<PAGE>
Filed Pursuant to Rule 497(e)
Registration File No.: 333-06935
PROSPECTUS - SEPTEMBER 27, 1999
Morgan Stanley Dean Witter
SPECIAL VALUE FUND
A MUTUAL FUND THAT SEEKS LONG-TERM CAPITAL APPRECIATION
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
CONTENTS
The Fund Investment Objective.......................... 1
Principal Investment Strategies............... 1
Principal Risks............................... 2
Past Performance.............................. 3
Fees and Expenses............................. 4
Additional Investment Strategy Information.... 5
Additional Risk Information................... 6
Fund Management............................... 8
Shareholder Information Pricing Fund Shares........................... 9
How to Buy Shares............................. 9
How to Exchange Shares....................... 11
How to Sell Shares........................... 13
Distributions................................ 15
Tax Consequences............................. 15
Share Class Arrangements..................... 16
Financial Highlights ............................................. 24
Our Family of Funds ............................. Inside Back Cover
This Prospectus contains important information about the Fund. Please read it
carefully and keep it for future reference.
<PAGE>
THE FUND
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
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Morgan Stanley Dean Witter Special Value Fund seeks long-term capital
appreciation.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------
{sidebar}
CAPITAL APPRECIATION
An investment objective having the goal of selecting
securities with the potential to rise in price rather than pay out income.
{end sidebar}
The Fund will normally invest at least 65% of its total assets in common
stocks of small companies that the Fund's "Investment Manager," Morgan
Stanley Dean Witter Advisors Inc., believes are undervalued relative to the
marketplace or similar companies. Companies within a capitalization range
of $100 million to $1.5 billion are considered small companies. In deciding
which securities to buy, hold or sell, the Investment Manager will pursue a
value oriented approach that seeks to identify securities whose market
value is less than their intrinsic value. The Investment Manager will focus
on securities with market-to-book ratios and price-earnings ratios that are
lower than those of the general market averages or similar companies. The
Investment Manager also may consider a company's dividend yield, growth in
sales, balance sheet, management capabilities, earnings and cash flow, as
well as other factors.
As part of the value-oriented approach, the Investment Manager may also
seek to identify companies with growth opportunities that are not fairly
valued in the marketplace. These growth opportunities may include valuable
franchises or other intangibles, ownership of trademarks or trade names,
control of distribution networks, ownership of undervalued real estate, and
other factors that would identify the company as a potential takeover
target or turnaround candidate. In addition, the Investment Manager may
select securities because it believes there is some potential catalyst to
cause a stock's price to rise. A catalyst might include increased investor
attention, asset sales, corporate reorganizations, a cyclical turnaround of
a depressed business or industry, a new product/innovation, significant
changes in management, or regulatory shifts.
In addition, the Fund may invest in common stocks of medium-sized and large
companies, convertible and non-convertible fixed-income and preferred
equity securities, and foreign securities (including depository receipts).
Common stock is a share ownership or equity interest in a corporation. It
may or may not pay dividends, as some companies reinvest all of their
profits back into their businesses, while others pay out some of their
profits to shareholders as dividends. A depository receipt is generally
issued by a bank or financial institution and represents an ownership
interest in the common stock or other equity securities of a foreign
company.
1
<PAGE>
In pursuing the Fund's investment objective, the Investment Manager has
considerable leeway in deciding which investments it buys, holds or sells
on a day-to-day basis -- and which trading strategies it uses. For example,
the Investment Manager in its discretion may determine to use some
permitted trading strategies while not using others.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
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There is no assurance that the Fund will achieve its investment objective.
The Fund's share price will fluctuate with changes in the market value of
the Fund's portfolio securities. When you sell Fund shares, they may be
worth less than what you paid for them and, accordingly, you can lose money
investing in this Fund.
A principal risk of investing in the Fund is associated with its
investments in common stocks. In general, stock values fluctuate in
response to activities specific to the company as well as general market,
economic and political conditions. These prices can fluctuate widely.
