DEAN WITTER SPECIAL VALUE FUND
485BPOS, 1997-02-28
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<PAGE>

  AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 1997 

                                                  REGISTRATION NOS.: 333-06935 
                                                                     811-7683 
- --------------------------------------------------------------------------------
                      SECURITIES AND EXCHANGE COMMISSION 

                            WASHINGTON, D.C. 20549 

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

                                  FORM N-1A 

                            REGISTRATION STATEMENT 

                       UNDER THE SECURITIES ACT OF 1933 
                                                                           [X] 

                         PRE-EFFECTIVE AMENDMENT NO. 
                                                                           [ ] 

                        POST-EFFECTIVE AMENDMENT NO. 1 
                                                                           [X] 

                                    AND/OR 

             REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY 

                                 ACT OF 1940 
                                                                           [X] 

                               AMENDMENT NO. 2 
                                                                           [X] 

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

                        DEAN WITTER SPECIAL VALUE FUND 

                       (A MASSACHUSETTS BUSINESS TRUST) 

              (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) 

                            TWO WORLD TRADE CENTER 
                           NEW YORK, NEW YORK 10048 

                   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) 

      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600 

                               BARRY FINK, ESQ. 
                            TWO WORLD TRADE CENTER 
                           NEW YORK, NEW YORK 10048 

                   (NAME AND ADDRESS OF AGENT FOR SERVICE) 

                                   COPY TO: 

                             DAVID M. BUTOWSKY, Esq. 
                             Gordon Altman Butowsky 
                             Weitzen Shalov & Wein 
                             114 West 47th Street 
                            New York, New York 10036 

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

                APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: 

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

      As soon as practicable after the effective date of this amendment. 

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX) 

     immediately upon filing pursuant to paragraph (b) 
 ---
  X  on March 28, 1997 pursuant to paragraph (b) 
 ---
     60 days after filing pursuant to paragraph (a) 
 ---
     on (date) pursuant to paragraph (a) of rule 485 
 ---

   THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE 
SECURITIES ACT OF 1933 PURSUANT TO SECTION (A)(1) OF RULE 24F-2 UNDER THE 
INVESTMENT COMPANY ACT OF 1940. THE REGISTRANT INTENDS TO FILE A RULE 24F-2 
NOTICE FOR ITS FISCAL PERIOD ENDING JULY 31, 1997 WITH THE SECURITIES AND 
EXCHANGE COMMISSION ON OR ABOUT AUGUST 15, 1997. 
- --------------------------------------------------------------------------------
<PAGE>
                        DEAN WITTER SPECIAL VALUE FUND 
                            CROSS-REFERENCE SHEET 
                                  FORM N-1A 

<TABLE>
<CAPTION>
 ITEM                   CAPTION 
- ----------------------- -------------------------------------------- 
PART A                  PROSPECTUS 
- ----------------------- -------------------------------------------- 
<S>    <C>              <C>
1.      ............    Cover Page 
2.      ............    Summary of Fund Expenses; Prospectus Summary 
3.      ............    Performance Information 
4.      ............    Investment Objective and Policies; Risk 
                          Considerations; The Fund and Its Management; 
                          Cover Page; Investment Restrictions; Prospectus
                          Summary 
5.      ............    The Fund and Its Management; Back Cover; 
                          Investment Objective and Policies 
6.      ............    Dividends, Distributions and Taxes; Additional
                          Information 
7.      ............    Purchase of Fund Shares; Shareholder Services;
                          Redemptions and Repurchases 
8.      ............    Redemptions and Repurchases; Shareholder Services 
9.      ............    Not Applicable 

PART B                  STATEMENT OF ADDITIONAL INFORMATION 
- --------                -------------------------------------------- 
10.     ............    Cover Page 
11.     ............    Table of Contents 
12.     ............    The Fund and Its Management 
13.     ............    Investment Practices and Policies; Investment
                          Restrictions; Portfolio Transactions and Brokerage 
14.     ............    The Fund and Its Management; Trustees and Officers 
15.     ............    Trustees and Officers 
16.     ............    The Fund and Its Management; Purchase of Fund 
                          Shares; Custodian and Transfer Agent; 
                          Independent Accountants 
17.     ............    Portfolio Transactions and Brokerage 
18.     ............    Description of Shares 
19.     ............    Repurchase of Fund Shares; Redemptions and 
                          Repurchases; Statement of Assets and Liabilities;
                          Shareholder Services 
20.     ............    Dividends, Distributions and Taxes 
21.     ............    Purchase of Fund Shares 
22.     ............    Dividends, Distributions and Taxes 
23.     ............    Performance Information 
</TABLE>

PART C 

   Information required to be included in Part C is set forth under the 
appropriate item, so numbered, in Part C of this Registration Statement. 


<PAGE>
   
PROSPECTUS -- MARCH 28, 1997 
- ----------------------------------------------------------------------------- 
                                             Dean Witter Special Value 
Fund (the "Fund") is an open-end, diversified management investment company 
whose investment objective is long-term capital appreciation. The Fund seeks 
to meet its investment objective by investing primarily in equity securities 
issued by companies whose equity market capitalization, at the time of 
purchase, falls within the range of $100 million to $1 billion and that 
appear undervalued relative to the marketplace or to investments in similar 
companies. Investing in smaller companies carries more risk than investing in 
larger companies. See "Risk Considerations and Investment Practices." 

                                             Shares of the Fund are 
continuously offered at the net asset value per share next determined 
following receipt of an order, without the imposition of a sales charge. 
However, redemptions and/or repurchases of shares are subject in most cases 
to a contingent deferred sales charge, scaled down from 5% to 1% of the 
amount redeemed, if made within six years of purchase, which charge will be 
paid to the Fund's Distributor, Dean Witter Distributors Inc. See 
"Redemptions and Repurchases--Contingent Deferred Sales Charge." In addition, 
the Fund pays the Distributor a Rule 12b-1 distribution fee pursuant to a 
Plan of Distribution at the annual rate of 1% of the average daily net assets 
of the Fund. See "Purchase of Fund Shares--Plan of Distribution." 

The Fund has temporarily suspended the offering of its shares to new 
investors. The Fund continues to offer its shares to current shareholders, 
and will recommence offering its shares to new investors from time to time as 
may be determined by the Fund's Investment Manager to be consistent with 
prudent portfolio management. 

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 March 28, 1997, 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. 

             DEAN WITTER DISTRIBUTORS INC., 
             DISTRIBUTOR 
    
TABLE OF CONTENTS 

Prospectus Summary ....................................................      2 
Summary of Fund Expenses ..............................................      4 
   
Financial Highlights (unaudited) ......................................      5 
The Fund and its Management ...........................................      6 
Investment Objective and Policies .....................................      6 
Risk Considerations and Investment Practices .........................       9 
Investment Restrictions ...............................................     14 
    
Purchase of Fund Shares ...............................................     15 
Shareholder Services ..................................................     17 
Redemptions and Repurchases ...........................................     20 
Dividends, Distributions and Taxes ....................................     22 
   
Performance Information ...............................................     23 
    
Additional Information ................................................     23 
   
Financial Statements (unaudited)-- 
January 31, 1997 .....................................................      25 
    

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. 
   
Dean Witter
Special Value Fund
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 869-NEWS (toll-free)
    
<PAGE>
   
PROSPECTUS SUMMARY 
- ----------------------------------------------------------------------------- 
    

   
<TABLE>
<CAPTION>
<S>                  <C>
 The                 The Fund is organized as a Trust, commonly known as a Massachusetts business trust, and is an 
Fund                 open-end, diversified management investment company. The Fund invests primarily in equity 
                     securities issued by companies whose equity market capitalization, at the time of purchase, falls 
                     within the range of $100 million to $1 billion and that appear undervalued relative to the 
                     marketplace or to investments in similar companies. 
- -------------------  ------------------------------------------------------------------------------------------------- 
Shares Offered       Shares of beneficial interest with $0.01 par value (see page 23). 
- -------------------  ------------------------------------------------------------------------------------------------- 
Offering             Shares of the Fund are offered at net asset value (see page 15). Shares redeemed within six years 
of Shares            after purchase are subject to a contingent deferred sales charge under most circumstances (see 
                     page 20). The Fund has temporarily suspended the offering of its shares to new investors. The 
                     Fund continues to offer its shares to current shareholders, and will recommence offering its 
                     shares to new investors from time to time as may be determined by the Fund's Investment Manager 
                     to be consistent with prudent portfolio management. Automatic reinvestment of dividends and 
                     distributions, and other shareholder services for existing Fund shareholders, are not affected 
                     (see page 15). 
- -------------------  ------------------------------------------------------------------------------------------------- 
Minimum              The minimum initial investment is $5,000 ($500 if the account is opened through EasyInvest 
Purchase             (Service Mark) ). The minimum subsequent investment is $100 (see page 15). 
- -------------------  ------------------------------------------------------------------------------------------------- 
Investment           The investment objective of the Fund is long-term capital appreciation. 
Objective 
- -------------------  ------------------------------------------------------------------------------------------------- 
Investment           Dean Witter InterCapital Inc., the Investment Manager of the Fund, and its wholly-owned 
Manager              subsidiary, Dean Witter Services Company Inc., serve in various investment management, advisory, 
                     management and administrative capacities to 101 investment companies and other portfolios with 
                     net assets under management of approximately $92.5 billion at January 31, 1997. 
- -------------------  ------------------------------------------------------------------------------------------------- 
Management           The Investment Manager receives a monthly fee at the annual rate of 0.75% of the Fund's average 
Fee                  daily net assets. 
- -------------------  ------------------------------------------------------------------------------------------------- 
Dividends and        Dividends from net investment income, if any, are paid at least annually. Capital gains, if any, 
Distributions        are distributed at least annually or retained for reinvestment by the Fund. Dividends and capital 
                     gains distributions are automatically reinvested in additional shares at net asset value unless 
                     the shareholder elects to receive cash (see page 22). 
- -------------------  ------------------------------------------------------------------------------------------------- 
Distributor and      Dean Witter Distributors Inc. (the "Distributor") is the Fund's Distributor. The Distributor 
Plan of              receives from the Fund a distribution fee accrued daily and payable monthly at the rate of 1.0% 
Distribution         per annum of the Fund's average daily net assets. This fee compensates the Distributor for the 
                     services provided in distributing shares of the Fund and for sales-related expenses. A portion of 
                     the 12b-1 fee equal to 0.25% of the Fund's average daily net assets is characterized as a service 
                     fee within the meaning of the National Association of Securities Dealers, Inc. ("NASD") 
                     guidelines and the remaining portion of the 12b-1 fee is characterized as an asset-based sales 
                     charge (see page 16). The Distributor also receives the proceeds of any contingent deferred sales 
                     charges (see page 20). 
- -------------------  ------------------------------------------------------------------------------------------------- 

                                2           
<PAGE>
- ----------------------------------------------------------------------------------------------------------------- 
Redemption--         Shares are redeemable by the shareholder at net asset value. An account may be involuntarily 
Contingent           redeemed if the total value of the account is less than $100 or, if the account was opened 
Deferred             through EasyInvest (Service Mark) , if after twelve months the shareholder has invested less than 
Sales                $5,000 in the account. Although no commission or sales load is imposed upon the purchase of 
Charge               shares, a contingent deferred sales charge (scaled down from 5% to 1%) is imposed on any 
                     redemption of shares if after such redemption the aggregate current value of an account with the 
                     Fund falls below the aggregate amount of the investor's purchase payments made during the six 
                     years preceding the redemption. However, there is no charge imposed on redemption of shares 
                     purchased through reinvestment of dividends or distributions (see pages 20-23). 
- -------------------  ------------------------------------------------------------------------------------------------- 
Risk                 The net asset value of the Fund's shares will fluctuate with changes in market value of portfolio 
Considerations       securities. Investing in small-sized market capitalization companies involves greater risk of 
                     volatility in the Fund's net asset value than is customarily associated with investing in larger, 
                     more established companies. Investing in "micro-cap" companies involves even greater risk than 
                     investing in companies in the higher end of the small equity market capitalization range. An 
                     investment in the Fund should be considered a long-term holding and subject to all the risks 
                     associated with small company stocks. The market value of the Fund's portfolio securities and, 
                     therefore, the Fund's net asset value per share, will increase or decrease due to a variety of 
                     economic, market or political factors which cannot be predicted. The Fund may invest in 
                     lower-rated convertible and non-convertible fixed-income securities, may enter into repurchase 
                     agreements, may purchase securities on a when-issued, delayed delivery or forward commitment 
                     basis, may purchase securities on a "when, as and if issued" basis, may lend its portfolio 
                     securities and may utilize certain investment techniques including transactions involving stock 
                     index futures which 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. 
                     An investment in shares of the Fund should not be considered a complete investment program and is 
                     not appropriate for all investors. Investors should carefully consider their ability to assume 
                     these risks and the risks outlined under the heading "Risk Considerations and Investment 
                     Practices" (pages 9-14) before making an investment in the Fund. 
- -------------------  ------------------------------------------------------------------------------------------------- 
Shareholder          Automatic Investment of Dividends and Distributions; Investment of Distributions Received in 
Services             Cash; Systematic Withdrawal Plan; Exchange Privilege; EasyInvest (Service Mark); Tax-Sheltered 
                     Retirement Plans (see pages 17-20). 
- -------------------  ------------------------------------------------------------------------------------------------- 
</TABLE>
    

The above is qualified in its entirety by the detailed information appearing 
                         elsewhere in this 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 estimated annualized fees and expenses set forth in 
the table below are for the fiscal period ending July 31, 1997. 
    

<TABLE>
<CAPTION>
<S>                                                                                        <C>
Shareholder Transaction Expenses 
- ------------------------------------------------------------------------------------ 
Maximum Sales Charge Imposed on Purchases ...........................................      None 
Maximum Sales Charge Imposed on Reinvested Dividends ................................      None 
Contingent Deferred Sales Charge 
 (as a percentage of the lesser of original purchase price or redemption proceeds)  .      5.0% 
</TABLE>

           A contingent deferred sales charge is imposed at the following 
declining rates: 

<TABLE>
<CAPTION>
YEAR SINCE PURCHASE 
PAYMENT MADE                   PERCENTAGE 
- --------------------------  -------------- 
<S>                         <C>
First .....................       5.0% 
Second ....................       4.0% 
Third .....................       3.0% 
Fourth ....................       2.0% 
Fifth .....................       2.0% 
Sixth .....................       1.0% 
                                  None 
Seventh and thereafter  ... 
</TABLE>

   
<TABLE>
<CAPTION>
<S>                                                                            <C>
 Redemption Fees ..........................................................     None 
Exchange Fee .............................................................      None 
Annual Fund Operating Expenses (as a Percentage of Average Net Assets) 
- ------------------------------------------------------------------------- 
Management Fees ..........................................................     0.75% 
12b-1 Fees* ..............................................................     1.00% 
Other Expenses ...........................................................     0.36% 
Total Fund Operating Expenses** ..........................................     2.11% 
</TABLE>
    

   *  The 12b-1 fee is accrued daily and payable monthly, at an annual rate of 
      1.0% of the Fund's average daily net assets. A portion of the 12b-1 fee 
      equal to 0.25% of the Fund's average daily net assets is characterized 
      as a service fee within the meaning of National Association of 
      Securities Dealers, Inc. ("NASD") guidelines and is a payment made to 
      the selling broker for personal service and/or maintenance of 
      shareholder accounts. The remainder of the 12b-1 fee 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"). 

   
   ** "Total Fund Operating Expenses," as shown above, are based upon the sum 
      of annualized 12b-1 Fees, Management Fees and "Other Expenses" which may 
      be incurred by the Fund for the fiscal period ended July 31, 1997. 
    

   
<TABLE>
<CAPTION>
 EXAMPLE                                                                               1 YEAR    3 YEARS 
- -----------------------------------------------------------------------------------  --------  --------- 
<S>                                                                                  <C>       <C>
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual 
 return and (2) redemption at the end of each time period: .........................    $71        $96 
You would pay the following expenses on the same investment, assuming no 
redemption: ........................................................................    $21        $66 
</TABLE>
    

   THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR 
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES OF THE FUND 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" and "Plan of Distribution." 

   Long-term shareholders of the Fund may pay more in distribution fees than 
the economic equivalent of the maximum front-end sales charge permitted by 
the NASD. 

                                4           
<PAGE>
   
FINANCIAL HIGHLIGHTS (unaudited) 
- ----------------------------------------------------------------------------- 

The following ratios and per share data for a share of beneficial interest 
outstanding throughout the period have been taken from the records of the 
Fund without examination by the independent accountants. The financial 
highlights should be read in conjunction with the unaudited financial 
statements and the notes thereto which are contained in this Prospectus 
commencing on page 25. 
    

   
<TABLE>
<CAPTION>
                                             FOR THE PERIOD 
                                            OCTOBER 29, 1996* 
                                                 THROUGH 
                                            JANUARY 31, 1997 
- -----------------------------------------  ----------------- 
<S>                                        <C>
PER SHARE OPERATING PERFORMANCE: 
Net asset value, beginning of period  ....      $  10.00 
                                           ----------------- 
Net investment income ....................          0.02 
Net realized and unrealized gain  ........          0.59 
                                           ----------------- 
Total from investment operations  ........          0.61 
Less dividends from net investment income          (0.03) 
                                           ----------------- 
Net asset value, end of period ...........      $  10.58 
                                           ================= 
TOTAL INVESTMENT RETURN+ .................          6.07%(1) 
RATIOS TO AVERAGE NET ASSETS: 
Expenses .................................          2.11%(2) 
Net investment income ....................          0.72%(2) 
SUPPLEMENTAL DATA: 
Net assets, end of period, in thousands  .      $225,286 
Portfolio turnover rate ..................             5%(1) 
Average commission rate paid .............      $ 0.0573 
</TABLE>
    
[FN]
   
- ------------ 

   *   Commencement of operations. 

   +   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. 

See Notes to Financial Statements 
    

                                5           
<PAGE>
THE FUND AND ITS MANAGEMENT 
- ----------------------------------------------------------------------------- 

   
   Dean Witter Special Value Fund (the "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 June 21, 1996. 
    

   Dean Witter InterCapital Inc. ("InterCapital" 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, which was 
incorporated in July, 1992, is a wholly-owned subsidiary of Dean Witter, 
Discover & Co. ("DWDC"), a balanced financial services organization providing 
a broad range of nationally marketed credit and investment products. 

   
   InterCapital and its wholly-owned subsidiary, Dean Witter Services Company 
Inc., serve in various investment management, advisory, management and 
administrative capacities to 101 investment companies, thirty of which are 
listed on the New York Stock Exchange, with combined assets of approximately 
$89.3 billion at January 31, 1997. The Investment Manager also manages 
portfolios of pension plans, other institutions and individuals which 
aggregated approximately $3.2 billion at such date. 

   On February 5, 1997, DWDC and Morgan Stanley Group Inc. announced that 
they had entered into an Agreement and Plan of Merger, with the combined 
company to be named Morgan Stanley, Dean Witter, Discover & Co. The business 
of Morgan Stanley Group Inc. and its affiliated companies is providing a wide 
range of financial services for sovereign governments, corporations, 
institutions and individuals throughout the world. DWDC is the direct parent 
of InterCapital and Dean Witter Distributors Inc., the Fund's distributor. It 
is currently anticipated that the transaction will close in mid-1997. 
Thereafter, InterCapital and Dean Witter Distributors Inc. will be direct 
subsidiaries of Morgan Stanley, Dean Witter, Discover & Co. 
    

   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. InterCapital has retained Dean Witter Services Company 
Inc. to perform the aforementioned administrative services for the Fund. 

   The Fund's Trustees review 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 incurred by the Investment Manager, the Fund 
pays the Investment Manager monthly compensation calculated daily by applying 
the annual rate of 0.75% to the Fund's net assets. 

   
   The Fund's expenses include: the fee of the Investment Manager; the fee 
pursuant to the Plan of Distribution (see "Purchase of Fund Shares"); taxes; 
transfer agent, custodian, auditing fees; and 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 long-term capital appreciation. 
The objective is a fundamental policy of the Fund and may not be changed 
without a vote of a majority of the outstanding voting securities of the 
Fund. There is no assurance that the objective will be achieved. The 
following policies may be changed by the Board of Trustees without 
shareholder approval. 

   The Fund seeks to achieve its objective by investing primarily in equity 
securities issued by 

                                6           
<PAGE>
companies whose equity market capitalization, at the time of purchase, falls 
within the range of $100 million to $1 billion and that, in the opinion of 
the Investment Manager, appear undervalued relative to the marketplace or to 
investments in similar companies. Under normal market conditions, the Fund 
will invest at least 65% of its total assets in common stocks issued by these 
small-sized companies. Up to 35% of the Fund's total assets may be invested 
in common stocks not meeting the foregoing small company equity market 
parameters, in debt or preferred equity securities convertible into or 
exchangeable for equity securities, in non-convertible debt or preferred 
equity securities, and in rights and warrants. 

   The Investment Manager intends to pursue a value-oriented approach in 
selecting securities for the Fund's portfolio. This approach seeks to 
identify securities whose market value, in the Investment Manager's view, is 
less than their intrinsic value. The Investment Manager believes that 
securities of certain small companies often trade at a discount from their 
intrinsic value (sometimes also referred to as "business value" or 
"investment worth"). 

   Stocks of small companies are often under-researched and not widely 
recognized by stock analysts or the financial press and, as a result, may be 
less efficiently priced than larger, better-known companies. In addition, 
small companies may have other unique attributes which make them relatively 
undervalued in the market place compared to other similar larger companies. 
The Investment Manager will attempt to identify and invest in such securities 
for the Fund with the expectation that the "value discount" may narrow over 
time and lead to capital appreciation for the Fund. 

   As part of the value-oriented approach, the Investment Manager, based on 
research and analysis, will seek to identify companies with attributes which 
the Investment Manager believes provide growth opportunities but are not 
fairly valued in the market place. Such attributes may include, among other 
things, one or more of the following: valuable franchises or other 
intangibles; ownership of valuable trademarks or trade names; control of 
distribution networks or of other market share for particular products; 
ownership of real estate, the value of which is understated; underutilized 
liquidity and other factors that would identify the issuer as a potential 
takeover target or turnaround candidate. 

   In addition to, or instead of, seeking companies with attributes such as 
those described above, the Investment Manager may select securities for 
investment by the Fund on the basis of the Investment Manager's belief that 
the potential exists for some catalyst to cause a stock's price to rise. Such 
a catalyst might include, among other things, one or more of the following: 
increased investor attention, asset sales, corporate restructurings or 
reorganizations, a cyclical turnaround of a depressed business or industry, a 
new product/innovation, or significant changes in management and regulatory 
or environmental shifts. 

   In its security selection process, the Investment Manager will focus 
initially on securities with market-to-book ratios and price-earnings ratios 
which are lower than those of the general market averages or those of 
securities of similar companies, although the Fund is not restricted to 
selecting only securities with those characteristics if other indicators of a 
value discount exist. In evaluating a company as a potential investment of 
the Fund, the Investment Manager will consider factors such as the company's 
dividend yield (if any), growth in sales, balance sheet, average 
sales-per-share, cash flow per share, management capabilities, attractiveness 
of business opportunities, pricing flexibility, financial and accounting 
practices and an ability or prospects to increase revenues, earnings and cash 
flow, and profitability, in an effort to determine whether the company's 
intrinsic value is greater than its market price. 

   The Fund's strategy of investing in small companies will involve 
investment in a large number of portfolio securities which may be volatile 
and long-term in nature. Such investments may include "micro-cap" companies 
(generally, companies with equity market capitalization of less than $150 
mil- 

                                7           
<PAGE>
lion) which represent some of the smallest and least liquid equity securities 
in the U.S. markets. An investment in the Fund, therefore, should be 
considered a long-term holding and not a complete investment program and may 
not be suitable for all investors. For a further discussion of the risks of 
investing in smaller companies, see "Risk Considerations and Investment 
Practices" below. 

   Fixed-income securities in which the Fund may invest include corporate 
notes and bonds and obligations issued or guaranteed by the U.S. Government, 
its agencies and instrumentalities. The non-governmental debt securities in 
which the Fund will invest will include: (a) corporate debt securities, 
including bonds, notes and commercial paper, rated in the four highest 
categories by a nationally recognized statistical rating organization 
("NRSRO") including Moody's Investors Service, Inc. ("Moody's"), Standard & 
Poor's Corporation ("S&P"), Duff and Phelps, Inc. and Fitch Investors 
Service, Inc., or, if unrated, of comparable quality as determined by the 
Investment Manager; and (b) bank obligations, including CDs, banker's 
acceptances and time deposits, issued by banks with a long-term CD rating in 
one of the four highest categories by a NRSRO. Investments in securities 
rated within the four highest rating categories by a NRSRO are considered 
"investment grade." However, such securities rated within the fourth highest 
rating category by a NRSRO have speculative characteristics and, therefore, 
changes in economic conditions or other circumstances are more likely to 
weaken the capacity of their issuers to make principal and interest payments 
than would be the case with investments in securities with higher credit 
ratings. Where a fixed-income security is not rated by a NRSRO, the 
Investment Manager will make a determination of its creditworthiness and may 
deem it to be investment grade. 

   The Fund also may invest up to 20% of its total assets in convertible 
fixed-income securities rated below investment grade or, if unrated, of 
comparable quality as determined by the Investment Manager. In addition, the 
Fund may invest up to 5% of its total assets in non-convertible fixed-income 
securities rated below investment grade or, if unrated, of comparable quality 
as determined by the Investment Manager. Securities below investment grade 
are the equivalent of high yield, high risk bonds (commonly known as "junk 
bonds"). The Fund will not invest in fixed-income securities that are in 
default in payment of principal or interest. In the event that the Fund's 
investments in securities rated below investment grade, including downgraded 
securities, constitute more than 20% (in the case of convertible fixed-income 
securities) or 5% (in the case of non-convertible fixed-income securities) of 
the Fund's total assets, the Fund will seek immediately to sell sufficient 
securities to reduce the total to below the applicable percentage. See "Risk 
Considerations and Investment Practices" below for a discussion of the risks 
of investing in lower-rated and unrated fixed-income securities and the 
Appendix to the Statement of Additional Information for a description of 
fixed-income security ratings. 

   The U.S. Government securities in which the Fund may invest include 
securities which are direct obligations of the United States Government, such 
as United States treasury bills, notes and bonds, and which are backed by the 
full faith and credit of the United States; securities which are backed by 
the full faith and credit of the United States but which are obligations of a 
United States agency or instrumentality (e.g., obligations of the Government 
National Mortgage Association); securities issued by a United States agency 
or instrumentality which has the right to borrow, to meet its obligations, 
from an existing line of credit with the United States Treasury (e.g., 
obligations of the Federal National Mortgage Association); securities issued 
by a United States agency or instrumentality which is backed by the credit of 
the issuing agency or instrumentality (e.g., obligations of the Federal Farm 
Credit System). 

   Money market instruments in which the Fund may invest include securities 
issued or guaranteed by the U.S. Government, its agencies and 
instrumentalities (Treasury bills, notes and bonds, including zero coupon 
securities); bank obligations; Eurodollar certificates of deposit; 
obligations of savings institutions; fully insured certificates of deposit; 
and 

                                8           
<PAGE>
commercial paper rated within the four highest grades by Moody's or S&P or, 
if not rated, issued by a company having an outstanding debt issue rated at 
least AA by S&P or Aa by Moody's. Such securities may be used to invest 
uncommitted cash balances. 

   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 up to 100% of its total assets is invested in 
money market instruments or cash. 

   The Fund may invest in American Depository Receipts (see "Risk 
Considerations and Investment Practices" below) and securities of Canadian 
issuers registered under the Securities Act of 1934, but under current policy 
the Fund will not otherwise invest in foreign securities. The Fund may also 
purchase and sell futures contracts on stock indexes, may invest in 
repurchase agreements, private placements, zero coupon securities and real 
estate investment trusts, may purchase securities on a when-issued, delayed 
delivery or forward commitment basis, may purchase securities on a "when, as 
and if issued" basis, and may lend its portfolio securities, as discussed 
under "Risk Considerations and Investment Practices" below. 

   The Fund reserves the right to seek to achieve its investment objective by 
converting to a "master/ feeder" fund structure (see "Additional 
Information"). 

RISK CONSIDERATIONS AND 
INVESTMENT PRACTICES 

   The net asset value of the Fund's shares will fluctuate with changes in 
the market value of the Fund's portfolio securities. The market value of the 
Fund's portfolio securities will increase or decrease due to a variety of 
economic, market or political factors which cannot be predicted. 

   Stocks of Smaller Companies. The Fund's strategy of investing in smaller 
companies carries more risk than investments in larger companies. As noted 
above, such investments may include "micro-cap" companies representing some 
of the smallest and least liquid equity securities in the U.S. markets. While 
some of the Fund's holdings may be listed on a national securities exchange, 
portfolio securities are more likely to be traded in the over-the-counter 
market. The low market liquidity of the Fund's holdings may have an adverse 
impact on the Fund's ability to sell certain portfolio securities at 
favorable prices and may also make it difficult for the Fund to obtain market 
quotations based on actual trades, for purposes of valuing the Fund's 
portfolio securities. 

   Investing in lesser-known, smaller capitalization companies involves 
greater risk of volatility of the Fund's net asset value than is customarily 
associated with larger, more established companies. Often smaller 
capitalization companies and the industries in which they are focused are 
still evolving and, while this may offer better growth potential than larger, 
more established companies, it also may make them more sensitive to changing 
market conditions. 

   Other risks of investing in smaller capitalization companies include the 
probability that some companies may never realize the value discount 
potential that appeared to be inherent in them at the time of investment or 
may even fail as a business for several reasons. A new product or innovation 
may not take hold, an anticipated takeover or turnaround may not occur, a 
trademark may lose its value to other generic products. Also, smaller 
companies may lack the resources, financial or otherwise, to take advantage 
of a valuable product or favorable market position or may be unable to 
withstand the competitive pressures of larger, more established rivals. The 
Investment Manager will seek to minimize the risks described above by broad 
diversification of the Fund's portfolio. However, there can be no assurance 
that such diversification will prevent loss in value of certain portfolio 
securities or in the Fund's net asset value. 

   Convertible Securities. A convertible security is a bond, debenture, note, 
preferred stock or other security that may be converted into or exchanged for 
a prescribed amount of common stock of the 

                                9           
<PAGE>
same or a different issuer within a particular period of time at a specified 
price or formula. Convertible securities rank senior to common stocks in a 
corporation's capital structure and, therefore, entail less risk than the 
corporation's common stock. The value of a convertible security is a function 
of its "investment value" (its value as if it did not have a conversion 
privilege), and its "conversion value" (the security's worth if it were to be 
exchanged for the underlying security, at market value, pursuant to its 
conversion privilege). 

   To the extent that a convertible security's investment value is greater 
than its conversion value, its price will be primarily a reflection of such 
investment value and its price will be likely to increase when interest rates 
fall and decrease when interest rates rise, as with a fixed-income security 
(the credit standing of the issuer and other factors may also have an effect 
on the convertible security's value). If the conversion value exceeds the 
investment value, the price of the convertible security will rise above its 
investment value and, in addition, the security may 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 Fund may invest up to 25% of its total assets in "enhanced" 
convertible securities. Enhanced convertible securities offer holders the 
opportunity to obtain higher current income than would be available from a 
traditional equity security issued by the same company, in return for reduced 
participation or a cap on appreciation in the underlying common stock of the 
issuer which the holder can realize. In addition, in many cases, enhanced 
convertible securities are convertible into the underlying common stock of 
the issuer automatically at maturity, unlike traditional convertible 
securities which are convertible only at the option of the security holder. 
Enhanced convertible securities may be more volatile than traditional 
convertible securities due to the mandatory conversion feature. 

   The Fund also may invest up to 10% in "synthetic" convertible securities. 
Unlike traditional convertible securities whose conversion values are based 
on the common stock of the issuer of the convertible security, "synthetic" 
convertible securities are preferred stocks or debt obligations of an issuer 
which are combined with an equity component whose conversion value is based 
on the value of the common stock of a different issuer or a particular 
benchmark (which may include a foreign issuer or basket of foreign stocks, or 
a company whose stock is not yet publicly traded). In many cases, "synthetic" 
convertible securities are not convertible prior to maturity, at which time 
the value of the security is paid in cash by the issuer. 

   "Synthetic" convertible securities may be less liquid than traditional 
convertible securities and their price changes may be more volatile. Reduced 
liquidity may have an adverse impact on the Fund's ability to sell particular 
synthetic securities promptly at favorable prices and may also make it more 
difficult for the Fund to obtain market quotations based on actual trades, 
for purposes of valuing the Fund's portfolio securities. 

   The Fund may invest without limitation in "exchangeable" convertible bonds 
and convertible preferred stock which are issued by one company, but 
convertible into the common stock of a different publicly traded company. 
These securities generally have liquidity trading and risk characteristics 
similar to traditional convertible securities noted above. 

   Because of the special nature of the Fund's permitted investments in lower 
rated convertible securities, the Investment Manager must take account of 
certain special considerations in assessing the risks associated with such 
investments. (Lower rated convertible and fixed-income securities are 
commonly known as "junk bonds.") These considerations are discussed below 
under "Lower-Rated Convertible and Fixed-Income Securities." 

   Corporate Notes and Bonds. Values and yield of corporate bonds will 
fluctuate with changes in prevailing interest rates and other factors. 
Generally, as prevailing interest rates rise, the value of corpo- 

                               10           
<PAGE>
rate notes and bonds held by the Fund will fall. Securities with longer 
maturities generally tend to produce higher yields and are subject to greater 
market fluctuation as a result of changes in interest rates than debt 
securities with shorter maturities. The Fund is not limited as to the 
maturities of the debt securities in which it may invest. 

