B-1 FEES(5)(7)(8)(9)
Class A ...................... 0.24% 0.25% 0.25%
Class B ...................... 0.80%(9) 0.86%(9) 0.84%(9)
Class C ...................... 1.00% 1.00% 1.00%
Class D ...................... none none none
OTHER EXPENSES(5)
Class A ...................... 0.32% 0.20% 0.20%
Class B ...................... 0.32% 0.20% 0.20%
Class C ...................... 0.32% 0.20% 0.20%
Class D ...................... 0.32% 0.20% 0.20%
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
GLOBAL GLOBAL PRO FORMA
TELECOM UTILITIES COMBINED
------- --------- ---------
<S> <C> <C> <C>
TOTAL FUND OPERATING EXPENSES
Class A ..................... 1.56% 1.10% 1.09%
Class B ..................... 2.12% 1.71% 1.68%
Class C ..................... 2.32% 1.85% 1.84%
Class D ..................... 1.32% 0.85% 0.84%
</TABLE>
- ----------
(1) Reduced for purchases of $25,000 and over (see "Purchase of Fund Shares
-- Initial Sales Charge Alternative -- Class A Shares" in each fund's
Prospectus).
(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 on redemptions made within one year after
purchase, except for certain specific circumstances (see "Purchases,
Exchanges and Redemptions" below and "Purchase of Fund Shares -- Initial
Sales Charge Alternative -- Class A Shares" in each fund's Prospectus).
(3) The CDSC is scaled down to 1.00% during the sixth year, reaching zero
thereafter.
(4) Only applicable to redemptions made within one year after purchase (see
"Purchases, Exchanges and Redemptions" below and "Purchase of Fund Shares
-- Level Load Alternative -- Class C Shares" in each fund's Prospectus).
(5) There were no outstanding shares of Class A, Class C or Class D of Global
Telecom prior to July 28, 1997. Accordingly, Global Telecom's operating
expenses for shares of Class A, Class C and Class D shown in the table
are annualized based upon actual expenses incurred by each of those
classes during the period July 28, 1997 through May 31, 1998.
(6) This rate reflects the anticipated lower advisory fee of Global Utilities
obtained by the effect of having additional assets at a lower breakpoint
in the advisory fee upon the combination of the two funds based upon
Global Telecom's average net assets for the fiscal year ended May 31,
1998 and Global Utilities' average net assets for the fiscal year ended
February 28, 1999, thus, a scaling down of the advisory fee to the
effective advisory fee rate shown.
(7) The 12b-1 fee is accrued daily and payable monthly. With respect to each
fund, the entire 12b-1 fee payable by Class A and a portion of the 12b-1
fee payable by each of Class B and Class C equal to 0.25% of the average
daily net assets of the class are currently characterized as a service
fee within the meaning of National Association of Securities Dealers,
Inc. ("NASD") guidelines and are payments made for personal service and/
or maintenance of shareholder accounts. The remainder of the 12b-1 fee,
if any, is an asset-based sales charge, and is a distribution fee paid to
Morgan Stanley Dean Witter Distributors Inc. (the "Distributor") to
compensate it for the services provided and the expenses borne by the
Distributor and others in the distribution of each fund's shares (see
"Description of Shares" below and "Purchase of Fund Shares -- Plan of
Distribution" in each fund's Prospectus).
(8) Upon conversion of Class B shares to Class A shares, such shares will be
subject to the lower 12b-1 fee applicable to Class A shares. No sales
charge is imposed at the time of conversion of Class B shares to Class A
shares. Class C shares do not have a conversion feature and, therefore,
are subject to an ongoing 1.00% 12b-1 fee (see "Description of Shares"
below and "Purchase of Fund Shares -- Alternative Purchase Arrangements"
in each fund's Prospectus).
(9) The formula for calculating the 12b-1 fees for the Class B shares (1.0%
of the lesser of average daily net sales or average daily net assets) is
similar for both funds although the application of the formula results in
lower annual 12b-1 fees on the existing assets of both funds. Upon the
consummation of the Reorganization, the assets of Global Telecom are
treated under the formula as new sales and a 1.0% rate is applied
thereto. When combined with the existing assets of Global Utilities, the
effect initially is a slight increase in the annual 12b-1 fees on the
Class B shares of the combined fund compared to the Class B shares of
Global Telecom.
6
<PAGE>
EXAMPLE
To attempt to show the effect of these expenses on an investment over
time, the hypotheticals shown below have been created. Assuming that an
investor makes a $10,000 investment in either Global Telecom or Global
Utilities or the new combined fund (Global Utilities), that the annual return
is 5% and that the operating expenses for each fund are the ones shown in the
chart above, if the investment was redeemed at the end of each period shown
below, the investor would incur the following expenses by the end of each
period shown:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Global Telecom
Class A ......... $675 $992 $1,330 $2,284
Class B ......... $715 $964 $1,339 $2,452
Class C ......... $335 $724 $1,240 $2,656
Class D ......... $134 $418 $ 723 $1,590
Global Utilities
Class A ......... $631 $856 $1,099 $1,795
Class B ......... $674 $839 $1,128 $2,019
Class C ......... $288 $582 $1,001 $2,169
Class D ......... $ 87 $271 $ 471 $1,049
Pro Forma Combined
Class A ......... $630 $853 $1,094 $1,784
Class B ......... $671 $830 $1,113 $1,987
Class C ......... $287 $579 $ 995 $2,159
Class D ......... $ 86 $268 $ 466 $1,037
</TABLE>
If such investment was not redeemed, the investor would incur the
following expenses:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Global Telecom
Class A ......... $675 $992 $1,330 $2,284
Class B ......... $215 $664 $1,139 $2,452
Class C ......... $235 $724 $1,240 $2,656
Class D ......... $134 $418 $ 723 $1,590
Global Utilities
Class A ......... $631 $856 $1,099 $1,795
Class B ......... $174 $539 $ 928 $2,019
Class C ......... $188 $582 $1,001 $2,169
Class D ......... $ 87 $271 $ 471 $1,049
Pro Forma Combined
Class A ......... $630 $853 $1,094 $1,784
Class B ......... $171 $530 $ 913 $1,987
Class C ......... $187 $579 $ 995 $2,159
Class D ......... $ 86 $268 $ 466 $1,037
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL OPERATING EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. LONG-TERM SHAREHOLDERS OF CLASS A, CLASS B AND CLASS C
SHARES OF GLOBAL TELECOM AND GLOBAL UTILITIES MAY PAY MORE IN SALES CHARGES
INCLUDING DISTRIBUTION FEES THAN THE ECONOMIC EQUIVALENT OF THE MAXIMUM
FRONT-END SALES CHARGES PERMITTED BY THE NASD.
7
<PAGE>
The purpose of the foregoing fee table is to assist the investor or
shareholder in understanding the various costs and expenses that an investor or
shareholder in the fund will bear directly or indirectly. For a more complete
description of these costs and expenses, see "Comparison of Global Telecom and
Global Utilities -- Investment Management and Distribution Plan Fees, Other
Significant Fees, and Purchases, Exchanges and Redemptions" below.
TAX CONSEQUENCES OF THE REORGANIZATION
As a condition to the Reorganization, Global Telecom will receive an
opinion of Gordon Altman Butowsky Weitzen Shalov & Wein to the effect that the
Reorganization will constitute a tax-free reorganization for Federal income tax
purposes, and that no gain or loss will be recognized by Global Telecom or the
shareholders of Global Telecom for Federal income tax purposes as a result of
the transactions included in the Reorganization. For further information about
the tax consequences of the Reorganization, see "The Reorganization -- Tax
Aspects of the Reorganization" below.
COMPARISON OF GLOBAL TELECOM AND GLOBAL UTILITIES
INVESTMENT OBJECTIVES AND POLICIES. Global Telecom and Global Utilities
are funds which have similar although not identical investment objectives. The
investment objective of Global Telecom is long-term capital appreciation. The
investment objective of Global Utilities is capital appreciation and current
income.
Global Telecom seeks to achieve its investment objective by investing,
under normal circumstances, at least 65% of its total assets in common stocks
and securities convertible into common stocks of domestic and foreign companies
operating in all aspects of the telecommunications and information industries.
Companies considered to be in the communications and information industries are
those companies which derive at least 35% of their revenues or earnings from
these industries or devote at least 35% of their assets to activities in such
industries. Global Utilities seeks to achieve its investment objective by
investing at least 65% of its total assets in equity and fixed-income
securities of issuers worldwide which are primarily engaged in the utilities
industry. Companies considered to be in the utilities industry are those
companies which, during a most recent twelve month period, derived at least 50%
of their gross revenues, on a consolidated basis, from the utilities industry.
Global Telecom, under normal circumstances, maintains at least 25% of its
portfolio in securities issued by issuers located in the United States and
maintains at least 65% of its total assets in securities of issuers located in
at least three different countries (no country other than the United States may
represent more than 25% of the fund's total assets). Up to 35% of the assets of
Global Telecom may be invested in investment grade fixed-income securities
consisting of U.S. Government securities, corporate debt securities and money
market instruments. Global Telecom may invest up to 25% of its total assets in
convertible securities which may be rated below investment grade and considered
"junk bonds". Global Utilities, under normal circumstances, invests in both
equity securities (including convertible securities) and investment grade
fixed-income securities and shifts its asset allocation without restriction
between equity and fixed-income securities and types of utilities worldwide
based upon the Investment Manager's determination of how to achieve the fund's
investment objective in light of prevailing market, economic and financial
conditions. The fund's investment portfolio will be invested in at least three
separate countries. Both funds may invest greater than 35% of their assets in
various money market instruments or cash when market conditions warrant a
reduction of the funds' securities holdings in order to adopt a temporary
defensive posture. The processes by which each fund selects common stocks and
other investments may differ and are more fully described under "Comparison of
Investment Objectives, Policies and Restrictions" below.
The principal differences between the funds' investment policies, as well
as certain similarities, are more fully described under "Comparison of
Investment Objectives, Policies and Restrictions" below.
8
<PAGE>
The investment policies of both Global Telecom and Global Utilities are
not fundamental and may be changed by their respective Boards of Trustees.
INVESTMENT MANAGEMENT AND DISTRIBUTION PLAN FEES. Global Telecom obtains
management services from MSDW Services, a wholly-owned subsidiary of MSDW
Advisors, and investment advisory services from TCW Funds Management Inc.
("TCW"). As compensation for such services, Global Telecom pays (i) MSDW
Services a fee at an annual rate of 0.60% of the fund's average daily net
assets and (ii) TCW a fee at an annual rate of 0.40% of the fund's average
daily net assets; this combined fee is higher than the compensation paid by
Global Utilities for such services. The fees are paid monthly and calculated
daily. Global Utilities obtains investment management services from MSDW
Advisors. As compensation for such services, Global Utilities pays MSDW
Advisors monthly compensation calculated daily by applying the annual rate of
0.65% to the portion of the fund's average daily net assets not exceeding $500
million and 0.625% to the portion of such daily net assets exceeding $500
million. Each class of both funds' shares is subject to the same management fee
rates applicable to the respective fund.
Both Global Telecom and Global Utilities have adopted similar distribution
plans ("Plans") pursuant to Rule 12b-1 under the 1940 Act. In the case of Class
A and Class C shares, each fund's Plan provides that the fund will reimburse
the Distributor and others for the expenses of certain activities and services
incurred by them in connection with the distribution of the Class A and Class C
Shares of the fund. Reimbursement for these expenses is made in monthly
payments by each fund to the Distributor which will in no event exceed amounts
equal to payments at the annual rates of 0.25% and 1.0% of the average daily
net assets of Class A and Class C shares, respectively. In the case of Class B
shares, Global Telecom's Plan and Global Utilities' Plan provide that each fund
will pay the Distributor a fee, which is accrued daily and paid monthly, at the
annual rate of 1.0% of the lesser of (a) the average daily net sales of the
fund's Class B shares or (b) the average daily net assets of Class B of the
fund. The fee is paid for the services provided and the expenses borne by the
Distributor and others in connection with the distribution of each fund's Class
B shares. There are no 12b-1 fees applicable to both funds' Class D shares. For
further information relating to the 12b-1 fees applicable to each class of
Global Utilities' shares, see the section entitled "Purchase of Fund Shares" in
Global Utilities' Prospectus, attached hereto. The Distributor also receives
the proceeds of any contingent deferred sales charge ("CDSC") paid by the
funds' shareholders at the time of redemption. The CDSC schedules applicable to
each of Global Telecom and Global Utilities are set forth below under
"Purchases, Exchanges and Redemptions."
OTHER SIGNIFICANT FEES. Both Global Telecom and Global Utilities pay
additional fees in connection with their operations, including legal, auditing,
transfer agent, trustees fees and custodial fees. See "Synopsis -- Fee Table"
above for the percentage of average net assets represented by such "Other
Expenses."
PURCHASES, EXCHANGES AND REDEMPTIONS. Class A shares of each fund are sold
at net asset value plus an initial sales charge of up to 5.25%. The initial
sales charge is reduced for certain purchases. Investments of $1 million or
more (and investment by certain other limited categories of investors) are not
subject to any sales charges at the time of purchase, but are subject to a CDSC
of 1.0% on redemptions made within one year after purchase (except for certain
specific circumstances fully described in each fund's Prospectus).
9
<PAGE>
Class B shares of each fund are offered at net asset value with no initial
sales charge, but are subject to the same CDSC schedule set forth below (Class
B shares of each fund purchased by certain qualified employer sponsored benefit
plans are subject to a reduced CDSC schedule):
<TABLE>
<CAPTION>
CLASS B SHARES OF GLOBAL TELECOM AND
YEAR SINCE PURCHASE PAYMENT MADE GLOBAL UTILITIES
-------------------------------- ------------------------------------
<S> <C>
First .......................... 5.0%
Second ......................... 4.0%
Third .......................... 3.0%
Fourth ......................... 2.0%
Fifth .......................... 2.0%
Sixth .......................... 1.0%
Seventh and thereafter ......... none
</TABLE>
Class C shares of each fund are sold at net asset value with no initial
sales charge, but are subject to a CDSC of 1.0% on redemptions made within one
year after purchase. The CDSC may be waived for certain redemptions (which are
fully described in each fund's Prospectus).
Class D shares of each fund are available only to limited categories of
investors and are sold at net asset value with no initial sales charge or CDSC.
The CDSC charge is paid to the Distributor. Shares of Global Utilities and
Global Telecom are distributed by the Distributor and offered by Dean Witter
Reynolds Inc. and other dealers who have entered into selected dealer
agreements with the Distributor. For further information relating to the CDSC
schedules applicable to each of the classes of Global Utilities' shares, see
the section entitled "Purchase of Fund Shares" in Global Utilities' Prospectus.
Shares of each class of Global Utilities may be exchanged for shares of
the same class of any other Morgan Stanley Dean Witter Fund that offers its
shares in more than one class, without the imposition of an exchange fee.
Additionally, shares of each class of Global Utilities may be exchanged for
shares of Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust, Morgan
Stanley Dean Witter Limited Term Municipal Trust, Morgan Stanley Dean Witter
Short-Term Bond Fund and the five Morgan Stanley Dean Witter Funds that are
money market funds (the foregoing eight funds are collectively referred to as
the "Exchange Funds"), without the imposition of an exchange fee. Class A
shares of Global Utilities may also be exchanged for shares of Morgan Stanley
Dean Witter Multi-State Municipal Series Trust and Morgan Stanley Dean Witter
Hawaii Municipal Trust. Upon consummation of the Reorganization, the foregoing
exchange privileges will still be applicable to shareholders of the combined
fund (Global Utilities). Shares of each class of Global Telecom may currently
be exchanged for shares of the same class of any other TCW/DW Fund advised by
TCW and managed by MSDW Services that offers its shares in more than one class,
without the imposition of an exchange fee. Global Telecom shares may also be
exchanged for TCW/DW North American Government Income Trust or for any of the
five Morgan Stanley Dean Witter Funds that are money market funds (the
foregoing six funds are collectively referred to as the "Global Telecom
Exchange Funds"), without the imposition of an exchange fee. Upon consummation
of the Reorganization, Shareholders will no longer be able to exchange their
shares for shares of a TCW/DW Fund but will be able to exchange their shares
for shares of any Morgan Stanley Dean Witter Fund.
With respect to both funds, no CDSC is imposed at the time of any
exchange, although any applicable CDSC will be imposed upon ultimate
redemption. During the period of time an Global Utilities or Global Telecom
shareholder remains in an Exchange Fund, the holding period (for purposes of
determining the CDSC rate) is frozen. Both Global Telecom and Global Utilities
provide telephone exchange privileges to their shareholders. For greater
details relating to exchange privileges applicable to Global Utilities, see the
section entitled "Shareholder Services" in Global Utilities' Prospectus.
10
<PAGE>
Shareholders of Global Telecom and Global Utilities may redeem their
shares for cash at any time at the net asset value per share next determined;
however, such redemption proceeds may be reduced by the amount of any
applicable CDSC. Both Global Telecom and Global Utilities offer a reinstatement
privilege whereby a shareholder who has not previously exercised such privilege
whose shares have been redeemed or repurchased may, within thirty-five days
after the date of redemption or repurchase, reinstate any portion or all of the
proceeds thereof in shares of the same class from which such shares were
redeemed or repurchased and receive a pro rata credit for any CDSC paid in
connection with such redemption or repurchase. Global Telecom and Global
Utilities may redeem involuntarily, at net asset value, most accounts valued at
less than $100.
DIVIDENDS. Each fund declares dividends separately for each of its
classes. Global Telecom pays dividends from the net investment income of the
fund at least once each year. Global Utilities pays dividends from the net
investment income of the fund on a quarterly basis. Both funds distribute net
long-term capital gains, and in the case of Global Utilities, net short-term
capital gains, if any, at least annually. Each fund, however, may determine
either to distribute or to retain all or part of any net long-term capital
gains in any year for reinvestment. With respect to each fund, dividends and
capital gains distributions are automatically reinvested in additional shares
of the same class of shares of the fund at net asset value unless the
shareholder elects to receive cash.
PRINCIPAL RISK FACTORS
The net asset value of Global Utilities and Global Telecom will fluctuate
with changes in the market value of their respective portfolio securities. The
market value of the funds' portfolio securities will increase or decrease due
to a variety of economic, market and political factors, including movements in
interest rates, which cannot be predicted. All fixed-income securities are
subject to two types of risk: credit risk and interest rate risk. Credit risk
relates to the ability of the issuer to meet interest or principal payments or
both as they come due. Interest rate risk refers to the fluctuations in the net
asset value of any portfolio of fixed-income securities resulting from the
inverse relationship between price and yield of fixed-income securities; that
is, when the general level of interest rates rises, the prices of outstanding
fixed-income securities decline, and when interest rates fall, prices rise.
Both funds may invest their assets in foreign securities (up to 100% for
Global Utilities and up to 75% for Global Telecom) and, as such, are subject to
additional risks such as adverse political and economic developments abroad,
including the possibility of expropriations or confiscatory taxation,
limitations on the use or transfer of fund assets and any effects of foreign
social, economic or political instability. Foreign companies are not subject to
the regulatory requirements of U.S. companies and, as such, there may be less
publicly available information about such companies. Moreover, foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards and requirements comparable to those applicable to U.S.
companies. Additionally, securities of foreign issuers may be less liquid than
comparable securities of U.S. issuers and, as such, their price changes may be
more volatile. Furthermore, foreign exchanges and broker-dealers are generally
subject to less government and exchange scrutiny and regulation than their
American counterparts and brokerage commissions, dealer concessions and other
transaction costs may be higher on foreign markets than in the U.S.
Fluctuations in the relative rates of exchange between the currencies of
different countries will affect the value of a fund's investments. Changes in
foreign currency exchange rates relative to the U.S. dollar will affect the
U.S. dollar value of a fund's assets denominated in that currency and thereby
impact upon the fund's total return on such assets.
Because both funds concentrate their investments in particular industries,
both funds' shares may be more volatile than that of investment companies that
do not similarly concentrate their investments. The telecommunications and
information industries may be subject to greater changes in governmental
policies and
11
<PAGE>
governmental regulation than many other industries in the United States and
worldwide. Regulatory approval requirements, ownership restrictions and
restrictions on rates of return and types of services that may be offered may
materially affect the products and services of these and related industries.
Additionally, the products and services of companies in these industries may be
subject to faster obsolescence as a result of greater competition, advancing
technological developments, and changing market and consumer preferences. As a
result, the stocks of companies in these industries may exhibit greater price
volatility than those of companies in other industries. Among the risks
affecting the utilities industry are the following: risks of increases in fuel
and other operating costs; the high cost of borrowing to finance capital
construction during inflationary periods; restrictions on operations and
increased costs and delays associated with compliance with environmental and
nuclear safety regulations; the difficulties involved in obtaining natural gas
for resale or fuel for generating electricity at reasonable prices; the risks
in connection with the construction and operation of nuclear power plants; the
effects of energy conservation and the effects of regulatory changes, such as
the possible adverse effects on profits of recent increased competition among
telecommunications companies and the uncertainties resulting from such
companies' diversification into new domestic and international businesses, as
well as agreements by many such companies linking future rate increases to
inflation or other factors not directly related to the actual operating profits
of the enterprise.
Global Telecom and Global Utilities may enter into foreign currency
exchange contracts when purchasing foreign securities in order to facilitate
settlement and to limit the effect of changes in the relationship between the
U.S. dollar and the foreign currency during the period between trade date and
settlement date and may also engage in options and futures transactions which
involve certain risks. Additionally, Global Utilities may enter into reverse
repurchase agreements and dollar rolls and both funds may enter into repurchase
agreements, may purchase securities on a when-issued and delayed delivery
basis, or on a when, as and if issued basis, may lend their portfolio
securities, and may enter into options and futures transactions, all of which
involve certain special risks. Both Global Telecom and Global Utilities may
invest in or acquire convertible securities which are fixed-income securities
convertible into common stock. However, while Global Telecom may only invest up
to 25% of its total assets in convertible securities, such securities may be
rated below investment grade and therefore subject to certain risks not
associated with higher rated, investment grade debt securities. Global
Utilities does not invest in convertible or other debt securities rated below
investment grade; however, if an investment grade fixed-income security held by
the convertible or other fund is subsequently downgraded by a rating agency
below investment grade, the fund may retain the security in its portfolio until
the Investment Manager deems it practicable to sell the security without undue
market or tax consequences to the fund. In the event such downgraded securities
constitute 5% or more of Global Utilities' net assets, the Investment Manager
will sell such securities as soon as is practicable in sufficient amounts to
reduce the total to below 5%. 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, the convertible
security 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.
The foregoing discussion is a summary of the principal risk factors. For a
more complete discussion of the risks of each fund, see "Investment Objective
and Policies -- Risk Considerations and Investment Practices" in the Prospectus
of Global Telecom and in Global Utilities' Prospectus attached hereto and
incorporated herein by reference.
12
<PAGE>
THE REORGANIZATION
THE PROPOSAL
The Board of Trustees of Global Telecom, including the Independent
Trustees, having reviewed the financial position of Global Telecom and the
prospects for achieving economies of scale through the Reorganization and
having determined that the Reorganization is in the best interests of Global
Telecom and its Shareholders and that the interests of Shareholders will not be
diluted as a result thereof, recommends approval of the Reorganization by
Shareholders of Global Telecom.
THE BOARD'S CONSIDERATION
At a meeting held on February 25, 1999, the Board, including all of the
Independent Trustees, unanimously approved the Reorganization Agreement and
determined to recommend that Shareholders approve the Reorganization Agreement.
In reaching this decision, the Board made an extensive inquiry into a number of
factors, particularly the comparative expenses currently incurred in the
operations of Global Telecom and Global Utilities. The Board also considered
other factors, including, but not limited to: the general compatibility of the
investment objectives, policies, restrictions and portfolios of Global Telecom
and Global Utilities; the terms and conditions of the Reorganization which
would affect the price of shares to be issued in the Reorganization; the
tax-free nature of the Reorganization; the ability of MSDW Advisers to provide
investment advisory services to Global Utilities; and any direct or indirect
costs to be incurred by Global Telecom and Global Utilities in connection with
the Reorganization.