Investing in securities of small companies may involve greater risk than is
customarily associated with investing in more established companies. Often,
small companies and the industries in which they are focused are still
evolving, and they are more sensitive to changing market conditions than
larger companies in more established industries. Small companies often have
limited product lines, financial resources and less experienced management.
As a consequence, their securities may be more volatile and have returns
that vary, sometimes significantly, from the overall stock market.
Securities of small companies also may be less liquid than established
companies.
Other Risks. The performance of the Fund also will depend on whether the
Investment Manager is successful in pursuing the Fund's investment
strategy. The Fund is also subject to other risks from its permissible
investments including the risks associated with the common stocks of
medium-sized and large companies, convertible and non-convertible
fixed-income securities, and foreign securities.
Shares of the Fund are not bank deposits and are not guaranteed or insured
by the FDIC or any other government agency.
2
<PAGE>
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------------------
The bar chart and table below provide some indication of the risks of
investing in the Fund. The Fund's past performance does not indicate how
the Fund will perform in the future.
{sidebar}
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Fund's Class B shares has
varied from year to year over the past 2 calendar years.
{end sidebar}
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
'97 '98
26.41% -7.25%
The bar chart reflects the performance of Class B shares; the performance
of the other Classes will differ because the Classes have different ongoing
fees. The performance information in the bar chart does not reflect the
deduction of sales charges; if these amounts were reflected, returns would
be less than shown. Year-to-date total return as of June 30, 1999 was
8.30%.
During the periods shown in the bar chart, the highest return for a
calendar quarter was 13.53% (quarter ended September 30, 1997) and the
lowest return for a calendar quarter was -16.93% (quarter ended September
30, 1998).
{sidebar}
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Fund's average annual returns with those of a broad
measure of market performance over time as well as with an index of funds
with similar investment objectives. The Fund's returns include the maximum
applicable sales charge for each Class and assume you sold your shares at
the end of each period.
{end sidebar}
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
<TABLE>
<CAPTION>
LIFE OF THE FUND
PAST 1 YEAR (SINCE OCTOBER 29, 1996)
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A(1) -11.46% --
- --------------------------------------------------------------------------------
Class B -11.36% 8.10%
- --------------------------------------------------------------------------------
Class C(1) -8.07% --
- --------------------------------------------------------------------------------
Class D(1) -6.39% --
- --------------------------------------------------------------------------------
S&P 500 Index(2) 28.58% 31.76%
- --------------------------------------------------------------------------------
Lipper Small Cap Funds Index(3) -0.85% 7.30%(5)
- --------------------------------------------------------------------------------
Russell 2000 Index(4) -2.55% 11.81%(5)
- --------------------------------------------------------------------------------
</TABLE>
(1) Classes A, C and D commenced operations on July 28, 1997.
(2) The Standard & Poor's (Registered Trademark) 500 Stock Price Index is
a broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The performance of the
Index does not include any expenses, fees or charges. The Index is
unmanaged and should not be considered an investment.
(3) The Lipper Small Cap Funds Index is anequally-weighted performance
index of the largest qualifying funds (based on net assets) in the
small cap funds objective. The index, which is adjusted for capital
gains distributions and income dividends, is unmanaged and should not
be considered an investment. There are currently [30] funds
represented in this index.
(4) The Russell 2000 Index is a capitalization weighted index which is
comprised of 2000 of the smallest stocks (on the basis of
capitalization) in the Russell 3000 Index. The Index does not include
any expenses, fees, or charges. The Index is unmanaged and should not
be considered an investment.
(5) For the period October 31, 1996 to December 31, 1998.
3
<PAGE>
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------------------
The table below briefly describes the fees and expenses that you may pay if
you buy and hold shares of the Fund. The Fund offers four Classes of
shares: Classes A, B, C and D. Each Class has a different combination of
fees, expenses and other features. The Fund does not charge account or
exchange fees. See the "Share Class Arrangements" section for further fee
and expense information.
{sidebar}
SHAREHOLDER FEES
These fees are paid directly from your investment.
{end sidebar}
{sidebar}
ANNUAL FUND OPERATING EXPENSES
These expenses are deducted from the Fund's assets and are based on
expenses paid for the fiscal year ended July 31, 1999.
