<PAGE>
PROSPECTUS May 1, 1999 as supplemented through October 8, 1999
A Portfolio of
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
[MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS LOGO APPEARS HERE]
MID CAP GROWTH PORTFOLIO
Long-term capital growth by investing primarily in common stocks and other
equity securities.
Investment Adviser Miller Anderson & Sherrerd, LLP
Distributor Morgan Stanley & Co. Incorporated
Morgan Stanley Dean Witter Universal Funds, Inc. (the "Fund") is a mutual
fund that provides investment vehicles for variable annuity contracts and
variable life insurance policies and for certain tax-qualified investors. The
Mid Cap Growth Portfolio (the "Portfolio") is one portfolio of the Fund
managed by Miller Anderson & Sherrerd, LLP ("MAS" or the "Adviser"), an
affiliate of Morgan Stanley Dean Witter Investment Management Inc.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation
to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INVESTMENT SUMMARY
Mid Cap Growth Portfolio 1
Additional Risk Factors and Information 2
INVESTMENT ADVISER 3
MANAGEMENT FEE 3
PORTFOLIO MANAGERS 4
SHAREHOLDER INFORMATION 5
</TABLE>
<PAGE>
INVESTMENT SUMMARY
MID CAP GROWTH PORTFOLIO
The Mid Cap Growth Portfolio seeks long-term capital growth by investing
primarily in common stocks and other equity securities.
Approach
The Adviser particularly focuses on the expectations of stock analysts and
invests the Portfolio in stocks of companies that it believes will report
earnings growth exceeding analysts' expectations. The equity capitalization of
these companies will generally match those in the S&P MidCap 400 Index
(currently $500 million to $6 billion). The Portfolio may invest to a limited
extent in foreign equity securities.
Process
The Adviser uses a quantitative screen to sort stocks based on revisions to
analysts' earnings predictions. The Adviser then conducts extensive fundamental
research into those companies with the most attractive earnings revisions.
Finally, the Adviser evaluates the valuation of the stocks to eliminate from
consideration the most overvalued stocks. The Adviser also follows a strict
sell discipline. The Portfolio sells stocks when their earnings revision scores
fall to unacceptable levels, fundamental research reveals unfavorable trends,
or their valuations exceed levels that are reasonable in relation to the
stocks' growth prospects.
Risk
Investing in the Portfolio may be appropriate for you if you are willing to
accept the risk and uncertainties of investing in mid-cap equity securities in
the hope of earning superior total returns. In general, prices of equity
securities are more volatile than those of fixed income securities. The prices
of equity securities will rise and fall in response to a number of different
factors. In particular, prices of equity securities will respond to events
which affect entire financial markets or industries (changes in inflation or
consumer demand, for example) and to events that affect particular issuers
(news about the success or failure of a new product, for example). As a result
of this price volatility, there is a risk that you may lose money by investing
in the Portfolio. Investments in smaller companies may involve greater risk
than investments in larger, more established companies, and smaller companies'
securities may be subject to more abrupt or erratic price movements. Certain
market conditions may favor growth stocks or stocks of mid-sized companies,
while other conditions may favor value stocks or stocks of larger or smaller
companies. Accordingly, a portfolio of mid- cap growth stocks may, over certain
periods of time, underperform a portfolio of value stocks or stocks of larger
or smaller companies.
There is no performance information for the Mid Cap Growth Portfolio since it
has not commenced operations as of the date of this Prospectus.
1
<PAGE>
INVESTMENT SUMMARY
ADDITIONAL RISK FACTORS AND INFORMATION
This section discusses additional risk factors and information relating to the
Portfolio. The Portfolio's investment practices and limitations are described in
more detail in the Statement of Additional Information ("SAI") which is legally
part of this Prospectus. For details on how to obtain a copy of the SAI and
other reports and information, see the back cover of this Prospectus.