In recommending the Reorganization to Shareholders, the Board of Global
Telecom considered that the Reorganization would have the following benefits to
Shareholders:
1. Once the Reorganization is consummated, the expenses which would be
borne by shareholders of each class of the "combined fund" should be lower on a
percentage basis than the expenses per share of each corresponding class of
Global Telecom. In part, this is because the estimated current rate of the
investment management fee to be paid by the surviving Global Utilities (0.64%
of average daily net assets) would be lower than the rate of the investment
management fee currently paid by Global Telecom (1.0% of average daily net
assets). Furthermore, to the extent that the Reorganization would result in
Shareholders becoming shareholders of a combined larger fund, further economies
of scale could be achieved since various fixed expenses (e.g., auditing and
legal) can be spread over a larger number of shares. The Board noted that the
expense ratio for each class of Global Telecom was higher (for its fiscal year
ended May 31, 1998) than the expense ratio for each corresponding class of
Global Utilities (for its fiscal year ended February 28, 1999).
2. Shareholders would have a continued participation in a diversified
portfolio of worldwide issuers in the telecommunications industry, as well as,
through investment in Global Utilities, participation in the utilities
industry.
3. The Reorganization is intended to qualify as a tax-free reorganization
for Federal income tax purposes, pursuant to which no gain or loss will be
recognized by Global Telecom or its Shareholders for Federal income tax
purposes as a result of transactions included in the Reorganization.
4. The Board also took into consideration that absent the Reorganization,
Global Utilities will continue to compete for investor funds with Global
Telecom. The Reorganization should allow for more concentrated selling efforts
to the benefit of both Global Telecom and Global Utilities shareholders and
avoid the inefficiencies associated with the operation and distribution of two
similar funds through the same sales organization.
13
<PAGE>
The Board of Trustees of Global Utilities, including a majority of the
Independent Trustees of Global Utilities, also have determined that the
Reorganization is in the best interests of Global Utilities and its
shareholders and that the interests of existing shareholders of Global
Utilities will not be diluted as a result thereof. The transaction will enable
Global Utilities to acquire investment securities which are consistent with
Global Utilities' investment objective, without the brokerage costs attendant
to the purchase of such securities in the market. Also, the addition of assets
to Global Utilities' portfolio may result in a further reduction in the
investment management fee resulting from the addition of more assets at a lower
breakpoint rate in the management fee schedule. Furthermore, like the
Shareholders of Global Telecom, the shareholders of Global Utilities may also
realize an intangible benefit in having the Morgan Stanley Dean Witter sales
organization concentrate its selling efforts on one rather than two similar
funds, which may result in further economies of scale. Finally, the Board
considered that even if the benefits enumerated above are not realized, the
costs to the Fund are sufficiently minor to warrant taking the opportunity to
realize those benefits. With respect to the Class B shares, the Board
recognized that the formula for calculating 12b-1 fees is similar for both
funds, although the application of the formula results in varying lower annual
fees for both Global Telecom and Global Utilities, and that combining the two
funds would, at least initially, result in somewhat higher 12b-1 fees for the
combined fund than Global Telecom's current 12b-1 fee, as noted above under
"Synopsis -- Fee Table." The Board believes, however, that this relatively
minor disadvantage would be offset by the other benefits of the Reorganization.
THE REORGANIZATION AGREEMENT
The terms and conditions under which the Reorganization would be
consummated, as summarized below, are set forth in the Reorganization
Agreement. This summary is qualified in its entirety by reference to the
Reorganization Agreement, a copy of which is attached as Exhibit A to this
Proxy Statement and Prospectus.
The Reorganization Agreement provides that (i) Global Telecom will
transfer all of its assets, including portfolio securities, cash (other than
cash amounts retained by Global Telecom as a "Cash Reserve" in the amount
sufficient to discharge its liabilities not discharged prior to the Valuation
Date (as defined below) and for expenses of the dissolution), cash equivalents
and receivables to Global Utilities on the Closing Date in exchange for the
assumption by Global Utilities of stated liabilities of Global Telecom,
including all expenses, costs, charges and reserves, as reflected on an
unaudited statement of assets and liabilities of Global Telecom prepared by the
Treasurer of Global Telecom as of the Valuation Date (as defined below) in
accordance with generally accepted accounting principles consistently applied
from the prior audited period, and the delivery of the Global Utilities Shares;
(ii) such Global Utilities Shares would be distributed to Shareholders on the
Closing Date or as soon as practicable thereafter; (iii) Global Telecom would
be dissolved; and (iv) the outstanding shares of Global Telecom would be
canceled.
The number of Global Utilities Shares to be delivered to Global Telecom
will be determined by dividing the aggregate net asset value of each class of
shares of Global Telecom acquired by Global Utilities by the net asset value
per share of the corresponding class of shares of Global Utilities; these
values will be calculated as of the close of business of the New York Stock
Exchange on the third business day following the receipt of the requisite
approval by Shareholders of the Reorganization Agreement or at such other time
as Global Telecom and Global Utilities may agree (the "Valuation Date"). As an
illustration, assume that on the Valuation Date, Class B shares of Global
Telecom had an aggregate net asset value (not including any Cash Reserve of
Global Telecom) of $100,000. If the net asset value per Class B share of Global
Utilities were $10 per share at the close of business on the Valuation Date,
the number of Class B shares Global Utilities to be issued would be 10,000
($100,000 (divided by) $10). These 10,000 Class B shares of Global Utilities
would be distributed to the former Class B shareholders of Global Telecom. This
example is given for illustration purposes only and does not bear any
relationship to the dollar amounts or shares expected to be involved in the
Reorganization.
14
<PAGE>
On the Closing Date or as soon as practicable thereafter, Global Telecom
will distribute pro rata to its Shareholders of record as of the close of
business on the Valuation Date, the Global Utilities Shares it receives. Each
Shareholder will receive the class of shares of Global Utilities that
corresponds to the class of shares of Global Telecom currently held by that
Shareholder. Accordingly, the Global Utilities Shares will be distributed as
follows: each of the Class A, Class B, Class C and Class D shares of Global
Utilities will be distributed to holders of Class A, Class B, Class C and Class
D shares of Global Telecom, respectively. Global Utilities will cause its
transfer agent to credit and confirm an appropriate number of Global Utilities
Shares to each Shareholder. Certificates for Global Utilities Shares will be
issued only upon written request of a Shareholder and only for whole shares,
with fractional shares credited to the name of the Shareholder on the books of
Global Utilities. Shareholders who wish to receive certificates representing
their Global Utilities Shares must, after receipt of their confirmations, make
a written request to Global Utilities' transfer agent Morgan Stanley Dean
Witter Trust FSB, Harborside Financial Center, Jersey City, New Jersey 07311.
Shareholders of Global Telecom holding their shares in certificate form will be
asked to surrender such certificates in connection with the Reorganization.
Shareholders who do not surrender their certificates prior to the Closing Date
will still receive their shares of Global Utilities; however, such Shareholders
will not be able to redeem, transfer or exchange the Global Utilities Shares
received until the old certificates have been surrendered.
The Closing Date will be the next business day following the Valuation
Date. The consummation of the Reorganization is contingent upon the approval of
the Reorganization by the Shareholders and the receipt of the other opinions
and certificates set forth in Sections 6, 7 and 8 of the Reorganization
Agreement and the occurrence of the events described in those Sections, certain
of which may be waived by Global Telecom or Global Utilities. The
Reorganization Agreement may be amended in any mutually agreeable manner. All
expenses of this solicitation, including the cost of preparing and mailing this
Proxy Statement and Prospectus, will be borne by Global Telecom, which expenses
are expected to approximate $145,000. Global Telecom and Global Utilities will
bear all of their respective other expenses associated with the Reorganization.
The Reorganization Agreement may be terminated and the Reorganization
abandoned at any time, before or after approval by Shareholders or by mutual
consent of Global Telecom and Global Utilities. In addition, either party may
terminate the Reorganization Agreement upon the occurrence of a material breach
of the Reorganization Agreement by the other party or if, by September 30,
1999, any condition set forth in the Reorganization Agreement has not been
fulfilled or waived by the party entitled to its benefits.
Under the Reorganization Agreement, within one year after the Closing
Date, Global Telecom shall: either pay or make provision for all of its
liabilities and distribute any remaining amount of the Cash Reserve (after
paying or making provision for such liabilities and the estimated cost of
making the distribution) to former Shareholders of Global Telecom that received
Global Utilities Shares. Global Telecom shall be dissolved and deregistered as
an investment company promptly following the distributions of shares of Global
Utilities to Shareholders of record of Global Telecom.
The effect of the Reorganization is that Shareholders who vote their
shares in favor of the Reorganization Agreement are electing to sell their
shares of Global Telecom (at net asset value on the Valuation Date calculated
after subtracting any Cash Reserve) and reinvest the proceeds in Global
Utilities Shares at net asset value and without recognition of taxable gain or
loss for Federal income tax purposes. See "Tax Aspects of the Reorganization"
below. As noted in "Tax Aspects of the Reorganization" below, if Global Telecom
recognizes net gain from the sale of securities prior to the Closing Date, such
gain, to the extent not offset by capital loss carryforwards, will be
distributed to Shareholders prior to the Closing Date and will be taxable to
Shareholders as capital gain.
Shareholders will continue to be able to redeem their shares of Global
Telecom at net asset value next determined after receipt of the redemption
request (subject to any applicable CDSC) until the close of business
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on the business day next preceding the Closing Date. Redemption requests
received by Global Telecom thereafter will be treated as requests for
redemption of shares of Global Utilities.
TAX ASPECTS OF THE REORGANIZATION
At least one but not more than 20 business days prior to the Valuation
Date, Global Telecom will declare and pay a dividend or dividends which,
together with all previous such dividends, will have the effect of distributing
to Shareholders all of Global Telecom's investment company taxable income for
all periods since the inception of Global Telecom through and including the
Valuation Date (computed without regard to any dividends paid deduction), and
all of Global Telecom's net capital gain, if any, realized in such periods
(after reduction for any capital loss carryforward).
The Reorganization is intended to qualify for Federal income tax purposes
as a tax-free reorganization under Section 368(a)(1)(C) of the Internal Revenue
Code of 1986, as amended (the "Code"). Global Telecom and Global Utilities have
represented that, to their best knowledge, there is no plan or intention by
Shareholders to redeem, sell, exchange or otherwise dispose of a number of
Global Utilities Shares received in the transaction that would reduce
Shareholders' ownership of Global Utilities Shares to a number of shares having
a value, as of the Closing Date, of less than 50% of the value of all of the
formerly outstanding Global Telecom shares as of the same date. Global Telecom
and Global Utilities have each further represented that, as of the Closing
Date, Global Telecom and Global Utilities will qualify as regulated investment
companies. In addition, Global Utilities has represented that it has no plan or
intention to sell or otherwise dispose of more than fifty percent of the assets
of Global Telecom acquired in the Reorganization, except for dispositions made
in the ordinary course of business.
As a condition to the Reorganization, Global Telecom and Global Utilities
will receive an opinion of Gordon Altman Butowsky Weitzen Shalov & Wein that,
based on certain assumptions, facts, the terms of the Reorganization Agreement
and additional representations set forth in the Reorganization Agreement or
provided by Global Telecom and Global Utilities:
1. The transfer of substantially all of Global Telecom's assets in
exchange for the Global Utilities Shares and the assumption by Global Utilities
of certain stated liabilities of Global Telecom followed by the distribution by
Global Telecom of the Global Utilities Shares to Shareholders in exchange for
their Global Telecom shares will constitute a "reorganization" within the
meaning of Section 368(a)(1)(C) of the Code, and Global Telecom and Global
Utilities will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code;
2. No gain or loss will be recognized by Global Utilities upon the receipt
of the assets of Global Telecom solely in exchange for the Global Utilities
Shares and the assumption by Global Utilities of the stated liabilities of
Global Telecom;
3. No gain or loss will be recognized by Global Telecom upon the transfer
of the assets of Global Telecom to Global Utilities in exchange for the Global
Utilities Shares and the assumption by Global Utilities of the stated
liabilities or upon the distribution of Global Utilities Shares to Shareholders
in exchange for their Global Telecom shares;
4. No gain or loss will be recognized by Shareholders upon the exchange of
the shares of Global Telecom for the Global Utilities Shares;
5. The aggregate tax basis for the Global Utilities Shares received by
each of the Shareholders pursuant to the Reorganization will be the same as the
aggregate tax basis of the shares in Global Telecom held by each such
Shareholder immediately prior to the Reorganization;
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6. The holding period of the Global Utilities Shares to be received by
each Shareholder will include the period during which the shares in Global
Telecom surrendered in exchange therefor were held (provided such shares in
Global Telecom were held as capital assets on the date of the Reorganization);
7. The tax basis of the assets of Global Telecom acquired by Global
Utilities will be the same as the tax basis of such assets of Global Telecom
immediately prior to the Reorganization; and
8. The holding period of the assets of Global Telecom in the hands of
Global Utilities will include the period during which those assets were held by
Global Telecom.
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE EFFECT, IF
ANY, OF THE PROPOSED TRANSACTION IN LIGHT OF THEIR INDIVIDUAL CIRCUMSTANCES.
BECAUSE THE FOREGOING DISCUSSION ONLY RELATES TO THE FEDERAL INCOME TAX
CONSEQUENCES OF THE PROPOSED TRANSACTION, SHAREHOLDERS SHOULD ALSO CONSULT
THEIR TAX ADVISORS AS TO STATE AND LOCAL TAX CONSEQUENCES, IF ANY, OF THE
PROPOSED TRANSACTION.
DESCRIPTION OF SHARES
Global Utilities shares to be issued pursuant to the Reorganization
Agreement will, when issued, be fully paid and non-assessable by Global
Utilities and transferable without restrictions and will have no preemptive
rights. Class B shares of Global Utilities, like Class B shares of Global
Telecom, have a conversion feature pursuant to which approximately ten (10)
years after the date of the original purchase of such shares, the shares will
convert automatically to Class A shares, based on the relative net asset values
of the two classes. For greater details regarding the conversion feature,
including the method by which the 10 year period is calculated and the
treatment of reinvested dividends, see "Purchase of Fund Shares" in each fund's
Prospectus.
CAPITALIZATION TABLE (UNAUDITED)
The following table sets forth the capitalization of Global Utilities and
Global Telecom as of February 28, 1999 and on a pro forma combined basis as if
the Reorganization had occurred on that date:
<TABLE>
<CAPTION>
NET ASSET
SHARES VALUE
NET ASSETS OUTSTANDING PER SHARE
------------ ------------ ---------
<S> <C> <C> <C>
CLASS A
- -----------------------------------
Global Telecom .................... $ 1,447,900 96,788 $14.96
Global Utilities .................. $ 4,892,129 285,101 $17.16
Combined Fund (pro forma) ......... $ 6,340,029 369,477 $17.16
CLASS B
- -----------------------------------
Global Telecom .................... $193,158,381 13,056,318 $14.79
Global Utilities .................. $540,820,015 31,534,740 $17.15
Combined Fund (pro forma) ......... $733,978,396 42,797,619 $17.15
CLASS C
- -----------------------------------
Global Telecom .................... $ 887,403 60,124 $14.76
Global Utilities .................. $ 3,385,556 198,209 $17.08
Combined Fund (pro forma) ......... $ 4,272,959 250,165 $17.08
CLASS D
- -----------------------------------
Global Telecom .................... $ 13,901 925 $15.03
Global Utilities .................. $ 117,122 6,818 $17.18
Combined Fund (pro forma) ......... $ 131,023 7,627 $17.18
</TABLE>
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APPRAISAL RIGHTS
Shareholders will have no appraisal rights in connection with the
Reorganization.
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES AND POLICIES
Global Telecom and Global Utilities each are funds which have similar
although not identical investment objectives and policies. The investment
objective of Global Telecom is long-term capital appreciation. The investment
objective of Global Utilities is capital appreciation and current income.
Global Telecom concentrates its investments in the telecommunications industry
and information industry. Global Utilities concentrates its investments in the
utilities industry which is a broad industry group that includes among others,
the telecommunications industry. Both funds seek to achieve their objectives by
investing principally in a diversified portfolio of securities in accordance
with their respective investment strategies set forth below.
Global Utilities invests at least 65% of its total assets in both equity
and fixed income securities of issuers worldwide and shifts its allocation
between the two without restriction. If, in the opinion of the Investment
Manager, favorable conditions for capital growth of equity securities are not
prevalent at a particular time, the fund may allocate its assets predominantly
or exclusively to debt securities with the aim of obtaining current income and
thus benefitting long-term growth of capital.
Global Utilities concentrates its investments in the utilities industry,
which in addition to companies engaged in the manufacture, production,
generation, transmission, sale and distribution of water, gas and electric
energy, or who manufacture or supply equipment for such companies, also
includes, as is the case of Global Telecom, companies engaged in the
communications field and the companies which manufacture or supply equipment
for such companies, including telephone, telegraph, satellite, cable,
microwave, radio-telephone, computer, mobile communication and cellular paging,
electronic mail, videotext and teletext and other new or emerging technology
companies.
In selecting equity securities for Global Utilities, the criteria used by
the Investment Manager include the following considerations: earnings and
dividend growth; book value; dividend discount; and price/earnings
relationships. In addition, the Investment Manager makes continuing assessments
of management, the prevailing regulatory framework and industry trends. The
Investment Manager may also utilize computer-based equity selection models. The
fixed-income securities in which the fund may invest are debt securities and
preferred stocks which are rated at the time of purchase Baa or better by
Moody's Investors Service, Inc. ("Moody's") or BBB or better by Standard &
Poor's Corporation ("S&P") or which, if unrated, are deemed to be of comparable
quality by the fund's Investment Manager. Greater than 35% of the fund's total
assets may be invested in money market instruments to maintain, temporarily, a
"defensive" posture when, in the opinion of the Investment Manager, it is
advisable to do so because of economic or market conditions.
Global Telecom invests at least 65% of its total assets in common stocks
and securities convertible into common stocks of domestic and foreign companies
operating in the telecommunications and information industries. Companies in
the telecommunications and information industries include information
transporters, content providers and providers of enabling technologies.
Information transporters are companies involved in developing and manufacturing
any portion of the so-called information superhighway, such as local/regional
telephone companies, long-distance carriers, cable television, personal
communications systems, wireless, cellular, paging, direct broadcast satellite
and the Internet. Content providers are companies providing some of the
information content that is transmitted via the information superhighway such
as movie studios, providers of transaction services, manufacturers of games and
educational programming, publishers and advertisers. Finally, providers of
enabling technologies are manufacturers of products such as
information-processing servers, consumer electronics, data and video
compression, software, storage and semiconductor products.
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Global Telecom may invest up to 35% of its total assets in U.S. Government
securities, corporate debt securities rated investment grade by Moody's or S&P
or if not rated, as deemed to be of comparable quality by the Adviser, and
money market instruments.
During periods in which, in the opinion of the Investment Manager, market
conditions warrant a reduction of some or all of the fund's securities
holdings, the fund may adopt a temporary "defensive" posture in which up to
100% of its total assets are invested in money market instruments or cash.
While both Global Utilities and Global Telecom may invest in convertible
securities, Global Utilities may only invest in investment grade convertible
securities while Global Telecom may invest in convertible securities rated
below investment grade by Moody's or S&P (Ba or BB or lower); Global Telecom
may not invest in convertible securities in an amount greater than 25% of its
total assets.
Both funds invest their assets in foreign securities, including securities
of foreign issuers denominated in foreign currencies or in the form of American
Depository Receipts ("ADRs") or European Depository Receipts ("EDRs"); however,
Global Telecom invests at least 25% of its total assets in securities of U.S.
issuers while Global Utilities has no such policy. Additionally, both funds may
enter into forward foreign currency exchange contracts in connection with its
foreign securities investments as a hedge against fluctuations in future
foreign exchange rates.
Both Global Telecom and Global Utilities may engage in options and futures
transactions. Both funds may purchase and sell (write) options on portfolio
securities denominated in U.S. dollars and foreign currencies and may purchase
and sell (write) options on the U.S. dollar and foreign currencies which are or
may be in the future listed on U.S. and foreign securities exchanges or are
written in over-the-counter transactions ("OTC options"). Both funds may write
covered call options on portfolio securities and currencies without limit, in
order to hedge against the decline in the value of a security or currency in
which such security is denominated and to close out long call option positions.
Both funds also may purchase listed and OTC call and put options in amounts
equaling up to 5% (Global Utilities) and 10% (Global Telecom) of their
respective total assets and Global Telecom may invest up to 5% of its total
assets in stock index options. Both funds may purchase call and put options to
close out covered call or written put positions, as applicable, or to protect
the value of the relevant security. Both funds may purchase and sell futures
contracts that are currently traded, or may in the future be traded, on U.S.
and foreign commodity exchanges on underlying portfolio securities, on any
currency ("currency" futures), as well as on U.S. and foreign fixed-income
securities ("interest rate" futures) and on such indexes of U.S. or foreign
equity or fixed-income securities as may exist or come into being ("index"
futures).
Both Global Utilities and Global Telecom may (i) purchase securities on a
when-issued or delayed delivery basis, (ii) purchase or sell securities on a
forward commitment basis, (iii) purchase securities on a "when, as and if
issued" basis, (iv) enter into repurchase agreements subject to certain
procedures designed to minimize risks associated with such agreements, (v)
purchase rights and warrants, (vi) invest in zero coupon securities and (vii)
invest up to 5% (Global Utilities) and 10% (Global Telecom) of their respective
total assets in securities which are subject to restrictions on resale because
they have not been registered under the Securities Act of 1933, as amended, or
which are not otherwise readily marketable (both funds do not include Rule 144A
securities in this limitation). Global Utilities may also enter into reverse
repurchase agreements and dollar rolls.
The investment policies of both Global Telecom and Global Utilities are
not fundamental and may be changed by their respective Boards. The foregoing
discussion is a summary of the principal differences and similarities between
the investment policies of the funds. For a more complete discussion of each
fund's policies, see "Investment Objective and Policies" in each fund's
Prospectus and "Investment Practices and Policies" in each fund's Statement of
Additional Information.
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<PAGE>
INVESTMENT RESTRICTIONS
The investment restrictions adopted by Global Telecom and Global Utilities
as fundamental policies are substantially similar and are summarized under the
caption "Investment Restrictions" in their respective Prospectuses and
Statements of Additional Information. A fundamental investment restriction
cannot be changed without the vote of the majority of the outstanding voting
securities of a fund, as defined in the 1940 Act. The material differences are
as follows: (a) Global Utilities has a fundamental restriction that it may not
invest more than 5% of the value of its total assets in the securities of
issuers (other than obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities) having a record, together with predecessors,
of less than three years of continuous operation; Global Telecom has no such
fundamental investment restriction although the fund includes this restriction
as a non-fundamental policy; (b) Global Telecom may not purchase warrants if as
a result the fund would have 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; Global Utilities has no such
restriction; (c) Global Telecom may not purchase securities of other investment
companies except in connection with a merger, consolidation, reorganization or
acquisition of assets; Global Utilities carves out an additional exception for
purchases complying with Section 12(d) of the 1940 Act; and (d) both funds are
prohibited from borrowing money except from a bank for temporary or emergency
purposes in amounts not exceeding 5% of their respective total assets; however,
Global Utilities carves out an additional exception for reverse repurchase
agreements and dollar rolls subject to this 5% limitation.
ADDITIONAL INFORMATION ABOUT GLOBAL TELECOM
AND GLOBAL UTILITIES
GENERAL
For a discussion of the organization and operation of Global Utilities and
Global Telecom, see "The Fund and its Management," "Investment Objective and
Policies," "Investment Restrictions" and "Prospectus Summary" in, and the cover
page of, their respective Prospectuses.
FINANCIAL INFORMATION
For certain financial information about Global Utilities and Global
Telecom, see "Financial Highlights" and "Performance Information" in their
respective Prospectuses.
MANAGEMENT
For information about the respective Board of Trustees, Investment
Manager, and the Distributor of Global Utilities and Global Telecom, see "The
Fund and its Management" and "Investment Objective and Policies" in, and on the
back cover of, their respective Prospectuses.
DESCRIPTION OF SECURITIES AND SHAREHOLDER INQUIRIES
For a description of the nature and most significant attributes of shares
of Global Telecom and Global Utilities, and information regarding shareholder
inquiries, see "Additional Information" in their respective Prospectuses.
DIVIDENDS, DISTRIBUTIONS AND TAXES
For a discussion of Global Utilities' and Global Telecom's policies with
respect to dividends, distributions and taxes, see "Dividends, Distributions
and Taxes" in their respective Prospectuses as well as the discussion herein
under "Synopsis -- Purchases, Exchanges and Redemptions."