{end sidebar}
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES
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Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price) 5.25%(1) None None None
- -----------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as
a percentage based on the lesser of the
offering price or net asset value at
redemption) None(2) 5.00%(3) 1.00%(4) None
- -----------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- -----------------------------------------------------------------------------------------
Management fee 0.75% 0.75% 0.75% 0.75%
- -----------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.23% 1.00% 0.89% None
- -----------------------------------------------------------------------------------------
Other expenses 0.24% 0.24% 0.24% 0.24%
- -----------------------------------------------------------------------------------------
Total annual Fund operating expenses 1.22% 1.99% 1.88% 0.99%
- -----------------------------------------------------------------------------------------
</TABLE>
1 Reduced for purchases of $25,000 and over.
2 Investments that are not subject to any salescharge at the time of
purchase are subject to a CDSC of 1.00% that will be imposed if you
sell your shares within one year after purchase, except for certain
specific circumstances.
3 The CDSC is scaled down to 1.00% during the sixth year, reaching zero
thereafter. See "Share Class Arrangements" for a complete discussion of
the CDSC.
4 Only applicable if you sell your shares within one year after purchase.
4
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund, your investment
has a 5% return each year, and the Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, the tables below
show your costs at the end of each period based on these assumptions
depending upon whether or not you sell your shares at the end of each
period.
<TABLE>
<CAPTION>
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES:
- -------------------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------- ----------------------------------------
CLASS A $643 $892 $1,160 $1,925 $643 $892 $1,160 $1,925
- -------------------------------------------------- ----------------------------------------
CLASS B $702 $924 $1,273 $2,317 $202 $624 $1,073 $2,317
- -------------------------------------------------- ----------------------------------------
CLASS C $291 $591 $1,016 $2,201 $191 $591 $1,016 $2,201
- -------------------------------------------------- ----------------------------------------
CLASS D $101 $315 $547 $1,213 $101 $315 $547 $1,213
- -------------------------------------------------- ----------------------------------------
</TABLE>
Long-term shareholders of Class B and Class C may pay more in sales
charges, including distribution fees, than the economic equivalent of the
maximum front-end sales charges permitted by the National Association of
Securities Dealers.
[GRAPHIC OMITTED]
ADDITIONAL INVESTMENT STRATEGY INFORMATION
- ---------------------------------------------------------
This section provides additional information relating to the Fund's
principal strategies.
Other Common Stocks and Fixed-Income Securities. The Fund may invest up to
35% of its total assets in common stocks of medium-sized and large
companies, convertible securities, and fixed-income securities. The
fixed-income securities in which the Fund may invest include U.S.
government securities and corporate debt securities.
Junk Bonds. The Fund may invest up to 20% of its assets in convertible
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 assets in fixed-income securities rated below
investment grade or, if unrated, of comparable quality as determined by the
Investment Manager. Securities below investment grade are commonly known as
"junk bonds."
Foreign Securities. The Fund may invest in foreign securities (including
depository receipts) that are listed in the U.S. on a national securities
exchange.
Defensive Investing. The Fund may take temporary "defensive" positions in
attempting to respond to adverse market conditions. The Fund may invest any
amount of its assets in cash or money market instruments in a defensive
posture when the Investment
5
<PAGE>
Manager believes it is advisable to do so. Although taking a defensive
posture is designed to protect the Fund from an anticipated market
downturn, it could have the effect of reducing the benefit from any upswing
in the market. When the Fund takes a defensive position, it may not achieve
its investment objective.
PORTFOLIO TURNOVER. The Fund may engage in active and frequent trading of
portfolio securities to achieve its principal investment strategies. The
portfolio turnover rate is not expected to exceed 150% annually under
normal circumstances. A high turnover rate, such as 150%, will increase
Fund brokerage costs. It also may increase the Fund's capital gains, which
are passed along to Fund shareholders as distributions. This, in turn may
increase your tax liability as a Fund shareholder. See the sections on
"Distributions" and "Tax Consequences."