   Lower-Rated Convertible and Fixed-Income Securities. A portion of the 
fixed-income and convertible securities in which the Fund may invest will 
generally be below investment grade (see above). Securities below investment 
grade are the equivalent of high yield, high risk bonds, commonly known as 
"junk bonds." Investment grade is generally considered to be debt securities 
rated BBB or higher by S&P or Baa or higher by Moody's. Fixed-income 
securities rated Baa by Moody's or BBB by S&P have speculative 
characteristics greater than those of more highly rated securities, while 
fixed-income securities rated Ba or BB or lower by Moody's or S&P, 
respectively, are considered to be speculative investments. As noted above, 
the Fund will not invest in fixed-income securities that are in default in 
payment of principal or interest. 

   Because of the special nature of the Fund's permitted investments in lower 
rated securities, it must take account of certain special considerations in 
assessing the risks associated with such investments. The prices of lower 
rated securities have been found to be less sensitive to changes in 
prevailing interest rates than higher rated investments, but are likely to be 
more sensitive to adverse economic changes or individual corporate 
developments. During an economic downturn or substantial period of rising 
interest rates, highly leveraged issuers may experience financial stress 
which would adversely affect their ability to service their principal and 
interest payment obligations, to meet their projected business goals or to 
obtain additional financing. If the issuer of a lower-rated security owned by 
the Fund defaults, the Fund may incur additional expenses to seek recovery. 
In addition, periods of economic uncertainty and change can be expected to 
result in an increased volatility of market prices of lower rated securities 
and a corresponding volatility in the net asset value of a share of the Fund. 

   Stock Index Futures Transactions. The Fund may purchase and sell futures 
contracts on stock indexes such as the Standard & Poor's 500 Composite Stock 
Price Index, the New York Stock Exchange Composite Index and the Russell 2000 
Index. An index futures contract sale creates an obligation by the Fund, as 
seller, to deliver cash at a specified future time. An index futures contract 
purchase would create an obligation by the Fund, as purchaser, to take 
delivery of cash at a specified future time. Futures contracts on indexes do 
not require the physical delivery of securities, but provide for a final cash 
settlement on the expiration date which reflects accumulated profits and 
losses credited or debited to each party's account. 

   The Fund may purchase or sell index futures contracts for the purpose of 
hedging some or all of its portfolio (or anticipated portfolio) securities 
against changes in their prices. Purchase of a futures contract by the Fund 
may serve as a temporary substitute for the purchase of individual stocks 
which may then be purchased in orderly fashion. The Fund will not enter into 
futures contracts on stock indexes for speculative purposes. The Fund may not 
enter into futures contracts if immediately thereafter the amount committed 
to margin exceeds 5% of the value of the Fund's total assets. The Fund may 
close out its position as a buyer or seller of a futures contract only if a 
liquid secondary market exists for futures contracts of that series. There is 
no assurance that such a market will exist. 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 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. Another risk which will arise in employing 

                               11           
<PAGE>
futures contracts to protect against the price volatility of portfolio 
securities is that the prices of indexes subject to futures contracts (and 
thereby the futures contract prices) may correlate imperfectly with the 
behavior of the cash prices of the Fund's portfolio securities. This risk may 
particularly apply, given the nature of the Fund's investments in securities 
of smaller companies rather than larger companies. See the Statement of 
Additional Information for a further discussion of risks. 

   The extent to which the Fund may enter into transactions involving futures 
contracts may be limited by the Internal Revenue Code's requirements for 
qualification as a regulated investment company and the Fund's intention to 
qualify as such. See "Dividends, Distributions and Taxes." 

   Rights and Warrants. The Fund may acquire rights and/or warrants which are 
attached to other securities in its portfolio, or which are issued as a 
distribution by the issuer of a security held in its portfolio. Rights and/or 
warrants are, in effect, options to purchase equity securities at a specific 
price, generally valid for a specific period of time, and have no voting 
rights, pay no dividends and have no rights with respect to the corporation 
issuing them. 

   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 debt securities from a 
selling financial institution such as a bank, savings and loan association or 
broker-dealer. The agreement provides that the Fund will sell back to the 
institution, and that the institution will repurchase, the underlying 
security 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 designed to minimize such 
risks. These procedures include effecting repurchase transactions only with 
large, well-capitalized and well-established financial institutions and 
maintaining adequate collateralization. 

   American Depository Receipts. The Fund may invest in securities of foreign 
issuers in the form of American Depository Receipts ("ADRs"), including ADRs 
sponsored by persons other than the underlying issuers ("unsponsored ADRs"). 
ADRs are receipts typically issued by a U.S. bank or trust company evidencing 
ownership of the underlying securities. Generally, issuers of the stock of 
unsponsored ADRs are not obligated to distribute material information in the 
United States and, therefore, there may not be a correlation between such 
information and the market value of such ADRs. 

   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. 
An increase in the percentage of the Fund's assets committed to the purchase 
of securities on a when-issued, delayed delivery or forward commitment basis 
may increase the volatility of its net asset value. See the Statement of 
Additional Information for additional risk disclosure. 

   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. 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. See 
the Statement of Additional Information for additional risk disclosure. 

   Zero Coupon Securities. A portion of the fixed-income securities purchased 
by the Fund may be zero coupon securities. Such securities are pur- 

                               12           
<PAGE>
chased at a discount from their face amount, giving the purchaser the right 
to receive their full value at maturity. The interest earned on such 
securities is, implicitly, automatically compounded and paid out at maturity. 
While such compounding at a constant rate eliminates the risk of receiving 
lower yields upon reinvestment of interest if prevailing interest rates 
decline, the owner of a zero coupon security will be unable to participate in 
higher yields upon reinvestment of interest received on interest-paying 
securities if prevailing interest rates rise. 

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

   Investment in Real Estate Investment Trusts. The Fund may invest in real 
estate investment trusts, which pool investors' funds for investments 
primarily in commercial real estate properties. Investment in real estate 
investment trusts may be the most practical available means for the Fund to 
invest in the real estate industry (the Fund is prohibited from investing in 
real estate directly). As a shareholder in a real estate investment trust, 
the Fund would bear its ratable share of the real estate investment trust's 
expenses, including its advisory and administration fees. At the same time 
the Fund would continue to pay its own investment management fees and other 
expenses, as a result of which the Fund and its shareholders in effect will 
be absorbing duplicate levels of fees with respect to investments in real 
estate investment trusts. Real estate investment trusts are not diversified 
and are subject to the risk of financing projects. They are also subject to 
heavy cash flow dependency, defaults by borrowers or tenants, 
self-liquidation, and the possibility of failing to qualify for tax-free 
status under the Internal Revenue Code and failing to maintain exemption from 
the Act. 

   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. 

   Lending of Portfolio Securities.  Consistent with applicable regulatory 
requirements, the Fund may lend its portfolio securities to brokers, dealers 
and other financial institutions, provided that such loans are callable at 
any time by the Fund (subject 

                               13           
<PAGE>
to certain notice provisions described in the Statement of Additional 
Information), and are at all times secured by cash or money market 
instruments, which are maintained in a segregated account pursuant to 
applicable regulations and that are equal to at least the market value, 
determined daily, of the loaned securities. As with any extensions of credit, 
there are risks of delay in recovery and in some cases even loss of rights in 
the collateral should the borrower of the securities fail financially. 
However, loans of portfolio securities will only be made to firms deemed by 
the Investment Manager to be creditworthy and when the income which can be 
earned from such loans justifies the attendant risks. 

   For additional risk disclosure, please refer to the "Investment Objective 
and Policies" section of the Prospectus and to the "Investment Practices and 
Policies" section of the Statement of Additional Information. 

   Except as specifically noted, all investment policies and practices 
discussed above are not fundamental policies of the Fund and, as such, may be 
changed without shareholder approval. 

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. ("DWR"), a broker-dealer affiliate of InterCapital, the 
views of Trustees of the Fund and others regarding economic developments and 
interest rate trends, and the Investment Manager's own analysis of factors it 
deems relevant. Jenny Beth Jones, Senior Vice President of InterCapital, has 
been the primary portfolio manager of the Fund since its inception. Prior to 
joining InterCapital in August, 1996, Ms. Jones was a portfolio manager at 
Oppenheimer Capital. 
    

   Although the Fund does not intend to engage in short-term trading of 
portfolio securities as a means of achieving its investment objective, it may 
sell portfolio securities without regard to the length of time they have been 
held whenever such sale will in the Investment Manager's opinion strengthen 
the Fund's position and contribute to its investment objective. Orders for 
transactions in portfolio securities and commodities are placed for the Fund 
with a number of brokers and dealers, including DWR. The Fund may incur 
brokerage commissions on transactions conducted through DWR. Pursuant to an 
order of the Securities and Exchange Commission, the Fund may effect 
principal transactions in certain money market instruments with DWR. It is 
not anticipated that the portfolio trading will result in the Fund's 
portfolio turnover rate exceeding 100% in any one year. The Fund will incur 
brokerage costs commensurate with its portfolio turnover rate. See 
"Dividends, Distributions and Taxes" for a discussion of the tax implications 
of the Fund's trading policy. 

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. 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 instrumentali- 

                               14           
<PAGE>
ties), except that the Fund may invest all or substantially all of its assets 
in another registered investment company having the same investment objective 
and policies and substantially the same investment restrictions as the Fund 
(a "Qualifying Portfolio"). 

   2. Purchase more than 10% of all outstanding voting securities or any 
class of securities of any one issuer, except that the Fund may invest all or 
substantially all of its assets in a Qualifying Portfolio. 

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

   
   4. Invest more than 5% of the value of its total assets in securities of 
issuers having a record, together with predecessors, of less than three years 
of continuous operation. This restriction shall not apply to any investment 
in a Qualifying Portfolio or any obligation of the United States Government, 
its agencies or instrumentalities. (See the Statement of Additional 
Information for additional investment restrictions.) 

PURCHASE OF FUND SHARES 
- ----------------------------------------------------------------------------- 

   The Fund offers its shares to the public on a continuous basis. Pursuant 
to a Distribution Agreement between the Fund and Dean Witter Distributors 
Inc. (the "Distributor"), an affiliate of the Investment Manager, shares of 
the Fund are distributed by the Distributor and offered by DWR and other 
dealers which have entered into selected dealer agreements with the 
Distributor ("Selected Broker-Dealers"). The principal executive office of 
the Distributor is located at Two World Trade Center, New York, New York 
10048. 

   The Fund has temporarily suspended the offering of its shares to new 
investors. Current shareholders continue to be able to purchase additional 
Fund shares. Automatic reinvestment of dividends and distributions, and other 
shareholder services for existing shareholders such as the Systematic 
Withdrawal Plan, EasyInvest (Service Mark) and the Exchange Privilege (see 
"Shareholder Services"), are not affected. The Fund will recommence offering 
its shares to new investors from time to time as may be determined by the 
Investment Manager to be consistent with prudent portfolio management. 
    

   The minimum initial purchase is $5,000. Minimum subsequent purchases of 
$100 or more may be made by sending a check, payable to Dean Witter Special 
Value Fund, directly to Dean Witter Trust Company (the "Transfer Agent") at 
P.O. Box 1040, Jersey City, NJ 07303 or by contacting an account executive of 
DWR or other Selected Broker-Dealer. The minimum initial purchase in the case 
of investments through EasyInvest (Service Mark), an automatic purchase plan 
(see "Shareholder Services"), is $500, provided that the schedule of 
automatic investments will result in investments totalling at least $5,000 
within the first twelve months. In the case of investments pursuant to 
Systematic Payroll Deduction Plans (including Individual Retirement Plans), 
the Fund, in its discretion, may accept investments without regard to any 
minimum amounts which would otherwise be required if the Fund has reason to 
believe that additional investments will increase the investment in all 
accounts under such Plans to at least $5,000. Certificates for shares 
purchased will not be issued unless a request is made by the shareholder in 
writing to the Transfer Agent. The offering price will be the net asset value 
per share next determined following receipt of an order (see "Determination 
of Net Asset Value"). 

   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 
day (settlement date) 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 

                               15           
<PAGE>
   
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. While no sales charge is imposed at the time shares are 
purchased, a contingent deferred sales charge may be imposed at the time of 
redemption (see "Redemptions and Repurchases"). Sales personnel are 
compensated for selling shares of the Fund by the Distributor and/or Selected 
Broker-Dealer. In addition, some sales personnel of the Selected 
Broker-Dealer will receive various types of 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. 

PLAN OF DISTRIBUTION 

   The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under 
the Act (the "Plan"), under which the Fund pays the Distributor a fee, which 
is accrued daily and payable monthly, at an annual rate of 1.0% of the Fund's 
average daily net assets. This fee is treated by the Fund as an expense in 
the year it is accrued. A portion of the fee payable pursuant to the Plan, 
equal to 0.25% of the Fund's average daily net assets, is characterized as a 
service fee within the meaning of NASD guidelines. The service fee is a 
payment made for personal service and/or the maintenance of shareholder 
accounts. 
    

   Amounts paid under the Plan are paid to the Distributor for services 
provided and the expenses borne by the Distributor and others in the 
distribution of the Fund's shares, including the payment of commissions for 
sales of the Fund's shares and incentive compensation to and expenses of 
DWR's account executives 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 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 period October 29, 1996 (commencement of operations) 
through January 31, 1997, the Fund accrued payments under the Plan amounting 
to $486,592, which amount is equal to 1.0% of the Fund's average daily net 
assets for the fiscal period. 

   At any given time, the expenses in distributing 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 contingent deferred sales charges paid by 
investors upon the re demption of shares (see "Redemptions and 
Repurchases--Contingent Deferred Sales Charge"). For example, if $1 million 
in expenses in distributing 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 the 
excess distribution expenses (including the carrying charge described above) 
totalled $11,160,385 at January 31, 1997, which was equal to 4.95% of the 
Fund's net assets 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, if any, 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 contingent deferred sales charges paid by 
investors upon redemption of shares, if for any reason the Plan is terminated 
the Trustees will consider at that time the manner in which to treat such 
expenses. Any cumulative expenses incurred, but not yet recovered through 
distribution fees or contingent deferred sales charges, may or may not be 
recovered through future distribution fees or contingent deferred sales 
charges. 

DETERMINATION OF NET ASSET VALUE 

   The net asset value per share of the Fund is determined once daily at 4:00 
p.m., New York time, 

                               16           
<PAGE>
on each day that the New York Stock Exchange is open (or, on days when the 
New York Stock Exchange closes prior to 4:00 p.m., at such earlier time), by 
taking the value of all assets of the Fund, subtracting all its liabilities, 
dividing by the number of shares outstanding and adjusting to the nearest 
cent. 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 
stock exchange is valued at its latest sale price on that exchange prior to 
the time assets are valued; if there were no sales that day, the security is 
valued at the latest bid price (in cases where a security is traded on more 
than one exchange, the security is valued on the exchange designated as the 
primary market pursuant to procedures adopted by the Trustees); (2) all other 
portfolio securities for which over-the-counter market quotations are readily 
available are valued at the latest bid price; (3) when market quotations are 
not readily available, including circumstances under which it is determined 
by the Investment Manager that sale or bid prices are not reflective of a 
security's market value, portfolio securities are valued at their fair value 
as determined in good faith under procedures established by and under the 
general supervision of the Fund's Trustees (valuation of debt securities for 
which market quotations are not readily available may be based upon current 
market prices of securities which are comparable in coupon, rating and 
maturity or an appropriate matrix utilizing similar factors); (4) the value 
of short-term debt securities which mature at a date less than sixty days 
subsequent to valuation date will be determined on an amortized cost or 
amortized value basis; and (5) the value of other assets will be determined 
in good faith at fair value under procedures established by and under the 
general supervision of the Fund's Trustees. Dividends receivable are accrued 
as of the ex-dividend date. Interest income is accrued daily. Certain 
securities in the Fund's portfolio may be valued by an outside pricing 
service approved by the Fund's Trustees. 
    

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 Fund (or, if specified by the shareholder, any other open-end 
investment company for which InterCapital serves as investment manager 
(collectively, with the Fund, the "Dean Witter Funds")), unless the 
shareholder requests that they be paid in cash. Shares so acquired are not 
subject to the imposition of a contingent deferred sales charge upon their 
redemption (see "Redemptions and Repurchases"). 

   Investment of Dividends or Distributions Received in Cash. Any shareholder 
who receives a cash payment representing a dividend or capital gains 
distribution may invest such dividend or distribution at the net asset value 
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 not subject to the imposition of a contingent 
deferred sales charge upon their redemption (see "Redemptions and 
Repurchases"). 

   
   EasyInvest (Service Mark). 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, 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"). EasyInvest (Service 
Mark) is available to new investors during any period when the Fund is 
offering its shares to new investors. 
    

   Systematic Withdrawal Plan. A systematic withdrawal plan (the "Withdrawal 
Plan") is available for shareholders who own or purchase shares of the 

                               17           
<PAGE>

   
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 amount, not less than $25, or in any 
whole percentage of the account balance, on an annualized basis. Any 
applicable contingent deferred sales charge will be imposed on shares 
redeemed under the Withdrawal Plan (see "Redemptions and 
Repurchases--Contingent Deferred Sales Charge"). Therefore, any shareholder 
participating in the Withdrawal Plan will have sufficient shares redeemed 
from his or her account so that the proceeds to the shareholder will be the 
designated monthly or quarterly amount. 
    

   Shareholders should contact their DWR or other Selected Broker-Dealer 
account executive 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, custodial fees and 
other details, investors should contact their DWR or other Selected 
Broker-Dealer account executive or the Transfer Agent. 

EXCHANGE PRIVILEGE 

   
   The Fund makes available to its shareholders an "Exchange Privilege" 
allowing the exchange of shares of the Fund for shares of other Dean Witter 
Funds sold with a contingent deferred sales charge ("CDSC funds"), and for 
shares of Dean Witter Short-Term U.S. Treasury Trust, Dean Witter Limited 
Term Municipal Trust, Dean Witter Short-Term Bond Fund, Dean Witter Balanced 
Income Fund, Dean Witter Balanced Growth Fund, Dean Witter Intermediate Term 
U.S. Treasury Trust and five Dean Witter Funds which are money market funds 
(the foregoing eleven non-CDSC funds are hereinafter collectively referred to 
in this section as the "Exchange Funds.") 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. 
Shareholders utilizing the Fund's Exchange Privilege may subsequently 
re-exchange such shares back to the Fund during any period when the Fund is 
offering its shares to new investors. 
    

   An exchange to another CDSC fund 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 day. Subsequent exchanges between any of 
the money market funds and any of the CDSC funds can be effected on the same 
basis. No contingent deferred sales charge ("CDSC") is imposed at the time of 
any exchange, although any applicable CDSC will be imposed upon ultimate 
redemption. Shares of the Fund acquired in exchange for shares of another 
CDSC fund having a different CDSC schedule than that of this Fund will be 
subject to the CDSC schedule of this Fund, even if such shares are 
subsequently re-exchanged for shares of the CDSC fund originally purchased. 
During the period of time the shareholder remains invested in shares of 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 
reexchanged for shares of a CDSC fund, the holding period previously frozen 
when the first exchange was made resumes on the last day of the month in 
which shares of a CDSC fund are reacquired. Thus, the CDSC is based upon the 
time (calculated as described above) the shareholder was invested in shares 
of a CDSC fund (see "Redemptions and Repurchases--Contingent Deferred Sales 
Charge"). However, in the case of shares exchanged into an Exchange Fund on 
or 

                               18           
<PAGE>
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, if any, 
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.) 

   In addition, shares of the Fund may be acquired in exchange for shares of 
Dean Witter Funds sold with a front-end sales charge ("front-end sales charge 
funds"), but shares of the Fund, however acquired, may not be exchanged for 
shares of front-end sales charge funds. Shares of a CDSC fund acquired in 
exchange for shares of a front-end sales charge fund (or in exchange for 
shares of other Dean Witter Funds for which shares of a front-end sales 
charge fund have been exchanged) are not subject to any CDSC upon their 
redemption. 

   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 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 to 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 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 Broker-Dealer are referred to their account executive 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 read it carefully 
before investing. Exchanges are subject to the minimum investment requirement 
and any other conditions imposed by each fund. An exchange will be treated 
for federal income tax purposes the same as a repurchase or redemption of 
shares on which the shareholder has realized 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 above 
Dean Witter Funds (for which the Exchange Privilege is available) pursuant to 
this Exchange Privilege by contacting their DWR or other Selected Dealer 
account executive (no Exchange Privilege Authorization Form is required). 
Other shareholders (and those who are clients of DWR or another Selected 
Broker-Dealer 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 

                               19           
<PAGE>
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 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 DWR or other 
Selected Broker-Dealer account executive, 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 of the other Dean Witter Funds in the past. 

   For further information regarding the Exchange Privilege, shareholders 
should contact their account executive or the Transfer Agent. 

REDEMPTIONS AND REPURCHASES 
- ----------------------------------------------------------------------------- 

   Redemption. Shares of the Fund can be redeemed for cash at any time at the 
net asset value per share next determined; however, such redemption proceeds 
will be reduced by the amount of any applicable contingent deferred sales 
charges (see below). 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 
documentation required by the Transfer Agent. 

   Contingent Deferred Sales Charge. 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 charge upon 
redemption. Shares redeemed sooner than six years after purchase may, 
however, be subject to a charge upon redemption. This charge is called a 
"contingent deferred sales charge" ("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 table below: 

<TABLE>
<CAPTION>
                                CONTINGENT DEFERRED 
         YEAR SINCE                SALES CHARGE 
          PURCHASE              AS A PERCENTAGE OF 
        PAYMENT MADE              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>

   A CDSC will not be imposed on: (i) any amount which represents an increase 
in value of shares purchased within the six years preceding the redemption; 
(ii) the current net asset value of shares purchased more than six 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 Dean Witter Funds sold with a front-end 
sales charge or of other 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 

                               20           
<PAGE>
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 
corporate or self-employed retirement plan qualified under Section 401(k) of 
the Internal Revenue Code which offers investment companies managed by the 
Investment Manager or its subsidiary, Dean Witter Services Company Inc., as 
self-directed investment alternatives and for which Dean Witter Trust Company 
or Dean Witter Trust FSB, each of which is an affiliate of the Investment 
Manager, serves as Trustee ("Eligible 401(k) Plan"), provided that either: 
(A) the plan continues to be an Eligible 401(k) 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. 

   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 or telegraphic request of the shareholder. The repurchase 
price is the net asset value per share next determined (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 repurchase by the 
Fund, the Distributor, DWR or other Selected Broker-Dealer. The offer by DWR 
and other Selected Broker-Dealers to repurchase shares may be suspended 
without notice by them 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 Dealer are referred to their account 
executive 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 thirty days after the date of the redemption or 
repurchase, reinstate any portion or 

                               21           
<PAGE>
all of the proceeds of such redemption or repurchase in shares of the Fund at 
the 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. 

   Involuntary Redemption. The Fund reserves the right to redeem, upon 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 Board of Trustees or, in the case of an account 
opened through EasyInvest (Service Mark), if after twelve months the 
shareholder has invested less than $5,000 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 the shareholder to make an additional investment 
in an amount which will increase the value of the 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 intends to distribute substantially 
all of the Fund's net investment income and net realized short-term and 
long-term capital gains, if there are any, at least once each year. The Fund 
may, however, determine either to distribute or 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 Fund shares and automatically credited to the shareholder's 
account without issuance of a share certificate unless the shareholder 
requests in writing that all dividends be paid in cash. (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. Shareholders who are required to pay taxes on 
their income will normally have to pay federal income taxes, and any state 
income taxes, on the dividends and distributions they receive from the Fund. 
Such dividends and distributions, to the extent that they are derived from 
net investment income or short-term capital gains, are taxable to the 
shareholder as ordinary 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. 

   One of the requirements for the Fund to remain qualified as a regulated 
investment company is that less than 30% of the Fund's gross income be 
derived from gains from the sale or other disposition of securities held for 
less than three months. Accordingly, the Fund may be restricted in its 
ability to engage in transactions involving futures contracts. 

   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 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. 
    

   After the end of the calendar year, shareholders will be sent full 
information on their dividends and capital gains distributions for tax 
purposes, including 

                               22           
<PAGE>
information as to the portion taxable as ordinary income, the portion taxable 
as long-term capital gains, and the amount of dividends eligible for the 
Federal dividends received deduction available to corporations. 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. 

   Shareholders should consult their tax advisers 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. The total return of the Fund is based on 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 the Fund of $1,000 over periods of one, five and ten years, or 
over the life of the Fund, if less than any of the foregoing. Total return 
and average annual total return reflect all income earned by the Fund, any 
appreciation or depreciation of the Fund's assets and all expenses incurred 
by the Fund for the stated periods. It alsoassumes reinvestment of all 
dividends and distributions paid by the Fund. 

   In addition to the foregoing, the Fund may advertise its total return over 
different periods of time by means of aggregate, average, year-by-year or 
other types of total return figures. The Fund may also advertise the growth 
of hypothetical investments of $10,000, $50,000 and $100,000 in 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. and the S&P 500 Index). 

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. 

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

   Code of Ethics. Directors, officers and employees of InterCapital, Dean 
Witter Services Company Inc. and the Distributor 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 ben- 

                               23           
<PAGE>
efit 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 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 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. Such investment would be made 
only if the Trustees of the Fund believe that to do so would be in the best 
interests of the Fund and its shareholders. 

   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. 

                               24           
<PAGE>
DEAN WITTER SPECIAL VALUE FUND 
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited) 

<TABLE>
<CAPTION>
 NUMBER OF 
   SHARES                                                                           VALUE 
- --------------------------------------------------------------------------------------------- 
<S>          <C>                                                               <C>
             COMMON STOCKS (86.2%) 
             Agriculture (0.4%) 
 65,000      Sylvan, Inc.*  ..................................................  $    812,500 
                                                                               -------------- 
             Apparel (0.9%) 
 94,100      Kellwood Co.  ...................................................     2,093,725 
                                                                               -------------- 
             Auto Parts -Original Equipment (1.7%) 
316,500      Titan Wheel International, Inc.  ................................     3,916,687 
                                                                               -------------- 
             Auto -Trucks & Parts (0.9%) 
 47,500      Borg-Warner Automotive, Inc.  ...................................     1,894,062 
                                                                               -------------- 
             Building Materials (1.2%) 
 99,000      Martin Marietta Materials, Inc.  ................................     2,635,875 
                                                                               -------------- 
             Chemicals -Specialty (0.9%) 
 90,300      McWhorter Technologies, Inc.*  ..................................     2,043,038 
                                                                               -------------- 
             Commercial Services (1.5%)  
 95,000      Primark Corp.*  .................................................     2,660,000 
 36,000      York Group, Inc.  ...............................................       783,000 
                                                                               -------------- 
                                                                                   3,443,000 
                                                                               -------------- 
             Computer Software (0.7%) 
 37,000      Boole & Babbage, Inc.*  .........................................       934,250 
 50,000      Business Objects S.A. (ADR)* (France)  ..........................       718,750 
                                                                               -------------- 
                                                                                   1,653,000 
                                                                               -------------- 
             Computer Software & Services (5.2%) 
320,000      BancTec, Inc.*  .................................................     6,200,000 
157,500      DecisionOne Holdings Corp.*  ....................................     2,756,250 
150,000      FileNet Corp.*  .................................................     2,812,500 
                                                                               -------------- 
                                                                                  11,768,750 
                                                                               -------------- 
             Consumer Services (0.6%) 
 79,000      Steinway Musical*  ..............................................     1,412,125 
                                                                               -------------- 
             Containers (1.0%) 
 40,000      Aptargroup, Inc.  ...............................................     1,340,000 
 30,000      Liqui-Box Corp.  ................................................       975,000 
                                                                               -------------- 
                                                                                   2,315,000 
                                                                               -------------- 
             Distribution (2.2%) 
 85,000      Rexel, Inc.*  ...................................................     1,391,875 
275,000      VWR Scientific Products Corp.*  .................................     3,643,750 
                                                                               -------------- 
                                                                                   5,035,625 
                                                                               -------------- 
             Electronics (6.8%) 
172,500      DII Group, Inc.*  ...............................................     4,096,875 
 90,000      Electroglas, Inc.*  .............................................     1,755,000 
 38,000      Elsag Bailey Process Automation $2.75 (Conv. Pref.)* 
               (Netherlands)  ................................................     1,489,144 
104,000      Exar Corp.*  ....................................................   $ 1,612,000 
132,000      Marshall Industries*  ...........................................     4,059,000 
 63,600      TB Wood's Corp.  ................................................       707,550 
 40,000      Unitrode Corp.*  ................................................     1,470,000 
                                                                               -------------- 
                                                                                  15,189,569 
                                                                               -------------- 
             Electronics -Defense (6.1%) 
235,000      EG & G, Inc.  ...................................................     4,993,750 
393,600      Tracor, Inc.*  ..................................................     8,659,200 
                                                                               -------------- 
                                                                                  13,652,950 
                                                                               -------------- 
             Entertainment (1.1%) 
110,000      Showboat, Inc.  .................................................     2,406,250 
                                                                               -------------- 
             Healthcare (5.1%) 
242,500      Magellan Health Services, Inc.*  ................................     6,062,500 
330,000      Sun Healthcare Group, Inc.*  ....................................     5,362,500 
                                                                               -------------- 
                                                                                  11,425,000 
                                                                               -------------- 
             Home Building (0.7%) 
 73,000      Schult Homes Corp.  .............................................     1,560,375 
                                                                               -------------- 
             Household Appliances (0.9%) 
 88,000      Rival Co.  ......................................................     2,024,000 
                                                                               -------------- 
             Insurance (8.0%) 
265,000      Capsure Holdings Corp.*  ........................................     2,881,875 
142,200      Delphi Financial Group, Inc. (Class A)*  ........................     4,443,750 
360,000      E. W. Blanch Holdings, Inc.  ....................................     8,100,000 
180,000      Gryphon Holdings, Inc.*  ........................................     2,587,500 
                                                                               -------------- 
                                                                                  18,013,125 
                                                                               -------------- 
             Machinery & Machine Tools (3.4%) 
 80,500      Applied Power, Inc. (Class A)  ..................................     3,340,750 
159,800      Greenfield Industries, Inc.  ....................................     4,314,600 
                                                                               -------------- 
                                                                                   7,655,350 
                                                                               -------------- 
             Machinery -Diversified (1.9%) 
 93,700      Briggs & Stratton Corp.  ........................................     4,228,213 
                                                                               -------------- 
             Manufacturing (5.6%) 
312,000      Lydall, Inc.*  ..................................................     7,293,000 
 87,000      NN Ball & Roller, Inc.  .........................................     1,011,375 
180,000      Watts Industries, Inc. (Class A)  ...............................     4,387,500 
                                                                               -------------- 
                                                                                  12,691,875 
                                                                               --------------
             Manufacturing -Diversified (2.0%) 
 85,000      AMETEK, Inc.  ...................................................    1,763,750 
 95,000      Kaman Corp. (Class A)  ..........................................    1,235,000 
110,100      Katy Industries  ................................................    1,568,925 
                                                                               -------------- 
                                                                                  4,567,675 
                                                                               -------------- 

                      SEE NOTES TO FINANCIAL STATEMENTS 

                               25           
           
<PAGE>
DEAN WITTER SPECIAL VALUE FUND 
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited) continued 

             Medical Equipment (1.3%) 
140,000      SpaceLabs Medical, Inc.*  .......................................  $  2,940,000 
                                                                               -------------- 
             Medical Products & Supplies (2.6%) 
 52,500      Dentsply International, Inc.  ...................................     2,611,875 
131,000      Vital Signs, Inc.  ..............................................     3,111,250 
                                                                               -------------- 
                                                                                   5,723,125 
                                                                               -------------- 
             Metals (0.4%) 
 48,300      Penn Engineering & Manfacturing Corp. (Class A)  ................       966,000 
                                                                               -------------- 
             Metals & Mining (1.0%) 
124,000      Stillwater Mining Co.*  .........................................     2,170,000 
                                                                               -------------- 
             Office Equipment & Supplies (1.6%) 
104,600      New England Business Service, Inc.  .............................     2,170,450 
170,000      Nu-Kote Holding, Inc. (Class A)*  ...............................     1,487,500 
                                                                               -------------- 
                                                                                   3,657,950 
                                                                               -------------- 
             Oil & Gas (1.6%) 
 95,000      Aquila Gas Pipeline Corp.  ......................................     1,413,125 
 50,000      Forest Oil Corp.*  ..............................................       818,750 
 40,000      Vintage Petroleum, Inc.  ........................................     1,335,000 
                                                                               -------------- 
                                                                                   3,566,875 
                                                                               -------------- 
             Oil & Gas Drilling (1.2%) 
105,000      Offshore Energy Development Corp.*  .............................     1,351,875 
 48,000      Stone Energy Corp.*  ............................................     1,368,000 
                                                                               -------------- 
                                                                                   2,719,875 
                                                                               -------------- 
             Publishing (2.1%) 
             Hollinger International, Inc. 
320,000      (Class A)  ......................................................     3,680,000 
 60,000      Valassis Communication, Inc.*  ..................................     1,102,500 
                                                                               -------------- 
                                                                                   4,782,500 
                                                                               -------------- 
             Real Estate Investment Trust (2.4%) 
126,000      Brandywine Realty Trust  ........................................     2,614,500 
 60,000      First Industrial Realty Trust, Inc.  ............................     1,740,000 
 37,000      Public Storage, Inc.  ...........................................     1,082,250 
                                                                               -------------- 
                                                                                   5,436,750 
                                                                               -------------- 
             Retail (0.8%) 
 95,000      Lazare Kaplan International, Inc.*  .............................     1,686,250 
                                                                               -------------- 
             Retail -Specialty (1.8%) 
155,000      Stanhome, Inc.  .................................................     4,010,625 
                                                                               -------------- 
             Savings & Loan Associations (1.8%) 
 51,250      First Financial Corp.  ..........................................  $  1,281,250 
 33,000      First Source Corp.  .............................................       841,500 
 63,000      InterWest Bancorp, Inc.  ........................................     2,000,250 
                                                                               -------------- 
                                                                                   4,123,000 
                                                                               -------------- 
             Telecommunications (3.6%) 
187,200      ECI Telecommunications Limited Designs (Israel)  ................     4,469,400 
125,000      Scientific-Atlanta, Inc.  .......................................     2,375,000 
 85,000      Western Wireless Corp. (Class A)*  ..............................     1,253,750 
                                                                               -------------- 
                                                                                   8,098,150 
                                                                               -------------- 
             Textiles (1.9%) 
137,800      Westpoint Stevens, Inc.*  .......................................     4,289,025 
                                                                               -------------- 
             Transportation -Miscellaneous (0.6%) 
112,500      Fritz Companies, Inc.*  .........................................     1,462,500 
                                                                               -------------- 
             Utilities (2.2%) 
165,900      Enron Global Power & Pipelines L.L.C.  ..........................     4,977,000 
                                                                               -------------- 
             Water (0.5%) 
 50,400      Southern California Water Co.  ..................................     1,134,000 
                                                                               -------------- 
             TOTAL COMMON STOCKS 
             (Identified Cost $183,438,067)  .................................   194,181,394 
                                                                               -------------- 
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
 PRINCIPAL 
 AMOUNT IN 
 THOUSANDS 
- ----------- 
<S>          <C>                                                               <C>
             CONVERTIBLE BONDS (0.8%) 
             Machinery (0.5%) 
$ 1,050      Robbins & Meyers, Inc. 
               6.50% due 09/01/03  ...........................................    1,233,750 
                                                                               -------------- 
             Retail (0.3%) 
    950      Sports & Recreation, Inc. 
               4.25% due 11/01/00  ...........................................      705,375 
                                                                               -------------- 
             TOTAL CONVERTIBLE BONDS 
             (Identified Cost $1,905,500)  ...................................    1,939,125 
                                                                               -------------- 
             SHORT-TERM INVESTMENTS (13.0%) 
             U.S. GOVERNMENT AGENCY (a) (12.9%) 
 29,000      Federal Home Loan Mortgage
               Corp. 5.48% due 02/03/97 
               (Amortized Cost $28,991,171)  ................................    28,991,171 
                                                                               -------------- 
</TABLE>

                      SEE NOTES TO FINANCIAL STATEMENTS 

                               26           
<PAGE>
DEAN WITTER SPECIAL VALUE FUND 
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited) continued 

<TABLE>
<CAPTION>
 PRINCIPAL 
 AMOUNT IN 
 THOUSANDS                                                                        VALUE 
- ------------------------------------------------------------------------------------------ 
<S>          <C>                                                               <C>
             REPURCHASE AGREEMENT (0.1%) 
$ 140        The Bank of New York 
               5.25% due 02/03/97 
               (dated 01/31/97; 
               proceeds $139,848; collateralized by $141,508 
               U.S. Treasury Note 5.375% 
               due 11/30/97 
               valued at $142,582) 
               (Identified Cost $139,786)  ................................... $   139,786 
                                                                               ----------- 
             TOTAL SHORT-TERM
             INVESTMENTS 
             (Identified Cost $29,130,957)  ..................................  29,130,957 
                                                                               ----------- 
</TABLE>

<TABLE>
<CAPTION>
<S>                                  <C>       <C>
TOTAL INVESTMENTS 
(Identified Cost $214,474,524) (b)     100.0%    225,251,476 
OTHER ASSETS IN EXCESS OF 
LIABILITIES ........................     0.0          34,529 
                                     --------  ------------- 
NET ASSETS .........................   100.0%   $225,286,005 
                                     ========  ============= 
</TABLE>

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

   *    Non-income producing security. 