Price volatility
The value of your investment in the Portfolio is based on the market prices of
the securities the Portfolio holds. These prices change daily due to economic
and other events that affect markets generally, as well as those that affect
particular regions, countries, industries and companies. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities the Portfolio owns and the markets in which the
securities trade. Over time, equity securities have generally shown superior
gains, although they have tended to be more volatile than fixed income
securities in the short term.
Foreign investing
Investing in foreign countries entails the risk that news and events unique to
a country or region will affect those markets and their issuers. These same
events will not necessarily have an effect on the U.S. economy or similar
issuers located in the United States. In addition, the Portfolio's investments
in foreign countries generally will be denominated in foreign currencies. As a
result, changes in the value of a country's currency compared to the U.S.
dollar may affect the value of the Portfolio's investments. These changes may
happen separately from and in response to events that do no otherwise affect
the value of the security in the issuer's home country. The Adviser may invest
in certain instruments, such as derivatives and may use certain techniques
such as hedging, to manage these risks. However, the Adviser cannot guarantee
that it will be practical to hedge these risks or that it will succeed in
doing so. The Adviser may use derivatives for other purposes such as gaining
exposure to foreign markets.
Year 2000 risk
The advisory and distribution services that the Adviser and Morgan Stanley &
Co. Incorporated ("Morgan Stanley") provide to the Fund 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 Adviser and Morgan Stanley have been actively working on
necessary changes to their own computer systems to deal with the year 2000
problem and expect that their systems will be adapted before that date. There
can be no assurance, however, that they will be successful. In addition, other
unaffiliated service providers may be faced with similar problems. The Adviser
and Morgan Stanley are monitoring their remedial efforts, however, there can
be no assurance that they and the services they provide will not be adversely
affected.
In addition, it is possible that the markets for securities in which the
Portfolio 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 Portfolio's
investments may be adversely affected.
Temporary defensive investments
When the Adviser believes that changes in economic, financial or political
conditions warrant, the Portfolio may invest without limit in certain short-
and medium-term fixed income securities for temporary defensive purposes. If
the Adviser incorrectly predicts the effects of these changes, such defensive
investments may adversely affect the Portfolio's performance and the Portfolio
may not achieve its investment objective.
Portfolio turnover
Consistent with its investment policies, the Portfolio will purchase and sell
securities without regard to the effect on portfolio turnover. Higher
portfolio turnover will cause the Portfolio to incur additional transaction
costs.
2
<PAGE>
INVESTMENT ADVISER
MAS, with principal offices at One Tower Bridge, West Conshohocken,
Pennsylvania 19428 provides investment advisory services to employee benefit
plans, endowment funds, foundations and other institutional investors and has
served as investment adviser to several open-end investment companies since
1984. MAS is a subsidiary of Morgan Stanley Dean Witter & Co. ("MSDW"). MSDW
is a preeminent global financial services firm that maintains leading market
positions in each of its three primary businesses -- securities, asset
management and credit services. As of July 31, 1999, MAS and its institutional
advisory affiliates had approximately $175 billion in assets under management
or fiduciary advice.
MANAGEMENT FEE
The Adviser is entitled to receive a management fee at an annual percentage of
the Portfolio's average daily net assets as follows:
<TABLE>
<CAPTION>
ASSETS FEE
- ----------------------------------------
<S> <C>
First $500 million 0.75%
- ----------------------------------------
From $500 million to $1 billion 0.70%
- ----------------------------------------
More than $1 billion 0.65%
- ----------------------------------------
</TABLE>
However, the Adviser has voluntarily agreed to reduce its management fee
and/or reimburse the Portfolio so that total annual operating expenses of the
Portfolio will not exceed 1.05% of its average daily assets. For purposes of
determining the amount of the voluntary management fee waiver and/or
reimbursement, if any, the annual operating expenses of the Portfolio exclude
certain investment related expenses such as foreign country tax expense and
interest expense on amounts borrowed. As a result, the expense ratio,
including these expenses, after fee waivers and/or reimbursements may be
higher than 1.05%. Fee waivers and/or expense reimbursements are voluntary and
the Adviser reserves the right to terminate any waiver and/or reimbursement at
any time without notice.