The percentage limitations relating to the composition of the Fund's
portfolio apply at the time the Fund acquires an investment and refer to
the Fund's net assets unless otherwise noted. Subsequent percentage changes
that result from market fluctuations will not require the Fund to sell any
portfolio security. The Fund may change its principal investment strategies
without shareholder approval; however, you would be notified of any
changes.
[GRAPHIC OMITTED]
ADDITIONAL RISK INFORMATION
- ----------------------------------------
This section provides additional information relating to the principal
risks of investing in the Fund.
Fixed-Income Securities. Principal risks of investing in the Fund are also
associated with its fixed-income securities. All fixed-income securities
are subject to two types of risk: credit risk and interest rate risk.
Credit risk refers to the possibility that the issuer of a security will be
unable to make interest payments and/or repay the principal on its debt.
While the Fund invests in investment grade securities, certain of these
securities have speculative characteristics.
Interest rate risk refers to fluctuations in the value of a fixed-income
security resulting from changes in the general level of interest rates.
When the general level of interest rates goes up, the prices of most
fixed-income securities go down. When the general level of interest rates
goes down, the prices of most fixed-income securities go up.
Convertible Securities. The Fund's investments in convertible securities
subject the Fund to the risks associated with both fixed-income securities
and common stocks. To the extent that a convertible security's investment
value is greater than its conversion value, its price will likely increase
when interest rates fall and decrease when interest rates rise, as with a
fixed-income security. If the conversion value exceeds the
6
<PAGE>
investment value, the price of the convertible security will tend to
fluctuate directly with the price of the underlying equity security.
Junk Bonds. Any "junk bond" investments of the Fund pose significant risks.
The prices of these securities are likely to be more sensitive to adverse
economic changes or individual corporate developments than higher rated
securites. During an economic downturn or substantial period of rising
interest rates, junk bond issuers and, in particular, highly leveraged
issuers may experience financial stress that would adversely affect their
ability to service their principal and interest payment obligations, to
meet their projected business goals or to obtain additional financing. In
the event of a default, the Fund may incur additional expenses to seek
recovery. In addition, periods of economic uncertainty and change probably
would result in an increased volatility of market prices of junk bond
securities and a corresponding volatility in the Fund's net asset value.
Foreign Securities. The Fund's investments in foreign securities (including
depository receipts) involve risks that are in addition to the risks
associated with domestic securities. One additional risk is currency risk.
While the price of Fund shares is quoted in U.S. dollars, the Fund
generally converts U.S. dollars to a foreign market's local currency to
purchase a security in that market. If the value of that local currency
falls relative to the U.S. dollar, the U.S. dollar value of the foreign
security will decrease. This is true even if the foreign security's local
price remains unchanged.
Foreign securities also have risks related to economic and political
developments abroad, including expropriations, confiscatory taxation,
exchange control regulation, limitations on the use or transfer of Fund
assets and any effects of foreign social, economic or political
instability. Foreign companies, in general, are not subject to the
regulatory requirements of U.S. companies and, as such, there may be less
publicly available information about these companies. Moreover, foreign
accounting, auditing and financial reporting standards generally are
different from those applicable to U.S. companies. Finally, in the event of
a default of any foreign debt obligations, it may be more difficult for the
Fund to obtain or enforce a judgment against the issuers of the securities.
Year 2000. The Fund could be adversely affected if the computer systems
necessary for the efficient operation of the Investment Manager, the Fund's
other service providers and the markets and corporate and governmental
issuers in which the Fund invests do not properly process and calculate
date-related information from and after January 1, 2000. While year
2000-related computer problems could have a negative effect on the Fund,
the Investment Manager and its affiliates are working hard to avoid any
problems and to obtain assurances from their service providers that they
are taking similar steps.
In addition, it is possible that the markets for securities in which the
Fund invests may be detrimentally affected by computer failures throughout
the financial services
7
<PAGE>
industry beginning January 1, 2000. Improperly functioning trading systems
may result in settlement problems and liquidity issues. Corporate and
governmental data processing errors also may result in production problems
for individual companies and overall economic uncertainties. Earnings of
individual issuers will be affected by remediation costs, which may be
substantial and may be reported inconsistently in U.S. and foreign
financial statements. Accordingly, the Fund's investments may be adversely
affected.