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<PAGE>
PURCHASES, REPURCHASES AND REDEMPTIONS
For a discussion of how Global Utilities' and Global Telecom's shares may
be purchased, repurchased and redeemed, see "Purchase of Fund Shares,"
"Shareholder Services" and "Redemptions and Repurchases" in their respective
Prospectuses.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
For a discussion of Global Utilities' performance, see management's letter
to shareholders in its Annual Report for its fiscal year ended February 28,
1999 accompanying this Proxy Statement and Prospectus. For a discussion of the
performance of Global Telecom, see its Annual Report for its fiscal year ended
May 31, 1998 and its unaudited Semi-Annual Report for the six months ended
November 30, 1998.
FINANCIAL STATEMENTS AND EXPERTS
The financial statements of Global Utilities, for the year ended February
28, 1999, and Global Telecom, for the year ended May 31, 1998 that are
incorporated by reference in the Statement of Additional Information relating
to the Registration Statement on Form N-14 of which this Proxy Statement and
Prospectus forms a part, have been audited by PricewaterhouseCoopers LLP,
independent accountants. The financial statements have been incorporated by
reference in reliance upon such reports given upon the authority of
PricewaterhouseCoopers LLP as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of Global
Utilities will be passed upon by Gordon Altman Butowsky Weitzen Shalov & Wein,
New York, New York. Such firm will rely on Lane Altman & Owens as to matters of
Massachusetts law.
AVAILABLE INFORMATION
Additional information about Global Telecom and Global Utilities is
available, as applicable, in the following documents which are incorporated
herein by reference: (i) Global Utilities' Prospectus dated June 26, 1998,
attached to this Proxy Statement and Prospectus, which Prospectus forms a part
of Post-Effective Amendment No. 6 to Global Utilities' Registration Statement
on Form N-1A (File Nos. 33-50709; 811-7119); (ii) Global Utilities' Annual
Report for its fiscal year ended February 28, 1999, accompanying this Proxy
Statement and Prospectus; (iii) Global Telecom's Prospectus dated July 31,
1998, which Prospectus forms a part of Post-Effective Amendment No. 4 to Global
Telecom's Registration Statement on Form N-1A (File Nos. 333-2419; 811-7591);
and (iv) Global Telecom's Annual Report for its fiscal year ended May 31, 1998
and its unaudited Semi-Annual Report for its six months ended November 30,
1998. The foregoing documents may be obtained without charge by calling (800)
869-NEWS (toll-free).
Global Telecom and Global Utilities are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and in
accordance therewith, file reports and other information with the Commission.
Proxy material, reports and other information about Global Telecom and Global
Utilities which are of public record can be inspected and copied at public
reference facilities maintained by the Commission at Room 1204, Judiciary
Plaza, 450 Fifth Street, NW, Washington, D.C. 20549 and certain of its regional
offices, and copies of such materials can be obtained at prescribed rates from
the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, D.C. 20549.
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OTHER BUSINESS
Management of Global Telecom knows of no business other than the matters
specified above which will be presented at the Meeting. Since matters not known
at the time of the solicitation may come before the Meeting, the proxy as
solicited confers discretionary authority with respect to such matters as
properly come before the Meeting, including any adjournment or adjournments
thereof, and it is the intention of the persons named as attorneys-in-fact in
the proxy to vote this proxy in accordance with their judgment on such matters.
By Order of the Board of Trustees
Barry Fink,
Secretary
April 12, 1999
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of this
25th day of February, 1999, by and between MORGAN STANLEY DEAN WITTER GLOBAL
UTILITIES FUND, a Massachusetts business trust ("Global Utilities") and TCW/DW
GLOBAL TELECOM TRUST, a Massachusetts business trust ("Global Telecom").
This Agreement is intended to be and is adopted as a "plan of
reorganization" within the meaning of Treas. Reg. 1.368-2(g), for a
reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"). The reorganization ("Reorganization") will consist of the
transfer to Global Utilities of substantially all of the assets of Global
Telecom in exchange for the assumption by Global Utilities of all stated
liabilities of Global Telecom and the issuance by Global Utilities of shares of
beneficial interest, par value $0.01 per share (the "Global Utilities Shares"),
to be distributed, after the Closing Date hereinafter referred to, to the
shareholders of Global Telecom in liquidation of Global Telecom as provided
herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. THE REORGANIZATION AND LIQUIDATION OF GLOBAL TELECOM
1.1 Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, Global Telecom agrees
to assign, deliver and otherwise transfer the Global Telecom Assets (as defined
in paragraph 1.2) to Global Utilities and Global Utilities agrees in exchange
therefor to assume all of Global Telecom's stated liabilities on the Closing
Date as set forth in paragraph 1.3(a) and to deliver to Global Telecom the
number of Global Utilities Shares, including fractional Global Utilities
Shares, determined in the manner set forth in paragraph 2.3. Such transactions
shall take place at the closing provided for in paragraph 3.1 ("Closing").
1.2 (a) The "Global Telecom Assets" shall consist of all property,
including without limitation, all cash (other than the "Cash Reserve" (as
defined in paragraph 1.3(b)), cash equivalents, securities and dividend and
interest receivables owned by Global Telecom, and any deferred or prepaid
expenses shown as an asset on Global Telecom's books on the Valuation Date.
(b) On or prior to the Valuation Date, Global Telecom will provide Global
Utilities with a list of all of Global Telecom's assets to be assigned,
delivered and otherwise transferred to Global Utilities and of the stated
liabilities to be assumed by Global Utilities pursuant to this Agreement.
Global Telecom reserves the right to sell any of the securities on such list
but will not, without the prior approval of Global Utilities, acquire any
additional securities other than securities of the type in which Global
Utilities is permitted to invest and in amounts agreed to in writing by Global
Utilities. Global Utilities will, within a reasonable time prior to the
Valuation Date, furnish Global Telecom with a statement of Global Utilities's
investment objectives, policies and restrictions and a list of the securities,
if any, on the list referred to in the first sentence of this paragraph that do
not conform to Global Utilities' investment objective, policies and
restrictions. In the event that Global Telecom holds any investments that
Global Utilities is not permitted to hold, Global Telecom will dispose of such
securities on or prior to the Valuation Date. In addition, if it is determined
that the portfolios of Global Telecom and Global Utilities, when aggregated,
would contain investments exceeding certain percentage
A-1
<PAGE>
limitations imposed upon Global Utilities with respect to such investments,
Global Telecom if requested by Global Utilities will, on or prior to the
Valuation Date, dispose of and/or reinvest a sufficient amount of such
investments as may be necessary to avoid violating such limitations as of the
Closing Date (as defined in paragraph 3.1).
1.3 (a) Global Telecom will endeavor to discharge all of its liabilities
and obligations on or prior to the Valuation Date. Global Utilities will assume
all stated liabilities, which includes, without limitation, all expenses,
costs, charges and reserves reflected on an unaudited Statement of Assets and
Liabilities of Global Telecom prepared by the Treasurer of Global Telecom as of
the Valuation Date in accordance with generally accepted accounting principles
consistently applied from the prior audited period.
(b) On the Valuation Date, Global Telecom may establish a cash reserve,
which shall not exceed 5% of Global Telecom's net assets as of the close of
business on the Valuation Date ("Cash Reserve") to be retained by Global
Telecom and used for the payment of its liabilities not discharged prior to the
Valuation Date and for the expenses of dissolution.
1.4 In order for Global Telecom to comply with Section 852(a)(1) of the
Code and to avoid having any investment company taxable income or net capital
gain (as defined in Sections 852(b)(2) and 1222(11) of the Code, respectively)
in the short taxable year ending with its dissolution, Global Telecom will on
or before the Valuation Date (a) declare a dividend in an amount large enough
so that it will have declared dividends of all of its investment company
taxable income and net capital gain, if any, for such taxable year (determined
without regard to any deduction for dividends paid) and (b) distribute such
dividend.
1.5 On the Closing Date or as soon as practicable thereafter, Global
Telecom will distribute Global Utilities Shares received by Global Telecom
pursuant to paragraph 1.1 pro rata to its shareholders of record determined as
of the close of business on the Valuation Date ("Global Telecom Shareholders").
Each Global Telecom Shareholder will receive the class of shares of Global
Utilities that corresponds to the class of shares of Global Telecom currently
held by that Global Telecom Shareholder. Accordingly, the Global Utilities
Shares will be distributed as follows: each of the Class A, Class B, Class C
and Class D shares of Global Utilities will be distributed to holders of Class
A, Class B, Class C and Class D shares of Global Telecom, respectively. Such
distribution will be accomplished by an instruction, signed by Global Telecom's
Secretary, to transfer Global Utilities Shares then credited to Global
Telecom's account on the books of Global Utilities to open accounts on the
books of Global Utilities in the names of the Global Telecom Shareholders and
representing the respective pro rata number of Global Utilities Shares due such
Global Telecom Shareholders. All issued and outstanding shares of Global
Telecom simultaneously will be canceled on Global Telecom's books; however,
share certificates representing interests in Global Telecom will represent a
number of Global Utilities Shares after the Closing Date as determined in
accordance with paragraph 2.3. Global Utilities will issue certificates
representing Global Utilities Shares in connection with such exchange only upon
the written request of a Global Telecom Shareholder.
1.6 Ownership of Global Utilities Shares will be shown on the books of
Global Utilities' transfer agent. Global Utilities Shares will be issued in the
manner described in Global Utilities' current Prospectus and Statement of
Additional Information.
1.7 Any transfer taxes payable upon issuance of Global Utilities Shares in
a name other than the registered holder of Global Utilities Shares on Global
Telecom's books as of the close of business on the Valuation Date shall, as a
condition of such issuance and transfer, be paid by the person to whom Global
Utilities Shares are to be issued and transferred.
1.8 Any reporting responsibility of Global Telecom is and shall remain the
responsibility of Global Telecom up to and including the date on which Global
Telecom is dissolved and deregistered pursuant to paragraph 1.9.
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1.9 Within one year after the Closing Date, Global Telecom shall pay or
make provision for the payment of all its liabilities and taxes, and distribute
to the shareholders of Global Telecom as of the close of business on the
Valuation Date any remaining amount of the Cash Reserve (as reduced by the
estimated cost of distributing it to shareholders). Global Telecom shall be
dissolved as a Massachusetts business trust and deregistered as an investment
company under the Investment Company Act of 1940, as amended ("1940 Act"),
promptly following the making of all distributions pursuant to paragraph 1.5.
1.10 Copies of all books and records maintained on behalf of Global
Telecom in connection with its obligations under the 1940 Act, the Code, state
blue sky laws or otherwise in connection with this Agreement will promptly
after the Closing be delivered to officers of Global Utilities or their
designee and Global Utilities or its designee shall comply with applicable
record retention requirements to which Global Telecom is subject under the 1940
Act.
2. VALUATION
2.1 The value of the Global Telecom Assets shall be the value of such
assets computed as of 4:00 p.m. on the New York Stock Exchange on the third
business day following the receipt of the requisite approval by shareholders of
Global Telecom of this Agreement or at such time on such earlier or later date
after such approval as may be mutually agreed upon in writing (such time and
date being hereinafter called the "Valuation Date"), using the valuation
procedures set forth in Global Utilities' then current Prospectus and Statement
of Additional Information.
2.2 The net asset value of a Global Utilities Share shall be the net asset
value per share computed on the Valuation Date, using the valuation procedures
set forth in Global Utilities' then current Prospectus and Statement of
Additional Information.
2.3 The number of Global Utilities Shares (including fractional shares, if
any) to be issued hereunder shall be determined, with respect to each class, by
dividing the aggregate net asset value of each class of Global Telecom shares
(determined in accordance with paragraph 2.1) by the net asset value per share
of the corresponding class of shares of Global Utilities (determined in
accordance with paragraph 2.2). For purposes of this paragraph, the aggregate
net asset value of each class of shares of Global Telecom shall not include the
amount of the Cash Reserve.
2.4 All computations of value shall be made by Morgan Stanley Dean Witter
Services Company Inc. ("MSDW Services") in accordance with its regular practice
in pricing Global Utilities. Global Utilities shall cause MSDW Services to
deliver a copy of its valuation report at the Closing.
3. CLOSING AND CLOSING DATE
3.1 The Closing shall take place on the next business day following the
Valuation Date (the "Closing Date"). The Closing shall be held as of 9:00 a.m.
Eastern time, or at such other time as the parties may agree. The Closing shall
be held in a location mutually agreeable to the parties hereto. All acts taking
place at the Closing shall be deemed to take place simultaneously as of 9:00
a.m. Eastern time on the Closing Date unless otherwise provided.
3.2 Portfolio securities held by Global Telecom and represented by a
certificate or other written instrument shall be presented by it or on its
behalf to The Bank of New York (the "Custodian"), as custodian for Global
Utilities, for examination no later than five business days preceding the
Valuation Date. Such portfolio securities (together with any cash or other
assets) shall be delivered by Global Telecom to the Custodian for the account
of Global Utilities on or before the Closing Date in conformity with applicable
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custody provisions under the 1940 Act and duly endorsed in proper form for
transfer in such condition as to constitute good delivery thereof in accordance
with the custom of brokers. The portfolio securities shall be accompanied by
all necessary Federal and state stock transfer stamps or a check for the
appropriate purchase price of such stamps. Portfolio securities and instruments
deposited with a securities depository (as defined in Rule 17f-4 under the 1940
Act) shall be delivered on or before the Closing Date by book-entry in
accordance with customary practices of such depository and the Custodian. The
cash delivered shall be in the form of a Federal Funds wire, payable to the
order of "The Bank of New York, Custodian for Morgan Stanley Dean Witter Global
Utilities Fund."
3.3 In the event that on the Valuation Date, (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted or
(b) trading or the reporting of trading on such Exchange or elsewhere shall be
disrupted so that, in the judgment of both Global Utilities and Global Telecom,
accurate appraisal of the value of the net assets of Global Utilities or the
Global Telecom Assets is impracticable, the Valuation Date shall be postponed
until the first business day after the day when trading shall have been fully
resumed without restriction or disruption and reporting shall have been
restored.
3.4 If requested, Global Telecom shall deliver to Global Utilities or its
designee (a) at the Closing, a list, certified by its Secretary, of the names,
addresses and taxpayer identification numbers of the Global Telecom
Shareholders and the number and percentage ownership of outstanding Global
Telecom shares owned by each such Global Telecom Shareholder, all as of the
Valuation Date, and (b) as soon as practicable after the Closing, all original
documentation (including Internal Revenue Service forms, certificates,
certifications and correspondence) relating to the Global Telecom Shareholders'
taxpayer identification numbers and their liability for or exemption from
back-up withholding. Global Utilities shall issue and deliver to such Secretary
a confirmation evidencing delivery of Global Utilities Shares to be credited on
the Closing Date to Global Telecom or provide evidence satisfactory to Global
Telecom that such Global Utilities Shares have been credited to Global
Telecom's account on the books of Global Utilities. At the Closing, each party
shall deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request.
4. COVENANTS OF GLOBAL UTILITIES AND GLOBAL TELECOM
4.1 Except as otherwise expressly provided herein with respect to Global
Telecom, Global Utilities and Global Telecom each will operate its business in
the ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include customary
dividends and other distributions.
4.2 Global Utilities will prepare and file with the Securities and
Exchange Commission ("Commission") a registration statement on Form N-14 under
the Securities Act of 1933, as amended ("1933 Act"), relating to Global
Utilities Shares ("Registration Statement"). Global Telecom will provide Global
Utilities with the Proxy Materials as described in paragraph 4.3 below, for
inclusion in the Registration Statement. Global Telecom will further provide
Global Utilities with such other information and documents relating to Global
Telecom as are reasonably necessary for the preparation of the Registration
Statement.
4.3 Global Telecom will call a meeting of its shareholders to consider and
act upon this Agreement and to take all other action necessary to obtain
approval of the transactions contemplated herein. Global Telecom will prepare
the notice of meeting, form of proxy and proxy statement (collectively, "Proxy
Materials") to be used in connection with such meeting; provided that Global
Utilities will furnish Global Telecom with its currently effective prospectus
for inclusion in the Proxy Materials and with such other information relating
to Global Utilities as is reasonably necessary for the preparation of the Proxy
Materials.
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4.4 Global Telecom will assist Global Utilities in obtaining such
information as Global Utilities reasonably requests concerning the beneficial
ownership of Global Telecom shares.
4.5 Subject to the provisions of this Agreement, Global Utilities and
Global Telecom will each take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
4.6 Global Telecom shall furnish or cause to be furnished to Global
Utilities within 30 days after the Closing Date a statement of Global Telecom's
assets and liabilities as of the Closing Date, which statement shall be
certified by Global Telecom's Treasurer and shall be in accordance with
generally accepted accounting principles consistently applied. As promptly as
practicable, but in any case within 60 days after the Closing Date, Global
Telecom shall furnish Global Utilities, in such form as is reasonably
satisfactory to Global Utilities, a statement certified by Global Telecom's
Treasurer of Global Telecom's earnings and profits for Federal income tax
purposes that will be carried over to Global Utilities pursuant to Section 381
of the Code.
4.7 As soon after the Closing Date as is reasonably practicable, Global
Telecom (a) shall prepare and file all Federal and other tax returns and
reports of Global Telecom required by law to be filed with respect to all
periods ending on or before the Closing Date but not theretofore filed and (b)
shall pay all Federal and other taxes shown as due thereon and/or all Federal
and other taxes that were unpaid as of the Closing Date, including without
limitation, all taxes for which the provision for payment was made as of the
Closing Date (as represented in paragraph 5.2(k)).
4.8 Global Utilities agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act and the 1940 Act and to
make such filings required by the state Blue Sky and securities laws as it may
deem appropriate in order to continue its operations after the Closing Date.
5. REPRESENTATIONS AND WARRANTIES
5.1 Global Utilities represents and warrants to Global Telecom as follows:
(a) Global Utilities is a validly existing Massachusetts business trust
with full power to carry on its business as presently conducted;
(b) Global Utilities is a duly registered, open-end, management
investment company, and its registration with the Commission as an
investment company under the 1940 Act and the registration of its shares
under the 1933 Act are in full force and effect;
(c) All of the issued and outstanding shares of Global Utilities have
been offered and sold in compliance in all material respects with
applicable registration requirements of the 1933 Act and state securities
laws. Shares of Global Utilities are registered in all jurisdictions in
which they are required to be registered under state securities laws and
other laws, and said registrations, including any periodic reports or
supplemental filings, are complete and current, all fees required to be
paid have been paid, and Global Utilities is not subject to any stop order
and is fully qualified to sell its shares in each state in which its shares
have been registered;
(d) The current Prospectus and Statement of Additional Information of
Global Utilities conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the regulations
thereunder and do not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading;
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(e) Global Utilities is not in, and the execution, delivery and
performance of this Agreement will not result in a, material violation of
any provision of Global Utilities' Declaration of Trust or By-Laws or of
any agreement, indenture, instrument, contract, lease or other undertaking
to which Global Utilities is a party or by which it is bound;
(f) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or, to its
knowledge, threatened against Global Utilities or any of its properties or
assets which, if adversely determined, would materially and adversely
affect its financial condition or the conduct of its business; and Global
Utilities knows of no facts that might form the basis for the institution
of such proceedings and is not a party to or subject to the provisions of
any order, decree or judgment of any court or governmental body which
materially and adversely affects, or is reasonably likely to materially and
adversely effect, its business or its ability to consummate the
transactions herein contemplated;
(g) The Statement of Assets and Liabilities, Statement of Operations,
Statement of Changes in Net Assets and Financial Highlights for the year
ended February 28, 1999, of Global Utilities certified by
PricewaterhouseCoopers LLP (copies of which have been furnished to Global
Telecom), fairly present, in all material respects, Global Utilities'
financial condition as of such date in accordance with generally accepted
accounting principles, and its results of such operations, changes in its
net assets and financial highlights for such period, and as of such date
there were no known liabilities of Global Utilities (contingent or
otherwise) not disclosed therein that would be required in accordance with
generally accepted accounting principles to be disclosed therein;
(h) All issued and outstanding Global Utilities Shares are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid
and nonassessable with no personal liability attaching to the ownership
thereof, except as set forth under the caption "Additional Information" in
Global Utilities' current Prospectus incorporated by reference in the
Registration Statement. Global Utilities does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of its
shares;
(i) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of Global Utilities,
and this Agreement constitutes a valid and binding obligation of Global
Utilities enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors rights and to general equity
principles. No other consents, authorizations or approvals are necessary in
connection with Global Utilities' performance of this Agreement;
(j) Global Utilities Shares to be issued and delivered to Global Telecom,
for the account of the Global Telecom Shareholders, pursuant to the terms
of this Agreement will at the Closing Date have been duly authorized and,
when so issued and delivered, will be duly and validly issued Global
Utilities Shares, and will be fully paid and non-assessable with no
personal liability attaching to the ownership thereof, except as set forth
under the caption "Additional Information" in Global Utilities' current
Prospectus incorporated by reference in the Registration Statement;
(k) All material Federal and other tax returns and reports of Global
Utilities required by law to be filed on or before the Closing Date have
been filed and are correct, and all Federal and other taxes shown as due or
required to be shown as due on said returns and reports have been paid or
provision has been made for the payment thereof, and to the best of Global
Utilities' knowledge, no such return is currently under audit and no
assessment has been asserted with respect to any such return;
(l) For each taxable year since its inception, Global Utilities has met
the requirements of Subchapter M of the Code for qualification and
treatment as a "regulated investment company" and neither the
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execution or delivery of nor the performance of its obligations under this
Agreement will adversely affect, and no other events are reasonably likely
to occur which will adversely affect the ability of Global Utilities to
continue to meet the requirements of Subchapter M of the Code;
(m) Since February 28, 1999 there has been no change by Global Utilities
in accounting methods, principles, or practices, including those required
by generally accepted accounting principles;
(n) The information furnished or to be furnished by Global Utilities for
use in registration statements, proxy materials and other documents which
may be necessary in connection with the transactions contemplated hereby
shall be accurate and complete in all material respects and shall comply in
all material respects with Federal securities and other laws and
regulations applicable thereto; and
(o) The Proxy Materials to be included in the Registration Statement
(only insofar as they relate to Global Utilities) will, on the effective
date of the Registration Statement and on the Closing Date, not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
materially misleading.