3
<PAGE>
PORTFOLIO MANAGERS
The following individuals have primary day-to-day portfolio management
responsibility for the Portfolio:
MID CAP GROWTH PORTFOLIO
Arden C. Armstrong and Abhi Y. Kanitkar
Arden C. Armstrong, a Managing Director of Morgan Stanley, joined MAS in 1986.
She assumed responsibility for the MAS Funds Mid Cap Growth Portfolio in 1990,
the MAS Funds Growth Portfolio in 1993 and the MAS Funds Equity Portfolio in
1994. Ms. Armstrong received a B.A. (Magna Cum Laude) in Economics from Brown
University, an M.B.A. from the Wharton School at University of Pennsylvania
and is a Chartered Financial Analyst. Abhi Y. Kanitkar, a Vice-President of
Morgan Stanley, joined MAS in 1994. He served as an Investment Analyst from
1993 through 1994 for Newbold's Asset Management and as Director & Investment
Analyst from 1990 through 1993 for Kanitkar Investment Services, Inc. He
assumed responsibility for the MAS Funds Mid Cap Growth Portfolio in 1996. Mr.
Kanitkar received a B.S. (Magna Cum Laude, Tau Beta Pi) in Electrical
Engineering from University of Michigan and an M.B.A. from the Wharton School
at University of Pennsylvania. Ms. Armstrong and Mr. Kanitkar have shared
primary responsibility for managing the Portfolio since its inception.
4
<PAGE>
SHAREHOLDER INFORMATION
Purchasing and selling Fund shares
Shares are offered on each day that the New York Stock Exchange (the "NYSE")
is open for business.
The Portfolio offers its shares only to insurance companies for separate
accounts they establish to fund variable life insurance and variable annuity
contracts and by other entities under qualified pension and retirement plans.
An insurance company purchases or redeems shares of the Portfolio based on,
among other things, the amount of net contract premiums or purchase payments
allocated to a separate account investment division, transfers to or from a
separate account investment division, contract loans and repayments, contract
withdrawals and surrenders, and benefit payments. The contract prospectus
describes how contract owners may allocate, transfer and withdraw amounts to,
and from, separate accounts.
The price per share will be the net asset value (NAV) per share next
determined after the Fund receives the insurance company's purchase order. In
some cases, an insurance company's order may be executed at the NAV that was
computed at the close of the previous business day. NAV for one share is the
value of that share's portion of all of the assets in the Portfolio. The Fund
determines the net asset value for the Portfolio as of the close of the NYSE
(normally 4:00 p.m. Eastern Time) on each day that the NYSE is open for
business.
About net asset value
In calculating NAV, the Portfolio generally values its portfolio securities at
their market price. If market prices are unavailable or the Portfolio thinks
that they are unreliable because of events occurring after the close of
trading, the Portfolio may determine fair value prices using methods approved
by the Board of Directors. The Portfolio may hold portfolio securities that
are listed on foreign exchanges. These securities may trade on weekends or
other days when the Portfolio does not calculate NAV. As a result, the value
of these investments may change on days when you cannot purchase or sell
shares.
Dividends and distributions
The Portfolio distributes its investment income annually as dividends and
makes distributions of capital gains, if any, at least annually.
Taxes
Please consult your tax advisor regarding your specific questions about
federal, state and local income taxes. Below is summarized some important tax
issues that affect the Portfolio and its shareholders. The summary is based on
current tax laws, which may change.
The Portfolio expects that it will not have to pay income taxes if it
distributes all of its income and gains. Net income and realized capital gains
that the Portfolio distributes are not currently taxable when left to
accumulate within a variable annuity or variable life insurance contract or
under a qualified pension or retirement plan.