[GRAPHIC OMITTED]
FUND MANAGEMENT
- ----------------------------
{sidebar}
MORGAN STANLEY DEAN WITTER ADVISORS INC.
The Investment Manager is widely recognized as a leader in the mutual fund
industry and together with Morgan Stanley Dean Witter Services Company
Inc., its wholly-owned subsidiary, has more than $136 billion in assets
under management or administration as of August 31, 1999.
{end sidebar}
The Fund has retained the Investment Manager -- Morgan Stanley Dean Witter
Advisors Inc. -- to provide administrative services, manage its business
affairs and invest its assets, including the placing of orders for the
purchase and sale of portfolio securities. The Investment Manager is a
wholly-owned subsidiary of Morgan Stanley Dean Witter & Co., a preeminent
global financial services firm that maintains leading market positions in
each of its three primary businesses: securities, asset management and
credit services. Its main business office is located at Two World Trade
Center, New York, NY 10048.
The Fund's portfolio is managed within the Investment Manager's Growth
Group. Jenny Beth Jones, Senior Vice President of the Investment Manager,
has been the Fund's primary portfolio manager since its inception in
October, 1996; she has been assisted by John S. Roscoe, Vice President of
the Investment Manager, since April, 1998. Prior to joining the Investment
Manager in August, 1996, Ms. Jones was a portfolio manager with Oppenheimer
Capital. Prior to joining the Investment Manager in December, 1997, Mr.
Roscoe was an equity analyst with Rockefeller & Co., Inc.
The Fund pays the Investment Manager a monthly management fee as full
compensation for the services and facilities furnished to the Fund, and for
Fund expenses assumed by the Investment Manager. The fee is based on the
Fund's average daily net assets. For the fiscal year ended July 31, 1999
the Fund accrued total compensation to the Investment Manager amounting to
0.75% of the Fund's average daily net assets. Effective May 1, 1999, the
Trustees of the Fund have reduced the compensation received by the
Investment Manager for assets exceeding $500 million, so that the
compensation is calculated daily at the rate of 0.75% of the portion of
daily net assets not exceeding $500 million and 0.725% of the portion of
daily net assets exceeding $500 million.
8
<PAGE>
SHAREHOLDER INFORMATION
[GRAPHIC OMITTED]
PRICING FUND SHARES
- -------------------------------
The price of Fund shares (excluding sales charges), called "net asset
value," is based on the value of the Fund's portfolio securities. While the
assets of each Class are invested in a single portfolio of securities, the
net asset value of each Class will differ because the Classes have
different ongoing distribution fees.
The net asset value per share of the Fund is determined once daily at 4:00
p.m. Eastern time, on each day that the New York Stock Exchange is open
(or, on days when the New York Stock Exchange closes prior to 4:00 p.m., at
such earlier time). Shares will not be priced on days that the New York
Stock Exchange is closed.
The value of the Fund's portfolio securities is based on the securities'
market price when available. When a market price is not readily available,
including circumstances under which the Investment Manager determines that
a security's market price is not accurate, a portfolio security is valued
at its fair value, as determined under procedures established by the Fund's
Board of Trustees. In these cases, the Fund's net asset value will reflect
certain portfolio securities' fair value rather than their market price.
An exception to the Fund's general policy of using market prices concerns
its short-term debt portfolio securities. Debt securities with remaining
maturities of sixty days or less at the time of purchase are valued at
amortized cost. However, if the cost does not reflect the securities'
market value, these securities will be valued at their fair value.
[GRAPHIC OMITTED]
HOW TO BUY SHARES
- ------------------------------
You may open a new account to buy Fund shares or buy additional Fund
shares for an existing account by contacting your Morgan Stanley Dean
Witter Financial Advisor or other authorized financial representative.
Your Financial Advisor will assist you, step-by-step, with the procedures
to invest in the Fund. You may also purchase shares directly by calling
the Fund's transfer agent and requesting an application.