   ADR  American Depository Receipt. 

   (a)  Security was purchased on a discount basis. The interest rate shown 
        has been adjusted to reflect a money market equivalent yield. 

   (b)  The aggregate cost for federal income purposes approximates 
        identified cost. The aggregate gross unrealized appreciation is 
        $13,326,113 and the aggregate gross unrealized depreciation is 
        $2,549,161, resulting in net unrealized appreciation of $10,776,952. 

                      SEE NOTES TO FINANCIAL STATEMENTS 

                               27           
<PAGE>
DEAN WITTER SPECIAL VALUE FUND 
FINANCIAL STATEMENTS 

STATEMENT OF ASSETS AND LIABILITIES 
JANUARY 31, 1997 (UNAUDITED) 

   
<TABLE>
<CAPTION>
<S>                                                                    <C>
 ASSETS: 
Investments in securities, at value 
 (identified cost $214,474,524) ......................................    $225,251,476 
Receivable for: 
  Shares of beneficial interest sold .................................       1,814,876 
  Investments sold ...................................................       1,476,326 
  Dividends ..........................................................          36,525 
  Interest ...........................................................          34,708 
Prepaid expenses and other assets ....................................           2,665 
Deferred organizational expenses .....................................         170,635 
                                                                        -------------- 
  TOTAL ASSETS .......................................................     228,787,211 
                                                                        -------------- 
LIABILITIES: 
Payable for: 
  Investments purchased ..............................................       2,814,036 
  Plan of distribution fee ...........................................         179,821 
  Investment management fee ..........................................         134,866 
  Shares of beneficial interest repurchased ..........................          76,556 
Organizational expenses ..............................................         180,000 
Accrued expenses and other payables ..................................         115,927 
                                                                        -------------- 
  TOTAL LIABILITIES ..................................................       3,501,206 
                                                                        -------------- 
NET ASSETS: 
Paid-in-capital ......................................................     214,015,871 
Net unrealized appreciation ..........................................      10,776,952 
Dividends in excess of net investment income .........................        (147,115) 
Undistributed net realized gain ......................................         640,297 
                                                                        -------------- 
  NET ASSETS .........................................................    $225,286,005 
                                                                        ============== 
NET ASSET VALUE PER SHARE, 
 21,286,335 shares outstanding (unlimited shares authorized of $.01 
 par value) ..........................................................    $      10.58 
                                                                        ============== 
</TABLE>
    

                      SEE NOTES TO FINANCIAL STATEMENTS 

                               28           
<PAGE>
DEAN WITTER SPECIAL VALUE FUND 
FINANCIAL STATEMENTS, continued 

STATEMENT OF OPERATIONS 
FOR THE PERIOD OCTOBER 29, 1996* THROUGH JANUARY 31, 1997 (UNAUDITED) 

<TABLE>
<CAPTION>
<S>                                               <C>
 NET INVESTMENT INCOME: 
INCOME 
Interest ........................................  $ 1,150,877 
Dividends (net of $405 foreign withholding tax)        222,896 
                                                  ------------ 
  TOTAL INCOME ..................................    1,373,773 
                                                  ------------ 
EXPENSES 
Plan of distribution fee ........................      486,592 
Investment management fee .......................      364,944 
Registration fees ...............................       64,663 
Transfer agent fees and expenses ................       49,082 
Professional fees ...............................       34,967 
Custodian fees ..................................       11,396 
Organizational expenses .........................        9,365 
Trustees' fees and expenses .....................        3,165 
Other ...........................................        1,082 
                                                  ------------ 
  TOTAL EXPENSES ................................    1,025,256 
                                                  ------------ 
  NET INVESTMENT INCOME .........................      348,517 
                                                  ------------ 
NET REALIZED AND UNREALIZED GAIN: 
Net realized gain ...............................      640,297 
Net unrealized appreciation .....................   10,776,952 
                                                  ------------ 
  NET GAIN ......................................   11,417,249 
                                                  ------------ 
NET INCREASE ....................................  $11,765,766 
                                                  ============ 
</TABLE>

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

*  Commencement of operations. 

                      SEE NOTES TO FINANCIAL STATEMENTS 

                               29           
<PAGE>
DEAN WITTER SPECIAL VALUE FUND 
FINANCIAL STATEMENTS, continued 

STATEMENT OF CHANGES IN NET ASSETS 

   
<TABLE>
<CAPTION>
                                                                       FOR THE PERIOD 
                                                                      OCTOBER 29, 1996* 
                                                                           THROUGH 
                                                                      JANUARY 31, 1997 
- -------------------------------------------------------------------  ----------------- 
                                                                         (UNAUDITED) 
<S>                                                                  <C>
INCREASE (DECREASE) IN NET ASSETS: 
OPERATIONS: 
Net investment income ..............................................    $    348,517 
Net realized gain ..................................................         640,297 
Net unrealized appreciation ........................................      10,776,952 
                                                                     ----------------- 
  NET INCREASE .....................................................      11,765,766 
Dividends from net investment income ...............................        (495,632) 
Net increase from transactions in shares of beneficial interest  ...     213,915,871 
                                                                     ----------------- 
  NET INCREASE .....................................................     225,186,005 
NET ASSETS: 
Beginning of period ................................................         100,000 
                                                                     ----------------- 
  END OF PERIOD 
  (Including dividends in excess of net investment income of 
  $147,115) ........................................................    $225,286,005 
                                                                     ================= 
</TABLE>
    

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

*  Commencement of operations. 

                      SEE NOTES TO FINANCIAL STATEMENTS 

                               30           
<PAGE>
DEAN WITTER SPECIAL VALUE FUND 
NOTES TO FINANCIAL STATEMENTS January 31, 1997 (unaudited) 

1. Organization and Accounting Policies 

Dean Witter Special Value Fund (the "Fund") is registered under the 
Investment Company Act of 1940, as amended (the "Act"), as a diversified, 
open-end management investment company. The Fund's investment objective is 
long-term capital appreciation. The Fund seeks to achieve its objective by 
investing primarily in domestic equity securities of small capitalization 
companies. The Fund was organized as a Massachusetts business trust on June 
21, 1996 and had no other operations other than those relating to 
organizational matters and the issuance of 10,000 shares of beneficial 
interest for $100,000 to Dean Witter InterCapital Inc. (the "Investment 
Manager") to effect the Fund's initial capitalization. The Fund commenced 
operations on October 29, 1996. 

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

The following is a summary of significant accounting policies: 

A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the 
New York, American or other domestic or foreign stock exchange is valued at 
its latest sale price on that exchange prior to the time when assets are 
valued; if there were no sales that day, the security is valued at the latest 
bid price (in cases where securities are traded on more than one exchange, 
the security is valued on the exchange designated as the primary market 
pursuant to procedures adopted by the Trustees); (2) all other portfolio 
securities for which over-the-counter market quotations are readily available 
are valued at the latest available bid price prior to the time of valuation; 
(3) when market quotations are not readily available, including circumstances 
under which it is determined by the Investment Manager that sale or bid 
prices are not reflective of a security's market value, portfolio securities 
are valued at their fair value as determined in good faith under procedures 
established by and under the general supervision of the Trustees (valuation 
of debt securities for which market quotations are not readily available may 
be based upon current market prices of securities which are comparable in 
coupon, rating and maturity or an appropriate matrix utilizing similar 
factors); (4) certain portfolio securities may be valued by an outside 
pricing service approved by the Trustees. The pricing service may utilize a 
matrix system incorporating security quality, maturity and coupon as the 
evaluation model parameters, and/or research and evaluations by its staff, 
including review of broker-dealer market price quotations, if available, in 
determining what it believes is the fair valuation of the portfolio 
securities valued by such pricing service; and (5) short-term debt securities 
having a maturity date of more than sixty days at time of purchase are valued 
on a 

                               31           
<PAGE>
DEAN WITTER SPECIAL VALUE FUND 
NOTES TO FINANCIAL STATEMENTS January 31, 1997 (unaudited) continued 

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

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

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

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

E. ORGANIZATIONAL EXPENSES -- The Investment Manager paid the organizational 
expenses of the Fund in the amount of approximately $180,000 which will be 
reimbursed for the full amount thereof. Such expenses have been deferred and 
are being amortized on the straight-line method over a period not to exceed 
five years from the commencement of operations. 

2. INVESTMENT MANAGEMENT AGREEMENT 

Pursuant to an Investment Management Agreement, the Fund pays the Investment 
Manager a management fee, accrued daily and payable monthly, by applying the 
annual rate of 0.75% to the net assets of the Fund determined as of the close 
of each business day. 

                               32           
<PAGE>
DEAN WITTER SPECIAL VALUE FUND 
NOTES TO FINANCIAL STATEMENTS January 31, 1997 (unaudited) continued 

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

3. PLAN OF DISTRIBUTION 

Shares of the Fund are distributed by Dean Witter Distributors Inc. (the 
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted 
a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act 
pursuant to which the Fund pays the Distributor compensation, accrued daily 
and payable monthly, at an annual rate of 1.0% of the Fund's average daily 
net assets. Amounts paid under the Plan are paid to the Distributor to 
compensate it for the services provided and the expenses borne by it and 
others in the distribution of the Fund's shares, including the payment of 
commissions for sales of the Fund's shares and incentive compensation to, and 
expenses of, the account executives of Dean Witter Reynolds Inc. ("DWR"), an 
affiliate of the Investment Manager and Distributor, and other employees or 
selected broker-dealers who engage in or support distribution of the Fund's 
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 be compensated 
under the Plan for its opportunity costs in advancing such amounts, which 
compensation would be in the form of a carrying charge on any unreimbursed 
expenses incurred by the Distributor. 

Provided that the Plan continues in effect, any cumulative expenses incurred 
but not yet recovered, may be recovered through future distribution fees from 
the Fund and contingent deferred sales charges from the Fund's shareholders. 

Although there is no legal obligation for the Fund to pay expenses incurred 
in excess of payments made to the Distributor under the Plan and the proceeds 
of contingent deferred sales charges paid by investors upon redemption of 
shares, if for any reason the Plan is terminated, the Trustees will consider 
at that time the manner in which to treat such expenses. The Distributor has 
advised the Fund that such excess amounts, including carrying charges, 
totaled $11,160,385 at January 31, 1997. 

                               33           
<PAGE>
DEAN WITTER SPECIAL VALUE FUND 
NOTES TO FINANCIAL STATEMENTS January 31, 1997 (unaudited) continued 

   
The Distributor has informed the Fund that for the period ended January 31, 
1997, it received approximately $52,000 in contingent deferred sales charges 
from certain redemptions of the Fund's 
shares. 
    

4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES 

   
The cost of purchases and proceeds from sales of portfolio securities, 
excluding short-term investments, for the period ended January 31, 1997 
aggregated $190,187,320 and $5,484,074, respectively. For the period ended 
January 31, 1997, the Fund incurred brokerage commissions of $39,165 with DWR 
for portfolio transactions executed on behalf of the Fund. 
    

Dean Witter Trust Company, an affiliate of the Investment Manager and 
Distributor, is the Fund's transfer agent. At January 31, 1997, the Fund had 
transfer agent fees and expenses payable of approximately $8,000. 

5. SHARES OF BENEFICIAL INTEREST 

Transactions in shares of beneficial interest were as follows: 

   
<TABLE>
<CAPTION>
                                    FOR THE PERIOD 
                                  OCTOBER 29, 1996* 
                                       THROUGH 
                                   JANUARY 31, 1997 
                            ---------------------------- 
                                SHARES         AMOUNT 
                            ------------  -------------- 
<S>                         <C>           <C>            
Sold ......................   21,715,044    $218,422,390 
Reinvestment of dividends         45,626         464,016 
                            ------------  -------------- 
                              21,760,670     218,886,406 
Repurchased ...............     (484,335)     (4,970,535) 
                            ------------  -------------- 
Net increase ..............   21,276,335    $213,915,871 
                            ============  ==============  
</TABLE>
    
[FN]
- ------------ 

* Commencement of operations. 

6. SELECTED PER SHARE DATA AND RATIOS 

See the "Financial Highlights" table on page 5 of this Prospectus. 

                               34           
<PAGE>
Dean Witter 
Special Value Fund 
Two World Trade Center 
New York, New York 10048 

TRUSTEES 

Michael Bozic 
Charles A. Fiumefreddo 
Edwin J. Garn 
John R. Haire 
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 
Jenny Beth Jones 
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 

Dean Witter Trust Company 
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 

Dean Witter InterCapital Inc. 



DEAN WITTER 
SPECIAL VALUE FUND 

   


PROSPECTUS -- MARCH 28, 1997 


    

<PAGE>
   
STATEMENT OF ADDITIONAL INFORMATION 
MARCH 28, 1997 
    

                                                     DEAN WITTER 
                                                     SPECIAL VALUE 
                                                     FUND 
- ----------------------------------------------------------------------------- 

   
   Dean Witter Special Value Fund (the "Fund") is an open-end, diversified 
management investment company whose investment objective is long-term capital 
appreciation. The Fund seeks to meet its investment objective by investing 
primarily in equity securities issued by companies whose equity market 
capitalization, at the time of purchase, falls within the range of $100 
million to $1 billion and that appear undervalued relative to the marketplace 
or to investments in similar companies. See "Investment Practices and 
Policies." 

   A Prospectus for the Fund dated March 28, 1997, which provides the basic 
information you should know before investing in the Fund, may be obtained 
without charge from the Fund at its address or telephone numbers listed below 
or from the Fund's Distributor, Dean Witter Distributors Inc., or from Dean 
Witter Reynolds Inc, at any of its branch offices. This Statement of 
Additional Information is not a Prospectus. It contains information in 
addition to and more detailed than that set forth in the Prospectus. It is 
intended to provide additional information regarding the activities and 
operations of the Fund, and should be read in conjunction with the 
Prospectus. 
    

Dean Witter Special Value Fund 
Two World Trade Center 
New York, New York 10048 
(212) 392-2550 or 
(800) 869-NEWS (toll-free) 

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

   
<TABLE>
<CAPTION>
<S>                                      <C>
The Fund and its Management ..........    3 
Trustees and Officers ................    6 
Investment Practices and Policies  ...   12 
Investment Restrictions ..............   16 
Portfolio Transactions and Brokerage     17 
The Distributor ......................   19 
Shareholder Services .................   21 
Redemptions and Repurchases ..........   25 
Dividends, Distributions and Taxes  ..   28 
Performance Information ..............   29 
Shares of the Fund ...................   30 
Custodian and Transfer Agent  ........   30 
Independent Accountants ..............   30 
Reports to Shareholders ..............   31 
Legal Counsel ........................   31 
Experts  .............................   31 
Registration Statement ...............   31 
Appendix .............................   32 
Report of Independent Accountants  ...   38 
Statements of Assets and Liabilities     39 
</TABLE>
    

                                2           
<PAGE>
THE FUND AND ITS MANAGEMENT 
- ----------------------------------------------------------------------------- 

THE FUND 

   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 June 21, 1996. 

THE INVESTMENT MANAGER 

   
   Dean Witter InterCapital Inc. (the "Investment Manager" or 
"InterCapital"), a Delaware corporation, whose address is Two World Trade 
Center, New York, New York 10048, is the Fund's Investment Manager. 
InterCapital is a wholly-owned subsidiary of Dean Witter, Discover & Co. 
("DWDC"), a Delaware corporation. In an internal reorganization which took 
place in January, 1993, InterCapital assumed the investment advisory, 
administrative and management activities previously performed by the 
InterCapital Division of Dean Witter Reynolds Inc. ("DWR"), a broker-dealer 
affiliate of InterCapital. (As hereinafter used in this Statement of 
Additional Information, the terms "InterCapital" and "Investment Manager" 
refer to DWR's InterCapital Division prior to the internal reorganization and 
to Dean Witter InterCapital Inc. thereafter). The daily management of the 
Fund and research relating to the Fund's portfolio are conducted by or under 
the direction of officers of the Fund and of the Investment Manager, subject 
to review of investments by the Fund's Board of Trustees. Information as to 
these Trustees and officers is contained under the caption "Trustees and 
Officers." 

   InterCapital is also the investment manager or investment adviser of the 
following investment companies: Dean Witter Liquid Asset Fund Inc., 
InterCapital Income Securities Inc., Dean Witter High Yield Securities Inc., 
Dean Witter Tax-Free Daily Income Trust, Dean Witter Developing Growth 
Securities Trust, Dean Witter Tax-Exempt Securities Trust, Dean Witter 
Natural Resource Development Securities Inc., Dean Witter Dividend Growth 
Securities Inc., Dean Witter American Value Fund, Dean Witter U.S. Government 
Money Market Trust, Dean Witter Variable Investment Series, Dean Witter World 
Wide Investment Trust, Dean Witter Select Municipal Reinvestment Fund, Dean 
Witter U.S. Government Securities Trust, Dean Witter California Tax-Free 
Income Fund, Dean Witter New York Tax-Free Income Fund, Dean Witter 
Convertible Securities Trust, Dean Witter Federal Securities Trust, Dean 
Witter Value-Added Market Series, High Income Advantage Trust, High Income 
Advantage Trust II, High Income Advantage Trust III, Dean Witter Government 
Income Trust, Dean Witter Utilities Fund, Dean Witter California Tax-Free 
Daily Income Trust, Dean Witter Strategist Fund, Dean Witter World Wide 
Income Trust, Dean Witter Intermediate Income Securities, Dean Witter New 
York Municipal Money Market Trust, Dean Witter Capital Growth Securities, 
Dean Witter European Growth Fund Inc., Dean Witter Precious Metals and 
Minerals Trust, Dean Witter Global Short-Term Income Fund Inc., Dean Witter 
Pacific Growth Fund Inc., Dean Witter Multi-State Municipal Series Trust, 
Dean Witter Short-Term U.S. Treasury Trust, Dean Witter Premier Income Trust, 
Dean Witter Diversified Income Trust, Dean Witter Health Sciences Trust, Dean 
Witter Retirement Series, Dean Witter Global Dividend Growth Securities, Dean 
Witter Limited Term Municipal Trust, Dean Witter Short-Term Bond Fund, Dean 
Witter Global Utilities Fund, Dean Witter High Income Securities Trust, Dean 
Witter International SmallCap Fund, Dean Witter Select Dimensions Investment 
Series, Dean Witter Mid-Cap Growth Fund, Dean Witter Global Asset Allocation 
Fund, Dean Witter National Municipal Trust, Dean Witter Balanced Growth Fund, 
Dean Witter Balanced Income Fund, Dean Witter Hawaii Municipal Trust, Dean 
Witter Capital Appreciation Fund, Dean Witter Information Fund, Dean Witter 
Intermediate Term U.S. Treasury Trust, Dean Witter Japan Fund, Dean Witter 
Income Builder Fund, Dean Witter Financial Services Trust, InterCapital 
Quality Municipal Income Trust, InterCapital California Quality Municipal 
Securities, InterCapital New York Quality Municipal Securities, InterCapital 
Quality Municipal Investment Trust, Active Assets Money Trust, Active Assets 
Tax-Free Trust, Active Assets California Tax-Free Trust, Active Assets 
Government Securities Trust, Municipal Income Trust, Municipal Income Trust 
II, Municipal Income Trust III, Municipal Income Opportunities Trust, 
Municipal Income Opportunities Trust II, Municipal Income Opportunities Trust 
III, Prime Income Trust and Municipal Premium Income Trust. The foregoing 
investment companies, together with the Fund, are collectively referred to as 
the Dean Witter Funds. 
    

                                3           
<PAGE>
   
   In addition, Dean Witter Services Company Inc., ("DWSC"), a wholly-owned 
subsidiary of InterCapital, serves as manager for the following investment 
companies for which TCW Funds Management, Inc. is the investment adviser: 
TCW/DW Core Equity Trust, TCW/DW North American Government Income Trust, 
TCW/DW Latin American Growth Fund, TCW/DW Income and Growth Fund, TCW/DW 
Small Cap Growth Fund, TCW/DW Balanced Fund, TCW/DW Mid-Cap Equity Trust, 
TCW/DW Total Return Trust, TCW/DW Global Telecom Trust, TCW/DW Strategic 
Income Trust, TCW/DW Emerging Markets Opportunities Trust, TCW/DW Term Trust 
2000, TCW/DW Term Trust 2002 and TCW/DW Term Trust 2003 (the "TCW/DW Funds"). 
InterCapital also serves as: (i) sub-adviser to Templeton Global 
Opportunities Trust, an open-end investment company; (ii) administrator of 
The BlackRock Strategic Term Trust Inc., a closed-end investment company; and 
(iii) subadministrator of MassMutual Participation Investors and Templeton 
Global Governments Income Trust, closed-end investment companies. 
    

   Pursuant to an Investment Management Agreement (the "Agreement") with the 
Investment Manager, the Fund has retained the Investment Manager to manage 
the investment of the Fund's assets, including the placing of orders for the 
purchase and sale of portfolio securities. The Investment Manager obtains and 
evaluates such information and advice relating to the economy, securities 
markets and specific securities as it considers necessary or useful to 
continuously manage the assets of the Fund in a manner consistent with its 
investment objective. 

   Under the terms of the Agreement, in addition to managing the Fund's 
investments, the Investment Manager maintains certain of the Fund's books and 
records and furnishes, at its own expense, such office space, facilities, 
equipment, clerical help and bookkeeping and certain legal services as the 
Fund may reasonably require in the conduct of its business, including the 
preparation of prospectuses, statements of additional information, proxy 
statements and reports required to be filed with federal and state securities 
commissions (except insofar as the participation or assistance of independent 
accountants and attorneys is, in the opinion of the Investment Manager, 
necessary or desirable). In addition, the Investment Manager pays the 
salaries of all personnel, including officers of the Fund, who are employees 
of the Investment Manager. The Investment Manager also bears the cost of 
telephone service, heat, light, power and other utilities provided to the 
Fund. The Investment Manager has retained DWSC to perform its administrative 
services under the Agreement. 

   Expenses not expressly assumed by the Investment Manager under the 
Agreement or by Dean Witter Distributiors Inc., the Distributor of the Fund's 
shares ("Distributors" or "the Distributor") will be paid by the Fund. The 
expenses borne by the Fund include, but are not limited to: expenses of the 
Plan of Distribution pursuant to Rule 12b-1 (see "The Distributor"); charges 
and expenses of any registrar; custodian, stock transfer and dividend 
disbursing agent; brokerage commissions; taxes; engraving and printing of 
share certificates; registration costs of the Fund and its shares under 
federal and state securities laws; the cost and expense of printing, 
including typesetting, and distributing Prospectuses and Statements of 
Additional Information of the Fund and supplements thereto to the Fund's 
shareholders; all expenses of shareholders' and Trustees' meetings and of 
preparing, printing and mailing of proxy statements and reports to 
shareholders; fees and travel expenses of Trustees or members of any advisory 
board or committee who are not employees of the Investment Manager or any 
corporate affiliate of the Investment Manager; all expenses incident to any 
dividend, withdrawal or redemption options; charges and expenses of any 
outside service used for pricing of the Fund's shares; fees and expenses of 
legal counsel, including counsel to the Trustees who are not interested 
persons of the Fund or of the Investment Manager (not including compensation 
or expenses of attorneys who are employees of the Investment Manager) and 
independent accountants; membership dues of industry associations; interest 
on Fund borrowings; postage; insurance premiums on property or personnel 
(including officers and Trustees) of the Fund which inure to its benefit; 
extraordinary expenses (including, but not limited to, legal claims and 
liabilities and litigation costs and any indemnification relating thereto); 
and all other costs of the Fund's operation. 

   As full compensation for the services and facilities furnished to the Fund 
and expenses of the Fund assumed by the Investment Manager, the Fund pays the 
Investment Manager monthly compensation 

                                4           
<PAGE>
   
calculated daily by applying the annual rate of 0.75% to the Fund's daily net 
assets. For the period October 29, 1996 (commencement of operations) through 
January 31, 1997, the Fund accrued to the Investment Manager total 
compensation under the Agreement in the amount of $364,944. 
    

   The Agreement provides that in the absence of willful misfeasance, bad 
faith, gross negligence or reckless disregard of its obligations thereunder, 
the Investment Manager is not liable to the Fund or any of its investors for 
any act or omission by the Investment Manager or for any losses sustained by 
the Fund or its investors. The Agreement in no way restricts the Investment 
Manager from acting as investment manager or adviser to others. 

   
   The Investment Manager paid the organizational expenses of the Fund 
incurred prior to the offering of the Fund's shares. The Fund has agreed to 
bear and reimburse the Investment Manager for such expenses, which totalled 
$180,000. The organizational expenses of the Fund have been deferred by the 
Fund and are being amortized on the straight line method over a period not to 
exceed five years from the date of commencement of the Fund's operations. 
    

   The Agreement was initially approved by the Trustees on July 23, 1996 and 
by InterCapital, as the then sole shareholder, on July 23, 1996. The 
Agreement may be terminated at any time, without penalty, on thirty days' 
notice by the Trustees of the Fund, by the holders of a majority of the 
outstanding shares of the Fund, as defined in the Investment Company Act of 
1940, as amended (the "Act"), or by the Investment Manager. The Agreement 
will automatically terminate in the event of its assignment (as defined in 
the Act). 

   Under its terms, the Agreement has an initial term ending April 30, 1998 
and will continue from year to year thereafter, provided continuance of the 
Agreement is approved at least annually by the vote of the holders of a 
majority of the outstanding shares of the Fund, as defined in the Act, or by 
the Trustees of the Fund; provided that in either event such continuance is 
approved annually by the vote of a majority of the Trustees of the Fund who 
are not parties to the Agreement or "interested persons" (as defined in the 
Act) of any such party (the "Independent Trustees"), which vote must be cast 
in person at a meeting called for the purpose of voting on such approval. 

   
   The Fund has acknowledged that the name "Dean Witter" is a property right 
of DWR. The Fund has agreed that DWR or its parent company may use or, at any 
time, permit others to use, the name "Dean Witter." The Fund has also agreed 
that in the event the Agreement is terminated, or if the affiliation between 
InterCapital and its parent company is terminated, the Fund will eliminate 
the name "Dean Witter" from its name if DWR or its parent company shall so 
request. 
    

                                5           
<PAGE>
TRUSTEES AND OFFICERS 
- ----------------------------------------------------------------------------- 

   
   The Trustees and Executive Officers of the Fund, their principal business 
occupations during the last five years and their affiliations, if any, with 
InterCapital, and with the 83 Dean Witter Funds and the 14 TCW/DW Funds are 
shown below: 

<TABLE>
<CAPTION>
  NAME, AGE, POSITION WITH FUND AND ADDRESS          PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS 
 -------------------------------------------  ----------------------------------------------------
<S>                                           <C>
Michael Bozic (56)..........................  Chairman and Chief Executive Officer of Levitz Furniture 
Trustee                                       Corporation (since November, 1995); Director or Trustee of 
c/o Levitz Furniture Corporation              the Dean Witter Funds; formerly President and Chief Executive 
6111 Broken Sound Parkway, N.W.               Officer of Hills Department Stores (May, 1991-July, 1995); 
Boca Raton, Florida                           formerly variously Chairman, Chief Executive Officer, 
                                              President and Chief Operating Officer (1987-1991) of the Sears 
                                              Merchandise Group of Sears, Roebuck and Co.; Director of 
                                              Eaglemark Financial Services, Inc., the United Negro College 
                                              Fund and Weirton Steel Corporation. 

Charles A. Fiumefreddo* (63)................. Chairman, Chief Executive Officer and Director of InterCapital, 
Chairman, President,                          Distributors and DWSC; Executive Vice President and Director 
Chief Executive Officer and Trustee           of DWR; Chairman, Director or Trustee, President and Chief 
Two World Trade Center                        Executive Officer of the Dean Witter Funds; Chairman, Chief 
New York, New York                            Executive Officer and Trustee of the TCW/DW Funds; Chairman 
                                              and Director of Dean Witter Trust Company ("DWTC"); Director 
                                              and/or officer of various DWDC subsidiaries; formerly Executive 
                                              Vice President and Director of DWDC (until February, 1993). 

Edwin J. Garn (64) .........................  Director or Trustee of the Dean Witter Funds; formerly United 
Trustee                                       States Senator (R-Utah) (1974-1992) and Chairman, Senate 
c/o Huntsman Corporation                      Banking Committee (1980-1986); formerly Mayor of Salt Lake 
500 Huntsman Way                              City, Utah (1972-1974); formerly Astronaut, Space Shuttle 
Salt Lake City, Utah                          Discovery (April 12-19, 1985); Vice Chairman, Huntsman 
                                              Corporation (since January, 1993); Director of Franklin Quest 
                                              (time management systems) and John Alden Financial Corp.; 
                                              member of the board of various civic and charitable 
                                              organizations. 

John R. Haire (72) .........................  Chairman of the Audit Committee and Chairman of the Committee 
Trustee                                       of the Independent Directors or Trustees and Director or Trustee 
Two World Trade Center                        of the Dean Witter Funds; Chairman of the Audit Committee 
New York, New York                            and Chairman of the Committee of the Independent Trustees 
                                              and Trustee of the TCW/DW Funds; formerly President, Council 
                                              for Aid to Education (1978-1989) and Chairman and Chief Executive 
                                              Officer of Anchor Corporation, an Investment Adviser 
                                              (1964-1978); Director of Washington National Corporation 
                                              (insurance). 
</TABLE>
    

                                6           
<PAGE>

   
<TABLE>
<CAPTION>
  NAME, AGE, POSITION WITH FUND AND ADDRESS          PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS 
 -------------------------------------------  ----------------------------------------------------
<S>                                           <C>
Dr. Manuel H. Johnson (48) .................  Senior Partner, Johnson Smick International, Inc., a consulting 
Trustee                                       firm; Co-Chairman and a founder of the Group of Seven 
c/o Johnson Smick International, Inc.         Council (G7C), an international economic commission; Director 
1133 Connecticut Avenue, N.W.                 or Trustee of the Dean Witter Funds; Trustee of the TCW/DW 
Washington, DC                                Funds; Director of NASDAQ (since June, 1995); Director of 
                                              Greenwich Capital Markets, Inc. (broker-dealer); Trustee of
                                              the Financial Accounting Foundation (oversight organization
                                              for the FASB); formerly Vice Chairman of the Board of
                                              Governors of the Federal Reserve System (1986-1990) and
                                              Assistant Secretary of the U.S. Treasury (1982-1986). 

Michael E. Nugent (60) .....................  General Partner, Triumph Capital, L.P., a private investment 
Trustee                                       partnership (since April, 1988); Director or Trustee of the 
Triumph Capital, L.P.                         Dean Witter Funds; Trustee of the TCW/DW Funds; formerly Vice 
237 Park Avenue                               President, Bankers Trust Company and BT Capital Corporation; 
New York, New York                            Director of various business organizations. 