5.2 Global Telecom represents and warrants to Global Utilities as follows:
(a) Global Telecom is a validly existing Massachusetts business trust
with full power to carry on its business as presently conducted;
(b) Global Telecom is a duly registered, open-end, management investment
company, and its registration with the Commission as an investment company
under the 1940 Act and the registration of its shares under the 1933 Act
are in full force and effect;
(c) All of the issued and outstanding shares of beneficial interest of
Global Telecom have been offered and sold in compliance in all material
respects with applicable requirements of the 1933 Act and state securities
laws. Shares of Global Telecom are registered in all jurisdictions in which
they are required to be registered and said registrations, including any
periodic reports or supplemental filings, are complete and current, all
fees required to be paid have been paid, and Global Telecom is not subject
to any stop order and is fully qualified to sell its shares in each state
in which its shares have been registered;
(d) The current Prospectus and Statement of Additional Information of
Global Telecom conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the regulations
thereunder and do not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading;
(e) Global Telecom is not, and the execution, delivery and performance of
this Agreement will not result, in a material violation of any provision of
Global Telecom's Declaration of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which Global
Telecom is a party or by which it is bound;
(f) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or, to its
knowledge, threatened against Global Telecom or any of its properties or
assets which, if adversely determined, would materially and adversely
affect its financial condition or the conduct of its business; and Global
Telecom knows of no facts that might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects, or is reasonably likely to materially and
adversely effect, its business or its ability to consummate the
transactions herein contemplated;
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(g) The Statement of Assets and Liabilities, Statement of Operations,
Statement of Changes in Net Assets and Financial Highlights of Global
Telecom for the year ended May 31, 1998, certified by
PricewaterhouseCoopers LLP (copies of which have been or will be furnished
to Global Utilities) fairly present, in all material respects, Global
Telecom's financial condition as of such date, and its results of
operations, changes in its net assets and financial highlights for such
period in accordance with generally accepted accounting principles, and as
of such date there were no known liabilities of Global Telecom (contingent
or otherwise) not disclosed therein that would be required in accordance
with generally accepted accounting principles to be disclosed therein;
(h) Global Telecom has no material contracts or other commitments (other
than this Agreement) that will be terminated with liability to it prior to
the Closing Date;
(i) All issued and outstanding shares of Global Telecom are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid
and nonassessable with no personal liability attaching to the ownership
thereof, except as set forth under the caption "Additional Information" in
Global Telecom's current Prospectus incorporated by reference in the
Registration Statement. Global Telecom does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of its
shares, nor is there outstanding any security convertible to any of its
shares. All such shares will, at the time of Closing, be held by the
persons and in the amounts set forth in the list of shareholders submitted
to Global Utilities pursuant to paragraph 3.4;
(j) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action on
the part of Global Telecom, and subject to the approval of Global Telecom's
shareholders, this Agreement constitutes a valid and binding obligation of
Global Telecom, enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors rights and to general equity
principles. No other consents, authorizations or approvals are necessary in
connection with Global Telecom's performance of this Agreement;
(k) All material Federal and other tax returns and reports of Global
Telecom required by law to be filed on or before the Closing Date shall
have been filed and are correct and all Federal and other taxes shown as
due or required to be shown as due on said returns and reports have been
paid or provision has been made for the payment thereof, and to the best of
Global Telecom's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to any such return;
(l) For each taxable year since its inception, Global Telecom has met all
the requirements of Subchapter M of the Code for qualification and
treatment as a "regulated investment company" and neither the execution or
delivery of nor the performance of its obligations under this Agreement
will adversely affect, and no other events are reasonably likely to occur
which will adversely affect the ability of Global Telecom to continue to
meet the requirements of Subchapter M of the Code;
(m) At the Closing Date, Global Telecom will have good and valid title to
the Global Telecom Assets, subject to no liens (other than the obligation,
if any, to pay the purchase price of portfolio securities purchased by
Global Telecom which have not settled prior to the Closing Date), security
interests or other encumbrances, and full right, power and authority to
assign, deliver and otherwise transfer such assets hereunder, and upon
delivery and payment for such assets, Global Utilities will acquire good
and marketable title thereto, subject to no restrictions on the full
transfer thereof, including any restrictions as might arise under the 1933
Act;
(n) On the effective date of the Registration Statement, at the time of
the meeting of Global Telecom's shareholders and on the Closing Date, the
Proxy Materials (exclusive of the currently effective
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Global Utilities Prospectus contained therein) will (i) comply in all
material respects with the provisions of the 1933 Act, the Securities
Exchange Act of 1934, as amended ("1934 Act") and the 1940 Act and the
regulations thereunder and (ii) not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. Any
other information furnished by Global Telecom for use in the Registration
Statement or in any other manner that may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete and
shall comply in all material respects with applicable Federal securities
and other laws and regulations thereunder;
(o) Global Telecom will, on or prior to the Valuation Date, declare one
or more dividends or other distributions to shareholders that, together
with all previous dividends and other distributions to shareholders, shall
have the effect of distributing to the shareholders all of its investment
company taxable income and net capital gain, if any, through the Valuation
Date (computed without regard to any deduction for dividends paid);
(p) Global Telecom has maintained or has caused to be maintained on its
behalf all books and accounts as required of a registered investment company
in compliance with the requirements of Section 31 of the 1940 Act and the
Rules thereunder; and
(q) Global Telecom is not acquiring Global Utilities Shares to be issued
hereunder for the purpose of making any distribution thereof other than in
accordance with the terms of this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF GLOBAL TELECOM
The obligations of Global Telecom to consummate the transactions provided
for herein shall be subject, at its election, to the performance by Global
Utilities of all the obligations to be performed by it hereunder on or before
the Closing Date and, in addition thereto, the following conditions:
6.1 All representations and warranties of Global Utilities contained in
this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;
6.2 Global Utilities shall have delivered to Global Telecom a certificate
of its President and Treasurer, in a form reasonably satisfactory to Global
Telecom and dated as of the Closing Date, to the effect that the
representations and warranties of Global Utilities made in this Agreement are
true and correct at and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other
matters as Global Telecom shall reasonably request;
6.3 Global Telecom shall have received a favorable opinion from Gordon
Altman Butowsky Weitzen Shalov & Wein, counsel to Global Utilities, dated as of
the Closing Date, to the effect that:
(a) Global Utilities is a validly existing Massachusetts business trust,
and has the power to own all of its properties and assets and to carry on
its business as presently conducted (Massachusetts counsel may be relied
upon in delivering such opinion); (b) Global Utilities is a duly
registered, open-end, management investment company, and its registration
with the Commission as an investment company under the 1940 Act is in full
force and effect; (c) this Agreement has been duly authorized, executed and
delivered by Global Utilities and, assuming that the Registration Statement
complies with the 1933 Act, the 1934 Act and the 1940 Act and regulations
thereunder and assuming due authorization, execution and delivery of this
Agreement by Global Telecom, is a valid and binding obligation of Global
Utilities enforceable against Global Utilities in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
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reorganization, moratorium and other laws relating to or affecting
creditors rights and to general equity principles; (d) Global Utilities
Shares to be issued to Global Telecom Shareholders as provided by this
Agreement are duly authorized and upon such delivery will be validly
issued, fully paid and non-assessable (except as set forth under the
caption "Additional Information" in Global Utilities' Prospectus), and no
shareholder of Global Utilities has any preemptive rights to subscription
or purchase in respect thereof (Massachusetts counsel may be relied upon in
delivering such opinion); (e) the execution and delivery of this Agreement
did not, and the consummation of the transactions contemplated hereby will
not, violate Global Utilities' Declaration of Trust or By-Laws; and (f) to
the knowledge of such counsel, no consent, approval, authorization or order
of any court or governmental authority of the United States or any state is
required for the consummation by Global Utilities of the transactions
contemplated herein, except such as have been obtained under the 1933 Act,
the 1934 Act and the 1940 Act and such as may be required under state
securities laws; and
6.4 As of the Closing Date, there shall have been no material change in
the investment objective, policies and restrictions nor any increase in the
investment management fees or annual fees pursuant to Global Utilities' 12b-1
plan of distribution from those described in Global Utilities' Prospectus dated
June 26, 1998 and Statement of Additional Information dated June 26, 1998.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF GLOBAL UTILITIES
The obligations of Global Utilities to complete the transactions provided
for herein shall be subject, at its election, to the performance by Global
Telecom of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of Global Telecom contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date;
7.2 Global Telecom shall have delivered to Global Utilities at the Closing
a certificate of its President and its Treasurer, in form and substance
satisfactory to Global Utilities and dated as of the Closing Date, to the
effect that the representations and warranties of Global Telecom made in this
Agreement are true and correct at and as of the Closing Date, except as they
may be affected by the transactions contemplated by this Agreement, and as to
such other matters as Global Utilities shall reasonably request;
7.3 Global Telecom shall have delivered to Global Utilities a statement of
the Global Telecom Assets and its liabilities, together with a list of Global
Telecom's portfolio securities and other assets showing the respective adjusted
bases and holding periods thereof for income tax purposes, as of the Closing
Date, certified by the Treasurer of Global Telecom;
7.4 Global Telecom shall have delivered to Global Utilities within three
business days after the Closing a letter from PricewaterhouseCoopers LLP dated
as of the Closing Date stating that (a) such firm has performed a limited
review of the Federal and state income tax returns of Global Telecom for each
of the last three taxable years and, based on such limited review, nothing came
to their attention that caused them to believe that such returns did not
properly reflect, in all material respects, the Federal and state income tax
liabilities of Global Telecom for the periods covered thereby, (b) for the
period from May 31, 1998 to and including the Closing Date, such firm has
performed a limited review (based on unaudited financial data) to ascertain the
amount of applicable Federal, state and local taxes and has determined that
same either have been paid or reserves have been established for payment of
such taxes, and, based on such limited review, nothing came to their attention
that caused them to believe that the taxes paid or reserves set aside for
payment of such
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taxes were not adequate in all material respects for the satisfaction of all
Federal, state and local tax liabilities for the period from May 31, 1998 to
and including the Closing Date and (c) based on such limited reviews, nothing
came to their attention that caused them to believe that Global Telecom would
not qualify as a regulated investment company for Federal income tax purposes
for any such year or period;
7.5 Global Utilities shall have received at the Closing a favorable
opinion from Gordon Altman Butowsky Weitzen Shalov & Wein, counsel to Global
Telecom, dated as of the Closing Date to the effect that:
(a) Global Telecom is a validly existing Massachusetts business trust and
has the power to own all of its properties and assets and to carry on its
business as presently conducted (Massachusetts counsel may be relied upon
in delivering such opinion); (b) Global Telecom is a duly registered,
open-end, management investment company under the 1940 Act, and its
registration with the Commission as an investment company under the 1940
Act is in full force and effect; (c) this Agreement has been duly
authorized, executed and delivered by Global Telecom and, assuming that the
Registration Statement complies with the 1933 Act, the 1934 Act and the
1940 Act and the regulations thereunder and assuming due authorization,
execution and delivery of this Agreement by Global Utilities, is a valid
and binding obligation of Global Telecom enforceable against Global Telecom
in accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors rights and to general equity principles; (d) the
execution and delivery of this Agreement did not, and the consummation of
the transactions contemplated hereby will not, violate Global Telecom's
Declaration of Trust or By-Laws; and (e) to the knowledge of such counsel,
no consent, approval, authorization or order of any court or governmental
authority of the United States or any state is required for the
consummation by Global Telecom of the transactions contemplated herein,
except such as have been obtained under the 1933 Act, the 1934 Act and the
1940 Act and such as may be required under state securities laws; and
7.6 On the Closing Date, the Global Telecom Assets shall include no assets
that Global Utilities, by reason of limitations of the fund's Declaration of
Trust or otherwise, may not properly acquire.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF GLOBAL UTILITIES AND GLOBAL
TELECOM
The obligations of Global Telecom and Global Utilities hereunder are each
subject to the further conditions that on or before the Closing Date:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
Global Telecom in accordance with the provisions of Global Telecom's
Declaration of Trust, and certified copies of the resolutions evidencing such
approval shall have been delivered to Global Utilities;
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities, including
"no-action" positions of and exemptive orders from such Federal and state
authorities) deemed necessary by Global Utilities or Global Telecom to permit
consummation, in all material respects, of the transactions contemplated herein
shall have been obtained, except where failure to obtain any such consent,
order or permit would not involve risk of a material adverse effect on the
assets or properties of Global Utilities or Global Telecom;
A-11
<PAGE>
8.4 The Registration Statement shall have become effective under the 1933
Act, no stop orders suspending the effectiveness thereof shall have been issued
and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act;
8.5 Global Telecom shall have declared and paid a dividend or dividends
and/or other distribution or distributions that, together with all previous
such dividends or distributions, shall have the effect of distributing to the
Global Telecom Shareholders all of Global Telecom's investment company taxable
income (computed without regard to any deduction for dividends paid) and all of
its net capital gain (after reduction for any capital loss carry-forward and
computed without regard to any deduction for dividends paid) for all taxable
years ending on or before the Closing Date; and
8.6 The parties shall have received a favorable opinion of the law firm of
Gordon Altman Butowsky Weitzen Shalov & Wein (based on such representations as
such law firm shall reasonably request), addressed to Global Utilities and
Global Telecom, which opinion may be relied upon by the shareholders of Global
Telecom, substantially to the effect that, for Federal income tax purposes:
(a) The transfer of substantially all of Global Telecom's assets in
exchange for Global Utilities Shares and the assumption by Global Utilities
of certain stated liabilities of Global Telecom followed by the
distribution by Global Telecom of Global Utilities Shares to the Global
Telecom Shareholders in exchange for their Global Telecom shares will
constitute a "reorganization" within the meaning of Section 368(a)(1)(C) of
the Code, and Global Telecom and Global Utilities will each be a "party to
a reorganization" within the meaning of Section 368(b) of the Code;
(b) No gain or loss will be recognized by Global Utilities upon the
receipt of the assets of Global Telecom solely in exchange for Global
Utilities Shares and the assumption by Global Utilities of the stated
liabilities of Global Telecom;
(c) No gain or loss will be recognized by Global Telecom upon the
transfer of the assets of Global Telecom to Global Utilities in exchange
for Global Utilities Shares and the assumption by Global Utilities of the
stated liabilities or upon the distribution of Global Utilities Shares to
the Global Telecom Shareholders in exchange for their Global Telecom
shares;
(d) No gain or loss will be recognized by the Global Telecom Shareholders
upon the exchange of the Global Telecom shares for Global Utilities Shares;
(e) The aggregate tax basis for Global Utilities Shares received by each
Global Telecom Shareholder pursuant to the reorganization will be the same
as the aggregate tax basis of the Global Telecom Shares held by each such
Global Telecom Shareholder immediately prior to the Reorganization;
(f) The holding period of Global Utilities Shares to be received by each
Global Telecom Shareholder will include the period during which the Global
Telecom Shares surrendered in exchange therefor were held (provided such
Global Telecom Shares were held as capital assets on the date of the
Reorganization);
(g) The tax basis of the assets of Global Telecom acquired by Global
Utilities will be the same as the tax basis of such assets to Global
Telecom immediately prior to the Reorganization; and
(h) The holding period of the assets of Global Telecom in the hands of
Global Utilities will include the period during which those assets were
held by Global Telecom.
Notwithstanding anything herein to the contrary, neither Global Utilities
nor Global Telecom may waive the conditions set forth in this paragraph 8.6.
A-12
<PAGE>
9. FEES AND EXPENSES
9.1 (a) Global Utilities shall bear its expenses incurred in connection
with the entering into, and carrying out of, the provisions of this Agreement,
including legal, accounting, Commission registration fees and Blue Sky
expenses. Global Telecom shall bear its expenses incurred in connection with
the entering into and carrying out of the provisions of this Agreement,
including legal and accounting fees, printing, filing and proxy solicitation
expenses and portfolio transfer taxes (if any) incurred in connection with the
consummation of the transactions contemplated herein.
(b) In the event the transactions contemplated herein are not consummated
by reason of Global Telecom being either unwilling or unable to go forward
(other than by reason of the nonfulfillment or failure of any condition to
Global Telecom's obligations specified in this Agreement), Global Telecom's
only obligation hereunder shall be to reimburse Global Utilities for all
reasonable out-of-pocket fees and expenses incurred by Global Utilities in
connection with those transactions.
(c) In the event the transactions contemplated herein are not consummated
by reason of Global Utilities being either unwilling or unable to go forward
(other than by reason of the nonfulfillment or failure of any condition to
Global Utilities' obligations specified in this Agreement), Global Utilities'
only obligation hereunder shall be to reimburse Global Telecom for all
reasonable out-of-pocket fees and expenses incurred by Global Telecom in
connection with those transactions.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 This Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection
herewith shall survive the consummation of the transactions contemplated
herein, except that the representations, warranties and covenants of Global
Telecom hereunder shall not survive the dissolution and complete liquidation of
Global Telecom in accordance with Section 1.9.
11. TERMINATION
11.1 This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
(a) by the mutual written consent of Global Telecom and Global Utilities;
(b) by either Global Utilities or Global Telecom by notice to the other,
without liability to the terminating party on account of such termination
(providing the terminating party is not otherwise in material default or
breach of this Agreement) if the Closing shall not have occurred on or
before September 30, 1999; or
(c) by either Global Utilities or Global Telecom, in writing without
liability to the terminating party on account of such termination (provided
the terminating party is not otherwise in material default or breach of
this Agreement), if (i) the other party shall fail to perform in any
material respect its agreements contained herein required to be performed
on or prior to the Closing Date, (ii) the other party materially breaches
any of its representations, warranties or covenants contained herein, (iii)
the Global Telecom shareholders fail to approve this Agreement at any
meeting called for such purpose at which a quorum was present or (iv) any
other condition herein expressed to be precedent to the obligations of the
terminating party has not been met and it reasonably appears that it will
not or cannot be met.
A-13
<PAGE>
11.2 (a) Termination of this Agreement pursuant to paragraphs 11.1 (a) or
(b) shall terminate all obligations of the parties hereunder and there shall be
no liability for damages on the part of Global Utilities or Global Telecom, or
the trustees or officers of Global Utilities or Global Telecom, to any other
party or its trustees or officers.
(b) Termination of this Agreement pursuant to paragraph 11.1 (c) shall
terminate all obligations of the parties hereunder and there shall be no
liability for damages on the part of Global Utilities or Global Telecom, or
the trustees or officers of Global Utilities or Global Telecom, except that
any party in breach of this Agreement shall, upon demand, reimburse the
non-breaching party for all reasonable out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by this
Agreement, including legal, accounting and filing fees.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the parties.
13. MISCELLANEOUS
13.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
13.5 The obligations and liabilities of Global Utilities hereunder are
solely those of Global Utilities. It is expressly agreed that no shareholder,
nominee, trustee, officer, agent, or employee of Global Utilities shall be
personally liable hereunder. The execution and delivery of this Agreement have
been authorized by the trustees of Global Utilities and signed by authorized
officers of Global Utilities acting as such, and neither such authorization by
such trustees nor such execution and delivery by such officers shall be deemed
to have been made by any of them individually or to impose any liability on any
of them personally.
13.6 The obligations and liabilities of Global Telecom hereunder are
solely those of Global Telecom. It is expressly agreed that no shareholder,
nominee, trustee, officer, agent, or employee of Global Telecom shall be
personally liable hereunder. The execution and delivery of this Agreement have
been authorized by the trustees of Global Telecom and signed by authorized
officers of Global Telecom acting as such, and neither such authorization by
such trustees nor such execution and delivery by such officers shall be deemed
to have been made by any of them individually or to impose any liability on any
of them personally.
A-14
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by a duly authorized officer.
TCW/DW GLOBAL TELECOM TRUST
By: /s/ CHARLES A. FIUMEFREDDO
-------------------------------------------
Name: Charles A. Fiumefreddo
Title: President
MORGAN STANLEY DEAN WITTER GLOBAL
UTILITIES FUND
By: /s/ BARRY FINK
-------------------------------------------
Name: Barry Fink
Title: Vice President
A-15
<PAGE>
EXHIBIT B
PROSPECTUS
JUNE 26, 1998
Morgan Stanley Dean Witter Global Utilities Fund (the "Fund") is
an open-end, diversified management investment company whose investment
objective is to seek both capital appreciation and current income. The Fund
seeks to meet its objective by investing in equity and fixed-income securities
of issuers worldwide, which are primarily engaged in the utilities industry.
(See "Investment Objective and Policies.")
The Fund offers four classes of shares (each, a "Class"), each
with a different combination of sales charges, ongoing fees and other features.
The different distribution arrangements permit an investor to choose the method
of purchasing shares that the investor believes is most beneficial given the
amount of the purchase, the length of time the investor expects to hold the
shares and other relevant circumstances. (See "Purchase of Fund
Shares--Alternative Purchase Arrangements.")
This Prospectus sets forth concisely the information you should
know before investing in the Fund. It should be read and retained for future
reference. Additional information about the Fund is contained in the Statement
of Additional Information, dated June 26, 1998, which has been filed with the
Securities and Exchange Commission, and which is available at no charge upon
request of the Fund at the address or telephone numbers listed on this page. The
Statement of Additional Information is incorporated herein by reference.
MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
DISTRIBUTOR
TABLE OF CONTENTS
Prospectus Summary/2
Summary of Fund Expenses/4
Financial Highlights/6
The Fund and its Management/9
Investment Objective and Policies/9
Risk Considerations and
Investment Practices/11
Investment Restrictions/18
Purchase of Fund Shares/18
Shareholder Services/30
Redemptions and Repurchases/33
Dividends, Distributions and Taxes/34
Performance Information/35
Additional Information/35
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Morgan Stanley Dean Witter
Global Utilities Fund
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 869-NEWS (toll-free)
<PAGE>
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
The The Fund is organized as a Trust, commonly known as a Massachusetts business trust, and is an open-end,
Fund diversified management investment company. The Fund invests in equity and fixed-income securities of issuers
worldwide, which are primarily engaged in the utilities industry (see page 9).
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Offered Shares of beneficial interest with $0.01 par value (see page 35). The Fund offers four Classes of shares, each
with a different combination of sales charges, ongoing fees and other features (see pages 18-29).
- ------------------------------------------------------------------------------------------------------------------------------------
Minimum The minimum initial investment for each Class is $1,000 ($100 if the account is opened through EasyInvest-SM-).
Purchase Class D shares are only available to persons investing $5 million ($25 million for certain qualified plans) or
more and to certain other limited categories of investors. For the purpose of meeting the minimum $5 million (or
$25 million) investment for Class D shares, and subject to the $1,000 minimum initial investment for each Class
of the Fund, an investor's existing holdings of Class A shares and shares of funds for which Morgan Stanley Dean
Witter Advisors Inc. serves as investment manager ("Morgan Stanley Dean Witter Funds") that are sold with a
front-end sales charge, and concurrent investments in Class D shares of the Fund and other Morgan Stanley Dean
Witter Funds that are multiple class funds, will be aggregated. The minimum subsequent investment is $100 (see
page 18).
- ------------------------------------------------------------------------------------------------------------------------------------
Investment The investment objective of the Fund is to seek both capital appreciation and current income (see page 9).
Objective
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Morgan Stanley Dean Witter Advisors Inc., the Investment Manager of the Fund, and its wholly-owned subsidiary,
Manager Morgan Stanley Dean Witter Services Company Inc., serve in various investment management, advisory, management
and administrative capacities to 101 investment companies and other portfolios with assets of approximately $115
billion at May 31, 1998 (see page 9).
- ------------------------------------------------------------------------------------------------------------------------------------
Management The Investment Manager receives a monthly fee at the annual rate of 0.65% of daily net assets, scaled down on
Fee assets over $500 million (see page 9).
- ------------------------------------------------------------------------------------------------------------------------------------
Distributor and Morgan Stanley Dean Witter Distributors Inc. (the "Distributor"). The Fund has adopted a distribution plan
Distribution Fee pursuant to Rule 12b-1 under the Investment Company Act (the "12b-1 Plan") with respect to the distribution fees
paid by the Class A, Class B and Class C shares of the Fund to the Distributor. The entire 12b-1 fee payable by
Class A and a portion of the 12b-1 fee payable by each of Class B and Class C equal to 0.25% of the average
daily net assets of the Class are currently each characterized as a service fee within the meaning of the
National Association of Securities Dealers, Inc. guidelines. The remaining portion of the 12b-1 fee, if any, is
characterized as an asset-based sales charge (see pages 18 and 27).
- ------------------------------------------------------------------------------------------------------------------------------------
Alternative Four classes of shares are offered:
Purchase
Arrangements - Class A shares are offered with a front-end sales charge, starting at 5.25% and reduced for larger purchases.
Investments of $1 million or more (and investments by certain other limited categories of investors) are not
subject to any sales charge at the time of purchase but a contingent deferred sales charge ("CDSC") of 1.0% may
be imposed on redemptions within one year of purchase. The Fund is authorized to reimburse the Distributor for
specific expenses incurred in promoting the distribution of the Fund's Class A shares and servicing shareholder
accounts pursuant to the Fund's 12b-1 Plan. Reimbursement may in no event exceed an amount equal to payments at
an annual rate of 0.25% of average daily net assets of the Class (see pages 18, 22 and 27).
</TABLE>
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- Class B shares are offered without a front-end sales charge, but will in most cases be subject to a CDSC
(scaled down from 5.0% to 1.0%) if redeemed within six years after purchase. The CDSC will be imposed on any
redemption of shares if after such redemption the aggregate current value of a Class B account with the Fund
falls below the aggregate amount of the investor's purchase payments made during the six years preceding the
redemption. A different CDSC schedule applies to investments by certain qualified plans. Class B shares are also
subject to a 12b-1 fee assessed at the annual rate of 1.0% of the lesser of: (a) the average daily net sales of
the Fund's Class B shares or (b) the average daily net assets of Class B. All shares of the Fund held prior to
July 28, 1997 have been designated Class B shares. Shares held before May 1, 1997 will convert to Class A shares
in May, 2007. In all other instances, Class B shares convert to Class A shares approximately ten years after the
date of the original purchase (see pages 18, 24 and 27).
- Class C shares are offered without a front-end sales charge, but will in most cases be subject to a CDSC of
1.0% if redeemed within one year after purchase. The Fund is authorized to reimburse the Distributor for
specific expenses incurred in promoting the distribution of the Fund's Class C shares and servicing shareholder
accounts pursuant to the Fund's 12b-1 Plan. Reimbursement may in no event exceed an amount equal to payments at
an annual rate of 1.0% of average daily net assets of the Class (see pages 18 and 27).