For information on federal income taxation of a life insurance company with to
its receipt of distributions from the Portfolio and federal income taxation of
owners of variable annuity or variable life insurance contracts, refer to the
contract prospectus.
5
<PAGE>
WHERE TO FIND ADDITIONAL INFORMATION
Statement of Additional Information
In addition to this Prospectus, the Fund has an SAI, dated May 1, 1999, as
supplemented through September 2, 1999, which contains additional, more
detailed information about the Fund and the Portfolio. The SAI is incorporated
by reference into this Prospectus and, therefore, legally forms a part of this
Prospectus.
Shareholder Reports
The Fund publishes annual and semi-annual reports containing financial
statements. These reports contain additional information about the Portfolio's
investments. In the Fund's shareholder reports, you will find a discussion of
the market conditions and the investment strategies that significantly
affected the Portfolio's performance during that period.
For additional Fund information, including information regarding the
investments comprising the Portfolio, please call 1-800-281-2715 or contact
your insurance company.
You may obtain the SAI and shareholder reports, when available, without charge
by contacting the Fund at the toll-free number above or your insurance
company.
Information about the Fund, including the SAI, and the annual and semi-annual
reports, may be obtained from the Securities and Exchange Commission in any of
the following ways: (1) In person: you may review and copy documents in the
Commission's Public Reference Room in Washington, D.C. (for information call
1-800-SEC-0330); (2) On-line: you may retrieve information from the
Commission's web site at "http://www.sec.gov"; or (3) By mail; you may request
documents, upon payment of a duplicating fee, by writing to Securities
Exchange Commission, Public Reference Section, Washington, D.C. 20549-6009. To
aid you in obtaining this information, the Fund's Investment Company Act
registration number is 811-7607.
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
[MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC. LOGO APPEARS HERE]
P.O. Box 2798
Boston, Massachusetts 02208-2798
For information call 1-800-281-2715
<PAGE>
PROSPECTUS May 1, 1999 as supplemented through October 8, 1999
A Portfolio of
[MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS LOGO APPEARS HERE]
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
Investment Adviser Miller Anderson & Sherrerd, LLP
Distributor Morgan Stanley & Co. Incorporated
MID CAP VALUE PORTFOLIO
Above-average total return over a market cycle of three to five years by
investing in common stocks and other equity securities.
Morgan Stanley Dean Witter Universal Funds, Inc. (the "Fund") is a mutual
fund that provides investment vehicles for variable annuity contracts and
variable life insurance policies and for certain tax-qualified investors. The
Mid Cap Value Portfolio (the "Portfolio") is one portfolio of the Fund
managed by Miller Anderson & Sherrerd, LLP ("MAS" or the "Adviser"), an
affiliate of Morgan Stanley Dean Witter Investment Management Inc.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation
to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INVESTMENT SUMMARY
Mid Cap Value Portfolio 1
Additional Risk Factors and Information 2
INVESTMENT ADVISER 3
MANAGEMENT FEE 3
PORTFOLIO MANAGERS 4
SHAREHOLDER INFORMATION 5
FINANCIAL HIGHLIGHTS 6
</TABLE>
<PAGE>
INVESTMENT SUMMARY
MID CAP VALUE PORTFOLIO
The Mid Cap Value Portfolio seeks above-average total return over a market cycle
of three to five years by investing in common stocks and other equity
securities.
Approach
The Portfolio focuses on stocks that the Adviser believes are undervalued based
on its proprietary measures of value. While value stocks typically pay
dividends, the Portfolio may purchase stocks that do not pay dividends if they
possess other value characteristics. The equity capitalization of the companies
the Portfolio invests in will generally match those in the S&P MidCap 400 Index
(currently $500 million to $6 billion). The Portfolio may invest to a limited
extent in foreign equity securities.