{sidebar}
CONTACTING A FINANCIAL ADVISOR
If you are new to the Morgan Stanley Dean Witter Family of Funds and would
like to contact a Financial Advisor, call (800) THE-DEAN for the telephone
number of the Morgan Stanley Dean Witter office nearest you. You may also
access our office locator on our Internet site at:
www.msdw.com/individual/funds
{end sidebar}
Because every investor has different immediate financial needs and
long-term investment goals, the Fund offers investors four Classes of
shares: Classes A, B, C and D. Class D shares are only offered to a limited
group of investors. Each Class of shares offers a distinct structure of
sales charges, distribution and service fees, and other features that are
designed to address a variety of needs. Your Financial Advisor or other
authorized financial representative can help you decide which Class may be
most appropriate for you. When purchasing Fund shares, you must specify
which Class of shares you wish to purchase.
9
<PAGE>
When you buy Fund shares, the shares are purchased at the next share price
calculated (less any applicable front-end sales charge for Class A shares)
after we receive your purchase order. Your payment is due on the third
business day after you place your purchase order. We reserve the right to
reject any order for the purchase of Fund Shares.
{sidebar}
EASYINVEST(SM)
A purchase plan that allows you to transfer money automatically from your
checking or savings account or from a Money Market Fund on a semi-monthly,
monthly or quarterly basis. Contact your Morgan Stanley Dean Witter
Financial Advisor for further information about this service.
{end sidebar}
<TABLE>
<CAPTION>
MINIMUM INVESTMENT AMOUNTS
- -------------------------------------------------------------------------------------------------
MINIMUM INVESTMENT
----------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Regular Accounts $5,000 $100
- -------------------------------------------------------------------------------------------------
Individual Retirement Accounts: Regular IRAs $5,000 $100
Education IRAs $500 $100
- -------------------------------------------------------------------------------------------------
EasyInvest(SM)
(Automatically from your checking or savings account
or Money Market Fund) $500* $500*
- -------------------------------------------------------------------------------------------------
</TABLE>
* Provided your schedule of investments totals $5,000 in twelve months.
There is no minimum investment amount if you purchase Fund shares through:
(1) the Investment Manager's mutual fund asset allocation plan, (2) a
program, approved by the Fund's distributor, in which you pay an
asset-based fee for advisory, administrative and/or brokerage services, or
(3) employer-sponsored employee benefit plan accounts.
Investment Options for Certain Institutional and Other Investors/Class D
Shares. To be eligible to purchase Class D shares, you must qualify under
one of the investor categories specified in the "Share Class Arrangements"
section of this Prospectus.
Subsequent Investments Sent Directly to the Fund. In addition to buying
additional Fund shares for an existing account by contacting your Morgan
Stanley Dean Witter Financial Advisor, you may send a check directly to the
Fund. To buy additional shares in this manner:
o Write a "letter of instruction" to the Fund specifying the name(s) on
the account, the account number, the social security or tax
identification number, the Class of shares you wish to purchase and the
investment amount (which would include any applicable front-end sales
charge). The letter must be signed by the account owner(s).
o Make out a check for the total amount payable to: Morgan Stanley Dean
Witter Special Value Fund.
o Mail the letter and check to Morgan Stanley Dean Witter Trust FSB at
P.O. Box 1040, Jersey City, NJ 07303.
10
<PAGE>
[GRAPHIC OMITTED]
HOW TO EXCHANGE SHARES
- ------------------------------------
Permissible Fund Exchanges. You may exchange shares of any Class of the
Fund for the same Class of any other continuously offered Multi-Class Fund,
or for shares of a No-Load Fund, a Money Market Fund, North American
Government Income Trust or Short-Term U.S. Treasury Trust, without the
imposition of an exchange fee. See the inside back cover of this Prospectus
for each Morgan Stanley Dean Witter Fund's designation as a Multi-Class
Fund, No-Load Fund or Money Market Fund. If a Morgan Stanley Dean Witter
Fund is not listed, consult the inside back cover of that fund's Prospectus
for its designation. For purposes of exchanges, shares of FSC Funds
(subject to a front-end sales charge) are treated as Class A shares of a
Multi-Class Fund.