- Class D shares are offered only to investors meeting an initial investment minimum of $5 million ($25 million
for certain qualified plans) and to certain other limited categories of investors. Class D shares are offered
without a front-end sales charge or CDSC and are not subject to any 12b-1 fee (see pages 18 and 27).
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends Dividends from net investment income are paid quarterly and distributions from net capital gains, if any, are
and paid at least once per year. The Fund may, however, determine to retain all or part of any net long-term capital
Capital Gains gains in any year for reinvestment. Dividends and capital gains distributions paid on shares of a Class are
Distributions automatically reinvested in additional shares of the same Class at net asset value unless the shareholder elects
to receive cash. Shares acquired by dividend and distribution reinvestment will not be subject to any sales
charge or CDSC (see pages 30 and 34).
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption Shares are redeemable by the shareholder at net asset value less any applicable CDSC on Class A, Class B or
Class C shares. An account may be involuntarily redeemed if the total value of the account is less than $100 or,
if the account was opened through EasyInvest-SM-, if after twelve months the shareholder has invested less than
$1,000 in the account (see page 33).
- ------------------------------------------------------------------------------------------------------------------------------------
Risks The net asset value of the Fund's shares will fluctuate with changes in market value of portfolio securities.
The utilities industry has certain characteristics and risks, and developments within that industry will affect
the Fund's portfolio. The value of debt securities (and, to a lesser extent, equity securities) issued by
utilities industry issuers tends to have an inverse relationship to movement of interest rates. It should be
recognized that the foreign securities and markets in which the Fund will invest pose different and greater
risks than those customarily associated with domestic securities and their markets (see pages 11-17).
</TABLE>
- --------------------------------------------------------------------------------
THE ABOVE IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION APPEARING
ELSEWHERE IN THE PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL
INFORMATION.
3
<PAGE>
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
The following table illustrates all expenses and fees that a shareholder of
the Fund will incur. The expenses and fees set forth in the table are based on
the expenses and fees for the fiscal year ended February 28, 1998.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
--------- ------- --------- -------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
- --------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)... 5.25%(1) None None None
Sales Charge Imposed on Dividend Reinvestments.................................. None None None None
Maximum Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds)................................................. None(2) 5.00%(3) 1.00%(4) None
Redemption Fees................................................................. None None None None
Exchange Fee.................................................................... None None None None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------
Management Fees................................................................. 0.65% 0.65% 0.65% 0.65%
12b-1 Fees (5) (6).............................................................. 0.25% 0.90% 1.00% None
Other Expenses.................................................................. 0.25% 0.25% 0.25% 0.25%
Total Fund Operating Expenses (7)............................................... 1.15% 1.80% 1.90% 0.90%
</TABLE>
- ------------
(1) REDUCED FOR PURCHASES OF $25,000 AND OVER (SEE "PURCHASE OF FUND
SHARES--INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES").
(2) INVESTMENTS THAT ARE NOT SUBJECT TO ANY SALES CHARGE AT THE TIME OF PURCHASE
ARE SUBJECT TO A CDSC OF 1.00% THAT WILL BE IMPOSED ON REDEMPTIONS MADE
WITHIN ONE YEAR AFTER PURCHASE, EXCEPT FOR CERTAIN SPECIFIC CIRCUMSTANCES
(SEE "PURCHASE OF FUND SHARES--INITIAL SALES CHARGE ALTERNATIVE--CLASS A
SHARES").
(3) THE CDSC IS SCALED DOWN TO 1.00% DURING THE SIXTH YEAR, REACHING ZERO
THEREAFTER.
(4) ONLY APPLICABLE TO REDEMPTIONS MADE WITHIN ONE YEAR AFTER PURCHASE (SEE
"PURCHASE OF FUND SHARES-- LEVEL LOAD ALTERNATIVE--CLASS C SHARES").
(5) THE 12b-1 FEE IS ACCRUED DAILY AND PAYABLE MONTHLY. THE ENTIRE 12b-1 FEE
PAYABLE BY CLASS A AND A PORTION OF THE 12b-1 FEE PAYABLE BY EACH OF CLASS B
AND CLASS C EQUAL TO 0.25% OF THE AVERAGE DAILY NET ASSETS OF THE CLASS ARE
CURRENTLY EACH CHARACTERIZED AS A SERVICE FEE WITHIN THE MEANING OF NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. ("NASD") GUIDELINES AND ARE PAYMENTS
MADE FOR PERSONAL SERVICE AND/OR MAINTENANCE OF SHAREHOLDER ACCOUNTS. THE
REMAINDER OF THE 12b-1 FEE, IF ANY, IS AN ASSET-BASED SALES CHARGE, AND IS A
DISTRIBUTION FEE PAID TO THE DISTRIBUTOR TO COMPENSATE IT FOR THE SERVICES
PROVIDED AND THE EXPENSES BORNE BY THE DISTRIBUTOR AND OTHERS IN THE
DISTRIBUTION OF THE FUND'S SHARES (SEE "PURCHASE OF FUND SHARES--PLAN OF
DISTRIBUTION").
(6) UPON CONVERSION OF CLASS B SHARES TO CLASS A SHARES, SUCH SHARES WILL BE
SUBJECT TO THE LOWER 12b-1 FEE APPLICABLE TO CLASS A SHARES. NO SALES CHARGE
IS IMPOSED AT THE TIME OF CONVERSION OF CLASS B SHARES TO CLASS A SHARES.
CLASS C SHARES DO NOT HAVE A CONVERSION FEATURE AND, THEREFORE, ARE SUBJECT
TO AN ONGOING 1.00% DISTRIBUTION FEE (SEE "PURCHASE OF FUND
SHARES--ALTERNATIVE PURCHASE ARRANGEMENTS").
(7) THERE WERE NO OUTSTANDING SHARES OF CLASS A, CLASS C OR CLASS D PRIOR TO
JULY 28, 1997. ACCORDINGLY, "TOTAL FUND OPERATING EXPENSES," AS SHOWN ABOVE
WITH RESPECT TO THOSE CLASSES, ARE ESTIMATES BASED UPON THE SUM OF 12b-1
FEES, MANAGEMENT FEES AND ESTIMATED "OTHER EXPENSES."
4
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXAMPLES 1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
Class A....................................... $64 $87 $112 $185
Class B....................................... $68 $87 $117 $212
Class C....................................... $29 $60 $103 $222
Class D....................................... $ 9 $29 $50 $111
You would pay the following expenses on the same
$1,000 investment assuming no redemption at the
end of the period:
Class A....................................... $64 $87 $112 $185
Class B....................................... $18 $57 $97 $212
Class C....................................... $19 $60 $103 $222
Class D....................................... $ 9 $29 $50 $111
</TABLE>
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES OF EACH CLASS MAY BE GREATER OR
LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For a more complete description of these costs and expenses, see
"The Fund and its Management," "Purchase of Fund Shares--Plan of Distribution"
and "Redemptions and Repurchases."
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.
5
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following ratios and per share data for a share of beneficial interest
outstanding throughout each period have been audited by Price Waterhouse LLP,
independent accountants. The financial highlights should be read in conjunction
with the financial statements, the notes thereto and the unqualified report of
independent accountants which are contained in the Statement of Additional
Information. Further information about the performance of the Fund is contained
in the Fund's Annual Report to Shareholders, which may be obtained without
charge upon request to the Fund.
<TABLE>
<CAPTION>
FOR THE
PERIOD
MAY 31,
1994*
FOR THE YEAR ENDED FEBRUARY 28, THROUGH
------------------------------- FEBRUARY
CLASS B SHARES 1998++++ 1997 1996** 28, 1995
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period.............................. $ 12.66 $ 11.33 $ 9.80 $ 10.00
--------- --------- --------- ----------
Net investment income................ 0.15 0.10 0.18 0.13
Net realized and unrealized gain
(loss).............................. 3.05 1.35 1.64 (0.21)
--------- --------- --------- ----------
Total from investment operations..... 3.20 1.45 1.82 (0.08)
--------- --------- --------- ----------
Less dividends and distributions
from:
Net investment income............. (0.15) (0.12) (0.16) (0.12)
Net realized gain................. (0.62) -- (0.13) --
--------- --------- --------- ----------
Total dividends and distributions.... (0.77) (0.12) (0.29) (0.12)
--------- --------- --------- ----------
Net asset value, end of period....... $ 15.09 $ 12.66 $ 11.33 $ 9.80
--------- --------- --------- ----------
--------- --------- --------- ----------
TOTAL INVESTMENT RETURN+............. 26.06% 12.91% 18.76% (0.87)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses............................. 1.80% 1.82% 1.87% 1.97%(2)
Net investment income................ 1.08% 0.85% 1.66% 1.83%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands........................... $396,483 $352,240 $360,347 $337,600
Portfolio turnover rate.............. 14% 10% 16% 2%(1)
Average commission rate paid......... $0.0024 $0.0071 -- --
</TABLE>
- -------------
* COMMENCEMENT OF OPERATIONS.
** YEAR ENDED FEBRUARY 29.
++ PRIOR TO JULY 28, 1997, THE FUND ISSUED ONE CLASS OF SHARES. ALL SHARES 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.
6
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
FEBRUARY 28,
CLASS A SHARES 1998++
----------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 13.77
-------
Net investment income................................................. 0.07
Net realized and unrealized gain...................................... 1.76
-------
Total from investment operations...................................... 1.83
-------
Less dividends and distributions from:
Net investment income.............................................. (0.07)
Net realized gain.................................................. (0.43)
-------
Total dividends and distributions..................................... (0.50)
-------
Net asset value, end of period........................................ $ 15.10
-------
-------
TOTAL INVESTMENT RETURN+.............................................. 13.74%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.18%(2)
Net investment income................................................. 0.88%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $948
Portfolio turnover rate............................................... 14%
Average commission rate paid.......................................... $0.0024
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 13.77
-------
Net investment income................................................. 0.01
Net realized and unrealized gain...................................... 1.76
-------
Total from investment operations...................................... 1.77
-------
Less dividends and distributions from:
Net investment income.............................................. (0.04)
Net realized gain.................................................. (0.43)
-------
Total dividends and distributions..................................... (0.47)
-------
Net asset value, end of period........................................ $ 15.07
-------
-------
TOTAL INVESTMENT RETURN+.............................................. 13.24%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.93%(2)
Net investment income................................................. 0.06%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $161
Portfolio turnover rate............................................... 14%
Average commission rate paid.......................................... $0.0024
</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.
7
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
FEBRUARY 28,
CLASS D SHARES 1998++
----------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 13.77
-------
Net investment income................................................. 0.09
Net realized and unrealized gain...................................... 1.76
-------
Total from investment operations...................................... 1.85
-------
Less dividends and distributions from:
Net investment income.............................................. (0.08)
Net realized gain.................................................. (0.43)
-------
Total dividends and distributions..................................... (0.51)
-------
Net asset value, end of period........................................ $ 15.11
-------
-------
TOTAL INVESTMENT RETURN+.............................................. 13.90%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.92%(2)
Net investment income................................................. 1.04%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $14
Portfolio turnover rate............................................... 14%
Average commission rate paid.......................................... $0.0024
</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.
8
<PAGE>
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter Global Utilities Fund (the "Fund") (formerly
named Dean Witter Global Utilities Fund) is an open-end diversified management
investment company. The Fund is a trust of the type commonly known as a
"Massachusetts business trust" and was organized under the laws of The
Commonwealth of Massachusetts on October 22, 1993.
Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors" or the "Investment
Manager"), whose address is Two World Trade Center, New York, New York 10048, is
the Fund's Investment 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. The
Investment Manager, which was incorporated in July, 1992 under the name Dean
Witter InterCapital Inc., changed its name to Morgan Stanley Dean Witter
Advisors Inc. on June 22, 1998.
MSDW Advisors and its wholly-owned subsidiary, Morgan Stanley Dean Witter
Services Company Inc. ("MSDW Services"), serve in various investment management,
advisory, management and administrative capacities to 101 investment companies,
28 of which are listed on the New York Stock Exchange, with combined assets of
approximately $110.3 billion at May 31, 1998. The Investment Manager also
manages portfolios of pension plans, other institutions and individuals which
aggregated approximately $4.3 billion at such date.
The Fund has retained the Investment Manager to provide administrative
services, manage its business affairs and manage the investment of the Fund's
assets, including the placing of orders for the purchase and sale of portfolio
securities. MSDW Advisors has retained MSDW Services to perform the
aforementioned administrative services for the Fund. The Fund's Board of
Trustees reviews the various services provided by the Investment Manager to
ensure that the Fund's general investment policies and programs are being
properly carried out and that administrative services are being provided to the
Fund in a satisfactory manner.
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Investment Manager, the Fund pays
the Investment Manager monthly compensation calculated daily by applying a
percentage rate to the Fund's daily net assets which declines as net assets of
the Fund reach levels over $500 million. For the fiscal year ended February 28,
1998, the Fund accrued total compensation to the Investment Manager amounting to
0.65% of the Fund's average daily net assets and the total expenses of Class B
amounted to 1.80% of the average daily net assets of Class B. Shares of Class A,
Class C and Class D were first issued on July 28, 1997. The expenses of the Fund
include: the fee of the Investment Manager; the fee pursuant to the Plan of
Distribution (see "Purchase of Fund Shares"); taxes; transfer agent, custodian
and auditing fees; certain legal fees; and printing and other expenses relating
to the Fund's operations which are not expressly assumed by the Investment
Manager under its Investment Management Agreement with the Fund.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The investment objective of the Fund is to seek both capital appreciation
and current income. The objective is a fundamental policy of the Fund and may
not be changed without shareholder approval. There is no assurance that the
objective will be achieved.
The Fund will attempt to meet its investment objective by investing (at
least 65% of its total assets) in equity and fixed-income securities of issuers
worldwide, which are primarily engaged in the utilities industry. The Fund's
investment portfolio will be invested in at least three separate countries.
9
<PAGE>
The term "utilities industry" describes companies engaged in the
manufacture, production, generation, transmission, sale and distribution of
water, gas and electric energy, or who manufacture or supply equipment for such
companies, as well as companies engaged in the communications field and the
companies which manufacture or supply equipment for such companies, including
telephone, telegraph, satellite, cable, microwave, radio-telephone, computer,
mobile communication and cellular paging, electronic mail, videotext and
teletext and other new or emerging technology companies. A company will be
considered to be in the utilities industry if, during the most recent twelve
month period, at least 50% of the company's gross revenues, on a consolidated
basis, are derived from the utilities industry. Under ordinary circumstances, at
least 65% of the Fund's total assets will be invested in securities of companies
in the utilities industry.
The principal currencies in which securities held in the Fund's portfolio
will be denominated are: the U.S. dollar; Australian dollar; Deutsche mark;
Japanese yen; French franc; British pound; Canadian dollar; Mexican peso; Swiss
franc; Dutch guilder; Hong Kong dollar; New Zealand dollar; Spanish Peseta;
Swedish Krona; European Currency Unit and, beginning on January 1, 1999, the
euro.
The Investment Manager believes the Fund's investment policies are suited to
benefit from certain characteristics and historical performance of the
securities of utility companies. Many of these companies have historically set a
pattern of paying regular dividends over time, and the average common stock
dividend yield of utilities historically has substantially exceeded that of
industrial stocks. The Investment Manager believes that these factors may not
only provide current income but also generally tend to moderate risk and thus
may enhance the opportunity for appreciation of securities owned by the Fund,
although the potential for capital appreciation has historically been lower for
many utility stocks compared with most industrial stocks. There can be no
assurance that the historical investment performance of the utilities industry
will be indicative of future events and performance.
The Fund invests in both equity securities (common stock and securities
convertible into common stock) and fixed-income securities (bonds and preferred
stock) in the utilities industry. The Fund will shift its asset allocation
without restriction between types of utilities, among nationalities of issuers
and between equity and fixed-income securities, based upon the Investment
Manager's determination of how to achieve the Fund's investment objective in
light of prevailing market, economic and financial conditions.
Criteria utilized by the Investment Manager in the selection of equity
securities include the following considerations: earnings and dividend growth;
book value; dividend discount; and price/earnings relationships. In addition,
the Investment Manager makes continuing assessments of management, the
prevailing regulatory framework and industry trends. The Investment Manager may
also utilize computer-based equity selection models. In keeping with the Fund's
objective, if in the opinion of the Investment Manager favorable conditions for
capital growth of equity securities are not prevalent at a particular time, the
Fund may allocate its assets predominantly or exclusively to debt securities
with the aim of obtaining current income and thus benefitting long-term growth
of capital.
The Fund may purchase equity securities sold on the New York, American and
other domestic and foreign stock exchanges and in the over-the-counter market.
Fixed-income securities in which the Fund may invest are debt securities and
preferred stocks which are rated at the time of purchase Baa or better by
Moody's Investors Service, Inc. ("Moody's") or BBB or better by Standard &
Poor's Corporation ("S&P") or which, if unrated, are deemed to be of comparable
quality by the Fund's Investment Manager. Under normal circumstances, the
average weighted maturity of the fixed-income securities held by the Fund is
expected to be in excess of
10
<PAGE>
seven years. A description of corporate bond ratings is contained in the
Appendix to the Statement of Additional Information.
Investments in fixed-income securities rated either BBB by S&P or Baa by
Moody's (the lowest credit ratings designated "investment grade") have
speculative characteristics and, therefore, changes in economic conditions or
other circumstances are more likely to weaken their capacity to make principal
and interest payments than would be the case with investments in securities with
higher credit ratings. If a fixed-income security held by the Fund is rated BBB
or Baa and is subsequently downgraded by a rating agency, the Fund will retain
such security in its portfolio until the Investment Manager determines that it
is practicable to sell the security without undue market or tax consequences to
the Fund. In the event that such downgraded securities constitute 5% or more of
the Fund's net assets, the Investment Manager will sell such securities as soon
as is practicable, in sufficient amounts to reduce the total to below 5%.
The Fund may also invest in securities of foreign issuers in the form of
American Depository Receipts (ADRs), European Depository Receipts (EDRs) or
other similar securities convertible into securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically issued
by a United States bank or trust company evidencing ownership of the underlying
securities. EDRs are European receipts evidencing a similar arrangement.
Generally, ADRs, in registered form, are designed for use in the United States
securities markets and EDRs, in bearer form, are designed for use in European
securities markets.
There may be periods during which, in the opinion of the Investment Manager,
market conditions warrant reduction of some or all of the Fund's securities
holdings. During such periods, the Fund may adopt a temporary "defensive"
posture in which greater than 35% of its net assets are invested in cash or
money market instruments. Money market instruments in which the Fund may invest
are securities issued or guaranteed by the U.S. Government (Treasury bills,
notes and bonds, including zero coupon securities); bank obligations (such as
certificates of deposit and bankers' acceptances); Yankee instruments;
Eurodollar certificates of deposit; obligations of savings institutions; fully
insured certificates of deposit; and commercial paper rated within the two
highest grades by Moody's or S&P or, if not rated, are issued by a company
having an outstanding debt issue rated at least AA by S&P or Aa by Moody's.
RISK CONSIDERATIONS AND INVESTMENT PRACTICES
UTILITIES INDUSTRY. The utilities industry as a whole has certain
characteristics and risks particular to that industry. Unlike industrial
companies, the rates which utility companies may charge their customers
generally are subject to review and limitation by governmental regulatory
commissions. Although rate changes of a utility usually fluctuate in approximate
correlation with financing costs due to political and regulatory factors, rate
changes ordinarily occur only following a delay after the changes in financing
costs. This factor will tend to favorably affect a utility company's earnings
and dividends in times of decreasing costs, but conversely will tend to
adversely affect earnings and dividends when costs are rising. In addition, the
value of utility debt securities (and, to a lesser extent, equity securities)
tends to have an inverse relationship to the movement of interest rates.
Among the risks affecting the utilities industry are the following: risks of
increases in fuel and other operating costs; the high cost of borrowing to
finance capital construction during inflationary periods; restrictions on
operations and increased costs and delays associated with compliance with
environmental and nuclear safety regulations; the difficulties involved in
obtaining natural gas for resale or fuel for generating electricity at
reasonable prices; the risks in connection with the construction and operation
of nuclear power plants; the effects of energy conservation and the effects of
regulatory
11
<PAGE>
changes, such as the possible adverse effects on profits of recent increased
competition among telecommunications companies and the uncertainties resulting
from such companies' diversification into new domestic and international
businesses, as well as agreements by many such companies linking future rate
increases to inflation or other factors not directly related to the actual
operating profits of the enterprise.
FOREIGN SECURITIES. Foreign securities investments may be affected by
changes in currency rates or exchange control regulations, changes in
governmental administration or economic or monetary policy (in the United States
and abroad) or changed circumstances in dealings between nations. Fluctuations
in the relative rates of exchange between currencies will affect the value of
the Fund's investments denominated in foreign currency. Changes in foreign
currency exchange rates relative to the U.S. dollar will affect the U.S. dollar
value of the Fund's assets denominated in that currency and thereby impact upon
the Fund's total return on such assets.
Foreign currency exchange rates are determined by forces of supply and
demand on the foreign exchange markets. These forces are themselves affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. Moreover,
foreign currency exchange rates may be affected by the regulatory control of the
exchanges on which the currencies trade. The foreign currency transactions of
the Fund will be conducted on a spot basis or through forward foreign currency
exchange contracts (described below). The Fund will incur certain costs in
connection with these currency transactions.
Investments in foreign securities will also occasion risks relating to
political and economic developments abroad, including the possibility of
expropriations or confiscatory taxation, limitations on the use or transfer of
Fund assets and any effects of foreign social, economic or political
instability. Foreign companies are not subject to the regulatory requirements of
U.S. companies and, as such, there may be less publicly available information
about such companies. Moreover, foreign companies are not subject to uniform
accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies.
Securities of foreign issuers may be less liquid than comparable securities
of U.S. issuers and, as such, their price changes may be more volatile.
Furthermore, foreign exchanges and broker-dealers are generally subject to less
government and exchange scrutiny and regulation than their American
counterparts. Brokerage commissions, dealer concessions and other transaction
costs may be higher on foreign markets than in the U.S. In addition, differences
in clearance and settlement procedures on foreign markets may occasion delays in
settlement of the Fund's trades effected in such markets. As such, the inability
to dispose of portfolio securities due to settlement delays could result in
losses to the Fund due to subsequent declines in value of such securities and
the inability of the Fund to make intended security purchases due to settlement
problems could result in a failure of the Fund to make potentially advantageous
investments. To the extent the Fund purchases Eurodollar certificates of deposit
issued by foreign branches of domestic United States banks, consideration will
be given to their domestic marketability, the lower reserve requirements
normally mandated for overseas banking operations, the possible impact of
interruptions in the flow of international currency transactions and future
international political and economic developments which might adversely affect
the payment of principal or interest.
Many European countries are about to adopt a single European currency, the
euro (the "Euro Conversion"). The consequences of the Euro Conversion for
foreign exchange rates, interest rates and the value of European securities
eligible for purchase by the Fund are presently unclear. Such consequences may
adversely affect the value and/or increase the volatility of securities held by
the Fund.
12
<PAGE>
Certain of the foreign markets in which the Fund may invest will be emerging
markets. These new and incompletely formed markets will have increased risk
levels above those occasioned by investing in foreign markets generally. The
types of these risks are set forth above. The Fund's management will take
cognizance of these risks in allocating any of the Fund's investments in either
fixed-income or equity securities issued by issuers in emerging market
countries.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may enter into forward
foreign currency exchange contracts ("forward contracts") in connection with its
foreign securities investments.
A forward contract involves an obligation to purchase or sell a currency at
a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
The Fund may enter into forward contracts as a hedge against fluctuations in
future foreign exchange rates.
The Fund will enter into forward contracts under various circumstances. When
the Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may, for example, desire to "lock in" the
price of the security in U.S. dollars or some other foreign currency which the
Fund is temporarily holding in its portfolio. By entering into a forward
contract for the purchase or sale, for a fixed amount of dollars or other
currency, of the amount of foreign currency involved in the underlying security
transactions, the Fund will be able to protect itself against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar or
other currency which is being used for the security purchase (by the Fund or the
counterparty) and the foreign currency in which the security is denominated
during the period between the date on which the security is purchased or sold
and the date on which payment is made or received.