Process
The Adviser continually measures the relative attractiveness of the Portfolio's
current holdings against potential purchases, analyzing each security on a
fundamental basis. The Portfolio's holdings typically will have lower
price/earnings ratios than the average stock included in the S&P MidCap 400
Index. Sector weightings normally are kept within 5% of those of the S&P MidCap
400 Index.
Risk
Investing in the Portfolio may be appropriate for you if you are willing to
accept the risks and uncertainties of investing in mid-cap equity securities in
the hope of earning superior returns. In general, prices of equity securities
are more volatile than those of fixed income securities. The prices of equity
securities will rise and fall in response to a number of different factors. In
particular, prices of equity securities will respond to events which affect
entire financial markets or industries (changes in inflation or consumer demand,
for example) and to events that affect particular issuers (news about the
success or failure of a new product, for example). As a result of this price
volatility, there is a risk that you may lose money by in-
vesting in the Portfolio. Investments in smaller
companies may involve greater risk than investments in
larger, more established companies, and smaller companies'
securities may be subject to more abrupt or erratic price
movements. Certain market conditions may favor value
stocks or stocks of mid-sized companies, while other
conditions may favor growth stocks or stocks of larger or
smaller companies. Accordingly, a portfolio of mid-cap
value stocks may, over certain periods of time,
underperform a portfolio of growth stocks or stocks of
larger or smaller companies.
PERFORMANCE
Commenced operations on January 2, 1997
40.93% 15.85%
- ---------------------------------------
1997 1998
HIGH (QUARTER) LOW (QUARTER)
<TABLE>
<S> <C>
7/97 - 9/97 7/98 - 9/98
20.57% -13.04%
</TABLE>
AVERAGE ANNUAL TOTAL RETURN for
periods ended December 31, 1998
<TABLE>
<CAPTION>
MID CAP VALUE STANDARD & POOR'S
PORTFOLIO MIDCAP 400 INDEX*
- --------------------------------------------------
<S> <C> <C>
Past One Year 15.85% 19.12%
- --------------------------------------------------
Since Inception 27.86% 26.45%
</TABLE>
The bar chart and table above show the
performance of the Portfolio year-by-
year and as an average over different
periods of time. This performance
information does not include the
impact of any charges deducted by your
insurance company. If it did, returns
would be lower. The bar chart and
table demonstrate the variability of
performance over time and provide an
indication of the risks of investing
in the Portfolio. How the Portfolio
has performed in the past does not
necessarily indicate how the Portfolio
will perform in the future.
* The S&P MidCap 400 Index is a value
weighted index. The companies chosen
for the Index generally have market
values between $500 million and $6
billion, depending on current market
valuation and represent a broad
range of industry segments within
the U.S. economy. An index is a
hypothetical measure of performance
based on the ups and downs of
securities that make up a particular
market. The index does not show
actual investment returns or reflect
payment of management or brokerage
fees, which would lower the index's
performance.
1
<PAGE>
INVESTMENT SUMMARY
ADDITIONAL RISK FACTORS AND INFORMATION
This section discusses additional risk factors and information relating to the
Portfolio. The Portfolio's investment practices and limitations are described in
more detail in the Statement of Additional Information ("SAI") which is legally
part of this Prospectus. For details on how to obtain a copy of the SAI and
other reports and information, see the back cover of this Prospectus.
Price volatility
The value of your investment in the Portfolio is based on the market prices of
the securities the Portfolio holds. These prices change daily due to economic
and other events that affect markets generally, as well as those that affect
particular regions, countries, industries and companies. These price movements,
sometimes called volatility, may be greater or lesser depending on the types of
securities the Portfolio owns and the markets in which the securities trade.
Over time, equity securities have generally shown superior gains, although they
have tended to be more volatile than fixed income securities in the short term.