Exchanges may be made after shares of the Fund acquired by purchase have
been held for thirty days. There is no waiting period for exchanges of
shares acquired by exchange or dividend reinvestment. The current
Prospectus for each Fund describes its investment objective(s), policies
and investment minimums, and should be read before investment. Since
exchanges are available only into continuously offered Morgan Stanley Dean
Witter Funds, exchanges are not available into any new Morgan Stanley Dean
Witter Fund during its initial offering period, or when shares of a Morgan
Stanley Dean Witter Fund are not being offered for purchase.
Exchange Procedures. You can process an exchange by contacting your Morgan
Stanley Dean Witter Financial Advisor or other authorized financial
representative. Otherwise, you must forward an exchange privilege
authorization form to the Fund's transfer agent -- Morgan Stanley Dean
Witter Trust FSB -- and then write the transfer agent or call (800)
869-NEWS to place an exchange order. You can obtain an exchange privilege
authorization form by contacting your Financial Advisor or other authorized
financial representative or by calling (800) 869-NEWS. If you hold share
certificates, no exchanges may be processed until we have received all
applicable share certificates.
An exchange to any Morgan Stanley Dean Witter Fund (except a Money Market
Fund) is made on the basis of the next calculated net asset values of the
Funds involved after the exchange instructions are accepted. When
exchanging into a Money Market Fund, the Fund's shares are sold at their
next calculated net asset value and the Money Market Fund's shares are
purchased at their net asset value on the following business day.
The Fund may terminate or revise the exchange privilege upon required
notice. The check writing privilege is not available for Money Market Fund
shares you acquire in an exchange.
Telephone Exchanges. For your protection when calling Morgan Stanley Dean
Witter Trust FSB, we will employ reasonable procedures to confirm that
exchange instructions communicated over the telephone are genuine. These
procedures may include
11
<PAGE>
requiring various forms of personal identification such as name, mailing
address, social security or other tax identification number. Telephone
instructions also may be recorded.
Telephone instructions will be accepted if received by the Fund's transfer
agent between 9:00 a.m. and 4:00 p.m. Eastern time, on any day the New York
Stock Exchange is open for business. During periods of drastic economic or
market changes, it is possible that the telephone exchange procedures may
be difficult to implement, although this has not been the case with the
Fund in the past.
Margin Accounts. If you have pledged your Fund shares in a margin account,
contact your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative regarding restrictions on the exchange
of such shares.
Tax Considerations of Exchanges. If you exchange shares of the Fund for
shares of another Morgan Stanley Dean Witter Fund there are important tax
considerations. For tax purposes, the exchange out of the Fund is
considered a sale of Fund shares -- and the exchange into the other Fund is
considered a purchase. As a result, you may realize a capital gain or loss.
You should review the "Tax Consequences" section and consult your own tax
professional about the tax consequences of an exchange.
Frequent Exchanges. A pattern of frequent exchanges may result in the Fund
limiting or prohibiting, at its discretion, additional purchases and/or
exchanges. The Fund will notify you in advance of limiting your exchange
privileges.
CDSC Calculations on Exchanges. See the "Share Class Arrangements" section
of this Prospectus for a further discussion of how applicable contingent
deferred sales charges (CDSCs) are calculated for shares of one Morgan
Stanley Dean Witter Fund that are exchanged for shares of another.
For further information regarding exchange privileges, you should contact
your Morgan Stanley Dean Witter Financial Advisor or call (800) 869-NEWS.
12
<PAGE>
[GRAPHIC OMITTED]
HOW TO SELL SHARES
- -------------------------------
You can sell some or all of your Fund shares at any time. If you sell Class
A, Class B or Class C shares, your net sale proceeds are reduced by the
amount of any applicable CDSC. Your shares will be sold at the next price
calculated after we receive your order to sell as described below.
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Contact Your To sell your shares, simply call your Morgan Stanley Dean Witter Financial Advisor or
Financial Advisor other authorized financial representative.