At other times, when, for example, the Fund's Investment Manager believes
that a currency may suffer a substantial decline against the U.S. dollar or some
other foreign currency, the Fund may enter into a forward contract to sell, for
a fixed amount of dollars or other currency, the amount of foreign currency
approximating the value of some or all of the Fund's securities holdings (or
securities which the Fund has purchased for its portfolio) denominated in such
foreign currency. Under identical circumstances, the Fund may enter into a
forward contract to sell, for a fixed amount of U.S. dollars or other currency,
an amount of foreign currency other than the currency in which the securities to
be hedged are denominated approximating the value of some or all of the
portfolio securities to be hedged. This method of hedging, called
"cross-hedging," will be selected by the Investment Manager when it is
determined that the foreign currency in which the portfolio securities are
denominated has insufficient liquidity or is trading at a discount as compared
with some other foreign currency with which it tends to move in tandem.
In addition, when the Fund's Investment Manager anticipates purchasing
securities at some time in the future, and wishes to lock in the current
exchange rate of the currency in which those securities are denominated against
the U.S. dollar or some other foreign currency, the Fund may enter into a
forward contract to purchase an amount of currency equal to some or all of the
value of the anticipated purchase, for a fixed amount of U.S. dollars or other
currency. The Fund may, however, close out the forward contract without
purchasing the security which was the subject of the "anticipatory" hedge.
In all of the above circumstances, if the currency in which the Fund's
securities holdings (or anticipated portfolio securities) are denominated rises
in value with respect to the currency which is being purchased (or sold), then
the Fund will have realized fewer gains than had the Fund not entered into the
forward contracts. Moreover, the precise matching of the forward contract
amounts and the value of the securities involved will not generally be possible,
since the future value of such securities in
13
<PAGE>
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the forward contract is entered into and
the date it matures. The Fund is not required to enter into such transactions
with regard to its foreign currency-denominated securities and will not do so
unless deemed appropriate by the Investment Manager. The Fund generally will not
enter into a forward contract with a term of greater than one year, although it
may enter into forward contracts for periods of up to five years. The Fund may
be limited in its ability to enter into hedging transactions involving forward
contracts by Internal Revenue Code requirements relating to qualification as a
regulated investment company (see "Dividends, Distributions and Taxes").
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements, which
may be viewed as a type of secured lending by the Fund, and which typically
involve the acquisition by the Fund of government securities or other securities
from a selling financial institution such as a bank, savings and loan
association or broker-dealer. The agreement provides that the Fund will sell
back to the institution, and that the institution will repurchase, the
underlying security at a specified price and at a fixed time in the future,
usually not more than seven days from the date of purchase. While repurchase
agreements involve certain risks not associated with direct investments in debt
securities, including the risks of default or bankruptcy of the selling
financial institution, the Fund follows procedures to minimize such risks. These
procedures include effecting repurchase transactions only with large,
well-capitalized and well-established financial institutions and maintaining
adequate collateralization.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS. From
time to time, in the ordinary course of business, the Fund may purchase
securities on a when-issued or delayed delivery basis or may purchase or sell
securities on a forward commitment basis. When such transactions are negotiated,
the price is fixed at the time of the commitment, but delivery and payment can
take place a month or more after the date of the commitment. There is no overall
limit on the percentage of the Fund's assets which may be committed to the
purchase of securities on a when-issued, delayed delivery or forward commitment
basis. An increase in the percentage of the Fund's assets committed to the
purchase of securities on a when-issued or delayed delivery basis may increase
the volatility of the Fund's net asset value.
WHEN, AS AND IF ISSUED SECURITIES. The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security depends
upon the occurrence of a subsequent event, such as approval of a merger,
corporate reorganization, leveraged buyout or debt restructuring. If the
anticipated event does not occur and the securities are not issued, the Fund
will have lost an investment opportunity. There is no overall limit on the
percentage of the Fund's assets which may be committed to the purchase of
securities on a "when, as and if issued" basis. 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.
REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. The Fund may also use
reverse repurchase agreements and dollar rolls as part of its investment
strategy. Reverse repurchase agreements involve sales by the Fund of portfolio
assets concurrently with an agreement by the Fund to repurchase the same assets
at a later date at a fixed price. The Fund may enter into dollar rolls in which
the Fund sells securities and simultaneously contracts to repurchase
substantially similar (same type and coupon) securities on a specified future
date. Reverse repurchase agreements and dollar rolls involve the risk that the
market value of the securities the Fund is obligated to repurchase under the
agreement may decline below the repurchase price. In the event the buyer of
securities under a reverse repurchase agreement or dollar roll files for
bankruptcy or becomes insolvent, the Fund's use of proceeds of
14
<PAGE>
the agreement may be restricted pending a determination by the other party, or
its trustee or receiver, whether to enforce the Fund's obligation to repurchase
the securities. Reverse repurchase agreements and dollar rolls are speculative
techniques involving leverage (which may increase investment risk), and are
considered borrowings by the Fund.
PRIVATE PLACEMENTS. The Fund may invest up to 5% of its total assets in
securities which are subject to restrictions on resale because they have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), or which are otherwise not readily marketable. (Securities eligible for
resale pursuant to Rule 144A under the Securities Act, and determined to be
liquid pursuant to the procedures discussed in the following paragraph, are not
subject to the foregoing restriction.) These securities are generally referred
to as private placements or restricted securities. Limitations on the resale of
such securities may have an adverse effect on their marketability, and may
prevent the Fund from disposing of them promptly at reasonable prices. The Fund
may have to bear the expense of registering such securities for resale and the
risk of substantial delays in effecting such registration.
The Securities and Exchange Commission has adopted Rule 144A under the
Securities Act, which permits the Fund to sell restricted securities to
qualified institutional buyers without limitation. The Investment Manager,
pursuant to procedures adopted by the Trustees of the Fund, will make a
determination as to the liquidity of each restricted security purchased by the
Fund. If a restricted security is determined to be "liquid," such security will
not be included within the category "illiquid securities," which under current
policy may not exceed 15% of the Fund's net assets. 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.
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.
YEAR 2000. The investment management services provided to the Fund by the
Investment Manager 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 cannot 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. The Investment
Manager, the Distributor and the Transfer Agent have been actively working on
necessary changes to their own computer systems to prepare for the year 2000 and
expect that their systems will be adapted before that date, but there can be no
15
<PAGE>
assurance that they will be successful, or that interaction with other
non-complying computer systems will not impair their services at that time. In
addition, it is possible that the markets for securities in which the Fund
invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues. In
addition, corporate and governmental data processing errors may result in
production problems for individual companies and overall economic uncertainties.
Earnings of individual issuers will be affected by remediation costs, which may
be substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Fund's investments may be adversely affected.
OPTIONS AND FUTURES TRANSACTIONS
The Fund may purchase and sell (write) call and put options on portfolio
securities which are denominated in either U.S. dollars or foreign currencies
and on the U.S. dollar and foreign currencies, which are or may in the future be
listed on several U.S. and foreign securities exchanges or are written in
over-the-counter transactions ("OTC options"). OTC options are purchased from or
sold (written) to dealers or financial institutions which have entered into
direct agreements with the Fund.
The Fund is permitted to write covered call options on portfolio securities
and the U.S. dollar and foreign currencies, without limit, in order to hedge
against the decline in the value of a security or currency in which such
security is denominated (although such hedge is limited to the value of the
premium received), to close out long call option positions and to generate
income. The Fund may write covered put options, under which the Fund incurs an
obligation to buy the security (or currency) underlying the option from the
purchaser of the put at the option's exercise price at any time during the
option period, at the purchaser's election.
The Fund may purchase listed and OTC call and put options in amounts
equalling up to 5% of its total assets. The Fund may purchase call options to
close out a covered call position or to protect against an increase in the price
of a security it anticipates purchasing or, in the case of call options on a
foreign currency, to hedge against an adverse exchange rate change of the
currency in which the security it anticipates purchasing is denominated
vis-a-vis the currency in which the exercise price is denominated. The Fund may
purchase put options on securities which it holds in its portfolio only to
protect itself against a decline in the value of the security. The Fund may also
purchase put options to close out written put positions in a manner similar to
call option closing purchase transactions. There are no other limits on the
Fund's ability to purchase call and put options.
The Fund may purchase and sell futures contracts that are currently traded,
or may in the future be traded, on U.S. and foreign commodity exchanges on
underlying portfolio securities, on any currency ("currency" futures), on U.S.
and foreign fixed-income securities ("interest rate" futures) and on such
indexes of U.S. or foreign equity or fixed-income securities as may exist or
come into being ("index" futures). The Fund may purchase or sell interest rate
futures contracts for the purpose of hedging some or all of the value of its
portfolio securities (or anticipated portfolio securities) against changes in
prevailing interest rates. The Fund may purchase or sell index futures contracts
for the purpose of hedging some or all of its portfolio securities (or
anticipated portfolio securities) against changes in their prices (or the
currency in which they are denominated). As a futures contract purchaser, the
Fund incurs an obligation to take delivery of a specified amount of the
obligation underlying the contract at a specified time in the future for a
specified price. As a seller of a futures contract, the Fund incurs an
obligation to deliver the specified amount of the underlying obligation at a
specified time in return for an agreed upon price.
The Fund also may purchase and write call and put options on futures
contracts which are traded on an exchange and enter into closing transactions
16
<PAGE>
with respect to such options to terminate an existing position.
New futures contracts, options and other financial products and various
combinations thereof continue to be developed. The Fund may invest in any such
futures, options or products as may be developed, to the extent consistent with
its investment objective and applicable regulatory requirements.
RISKS OF OPTIONS AND FUTURES TRANSACTIONS. The Fund may close out its
position as writer of an option, or as a buyer or seller of a futures contract,
only if a liquid secondary market exists for options or futures contracts of
that series. There is no assurance that such a market will exist, particularly
in the case of OTC options, as such options may generally only be closed out by
entering into a closing purchase transaction with the purchasing dealer. Also,
exchanges may limit the amount by which the price of many futures contracts may
move on any day. If the price moves equal the daily limit on successive days,
then it may prove impossible to liquidate a futures position until the daily
limit moves have ceased.
Futures contracts and options transactions may be considered speculative in
nature and may involve greater risks than those customarily assumed by other
investment companies which do not invest in such instruments. One such risk is
that the Investment Manager could be incorrect in its expectations as to the
direction or extent of various interest rate or price movements or the time span
within which the movements take place. For example, if the Fund sold futures
contracts for the sale of securities in anticipation of an increase in interest
rates, and then interest rates went down instead, causing bond prices to rise,
the Fund would lose money on the sale. Another risk which will arise in
employing futures contracts to protect against the price volatility of portfolio
securities is that the prices of securities, currencies and indexes subject to
futures contracts (and thereby the futures contract prices) may correlate
imperfectly with the behavior of the U.S. dollar cash prices of the Fund's
portfolio securities and their denominated currencies. See the Statement of
Additional Information for a further discussion of risks.
PORTFOLIO MANAGEMENT
The Fund's portfolio is actively managed by its Investment Manager with a
view to achieving the Fund's investment objective. In determining which
securities to purchase for the Fund or hold in the Fund's portfolio, the
Investment Manager will rely on information from various sources, including
research, analysis and appraisals of brokers and dealers, including Dean Witter
Reynolds Inc., Morgan Stanley & Co. Incorporated and other broker-dealers that
are affiliates of the Investment Manager, and others regarding economic
developments and interest rate trends, and the Investment Manager's own analysis
of factors it deems relevant. The Fund's portfolio is managed within MSDW
Advisors' Income and Growth Group, which manages twenty-six funds and fund
portfolios with approximately $36 billion in assets as of May 31, 1998. Edward
F. Gaylor, Senior Vice President of MSDW Advisors and a member of MSDW Advisors'
Income and Growth Group, has been the primary portfolio manager of the Fund
since its inception. Mr. Gaylor has been managing portfolios comprised of equity
and fixed-income securities at MSDW Advisors for over five years.
Although the Fund does not engage in substantial short-term trading as a
means of achieving its investment objective, it may sell portfolio securities
without regard to the length of time they have been held, in accordance with the
investment policies described earlier. Pursuant to an order of the Securities
and Exchange Commission, the Fund may effect principal transactions in certain
money market instruments with Dean Witter Reynolds Inc. Orders for transactions
in portfolio securities and commodities are placed for the Fund with a number of
brokers and dealers including Dean Witter Reynolds Inc., Morgan Stanley & Co.
Incorporated and other brokers and dealers that are affiliates of the
17
<PAGE>
Investment Manager. The Fund may incur brokerage commissions on transactions
conducted through such affiliates. Under normal circumstances, it is not
anticipated that the portfolio trading will result in the Fund's portfolio
turnover rate exceeding 100% in any one year.
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
The investment restrictions listed below are among the restrictions which
have been adopted by the Fund as fundamental policies. Under the Investment
Company Act of 1940, as amended (the "Act"), a fundamental policy may not be
changed without the vote of a majority of the outstanding voting securities of
the Fund, as defined in the Act. For purposes of the following limitations: (i)
all percentage limitations apply immediately after a purchase or initial
investment, and (ii) any subsequent change in any applicable percentage
resulting from market fluctuations or other changes in total or net assets does
not require elimination of any security from the portfolio.
The Fund may not:
1. As to 75% of its total 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. Invest 25% or more of the value of its total assets in securities of
issuers in any one industry, with the exception of the utilities industry. This
restriction does not apply to obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities.
3. Invest more than 5% of the value of its total assets in securities of
issuers having a record, together with predecessors, of less than three years of
continuous operation. This restriction shall not apply to any obligation issued
or guaranteed by the United States Government, its agencies
or instrumentalities.
4. As to 75% of its total assets, purchase more than 10% of the voting
securities, or more than 10% of any class of securities, of any issuer.
Notwithstanding any other investment policy or restriction, the Fund may
seek to achieve its investment objectives by investing all or substantially all
of its assets in another investment company having substantially the same
investment objectives and policies as the Fund.
PURCHASE OF FUND SHARES
- --------------------------------------------------------------------------------
GENERAL
The Fund offers each class of its shares for sale to the public on a
continuous basis. Pursuant to a Distribution Agreement between the Fund and
Morgan Stanley Dean Witter Distributors Inc. ("MSDW Distributors" or the
"Distributor"), an affiliate of the Investment Manager, shares of the Fund are
distributed by the Distributor and offered by Dean Witter Reynolds Inc. ("DWR"),
a selected dealer and subsidiary of Morgan Stanley Dean Witter & Co., and other
dealers who have entered into selected dealer agreements with the Distributor
("Selected Broker-Dealers"). It is anticipated that DWR will undergo a change of
corporate name which is expected to incorporate the brand name of "Morgan
Stanley Dean Witter," pending approval of various regulatory authorities. The
principal executive office of the Distributor is located at Two World Trade
Center, New York, New York 10048.
The Fund offers four classes of shares (each, a "Class"). Class A shares are
sold to investors with an initial sales charge that declines to zero for larger
purchases; however, Class A shares sold without an initial sales charge are
subject to a
18
<PAGE>
contingent deferred sales charge ("CDSC") of 1.0% if redeemed within one year of
purchase, except for certain specific circumstances. Class B shares are sold
without an initial sales charge but are subject to a CDSC (scaled down from 5.0%
to 1.0%) payable upon most redemptions within six years after purchase. (Class B
shares purchased by certain qualified plans are subject to a CDSC scaled down
from 2.0% to 1.0% if redeemed within three years after purchase.) Class C shares
are sold without an initial sales charge but are subject to a CDSC of 1.0% on
most redemptions made within one year after purchase. Class D shares are sold
without an initial sales charge or CDSC and are available only to investors
meeting an initial investment minimum of $5 million ($25 million for certain
qualified plans), and to certain other limited categories of investors. At the
discretion of the Board of Trustees of the Fund, Class A shares may be sold to
categories of investors in addition to those set forth in this prospectus at net
asset value without a front-end sales charge, and Class D shares may be sold to
certain other categories of investors, in each case as may be described in the
then current prospectus of the Fund. See "Alternative Purchase Arrangements--
Selecting a Particular Class" for a discussion of factors to consider in
selecting which Class of shares to purchase.
The minimum initial purchase is $1,000 for each Class of shares, although
Class D shares are only available to persons investing $5 million ($25 million
for certain qualified plans) or more and to certain other limited categories of
investors. For the purpose of meeting the minimum $5 million (or $25 million)
initial investment for Class D shares, and subject to the $1,000 minimum initial
investment for each Class of the Fund, an investor's existing holdings of Class
A shares of the Fund and other Morgan Stanley Dean Witter Funds that are
multiple class funds ("Morgan Stanley Dean Witter Multi-Class Funds") and shares
of Morgan Stanley Dean Witter Funds sold with a front-end sales charge ("FSC
Funds") and concurrent investments in Class D shares of the Fund and other
Morgan Stanley Dean Witter Multi-Class Funds will be aggregated. Subsequent
purchases of $100 or more may be made by sending a check, payable to Morgan
Stanley Dean Witter Global Utilities Fund, directly to Morgan Stanley Dean
Witter Trust FSB (the "Transfer Agent" or "MSDW Trust") at P.O. Box 1040, Jersey
City, NJ 07303 or by contacting a Morgan Stanley Dean Witter Financial Advisor
or other Selected Broker-Dealer representative. When purchasing shares of the
Fund, investors must specify whether the purchase is for Class A, Class B, Class
C or Class D shares. If no Class is specified, the Transfer Agent will not
process the transaction until the proper Class is identified.
The minimum initial purchase in the case of investments through
EasyInvest-SM-, an automatic purchase plan (see "Shareholder Services"), is
$100, provided that the schedule of automatic investments will result in
investments totalling $1,000 within the first twelve months. The minimum initial
purchase in the case of an "Education IRA" is $500, if the Distributor has
reason to believe that additional investments will increase the investment in
the account to $1,000 within three years. In the case of purchases pursuant to
(i) Systematic Payroll Deduction Plans (including Individual Retirement Plans),
(ii) the MSDW Advisors mutual fund asset allocation program and (iii) fee-based
programs approved by the Distributor, pursuant to which participants pay an
asset based fee for services in the nature of investment advisory,
administrative and/or brokerage services, the Fund, in its discretion, may
accept such purchases without regard to any minimum amounts which would
otherwise be required, provided, in the case of Systematic Payroll Deduction
Plans, that the Distributor has reason to believe that additional investments
will increase the investment in all accounts under such Plans to at least
$1,000. Certificates for shares purchased will not be issued unless requested by
the shareholder in writing to the Transfer Agent.
Shares of the Fund are sold through the Distributor on a normal three
business day settlement basis; that is, payment is due on the third business
19
<PAGE>
day after the order is placed with the Distributor. Since DWR and other Selected
Broker-Dealers forward investors' funds on settlement date, they will benefit
from the temporary use of the funds if payment is made prior thereto. As noted
above, orders placed directly with the Transfer Agent must be accompanied by
payment. Investors will be entitled to receive income dividends and capital
gains distributions if their order is received by the close of business on the
day prior to the record date for such dividends and distributions. Sales
personnel of a Selected Broker-Dealer are compensated for selling shares of the
Fund at the time of their sale by the Distributor or any of its affiliates
and/or the Selected Broker-Dealer. In addition, some sales personnel of the
Selected Broker-Dealer will receive non-cash compensation as special sales
incentives, including trips, educational and/or business seminars and
merchandise. The Fund and the Distributor reserve the right to reject any
purchase orders.
ALTERNATIVE PURCHASE ARRANGEMENTS
The Fund offers several Classes of shares to investors designed to provide
them with the flexibility of selecting an investment best suited to their needs.
The general public is offered three Classes of shares: Class A shares, Class B
shares and Class C shares, which differ principally in terms of sales charges
and rate of expenses to which they are subject. A fourth Class of shares, Class
D shares, is offered only to limited categories of investors (see "No Load
Alternative--Class D Shares" below).
Each Class A, Class B, Class C or Class D share of the Fund represents an
identical interest in the investment portfolio of the Fund except that Class A,
Class B and Class C shares bear the expenses of the ongoing shareholder service
fees, Class B and Class C shares bear the expenses of the ongoing distribution
fees and Class A, Class B and Class C shares which are redeemed subject to a
CDSC bear the expense of the additional incremental distribution costs resulting
from the CDSC applicable to shares of those Classes. The ongoing distribution
fees that are imposed on Class A, Class B and Class C shares will be imposed
directly against those Classes and not against all assets of the Fund and,
accordingly, such charges against one Class will not affect the net asset value
of any other Class or have any impact on investors choosing another sales charge
option. See "Plan of Distribution" and "Redemptions and Repurchases."
Set forth below is a summary of the differences between the Classes and the
factors an investor should consider when selecting a particular Class. This
summary is qualified in its entirety by detailed discussion of each Class that
follows this summary.
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 certain
purchases. Investments of $1 million or more (and investments by certain other
limited categories of investors) are not subject to any sales charges at the
time of purchase but are subject to a CDSC of 1.0% on redemptions made within
one year after purchase, except for certain specific circumstances. Class A
shares are also subject to a 12b-1 fee of up to 0.25% of the average daily net
assets of the Class. See "Initial Sales Charge Alternative--Class A Shares."
CLASS B SHARES. Class B shares are offered at net asset value with no
initial sales charge but are subject to a CDSC (scaled down from 5.0% to 1.0%)
if redeemed within six years of purchase. (Class B shares purchased by certain
qualified plans are subject to a CDSC scaled down from 2.0% to 1.0% if redeemed
within three years after purchase.) This CDSC may be waived for certain
redemptions. Class B shares are also subject to an annual 12b-1 fee of 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 reinvestments 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 CDSC has been imposed or waived, or (b) the average daily net assets of
Class B. The Class B shares' distribution
20
<PAGE>
fee will cause that Class to have higher expenses and pay lower dividends than
Class A or Class D shares.
After approximately ten (10) years, Class B shares will convert
automatically to Class A shares of the Fund, based on the relative net asset
values of the shares of the two Classes on the conversion date. In addition, a
certain portion of Class B shares that have been acquired through the
reinvestment of dividends and distributions will be converted at that time. See
"Contingent Deferred Sales Charge Alternative--Class B Shares."
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 redemptions made within one
year after purchase. This CDSC may be waived for certain redemptions. They are
subject to an annual 12b-1 fee of up to 1.0% of the average daily net assets of
the Class C shares. 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. See
"Level Load Alternative--Class C Shares."
CLASS D SHARES. Class D shares are available only to limited categories of
investors (see "No Load Alternative--Class D Shares" below). Class D shares are
sold at net asset value with no initial sales charge or CDSC. They are not
subject to any 12b-1 fees. See "No Load Alternative--Class D Shares."
SELECTING A PARTICULAR CLASS. In deciding which Class of Fund shares to
purchase, investors should consider the following factors, as well as any other
relevant facts and circumstances:
The decision as to which Class of shares is more beneficial to an investor
depends on the amount and intended length of his or her investment. Investors
who prefer an initial sales charge alternative may elect to purchase Class A
shares. Investors qualifying for significantly reduced or, in the case of
purchases of $1 million or more, no initial sales charges may find Class A
shares particularly attractive because similar sales charge reductions are not
available with respect to Class B or Class C shares. Moreover, Class A shares
are subject to lower ongoing expenses than are Class B or Class C shares over
the term of the investment. As an alternative, Class B and Class C shares are
sold without any initial sales charge so the entire purchase price is
immediately invested in the Fund. Any investment return on these additional
investment amounts may partially or wholly offset the higher annual expenses of
these Classes. Because the Fund's future return cannot be predicted, however,
there can be no assurance that this would be the case.
Finally, investors should consider the effect of the CDSC period and any
conversion rights of the Classes in the context of their own investment time
frame. For example, although Class C shares are subject to a significantly lower
CDSC upon redemptions, they do not, unlike Class B shares, convert into Class A
shares after approximately ten years, and, therefore, are subject to an ongoing
12b-1 fee of 1.0% (rather than the 0.25% fee applicable to Class A shares) for
an indefinite period of time. Thus, Class B shares may be more attractive than
Class C shares to investors with longer term investment outlooks. Other
investors, however, may elect to purchase Class C shares if, for example, they
determine that they do not wish to be subject to a front-end sales charge and
they are uncertain as to the length of time they intend to hold their shares.