Foreign investing
Investing in foreign countries entails the risk that news and events unique to a
country or region will affect those markets and their issuers. These same events
will not necessarily have an effect on the U.S. economy or similar issuers
located in the United States. In addition, the Portfolio's investments in
foreign countries generally will be denominated in foreign currencies. As a
result, changes in the value of a country's currency compared to the U.S. dollar
may affect the value of the Portfolio's investments. These changes may occur
separately from and in response to events that do no otherwise affect the value
of the security in the issuer's home country. The Adviser may invest in certain
instruments, such as derivatives and may use certain techniques such as hedging,
to manage these risks. However, the Adviser cannot guarantee that it will be
practical to hedge these risks in certain markets or under particular conditions
or that it will succeed in doing so. The Adviser may use derivatives for other
purposes such as gaining exposure to foreign markets.
Year 2000 risk
The advisory and distribution services that the Adviser and Morgan Stanley & Co.
Incorporated ("Morgan Stanley") provide to the Fund 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 Adviser and Morgan Stanley have been actively working on necessary
changes to their own computer systems to deal with the year 2000 problem and
expect that their systems will be adapted before that date. There can be no
assurance, however, that they will be successful. In addition, other
unaffiliated service providers may be faced with similar problems. The Adviser
and Morgan Stanley are monitoring their remedial efforts, however, there can be
no assurance that they and the services they provide will not be adversely
affected.
In addition, it is possible that the markets for securities in which the
Portfolio 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 Portfolio's investments may be
adversely affected.
Temporary defensive investments
When the Adviser believes that changes in economic, financial or political
conditions warrant, the Portfolio may invest without limit in certain short-and
medium-term fixed income securities for temporary defensive purposes. If the
Adviser incorrectly predicts the effects of these changes, such defensive
investments may adversely affect the Portfolio's performance and the Portfolio
may not achieve its investment objective.
Portfolio turnover
Consistent with its investment policies, the Portfolio will purchase and sell
securities without regard to the effect on portfolio turnover. Higher portfolio
turnover will cause the Portfolio to incur additional transaction costs.
2
<PAGE>
INVESTMENT ADVISER
MAS, with principal offices at One Tower Bridge, West Conshohocken,
Pennsylvania 19428 provides investment advisory services to employee benefit
plans, endowment funds, foundations and other institutional investors and has
served as investment adviser to several open-end investment companies since
1984. MAS is a subsidiary of Morgan Stanley Dean Witter & Co. ("MSDW"). MSDW
is a preeminent global financial services firm that maintains leading market
positions in each of its three primary businesses -- securities, asset
management and credit services. As of July 31, 1999, MAS and its institutional
advisory affiliates had approximately $175 billion in assets under management
or fiduciary advice.
MANAGEMENT FEE
The Adviser is entitled to receive a management fee at an annual percentage of
the Portfolio's average daily net assets as follows:
<TABLE>
<CAPTION>
ASSETS FEE
- ----------------------------------------
<S> <C>
First $500 million 0.75%
- ----------------------------------------
From $500 million to $1 billion 0.70%
- ----------------------------------------
More than $1 billion 0.65%
</TABLE>
However, the Adviser has voluntarily agreed to reduce its management fee
and/or reimburse the Portfolio so that total annual operating expenses of the
Portfolio will not exceed 1.05% of its average daily assets. For purposes of
determining the amount of the voluntary management fee waiver and/or
reimbursement, if any, the annual operating expenses of the Portfolio exclude
certain investment related expenses such as foreign country tax expense and
interest expense on amounts borrowed. As a result, the expense ratio,
including these expenses, after fee waivers and/or reimbursements may be
higher than 1.05%. Fee waivers and/or expense reimbursements are voluntary and
the Adviser reserves the right to terminate any waiver and/or reimbursement at
any time without notice.
For the fiscal year ended December 31, 1998, MAS received a fee (net of fee
waivers) equal to 0.23% of the Portfolio's average daily net assets for
management services.