Philip J. Purcell* (53) ....................  Chairman of the Board of Directors and Chief Executive Officer 
Trustee                                       of DWDC, DWR, and Novus Credit Services Inc.; Director of 
Two World Trade Center                        InterCapital, DWSC, and Distributors; Director or Trustee 
New York, New York                            of the Dean Witter Funds; Director and/or officer of various 
                                              DWDC subsidiaries. 

John L. Schroeder (66) .....................  Retired; Director or Trustee of the Dean Witter Funds; Trustee 
Trustee                                       of the TCW/DW Funds; Director of Citizens Utilities Company; 
c/o Gordon Altman Butowsky Weitzen            formerly Executive Vice President and Chief Investment Officer 
 Shalov & Wein                                of the Home Insurance Company (August, 1991 September, 1995), 
Counsel to the Independent Trustees           Chairman and Chief Investment Officer of Axe-Houghton 
114 West 47th Street                          Management and the Axe-Houghton Funds (April, 1983-June, 1991) 
New York, New York                            and President of USF&G Financial Services, Inc. (June, 
                                              1990-June, 1991). 

Barry Fink (42).............................. First Vice President (since June, 1993) and Secretary and 
Vice President,                               General Counsel (since February, 1997) of InterCapital and 
Secretary and General Counsel                 DWSC; First Vice President, Assistant Secretary and Assistant 
Two World Trade Center                        General Counsel of Distributors (since February, 1997); 
New York, New York                            Assistant Secretary of DWR (since August, 1996); Vice President, 
                                              Secretary and General Counsel of the Dean Witter Funds and 
                                              the TCW/DW Funds (since February, 1997); previously Vice 
                                              President, Assistant Secretary and Assistant General Counsel 
                                              of InterCapital and DWSC and Assistant Secretary of the Dean 
                                              Witter Funds and the TCW/DW Funds. 
</TABLE>

                                7           
<PAGE>
<TABLE>
<CAPTION>
  NAME, AGE, POSITION WITH FUND AND ADDRESS          PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS 
 -------------------------------------------  ----------------------------------------------------
<S>                                           <C>
Jenny Beth Jones (38) ......................... Senior Vice President of InterCapital (since August, 1996); 
Vice President                                formerly Senior Vice President and Manager of Small Cap 
Two World Trade Center                        Department of Oppenheimer Capital. 
New York, New York 
Thomas F. Caloia (50) ......................... First Vice President and Assistant Treasurer of InterCapital 
Treasurer                                     and DWSC; Treasurer of the Dean Witter Funds and the TCW/DW 
Two World Trade Center                        Funds. 
</TABLE>
    
New York, New York [FN]
- ------------ 
   * Denotes Trustees who are "interested persons" of the Fund, as defined in 
the Act. 

   
   In addition, Robert M. Scanlan, President and Chief Operating Officer of 
InterCapital and DWSC, Executive Vice President of Distributors and DWTC and 
Director of DWTC, Joseph J. McAlinden, Executive Vice President and Chief 
Investment Officer of InterCapital and Director of DWTC, Robert S. Giambrone, 
Senior Vice President of InterCapital, DWSC, Distributors and DWTC and 
Director of DWTC, and Kirk Balzer, Peter Hermann and Michael Knox, Vice 
Presidents of InterCapital, are Vice Presidents of the Fund, and Marilyn K. 
Cranney, First Vice President and Assistant General Counsel of InterCapital 
and DWSC, Lou Anne D. McInnis and Ruth Rossi, Vice Presidents and Assistant 
General Counsels of InterCapital and DWSC, and Frank Bruttomesso and Carsten 
Otto, Staff Attorneys with InterCapital, are Assistant Secretaries of the 
Fund. 
    

THE BOARD OF TRUSTEES, THE INDEPENDENT TRUSTEES, AND THE COMMITTEES 

   
   The Board of Trustees consists of eight (8) trustees. These same 
individuals also serve as directors or trustees for all of the Dean Witter 
Funds, and are referred to in this section as Trustees. As of the date of 
this Statement of Additional Information, there are a total of 83 Dean Witter 
Funds, comprised of 126 portfolios. As of January 31, 1997, the Dean Witter 
Funds had total net assets of approximately $83.6 billion and more than five 
million shareholders. 
    

   Six Trustees (75% of the total number) have no affiliation or business 
connection with InterCapital or any of its affiliated persons and do not own 
any stock or other securities issued by InterCapital's parent company, DWDC. 
These are the "disinterested" or "independent" Trustees. The other two 
Trustees (the "management Trustees") are affiliated with InterCapital. Four 
of the six independent Trustees are also Independent Trustees of the TCW/DW 
Funds. 

   Law and regulation establish both general guidelines and specific duties 
for the Independent Trustees. The Dean Witter Funds seek as Independent 
Trustees individuals of distinction and experience in business and finance, 
government service or academia; these are people whose advice and counsel are 
in demand by others and for whom there is often competition. To accept a 
position on the Funds' Boards, such individuals may reject other attractive 
assignments because the Funds make substantial demands on their time. Indeed, 
by serving on the Funds' Boards, certain Trustees who would otherwise be 
qualified and in demand to serve on bank boards would be prohibited by law 
from doing so. 

   
   All of the Independent Trustees serve as members of the Audit Committee 
and the Committee of the Independent Trustees. Three of them also serve as 
members of the Derivatives Committee. During the calendar year ended December 
31, 1996, the three Committees held a combined total of sixteen meetings. The 
Committees hold some meetings at InterCapital's offices and some outside 
InterCapital. Management Trustees or officers do not attend these meetings 
unless they are invited for purposes of furnishing information or making a 
report. 
    

   The Committee of the Independent Trustees is charged with recommending to 
the full Board approval of management, advisory and administration contracts, 
Rule 12b-1 plans and distribution and underwriting agreements; continually 
reviewing Fund performance; checking on the pricing of portfolio securities, 
brokerage commissions, transfer agent costs and performance, and trading 
among Funds in the same complex; and approving fidelity bond and related 
insurance coverage and allocations, as well 

                                8           
<PAGE>
as other matters that arise from time to time. The Independent Trustees are 
required to select and nominate individuals to fill any Independent Trustee 
vacancy on the Board of any Fund that has a Rule 12b-1 plan of distribution. 
Most of the Dean Witter Funds have such a plan. 

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

   Finally, the Board of each Fund has formed a Derivatives Committee to 
establish parameters for and oversee the activities of the Fund with respect 
to derivative investments, if any, made by the Fund. 

DUTIES OF CHAIRMAN OF COMMITTEE OF THE INDEPENDENT TRUSTEES AND AUDIT 
COMMITTEE 

   The Chairman of the Committee of the Independent Trustees and the Audit 
Committee maintains an office at the Funds' headquarters in New York. He is 
responsible for keeping abreast of regulatory and industry developments and 
the Funds' operations and management. He screens and/or prepares written 
materials and identifies critical issues for the Independent Trustees to 
consider, develops agendas for Committee meetings, determines the type and 
amount of information that the Committees will need to form a judgment on 
various issues, and arranges to have that information furnished to Committee 
members. He also arranges for the services of independent experts and 
consults with them in advance of meetings to help refine reports and to focus 
on critical issues. Members of the Committees believe that the person who 
serves as Chairman of both Committees and guides their efforts is pivotal to 
the effective functioning of the Committees. 

   The Chairman of the Committees also maintains continuous contact with the 
Funds' management, with independent counsel to the Independent Trustees and 
with the Funds' independent auditors. He arranges for a series of special 
meetings involving the annual review of investment advisory, management and 
other operating contracts of the Funds and, on behalf of the Committees, 
conducts negotiations with the Investment Manager and other service 
providers. In effect, the Chairman of the Committees serves as a combination 
of chief executive and support staff of the Independent Trustees. 

   The Chairman of the Committee of the Independent Trustees and the Audit 
Committee is not employed by any other organization and devotes his time 
primarily to the services he performs as Committee Chairman and Independent 
Trustee of the Dean Witter Funds and as an Independent Trustee and, since 
July 1, 1996, as Chairman of the Committee of the Independent Trustees and 
the Audit Committee of the TCW/DW Funds. The current Committee Chairman has 
had more than 35 years experience as a senior executive in the investment 
company industry. 

ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL DEAN 
WITTER FUNDS 

   
   The Independent Trustees and the Funds' management believe that having the 
same Independent Trustees for each of the Dean Witter Funds avoids the 
duplication of effort that would arise from having different groups of 
individuals serving as Independent Trustees for each of the Funds or even of 
sub-groups of Funds. They believe that having the same individuals serve as 
Independent Trustees of all the Funds tends to increase their knowledge and 
expertise regarding matters which affect the Fund complex generally and 
enhances their ability to negotiate on behalf of each Fund with the Fund's 
service providers. This arrangement also precludes the possibility of 
separate groups of Independent Trustees arriving at conflicting decisions 
regarding operations and management of the Funds and avoids the cost and 
confusion that would likely ensue. Finally, having the same Independent 
Trustees serve on all Fund Boards enhances the ability of each Fund to 
obtain, at modest cost to each separate Fund, the services of Independent 
Trustees, and a Chairman of their Committees, of the caliber, experience and 
business acumen of the individuals who serve as Independent Trustees of the 
Dean Witter Funds. 
    

                                9           
<PAGE>
   
COMPENSATION OF INDEPENDENT TRUSTEES 

   The Fund pays each Independent Trustee an annual fee of $1,000 plus a per 
meeting fee of $50 for meetings of the Board of Trustees or committees of the 
Board of Trustees attended by the Trustee (the Fund pays the Chairman of the 
Audit Committee an annual fee of $750 and pays the Chairman of the Committee 
of the Independent Trustees an additional annual fee of $1,200). The Fund 
also reimburses such Trustees for travel and other out-of-pocket expenses 
incurred by them in connection with attending such meetings. Trustees and 
officers of the Fund who are or have been employed by the Investment Manager 
or an affiliated company receive no compensation or expense reimbursement 
from the Fund. 

   At such time as the Fund has been in operation, and has paid fees to the 
Independent Trustees, for a full fiscal year, and assuming that during such 
fiscal year the Fund holds the same number of Board and committee meetings as 
were held by the other Dean Witter Funds during the calendar year ended 
December 31, 1996, it is estimated that the compensation paid to each 
Independent Trustee during such fiscal year will be the amount shown in the 
following table: 

                        FUND COMPENSATION (ESTIMATED) 
    

   
<TABLE>
<CAPTION>
                                AGGREGATE 
                               COMPENSATION 
NAME OF INDEPENDENT TRUSTEE    FROM THE FUND 
- ---------------------------    -------------
<S>                           <C>
Michael Bozic .............        $1,900 
Edwin J. Garn .............         1,900 
John R. Haire .............         3,850 
Dr. Manuel H. Johnson  ....         1,900 
Michael E. Nugent .........         1,900 
John L. Schroeder .........         1,900 
</TABLE>
    

   
   The following table illustrates the compensation paid to the Fund's 
Independent Trustees for the calendar year ended December 31, 1996 for 
services to the 82 Dean Witter Funds and, in the case of Messrs. Haire, 
Johnson, Nugent and Schroeder, the 14 TCW/DW Funds that were in operation at 
December 31, 1996. With respect to Messrs. Haire, Johnson, Nugent and 
Schroeder, the TCW/DW Funds are included solely because of a limited exchange 
privilege between those Funds and five Dean Witter Money Market Funds. 

          CASH COMPENSATION FROM DEAN WITTER FUNDS AND TCW/DW FUNDS 
    

   
<TABLE>
<CAPTION>
                                                               FOR SERVICE AS 
                                                                CHAIRMAN OF 
                                                               COMMITTEES OF     FOR SERVICE AS 
                                                                INDEPENDENT       CHAIRMAN OF 
                            FOR SERVICE                          DIRECTORS/      COMMITTEES OF      TOTAL CASH 
                          AS DIRECTOR OR     FOR SERVICE AS     TRUSTEES AND      INDEPENDENT      COMPENSATION 
                            TRUSTEE AND       TRUSTEE AND          AUDIT            TRUSTEES      FOR SERVICES TO 
                         COMMITTEE MEMBER   COMMITTEE MEMBER  COMMITTEES OF 82      AND AUDIT      82 DEAN WITTER 
       NAME OF          OF 82 DEAN WITTER    OF 14 TCW/DW      DEAN WITTER      COMMITTEES OF 14   FUNDS AND 14 
INDEPENDENT TRUSTEE            FUNDS             FUNDS             FUNDS           TCW/DW FUNDS     TCW/DW FUNDS 
- ---------------------   -----------------    --------------    ---------------  -----------------  --------------
<S>                      <C>                  <C>               <C>             <C>                <C>
Michael Bozic .........      $138,850                --                 --               --          $138,850 
Edwin J. Garn .........       140,900                --                 --               --           140,900 
John R. Haire .........       106,400           $64,283           $195,450          $12,187           378,320 
Dr. Manuel H. Johnson         137,100            66,483                 --               --           203,583 
Michael E. Nugent  ....       138,850            64,283                 --               --           203,133 
John L. Schroeder  ....       137,150            69,083                 --               --           206,233 
</TABLE>
    

                               10           
<PAGE>
   
   As of the date of this Statement of Additional Information, 57 of the Dean 
Witter Funds, not including the Fund, have adopted a retirement program under 
which an Independent Trustee who retires after serving for at least five 
years (or such lesser period as may be determined by the Board) as an 
Independent Director or Trustee of any Dean Witter Fund that has adopted the 
retirement program (each such Fund referred to as an "Adopting Fund" and each 
such Trustee referred to as an "Eligible Trustee") is entitled to retirement 
payments upon reaching the eligible retirement age (normally, after attaining 
age 72). Annual payments are based upon length of service. Currently, upon 
retirement, each Eligible Trustee is entitled to receive from the Adopting 
Fund, commencing as of his or her retirement date and continuing for the 
remainder of his or her life, an annual retirement benefit (the "Regular 
Benefit") equal to 25.0% of his or her Eligible Compensation plus 0.4166666% 
of such Eligible Compensation for each full month of service as an 
Independent Director or Trustee of any Adopting Fund in excess of five years 
up to a maximum of 50.0% after ten years of service. The foregoing 
percentages may be changed by the Board.(1) "Eligible Compensation" is 
one-fifth of the total compensation earned by such Eligible Trustee for 
service to the Adopting Fund in the five year period prior to the date of the 
Eligible Trustee's retirement. Benefits under the retirement program are not 
secured or funded by the Adopting Funds. 

   The following table illustrates the retirement benefits accrued to the 
Fund's Independent Trustees by the 57 Dean Witter Funds (not including the 
Fund) for the year ended December 31, 1996, and the estimated retirement 
benefits for the Fund's Independent Trustees, to commence upon their 
retirement, from the 57 Dean Witter Funds as of December 31, 1996. 

                RETIREMENT BENEFITS FROM ALL DEAN WITTER FUNDS 
    

   
<TABLE>
<CAPTION>
                                                                              ESTIMATED 
                                                                RETIREMENT      ANNUAL 
                                ESTIMATED                        BENEFITS      BENEFITS 
                                CREDITED                        ACCRUED AS       UPON 
                                  YEARS          ESTIMATED       EXPENSES     RETIREMENT 
                              OF SERVICE AT    PERCENTAGE OF      BY ALL       FROM ALL 
      NAME OF                  RETIREMENT        ELIGIBLE        ADOPTING      ADOPTING 
INDEPENDENT TRUSTEE           (MAXIMUM 10)     COMPENSATION       FUNDS       FUNDS (2) 
- -------------------           ------------     -------------    ---------    -----------
<S>                           <C>              <C>               <C>          <C>
Michael Bozic .............        10              50.0%         $20,147       $ 51,325 
Edwin J. Garn .............        10              50.0           27,772         51,325 
John R. Haire .............        10              50.0           46,952        129,550 
Dr. Manuel H. Johnson  ....        10              50.0           10,926         51,325 
Michael E. Nugent .........        10              50.0           19,217         51,325 
John L. Schroeder .........         8              41.7           38,700         42,771 
</TABLE>
- ------------
   (1) An Eligible Trustee may elect alternate payments of his or her 
       retirement benefits based upon the combined life expectancy of such 
       Eligible Trustee and his or her spouse on the date of such Eligible 
       Trustee's retirement. The amount estimated to be payable under this 
       method, through the remainder of the later of the lives of such 
       Eligible Trustee and spouse, will be the actuarial equivalent of the 
       Regular Benefit. In addition, the Eligible Trustee may elect that the 
       surviving spouse's periodic payment of benefits will be equal to either 
       50% or 100% of the previous periodic amount, an election that, 
       respectively, increases or decreases the previous periodic amount so 
       that the resulting payments will be the actuarial equivalent of the 
       Regular Benefit. 

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

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

                               11           
<PAGE>
INVESTMENT PRACTICES AND POLICIES 
- ----------------------------------------------------------------------------- 

REPURCHASE AGREEMENTS 

   When cash may be available for only a few days, it may be invested by the 
Fund in repurchase agreements until such time as it may otherwise be invested 
or used for payments of obligations of the Fund. These agreements, which may 
be viewed as a type of secured lending by the Fund, typically involve the 
acquisition by the Fund of debt securities from a selling financial 
institution such as a bank, savings and loan association or broker-dealer. 
The agreement provides that the Fund will sell back to the institution, and 
that the institution will repurchase, the underlying security ("collateral") 
at a specified price and at a fixed time in the future, usually not more than 
seven days from the date of purchase. The collateral will be maintained in a 
segregated account and will be marked to market daily to determine that the 
value of the collateral, as specified in the agreement, does not decrease 
below the purchase price plus accrued interest. If such decrease occurs, 
additional collateral will be requested and, when received, added to the 
account to maintain full collateralization. The Fund will accrue interest 
from the institution until the time when the repurchase is to occur. Although 
such date is deemed by the Fund to be the maturity date of a repurchase 
agreement, the maturities of the collateral are not subject to any limits. 

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

STOCK INDEX FUTURES CONTRACTS 

   As discussed in the Prospectus, the Fund may invest in stock index futures 
contracts. Futures contracts on indexes do not require the physical delivery 
of securities, but provide for a final cash settlement on the expiration date 
which reflects accumulated profits and losses credited or debited to each 
party's account. An index futures contract sale creates an obligation by the 
Fund, as seller, to deliver cash at a specified future time. An index futures 
contract purchase would create an obligation by the Fund, as purchaser, to 
take delivery of cash at a specified future time. 

   The Fund will purchase or sell stock index futures contracts for the 
purpose of hedging its equity portfolio (or anticipated portfolio) securities 
against changes in their prices. If the Investment Manager anticipates that 
the prices of stock held by the Fund may fall, the Fund may sell a stock 
index futures contract. Conversely, if the Investment Manager wishes to hedge 
against anticipated price rises in those stocks which the Fund intends to 
purchase, the Fund may purchase stock index futures contracts. In addition, 
stock index futures contracts will be bought or sold in order to close out a 
short or long position in a corresponding futures contract. 

   A futures contract sale is closed out by effecting a futures contract 
purchase for the same aggregate amount and the same delivery date. If the 
sale price exceeds the offsetting purchase price, the seller would be paid 
the difference and would realize a gain. If the offsetting purchase price 
exceeds the sale price, the seller would pay the difference and would realize 
a loss. Similarly, a futures contract purchase is closed out by effecting a 
futures contract sale for the same aggregate amount of the specific type of 
equity security and the same delivery date. If the offsetting sale price 
exceeds the purchase price, the purchaser would realize a gain, whereas if 
the purchase price exceeds the offsetting sale price, the purchaser would 
realize a loss. There is no assurance that the Fund will be able to enter 
into a closing transaction. 

                               12           
<PAGE>
   The Fund is required to maintain margin deposits with the Fund's 
Custodian, in a segregated account in the name of the broker through which it 
effects index futures contracts. Currently, the initial margin requirements 
range from 3% to 10% of the contract amount for index futures. In addition, 
due to current industry practice, daily variations in gains and losses on 
open contracts are required to be reflected in cash in the form of variation 
margin payments. The Fund may be required to make additional margin payments 
during the term of the contract. 

   At any time prior to expiration of the futures contract, the Fund may 
elect to close the position by taking an opposite position which will operate 
to terminate the Fund's position in the futures contract. A final 
determination of variation margin is then made, additional cash is required 
to be paid by or released to the Fund and the Fund realizes a loss or a gain. 

   Currently, index futures contracts can be purchased or sold with respect 
to, among others, the Standard & Poor's 500 Stock Price Index, the Russell 
2000 Index, the Standard & Poor's 100 Stock Price Index on the Chicago 
Mercantile Exchange, the New York Stock Exchange Composite Index on the New 
York Futures Exchange, the Major Market Index on the American Stock Exchange, 
the Moody's Investment-Grade Corporate Bond Index on the Chicago Board of 
Trade and the Value Line Stock Index on the Kansas City Board of Trade. 

   Limitations on Futures Contracts. The Fund may not enter into futures 
contracts if, immediately thereafter, the amount committed to margin exceeds 
5% of the value of the Fund's total assets, after taking into account 
unrealized gains and unrealized losses on such contracts it has entered into. 
However, there is no overall limitation on the percentage of the Fund's 
assets which may be subject to a hedge position. In addition, in accordance 
with the regulations of the Commodity Futures Trading Commission ("CFTC") 
under which the Fund is exempted from registration as a commodity pool 
operator, the Fund may only enter into futures contracts in accordance with 
the limitation described above. If the CFTC changes its regulations so that 
the Fund would be permitted more latitude to enter into futures contracts for 
purposes other than hedging the Fund's investments without CFTC registration, 
the Fund may engage in such transactions for those purposes. Except as 
described above, there are no other limitations on the use of futures by the 
Fund. 

   Risks of Transactions in Futures Contracts. The successful use of futures 
contracts depends on the ability of the Investment Manager to accurately 
predict market and interest rate movements. As stated in the Prospectus, the 
Fund may sell a futures contract to protect against the decline in the value 
of securities held by the Fund. However, it is possible that the futures 
market may advance and the value of securities held in the portfolio of the 
Fund may decline. If this occurred, the Fund would lose money on the futures 
contract and also experience a decline in value of its portfolio securities. 
However, while this could occur for a very brief period or to a very small 
degree, over time the value of a diversified portfolio will tend to move in 
the same direction as the futures contracts. 

   If the Fund purchases a futures contract to hedge against the increase in 
value of securities it intends to buy, and the value of such securities 
decreases, then the Fund may determine not to invest in the securities as 
planned and will realize a loss on the futures contract that is not offset by 
a reduction in the price of the securities. 

   In addition, if the Fund holds a long position in a futures contract, it 
will hold cash, U.S. Government securities or other liquid portfolio 
securities equal to the purchase price of the contract (less the amount of 
initial or variation margin on deposit) in a segregated account maintained 
for the Fund by its Custodian. If the Fund maintains a short position in a 
futures contract, it will cover this position by holding, in a segregated 
account maintained at its Custodian, cash, U.S. Government securities or 
other liquid portfolio securities equal in value (when added to any initial 
or variation margin on deposit) to the market value of the securities 
underlying the futures contract. Such a position may also be covered by 
owning a portfolio of securities substantially replicating the relevant 
index. 

   Exchanges may limit the amount by which the price of 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. In the event of adverse price movements, the Fund 

                               13           
<PAGE>

would be required to make daily cash payments of variation margin on open 
futures positions. In such situations, if the Fund has insufficient cash, it 
may have to sell portfolio securities to meet daily variation margin 
requirements at a time when it may be disadvantageous to do so. The inability 
to close out futures positions could also have an adverse impact on the 
Fund's ability to effectively hedge its portfolio. 

   The extent to which the Fund may enter into transactions involving futures 
contracts may be limited by the Internal Revenue Code's requirements for 
qualification as a regulated investment company and the Fund's intention to 
qualify as such. See "Dividends, Distributions and Taxes" in the Prospectus. 

   While the futures contracts to be engaged in by the Fund for the purpose 
of hedging the Fund's portfolio securities are not speculative in nature, 
there are risks inherent in the use of such instruments. One such risk which 
may arise in employing futures contracts to protect against the price 
volitility of portfolio securities is that the prices of indexes subject to 
futures contracts (and thereby the futures contract prices) may correlate 
imperfectly with the behavior of the cash prices of the Fund's portfolio 
securities. A correlation may also be distorted (a) temporarily, by 
short-term traders seeking to profit from the difference between a contract 
or security price objective and their cost of borrowed funds; (b) by 
investors in futures contracts electing to close out their contracts through 
offsetting transactions rather than meet margin deposit requirements; (c) by 
investors in futures contracts opting to make or take delivery of underlying 
securities rather than engage in closing transactions, thereby reducing 
liquidity of the futures market; and (d) temporarily, by speculators who view 
the deposit requirements in the futures markets as less onerous than margin 
requirements in the cash market. Due to the possibility of price distortion 
in the futures market and because of the imperfect correlation between 
movements in the prices of securities and movements in the prices of futures 
contracts, a correct forecast of interest rate trends may still not result in 
a successful hedging transaction. 

   As stated in the Prospectus, there is no assurance that a liquid secondary 
market will exist for futures contracts in which the Fund may invest. In the 
event a liquid market does not exist, it may not be possible to close out a 
futures position, and in the event of adverse price movements, the Fund would 
continue to be required to make daily cash payments of variation margin. In 
addition, limitations imposed by an exchange or board of trade on which 
futures contracts are traded may compel or prevent the Fund from closing out 
a contract which may result in reduced gain or increased loss to the Fund. 

   The Investment Manager has substantial experience in the use of the 
investment techniques described above under the heading "Stock Index Futures 
Contracts," which techniques require skills different from those needed to 
select the portfolio securities underlying futures contracts. 

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS 

   From time to time 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 commitment. While the Fund will only purchase 
securities on a when-issued, delayed delivery or forward commitment basis 
with the intention of acquiring the securities, the Fund may sell the 
securities before the settlement date, if it is deemed advisable. The 
securities so purchased or sold are subject to market fluctuation and no 
interest or dividends accrue to the purchaser prior to the settlement date. 
At the time the Fund makes the commitment to purchase or sell securities on a 
when-issued, delayed delivery or forward commitment basis, it will record the 
transaction and thereafter reflect the value, each day, of such security 
purchased, or if a sale, the proceeds to be received, in determining its net 
asset value. At the time of delivery of the securities, their value may be 
more or less than the purchase or sale price. The Fund will also establish a 
segregated account with its custodian bank in which it will continually 
maintain cash or cash equivalents or other high grade debt portfolio 
securities equal in value to commitments to purchase securities on a 
when-issued, delayed delivery or forward commitment basis. 

WHEN, AS AND IF ISSUED SECURITIES 

   The Fund may purchase securities on a "when, as and if issued" basis under 
which the issuance of the security depends upon the occurrence of a 
subsequent event, such as approval of a merger, 

                               14           
<PAGE>

corporate reorganization or debt restructuring. The commitment for the 
purchase of any such security will not be recognized in the portfolio of the 
Fund until the Investment Manager determines that issuance of the security is 
probable. At such time, the Fund will record the transaction and, in 
determining its net asset value, will reflect the value of the security 
daily. At such time, the Fund will also establish a segregated account with 
its custodian bank in which it will maintain cash or cash equivalents or 
other high grade debt portfolio securities equal in value to recognized 
commitments for such securities. The value of the Fund's commitments to 
purchase the securities of any one issuer, together with the value of all 
securities of such issuer owned by the Fund, may not exceed 5% of the value 
of the Fund's total assets at the time the initial commitment to purchase 
such securities is made (see "Investment Restrictions"). An increase in the 
percentage of the Fund's assets committed to the purchase of securities on a 
"when, as and if issued" basis may increase the volatility of its net asset 
value. The Investment Manager and the Trustees do not believe that the net 
asset value of the Fund will be adversely affected by its purchase of 
securities on such basis. The Fund may also sell securities on a "when, as 
and if issued" basis provided that the issuance of the security will result 
automatically from the exchange or conversion of a security owned by the Fund 
at the time of sale. 

RULE 144A SECURITIES 

   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. The procedures require that the following factors be taken into 
account in making a liquidity determination: (1) the frequency of trades and 
price quotes for the security; (2) the number of dealers and other potential 
purchasers who have issued quotes on the security; (3) any dealer 
undertakings to make a market in the security; and (4) the nature of the 
security and the nature of the marketplace trades (the time needed to dispose 
of the security, the method of soliciting offers, and the mechanics of 
transfer). 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. 

LENDING OF PORTFOLIO SECURITIES 

   Consistent with applicable regulatory requirements, the Fund may lend its 
portfolio securities to brokers, dealers and other financial institutions, 
provided that such loans are callable at any time by the Fund (subject to 
notice provisions described below), and are at all times secured by cash or 
cash equivalents, which are maintained in a segregated account pursuant to 
applicable regulations and that are equal to at least the market value, 
determined daily, of the loaned securities. The advantage of such loans is 
that the Fund continues to receive the income on the loaned securities while 
at the same time earning interest on the cash amounts deposited as 
collateral, which will be invested in short-term obligations. The Fund will 
not lend its portfolio securities if such loans are not permitted by the laws 
or regulations of any state in which its shares are qualified for sale and 
will not lend more than 25% of the value of its total assets. A loan may be 
terminated by the borrower on one business day's notice, or by the Fund on 
four business days' notice. If the borrower fails to deliver the loaned 
securities within four days after receipt of notice, the Fund could use the 
collateral to replace the securities while holding the borrower liable for 
any excess of replacement cost over collateral. As with any extensions of 
credit, there are risks of delay in recovery and in some cases even loss of 
rights in the collateral should the borrower of the securities fail 
financially. However, these loans of portfolio securities will only be made 
to firms deemed by the Fund's management to be creditworthy and when the 
income which can be earned from such loan justifies the attendant risks. Upon 
termination of the loan, the borrower is required to return the securities to 
the Fund. Any gain or loss in the market price during the loan period would 
inure to the Fund. The creditworthiness of firms to which the Fund lends its 
portfolio securities will be monitored on an ongoing basis by the Investment 
Manager pursuant to procedures adopted and reviewed, on an ongoing basis, by 
the Board of Trustees of the Fund. 

   When voting or consent rights which accompany loaned securities pass to 
the borrower, the Fund will follow the policy of calling the loaned 
securities, to be delivered within one day after notice, to permit 

                               15           
<PAGE>
the exercise of such rights if the matters involved would have a material 
effect on the Fund's investment in such loaned securities. The Fund will pay 
reasonable finder's, administrative and custodial fees in connection with a 
loan of its securities. 

NEW INSTRUMENTS 

   New financial products and various combinations thereof continue to be 
developed. The Fund may invest in any such products as may be developed, to 
the extent conistent with its investment objective and applicable regulatory 
requirements. 

PORTFOLIO TURNOVER 

   It is anticipated that the Fund's portfolio turnover rate will not exceed 
100%. A 100% turnover rate would occur, for example, if 100% of the 
securities held in the Fund's portfolio (excluding all securities whose 
maturities at acquisition were one year or less) were sold and replaced 
within one year. 

INVESTMENT RESTRICTIONS 
- ----------------------------------------------------------------------------- 

   In addition to the investment restrictions enumerated in the Prospectus, 
the investment restrictions listed below have been adopted by the Fund as 
fundamental policies, except as otherwise indicated. Under 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. Such a 
majority is defined as the lesser of (a) 67% or more of the shares present at 
a meeting of Shareholders, if the holders of 50% of the outstanding shares of 
the Fund are present or represented by proxy or (b) more than 50% of the 
outstanding shares of the Fund. For purposes of the following restrictions: 
(i) all percentage limitations apply immediately after a purchase or initial 
investment; and (ii) any subsequent change in any applicable percentage 
resulting from market fluctuations or other changes in total or net assets 
does not require elimination of any security from the portfolio. 

   The Fund may not: 

     1. Invest in securities of any issuer if in the exercise of reasonable 
  diligence, the Fund has determined that any officer or trustee/director of 
  the Fund or of the Investment Manager owns more than 1/2 of 1% of the 
  outstanding securities of such issuer, and such officers and 
  trustees/directors who own more than 1/2 of 1% own in the aggregate more 
  than 5% of the outstanding securities of such issuer. 

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

     3. Purchase or sell commodities or commodities contracts except that the 
  Fund may purchase or sell financial or index futures contracts and related 
  options. 

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

     5. Purchase securities of other investment companies, except in 
  connection with a merger, consolidation, reorganization or acquisition of 
  assets. This restriction does not apply to an investment by the Fund of 
  all or substantially all of its assets in another registered investment 
  company having the same investment objective and policies and 
  substantially the same investment restrictions as the Fund. 

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

     7.  Pledge its assets or assign or otherwise encumber them except to 
  secure borrowings effected within the limitations set forth in 
  restriction (6). 

                               16           
<PAGE>
     8. Issue senior securities as defined in the Act except insofar as the 
  Fund may be deemed to have issued a senior security by reason of: (a) 
  entering into any repurchase agreement; (b) purchasing or selling futures 
  contracts or options; (c) borrowing money in accordance with restrictions 
  described above; (d) purchasing any securities on a when-issued or delayed 
  delivery basis; or (e) lending portfolio securities. 

     9. Make loans of money or securities, except: (a) by the purchase of debt 
  obligations in which the Fund may invest consistent with its investment 
  objective and policies; (b) by investment in repurchase agreements; or (c) 
  by lending its portfolio securities. 

     10. Make short sales of securities. 

     11. Purchase securities on margin, except for such short-term loans as 
  are necessary for the clearance of portfolio securities. The deposit or 
  payment by the Fund of initial or variation margin in connection with 
  futures contracts or related options is not considered the purchase of a 
  security on margin. 

     12. Engage in the underwriting of securities, except insofar as the Fund 
  may be deemed an underwriter under the Securities Act of 1933 in disposing 
  of a portfolio security. 