For the purpose of meeting the $5 million (or $25 million) minimum
investment amount for Class D shares, holdings of Class A shares in all Morgan
Stanley Dean Witter Multi-Class Funds, shares of FSC Funds and shares of Morgan
Stanley Dean Witter Funds for which such shares have been exchanged will be
included together with the current investment amount.
Sales personnel may receive different compensation for selling each Class of
shares. Investors should understand that the purpose of a CDSC is the same as
that of the initial sales charge in that the sales charges applicable to each
Class provide for the financing of the distribution of shares of that Class.
21
<PAGE>
Set forth below is a chart comparing the sales charge, 12b-1 fees and
conversion options applicable to each Class of shares:
<TABLE>
<CAPTION>
- -----------------------------------------------------------
CONVERSION
CLASS SALES CHARGE 12b-1 FEE FEATURE
<C> <S> <C> <C>
- -----------------------------------------------------------
A Maximum 5.25% 0.25% No
initial sales
charge reduced for
purchases of
$25,000 and over;
shares sold
without an initial
sales charge
generally subject
to a 1.0% CDSC
during first year.
- -----------------------------------------------------------
B Maximum 5.0% CDSC 1.0% B shares convert
during the first to A shares
year decreasing to automatically
0 after six years after
approximately
ten years
- -----------------------------------------------------------
C 1.0% CDSC during 1.0% No
first year
- -----------------------------------------------------------
D None None No
</TABLE>
See "Purchase of Fund Shares" and "The Fund and its Management" for a
complete description of the sales charges and service and distribution fees for
each Class of shares and "Determination of Net Asset Value," "Dividends,
Distributions and Taxes" and "Shareholder Services--Exchange Privilege" for
other differences between the Classes of shares.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
Class A shares are sold at net asset value plus an initial sales charge. In
some cases, reduced sales charges may be available, as described below.
Investments of $1 million or more (and investments by certain other limited
categories of investors) are not subject to any sales charges at the time of
purchase but are subject to a CDSC of 1.0% on redemptions made within one year
after purchase (calculated from the last day of the month in which the shares
were purchased), except for certain specific circumstances. The CDSC will be
assessed on an amount equal to the lesser of the current market value or the
cost of the shares being redeemed. The CDSC will not be imposed (i) in the
circumstances set forth below in the section "Contingent Deferred Sales Charge
Alternative--Class B Shares--CDSC Waivers," except that the references to six
years in the first paragraph of that section shall mean one year in the case of
Class A shares, and (ii) in the circumstances identified in the section
"Additional Net Asset Value Purchase Options" below. Class A shares are also
subject to an annual 12b-1 fee of up to 0.25% of the average daily net assets of
the Class.
The offering price of Class A shares will be the net asset value per share
next determined following receipt of an order (see "Determination of Net Asset
Value" below), plus a sales charge (expressed as a percentage of the offering
price) on a single transaction as shown in the following table:
<TABLE>
<CAPTION>
SALES CHARGE
------------------------------------------
PERCENTAGE OF APPROXIMATE
AMOUNT OF PUBLIC OFFERING PERCENTAGE OF AMOUNT
SINGLE TRANSACTION PRICE 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>
Upon notice to all Selected Broker-Dealers, the Distributor may reallow up
to the full applicable sales charge as shown in the above schedule 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 of 1933.
The above schedule of sales charges is applicable to purchases in a single
transaction by, among others: (a) an individual; (b) an individual, his or her
spouse and their children under the age of
22
<PAGE>
21 purchasing shares for his, her or their own accounts; (c) a trustee or other
fiduciary purchasing shares for a single trust estate or a single fiduciary
account; (d) a pension, profit-sharing or other employee benefit plan qualified
or non-qualified under Section 401 of the Internal Revenue Code; (e) tax-exempt
organizations enumerated in Section 501(c)(3) or (13) of the Internal Revenue
Code; (f) employee benefit plans qualified under Section 401 of the Internal
Revenue Code of a single employer or of employers who are "affiliated persons"
of each other within the meaning of Section 2(a)(3)(c) of the Act; and for
investments in Individual Retirement Accounts of employees of a single employer
through Systematic Payroll Deduction plans; or (g) any other organized group of
persons, whether incorporated or not, provided the organization has been in
existence for at least six months and has some purpose other than the purchase
of redeemable securities of a registered investment company at a discount.
COMBINED PURCHASE PRIVILEGE. Investors may have the benefit of reduced
sales charges in accordance with the above schedule by combining purchases of
Class A shares of the Fund in single transactions with the purchase of Class A
shares of other Morgan Stanley Dean Witter Multi-Class Funds and shares of FSC
Funds. The sales charge payable on the purchase of the Class A shares of the
Fund, the Class A shares of the other Morgan Stanley Dean Witter Multi-Class
Funds and the shares of the FSC Funds will be at their respective rates
applicable to the total amount of the combined concurrent purchases of such
shares.
RIGHT OF ACCUMULATION. The above persons and entities may benefit from a
reduction of the sales charges in accordance with the above schedule if the
cumulative net asset value of Class A shares purchased in a single transaction,
together with shares of the Fund and other Morgan Stanley Dean Witter Funds
previously purchased at a price including a front-end sales charge (including
shares of the Fund and other Morgan Stanley Dean Witter Funds acquired in
exchange for those shares, and including in each case shares acquired through
reinvestment of dividends and distributions), which are held at the time of such
transaction, amounts to $25,000 or more. If such investor has a cumulative net
asset value of shares of FSC Funds and Class A and Class D shares that, together
with the current investment amount, is equal to at least $5 million ($25 million
for certain qualified plans), such investor is eligible to purchase Class D
shares subject to the $1,000 minimum initial investment requirement of that
Class of the Fund. See "No Load Alternative--Class D Shares" below.
The Distributor must be notified by DWR or a Selected Broker-Dealer or the
shareholder 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 by the dealer or shareholder when such an order is
placed by mail. The reduced sales charge will not be granted if: (a) such
notification is not furnished at the time of the order; or (b) a review of the
records of the Selected Broker-Dealer or the Transfer Agent fails to confirm the
investor's represented holdings.
LETTER OF INTENT. The foregoing schedule of reduced sales charges will also
be available to investors who enter into a written Letter of Intent providing
for the purchase, within a thirteen-month period, of Class A shares of the Fund
from DWR or other Selected Broker-Dealers. The cost of Class A shares of the
Fund or shares of other Morgan Stanley Dean Witter Funds which were previously
purchased at a price including a front-end sales charge during the 90-day period
prior to the date of receipt by the Distributor of the Letter of Intent, or of
Class A shares of the Fund or shares of other Morgan Stanley Dean Witter Funds
acquired in exchange for shares of such funds purchased during such period at a
price including a front-end sales charge, which are still owned by the
shareholder, may also be included in determining the applicable reduction.
ADDITIONAL NET ASSET VALUE PURCHASE OPTIONS. In addition to investments of
$1 million or more,
23
<PAGE>
Class A shares also may be purchased at net asset value by the following:
(1) trusts for which MSDW Trust (an affiliate of the Investment Manager)
provides discretionary trustee services;
(2) persons participating in a fee-based program approved by the
Distributor, pursuant to which such persons pay an asset based fee for services
in the nature of investment advisory, administrative and/or brokerage services
(such investments are subject to all of the terms and conditions of such
programs, which may include termination fees, mandatory redemption upon
termination and such other circumstances as specified in the programs'
agreements, and restrictions on transferability of Fund shares);
(3) employer-sponsored 401(k) and other plans qualified under Section 401(a)
of the Internal Revenue Code ("Qualified Retirement Plans") with at least 200
eligible employees and for which MSDW Trust serves as Trustee or DWR's
Retirement Plan Services serves as recordkeeper pursuant to a written
Recordkeeping Services Agreement;
(4) Qualified Retirement Plans for which MSDW Trust serves as Trustee or
DWR's Retirement Plan Services serves as recordkeeper pursuant to a written
Recordkeeping Services Agreement whose Class B shares have converted to Class A
shares, regardless of the plan's asset size or number of eligible employees;
(5) investors who are clients of a Morgan Stanley Dean Witter Financial
Advisor who joined Morgan Stanley Dean Witter from another investment firm
within six months prior to the date of purchase of Fund shares by such
investors, if the shares are being purchased with the proceeds from a redemption
of shares of an open-end proprietary mutual fund of the Financial Advisor's
previous firm which imposed either a front-end or deferred sales charge,
provided such purchase was made within sixty days after the redemption and the
proceeds of the redemption had been maintained in the interim in cash or a money
market fund; and
(6) other categories of investors, at the discretion of the Board, as
disclosed in the then current prospectus of the Fund.
No CDSC will be imposed on redemptions of shares purchased pursuant to
paragraphs (1), (2) or (5), above.
For further information concerning purchases of the Fund's shares, contact
DWR or another Selected Broker-Dealer or consult the Statement of Additional
Information.
CONTINGENT DEFERRED SALES CHARGE
ALTERNATIVE--CLASS B SHARES
Class B shares are sold at net asset value next determined without an
initial sales charge so that the full amount of an investor's purchase payment
may be immediately invested in the Fund. A CDSC, however, will be imposed on
most Class B shares redeemed within six years after purchase. The CDSC will be
imposed on any redemption of shares if after such redemption the aggregate
current value of a Class B account with the Fund falls below the aggregate
amount of the investor's purchase payments for Class B shares made during the
six years (or, in the case of shares held by certain Qualified Retirement Plans,
three years) preceding the redemption. In addition, Class B shares are subject
to an annual 12b-1 fee of 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 reinvestments 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 CDSC has been imposed or waived, or (b)
the average daily net assets of Class B.
Except as noted below, Class B shares of the Fund which are held for six
years or more after purchase (calculated from the last day of the month in which
the shares were purchased) will not be subject to any CDSC upon redemption.
Shares
24
<PAGE>
redeemed earlier than six years after purchase may, however, be subject to a
CDSC which will be a percentage of the dollar amount of shares redeemed and will
be assessed on an amount equal to the lesser of the current market value or the
cost of the shares being redeemed. The size of this percentage will depend upon
how long the shares have been held, as set forth in the following table:
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE CDSC AS A PERCENTAGE
PAYMENT MADE OF AMOUNT REDEEMED
- -------------------------------------- ---------------------
<S> <C>
First................................. 5.0%
Second................................ 4.0%
Third................................. 3.0%
Fourth................................ 2.0%
Fifth................................. 2.0%
Sixth................................. 1.0%
Seventh and thereafter................ None
</TABLE>
In the case of Class B shares of the Fund purchased on or after July 28,
1997 by Qualified Retirement Plans for which MSDW Trust serves as Trustee or
DWR's Retirement Plan Services serves as recordkeeper pursuant to a written
Recordkeeping Services Agreement, shares held for three years or more after
purchase (calculated as described in the paragraph above) will not be subject to
any CDSC upon redemption. However, shares redeemed earlier than three years
after purchase may be subject to a CDSC (calculated as described in the
paragraph above), the percentage of which will depend on how long the shares
have been held, as set forth in the following table:
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE CDSC AS A PERCENTAGE
PAYMENT MADE OF AMOUNT REDEEMED
- -------------------------------------- ---------------------
<S> <C>
First................................. 2.0%
Second................................ 2.0%
Third................................. 1.0%
Fourth and thereafter................. None
</TABLE>
CDSC WAIVERS. A CDSC will not be imposed on: (i) any amount which
represents an increase in value of shares purchased within the six years (or, in
the case of shares held by certain Qualified Retirement Plans, three years)
preceding the redemption; (ii) the current net asset value of shares purchased
more than six years (or, in the case of shares held by certain Qualified
Retirement Plans, three years) prior to the redemption; and (iii) the current
net asset value of shares purchased through reinvestment of dividends or
distributions and/or shares acquired in exchange for shares of FSC Funds or of
other Morgan Stanley Dean Witter Funds acquired in exchange for such shares.
Moreover, in determining whether a CDSC is applicable it will be assumed that
amounts described in (i), (ii) and (iii) above (in that order) are redeemed
first.
In addition, the CDSC, if otherwise applicable, will be waived in the case
of:
(1) redemptions of shares held at the time a shareholder dies or becomes
disabled, only if the shares are: (a) registered either in the name of an
individual shareholder (not a trust), or in the names of such shareholder and
his or her spouse as joint tenants with right of survivorship; or (b) held in a
qualified corporate or self-employed retirement plan, Individual Retirement
Account ("IRA") or Custodial Account under Section 403(b)(7) of the Internal
Revenue Code ("403(b) Custodial Account"), provided in either case that the
redemption is requested within one year of the death or initial determination of
disability;
(2) redemptions in connection with the following retirement plan
distributions: (a) lump-sum or other distributions from a qualified corporate
or self-employed retirement plan following retirement (or, in the case of a "key
employee" of a "top heavy" plan, following attainment of age 59 1/2); (b)
distributions from an IRA or 403(b) Custodial Account following attainment of
age 59 1/2; or (c) a tax-free return of an excess contribution to an IRA; and
(3) all redemptions of shares held for the benefit of a participant in a
Qualified Retirement Plan which offers investment companies managed by the
Investment Manager or its subsidiary, MSDW Services, as self-directed investment
alternatives and for which MSDW Trust serves as Trustee or
25
<PAGE>
DWR's Retirement Plan Services serves as recordkeeper pursuant to a written
Recordkeeping Services Agreement ("Eligible Plan"), provided that either: (a)
the plan continues to be an Eligible Plan after the redemption; or (b) the
redemption is in connection with the complete termination of the plan involving
the distribution of all plan assets to participants.
With reference to (1) above, for the purpose of determining disability, the
Distributor utilizes the definition of disability contained in Section 72(m)(7)
of the Internal Revenue Code, which relates to the inability to engage in
gainful employment. With reference to (2) above, the term "distribution" does
not encompass a direct transfer of IRA, 403(b) Custodial Account or retirement
plan assets to a successor custodian or trustee. All waivers will be granted
only following receipt by the Distributor of confirmation of the shareholder's
entitlement.
CONVERSION TO CLASS A SHARES. All shares of the Fund held prior to July 28,
1997 have been designated Class B shares. Shares held before May 1, 1997 will
convert to Class A shares in May, 2007. In all other instances Class B shares
will convert automatically to Class A shares, based on the relative net asset
values of the shares of the two Classes on the conversion date, which will be
approximately ten (10) years after the date of the original purchase. The ten
year period is calculated 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 or
a series of exchanges, from the last day of the month in which the original
Class B shares were purchased, provided that shares originally purchased before
May 1, 1997 will convert to Class A shares in May, 2007. The conversion of
shares purchased on or after May 1, 1997 will take place in the month following
the tenth anniversary of the purchase. There will also be converted at that time
such proportion of Class B shares acquired through automatic reinvestment of
dividends and distributions owned by the shareholder as the total number of his
or her Class B shares converting at the time bears to the total number of
outstanding Class B shares purchased and owned by the shareholder. In the case
of Class B shares held by a Qualified Retirement Plan for which MSDW Trust
serves as Trustee or DWR's Retirement Plan Services serves as recordkeeper
pursuant to a written Recordkeeping Services Agreement, 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 first shares of a Morgan Stanley Dean Witter Multi-Class
Fund purchased by that plan. In the case of Class B shares previously exchanged
for shares of an "Exchange Fund" (see "Shareholder Services-- Exchange
Privilege"), the period of time the shares were held in the Exchange Fund
(calculated from the last day of the month in which the Exchange Fund shares
were acquired) is excluded from the holding period for conversion. If those
shares are subsequently re-exchanged for Class B shares of a Morgan Stanley Dean
Witter Multi-Class Fund, the holding period resumes on the last day of the month
in which Class B shares are reacquired.
If a shareholder has received share certificates for Class B shares, such
certificates must be delivered to the Transfer Agent at least one week prior to
the date for conversion. Class B shares evidenced by share certificates that are
not received by the Transfer Agent at least one week prior to any conversion
date will be converted into Class A shares on the next scheduled conversion date
after such certificates are received.
Effectiveness of the conversion feature is subject to the continuing
availability of a ruling of the Internal Revenue Service or an opinion of
counsel that (i) the conversion of shares does not constitute a taxable event
under the Internal Revenue Code, (ii) Class A shares received on conversion will
have a basis equal to the shareholder's basis in the converted Class B shares
immediately prior to the conversion, and (iii) Class A shares received on
conversion will have a holding period that includes the holding period of the
converted Class B shares. The conversion feature may be suspended if the ruling
or opinion is no longer available. In such event,
26
<PAGE>
Class B shares would continue to be subject to Class B 12b-1 fees.
LEVEL LOAD ALTERNATIVE--CLASS C SHARES
Class C shares are sold at net asset value next determined without an
initial sales charge but are subject to a CDSC of 1.0% on most redemptions made
within one year after purchase (calculated from the last day of the month in
which the shares were purchased). The CDSC will be assessed on an amount equal
to the lesser of the current market value or the cost of the shares being
redeemed. The CDSC will not be imposed in the circumstances set forth above in
the section "Contingent Deferred Sales Charge Alternative--Class B Shares--CDSC
Waivers," except that the references to six years in the first paragraph of that
section shall mean one year in the case of Class C shares. Class C shares are
subject to an annual 12b-1 fee of up to 1.0% of the average daily net assets of
the Class. Unlike Class B shares, Class C shares have no conversion feature and,
accordingly, an investor that purchases Class C shares will be subject to 12b-1
fees applicable to Class C shares for an indefinite period subject to annual
approval by the Fund's Board of Trustees and regulatory limitations.
NO LOAD ALTERNATIVE--CLASS D SHARES
Class D shares are offered without any sales charge on purchase or
redemption and without any 12b-1 fee. Class D shares are offered only to
investors meeting an initial investment minimum of $5 million ($25 million for
Qualified Retirement Plans for which MSDW Trust serves as Trustee or DWR's
Retirement Plan Services serves as recordkeeper pursuant to a written
Recordkeeping Services Agreement) and the following categories of investors: (i)
investors participating in the MSDW Advisors mutual fund asset allocation
program pursuant to which such persons pay an asset based fee; (ii) persons
participating in a fee-based program approved by the Distributor, pursuant to
which such persons pay an asset based fee for services in the nature of
investment advisory, administrative and/or brokerage services (subject to all of
the terms and conditions of such programs referred to in (i) and (ii) above,
which may include termination fees, mandatory redemption upon termination and
such other circumstances as specified in the programs' agreements, and
restrictions on transferability of Fund shares); (iii) 401(k) plans established
by DWR and SPS Transaction Services, Inc. (an affiliate of DWR) for their
employees; (iv) certain Unit Investment Trusts sponsored by DWR; (v) certain
other open-end investment companies whose shares are distributed by the
Distributor; and (vi) other categories of investors, at the discretion of the
Board, as disclosed in the then current prospectus of the Fund. Investors who
require a $5 million (or $25 million) minimum initial investment to qualify to
purchase Class D shares may satisfy that requirement by investing that amount in
a single transaction in Class D shares of the Fund and other Morgan Stanley Dean
Witter Multi-Class Funds, subject to the $1,000 minimum initial investment
required for that Class of the Fund. In addition, for the purpose of meeting the
$5 million (or $25 million) minimum investment amount, holdings of Class A
shares in all Morgan Stanley Dean Witter Multi-Class Funds, shares of FSC Funds
and shares of Morgan Stanley Dean Witter Funds for which such shares have been
exchanged will be included together with the current investment amount. If a
shareholder redeems Class A shares and purchases Class D shares, such redemption
may be a taxable event.
PLAN OF DISTRIBUTION
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the
Act with respect to the distribution of Class A, Class B and Class C shares of
the Fund. In the case of Class A and Class C shares, the Plan provides that the
Fund will reimburse the Distributor and others for the expenses of certain
activities and services incurred by them specifically on behalf of those shares.
Reimbursements for these expenses will be made in monthly payments by the Fund
to the Distributor, which will in no event exceed amounts equal to payments at
the annual rates of 0.25% and 1.0% of the average daily net assets of Class A
and Class C,
27
<PAGE>
respectively. In the case of Class B shares, the Plan provides that the Fund
will pay the Distributor a fee, which is accrued daily and paid monthly, at the
annual rate of 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 reinvestments 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 CDSC has been imposed or waived, or (b)
the average daily net assets of Class B. The fee is treated by the Fund as an
expense in the year it is accrued. In the case of Class A shares, the entire
amount of the fee currently represents a service fee within the meaning of the
NASD guidelines. In the case of Class B and Class C shares, a portion of the fee
payable pursuant to the Plan, equal to 0.25% of the average daily net assets of
each of these Classes, is currently characterized as a service fee. A service
fee is a payment made for personal service and/or the maintenance of shareholder
accounts.
Additional amounts paid under the Plan in the case of Class B and Class C
shares are paid to the Distributor for services provided and the expenses borne
by the Distributor and others in the distribution of the shares of those
Classes, including the payment of commissions for sales of the shares of those
Classes and incentive compensation to and expenses of Morgan Stanley Dean Witter
Financial Advisors and others who engage in or support distribution of shares or
who service shareholder accounts, including overhead and telephone expenses;
printing and distribution of prospectuses and reports used in connection with
the offering of the Fund's shares to other than current shareholders; and
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may utilize fees paid pursuant to the
Plan in the case of Class B shares to compensate DWR and other Selected
Broker-Dealers for their opportunity costs in advancing such amounts, which
compensation would be in the form of a carrying charge on any unreimbursed
expenses.
For the fiscal year ended February 28, 1998, Class B shares of the Fund
accrued payments under the Plan amounting to $3,262,820, which amount is equal
to 0.90% of the average daily net assets of Class B for the fiscal year. These
payments were calculated pursuant to clause (a) of the compensation formula
under the Plan. All shares held prior to July 28, 1997 have been designated
Class B shares. For the fiscal period July 28, 1997 through February 28, 1998,
Class A and Class C shares of the Fund accrued payments under the Plan amounting
to $892 and $606, respectively, which amounts on an annualized basis are equal
to 0.24% and 1.00% of the average daily net assets of Class A and Class C,
respectively, for such period.
In the case of Class B shares, at any given time, the expenses in
distributing Class B shares of the Fund may be in excess of the total of (i) the
payments made by the Fund pursuant to the Plan, and (ii) the proceeds of CDSCs
paid by investors upon the redemption of Class B 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 such
excess amounts, including the carrying charge described above, totalled
$10,016,830 at February 28, 1998, which was equal to 2.53% 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 or any requirement that
the Plan be continued from year to year, such 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.
28
<PAGE>
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 Selected Broker-Dealer representatives at the time of sale may be
reimbursed in the subsequent calendar year. The Distributor has advised the Fund
that there were no such expenses which may be reimbursed in the subsequent year
in the case of Class A and Class C at December 31, 1997. 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.
DETERMINATION OF NET ASSET VALUE
The net asset value per share is determined once daily at 4:00 p.m., New
York time (or, on days when the New York Stock Exchange closes prior to 4:00
p.m., at such earlier time), on each day that the New York Stock Exchange is
open by taking the net assets of the Fund, dividing by the number of shares
outstanding and adjusting to the nearest cent. The assets belonging to the Class
A, Class B, Class C and Class D shares will be invested together in a single
portfolio. The net asset value of each Class, however, will be determined
separately by subtracting each Class's accrued expenses and liabilities. The net
asset value per share will not be determined on Good Friday and on such other
federal and non-federal holidays as are observed by the New York Stock Exchange.
In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
domestic or foreign stock exchange is valued at its latest sale price on that
exchange; 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 that sale
and bid prices are not reflective of a security's market value, portfolio
securities are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Board of
Trustees.
Generally, trading in foreign securities, as well as corporate bonds, United
States 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 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 some Trustees.
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
29
<PAGE>
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.
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. All income dividends
and capital gains distributions are automatically paid in full and fractional
shares of the applicable Class of the Fund (or, if specified by the shareholder,
in shares of any other open-end Morgan Stanley Dean Witter Fund), unless the
shareholder requests that they be paid in cash. Shares so acquired are acquired
at net asset value and are not subject to the imposition of a front-end sales
charge or a CDSC (see "Redemptions and Repurchases").
INVESTMENT OF DIVIDENDS AND DISTRIBUTIONS RECEIVED IN CASH. Any shareholder
who receives a cash payment representing a dividend or capital gains
distribution may invest such dividend or distribution in shares of the
applicable Class at the net asset value per share next determined after receipt
by the Transfer Agent, by returning the check or the proceeds to the Transfer
Agent within thirty days after the payment date. Shares so acquired are acquired
at net asset value and are not subject to the imposition of a front-end sales
charge or a CDSC (see "Redemptions and Repurchases").