3
<PAGE>
PORTFOLIO MANAGERS
The following individuals have primary day-to-day portfolio management
responsibility for the Portfolio:
MID CAP VALUE PORTFOLIO
William B. Gerlach, Gary G. Schlarbaum, Bradley S. Daniels and Chris Leavy
William B. Gerlach, a Vice President of Morgan Stanley, joined MAS in 1991. He
served as a Programmer in Applications Software Development at Alphametrics
Corporation from 1987 through 1991 and as a Data Analyst and Inflation
Economist at Wharton Econometric Forecasting Associates from 1984 through
1987. He holds a B.A. in Economics from Haverford College. Gary G. Schlarbaum,
a Managing Director of Morgan Stanley, joined MAS in 1987. He assumed
responsibility for the MAS Funds Equity and Small Cap Value Portfolios in
1987, the MAS Funds Balanced Portfolio in 1992 and the MAS Funds Multi-Asset-
Class and Mid Cap Value Portfolios in 1994. Mr. Schlarbaum holds a B.A. degree
from Coe College and a Ph.D. from the University of Pennsylvania. Bradley S.
Daniels, a Vice President of Morgan Stanley, joined MAS in 1985. Chris Leavy
joined MAS in 1997. He served as a Portfolio Manager for Capitoline Investment
Services from 1995-1997; a Portfolio Manager for Premier Trust Company from
1994 to 1995; and as a Research Analyst for Leavy Investment Management from
1993-1994. Messrs. Gerlach, Schlarbaum, Daniels and Leavy have had primary
responsibility for managing the Portfolio since its inception.
4
<PAGE>
SHAREHOLDER INFORMATION
Purchasing and selling Fund shares
Shares are offered on each day that the New York Stock Exchange (the "NYSE") is
open for business.
The Portfolio offers its shares only to insurance companies for separate
accounts they establish to fund variable life insurance and variable annuity
contracts and by other entities under qualified pension and retirement plans. An
insurance company purchases or redeems shares of the Portfolio based on, among
other things, the amount of net contract premiums or purchase payments allocated
to a separate account investment division, transfers to or from a separate
account investment division, contract loans and repayments, contract withdrawals
and surrenders, and benefit payments. The contract prospectus describes how
contract owners may allocate, transfer and withdraw amounts to, and from,
separate accounts.
The price per share will be the net asset value (NAV) per share next determined
after the Fund receives the insurance company's purchase order. In some cases,
an insurance company's order may be executed at the NAV that was computed at the
close of the previous business day. NAV for one share is the value of that
share's portion of all of the assets in the Portfolio. The Fund determines the
net asset value for the Portfolio as of the close of the NYSE (normally 4:00
p.m. Eastern Time) on each day that the NYSE is open for business.
About net asset value
In calculating NAV, the Portfolio generally values its portfolio securities at
their market price. If market prices are unavailable or the Portfolio thinks
that they are unreliable because of events occurring after the close of trading,
the Portfolio may determine fair value prices using methods approved by the
Board of Directors. The Portfolio may hold portfolio securities that are listed
on foreign exchanges. These securities may trade on weekends or other days when
the Portfolio does not calculate NAV. As a result, the value of these
investments may change on days when you cannot purchase or sell shares.
Dividends and distributions
The Portfolio distributes its investment income annually as dividends and makes
distributions of capital gains, if any, at least annually.
Taxes
Please consult your tax advisor regarding your specific questions about federal,
state and local income taxes. Below is summarized some important tax issues that
affect the Portfolio and its shareholders. The summary is based on current tax
laws, which may change.
The Portfolio expects that it will not have to pay income taxes if it
distributes all of its income and gains. Net income and realized capital gains
that the Portfolio distributes are not currently taxable when left to accumulate
within a variable annuity or variable life insurance contract or under a
qualified pension or retirement plan.
For information on federal income taxation of a life insurance company with
respect to its receipt of distributions from the Portfolio and federal income
taxation of owners of variable annuity or variable life insurance contracts,
refer to the contract prospectus.