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

   In addition, the Fund, as a non-fundamental policy, will not invest more 
than 5% of the value of its net assets in warrants, including not more than 
2% of such assets in warrants not listed on the New York or American Stock 
Exchange. However, the acquisition of warrants attached to other securities 
is not subject to this restriction. 

PORTFOLIO TRANSACTIONS AND BROKERAGE 
- ----------------------------------------------------------------------------- 

   
   Subject to the general supervision of the Board of Trustees, the 
Investment Manager is responsible for decisions to buy and sell securities 
for the Fund, the selection of brokers and dealers to effect the 
transactions, and the negotiation of brokerage commissions, if any. Purchases 
and sales of securities on a stock exchange are effected through brokers who 
charge a commission for their services. In the over-the-counter market, 
securities are generally traded on a "net" basis with dealers acting as 
principal for their own accounts without a stated commission, although the 
price of the security usually includes a profit to the dealer. The Fund also 
expects that securities will be purchased at times in underwritten offerings 
where the price includes a fixed amount of compensation, generally referred 
to as the underwriter's concession or discount. Futures transactions are 
usually effected through a broker and a commission will be charged. On 
occasion, the Fund may also purchase certain money market instruments 
directly from an issuer, in which case no commissions or discounts are paid. 
During the period October 29, 1996 (commencement of operations) through 
January 31, 1997, the Fund paid a total of $333,445 in brokerage commissions. 
    

   The Investment Manager currently serves as investment manager to a number 
of clients, including other investment companies, and may in the future act 
as investment manager or adviser to others. It is the practice of the 
Investment Manager to cause purchase and sale transactions to be allocated 
among the Fund and others whose assets it manages in such manner as it deems 
equitable. In making such allocations among the Fund and other client 
accounts, various factors may be considered, including the respective 
investment objectives, the relative size of portfolio holdings of the same or 
comparable securities, the availability of cash for investment, the size of 
investment commitments generally held and the opinions of the persons 
responsible for managing the portfolios of the Fund and other client 
accounts. In the case of certain initial and secondary public offerings, the 
Investment Manager may utilize a pro-rata allocation process based on the 
size of the Dean Witter Funds involved and the number of shares available 
from the public offering. 

   The policy of the Fund regarding purchases and sales of securities for its 
portfolio is that primary consideration will be given to obtaining the most 
favorable prices and efficient executions of transactions. Consistent with 
this policy, when securities transactions are effected on a stock exchange, 
the Fund's 

                               17           
<PAGE>
policy is to pay commissions which are considered fair and reasonable without 
necessarily determining that the lowest possible commissions are paid in all 
circumstances. The Fund believes that a requirement always to seek the lowest 
possible commission cost could impede effective portfolio management and 
preclude the Fund and the Investment Manager from obtaining a high quality of 
brokerage and research services. In seeking to determine the reasonableness 
of brokerage commissions paid in any transaction, the Investment Manager 
relies upon its experience and knowledge regarding commissions generally 
charged by various brokers and on its judgment in evaluating the brokerage 
and research services received from the broker effecting the transaction. 
Such determinations are necessarily subjective and imprecise, as in most 
cases an exact dollar value for those services is not ascertainable. 

   
   In seeking to implement the Fund's policies, the Investment Manager 
effects transactions with those brokers and dealers who the Investment 
Manager believes provide the most favorable prices and are capable of 
providing efficient executions. If the Investment Manager believes such 
prices and executions are obtainable from more than one broker or dealer, it 
may give consideration to placing portfolio transactions with those brokers 
and dealers who also furnish research and other services to the Fund or the 
Investment Manager. Such services may include, but are not limited to, any 
one or more of the following: information as to the availability of 
securities for purchase or sale; statistical or factual information or 
opinions pertaining to investments; wire services; and appraisals or 
evaluations of portfolio securities. During the period October 29, 1996 
through January 31, 1997, the Fund directed the payment of $268,495 in 
brokerage commissions in connection with transactions in the aggregate amount 
of $89,965,059 to brokers because of research services provided. 
    

   The information and services received by the Investment Manager from 
brokers and dealers may be of benefit to the Investment Manager in the 
management of accounts of some of its other clients and may not in all cases 
benefit the Fund directly. While the receipt of such information and services 
is useful in varying degrees and would generally reduce the amount of 
research or services otherwise performed by the Investment Manager and 
thereby reduce its expenses, it is of indeterminable value and the management 
fee paid to the Investment Manager is not reduced by any amount that may be 
attributable to the value of such services. 

   Pursuant to an order of the Securities and Exchange Commission, the Fund 
may effect principal transactions in certain money market instruments with 
DWR. The Fund will limit its transactions with DWR to U.S. Government and 
Government Agency Securities, Bank Money Instruments (i.e., Certificates of 
Deposit and Bankers' Acceptances) and Commercial Paper. Such transactions 
will be effected with DWR only when the price available from DWR is better 
than that available from other dealers. 

   
   Consistent with the policy described above, brokerage transactions in 
securities listed on exchanges or admitted to unlisted trading privileges may 
be effected through DWR. In order for DWR to effect any portfolio 
transactions for the Fund, the commissions, fees or other remuneration 
received by DWR must be reasonable and fair compared to the commissions, fees 
or other remuneration paid to other brokers in connection with comparable 
transactions involving similar securities being purchased or sold on an 
exchange during a comparable period of time. This standard would allow DWR to 
receive no more than the remuneration which would be expected to be received 
by an unaffiliated broker in a commensurate arm's-length transaction. 
Furthermore, the Board of Trustees of the Fund, including a majority of the 
Trustees who are not "interested" persons of the Fund, as defined in the Act, 
have adopted procedures which are reasonably designed to provide that any 
commissions, fees or other remuneration paid to DWR are consistent with the 
foregoing standard. The Fund does not reduce the management fee it pays to 
the Investment Manager by any amount of the brokerage commissions it may pay 
to DWR. During the period October 29, 1996 through January 31, 1997, the Fund 
paid $39,165 in brokerage commissions to DWR. The commissions paid to DWR 
during that period represented approximately 11.75% of the total brokerage 
commissions paid by the Fund during the period and were paid on account of 
transactions having an aggregate dollar value equal to approximately 14.16% 
of the aggregate dollar value of all portfolio transactions of the Fund 
during the period for which commissions were paid. 
    

                               18           
<PAGE>
THE DISTRIBUTOR 
- ----------------------------------------------------------------------------- 

   As discussed in the Prospectus, shares of the Fund are distributed by Dean 
Witter Distributors Inc. (the "Distributor"). The Distributor has entered 
into a selected dealer agreement with DWR, which through its own sales 
organization sells shares of the Fund. In addition, the Distributor may enter 
into selected dealer agreements with other selected broker-dealers. The 
Distributor, a Delaware corporation, is a wholly-owned subsidiary of DWDC. 
The Board of Trustees of the Fund including a majority of the Trustees who 
are not, and were not at the time they voted, interested persons of the Fund, 
as defined in the Act ( the "Independent Trustees"), approved, at their 
meeting held on July 23, 1996, a Distribution Agreement appointing the 
Distributor as exclusive distributor of the Fund's shares and providing for 
the Distributor to bear distribution expenses not borne by the Fund. By its 
terms, the Distribution Agreement has an initial term ending April 30, 1997, 
and provides that it will remain in effect from year to year thereafter if 
approved by the Board. 

   The Distributor bears all expenses it may incur in providing services 
under the Distribution Agreement. Such expenses include the payment of 
commissions for sales of the Fund's shares and incentive compensation to 
account executives. The Distributor also pays certain expenses in connection 
with the distribution of the Fund's shares, including the costs of preparing, 
printing and distributing advertising or promotional materials, and the costs 
of printing and distributing prospectuses and supplements thereto used in 
connection with the offering and sale of the Fund's shares. The Fund bears 
the costs of initial typesetting, printing and distribution of prospectuses 
and supplements thereto to shareholders. The Fund also bears the costs of 
registering the Fund and its shares under federal and state securities laws. 
The Fund and the Distributor have agreed to indemnify each other against 
certain liabilities, including liabilities under the Securities Act of 1933, 
as amended. Under the Distribution Agreement, the Distributor uses its best 
efforts in rendering services to the Fund, but in the absence of willful 
misfeasance, bad faith, gross negligence or reckless disregard of its 
obligations, the Distributor is not liable to the Fund or any of its 
shareholders for any error of judgment or mistake of law or for any act or 
omission or for any losses sustained by the Fund or its shareholders. 

PLAN OF DISTRIBUTION 

   
   To compensate the Distributor for the services it or any selected 
broker-dealer provides and for the expenses it bears under the Distribution 
Agreement, the Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 
under the Act (the "Plan" ) pursuant to which the Fund pays the Distributor 
compensation accrued daily and payable monthly at the annual rate of 1.0% of 
the Fund's average daily net assets. The Distributor receives the proceeds of 
contingent deferred sales charges imposed on certain redemptions of shares, 
which are separate and apart from payments made pursuant to the Plan (see 
"Redemptions and Repurchases--Contingent Deferred Sales Charge" in the 
Prospectus). The Distributor has informed the Fund that it received 
approximately $52,000 in contingent deferred sales charges for the period 
October 29, 1996 (commencement of operations) through January 31, 1997. 

   The Distributor has informed the Fund that an amount of the fees payable 
by the Fund each year pursuant to the Plan of Distribution equal to 0.25% of 
the Fund's average daily net assets is characterized as a "service fee" under 
the Rules of Fair Practice of the National Association of Securities Dealers, 
Inc. (of which the Distributor is a member). Such fee is a payment made for 
personal service and/or the maintenance of shareholder accounts. The 
remaining portion of the Plan of Distribution fee payments made by the Fund 
is characterized as an "asset-based sales charge" as such is defined by the 
aforementioned Rules of Fair Practice. 
    

   The Plan was adopted by a vote of the Trustees of the Fund on July 23, 
1996 at a meeting of the Trustees called for the purpose of voting on such 
Plan. The vote included the vote of a majority of the Trustees of the Fund 
who are not "interested persons" of the Fund (as defined in the Act) and who 
have no direct or indirect financial interest in the operation of the Plan 
(the "Independent 12b-1 Trustees"). In making their decision to adopt the 
Plan, the Trustees requested from the Distributor and received such 
information as they deemed necessary to make an informed determination as to 
whether or not adoption of the Plan was in the best interests of the 
shareholders of the Fund. After due consideration of the 

                               19           
<PAGE>
information received, the Trustees, including the Independent 12b-1 Trustees, 
determined that adoption of the Plan would benefit the shareholders of the 
Fund. InterCapital, as then sole shareholder of the Fund, approved the Plan 
on July 23, 1996, whereupon the Plan went into effect. 

   
   Under its terms, the Plan will continue in effect until April 30, 1997 and 
will remain in effect from year to year thereafter, provided such continuance 
is approved annually by a vote of the Trustees in the manner described above. 
Under the Plan and as required by Rule 12b-1, the Trustees will receive and 
review promptly after the end of each calendar quarter a written report 
provided by the Distributor of the amounts expended by the Distributor under 
the Plan and the purpose for which such expenditures were made. The Fund 
accrued amounts payable to the Distributor under the Plan, during the period 
October 29, 1996 through January 31, 1997, of $486,592. This amount is equal 
to 1.0% of the Fund's average daily net assets for the fiscal period and is 
treated by the Fund as an expense in the year it is accrued. 

   The Plan was adopted in order to permit the implementation of the Fund's 
method of distribution. Under this distribution method shares of the Fund are 
sold without a sales load being deducted at the time of purchase, so that the 
full amount of an investor's purchase payment will be invested in shares 
without any deduction for sales charges. Shares of the Fund may be subject to 
a contingent deferred sales charge, payable to the Distributor, if redeemed 
during the six years after their purchase. DWR compensates its account 
executives by paying them, from its own funds, commissions for the sales of 
the Fund's shares, currently a gross sales credit of up to 5% of the amount 
sold and an annual residual commission of up to 0.25 of 1% of the current 
value of the account. The gross sales credit is a charge which reflects 
commissions paid by DWR to its account executives and Fund associated 
distribution-related expenses, including sales compensation and overhead and 
other branch office distribution-related expenses including: (a) the expenses 
of operating DWR's branch offices in connection with the sale of Fund shares, 
including lease costs, the salaries and employee benefits of operations and 
sales support personnel, utility costs, communications costs and the costs of 
stationery and supplies; (b) the costs of client sales seminars; (c) travel 
expenses of mutual fund sales coordinators to promote the sale of Fund 
shares; and (d) other expenses relating to branch promotion of Fund shares 
sales. Payments may also be made with respect to distribution expenses 
incurred in connection with the distribution of shares, including personal 
services to shareholders with respect to holdings of such shares, of an 
investment company whose assets are acquired by the Fund in a tax-free 
reorganization. 

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

   The Fund paid 100% of the $486,592 accrued under the Plan for the fiscal 
period ended January 31, 1997 to the Distributor. The Distributor and DWR 
estimate that they have spent, pursuant to the Plan, $11,698,934 on behalf of 
the Fund since the inception of the Plan. It is estimated that this amount 
was spent in approximately the following ways: (i) 12.02% 
($1,406,128)--advertising and promotional expenses; (ii) 1.69% 
($197,343)--printing of prospectuses for distribution to other than current 
shareholders; and (iii) 86.29% ($10,095,463)--other expenses, including the 
gross sales credit and the carrying charge, of which 1.13% ($113,895) 
represents carrying charges, 39.94% ($4,032,553) represents commission 
credits to DWR branch offices for payments of commissions to account 
executives and 58.93% ($5,949,015) represents overhead and other branch 
office distribution-related expenses. 

   At any given time, the expenses in distributing shares of the Fund may be 
more or less than the total of (i) the payments made by the Fund pursuant to 
the Plan and (ii) the proceeds of contingent deferred sales charges paid by 
investors upon redemption of shares. The Distributor has advised the Fund 
that 

                               20           
    
<PAGE>
   
the excess distribution expenses, including the carrying charge designed to 
approximate the opportunity costs incurred by DWR which arise from it having 
advanced monies without having received the amount of any sales charges 
imposed at the time of sale of the Fund's shares, totalled $11,160,385 as of 
January 31, 1997. Because there is no requirement under the Plan that the 
Distributor be reimbursed for all expenses or any requirement that the Plan 
be continued from year to year, this excess amount does not constitute a 
liability of the Fund. Although there is no legal obligation for the Fund to 
pay distribution expenses in excess of payments made under the Plan and the 
proceeds of contingent deferred sales charges paid by investors upon 
redemption of shares, if for any reason the Plan is terminated, the Trustees 
will consider at that time the manner in which to treat such expenses. Any 
cumulative expenses incurred, but not yet recovered through distribution fees 
or contingent deferred sales charges, may or may not be recovered through 
future distribution fees or contingent deferred sales charges. 
    

   No interested person of the Fund nor any Trustee of the Fund who is not an 
interested person of the Fund, as defined in the Act, has any direct or 
indirect financial interest in the operation of the Plan except to the extent 
that the Distributor, InterCapital, DWSC and DWR or certain of their 
employees may be deemed to have such an interest as a result of benefits 
derived from the successful operation of the Plan or as a result of receiving 
a portion of the amounts expended thereunder by the Fund. 

   The Plan may not be amended to increase materially the amount to be spent 
for the services described therein without approval of the shareholders of 
the Fund, and all material amendments of the Plan must also be approved by 
the Trustees in the manner described above. The Plan may be terminated at any 
time, without payment of any penalty, by vote of a majority of the 
Independent 12b-1 Trustees or by a vote of a majority of the outstanding 
voting securities of the Fund (as defined in the Act) or not more than thirty 
days' written notice to any other party to the Plan. So long as the Plan is 
in effect, the election and nomination of Independent Trustees shall be 
committed to the discretion of the Independent Trustees. 

DETERMINATION OF NET ASSET VALUE 

   As stated in the Prospectus, short-term 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. Other short-term debt 
securities will be valued on a mark-to-market basis until such time as they 
reach a remaining maturity of sixty days, whereupon they will be valued at 
amortized cost using their value on the 61st day 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. All other securities and other assets are valued at their fair 
value as determined in good faith under procedures established by and under 
the supervision of the Trustees. 

   The net asset value per share of the Fund 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 value of all assets of the Fund, subtracting 
its liabilities, dividing by the number of shares outstanding and adjusting 
to the nearest cent. The New York Stock Exchange currently observes the 
following holidays: New Year's Day; Presidents Day; Good Friday; Memorial 
Day; Independence Day; Labor Day; Thanksgiving Day; and Christmas Day. 

SHAREHOLDER SERVICES 
- ----------------------------------------------------------------------------- 

   Upon the purchase of shares of the Fund, a Shareholder Investment Account 
is opened for the investor on the books of the Fund and maintained by Dean 
Witter Trust Company (the "Transfer Agent"). This is an open account in which 
shares owned by the investor are credited by the Transfer Agent in lieu of 
issuance of a share certificate. If a share certificate is desired, it must 
be requested in writing for each transaction. Certificates are issued only 
for full shares and may be redeposited in the account at any time. There is 
no charge to the investor for issuance of a certificate. Whenever a 
shareholder instituted transaction takes place in the Shareholder Investment 
Account, the shareholder will be mailed a confirmation of the transaction 
from the Fund or from DWR or other selected broker-dealer. 

                               21           
<PAGE>

   Automatic Investment of Dividends and Distributions. As stated in the 
Prospectus, all income dividends and capital gains distributions are 
automatically paid in full and fractional shares of the Fund, unless the 
shareholder requests that they be paid in cash. Each purchase of shares of 
the Fund is made upon the condition that the Transfer Agent is thereby 
automatically appointed as agent of the investor to receive all dividends and 
capital gains distributions on shares owned by the investor. Such dividends 
and distributions will be paid, at the net asset value per share, in shares 
of the Fund (or in cash if the shareholder so requests) as of the close of 
business on the record date. At any time an investor may request the Transfer 
Agent, in writing, to have subsequent dividends and/or capital gains 
distributions paid to him or her in cash rather than shares. To assure 
sufficient time to process the change, such request should be received by the 
Transfer Agent at least five business days prior to the record date of the 
dividend or distribution. In the case of recently purchased shares for which 
registration instructions have not been received on the record date, cash 
payments will be made to DWR or other selected broker-dealer, and will be 
forwarded to the shareholder, upon the receipt of proper instructions. 

   Targeted Dividends (Service Mark) . In states where it is legally 
permissible, shareholders may also have all income dividends and capital 
gains distributions automatically invested in shares of an open-end Dean 
Witter Fund other than Dean Witter Special Value Fund. Such investment will 
be made as described above for automatic investment in shares of the Fund, at 
the net asset value per share of the selected Dean Witter Fund as of the 
close of business on the payment date of the dividend or distribution and 
will begin to earn dividends, if any, in the selected Dean Witter Fund the 
next business day. To participate in the Targeted Dividends program, 
shareholders should contact their DWR or other selected broker-dealer account 
executive or the Transfer Agent. Shareholders of the Fund must be 
shareholders of the Dean Witter Fund targeted to receive investments from 
dividends at the time they enter the Targeted Dividends program. Investors 
should review the prospectus of the targeted Dean Witter Fund before entering 
the program. 

   EasyInvest (Service Mark). 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, on a 
semi-monthly, monthly or quarterly basis, to the Transfer Agent for 
investment in shares of the Fund. Shares purchased through EasyInvest will be 
added to the shareholder's existing account at the net asset value calculated 
the same business day the transfer of funds is effected. For further 
information or to subscribe to EasyInvest, shareholders should contact their 
DWR or other selected broker-dealer account executive or the Transfer Agent. 

   Investment of Dividends or Distributions Received in Cash. As discussed in 
the Prospectus, any shareholder who receives a cash payment representing a 
dividend or distribution may invest such dividend or distribution at net 
asset value by returning the check or the proceeds to the Transfer Agent 
within thirty days after the payment date. If the shareholder returns the 
proceeds of a dividend or distribution, such funds must be accompanied by a 
signed statement indicating that the proceeds constitute a dividend or 
distribution to be invested. Such investment will be made at the net asset 
value per share next determined after receipt of the check or proceeds by the 
Transfer Agent. 

   Systematic Withdrawal Plan. As discussed in the Prospectus, 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 then $25, or in any whole percentage of the account balance, on an 
annualized basis. Any applicable contingent deferred sales charge will be 
imposed on shares redeemed under the Withdrawal Plan (see "Redemptions and 
Repurchases -- Contingent Deferred Sales Charge" in the Prospectus). 
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 contingent deferred sales charge) to the shareholder will 
be the designated monthly or quarterly amount. 

   The Transfer Agent acts as agent for the shareholder in tendering to the 
Fund for redemption sufficient full and fractional shares to provide the 
amount of the periodic withdrawal payment designated in the application. The 
shares will be redeemed at their net asset value determined, at the 
shareholder's 

                               22           
<PAGE>
option, on the tenth or twenty-fifth day (or next following business day) of 
the relevant month or quarter and normally a check for the proceeds will be 
mailed by the Transfer Agent, or amounts credited to a shareholder's DWR 
brokerage account, within five business days after the date of redemption. 
The Withdrawal Plan may be terminated at any time by the Fund. 

   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 share holder'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. 

   Any shareholder who wishes to have payments under the Withdrawal Plan made 
to a third party or sent to an address other than the one listed on the 
account must send complete written instructions to the Transfer Agent to 
enroll in the Withdrawal Plan. The shareholder's signature on such 
instructions must be guaranteed by an eligible guarantor acceptable to the 
Transfer Agent (shareholders should contact the Transfer Agent for a 
determination as to whether a particular institution is such an eligible 
guarantor). A shareholder may, at any time, change the amount and interval of 
withdrawal payments through his or her Account Executive or by written 
notification to the Transfer Agent. In addition, the party and/or the address 
to which checks are mailed may be changed by written notification to the 
Transfer Agent, with signature guarantees required in the manner described 
above. The shareholder may also terminate the Withdrawal Plan at any time by 
written notice to the Transfer Agent. In the event of such termination, the 
account will be continued as a regular shareholder investment account. The 
shareholder may also redeem all or part of the shares held in the Withdrawal 
Plan account (see "Redemptions and Repurchases" in the Prospectus) at any 
time. Shareholders wishing to enroll in the Withdrawal Plan should contact 
their account executive or the Transfer Agent. 

   Direct Investments through Transfer Agent. As discussed in the Prospectus, 
a shareholder may make additional investments in Fund shares at any time by 
sending a check in any amount, not less than $100, payable to Dean Witter 
Special Value Fund, directly to the Fund's Transfer Agent. Such amounts will 
be applied to the purchase of Fund shares at the net asset value per share 
next computed after receipt of the check or purchase payment by the Transfer 
Agent. The shares so purchased will be credited to the investor's account. 

EXCHANGE PRIVILEGE 

   As discussed in the Prospectus, the Fund makes available to its 
shareholders an Exchange Privilege whereby shareholders of the Fund may 
exchange their shares for shares of other Dean Witter Funds sold with a 
contingent deferred sales charge ("CDSC funds"), and for shares of Dean 
Witter Short-Term U.S. Treasury Trust, Dean Witter Limited Term Municipal 
Trust, Dean Witter Short-Term Bond Fund, Dean Witter Balanced Income Fund, 
Dean Witter Balanced Growth Fund, Dean Witter Intermediate Term U.S. Treasury 
Trust and five Dean Witter Funds which are money market funds (the foregoing 
eleven non-CDSC funds are hereinafter referred to as the "Exchange Funds"). 
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 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. 

   Any new account established through the Exchange Privilege will have the 
same registration and cash dividend or dividend reinvestment plan as the 
present account, unless the Transfer Agent receives written notification to 
the contrary. For telephone exchanges, the exact registration of the existing 
account and the account number must be provided. 

   Any shares held in certificate form cannot be exchanged but must be 
forwarded to the Transfer Agent and deposited into the shareholder's account 
before being eligible for exchange. (Certificates mailed in for deposit 
should not be endorsed.) 

   As described below, and in the Prospectus under the captions "Exchange 
Privilege" and "Contingent Deferred Sales Charge," a contingent deferred 
sales charge ("CDSC") may be imposed upon a 

                               23           
<PAGE>
redemption, depending on a number of factors, including the number of years 
from the time of purchase until the time of redemption or exchange ("holding 
period"). When shares of the Fund or any other CDSC fund are exchanged for 
shares of an Exchange Fund, the exchange is executed at no charge to the 
shareholder, without the imposition of the CDSC at the time of the exchange. 
During the period of time the shareholder remains in the Exchange Fund 
(calculated from the last day of the month in which the Exchange Fund shares 
were acquired), the holding period or "year since purchase payment made" is 
frozen. When shares are redeemed out of the Exchange Fund, they will be 
subject to a CDSC which would be based upon the period of time the 
shareholder held shares in a CDSC fund. However, 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, if any, incurred on or after that date which are 
attributable to those shares. Shareholders acquiring shares of an Exchange 
Fund pursuant to this exchange privilege may exchange those shares back into 
a CDSC fund from the Exchange Fund, with no CDSC being imposed on such 
exchange. The holding period previously frozen when shares were first 
exchanged for shares of the Exchange Fund resumes on the last day of the 
month in which shares of a CDSC fund are reacquired. A CDSC is imposed only 
upon an ultimate redemption, based upon the time (calculated as described 
above) the shareholder was invested in a CDSC fund. 

   In addition, shares of the Fund may be acquired in exchange for shares of 
Dean Witter Funds sold with a front-end sales charge ("front-end sales charge 
funds"), but shares of the Fund, however acquired may not be exchanged for 
shares of front-end sales charge funds. Shares of a CDSC fund acquired in 
exchange for shares of a front-end sales charge fund (or in exchange for 
shares of other Dean Witter Funds for which shares of a front-end sales 
charge fund have been exchanged) are not subject to any CDSC upon their 
redemption. 

   When shares initially purchased in a CDSC fund are exchanged for shares of 
another CDSC fund, or for shares of an Exchange Fund, the date of purchase of 
the shares of the fund exchanged into, for purposes of the CDSC upon 
redemption, will be the last day of the month in which the shares being 
exchanged were originally purchased. In allocating the purchase payments 
between funds for purposes of the CDSC, the amount which represents the 
current net asset value of shares at the time of the exchange which were (i) 
purchased more than three or six years (depending on the CDSC schedule 
applicable to the shares) prior to the exchange, (ii) originally acquired 
through reinvestment of dividends or distributions and (iii) acquired in 
exchange for shares of front-end sales charge funds, or for shares of other 
Dean Witter Funds for which shares of front-end sales charge funds have been 
exchanged (all such shares called "Free Shares"), will be exchanged first. 
Shares of Dean Witter American Value Fund acquired prior to April 30, 1984, 
shares of Dean Witter Dividend Growth Securities Inc. and Dean Witter Natural 
Resource Development Securities Inc. acquired prior to July 2, 1984, and 
shares of Dean Witter Strategist Fund acquired prior to November 8, 1989 are 
also considered Free Shares and will be the first Free Shares to be 
exchanged. After an exchange, all dividends earned on shares in an Exchange 
Fund will be considered Free Shares. If the exchanged amount exceeds the 
value of such Free Shares, an exchange is made, on a block-by-block basis, of 
non-Free Shares held for the longest period of time (except that if shares 
held for identical periods of time but subject to different CDSC schedules 
are held in the same Exchange Privilege account, the shares of that block 
that are subject to the lower CDSC rate will be exchanged prior to the shares 
of that block that are subject to a higher CDSC rate). Shares equal to any 
appreciation in the value of non-Free Shares exchanged will be treated as 
Free Shares, and the amount of the purchase payments for the non-Free Shares 
of the fund exchanged into will be equal to the lesser of (a) the purchase 
payments for, or (b) the current net asset value of, the exchanged non-Free 
Shares. If an exchange between funds would result in exchange of only part of 
a particular block of non-Free Shares, then shares equal to any appreciation 
in the value of the block (up to the amount of the exchange) will be treated 
as Free Shares and exchanged first, and the purchase payment for that block 
will be allocated on a pro rata basis between the non-Free Shares of that 
block to be retained and the non-Free Shares to be exchanged. The prorated 
amount of such purchase payment attributable to the retained non-Free Shares 
will remain as the purchase payment for such shares, and the amount of 
purchase payment for the exchanged non-Free Shares will be equal to the 
lesser of (a) the prorated amount of the purchase payment for, or (b) the 
current net asset value of, those exchanged non-Free 

                               24           
<PAGE>
Shares. Based upon the procedures described in the Prospectus under the 
caption "Contingent Deferred Sales Charge," any applicable CDSC will be 
imposed upon the ultimate redemption of shares of any fund, regardless of the 
number of exchanges since those shares were originally purchased. 

   With respect to the redemption or repurchase of shares of the Fund, the 
application of proceeds to the purchase of new shares in the Fund or any 
other of the funds and the general administration of the Exchange Privilege, 
the Transfer Agent acts as agent for the Distributor and for the 
shareholder's selected broker-dealer, if any, in the performance of such 
functions. With respect to exchanges, redemptions or repurchases, the 
Transfer Agent shall be liable for its own negligence and not for the default 
or negligence of its correspondents or for losses in transit. The Fund shall 
not be liable for any default or negligence of the Transfer Agent, the 
Distributor or any selected broker-dealer. 

   The Distributor and any Selected broker-dealer have authorized and 
appointed the Transfer Agent to act as their agent in connection with the 
application of proceeds of any redemption of Fund shares to the purchase of 
shares of any other fund and the general administration of the Exchange 
Privilege. No commission or discounts will be paid to the Distributor or any 
Selected broker-dealer for any transactions pursuant to this Exchange 
Privilege. 

   Exchanges are subject to the minimum investment requirement and any other 
conditions imposed by each fund. (The minimum initial investment is $5,000 
for Dean Witter Liquid Asset Fund Inc., Dean Witter Tax-Free Daily Income 
Trust, Dean Witter California Tax-Free Daily Income Trust and Dean Witter New 
York Municipal Money Market Trust although those funds may, at their 
discretion, accept initial investments of as low as $1,000. The minimum 
investment is $10,000 for Dean Witter Short-Term U.S. Treasury Trust, 
although that fund, in its discretion, may accept initial purchases of as low 
as $5,000. The minimum initial investment for all other Dean Witter Funds for 
which the Exchange Privilege is available is $1,000.) Upon exchange into an 
Exchange Fund, the shares of that fund will be held in a special Exchange 
Privilege Account separately from accounts of those shareholders who have 
acquired their shares directly from that fund. As a result, certain services 
normally available to shareholders of those funds, including the check 
writing feature, will not be available for funds held in that account. 

   The Fund and each of the other Dean Witter Funds may limit the number of 
times this Exchange Privilege may be exercised by any investor within a 
specified period of time. Also, the Exchange Privilege may be terminated or 
revised at any time by the Fund and/or any of the Dean Witter Funds for which 
shares of the Fund have been exchanged, upon such notice as may be required 
by applicable regulatory agencies (presently sixty days' prior written notice 
for termination or material revision), provided that six months' prior 
written notice of termination will be given to the shareholders who hold 
shares of Exchange Funds, pursuant to the Exchange Privilege, and provided 
further that the Exchange Privilege may be terminated or materially revised 
without notice at times (a) when the New York Stock Exchange is closed for 
other than customary weekends and holidays, (b) when trading on that Exchange 
is restricted, (c) when an emergency exists as a result of which disposal by 
the Fund of securities owned by it is not reasonably practicable or it is not 
reasonably practicable for the Fund fairly to determine the value of its net 
assets, (d) during any other period when the Securities and Exchange 
Commission by order so permits (provided that applicable rules and 
regulations of the Securities and Exchange Commission shall govern as to 
whether the conditions prescribed in (b) or (c) exist) or (e) if the Fund 
would be unable to invest amounts effectively in accordance with its 
investment objective, policies and restrictions. 

   For further information regarding the Exchange Privilege, shareholders 
should contact their DWR or other selected broker-dealer account executive or 
the Transfer Agent. 

REDEMPTIONS AND REPURCHASES 
- ----------------------------------------------------------------------------- 

   Redemption. As stated in the Prospectus, shares of the Fund can be 
redeemed for cash at any time at the net asset value per share next 
determined. 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. The share certificate, or an 
accompanying stock power, and the request for redemption, must be signed by 
the shareholder or 

                               25           
<PAGE>
shareholders exactly as the shares are registered. Each request for 
redemption, whether or not accompanied by a share certificate, must be sent 
to the Fund's Transfer Agent, which will redeem the shares at their net asset 
value next computed (see "Purchase of Fund Shares") after it receives the 
request, and certificate, if any, in good order. Any redemption request 
received after such computation will be redeemed at the next determined net 
asset value. The term "good order" means that the share certificate, if any, 
and request for redemption are properly signed, accompanied by any 
documentation required by the Transfer Agent, and bear signature guarantees 
when required by the Fund or the Transfer Agent. If redemption is requested 
by a corporation, partnership, trust or fiduciary, the Transfer Agent may 
require that written evidence of authority acceptable to the Transfer Agent 
be submitted before such request is accepted. 

   Whether certificates are held by the shareholder or shares are held in a 
shareholder's account, if the proceeds are to be paid to any person other 
than the record owner, or if the proceeds are to be paid to a corporation 
(other than the Distributor or a selected broker-dealer for the account of 
the shareholder), partnership, trust or fiduciary, or sent to the shareholder 
at an address other than the registered address, signatures must be 
guaranteed by an eligible guarantor acceptable to the Transfer Agent 
(shareholders should contact the Transfer Agent for a determination as to 
whether a particular institution is such an eligible guarantor). A stock 
power may be obtained from any dealer or commercial bank. The Fund may change 
the signature guarantee requirements from time to time upon notice to 
shareholders, which may be by means of a supplement to the prospectus. 