EASYINVEST.-SM- Shareholders may subscribe to EasyInvest, an automatic
purchase plan which provides for any amount from $100 to $5,000 to be
transferred automatically from a checking or savings account, or following
redemption of shares of a Morgan Stanley Dean Witter money market fund, on a
semi-monthly, monthly or quarterly basis, to the Transfer Agent for investment
in shares of the Fund (see "Purchase of Fund Shares" and "Redemptions and
Repurchases--Involuntary Redemption").
SYSTEMATIC WITHDRAWAL PLAN. A systematic withdrawal plan (the "Withdrawal
Plan") is available for shareholders who own or purchase shares of the Fund
having a minimum value of $10,000 based upon the then current net asset value.
The Withdrawal Plan provides for monthly or quarterly (March, June, September
and December) checks in any dollar amount, not less than $25, or in any whole
percentage of the account balance, on an annualized basis. Any applicable CDSC
will be imposed on shares redeemed under the Withdrawal Plan (see "Purchase of
Fund Shares"). Therefore, any shareholder participating in the Withdrawal Plan
will have sufficient shares redeemed from his or her account so that the
proceeds (net of any applicable CDSC) to the shareholder will be the designated
monthly or quarterly amount. Withdrawal plan payments should not be considered
as dividends, yields or income. If periodic withdrawal plan payments
continuously exceed net investment income and net capital gains, the
shareholder's original investment will be correspondingly reduced and ultimately
exhausted. Each withdrawal constitutes a redemption of shares and any gain or
loss realized must be recognized for federal income tax purposes.
Shareholders should contact their Morgan Stanley Dean Witter Financial
Advisor or other Selected Broker-Dealer representative or the Transfer Agent for
further information about any of the above services.
TAX-SHELTERED RETIREMENT PLANS. Retirement plans are available for use by
corporations, the self-employed, Individual Retirement Accounts and Custodial
Accounts under Section 403(b)(7) of the Internal Revenue Code. Adoption of such
plans should be on advice of legal counsel or tax adviser.
For further information regarding Plan Administration, custody fees and
other details, investors should contact their Morgan Stanley Dean Witter
30
<PAGE>
Financial Advisor or other Selected Broker-Dealer representative or the Transfer
Agent.
EXCHANGE PRIVILEGE
Shares of each Class may be exchanged for shares of the same Class of any
other Morgan Stanley Dean Witter Multi-Class Fund without the imposition of any
exchange fee. Shares may also be exchanged for shares of the following funds:
Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust, Morgan Stanley Dean
Witter Limited Term Municipal Trust, Morgan Stanley Dean Witter Short-Term Bond
Fund, Morgan Stanley Dean Witter Intermediate Term U.S. Treasury Trust and five
Morgan Stanley Dean Witter funds which are money market funds (the "Exchange
Funds"). Class A shares may also be exchanged for shares of Morgan Stanley Dean
Witter Multi-State Municipal Series Trust and Morgan Stanley Dean Witter Hawaii
Municipal Trust, which are Morgan Stanley Dean Witter Funds sold with a
front-end sales charge ("FSC Funds"). Class B shares may also be exchanged for
shares of Morgan Stanley Dean Witter Global Short-Term Income Fund Inc. ("Global
Short-Term"), which is a Morgan Stanley Dean Witter Fund offered with a CDSC.
Exchanges may be made after the shares of the Fund acquired by purchase (not by
exchange or dividend reinvestment) have been held for thirty days. There is no
waiting period for exchanges of shares acquired by exchange or dividend
reinvestment.
An exchange to another Morgan Stanley Dean Witter Multi-Class Fund, any FSC
Fund, Global Short-Term or any Exchange Fund that is not a money market fund is
on the basis of the next calculated net asset value per share of each fund after
the exchange order is received. When exchanging into a money market fund from
the Fund, shares of the Fund are redeemed out of the Fund at their next
calculated net asset value and the proceeds of the redemption are used to
purchase shares of the money market fund at their net asset value determined the
following business day. Subsequent exchanges between any of the money market
funds and any of the Morgan Stanley Dean Witter Multi-Class Funds, FSC Funds,
Global Short-Term or any Exchange Fund that is not a money market fund can be
effected on the same basis.
No CDSC is imposed at the time of any exchange of shares, although any
applicable CDSC will be imposed upon ultimate redemption. During the period of
time the shareholder remains in an Exchange Fund (calculated from the last day
of the month in which the Exchange Fund shares were acquired), the holding
period (for the purpose of determining the rate of the CDSC) is frozen. If those
shares are subsequently re-exchanged for shares of a Morgan Stanley Dean Witter
Multi-Class Fund or shares of Global Short-Term, the holding period previously
frozen when the first exchange was made resumes on the last day of the month in
which shares of a Morgan Stanley Dean Witter Multi-Class Fund or shares of
Global Short-Term are reacquired. Thus, the CDSC is based upon the time
(calculated as described above) the shareholder was invested in shares of a
Morgan Stanley Dean Witter Multi-Class Fund or in shares of Global Short-Term
(see "Purchase of Fund Shares"). In the case of exchanges of Class A shares
which are subject to a CDSC, the holding period also includes the time
(calculated as described above) the shareholder was invested in shares of a FSC
Fund. In the case of shares exchanged into an Exchange Fund on or after April
23, 1990, upon a redemption of shares which results in a CDSC being imposed, a
credit (not to exceed the amount of the CDSC) will be given in an amount equal
to the Exchange Fund 12b-1 distribution fees incurred on or after that date
which are attributable to those shares. (Exchange Fund 12b-1 distribution fees
are described in the prospectuses for those funds.) Class B shares of the Fund
acquired in exchange for Class B shares of another Morgan Stanley Dean Witter
Multi-Class Fund or shares of Global Short-Term having a different CDSC schedule
than that of this Fund will be subject to the higher CDSC schedule, even if such
shares are subsequently re-exchanged for shares of the fund with the lower CDSC
schedule.
31
<PAGE>
ADDITIONAL INFORMATION REGARDING EXCHANGES. Purchases and exchanges should
be made for investment purposes only. A pattern of frequent exchanges may be
deemed by the Investment Manager to be abusive and contrary to the best
interests of the Fund's other shareholders and, at the Investment Manager's
discretion, may be limited by the Fund's refusal to accept additional purchases
and/ or exchanges from the investor. Although the Fund does not have any
specific definition of what constitutes a pattern of frequent exchanges, and
will consider all relevant factors in determining whether a particular situation
is abusive and contrary to the best interests of the Fund and its other
shareholders, investors should be aware that the Fund and each of the other
Morgan Stanley Dean Witter Funds may in their discretion limit or otherwise
restrict the number of times this Exchange Privilege may be exercised by any
investor. Any such restriction will be made by the Fund on a prospective basis
only, upon notice of the shareholder not later than ten days following such
shareholder's most recent exchange. Also, the Exchange Privilege may be
terminated or revised at any time by the Fund and/or any of such Morgan Stanley
Dean Witter Funds for which shares of the Fund have been exchanged, upon such
notice as may be required by applicable regulatory agencies. Shareholders
maintaining margin accounts with DWR or another Selected Dealer are referred to
their Morgan Stanley Dean Witter Financial Advisor or other Selected
Broker-Dealer representative regarding restrictions on exchange of shares of the
Fund pledged in the margin account.
The current prospectus for each fund describes its investment objective(s)
and policies, and shareholders should obtain a copy and examine it carefully
before investing. Exchanges are subject to the minimum investment requirement of
each Class of shares and any other conditions imposed by each fund. In the case
of a shareholder holding a share certificate or certificates, no exchanges may
be made until all applicable share certificates have been received by the
Transfer Agent and deposited in the shareholder's account. An exchange will be
treated for federal income tax purposes the same as a repurchase or redemption
of shares, on which the shareholder may realize a capital gain or loss. However,
the ability to deduct capital losses on an exchange may be limited in situations
where there is an exchange of shares within ninety days after the shares are
purchased. The Exchange Privilege is only available in states where an exchange
may legally be made.
If DWR or another Selected Broker-Dealer is the current dealer of record and
its account numbers are part of the account information, shareholders may
initiate an exchange of shares of the Fund for shares of any of the Morgan
Stanley Dean Witter Funds (for which the Exchange Privilege is available)
pursuant to this Exchange Privilege by contacting their Morgan Stanley Dean
Witter Financial Advisor or other Selected Broker-Dealer representative (no
Exchange Privilege Authorization Form is required). Other shareholders (and
those shareholders who are clients of DWR or another Selected Broker-Dealers but
who wish to make exchanges directly by writing or telephoning the Transfer
Agent) must complete and forward to the Transfer Agent an Exchange Privilege
Authorization Form, copies of which may be obtained from the Transfer Agent, to
initiate an exchange. If the Authorization Form is used, exchanges may be made
in writing or by contacting the Transfer Agent at (800) 869-NEWS (toll-free).
The Fund will employ reasonable procedures to confirm that exchange
instructions communicated over the telephone are genuine. Such procedures may
include requiring various forms of personal identification such as name, mailing
address, social security or other tax identification number and DWR or other
Selected Broker-Dealer account number (if any). Telephone instructions may also
be recorded. If such procedures are not employed, the Fund may be liable for any
losses due to unauthorized or fraudulent instructions.
Telephone exchange instructions will be accepted if received by the Transfer
Agent between
32
<PAGE>
9:00 a.m. and 4:00 p.m., New York time, on any day the New York Stock Exchange
is open. Any shareholder wishing to make an exchange who has previously filed an
Exchange Privilege Authorization Form and who is unable to reach the Fund by
telephone should contact his or her Morgan Stanley Dean Witter Financial Advisor
or other Selected Broker-Dealer representative, if appropriate, or make a
written exchange request. Shareholders are advised that during periods of
drastic economic or market changes, it is possible that the telephone exchange
procedures may be difficult to implement, although this has not been the
experience with the Morgan Stanley Dean Witter Funds in the past.
Shareholders should contact their Morgan Stanley Dean Witter Financial
Advisor or other Selected Broker-Dealer representative or the Transfer Agent for
further information about the Exchange Privilege.
REDEMPTIONS AND REPURCHASES
- --------------------------------------------------------------------------------
REDEMPTION. Shares of each Class of the Fund can be redeemed for cash at
any time at the net asset value per share next determined less the amount of any
applicable CDSC in the case of Class A, Class B or Class C shares (see "Purchase
of Fund Shares"). If shares are held in a shareholder's account without a share
certificate, a written request for redemption to the Fund's Transfer Agent at
P.O. Box 983, Jersey City, NJ 07303 is required. If certificates are held by the
shareholder, the shares may be redeemed by surrendering the certificates with a
written request for redemption, along with any additional information required
by the Transfer Agent.
REPURCHASE. DWR and other Selected Broker-Dealers are authorized to
repurchase shares represented by a share certificate which is delivered to any
of their offices. Shares held in a shareholder's account without a share
certificate may also be repurchased by DWR and other Selected Broker-Dealers
upon the telephonic request of the shareholder. The repurchase price is the net
asset value next computed (see "Purchase of Fund Shares") after such repurchase
order is received by DWR or other Selected Broker-Dealer, reduced by any
applicable CDSC.
The CDSC, if any, will be the only fee imposed upon redemption by either the
Fund or the Distributor. The offer by DWR and other Selected Broker-Dealers to
repurchase shares may be suspended without notice by the Distributor at any
time. In that event, shareholders may redeem their shares through the Fund's
Transfer Agent as set forth above under "Redemption."
PAYMENT FOR SHARES REDEEMED OR REPURCHASED. Payment for shares presented
for repurchase or redemption will be made by check within seven days after
receipt by the Transfer Agent of the certificate and/or written request in good
order. Such payment may be postponed or the right of redemption suspended under
unusual circumstances; E.G., when normal trading is not taking place on the New
York Stock Exchange. If the shares to be redeemed have recently been purchased
by check, payment of the redemption proceeds may be delayed for the minimum time
needed to verify that the check used for investment has been honored (not more
than fifteen days from the time of receipt of the check by the Transfer Agent).
Shareholders maintaining margin accounts with DWR or another Selected
Broker-Dealer are referred to their Morgan Stanley Dean Witter Financial Advisor
or other Selected Broker-Dealer representative regarding restrictions on
redemption of shares of the Fund pledged in the margin account.
REINSTATEMENT PRIVILEGE. A shareholder who has had his or her shares
redeemed or repurchased and has not previously exercised this reinstatement
privilege may, within 35 days after the date of the redemption or repurchase,
reinstate any portion or all of the proceeds of such redemption or repurchase in
shares of the Fund in the same Class from which such shares were redeemed or
repurchased, at their net asset value next determined after a reinstatement
request, together with the proceeds, is received by the Transfer Agent and
receive a pro rata credit for any CDSC paid in connection with such redemption
or repurchase.
33
<PAGE>
INVOLUNTARY REDEMPTION. The Fund reserves the right to redeem, on sixty
days' notice and at net asset value, the shares of any shareholder (other than
shares held in an Individual Retirement Account or Custodial Account under
Section 403(b)(7) of the Internal Revenue Code) whose shares due to redemptions
by the shareholder have a value of less than $100 or such lesser amount as may
be fixed by the Trustees or, in the case of an account opened through
EasyInvest-SM-, if after twelve months the shareholder has invested less than
$1,000 in the account. However, before the Fund redeems such shares and sends
the proceeds to the shareholder, it will notify the shareholder that the value
of the shares is less than the applicable amount and allow him or her sixty days
to make an additional investment in an amount which will increase the value of
his or her account to at least the applicable amount before the redemption is
processed. No CDSC will be imposed on any involuntary redemption.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS. The Fund declares dividends separately for
each Class of shares and intends to pay quarterly income dividends and to
distribute net short-term and net long-term capital gains, if any, at least once
each year. The Fund may, however, determine to retain all or part of any net
long-term capital gains in any year for reinvestment.
All dividends and any capital gains distributions will be paid in additional
shares of the same Class and automatically credited to the shareholder's account
without issuance of a share certificate unless the shareholder requests in
writing that all dividends and/or distributions be paid in cash. Shares acquired
by dividend and distribution reinvestments will not be subject to any front-end
sales charge or CDSC. Class B shares acquired through dividend and distribution
reinvestments will become eligible for conversion to Class A shares on a pro
rata basis. Distributions paid on Class A and Class D shares will be higher than
for Class B and Class C shares because distribution fees paid by Class B and
Class C shares are higher. (See "Shareholder Services--Automatic Investment of
Dividends and Distributions").
TAXES. Because the Fund intends to distribute all of its net investment
income and net short-term capital gains to shareholders and otherwise remain
qualified as a regulated investment company under Subchapter M of the Internal
Revenue Code, it is not expected that the Fund will be required to pay any
Federal income tax on any such income and capital gains. Shareholders will
normally have to pay Federal income taxes, and any state and local income taxes,
on the dividends and distributions they receive from the Fund. Some part of such
dividends and distributions may be eligible for the Federal dividends received
deduction available to the Fund's corporate shareholders.
Distributions of net investment income and net short-term capital gains are
taxable to the shareholder as ordinary dividend income regardless of whether the
shareholder receives such distributions in additional shares or in cash. Any
dividends declared in the last quarter of any calendar year which are paid in
the following year prior to February 1 will be deemed, for tax purposes, to have
been received by the shareholder in the prior year.
Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash. Capital gains distributions are not eligible for
the corporate dividends received deduction.
The Fund may at times make payments from sources other than income or net
capital gains. Payments from such sources will, in effect, represent a return of
a portion of each shareholder's investment. All, or a portion, of such payments
will not be taxable to shareholders.
34
<PAGE>
After the end of the calendar year, shareholders will be sent full
information on their dividends and capital gains distributions for tax purposes.
Shareholders will also be notified of their proportionate share of long-term
capital gains distributions that are eligible for a reduced rate of tax under
the Taxpayer Relief Act of 1997. To avoid being subject to a 31% Federal backup
withholding tax on taxable dividends, capital gains distributions and the
proceeds of redemptions and repurchases, shareholders' taxpayer identification
numbers must be furnished and certified as to their accuracy.
Dividends, interest and gains received by the Fund may give rise to
withholding and other taxes imposed by foreign countries. If it qualifies for
and makes the appropriate election with the Internal Revenue Service, the Fund
will report annually to its shareholders the amount per share of such taxes to
enable shareholders to claim United States foreign tax credits or deductions
with respect to such taxes. In the absence of such an election, the Fund would
deduct foreign tax in computing the amount of its distributable income.
Shareholders should consult their tax advisors as to the applicability of
the foregoing to their current situation.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
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 total return of the Fund is based upon
historical earnings and is not intended to indicate future performance. The
"average annual total return" of the Fund refers to a figure reflecting the
average annualized percentage increase (or decrease) in the value of an initial
investment in a Class of the Fund of $1,000 over periods of one, five and ten
years, as well as over the life of the Class if less than any of the foregoing.
Average annual total return reflects all income earned by the Fund, any
appreciation or depreciation of the Fund's assets, all expenses incurred by the
applicable Class of the Fund and all sales charges which would be incurred by
shareholders, for the stated periods. It also assumes reinvestment of all
dividends and distributions paid by the Fund.
In addition to the foregoing, the Fund may advertise its total return for
each Class over different periods of time by means of aggregate, average, and
year-by-year or other types of total return figures. Such calculations may or
may not reflect the deduction of any sales charge which, if reflected, would
reduce the performance quoted. The Fund may also advertise the growth of
hypothetical investments of $10,000, $50,000 and $100,000 in each Class of
shares of the Fund. The Fund from time to time may also advertise its
performance relative to certain performance rankings and indexes compiled by
independent organizations, such as mutual fund performance rankings of Lipper
Analytical Services, Inc.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS. All shares of beneficial interest of the Fund are of $0.01
par value and are equal as to earnings, assets and voting privileges 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, as discussed herein, Class A,
35
<PAGE>
Class B and Class C bear the expenses related to the distribution of their
respective shares.
The Fund is not required to hold Annual Meetings of Shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call Special Meetings of Shareholders for action by shareholder
vote as may be required by the Act or the Declaration of Trust. Under certain
circumstances the Trustees may be removed by action of the Trustees or by the
shareholders.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for obligations of the
Fund. However, the Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Fund, requires that Fund
obligations include such disclaimer, and provides for indemnification and
reimbursement of expenses out of the Fund's property for any shareholder held
personally liable for the obligations of the Fund. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund itself would be unable to meet its
obligations. Given the above 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, in the opinion of
Massachusetts counsel to the Fund, the risk to Fund shareholders of personal
liability is remote.
CODE OF ETHICS. Directors, officers and employees of MSDW Advisors, MSDW
Services and MSDW Distributors are subject to a strict Code of Ethics adopted by
those companies. The Code of Ethics is intended to ensure that the interests of
shareholders and other clients are placed ahead of any personal interest, that
no undue personal benefit is obtained from a person's employment activities and
that actual and potential conflicts of interest are avoided. To achieve these
goals and comply with regulatory requirements, the Code of Ethics requires,
among other things, that personal securities transactions by employees of the
companies be subject to an advance clearance process to monitor that no Morgan
Stanley Dean Witter Fund is engaged at the same time in a purchase or sale of
the same security. The Code of Ethics bans the purchase of securities in an
initial public offering, and also prohibits engaging in futures and options
transactions and profiting on short-term trading (that is, a purchase within
sixty days of a sale or a sale within sixty days of a purchase) of a security.
In addition, investment personnel may not purchase or sell a security for their
personal account within thirty days before or after any transaction in any
Morgan Stanley Dean Witter Fund managed by them. Any violations of the Code of
Ethics are subject to sanctions, including reprimand, demotion or suspension or
termination of employment. The Code of Ethics comports with regulatory
requirements and the recommendations in the 1994 report by the Investment
Company Institute Advisory Group on Personal Investing.
MASTER/FEEDER CONVERSION. The Fund reserves the right to seek to achieve
its investment objective by investing all of its investable assets in a
diversified, open-end management investment company having the same investment
objective and policies and substantially the same investment restrictions as
those applicable to the Fund.
SHAREHOLDER INQUIRIES. All inquiries regarding the Fund should be directed
to the Fund at the telephone numbers or address set forth on the front cover of
this Prospectus.
36
<PAGE>
Morgan Stanley Dean Witter
Global Utilities Fund
Two World Trade Center
New York, New York 10048
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Edward F. Gaylor
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Bank of New York
90 Washington Street
New York, New York 10286
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center,
Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Morgan Stanley Dean Witter Advisors Inc.
MORGAN STANLEY DEAN WITTER
GLOBAL UTILITIES
FUND
[PHOTO]
PROSPECTUS -- JUNE 26, 1998
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 8, 1999
The undersigned shareholder of TCW/DW Global Telecom Trust does hereby
appoint Barry Fink, Ronald E. Robison and Robert S. Giambrone and each of them,
as attorneys-in-fact and proxies of the undersigned, each with the full power
of substitution, to attend the Special Meeting of Shareholders of TCW/DW Global
Telecom Trust to be held on June 8, 1999, in Conference Room A, Forty-Fourth
Floor, Two World Trade Center, New York, New York at 11:00 A.M., New York time,
and at all adjournments thereof and to vote the shares held in the name of the
undersigned on the record date for said meeting for the Proposal specified on
the reverse side hereof. Said attorneys-in-fact shall vote in accordance with
their best judgment as to any other matter.
(Continued on reverse side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE PROPOSAL SET FORTH ON THE REVERSE HEREOF AND AS RECOMMENDED BY
THE BOARD OF TRUSTEES.
IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
<PAGE>
- --------------------------------------------------------------------------------
PLEASE MARK VOTES AS
IN THE EXAMPLE USING X
BLACK OR BLUE INK
TO VOTE BY MAIL, PLEASE COMPLETE AND RETURN THIS CARD
YOU ALSO MAY VOTE A PROXY BY TOUCH-TONE PHONE OR BY INTERNET
(SEE ENCLOSED VOTING INFORMATION CARD FOR FURTHER INSTRUCTIONS)
TO VOTE A PROXY BY PHONE, call Toll-Free: 1-800-690-6903
TO VOTE A PROXY BY INTERNET, visit our Website(s): WWW/MSDWT.COM or
WWW.PROXYVOTE.COM
FOR AGAINST ABSTAIN
The Proposal:
----- ----- -----
Approval of the Agreement and Plan of Reorganization, dated as of February 25,
1999, pursuant to which substantially all of the assets of TCW/DW Global Telecom
Trust would be combined with those of Morgan Stanley Dean Witter Global
Utilities Fund and shareholders of TCW/DW Global Telecom Trust would become
shareholders of Morgan Stanley Dean Witter Global Utilities Fund receiving
shares in Morgan Stanley Dean Witter Global Utilities Fund with a value equal to
the value of their holdings in TCW/DW Global Telecom Trust.
Please sign personally. If the shares are registered in more than one name,
each joint owner or each fiduciary should sign personally. Only authorized
officers should sign for corporations.
Please make sure to sign and date this Proxy using black or blue ink.
Date
-----------------------------------------
-----------------------------------------
Shareholder sign in the box above
-----------------------------------------
Co-Owner (if any) sign in the box above
- --------------------------------------------------------------------------------
PLEASE FOLD AND DETACH AT PERFORATION ALONG DOTTED LINES
TCW/DW GLOBAL TELECOM TRUST
IMPORTANT
USE ONE OF THE THREE EASY WAYS TO VOTE YOUR PROXY
1. BY MAIL. PLEASE DATE, SIGN AND RETURN THE ABOVE PROXY CARD IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
2. BY INTERNET. HAVE YOUR PROXY CARD AT HAND. GO TO THE "VOTE YOUR PROXY HERE"
LINK ON THE WEBSITE WWW.MSDWT.COM OR WWW.PROXYVOTE.COM. ENTER YOUR 12
DIGIT CONTROL NUMBER LOCATED ON THE PROXY CARD AND FOLLOW THE SIMPLE
INSTRUCTIONS.
3. BY TELEPHONE. HAVE YOUR PROXY CARD AT HAND. CALL 1-800-690-6903 ON A
TOUCH-TONE PHONE. ENTER YOUR 12-DIGIT CONTROL NUMBER LOCATED ON THE PROXY
CARD AND FOLLOW THE SIMPLE RECORDED INSTRUCTIONS.
- --------------------------------------------------------------------------------
144, 459, 460, 461