5
<PAGE>
FINANCIAL HIGHLIGHTS
MID CAP VALUE PORTFOLIO
The financial highlights table is intended to help you understand the
Portfolio's financial performance since its inception. Certain information
reflects financial results for a single Portfolio share. The total returns in
the table represent the rate that an investor would have earned (or lost) on
an investment in the Portfolio (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers
LLP, whose unqualified report thereon appears in the Portfolio's Annual Report
to Shareholders and is incorporated by reference in the Statement of
Additional Information. The Annual Report and the financial statements
therein, as well as the Statement of Additional Information, are available at
no cost from the Fund at the toll free number noted on the back cover to this
Prospectus or from your insurance company.
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 2, 1997* TO
DECEMBER 31, 1998 DECEMBER 31, 1997
<S> <C> <C>
SELECTED PER SHARE DATA
AND RATIOS
Net Asset Value, Beginning of Period $ 13.32 $ 10.00
------- -------
Income From Investment Operations
Net Investment Income 0.04 0.02
Net Realized and Unrealized Gain 2.04 4.05
------- -------
Total From Investment Operations 2.08 4.07
------- -------
Distributions
Net Investment Income (0.03) (0.02)
Net Realized Gain (0.45) (0.73)
------- -------
Total Distributions (0.48) (0.75)
------- -------
Net Asset Value, End of Period $ 14.92 $ 13.32
======= =======
Total Return 15.85 % 40.93 %
======= =======
RATIOS AND SUPPLEMENTAL DATA:
Net Assets, End of Period (000's) $31,381 $11,461
Ratio of Expenses to Average Net Assets 1.05 % 1.05 %**
Ratio of Net Investment Income to
Average Net Assets 0.42 % 0.19 %**
Portfolio Turnover Rate 228 % 141 %
Effect of Voluntary Expense Limitation
During the Period:
Per Share Benefit to Net Investment
Income $ 0.05 $ 0.08
Ratios Before Expense Limitation:
Expenses to Average Net Assets 1.57 % 2.13 %**
Net Investment Loss to Average Net
Assets (0.10)% (0.89)%**
</TABLE>
- -------
* Commencement of operations
** Annualized
6
<PAGE>
WHERE TO FIND ADDITIONAL INFORMATION
Statement of Additional Information
In addition to this Prospectus, the Fund has an SAI, dated May 1, 1999, as
supplemented through September 2, 1999, which contains additional, more
detailed information about the Fund and the Portfolio. The SAI is incorporated
by reference into this Prospectus and, therefore, legally forms a part of this
Prospectus.
Shareholder Reports
The Fund publishes annual and semi-annual reports containing financial
statements. These reports contain additional information about the Portfolio's
investments. In the Fund's shareholder reports, you will find a discussion of
the market conditions and the investment strategies that significantly
affected the Portfolio's performance during that period.
For additional Fund information, including information regarding the
investments comprising the Portfolio, please call 1-800-281-2715 or contact
your insurance company.
You may obtain the SAI and shareholder reports, when available, without charge
by contacting the Fund at the toll-free number above or your insurance
company.
Information about the Fund, including the SAI, and the annual and semi-annual
reports, may be obtained from the Securities and Exchange Commission in any of
the following ways: (1) In person: you may review and copy documents in the
Commission's Public Reference Room in Washington, D.C. (for information call
1-800-SEC-0330); (2) On-line: you may retrieve information from the
Commission's web site at "http://www.sec.gov"; or (3) By mail; you may request
documents, upon payment of a duplicating fee, by writing to Securities
Exchange Commission, Public Reference Section, Washington, D.C. 20549-6009. To
aid you in obtaining this information, the Fund's Investment Company Act
registration number is 811-7607.
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
[MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC. LOGO APPEARS HERE]
P.O. Box 2798
Boston, Massachusetts 02208-2798
For information call 1-800-281-2715