   Contingent Deferred Sales Charge. As stated in the Prospectus, a 
contingent deferred sales charge ("CDSC") will be imposed on any redemption 
by an investor if after such redemption the current value of the investor's 
shares of the Fund is less than the dollar amount of all payments by the 
shareholder for the purchase of Fund shares during the preceding six years. 
However, no CDSC will be imposed to the extent that the net asset value of 
the shares redeemed does not exceed: (a) the current net asset value of 
shares purchased more than six years prior to the redemption, plus (b) the 
current net asset value of shares purchased through reinvestment of dividends 
or distributions of the Fund or another Dean Witter Fund (see "Shareholder 
Services -- Targeted Dividends"), plus (c) the current net asset value of 
shares acquired in exchange for (i) shares of Dean Witter front-end sales 
charge funds, or (ii) shares of other Dean Witter Funds for which shares of 
front-end sales charge funds have been exchanged (see "Shareholder Services 
- -- Exchange Privilege"), plus (d) increases in the net asset value of the 
investor's shares above the total amount of payments for the purchase of Fund 
shares made during the preceding six years. The CDSC will be paid to the 
Distributor. 

   In determining the applicability of a CDSC to each redemption, the amount 
which represents an increase in the net asset value of the investor's shares 
above the amount of the total payments for the purchase of shares within the 
last six years will be redeemed first. In the event the redemption amount 
exceeds such increase in value, the next portion of the amount redeemed will 
be the amount which represents the net asset value of the investor's shares 
purchased more than six years prior to the redemption and/or shares purchased 
through reinvestment of dividends or distributions and/or shares acquired in 
exchange for shares of Dean Witter front-end sales charge funds, or for 
shares of other Dean Witter Funds for which shares of front-end sales charge 
funds have been exchanged. Any portion of the amount redeemed which exceeds 
an amount which represents both such increase in value and the value of 
shares purchased more than six years prior to the redemption and/or shares 
purchased through reinvestment of dividends or distributions and/or shares 
acquired in the above-described exchanges will be subject to a CDSC. 

   The amount of the CDSC, if any, will vary depending on the number of years 
from the time of payment for the purchase of Fund shares until the time of 
redemption of such shares. For purposes of determining the number of years 
from the time of any payment for the purchase of shares, all payments made 
during a month will be aggregated and deemed to have been made on the last 
day of the month. The following table sets forth the rates of the CDSC: 

                               26           
<PAGE>
<TABLE>
<CAPTION>
                               CONTINGENT DEFERRED 
         YEAR SINCE               SALES CHARGE 
          PURCHASE             AS A PERCENTAGE OF 
        PAYMENT MADE             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 determining the rate of the CDSC, it will be assumed that a redemption 
is made of shares held by the investor for the longest period of time within 
the applicable six-year period. This will result in any such CDSC being 
imposed at the lowest possible rate. Accordingly, shareholders may redeem, 
without incurring any CDSC, amounts equal to any net increase in the value of 
their shares above the amount of their purchase payments made within the past 
six years and amounts equal to the current value of shares purchased more 
than six years prior to the redemption and shares purchased through 
reinvestment of dividends or distributions or acquired in exchange for shares 
of Dean Witter front-end sales charge funds, or for shares of other Dean 
Witter Funds for which shares of front-end sales charge funds have been 
exchanged. The CDSC will be imposed, in accordance with the table shown 
above, on any redemptions within six years of purchase which are in excess of 
these amounts and which redemptions are not (a) requested within one year of 
death or initial determination of disability of a shareholder, or (b) made 
pursuant to certain taxable distributions from retirement plans or retirement 
accounts, as described in the Prospectus. 

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

   Reinstatement Privilege. As discussed in the Prospectus, a shareholder who 
has had his or her shares redeemed or repurchased and has not previously 
exercised this reinstatement privilege may, within thirty days after the 
redemption or repurchase, reinstate any portion or all of the proceeds of 
such redemption or repurchase in shares of the Fund held by the shareholder 
at the net asset value next determined after a reinstatement request, 
together with the proceeds, is received by the Transfer Agent. 

   Exercise of the reinstatement privilege will not affect the federal income 
tax and state income tax treatment of any gain or loss realized upon the 
redemption or repurchase, except that if the redemption or repurchase 
resulted in a loss and reinstatement is made in shares of the Fund, some or 
all of the loss, depending on the amount reinstated, will not be allowed as a 
deduction for federal income tax and state personal income tax purposes but 
will be applied to adjust the cost basis of the shares acquired upon 
reinstatement. 

   Payment for Shares Redeemed or Repurchased. As discussed in the 
Prospectus, 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. The term good order means 
that the share certificate, if any, and request for redemption are properly 
signed, accompanied by any documentation required by the Transfer Agent, and 
bear signature guarantees when required by the Fund or Transfer Agent. Such 
payment may be postponed or the right of redemption suspended at times (a) 
when the New York Stock Exchange is closed for other than customary weekends 
and holidays, (b) when trading on that Exchange is restricted, (c) when an 
emergency exists as a result of which disposal 

                               27           
<PAGE>
by the Fund of securities owned by it is not reasonably practicable or it is 
not reasonably practicable for the Fund fairly to determine the value of its 
net assets, or (d) during any other period when the Securities and Exchange 
Commission by order so permits; provided that applicable rules and 
regulations of the Securities and Exchange Commission shall govern as to 
whether the conditions prescribed in (b) or (c) exist. 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 account executive regarding restrictions on redemption of shares of the 
Fund pledged in the margin account. 

DIVIDENDS, DISTRIBUTIONS AND TAXES 
- ----------------------------------------------------------------------------- 

   As discussed in the Prospectus under "Dividends, Distributions and Taxes", 
the Fund will determine either to distribute or to retain all or part of any 
net long-term capital gains in any year for reinvestment. If any such gains 
are retained, the Fund will pay federal income tax thereon, and shareholders 
at year-end will be able to claim their share of the tax paid by the Fund as 
a credit against their individual federal income tax. Shareholders will 
increase their tax basis of Fund shares owned by an amount equal, under 
current law, to 65% of the amount of undistributed capital gains. 

   The Fund, however, intends to distribute substantially all of its net 
investment income and net capital gains to shareholders and otherwise qualify 
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. Shareholders will normally have to pay federal income taxes, and 
any state income taxes, on the dividends and distributions they receive from 
the Fund. Such dividends and distributions, to the extent that they are 
derived from the net investment income or net short-term capital gains, are 
taxable to the shareholder as ordinary income regardless of whether the 
shareholder receives such payments in additional shares or in cash. 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 received by the 
shareholder in the prior calendar year. Dividend payments will be eligible 
for the federal dividends received deduction available to the Fund's 
corporate shareholders only to the extent the aggregate dividends received by 
the Fund would be eligible for the deduction if the Fund were the shareholder 
claiming the dividends received deduction. In this regard, a 46-day holding 
period generally must be met by the Fund and the shareholder. 

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

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

   Under current federal tax law, the Fund will receive net investment income 
in the form of interest by virtue of holding Treasury bills, notes and bonds, 
and will recognize income attributable to it from holding zero coupon 
Treasury securities. 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 payment in cash on the security during the year. As an investment 
company, the Fund must pay out substantially all of its net investment income 
each year. Accordingly, the Fund, to the extent it invests in zero coupon 
Treasury securities, may be required to pay out as an income distribution 
each year an amount which is greater than the total amount of cash receipts 
of interest the Fund actually received. Such distributions will be made from 
the available cash 

                               28           
<PAGE>
of the Fund or by liquidation of portfolio securities if necessary. If a 
distribution of cash necessitates the liquidation of portfolio securities, 
the Investment Manager will select which securities to sell. The Fund may 
realize a gain or loss from such sales. In the event the Fund realizes net 
capital gains from such transactions, its shareholders may receive a larger 
capital gain distribution, if any, than they would in the absence of such 
transactions. 

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

   Shareholders are urged to consult their attorneys or tax advisers 
regarding specific questions as to federal, state or local taxes. 

PERFORMANCE INFORMATION 
- ----------------------------------------------------------------------------- 

   As discussed in the Prospectus, from time to time the Fund may quote its 
"total return" in advertisements and sales literature. The Fund's "average 
annual total return" represents an annualization of the Fund's total return 
over a particular period and is computed by finding the annual percentage 
rate which will result in the ending redeemable value of a hypothetical 
$1,000 investment made at the beginning of a one, five or ten year period, or 
for the period from the date of commencement of the Fund's operations, if 
shorter than any of the foregoing. For periods of less than one year, the 
Fund quotes its total return on a non-annualized basis. 

   
   The Fund may compute its aggregate total return for specified periods by 
determining the aggregate percentage rate which will result in the ending 
value of a hypothetical $1,000 investment made at the beginning of the 
period. For the purpose of this calculation, it is assumed that all dividends 
and distributions are reinvested. The formula for computing aggregate total 
return involves a percentage obtained by dividing the ending value by the 
initial $1,000 investment and subtracting 1 from the result. The ending 
redeemable value is reduced by any contingent deferred sales charge at the 
end of the period. Based on the foregoing calculations, the Fund's total 
return for the period October 29, 1996 (commencement of operations) through 
January 31, 1997 was 1.07%. 

   In addition to the foregoing, the Fund may advertise its total return over 
different periods of time by means of aggregate, average, year-by-year or 
other types of total return figures. Such calculations may or may not reflect 
the deduction of the contingent deferred charge which, if reflected, would 
reduce the performance quotes. For example, the total return of the Fund may 
be calculated in the manner described above, but without deduction of any 
applicable contingent deferred sales charge. Based on this calculation, the 
aggregate total return of the Fund for the period October 29, 1996 through 
January 31, 1997 was 6.07%. 

   The Fund may also advertise the growth of hypothetical investments of 
$10,000, $50,000 and $100,000 in shares of the Fund by adding 1 to the Fund's 
aggregate total return to date (expressed as a decimal) and multiplying by 
$10,000, $50,000 or $100,000, as the case may be. Investments of $10,000, 
$50,000 and $100,000 in the Fund at inception would have grown to $10,607, 
$53,035 and $106,070, respectively, at January 31, 1997. 
    

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

                               29           
<PAGE>
SHARES OF THE FUND 
- ----------------------------------------------------------------------------- 

   The shareholders of the Fund are entitled to a full vote for each full 
share of beneficial interest held. The Fund is authorized to issue an 
unlimited number of shares of beneficial interest. The Trustees themselves 
have the power to alter the number and the terms of office of the Trustees 
(as provided for in the Declaration of Trust), and they may at any time 
lengthen or shorten their own terms or make their terms of unlimited duration 
and appoint their own successors, provided that always at least a majority of 
the Trustees has been elected by the shareholders of the Fund. Under certain 
circumstances the Trustees may be removed by action of the Trustees. The 
shareholders also have the right under certain circumstances to remove the 
Trustees. The voting rights of shareholders are not cumulative, so that 
holders of more than 50 percent of the shares voting can, if they choose, 
elect all Trustees being selected, while the holders of the remaining shares 
would be unable to elect any Trustees. 

   
   The Declaration of Trust permits the Trustees to authorize the creation of 
additional series of shares (the proceeds of which would be invested in 
separate, independently managed portfolios) and additional classes of shares 
within any series (which would be used to distinguish among the rights of 
different categories of shareholders, as might be required by future 
regulations or other unforeseen circumstances). The Trustees have not 
presently authorized any such additional series or classes of shares. 
    

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

   
   The Fund shall be of unlimited duration subject to the provisions in the 
Declaration of Trust concerning termination by action of the shareholders or 
the Trustees. 
    

CUSTODIAN AND TRANSFER AGENT 
- ----------------------------------------------------------------------------- 

   The Bank of New York, 90 Washington Street, New York, New York 10286 is 
the Custodian of the Fund's assets. Any of the Fund's cash balances with the 
Custodian in excess of $100,000 are unprotected by federal deposit insurance. 
Such balances may, at times, be substantial. 

   
   Dean Witter Trust Company, Harborside Financial Center, Plaza Two, Jersey 
City, New Jersey 07311 is the Transfer Agent of the Fund's shares and 
Dividend Disbursing Agent for payment of dividends and distributions on Fund 
shares and Agent for shareholders under various investment plans described 
herein. Dean Witter Trust Company is an affiliate of Dean Witter InterCapital 
Inc., the Fund's Investment Manager and Dean Witter Distributors Inc., the 
Fund's Distributor. As Transfer Agent and Dividend Disbursing Agent, Dean 
Witter Trust Company's responsibilities include maintaining shareholder 
accounts, disbursing cash dividends and reinvesting dividends, processing 
account registration changes, handling purchase and redemption transactions, 
mailing prospectuses and reports, mailing and tabulating proxies, processing 
share certificate transactions; and maintaining shareholder records and 
lists. For these services Dean Witter Trust Company receives a per 
shareholder account fee from the Fund. 
    

INDEPENDENT ACCOUNTANTS 
- ----------------------------------------------------------------------------- 

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

                               30           
<PAGE>
REPORTS TO SHAREHOLDERS 
- ----------------------------------------------------------------------------- 

   The Fund will send to shareholders, at least semi-annually, reports 
showing the Fund's portfolio and other information. An annual report, 
containing financial statements audited by independent account-ants, will be 
sent to shareholders each year. 

   
   The Fund's fiscal year ends on July 31. The financial statements of the 
Fund must be audited at least once a year by independent accountants whose 
selection is made annually by the Fund's Board of Trustees. 
    

LEGAL COUNSEL 
- ----------------------------------------------------------------------------- 

   
   Barry Fink, Esq., who is an officer and the General Counsel of the 
Investment Manager, is an officer and the General Counsel of the Fund. 
    

EXPERTS 
- ----------------------------------------------------------------------------- 

   The Statement of Assets and Liabilities of the Fund included in this 
Statement of Additional Information and incorporated by reference in the 
Prospectus has been so included and incorporated in reliance on the report of 
Price Waterhouse LLP, independent accountants, given on the authority of said 
firm as experts in auditing and accounting. 

REGISTRATION STATEMENT 
- ----------------------------------------------------------------------------- 

   This Statement of Additional Information and the Prospectus do not contain 
all of the information set forth in the Registration Statement the Fund has 
filed with the Securities and Exchange Commission. The complete Registration 
Statement may be obtained from the Securities and Exchange Commission upon 
payment of the fee prescribed by the rules and regulations of the Commission. 

                               31           
<PAGE>
APPENDIX 
- ----------------------------------------------------------------------------- 

RATINGS OF CORPORATE DEBT INSTRUMENTS INVESTMENTS 
MOODY'S INVESTORS SERVICE INC. ("MOODY'S") 

                        FIXED-INCOME SECURITY RATINGS 

<TABLE>
<CAPTION>
<S>      <C>
 Aaa     Fixed-income securities which are rated Aaa are judged to be of the best quality. They carry the smallest 
         degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by 
         a large or by an exceptionally stable margin and principal is secure. While the various protective elements 
         are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong 
         position of such issues. 

Aa       Fixed-income securities which are rated Aa are judged to be of high quality by all standards. Together with 
         the Aaa group they comprise what are generally known as high grade fixed-income securities. They are rated 
         lower than the best fixed-income securities because margins of protection may not be as large as in Aaa securities 
         or fluctuation of protective elements may be of greater amplitude or there may be other elements present 
         which make the long-term risks appear somewhat larger than in Aaa securities. 

A        Fixed-income securities which are rated A possess many favorable investment attributes and are to be considered 
         as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, 
         but elements may be present which suggest a susceptibility to impairment sometime in the future. 

Baa      Fixed-income securities which are rated Baa are considered as medium grade obligations; i.e., they are neither 
         highly protected nor poorly secured. Interest payments and principal security appear adequate for the present 
         but certain protective elements may be lacking or may be characteristically unreliable over any great length 
         of time. Such fixed-income securities lack outstanding investment characteristics and in fact have speculative 
         characteristics as well. 
         Fixed-income securities rated Aaa, Aa, A and Baa are considered investment grade. 

Ba       Fixed-income securities which are rated Ba are judged to have speculative elements; their future cannot be 
         considered as well assured. Often the protection of interest and principal payments may be very moderate, 
         and therefore not well safeguarded during both good and bad times in the future. Uncertainty of position 
         characterizes bonds in this class. 

B        Fixed-income securities which are rated B generally lack characteristics of a desirable investment. Assurance 
         of interest and principal payments or of maintenance of other terms of the contract over any long period 
         of time may be small. 

Caa      Fixed-income securities which are rated Caa are of poor standing. Such issues may be in default or there 
         may be present elements of danger with respect to principal or interest. 

Ca       Fixed-income securities which are rated Ca present obligations which are speculative in a high degree. Such 
         issues are often in default or have other marked shortcomings. 

C        Fixed-income securities which are rated C are the lowest rated class of fixed-income securities, and issues 
         so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. 
</TABLE>

   Rating Refinements: Moody's may apply numerical modifiers, 1, 2, and 3 in 
each generic rating classification from Aa through B in its municipal 
fixed-income security rating system. The modifier 1 indicates that the 
security ranks in the higher end of its generic rating category; the modifier 
2 indicates a mid-range ranking; and a modifier 3 indicates that the issue 
ranks in the lower end of its generic rating category. 

                               32           
<PAGE>
                           COMMERCIAL PAPER RATINGS 

   Moody's Commercial Paper ratings are opinions of the ability to repay 
punctually promissory obligations not having an original maturity in excess 
of nine months. The ratings apply to Municipal Commercial Paper as well as 
taxable Commercial Paper. Moody's employs the following three designa-tions, 
all judged to be investment grade, to indicate the relative repayment 
capacity of rated issuers: Prime-1, Prime-2, Prime-3. 

   Issuers rated Prime-1 have a superior capacity for repayment of short-term 
promissory obligations. Issuers rated Prime-2 have a strong capacity for 
repayment of short-term promissory obligations; and Issuers rated Prime-3 
have an acceptable capacity for repayment of short-term promissory 
obligations. Issuers rated Not Prime do not fall within any of the Prime 
rating categories. 

STANDARD & POOR'S CORPORATION ("STANDARD & POOR'S") 

                        FIXED-INCOME SECURITY RATINGS 

   A Standard & Poor's fixed-income security rating is a current assessment 
of the creditworthiness of an obligor with respect to a specific obligation. 
This assessment may take into consideration obligors such as guarantors, 
insurers, or lessees. 

   The ratings are based on current information furnished by the issuer or 
obtained by Standard & Poor's from other sources it considers reliable. The 
ratings are based, in varying degrees, on the following considerations: (1) 
likelihood of default-capacity and willingness of the obligor as to the 
timely payment of interest and repayment of principal in accordance with the 
terms of the obligation; (2) nature of and provisions of the obligation; and 
(3) protection afforded by, and relative position of, the obligation in the 
event of bankruptcy, reorganization or other arrangement under the laws of 
bankruptcy and other laws affecting creditors' rights. 

   Standard & Poor's does not perform an audit in connection with any rating 
and may, on occasion, rely on unaudited financial information. The ratings 
may be changed, suspended or withdrawn as a result of changes in, or 
unavailability of, such information, or for other reasons. 

<TABLE>
<CAPTION>
<S>      <C>
AAA      Fixed-income securities rated "AAA" have the highest rating assigned by Standard & Poor's. Capacity to 
         pay interest and repay principal is extremely strong. 

AA       Fixed-income securities rated "AA" have a very strong capacity to pay interest and repay principal and 
         differs from the highest-rate issues only in small degree. 

A        Fixed-income securities rated "A" have a strong capacity to pay interest and repay principal although they 
         are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions 
         than fixed-income securities in higher-rated categories. 

BBB      Fixed-income securities rated "BBB" are regarded as having an adequate capacity to pay interest and repay 
         principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or 
         changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal 
         for fixed-income securities in this category than for fixed-income securities in higher-rated categories. 

         Fixed-income securities rated AAA, AA, A and BBB are considered investment grade. 

BB       Fixed-income securities rated "BB" have less near-term vulnerability to default than other speculative 
         grade fixed-income securities. However, it faces major ongoing uncertainties or exposures to adverse business, 
         financial or economic conditions which could lead to inadequate capacity or willingness to pay interest 
         and repay principal. 

B        Fixed-income securities rated "B" have a greater vulnerability to default but presently have the capacity 
         to meet interest payments and principal repayments. Adverse business, financial or economic conditions 
         would likely impair capacity or willingness to pay interest and repay principal. 
</TABLE>

                               33           
<PAGE>
<TABLE>
<CAPTION>
<S>      <C>
CCC      Fixed-income securities rated "CCC" have a current identifiable vulnerability to default, and are dependent 
         upon favorable business, financial and economic conditions to meet timely payments of interest and repayments 
         of principal. In the event of adverse business, financial or economic conditions, they are not likely to 
         have the capacity to pay interest and repay principal. 

CC       The rating "CC" is typically applied to fixed-income securities subordinated to senior debt which is assigned 
         an actual or implied "CCC" rating. 

C        The rating "C" is typically applied to fixed-income securities subordinated to senior debt which is assigned 
         an actual or implied "CCC-" rating. 

CI       The rating "Cl" is reserved for fixed-income securities on which no interest is being paid. 

NR       Indicates that no rating has been requested, that there is insufficient information on which to base a rating 
         or that Standard & Poor's does not rate a particular type of obligation as a matter of policy. 

         Fixed-income securities rated "BB," "B," "CCC," "CC" and "C" are regarded as having predominantly speculative 
         characteristics with respect to capacity to pay interest and repay principal. "BB" indicates the least degree 
         of speculation and "C" the highest degree of speculation. While such fixed-income securities will likely 
         have some quality and protective characteristics, these are outweighed by large uncertainties or major risk 
         exposures to adverse conditions. 

         Plus (+) or minus (-): The rating from "AA" to "CCC" may be modified by the addition of a plus or minus 
         sign to show relative standing within the major ratings categories. 
</TABLE>

                           COMMERCIAL PAPER RATINGS 

   Standard and Poor's commercial paper rating is a current assessment of the 
likelihood of timely payment of debt having an original maturity of no more 
than 365 days. The commercial paper rating is not a recommendation to 
purchase or sell a security. The ratings are based upon current information 
furnished by the issuer or obtained by S&P from other sources it considers 
reliable. The ratings may be changed, suspended, or withdrawn as a result of 
changes in or unavailability of such information. Ratings are graded into 
group categories, ranging from "A" for the highest quality obligations to "D" 
for the lowest. Ratings are applicable to both taxable and tax-exempt 
commercial paper. The categories are as follows: 

   Issues assigned A ratings are regarded as having the greatest capacity for 
timely payment. Issues in this category are further refined with the 
designation 1, 2, and 3 to indicate the relative degree of safety. 

<TABLE>
<CAPTION>
<S>      <C>
A-1      indicates that the degree of safety regarding timely payment is very strong. 

A-2      indicates capacity for timely payment on issues with this designation is strong. However, the relative 
         degree of safety is not as overwhelming as for issues designated "A-1." 

A-3      indicates a satisfactory capacity for timely payment. Obligations carrying this designation are, however, 
         somewhat more vulnerable to the adverse effects of changes in circumstances than obligations carrying 
         the higher designations. 
</TABLE>

FITCH INVESTORS SERVICE, INC. ("FITCH") 

                                 BOND RATINGS 

   The Fitch Bond Ratings provides a guide to investors in determining the 
investment risk associated with a particular security. The rating represents 
its assessment of the issuer's ability to meet the obligations of a specific 
debt issue or class of debt in a timely manner. Fitch bond ratings are not 
recommendations to buy, sell or hold securities since they incorporate no 
information on market price or yield relative to other debt instruments. 

   The rating takes into consideration special features of the issue, its 
relationship to other obligations of the issuer, the record of the issuer and 
of any guarantor, as well as the political and economic environment that 
might affect the future financial strength and credit quality of the issuer. 

                               34           
<PAGE>
   Bonds which have the same rating are of similar but not necessarily 
identical investment quality since the limited number of rating categories 
cannot fully reflect small differences in the degree of risk. Moreover, the 
character of the risk factor varies from industry to industry and between 
corporate, health care and municipal. 

   In assessing credit risk, Fitch Investors Service relies on current 
information furnished by the issuer and/or guarantor and other sources which 
it considers reliable. Fitch does not perform an audit of the financial 
statements used in assigning a rating. 

   Ratings may be changed, withdrawn or suspended at any time to reflect 
changes in the financial condition of the issuer, the status of the issue 
relative to other debt of the issuer, or any other circum-stances that Fitch 
considers to have a material effect on the credit of the obligor. 

<TABLE>
<CAPTION>
<S>      <C>
AAA      rated bonds are considered to be investment grade and of the highest credit quality. The obligor has an 
         exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably 
         foreseeable events. 

AA       rated bonds are considered to be investment grade and of very high credit quality. The obligor's ability 
         to pay interest and repay principal, while very strong, is somewhat less than for AAA rated securities or 
         more subject to possible change over the term of the issue. 

A        rated bonds are considered to be Investment grade and of high credit quality. The obligor's ability to pay 
         interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in 
         economic conditions and circumstances than bonds with higher ratings. 

BBB      rated bonds are considered to be investment grade and of satisfactory credit quality. The obligor's ability 
         to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions 
         and circumstances, however, are more likely to weaken this ability than bonds with higher ratings. 

BB       rated bonds are considered speculative and of low investment grade. The obligor's ability to pay interest 
         and repay principal is not strong and is considered likely to be affected over time by adverse economic 
         changes. 

B        rated bonds are considered highly speculative. Bonds in this class are lightly protected as to the obligor's 
         ability to pay interest over the life of the issue and repay principal when due. 

CCC      rated bonds may have certain identifiable characteristics which, if not remedied, could lead to the possibility 
         of default in either principal or interest payments. 

CC       rated bonds are minimally protected. Default in payment of interest and/or principal seems probable. 

C        rated bonds are in imminent default in payment of interest and/or principal. 
</TABLE>

                              SHORT-TERM RATINGS 

   Fitch's short-term ratings apply to debt obligations that are payable on 
demand or have original maturities of generally up to three years, including 
commercial paper, certificates of deposit, medium-term notes, and municipal 
and investment notes. Although the credit analysis is similar to Fitch's bond 
rating analysis, the short-term rating places greater emphasis on the 
existence of liquidity necessary to meet the issuer's obligations in a timely 
manner. Fitch's short-term ratings are as follows: 

<TABLE>
<CAPTION>
<S>           <C>
Fitch-1+      (Exceptionally Strong Credit Quality) Issues assigned this rating are regarded as having the strongest 
              degree of assurance for timely payment. 

Fitch-1       (Very Strong Credit Quality) Issues assigned this rating reflect an assurance of timely payment only 
              slightly less in degree than issues rated Fitch-1+. 

Fitch-2       (Good Credit Quality) Issues assigned this rating have a satisfactory degree of assurance for timely 
              payment but the margin of safety is not as great as the two higher categories. 
</TABLE>

                               35           
<PAGE>
<TABLE>
<CAPTION>
<S>          <C>
Fitch-3      (Fair Credit Quality) Issues assigned this rating have characteristics suggesting that the degree of 
             assurance for timely payment is adequate, however, near-term adverse change is likely to cause these 
             securities to be rated below investment grade. 

Fitch-S      (Weak Credit Quality) Issues assigned this rating have characteristics suggesting a minimal degree of 
             assurance for timely payment and are vulnerable to near term adverse changes in financial and economic 
             conditions. 

D            (Default) Issues assigned this rating are in actual or imminent payment default. 

LOC          This symbol LOC indicates that the rating is based on a letter of credit issued by a commercial bank. 
</TABLE>

DUFF & PHELPS, INC. 

                              LONG-TERM RATINGS 

   These ratings represent a summary opinion of the issuer's long-term 
fundamental quality. Rating determination is based on qualitative and 
quantitative factors which may vary according to the basic economic and 
financial characteristics of each industry and each issuer. Important 
considerations are vulnerability to economic cycles as well as risks related 
to such factors as competition, government action, regulation, technological 
obsolescence, demand shifts, cost structure, and management depth and 
expertise. The projected viability of the obligor at the trough of the cycle 
is a critical determination. 

   Each rating also takes into account the legal form of the security, (e.g., 
first mortgage bonds, subordinated debt, preferred stock, etc.). The extent 
of rating dispersion among the various classes of securities is determined by 
several factors including relative weightings of the different security 
classes in the capital structure, the overall credit strength of the issuer, 
and the nature of covenant protection. Review of indenture restrictions is 
important to the analysis of a company's operating and financial constraints. 

   The Credit Rating Committee formally reviews all ratings once per quarter 
(more frequently, if necessary). 

<TABLE>
<CAPTION>
 RATING SCALE     DEFINITION 
<S>               <C>
AAA               Highest credit quality. The risk factors are negligible, being only slightly more than risk-free 
                  U.S. Treasury debt. 
AA+               High credit quality. Protection factors are strong. Risk is modest, but may vary slightly from time 
AA                to time because of economic conditions. 
AA- 
A+                Protection factors are average but adequate. However, risk factors are more variable and greater 
A                 in periods of economic stress. 
A- 
BBB+              Below average protection factors but still considered sufficient for prudent investment. Considerable 
BBB               variability in risk during economic cycles. 
BBB- 
BB+               Below investment grade but deemed likely to meet obligations when due. Present or prospective financial 
BB                protection factors fluctuate according to industry conditions or company fortunes. Overall quality 
BB-               may move up or down frequently within this category. 
B+                Below investment grade and possessing risk that obligations will not be met when due. Financial protection 
B                 factors will fluctuate widely according to economic cycles, industry conditions and/or company fortunes. 
B-                Potential exists for frequent changes in the quality rating within this category or into a higher 
                  or lower quality rating grade. 
</TABLE>

                               36           
<PAGE>
<TABLE>
<CAPTION>
<S>      <C>
CCC      Well below investment grade securities. May be in default or considerable uncertainty exists 
         as to timely payment of principal, interest or preferred dividends. Protection factors are 
         narrow and risk can be substantial with unfavorable economic/ industry conditions, and/or 
         with unfavorable company developments. 

DD       Defaulted debt obligations. Issuer failed to meet scheduled principal and/or interest payments. 

DP       Preferred stock with dividend arrearages. 
</TABLE>

                              SHORT-TERM RATINGS 

   Duff & Phelps' short-term ratings are consistent with the rating criteria 
utilized by money market participants. The ratings apply to all obligations 
with maturities of under one year, including commercial paper, the uninsured 
portion of certificates of deposit, unsecured bank loans, master notes, 
bankers acceptances, irrevocable letters of credit, and current maturities of 
long-term debt. Asset-backed com-mercial paper is also rated according to 
this scale. 

   Emphasis is placed on liquidity which is defined as not only cash from 
operations, but also access to alternative sources of funds, including trade 
credit, bank lines, and the capital markets. An important consideration is 
the level of an obligor's reliance on short-term funds on an ongoing basis. 

<TABLE>
<CAPTION>
                    <S>                 <C>
                    A. CATEGORY 1:      HIGH GRADE 
                    Duff 1+             Highest certainty of timely payment. Short-term liquidity, including internal  operating 
                                        factors and/or access to alternative sources of funds, is  outstanding, and safety is 
                                        just below risk-free U.S. Treasury short-term  obligations. 

                    Duff 1              Very high certainty of timely payment. Liquidity factors are excellent and  supported by 
                                        good fundamental protection factors. Risk factors are minor. 
                    Duff-               High certainty of timely payment. Liquidity factors are strong and supported  by good 
                                        fundamental 
                                        protection factors. Risk factors are very small. 

                    B. CATEGORY 2:      GOOD GRADE 
                    Duff 2              Good certainty of timely payment. Liquidity factors and company fundamentals  are sound. 
                                        Although ongoing funding needs may enlarge total financing  requirements, access to 
                                        capital markets is good. Risk factors are small. 

                    C. CATEGORY 3:      SATISFACTORY GRADE 
                    Duff 3              Satisfactory liquidity and other protection factors qualify issue as to investment  
                                        grade. 
                                        Risk factors are larger and subject to more variation. Nevertheless,  timely payment is 
                                        expected. 

                    D. CATEGORY 4:      NON-INVESTMENT GRADE 
                    Duff 4              Speculative investment characteristics. Liquidity is not sufficient to insure  against 
                                        disruption in debt service. Operating factors and market access  may be subject to a high 
                                        degree of variation. 

                    E. CATEGORY 5:      DEFAULT 
                    Duff 5              Issuer failed to meet scheduled principal and/or interest payments. 

</TABLE>

                               37           
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS 
- ----------------------------------------------------------------------------- 

To the Shareholder and Trustees of 
Dean Witter Special Value Fund 

   In our opinion, the accompanying statement of assets and liabilities 
presents fairly, in all material respects, the financial position of Dean 
Witter Special Value Fund (the "Fund") at August 16, 1996, in conformity with 
generally accepted accounting principles. This financial statement is the 
responsibility of the Fund's management; our responsibility is to express an 
opinion on this financial statement based on our audit. We conducted our 
audit of this financial statement in accordance with generally accepted 
auditing standards which require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statement is free of 
material misstatement. An audit includes examining, on a test basis, evidence 
supporting the amounts and disclosures in the financial statement, assessing 
the accounting principles used and significant estimates made by management, 
and evaluating the overall financial statement presentation. We believe that 
our audit provides a reasonable basis for the opinion expressed above. 

PRICE WATERHOUSE LLP 
1177 Avenue of the Americas 
New York, New York 10036 
August 19, 1996 


                               38           
<PAGE>
DEAN WITTER SPECIAL VALUE FUND 
STATEMENT OF ASSETS AND LIABILITIES AT AUGUST 16, 1996 
- ----------------------------------------------------------------------------- 

<TABLE>
<CAPTION>
<S>                                                                            <C>
ASSETS: 
 Cash ......................................................................   $100,000 
 Deferred organizational expenses (Note 1) .................................    180,000 
   Total Assets ............................................................    280,000 
LIABILITIES: 
 Organizational expenses payable (Note 1) ..................................    180,000 
 Commitments (Note 1 and 2) ................................................ 
   Net Assets ..............................................................   $100,000 
Net Asset Value Per Share (10,000 shares of beneficial interest 
 outstanding; 
 unlimited authorized shares of beneficial interest of $.01 par value)  ....     $10.00 

</TABLE>

NOTE 1 -- Dean Witter Special Value Fund (the "Fund") was organized as a 
Massachusetts business trust on June 21, 1996. To date the Fund has had no 
transactions other than those relating to organizational matters and the sale 
of 10,000 shares of beneficial interest for $100,000 to Dean Witter 
InterCapital Inc. (the "Investment Manager"). The Fund is registered under 
the Investment Company Act of 1940, as amended (the "Act"), as a diversified, 
open-end management investment company. Organizational expenses of the Fund 
incurred prior to the offering of the Fund's shares will be paid by the 
Investment Manager. It is currently estimated that the Investment Manager 
will incur, and be reimbursed by the Fund for, approximately $180,000 in 
organizational expenses. Actual results could differ from those estimates. 
These expenses will be deferred and amortized by the Fund on the 
straight-line method over a period not to exceed five years from the date of 
commencement of the Fund's operations. In the event that, at any time during 
the five year period beginning with the date of commencement of operations, 
the initial shares acquired by the Investment Manager prior to such date are 
redeemed, by any holder thereof, the redemption proceeds payable in respect 
of such shares will be reduced by the pro rata share (based on the 
proportionate share of the initial shares redeemed to the total number of 
original shares outstanding at the time of redemption) of the then 
unamortized deferred organizational expenses as of the date of such 
redemption. In the event that the Fund liquidates before the deferred 
organizational expenses are fully amortized, the Investment Manager shall 
bear such unamortized deferred organizational expenses. 

NOTE 2 -- The Fund has entered into an investment management agreement with 
the Investment Manager. Certain officers and/or trustees of the Fund are 
officers and/or directors of the Investment Manager. The Fund has retained 
the Investment Manager to manage the investment of the Fund's assets, 
including the placing of orders for the purchase and sale of portfolio 
securities. Under the terms of the Investment Management Agreement, the 
Investment Manager maintains certain of the Fund's books and records and 
furnishes, at its own expense, such office space, facilities, equipment, 
supplies, clerical help and bookkeeping and certain legal services as the 
Fund may reasonably require in the conduct of its business. In addition, the 
Investment Manager pays the salaries of all personnel, including officers of 
the Fund, who are employees of the Investment Manager. The Investment Manager 
also bears the cost of the Fund's telephone service, heat, light, power and 
other utilities. 

   As full compensation for the services and facilities furnished to the Fund 
and expenses of the Fund incurred by the Investment Manager, the Fund will 
pay the Investment Manager monthly compensation calculated daily by applying 
the annual rate of 0.75% to the Fund's daily net assets. 

   Shares of the Fund will be distributed by Dean Witter Distributors Inc. 
(the "Distributor"), an affiliate of the Investment Manager. The Fund has 
adopted a Plan of Distribution pursuant to Rule 12b-1 under the Act (the 
"Plan"). The Plan provides that the Distributor will bear the expense of all 
promotional and 

                               39           
<PAGE>
distribution related activities on behalf of the Fund, including the payment 
of commissions for sales of the Fund's shares and incentive compensation to 
and expenses of Dean Witter Reynolds Inc., an affiliate of the Investment 
Manager and the Distributor, account executives 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. 

   To compensate the Distributor for the services it or any selected dealer 
provides and for the expenses it bears under the Plan, the Fund will pay the 
Distributor compensation accrued daily and payable monthly at the annual rate 
of 1.00% of the Fund's average daily net assets. The Distributor receives the 
proceeds of contingent deferred sales charges imposed on certain redemptions 
of shares, which are separate and apart from payments made pursuant to the 
Plan. 

   Dean Witter Trust Company, an affiliate of the Investment Manager and the 
Distributor, is the transfer agent of the Fund's shares, dividend disbursing 
agent for payment of dividends and distributions on Fund shares and agent for 
shareholders under various investment plans. 

   The Investment Manager has undertaken to assume all operating expenses 
(except for the Plan fee and brokerage fees) and to waive the compensation 
provided for in its investment management agreement for services rendered 
until such time as the Fund has $50 million of net assets or until six months 
from the date of commencement of the Fund's operations, whichever occurs 
first. 

                               40           

<PAGE>
                         DEAN WITTER SPECIAL VALUE FUND
                            PART C OTHER INFORMATION

Item 24.  Financial Statements and Exhibits

     (a)  Financial Statements

       (1)  Financial statements and schedules, included
            in Prospectus (Part A):                                  Page in
                                                                     Prospectus
                                                                     ----------

            Financial highlights for the period October 29, 1996
            (commencement of operations) through January 31,
            1997.................................................          5

            Portfolio of Investments at January 31, 1997.........         25

            Statement of Assets and Liabilities at January 31,
            1997.................................................         28

            Statement of Operations for the period October 29,
            1996 through January 31, 1997........................         29

            Statement of Changes in Net Assets for the period
            October 29, 1996 through January 31, 1997............         30

            Notes to Financial Statements........................         31

       (2)  Financial statements included in the Statement of
            Additional Information (Part B):

            None

       (3)  Financial statements included in Part C:

            None

       (b)  Exhibits:

2.   --     By-Laws of the Registrant, Amended and Restated
            as of October 25, 1996

11.  --     Consent of Independent Accountants

16.  --     Schedule for Computation of Performance Quotations

27.  --     Financial Data Schedule

- ----------------------------------
            All other exhibits previously filed and incorporated by
            reference.

                                       1
<PAGE>

Item 25.  Persons Controlled by or Under Common Control With
          Registrant.

          None


Item 26.  Number of Holders of Securities.

       (1)                                     (2)
                                     Number of Record Holders
     Title of Class                     at January 31, 1997
     --------------                  ------------------------

Shares of Beneficial Interest                  20,459


Item 27.  Indemnification

     Pursuant to Section 5.3 of the Registrant's Declaration of Trust and under
Section 4.8 of the Registrant's By-Laws, the indemnification of the
Registrant's trustees, officers, employees and agents is permitted if it is
determined that they acted under the belief that their actions were in or not
opposed to the best interest of the Registrant, and, with respect to any
criminal proceeding, they had reasonable cause to believe their conduct was not
unlawful. In addition, indemnification is permitted only if it is determined
that the actions in question did not render them liable by reason of willful
misfeasance, bad faith or gross negligence in the performance of their duties
or by reason of reckless disregard of their obligations and duties to the
Registrant. Trustees, officers, employees and agents will be indemnified for
the expense of litigation if it is determined that they are entitled to
indemnification against any liability established in such litigation. The
Registrant may also advance money for these expenses provided that they give
their undertakings to repay the Registrant unless their conduct is later
determined to permit indemnification.

     Pursuant to Section 5.2 of the Registrant's Declaration of Trust and
paragraph 8 of the Registrant's Investment Management Agreement, neither the
Investment Manager nor any trustee, officer, employee or agent of the
Registrant shall be liable for any action or failure to act, except in the case
of bad faith, willful misfeasance, gross negligence or reckless disregard of
duties to the Registrant.

     Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the

                                       2
<PAGE>

event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a trustee, officer,
or controlling person of the Registrant in connection with the successful
defense of any action, suit or proceeding) is asserted against the Registrant
by such trustee, officer or controlling person in connection with the shares
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act, and will be governed by the
final adjudication of such issue.

     The Registrant hereby undertakes that it will apply the indemnification
provision of its by-laws in a manner consistent with Release 11330 of the
Securities and Exchange Commission under the Investment Company Act of 1940, so
long as the interpretation of Sections 17(h) and 17(i) of such Act remains in
effect.

     Registrant, in conjunction with the Investment Manager, Registrant's
Trustees, and other registered investment management companies managed by the
Investment Manager, maintains insurance on behalf of any person who is or was a
Trustee, officer, employee, or agent of Registrant, or who is or was serving at
the request of Registrant as a trustee, director, officer, employee or agent of
another trust or corporation, against any liability asserted against him and
incurred by him or arising out of his position. However, in no event will
Registrant maintain insurance to indemnify any such person for any act for
which Registrant itself is not permitted to indemnify him.

Item 28.  Business and Other Connections of Investment Adviser.

     See "The Fund and Its Management" in the Prospectus regarding the business
of the investment adviser. The following information is given regarding
officers of Dean Witter InterCapital Inc. InterCapital is a wholly-owned
subsidiary of Dean Witter, Discover & Co. The principal address of the Dean
Witter Funds is Two World Trade Center, New York, New York 10048.

     The term "Dean Witter Funds" used below refers to the following registered
investment companies:

Closed-End Investment Companies
- -------------------------------
 (1) InterCapital Income Securities Inc.
 (2) High Income Advantage Trust
 (3) High Income Advantage Trust II
 (4) High Income Advantage Trust III
 (5) Municipal Income Trust
 (6) Municipal Income Trust II
 (7) Municipal Income Trust III

                                       3
<PAGE>

 (8) Dean Witter Government Income Trust
 (9) Municipal Premium Income Trust
(10) Municipal Income Opportunities Trust 
(11) Municipal Income Opportunities Trust II 
(12) Municipal Income Opportunities Trust III 
(13) Prime Income Trust 
(14) InterCapital Insured Municipal Bond Trust 
(15) InterCapital Quality Municipal Income Trust 
(16) InterCapital Quality Municipal Investment Trust
(17) InterCapital Insured Municipal Income Trust
(18) InterCapital California Insured Municipal Income Trust 
(19) InterCapital Insured Municipal Trust 
(20) InterCapital Quality Municipal Securities 
(21) InterCapital New York Quality Municipal Securities 
(22) InterCapital California Quality Municipal Securities 
(23) InterCapital Insured California Municipal Securities 
(24) InterCapital Insured Municipal Securities

Open-end Investment Companies:
- ------------------------------
 (1) Dean Witter Short-Term Bond Fund
 (2) Dean Witter Tax-Exempt Securities Trust
 (3) Dean Witter Tax-Free Daily Income Trust
 (4) Dean Witter Dividend Growth Securities Inc.
 (5) Dean Witter Convertible Securities Trust
 (6) Dean Witter Liquid Asset Fund Inc.
 (7) Dean Witter Developing Growth Securities Trust
 (8) Dean Witter Retirement Series
 (9) Dean Witter Federal Securities Trust
(10) Dean Witter World Wide Investment Trust
(11) Dean Witter U.S. Government Securities Trust
(12) Dean Witter Select Municipal Reinvestment Fund
(13) Dean Witter High Yield Securities Inc.
(14) Dean Witter Intermediate Income Securities
(15) Dean Witter New York Tax-Free Income Fund
(16) Dean Witter California Tax-Free Income Fund
(17) Dean Witter Health Sciences Trust
(18) Dean Witter California Tax-Free Daily Income Trust
(19) Dean Witter Global Asset Allocation Fund
(20) Dean Witter American Value Fund
(21) Dean Witter Strategist Fund
(22) Dean Witter Utilities Fund
(23) Dean Witter World Wide Income Trust
(24) Dean Witter New York Municipal Money Market Trust
(25) Dean Witter Capital Growth Securities
(26) Dean Witter Precious Metals and Minerals Trust
(27) Dean Witter European Growth Fund Inc.
(28) Dean Witter Global Short-Term Income Fund Inc.
(29) Dean Witter Pacific Growth Fund Inc.
(30) Dean Witter Multi-State Municipal Series Trust
(31) Dean Witter Premier Income Trust
(32) Dean Witter Short-Term U.S. Treasury Trust
(33) Dean Witter Diversified Income Trust
(34) Dean Witter U.S. Government Money Market Trust
(35) Dean Witter Global Dividend Growth Securities

                                       4
<PAGE>

(36) Active Assets California Tax-Free Trust 
(37) Dean Witter Natural Resource Development Securities Inc. 
(38) Active Assets Government Securities Trust 
(39) Active Assets Money Trust 
(40) Active Assets Tax-Free Trust 
(41) Dean Witter Limited Term Municipal Trust 
(42) Dean Witter Variable Investment Series 
(43) Dean Witter Value-Added Market Series 
(44) Dean Witter Global Utilities Fund
(45) Dean Witter High Income Securities 
(46) Dean Witter National Municipal Trust 
(47) Dean Witter International SmallCap Fund 
(48) Dean Witter Mid-Cap Growth Fund 
(49) Dean Witter Select Dimensions Investment Series 
(50) Dean Witter Balanced Growth Fund 
(51) Dean Witter Balanced Income Fund 
(52) Dean Witter Hawaii Municipal Trust 
(53) Dean Witter Capital Appreciation Fund 
(54) Dean Witter Intermediate Term U.S. Treasury Trust 
(55) Dean Witter Information Fund 
(56) Dean Witter Japan Fund 
(57) Dean Witter Income Builder Fund 
(58) Dean Witter Special Value Fund 
(59) Dean Witter Financial Services Trust
(60) Dean Witter Market Leader Trust

The term "TCW/DW Funds" refers to the following registered
investment companies:

Open-End Investment Companies
- -----------------------------
 (1) TCW/DW Core Equity Trust
 (2) TCW/DW North American Government Income Trust
 (3) TCW/DW Latin American Growth Fund
 (4) TCW/DW Income and Growth Fund
 (5) TCW/DW Small Cap Growth Fund
 (6) TCW/DW Balanced Fund
 (7) TCW/DW Total Return Trust
 (8) TCW/DW Mid-Cap Equity Trust
 (9) TCW/DW Global Telecom Trust
(10) TCW/DW Strategic Income Trust

Closed-End Investment Companies
- -------------------------------
 (1) TCW/DW Term Trust 2000
 (2) TCW/DW Term Trust 2002
 (3) TCW/DW Term Trust 2003
 (4) TCW/DW Emerging Markets Opportunities Trust

                                       5
<PAGE>

NAME AND POSITION            OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER             OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC.            AND NATURE OF CONNECTION
- -----------------            ------------------------------------------------

Charles A. Fiumefreddo       Executive Vice President and Director of Dean
Chairman, Chief              Witter Reynolds Inc. ("DWR"); Chairman, Chief
Executive Officer and        Executive Officer and Director of Dean Witter
Director                     Distributors Inc. ("Distributors") and Dean
                             Witter Services Company Inc. ("DWSC"); Chairman
                             and Director of Dean Witter Trust Company
                             ("DWTC"); Chairman, Director or Trustee,
                             President and Chief Executive Officer of the
                             Dean Witter Funds and Chairman, Chief Executive
                             Officer and Trustee of the TCW/DW Funds;
                             Formerly Executive Vice President and Director
                             of Dean Witter, Discover & Co. ("DWDC");
                             Director and/or officer of various DWDC
                             subsidiaries.

Philip J. Purcell            Chairman, Chief Executive Officer and Director of
Director                     of DWDC and DWR; Director of DWSC and
                             Distributors; Director or Trustee of the Dean
                             Witter Funds; Director and/or officer of various
                             DWDC subsidiaries.

Richard M. DeMartini         Executive Vice President of DWDC; President and
Director                     Chief Operating Officer of Dean Witter Capital;
                             Director of DWR, DWSC, Distributors and DWTC;
                             Trustee of the TCW/DW Funds; Member (since
                             January, 1993) and Chairman (since
                             January, 1995) of the Board of Directors of NASDAQ.

James F. Higgins             Executive Vice President of DWDC; President and
Director                     Chief Operating Officer of Dean Witter Financial;
                             Director of DWR, DWSC, Distributors and DWTC.

Thomas C. Schneider          Executive Vice President and Chief Financial
Executive Vice               Officer of DWDC, DWR, DWSC and Distributors;
President, Chief             Director of DWR, DWSC and Distributors.
Financial Officer and
Director

Christine A. Edwards         Executive Vice President, Secretary and General
Director                     Counsel of DWDC and DWR; Executive Vice President,
                             Secretary and Chief Legal Officer of Distributors;
                             Director of DWR, DWSC and Distributors.

                                   6
<PAGE>

NAME AND POSITION            OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER             OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC.            AND NATURE OF CONNECTION
- -----------------            ------------------------------------------------

Robert M. Scanlan            President and Chief Operating Officer of DWSC,
President and Chief          Executive Vice President of Distributors;
Operating Officer            Executive Vice President and Director of DWTC;
                             Vice President of the Dean Witter Funds and the
                             TCW/DW Funds.

John Van Heuvelen            President, Chief Operating Officer and Director
Executive Vice               of DWTC.
President

Joseph J. McAlinden          Vice President of the Dean Witter Funds and
Executive Vice President     Director of DWTC.                          
and Chief Investment         
Officer                      

Peter M. Avelar              Vice President of various Dean Witter Funds.
Senior Vice President        

Mark Bavoso                  Vice President of various Dean Witter Funds.
Senior Vice President        

Richard Felegy
Senior Vice President

Edward Gaylor                Vice President of various Dean Witter Funds.
Senior Vice President        

Robert S. Giambrone          Vice President Senior Vice President of DWSC,    
Senior                       Distributors and DWTC and Director of DWTC; Vice 
                             President of the Dean Witter Funds and the TCW/DW
                             Funds.                                           

Rajesh K. Gupta              Vice President of various Dean Witter Funds.
Senior Vice President        

Kenton J. Hinchcliffe        Vice President of various Dean Witter Funds.
Senior Vice President        

Kevin Hurley                 Vice President of various Dean Witter Funds.
Senior Vice President        

Jenny B. Jones               Vice President of Dean Witter Special Value Fund.
Senior Vice President        


John B. Kemp, III            Director of the Provident Savings Bank, Jersey
Senior Vice President        City, New Jersey.

Anita Kolleeny               Vice President of various Dean Witter Funds.
Senior Vice President        

                                     7
<PAGE>

NAME AND POSITION            OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER             OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC.            AND NATURE OF CONNECTION
- -----------------            ------------------------------------------------

Jonathan R. Page             Vice President of various Dean Witter Funds.
Senior Vice President        

Ira N. Ross                  Vice President of various Dean Witter Funds.
Senior Vice President        

Guy G. Rutherfurd            Vice President of Dean Witter Market Leader Trust.
Senior Vice President

Rochelle G. Siegel           Vice President of various Dean Witter Funds.
Senior Vice President        

Paul D. Vance                Vice President of various Dean Witter Funds.
Senior Vice President        

Elizabeth A. Vetell
Senior Vice President

James F. Willison            Vice President of various Dean Witter Funds.
Senior Vice President        

Ronald J. Worobel            Vice President of various Dean Witter Funds.
Senior Vice President        

Thomas F. Caloia             First Vice President and Assistant Treasurer of
First Vice President         DWSC, Assistant Treasurer of Distributors;
and Assistant                Treasurer and Chief Financial Officer of the
Treasurer                    Dean Witter Funds and the TCW/DW Funds.

Marilyn K. Cranney           Assistant Secretary of DWR; First Vice President
First Vice President         and Assistant Secretary of DWSC; Assistant
and Assistant Secretary      Secretary of the Dean Witter Funds and the TCW/DW
                             Funds.

Barry Fink                   Assistant Secretary of DWR; First Vice President,
First Vice President,        Secretary and General Counsel of DWSC; First Vice
Secretary and General        President, Assistant Secretary and Assistant
Counsel                      General Counsel of Distributors; Vice President,
                             Secretary and General Counsel of the Dean Witter
                             Funds and the TCW/DW Funds.

Michael Interrante           First Vice President and Controller of DWSC;
First Vice President         Assistant Treasurer of Distributors;First Vice
and Controller               President and Treasurer of DWTC.

Robert Zimmerman
First Vice President

Joan Allman
Vice President

                                       8
<PAGE>

NAME AND POSITION            OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER             OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC.            AND NATURE OF CONNECTION
- -----------------            ------------------------------------------------

Joseph Arcieri               Vice President of various Dean Witter Funds.
Vice President               

Kirk Balzer                  Vice President of various Dean Witter Funds.
Vice President               

Douglas Brown
Vice President

Philip Casparius
Vice President

Thomas Chronert
Vice President

Rosalie Clough
Vice President

Patricia A. Cuddy            Vice President of various Dean Witter Funds.
Vice President               

B. Catherine Connelly
Vice President

Salvatore DeSteno            Vice President of DWSC.
Vice President               

Frank J. DeVito              Vice President of DWSC.
Vice President               

Bruce Dunn
Vice President

Jeffrey D. Geffen
Vice President

Deborah Genovese
Vice President

Peter W. Gurman
Vice President

John Hechtlinger
Vice President

Peter Hermann                Vice President of various Dean Witter Funds.
Vice President               

                                     9
<PAGE>

NAME AND POSITION            OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER             OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC.            AND NATURE OF CONNECTION
- -----------------            ------------------------------------------------

Elizabeth Hinchman
Vice President

David Hoffman
Vice President

David Johnson
Vice President

Christopher Jones
Vice President

James Kastberg
Vice President

Stanley Kapica
Vice President

Michael Knox                 Vice President of various Dean Witter Funds.
Vice President               

Konrad J. Krill              Vice President of various Dean Witter Funds.
Vice President               

Paula LaCosta                Vice President of various Dean Witter Funds.
Vice President               

Thomas Lawlor
Vice President

Gerard Lian                  Vice President of various Dean Witter Funds.
Vice President               

LouAnne D. McInnis           Vice President and Assistant Secretary of DWSC;
Vice President and           Assistant Secretary of the Dean Witter Funds and
Assistant Secretary          the TCW/DW Funds.

Sharon K. Milligan
Vice President

Julie Morrone
Vice President

David Myers
Vice President

James Nash
Vice President

                                      10
<PAGE>

NAME AND POSITION            OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER             OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC.            AND NATURE OF CONNECTION
- -----------------            ------------------------------------------------

Richard Norris
Vice President

Anne Pickrell                Vice President of Dean Witter Global Short-
Vice President               Term Income Fund Inc.
                             
Hugh Rose
Vice President

Robert Rossetti              Vice President of Dean Witter Precious Metals and
Vice President               Minerals Trust.

Ruth Rossi                   Vice President and Assistant Secretary of DWSC;
Vice President and           Assistant Secretary of the Dean Witter Funds and
Assistant Secretary          the TCW/DW Funds.

Carl F. Sadler
Vice President

Rafael Scolari               Vice President of Prime Income Trust.
Vice President               

Peter Seeley                 Vice President of Dean Witter World
Vice President               Wide Income Trust.

Jayne M. Stevlingson         Vice President of various Dean Witter Funds.
Vice President               

Kathleen Stromberg           Vice President of various Dean Witter Funds.
Vice President               

Vinh Q. Tran                 Vice President of various Dean Witter Funds.
Vice President               

Alice Weiss                  Vice President of various Dean Witter Funds.
Vice President               

Katherine C. Wickham
Vice President

                                      11
<PAGE>

Item 29.    Principal Underwriters

     (a)  Dean Witter Distributors Inc. ("Distributors"), a Delaware
          corporation, is the principal underwriter of the Registrant.
          Distributors is also the principal underwriter of the following
          investment companies:

 (1)        Dean Witter Liquid Asset Fund Inc.
 (2)        Dean Witter Tax-Free Daily Income Trust
 (3)        Dean Witter California Tax-Free Daily Income Trust
 (4)        Dean Witter Retirement Series
 (5)        Dean Witter Dividend Growth Securities Inc.
 (6)        Dean Witter Global Asset Allocation
 (7)        Dean Witter World Wide Investment Trust
 (8)        Dean Witter Capital Growth Securities
 (9)        Dean Witter Convertible Securities Trust
(10)        Active Assets Tax-Free Trust
(11)        Active Assets Money Trust
(12)        Active Assets California Tax-Free Trust
(13)        Active Assets Government Securities Trust
(14)        Dean Witter Short-Term Bond Fund
(15)        Dean Witter Mid-Cap Growth Fund
(16)        Dean Witter U.S. Government Securities Trust
(17)        Dean Witter High Yield Securities Inc.
(18)        Dean Witter New York Tax-Free Income Fund
(19)        Dean Witter Tax-Exempt Securities Trust
(20)        Dean Witter California Tax-Free Income Fund
(21)        Dean Witter Limited Term Municipal Trust
(22)        Dean Witter Natural Resource Development Securities Inc.
(23)        Dean Witter World Wide Income Trust
(24)        Dean Witter Utilities Fund
(25)        Dean Witter Strategist Fund
(26)        Dean Witter New York Municipal Money Market Trust
(27)        Dean Witter Intermediate Income Securities
(28)        Prime Income Trust
(29)        Dean Witter European Growth Fund Inc.
(30)        Dean Witter Developing Growth Securities Trust
(31)        Dean Witter Precious Metals and Minerals Trust
(32)        Dean Witter Pacific Growth Fund Inc.
(33)        Dean Witter Multi-State Municipal Series Trust
(34)        Dean Witter Federal Securities Trust
(35)        Dean Witter Short-Term U.S. Treasury Trust
(36)        Dean Witter Diversified Income Trust
(37)        Dean Witter Health Sciences Trust
(38)        Dean Witter Global Dividend Growth Securities
(39)        Dean Witter American Value Fund
(40)        Dean Witter U.S. Government Money Market Trust
(41)        Dean Witter Global Short-Term Income Fund Inc.
(42)        Dean Witter Premier Income Trust
(43)        Dean Witter Value-Added Market Series
(44)        Dean Witter Global Utilities Fund
(45)        Dean Witter High Income Securities
(46)        Dean Witter National Municipal Trust
(47)        Dean Witter International SmallCap Fund

                                      12
<PAGE>

(48)        Dean Witter Balanced Growth Fund
(49)        Dean Witter Balanced Income Fund
(50)        Dean Witter Hawaii Municipal Trust
(51)        Dean Witter Variable Investment Series
(52)        Dean Witter Capital Appreciation Fund
(53)        Dean Witter Intermediate Term U.S. Treasury Trust
(54)        Dean Witter Information Fund
(55)        Dean Witter Japan Fund
(56)        Dean Witter Income Builder Fund
(57)        Dean Witter Special Value Fund
(58)        Dean Witter Financial Services Trust
(59)        Dean Witter Market Leader Trust
 (1)        TCW/DW Core Equity Trust
 (2)        TCW/DW North American Government Income Trust
 (3)        TCW/DW Latin American Growth Fund
 (4)        TCW/DW Income and Growth Fund
 (5)        TCW/DW Small Cap Growth Fund
 (6)        TCW/DW Balanced Fund
 (7)        TCW/DW Total Return Trust
 (8)        TCW/DW Mid-Cap Equity Trust
 (9)        TCW/DW Global Telecom Trust
(10)        TCW/DW Strategic Income Trust

     (b) The following information is given regarding directors and officers of
     Distributors not listed in Item 28 above. The principal address of
     Distributors is Two World Trade Center, New York, New York 10048. None of
     the following persons has any position or office with the Registrant.

                                          Positions and
                                          Office with
Name                                      Distributors
- ----                                      -------------
Fredrick K. Kubler                       Senior Vice President, Assistant
                                         Secretary and Chief Compliance
                                         Officer.

Michael T. Gregg                         Vice President and Assistant
                                         Secretary.

Item 30.    Location of Accounts and Records

       All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder
are maintained by the Investment Manager at its offices, except records
relating to holders of shares issued by the Registrant, which are maintained by
the Registrant's Transfer Agent, at its place of business as shown in the
prospectus.

Item 31.    Management Services

        Registrant is not a party to any such management-related service
contract.

                                       13
<PAGE>

Item 32.    Undertakings

        Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.

                                       14
<PAGE>

                                   SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York and State
of New York on the 27th day of February, 1997.

                                            DEAN WITTER SPECIAL VALUE FUND

                                            By     /s/ Barry Fink
                                              -------------------------------
                                                       Barry Fink
                                                Vice President and Secretary

        Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 1 has been signed below by the following persons in the
capacities and on the dates indicated.

        Signatures                 Title                       Date
        ----------                 -----                       ----

(1) Principal Executive Officer    President, Chief
                                   Executive Officer,
                                   Trustee and Chairman
By  /s/ Charles A. Fiumefreddo                               02/27/97
  ----------------------------
        Charles A. Fiumefreddo

(2) Principal Financial Officer    Treasurer and Principal
                                   Accounting Officer

By  /s/ Thomas F. Caloia                                     02/27/97
  ----------------------------
        Thomas F. Caloia

(3) Majority of the Trustees

    Charles A. Fiumefreddo (Chairman)
    Philip J. Purcell


By  /s/ Barry Fink                                           02/27/97
  ----------------------------
        Barry Fink
        Attorney-in-Fact

    Michael Bozic              Manuel H. Johnson
    Edwin J. Garn              Michael E. Nugent
    John R. Haire              John L. Schroeder


By  /s/ David M. Butowsky                                    02/27/97
  ----------------------------
        David M. Butowsky
        Attorney-in-Fact

<PAGE>

                         DEAN WITTER SPECIAL VALUE FUND

                                 EXHIBIT INDEX

Exhibit No.        Description
- -----------        -----------

2.   --            By-Laws of the Registrant, Amended and Restated
                   as of October 25, 1996

11.  --            Consent of Independent Accountants

16.  --            Schedule for Computation of Performance Quotations

27.  --            Financial Data Schedule


<PAGE>

                                    BY-LAWS

                                       OF

                         DEAN WITTER SPECIAL VALUE FUND
                  AMENDED AND RESTATED AS OF OCTOBER 25, 1996

                                   ARTICLE I
                                  DEFINITIONS

   The terms "Commission," "Declaration," "Distributor," "Investment 
Adviser," "Majority Shareholder Vote," "1940 Act," "Shareholder," "Shares," 
"Transfer Agent," "Trust," "Trust Property" and "Trustees" have the 
respective meanings given them in the Declaration of Trust of Dean Witter 
Special Value Fund dated June 21, 1996. 

                                   ARTICLE II
                                    OFFICES

   SECTION 2.1. Principal Office. Until changed by the Trustees, the 
principal office of the Trust in the Commonwealth of Massachusetts shall be 
in the City of Boston, County of Suffolk. 

   SECTION 2.2. Other Offices. In addition to its principal office in the 
Commonwealth of Massachusetts, the Trust may have an office or offices in the 
City of New York, State of New York, and at such other places within and 
without the Commonwealth as the Trustees may from time to time designate or 
the business of the Trust may require. 

                                  ARTICLE III
                             SHAREHOLDERS' MEETINGS

   SECTION 3.1. Place of Meetings. Meetings of Shareholders shall be held at 
such place, within or without the Commonwealth of Massachusetts, as may be 
designated from time to time by the Trustees. 

   SECTION 3.2. Meetings. Meetings of Shareholders of the Trust shall be held 
whenever called by the Trustees or the President of the Trust and whenever 
election of a Trustee or Trustees by Shareholders is required by the 
provisions of Section 16(a) of the 1940 Act, for that purpose. Meetings of 
Shareholders shall also be called by the Secretary upon the written request 
of the holders of Shares entitled to vote as otherwise required by Section 
16(c) of the 1940 Act and to the extent required by the corporate or business 
statute of any state in which the Shares of the Trust are sold, as made 
applicable to the Trust by the provisions of Section 2.3 of the Declaration. 
Such request shall state the purpose or purposes of such meeting and the 
matters proposed to be acted on thereat. Except to the extent otherwise 
required by Section 16(c) of the 1940 Act, as made applicable to the Trust by 
the provisions of Section 2.3 of the Declaration, the Secretary shall inform 
such Shareholders of the reasonable estimated cost of preparing and mailing 
such notice of the meeting, and upon payment to the Trust of such costs, the 
Secretary shall give notice stating the purpose or purposes of the meeting to 
all entitled to vote at such meeting. No meeting need be called upon the 
request of the holders of Shares entitled to cast less than a majority of all 
votes entitled to be cast at such meeting, to consider any matter which is 
substantially the same as a matter voted upon at any meeting of Shareholders 
held during the preceding twelve months. 

   SECTION 3.3. Notice of Meetings. Written or printed notice of every 
Shareholders' meeting stating the place, date, and purpose or purposes 
thereof, shall be given by the Secretary not less than ten (10) nor more than 
ninety (90) days before such meeting to each Shareholder entitled to vote at 
such meeting. Such notice shall be deemed to be given when deposited in the 
United States mail, postage prepaid, directed to the Shareholder at his 
address as it appears on the records of the Trust. 

<PAGE>

   SECTION 3.4. Quorum and Adjournment of Meetings. Except as otherwise 
provided by law, by the Declaration or by these By-Laws, at all meetings of 
Shareholders the holders of a majority of the Shares issued and outstanding 
and entitled to vote thereat, present in person or represented by proxy, 
shall be requisite and shall constitute a quorum for the transaction of 
business. In the absence of a quorum, the Shareholders present or represented 
by proxy and entitled to vote thereat shall have power to adjourn the meeting 
from time to time. Any adjourned meeting may be held as adjourned without 
further notice. At any adjourned meeting at which a quorum shall be present, 
any business may be transacted as if the meeting had been held as originally 
called. 

   SECTION 3.5. Voting Rights, Proxies. At each meeting of Shareholders, each 
holder of record of Shares entitled to vote thereat shall be entitled to one 
vote in person or by proxy, executed in writing by the Shareholder or his 
duly authorized attorney-in-fact, for each Share of beneficial interest of 
the Trust and for the fractional portion of one vote for each fractional 
Share entitled to vote so registered in his name on the records of the Trust 
on the date fixed as the record date for the determination of Shareholders 
entitled to vote at such meeting. No proxy shall be valid after eleven months 
from its date, unless otherwise provided in the proxy. At all meetings of 
Shareholders, unless the voting is conducted by inspectors, all questions 
relating to the qualification of voters and the validity of proxies and the 
acceptance or rejection of votes shall be decided by the chairman of the 
meeting. Pursuant to a resolution of a majority of the Trustees, proxies may 
be solicited in the name of one or more Trustees or Officers of the Trust. 

   SECTION 3.6. Vote Required. Except as otherwise provided by law, by the 
Declaration of Trust, or by these By-Laws, at each meeting of Shareholders at 
which a quorum is present, all matters shall be decided by Majority 
Shareholder Vote. 

   SECTION 3.7. Inspectors of Election. In advance of any meeting of 
Shareholders, the Trustees may appoint Inspectors of Election to act at the 
meeting or any adjournment thereof. If Inspectors of Election are not so 
appointed, the chairman of any meeting of Shareholders may, and on the 
request of any Shareholder or his proxy shall, appoint Inspectors of Election 
of the meeting. In case any person appointed as Inspector fails to appear or 
fails or refuses to act, the vacancy may be filled by appointment made by the 
Trustees in advance of the convening of the meeting or at the meeting by the 
person acting as chairman. The Inspectors of Election shall determine the 
number of Shares outstanding, the Shares represented at the meeting, the 
existence of a quorum, the authenticity, validity and effect of proxies, 
shall receive votes, ballots or consents, shall hear and determine all 
challenges and questions in any way arising in connection with the right to 
vote, shall count and tabulate all votes or consents, determine the results, 
and do such other acts as may be proper to conduct the election or vote with 
fairness to all Shareholders. On request of the chairman of the meeting, or 
of any Shareholder or his proxy, the Inspectors of Election shall make a 
report in writing of any challenge or question or matter determined by them 
and shall execute a certificate of any facts found by them. 

   SECTION 3.8. Inspection of Books and Records. Shareholders shall have such 
rights and procedures of inspection of the books and records of the Trust as 
are granted to Shareholders under Section 32 of the Corporations Law of the 
State of Massachusetts. 

   SECTION 3.9. Action by Shareholders Without Meeting. Except as otherwise 
provided by law, the provisions of these By-Laws relating to notices and 
meetings to the contrary notwithstanding, any action required or permitted to 
be taken at any meeting of Shareholders may be taken without a meeting if a 
majority of the Shareholders entitled to vote upon the action consent to the 
action in writing and such consents are filed with the records of the Trust. 
Such consent shall be treated for all purposes as a vote taken at a meeting 
of Shareholders. 

   SECTION 3.10 Presence at Meetings. Presence at meetings of shareholders 
requires physical attendance by the shareholder or his or her proxy at the 
meeting site and does not encompass attendance by telephonic or other 
electronic means. 

                                       2
<PAGE>

                                   ARTICLE IV
                                    TRUSTEES

   SECTION 4.1. Meetings of the Trustees. The Trustees may in their 
discretion provide for regular or special meetings of the Trustees. Regular 
meetings of the Trustees may be held at such time and place as shall be 
determined from time to time by the Trustees without further notice. Special 
meetings of the Trustees may be called at any time by the Chairman and shall 
be called by the Chairman or the Secretary upon the written request of any 
two (2) Trustees. 

   SECTION 4.2. Notice of Special Meetings. Written notice of special 
meetings of the Trustees, stating the place, date and time thereof, shall be 
given not less than two (2) days before such meeting to each Trustee, 
personally, by telegram, by mail, or by leaving such notice at his place of 
residence or usual place of business. If mailed, such notice shall be deemed 
to be given when deposited in the United States mail, postage prepaid, 
directed to the Trustee at his address as it appears on the records of the 
Trust. Subject to the provisions of the 1940 Act, notice or waiver of notice 
need not specify the purpose of any special meeting. 

   SECTION 4.3. Telephone Meetings. Subject to the provisions of the 1940 
Act, any Trustee, or any member or members of any committee designated by the 
Trustees, may participate in a meeting of the Trustees, or any such 
committee, as the case may be, by means of a conference telephone or similar 
communications equipment if all persons participating in the meeting can hear 
each other at the same time. Participation in a meeting by these means 
constitutes presence in person at the meeting. 

   SECTION 4.4. Quorum, Voting and Adjournment of Meetings. At all meetings 
of the Trustees, a majority of the Trustees shall be requisite to and shall 
constitute a quorum for the transaction of business. If a quorum is present, 
the affirmative vote of a majority of the Trustees present shall be the act 
of the Trustees, unless the concurrence of a greater proportion is expressly 
required for such action by law, the Declaration or these By-Laws. If at any 
meeting of the Trustees there be less than a quorum present, the Trustees 
present thereat may adjourn the meeting from time to time, without notice 
other than announcement at the meeting, until a quorum shall have been 
obtained. 

   SECTION 4.5. Action by Trustees Without Meeting. The provisions of these 
By-Laws covering notices and meetings to the contrary notwithstanding, and 
except as required by law, any action required or permitted to be taken at 
any meeting of the Trustees may be taken without a meeting if a consent in 
writing setting forth the action shall be signed by all of the Trustees 
entitled to vote upon the action and such written consent is filed with the 
minutes of proceedings of the Trustees. 

   SECTION 4.6. Expenses and Fees. Each Trustee may be allowed expenses, if 
any, for attendance at each regular or special meeting of the Trustees, and 
each Trustee who is not an officer or employee of the Trust or of its 
investment manager or underwriter or of any corporate affiliate of any of 
said persons shall receive for services rendered as a Trustee of the Trust 
such compensation as may be fixed by the Trustees. Nothing herein contained 
shall be construed to preclude any Trustee from serving the Trust in any 
other capacity and receiving compensation therefor. 

   SECTION 4.7. Execution of Instruments and Documents and Signing of Checks 
and Other Obligations and Transfers. All instruments, documents and other 
papers shall be executed in the name and on behalf of the Trust and all 
checks, notes, drafts and other obligations for the payment of money by the 
Trust shall be signed, and all transfer of securities standing in the name of 
the Trust shall be executed, by the Chairman, the President, any Vice 
President or the Treasurer or by any one or more officers or agents of the 
Trust as shall be designated for that purpose by vote of the Trustees; 
notwithstanding the above, nothing in this Section 4.7 shall be deemed to 
preclude the electronic authorization, by designated persons, of the Trust's 
Custodian (as described herein in Section 9.1) to transfer assets of the 
Trust, as provided for herein in Section 9.1. 

   SECTION 4.8. Indemnification of Trustees, Officers, Employees and 
Agents. (a) The Trust shall indemnify any person who was or is a party or is 
threatened to be made a party to any threatened, pending, or completed 
action, suit or proceeding, whether civil, criminal, administrative or 
investigative 

                                       3
<PAGE>

(other than an action by or in the right of the Trust) by reason of the fact 
that he is or was a Trustee, officer, employee, or agent of the Trust. The 
indemnification shall be against expenses, including attorneys' fees, 
judgments, fines, and amounts paid in settlement, actually and reasonably 
incurred by him in connection with the action, suit, or proceeding, if he 
acted in good faith and in a manner he reasonably believed to be in or not 
opposed to the best interests of the Trust, and, with respect to any criminal 
action or proceeding, had no reasonable cause to believe his conduct was 
unlawful. The termination of any action, suit or proceeding by judgment, 
order, settlement, conviction, or upon a plea of nolo contendere or its 
equivalent, shall not, of itself, create a presumption that the person did 
not act in good faith and in a manner which he reasonably believed to be in 
or not opposed to the best interests of the Trust, and, with respect to any 
criminal action or proceeding, had reasonable cause to believe that his 
conduct was unlawful. 

   (b) The Trust shall indemnify any person who was or is a party or is 
threatened to be made a party to any threatened, pending or completed action 
or suit by or on behalf of the Trust to obtain a judgment or decree in its 
favor by reason of the fact that he is or was a Trustee, officer, employee, 
or agent of the Trust. The indemnification shall be against expenses, 
including attorneys' fees actually and reasonably incurred by him in 
connection with the defense or settlement of the action or suit, if he acted 
in good faith and in a manner he reasonably believed to be in or not opposed 
to the best interests of the Trust; except that no indemnification shall be 
made in respect of any claim, issue, or matter as to which the person has 
been adjudged to be liable for negligence or misconduct in the performance of 
his duty to the Trust, except to the extent that the court in which the 
action or suit was brought, or a court of equity in the county in which the 
Trust has its principal office, determines upon application that, despite the 
adjudication of liability but in view of all circumstances of the case, the 
person is fairly and reasonably entitled to indemnity for those expenses 
which the court shall deem proper, provided such Trustee, officer, employee 
or agent is not adjudged to be liable by reason of his willful misfeasance, 
bad faith, gross negligence or reckless disregard of the duties involved in 
the conduct of his office. 

   (c) To the extent that a Trustee, officer, employee, or agent of the Trust 
has been successful on the merits or otherwise in defense of any action, suit 
or proceeding referred to in subsection (a) or (b) or in defense of any 
claim, issue or matter therein, he shall be indemnified against expenses, 
including attorneys' fees, actually and reasonably incurred by him in 
connection therewith. 

   (d) (1) Unless a court orders otherwise, any indemnification under 
subsections (a) or (b) of this section may be made by the Trust only as 
authorized in the specific case after a determination that indemnification of 
the Trustee, officer, employee, or agent is proper in the circumstances 
because he has met the applicable standard of conduct set forth in 
subsections (a) or (b). 

       (2) The determination shall be made: 

          (i) By the Trustees, by a majority vote of a quorum which consists of 
   Trustees who were not parties to the action, suit or proceeding; or 

         (ii) If the required quorum is not obtainable, or if a quorum of 
   disinterested Trustees so directs, by independent legal counsel in a 
   written opinion; or 

        (iii) By the Shareholders. 

       (3) Notwithstanding any provision of this Section 4.8, no person shall 
   be entitled to indemnification for any liability, whether or not there is 
   an adjudication of liability, arising by reason of willful misfeasance, 
   bad faith, gross negligence, or reckless disregard of duties as described 
   in Section 17(h) and (i) of the Investment Company Act of 1940 
   ("disabling conduct"). A person shall be deemed not liable by reason of 
   disabling conduct if, either: 

          (i) a final decision on the merits is made by a court or other body 
   before whom the proceeding was brought that the person to be indemnified 
   ("indemnitee") was not liable by reason of disabling conduct; or 

         (ii) in the absence of such a decision, a reasonable determination, 
   based upon a review of the facts, that the indemnitee was not liable by 
   reason of disabling conduct, is made by either-- 

                                       4
<PAGE>

          (A) a majority of a quorum of Trustees who are neither "interested 
         persons" of the Trust, as defined in Section 2(a)(19) of the 
         Investment Company Act of 1940, nor parties to the action, suit or 
         proceeding, or 

          (B) an independent legal counsel in a written opinion. 

   (e) Expenses, including attorneys' fees, incurred by a Trustee, officer, 
employee or agent of the Trust in defending a civil or criminal action, suit 
or proceeding may be paid by the Trust in advance of the final disposition 
thereof if: 

       (1) authorized in the specific case by the Trustees; and 

       (2) the Trust receives an undertaking by or on behalf of the Trustee, 
   officer, employee or agent of the Trust to repay the advance if it is not 
   ultimately determined that such person is entitled to be indemnified by 
   the Trust; and 

       (3) either, (i) such person provides a security for his undertaking, 
   or 

           (ii) the Trust is insured against losses by reason of any lawful 
         advances, or 

          (iii) a determination, based on a review of readily available 
         facts, that there is reason to believe that such person ultimately 
         will be found entitled to indemnification, is made by either-- 

               (A) a majority of a quorum which consists of Trustees who are 
             neither "interested persons" of the Trust, as defined in Section 
             2(a)(19) of the 1940 Act, nor parties to the action, suit or 
             proceeding, or 

               (B) an independent legal counsel in a written opinion. 

   (f) The indemnification provided by this Section shall not be deemed 
exclusive of any other rights to which a person may be entitled under any 
by-law, agreement, vote of Shareholders or disinterested Trustees or 
otherwise, both as to action in his official capacity and as to action in 
another capacity while holding the office, and shall continue as to a person 
who has ceased to be a Trustee, officer, employee, or agent and inure to the 
benefit of the heirs, executors and administrators of such person; provided 
that no person may satisfy any right of indemnity or reimbursement granted 
herein or to which he may be otherwise entitled except out of the property of 
the Trust, and no Shareholder shall be personally liable with respect to any 
claim for indemnity or reimbursement or otherwise. 

   (g) The Trust may purchase and maintain insurance on behalf of any person 
who is or was a Trustee, officer, employee, or agent of the Trust, against 
any liability asserted against him and incurred by him in any such capacity, 
or arising out of his status as such. However, in no event will the Trust 
purchase insurance to indemnify any officer or Trustee against liability for 
any act for which the Trust itself is not permitted to indemnify him. 

   (h) Nothing contained in this Section shall be construed to protect any 
Trustee or officer of the Trust against any liability to the Trust or to its 
security holders to which he would otherwise be subject by reason of willful 
misfeasance, bad faith, gross negligence or reckless disregard of the duties 
involved in the conduct of his office. 

                                   ARTICLE V
                                   COMMITTEES

   SECTION 5.1. Executive and Other Committees. The Trustees, by resolution 
adopted by a majority of the Trustees, may designate an Executive Committee 
and/or committees, each committee to consist of two (2) or more of the 
Trustees of the Trust and may delegate to such committees, in the intervals 
between meetings of the Trustees, any or all of the powers of the Trustees in 
the management of the business and affairs of the Trust. In the absence of 
any member of any such committee, the members thereof present at any meeting, 
whether or not they constitute a quorum, may appoint a Trustee to act in 
place of such absent member. Each such committee shall keep a record of its 
proceedings. 

                                       5
<PAGE>

   The Executive Committee and any other committee shall fix its own rules or 
procedure, but the presence of at least fifty percent (50%) of the members of 
the whole committee shall in each case be necessary to constitute a quorum of 
the committee and the affirmative vote of the majority of the members of the 
committee present at the meeting shall be necessary to take action. 

   All actions of the Executive Committee shall be reported to the Trustees 
at the meeting thereof next succeeding to the taking of such action. 

   SECTION 5.2. Advisory Committee. The Trustees may appoint an advisory 
committee which shall be composed of persons who do not serve the Trust in 
any other capacity and which shall have advisory functions with respect to 
the investments of the Trust but which shall have no power to determine that 
any security or other investment shall be purchased, sold or otherwise 
disposed of by the Trust. The number of persons constituting any such 
advisory committee shall be determined from time to time by the Trustees. The 
members of any such advisory committee may receive compensation for their 
services and may be allowed such fees and expenses for the attendance at 
meetings as the Trustees may from time to time determine to be appropriate. 

   SECTION 5.3. Committee Action Without Meeting. The provisions of these 
By-Laws covering notices and meetings to the contrary notwithstanding, and 
except as required by law, any action required or permitted to be taken at 
any meeting of any Committee of the Trustees appointed pursuant to Section 
5.1 of these By-Laws may be taken without a meeting if a consent in writing 
setting forth the action shall be signed by all members of the Committee 
entitled to vote upon the action and such written consent is filed with the 
records of the proceedings of the Committee. 

                                   ARTICLE VI
                                    OFFICERS

   SECTION 6.1. Executive Officers. The executive officers of the Trust shall 
be a Chairman, a President, one or more Vice Presidents, a Secretary and a 
Treasurer. The Chairman shall be selected from among the Trustees but none of 
the other executive officers need be a Trustee. Two or more offices, except 
those of President and any Vice President, may be held by the same person, 
but no officer shall execute, acknowledge or verify any instrument in more 
than one capacity. The executive officers of the Trust shall be elected 
annually by the Trustees and each executive officer so elected shall hold 
office until his successor is elected and has qualified. 

   SECTION 6.2. Other Officers and Agents. The Trustees may also elect one or 
more Assistant Vice Presidents, Assistant Secretaries and Assistant 
Treasurers and may elect, or may delegate to the Chairman the power to 
appoint, such other officers and agents as the Trustees shall at any time or 
from time to time deem advisable. 

   SECTION 6.3. Term and Removal and Vacancies. Each officer of the Trust 
shall hold office until his successor is elected and has qualified. Any 
officer or agent of the Trust may be removed by the Trustees whenever, in 
their judgment, the best interests of the Trust will be served thereby, but 
such removal shall be without prejudice to the contractual rights, if any, of 
the person so removed. 

   SECTION 6.4. Compensation of Officers. The compensation of officers and 
agents of the Trust shall be fixed by the Trustees, or by the Chairman to the 
extent provided by the Trustees with respect to officers appointed by the 
Chairman. 

   SECTION 6.5. Power and Duties. All officers and agents of the Trust, as 
between themselves and the Trust, shall have such authority and perform such 
duties in the management of the Trust as may be provided in or pursuant to 
these By-Laws, or to the extent not so provided, as may be prescribed by the 
Trustees; provided, that no rights of any third party shall be affected or 
impaired by any such By-Law or resolution of the Trustees unless he has 
knowledge thereof. 

   SECTION 6.6. The Chairman. (a) The Chairman shall be the chief executive 
officer of the Trust; he shall preside at all meetings of the Shareholders 
and of the Trustees; he shall have general and active management of the 
business of the Trust, shall see that all orders and resolutions of the 
Trustees are 

                                       6
<PAGE>

carried into effect, and, in connection therewith, shall be authorized to 
delegate to the President or to one or more Vice Presidents such of his 
powers and duties at such times and in such manner as he may deem advisable; 
he shall be a signatory on all Annual and Semi-Annual Reports as may be sent 
to shareholders, and he shall perform such other duties as the Trustees may 
from time to time prescribe. 

   (b) In the absence of the Chairman, the Board shall determine who shall 
preside at all meetings of the shareholders and the Board of Trustees. 

   SECTION 6.7. The President. The President shall perform such duties as the 
Board of Trustees and the Chairman may from time to time prescribe. 

   SECTION 6.8. The Vice Presidents. The Vice Presidents shall be of such 
number and shall have such titles as may be determined from time to time by 
the Trustees. The Vice President, or, if there be more than one, the Vice 
Presidents in the order of their seniority as may be determined from time to 
time by the Trustees or the Chairman, shall, in the absence or disability of 
the President, exercise the powers and perform the duties of the President, 
and he or they shall perform such other duties as the Trustees or the 
Chairman may from time to time prescribe. 

   SECTION 6.9. The Assistant Vice Presidents. The Assistant Vice President, 
or, if there be more than one, the Assistant Vice Presidents, shall perform 
such duties and have such powers as may be assigned them from time to time by 
the Trustees or the Chairman. 

   SECTION 6.10. The Secretary. The Secretary shall attend all meetings of 
the Trustees and all meetings of the Shareholders and record all the 
proceedings of the meetings of the Shareholders and of the Trustees in a book 
to be kept for that purpose, and shall perform like duties for the standing 
committees when required. He shall give, or cause to be given, notice of all 
meetings of the Shareholders and special meetings of the Trustees, and shall 
perform such other duties and have such powers as the Trustees, or the 
Chairman, may from time to time prescribe. He shall keep in safe custody the 
seal of the Trust and affix or cause the same to be affixed to any instrument 
requiring it, and, when so affixed, it shall be attested by his signature or 
by the signature of an Assistant Secretary. 

   SECTION 6.11. The Assistant Secretaries. The Assistant Secretary, or, if 
there be more than one, the Assistant Secretaries in the order determined by 
the Trustees or the Chairman, shall, in the absence or disability of the 
Secretary, perform the duties and exercise the powers of the Secretary and 
shall perform such duties and have such other powers as the Trustees or the 
Chairman may from time to time prescribe. 

   SECTION 6.12. The Treasurer. The Treasurer shall be the chief financial 
officer of the Trust. He shall keep or cause to be kept full and accurate 
accounts of receipts and disbursements in books belonging to the Trust, and 
he shall render to the Trustees and the Chairman, whenever any of them 
require it, an account of his transactions as Treasurer and of the financial 
condition of the Trust; and he shall perform such other duties as the 
Trustees, or the Chairman, may from time to time prescribe. 

   SECTION 6.13. The Assistant Treasurers. The Assistant Treasurer, or, if 
there shall be more than one, the Assistant Treasurers in the order 
determined by the Trustees or the Chairman, shall, in the absence or 
disability of the Treasurer, perform the duties and exercise the powers of 
the Treasurer and shall perform such other duties and have such other powers 
as the Trustees, or the Chairman, may from time to time prescribe. 

   SECTION 6.14. Delegation of Duties. Whenever an officer is absent or 
disabled, or whenever for any reason the Trustees may deem it desirable, the 
Trustees may delegate the powers and duties of an officer or officers to any 
other officer or officers or to any Trustee or Trustees. 

                                  ARTICLE VII
                          DIVIDENDS AND DISTRIBUTIONS

   Subject to any applicable provisions of law and the Declaration, dividends 
and distributions upon the Shares may be declared at such intervals as the 
Trustees may determine, in cash, in securities or other property, or in 
Shares, from any sources permitted by law, all as the Trustees shall from 
time to time determine. 

                                7           
<PAGE>

   Inasmuch as the computation of net income and net profits from the sales 
of securities or other properties for federal income tax purposes may vary 
from the computation thereof on the records of the Trust, the Trustees shall 
have power, in their discretion, to distribute as income dividends and as 
capital gain distributions, respectively, amounts sufficient to enable the 
Trust to avoid or reduce liability for federal income taxes. 

                                  ARTICLE VIII
                             CERTIFICATES OF SHARES

   SECTION 8.1. Certificates of Shares. Certificates for Shares of each 
series or class of Shares shall be in such form and of such design as the 
Trustees shall approve, subject to the right of the Trustees to change such 
form and design at any time or from time to time, and shall be entered in the 
records of the Trust as they are issued. Each such certificate shall bear a 
distinguishing number; shall exhibit the holders' name and certify the number 
of full Shares owned by such holder; shall be signed by or in the name of the 
Trust by the Chairman, the President, or a Vice President, and countersigned 
by the Secretary or an Assistant Secretary or the Treasurer and an Assistant 
Treasurer of the Trust; shall be sealed with the seal; and shall contain such 
recitals as may be required by law. Where any certificate is signed by a 
Transfer Agent or by a Registrar, the signature of such officers and the seal 
may be facsimile, printed or engraved. The Trust may, at its option, 
determine not to issue a certificate or certificates to evidence Shares owned 
of record by any Shareholder. 

   In case any officer or officers who shall have signed, or whose facsimile 
signature or signatures shall appear on, any such certificate or certificates 
shall cease to be such officer or officers of the Trust, whether because of 
death, resignation or otherwise, before such certificate or certificates 
shall have been delivered by the Trust, such certificate or certificates 
shall, nevertheless, be adopted by the Trust and be issued and delivered as 
though the person or persons who signed such certificate or certificates or 
whose facsimile signature or signatures shall appear therein had not ceased 
to be such officer or officers of the Trust. 

   No certificate shall be issued for any share until such share is fully 
paid. 

   SECTION 8.2. Lost, Stolen, Destroyed and Mutilated Certificates. The 
Trustees may direct a new certificate or certificates to be issued in place 
of any certificate or certificates theretofore issued by the Trust alleged to 
have been lost, stolen or destroyed, upon satisfactory proof of such loss, 
theft, or destruction; and the Trustees may, in their discretion, require the 
owner of the lost, stolen or destroyed certificate, or his legal 
representative, to give to the Trust and to such Registrar, Transfer Agent 
and/or Transfer Clerk as may be authorized or required to countersign such 
new certificate or certificates, a bond in such sum and of such type as they 
may direct, and with such surety or sureties, as they may direct, as 
indemnity against any claim that may be against them or any of them on 
account of or in connection with the alleged loss, theft or destruction of 
any such certificate. 

                                   ARTICLE IX
                                   CUSTODIAN

   SECTION 9.1. Appointment and Duties. The Trust shall at all times employ a 
bank or trust company having capital, surplus and undivided profits of at 
least five million dollars ($5,000,000) as custodian with authority as its 
agent, but subject to such restrictions, limitations and other requirements, 
if any, as may be contained in these By-Laws and the 1940 Act: 

      (1) to receive and hold the securities owned by the Trust and deliver 
   the same upon written or electronically transmitted order; 

      (2) to receive and receipt for any moneys due to the Trust and deposit 
   the same in its own banking department or elsewhere as the Trustees may 
   direct; 

      (3) to disburse such funds upon orders or vouchers; 

                                       8
<PAGE>

all upon such basis of compensation as may be agreed upon between the 
Trustees and the custodian. If so directed by a Majority Shareholder Vote, 
the custodian shall deliver and pay over all property of the Trust held by it 
as specified in such vote. 

   The Trustees may also authorize the custodian to employ one or more 
sub-custodians from time to time to perform such of the acts and services of 
the custodian and upon such terms and conditions as may be agreed upon 
between the custodian and such sub-custodian and approved by the Trustees. 

   SECTION 9.2. Central Certificate System. Subject to such rules, 
regulations and orders as the Commission may adopt, the Trustees may direct 
the custodian to deposit all or any part of the securities owned by the Trust 
in a system for the central handling of securities established by a national 
securities exchange or a national securities association registered with the 
Commission under the Securities Exchange Act of 1934, or such other person as 
may be permitted by the Commission, or otherwise in accordance with the 1940 
Act, pursuant to which system all securities of any particular class or 
series of any issuer deposited within the system are treated as fungible and 
may be transferred or pledged by bookkeeping entry without physical delivery 
of such securities, provided that all such deposits shall be subject to 
withdrawal only upon the order of the Trust. 

                                   ARTICLE X
                                WAIVER OF NOTICE

   Whenever any notice of the time, place or purpose of any meeting of 
Shareholders, Trustees, or of any committee is required to be given in 
accordance with law or under the provisions of the Declaration or these 
By-Laws, a waiver thereof in writing, signed by the person or persons 
entitled to such notice and filed with the records of the meeting, whether 
before or after the holding thereof, or actual attendance at the meeting of 
Shareholders, Trustees or committee, as the case may be, in person, shall be 
deemed equivalent to the giving of such notice to such person. 

                                   ARTICLE XI
                                 MISCELLANEOUS

   SECTION 11.1. Location of Books and Records. The books and records of the 
Trust may be kept outside the Commonwealth of Massachusetts at such place or 
places as the Trustees may from time to time determine, except as otherwise 
required by law. 

   SECTION 11.2. Record Date. The Trustees may fix in advance a date as the 
record date for the purpose of determining Shareholders entitled to notice 
of, or to vote at, any meeting of Shareholders, or Shareholders entitled to 
receive payment of any dividend or the allotment of any rights, or in order 
to make a determination of Shareholders for any other proper purpose. Such 
date, in any case, shall be not more than ninety (90) days, and in case of a 
meeting of Shareholders not less than ten (10) days, prior to the date on 
which particular action requiring such determination of Shareholders is to be 
taken. In lieu of fixing a record date the Trustees may provide that the 
transfer books shall be closed for a stated period but not to exceed, in any 
case, twenty (20) days. If the transfer books are closed for the purpose of 
determining Shareholders entitled to notice of a vote at a meeting of 
Shareholders, such books shall be closed for at least ten (10) days 
immediately preceding such meeting. 

   SECTION 11.3. Seal. The Trustees shall adopt a seal, which shall be in 
such form and shall have such inscription thereon as the Trustees may from 
time to time provide. The seal of the Trust may be affixed to any document, 
and the seal and its attestation may be lithographed, engraved or otherwise 
printed on any document with the same force and effect as if it had been 
imprinted and attested manually in the same manner and with the same effect 
as if done by a Massachusetts business corporation under Massachusetts law. 

   SECTION 11.4. Fiscal Year. The fiscal year of the Trust shall end on such 
date as the Trustees may by resolution specify, and the Trustees may by 
resolution change such date for future fiscal years at any time and from time 
to time. 

                                       9
<PAGE>

   SECTION 11.5. Orders for Payment of Money. All orders or instructions for 
the payment of money of the Trust, and all notes or other evidences of 
indebtedness issued in the name of the Trust, shall be signed by such officer 
or officers or such other person or persons as the Trustees may from time to 
time designate, or as may be specified in or pursuant to the agreement 
between the Trust and the bank or trust company appointed as Custodian of the 
securities and funds of the Trust. 

                                  ARTICLE XII
                      COMPLIANCE WITH FEDERAL REGULATIONS

   The Trustees are hereby empowered to take such action as they may deem to 
be necessary, desirable or appropriate so that the Trust is or shall be in 
compliance with any federal or state statute, rule or regulation with which 
compliance by the Trust is required. 

                                  ARTICLE XIII
                                   AMENDMENTS

   These By-Laws may be amended, altered, or repealed, or new By-Laws may be 
adopted, (a) by a Majority Shareholder Vote, or (b) by the Trustees; 
provided, however, that no By-Law may be amended, adopted or repealed by the 
Trustees if such amendment, adoption or repeal requires, pursuant to law, the 
Declaration, or these By-Laws, a vote of the Shareholders. The Trustees shall 
in no event adopt By-Laws which are in conflict with the Declaration, and any 
apparent inconsistency shall be construed in favor of the related provisions 
in the Declaration. 

                                  ARTICLE XIV
                              DECLARATION OF TRUST

   The Declaration of Trust establishing Dean Witter Special Value Fund, 
dated June 21, 1996, a copy of which is on file in the office of the 
Secretary of the Commonwealth of Massachusetts, provides that the name Dean 
Witter Special Value Fund refers to the Trustees under the Declaration 
collectively as Trustees, but not as individuals or personally; and no 
Trustee, Shareholder, officer, employee or agent of Dean Witter Special Value 
Fund shall be held to any personal liability, nor shall resort be had to 
their private property for the satisfaction of any obligation or claim or 
otherwise, in connection with the affairs of said Dean Witter Special Value 
Fund, but the Trust Estate only shall be liable. 

                                       10


<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 1 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
August 19, 1996, relating to the statement of assets and liabilities of Dean
Witter Special Value Fund, which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the references to us under the headings "Independent Accountants"
and "Experts" in such Statement of Additional Information.


/s/ Price Waterhouse LLP

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
February 25, 1997




<PAGE>





                   SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
                               SPECIAL VALUE FUND




(A)  AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)

                                   -                                      -
                                  |        ----------------------  |
FORMULA:                          |       |            |
                                  |  /\ n  |           ERV           |
                  T  =            |    \  |      -------------      |  - 1
                                  |     \ |             P          |
                                  |      \|             |
                                  |_                    _|

                 T = AVERAGE ANNUAL COMPOUND RETURN
                 n = NUMBER OF YEARS
               ERV = ENDING REDEEMABLE VALUE
                 P = INITIAL INVESTMENT

                                                      (A)
  $1,000        ERV AS OF       NUMBER OF    AVERAGE ANNUAL          CUMULATIVE
INVESTED - P      31-Jan-97     YEARS - n    COMPOUND RETURN - T   TOTAL RETURN
- ------------      ---------     ---------    -------------------   ------------
 29-Oct-96        $1,010.70         0.26             N/A                1.07%




(B)  TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE (NON STANDARD
     COMPUTATIONS)
(C)  AVERAGE ANNUAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE (NON
     STANDARD COMPUTATIONS)

                                 -                                           -
                                |        ----------------------  |
FORMULA:                        |       |            |
                                |  /\ n  |           EV        |
                t  =            |    \  |      -------------   | - 1
                                |     \ |            P        |
                                |      \|           |
                                |_                  _|

                          EV
               TR  =   ----------    - 1
                           P


              t = AVERAGE ANNUAL COMPOUND RETURN
                  (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
              n = NUMBER OF YEARS
             EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
              P = INITIAL INVESTMENT
             TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)


                                      (B)                    (C)
  $1,000        EV AS OF         TOTAL         NUMBER OF    AVERAGE ANNUAL
INVESTED - P       31-Jan-97     RETURN - TR   YEARS - n    COMPOUND RETURN - t
- ------------    ------------     -----------   ---------    -------------------

29-Oct-96       $1,060.70           6.07%         0.26               N/A


          (D)  GROWTH OF $10,000
          (E)  GROWTH OF $50,000
          (F)  GROWTH OF $100,000

FORMULA:   G= (TR+1)*P
           G= GROWTH OF INITIAL INVESTMENT
           P= INITIAL INVESTMENT
           TR= TOTAL RETURN SINCE INCEPTION

<TABLE>
<CAPTION>

                TOTAL           (D)   GROWTH OF           (E)   GROWTH OF        (F)   GROWTH OF
INVESTED - P    RETURN - TR      $10,000 INVESTMENT - G   $50,000 INVESTMENT-G    $100,000 INVESTMENT - G
- ------------    -----------      ----------------------   --------------------    -----------------------
<S>              <C>                   <C>                      <C>                   <C>     
29-Oct-96         6.07                  $10,607                  $53,035               $106,070
</TABLE>







<TABLE> <S> <C>

<PAGE>

<ARTICLE> 6
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          JUL-31-1997
<PERIOD-END>                               JAN-31-1997
<INVESTMENTS-AT-COST>                      214,474,524
<INVESTMENTS-AT-VALUE>                     225,251,476
<RECEIVABLES>                                3,362,435
<ASSETS-OTHER>                                 173,300
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                             228,787,211
<PAYABLE-FOR-SECURITIES>                     2,814,036
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      687,170
<TOTAL-LIABILITIES>                          3,501,206
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                   214,015,871
<SHARES-COMMON-STOCK>                       21,286,335
<SHARES-COMMON-PRIOR>                           10,000
<ACCUMULATED-NII-CURRENT>                    (147,115)
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                        640,297
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                    10,776,952
<NET-ASSETS>                               225,286,005
<DIVIDEND-INCOME>                              222,896
<INTEREST-INCOME>                            1,150,877
<OTHER-INCOME>                                       0
<EXPENSES-NET>                               1,025,256
<NET-INVESTMENT-INCOME>                        348,517
<REALIZED-GAINS-CURRENT>                       640,297
<APPREC-INCREASE-CURRENT>                   10,776,952
<NET-CHANGE-FROM-OPS>                       11,765,766
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                    (495,632)
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                     21,715,044
<NUMBER-OF-SHARES-REDEEMED>                  (484,335)
<SHARES-REINVESTED>                             45,626
<NET-CHANGE-IN-ASSETS>                     225,186,005
<ACCUMULATED-NII-PRIOR>                              0
<ACCUMULATED-GAINS-PRIOR>                            0
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                          364,944
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                              1,025,256
<AVERAGE-NET-ASSETS>                       186,953,684
<PER-SHARE-NAV-BEGIN>                            10.00
<PER-SHARE-NII>                                    .02
<PER-SHARE-GAIN-APPREC>                            .59
<PER-SHARE-DIVIDEND>                             (.03)
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              10.58
<EXPENSE-RATIO>                                   2.11
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        


</TABLE>


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