[GRAPHIC OMITTED] -------------------------------------------------------------------------------------------
Payment will be sent to the address to which the account is registered or deposited in
your brokerage account.
- ------------------------------------------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of instruction" that includes:
[GRAPHIC OMITTED] o your account number;
o the dollar amount or the number of shares you wish to sell;
o the Class of shares you wish to sell; and
o the signature of each owner as it appears on the account.
--------------------------------------------------------------------------------------------
If you are requesting payment to anyone other than the registered owner(s) or that
payment be sent to any address other than the address of the registered owner(s) or
pre-designated bank account, you will need a signature guarantee. You can obtain a
signature guarantee from an eligible guarantor acceptable to Morgan Stanley Dean
Witter Trust FSB. (You should contact Morgan Stanley Dean Witter Trust FSB at (800)
869-NEWS for a determination as to whether a particular institution is an eligible
guarantor.) A notary public cannot provide a signature guarantee. Additional
documentation may be required for shares held by a corporation, partnership, trustee
or executor.
--------------------------------------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at P.O. Box 983, Jersey City, NJ
07303. If you hold share certificates, you must return the
certificates, along with the letter and any required
additional documentation.
--------------------------------------------------------------------------------------------
A check will be mailed to the name(s) and address in which the account is registered,
or otherwise according to your instructions.
- -----------------------------------------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter Family of Funds has a total
Withdrawal Plan market value of at least $10,000, you may elect to withdraw amounts of $25 or more,
[GRAPHIC OMITTED] or in any whole percentage of a Fund's balance (provided the amount is at least $25), on
a monthly, quarterly, semi-annual or annual basis, from any Fund with balance of at least
$1,000. Each time you add a Fund to the plan, you must meet the plan requirements.
--------------------------------------------------------------------------------------------
Amounts withdrawn are subject to any applicable CDSC. A CDSC may be waived under
certain circumstances. See the Class B waiver categories listed in the "Share Class
Arrangements" section of this Prospectus.
--------------------------------------------------------------------------------------------
To sign up for the Systematic Withdrawal Plan, contact your Morgan Stanley Dean
Witter Financial Advisor or call (800) 869-NEWS. You may terminate or suspend your
plan at any time. Please remember that withdrawals from the plan are sales of shares,
not Fund "distributions," and ultimately may exhaust your account balance. The Fund
may terminate or revise the plan at any time.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Payment for Sold Shares. After we receive your complete instructions to
sell as described above, a check will be mailed to you within seven days,
although we will attempt to make payment within one business day. Payment
may also be sent to your brokerage account.
Payment may be postponed or the right to sell your shares suspended under
unusual circumstances. If you request to sell shares that were recently
purchased by check, payment of the sale proceeds may be delayed for the
minimum time needed to verify that the check has been honored (not more
than fifteen days from the time we receive the check).
Tax Considerations. Normally, your sale of Fund shares is subject to
federal and state income tax. You should review the "Tax Consequences"
section of this Prospectus and consult your own tax professional about the
tax consequences of a sale.
Reinstatement Privilege. If you sell Fund shares and have not previously
exercised the reinstatement privilege, you may, within 35 days after the
date of sale, invest any portion of the proceeds in the same Class of Fund
shares at their net asset value and receive a pro rata credit for any CDSC
paid in connection with the sale.
Involuntary Sales. The Fund reserves the right, on sixty days' notice, to
sell the shares of any shareholder (other than shares held in an IRA or
403(b) Custodial Account) whose shares, due to sales by the shareholder,
have a value below $100, or in the case of an account opened through
EasyInvestSM, if after 12 months the shareholder has invested less than
$1,000 in the account.
However, before the Fund sells your shares in this manner, we will notify
you and allow you sixty days to make an additional investment in an amount
that will increase the value of your account to at least the required
amount before the sale is processed. No CDSC will be imposed on any
involuntary sale.
Margin Accounts. If you have pledged your Fund shares in a margin account,
contact your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative regarding restrictions on the sale of
such securities.
14
<PAGE>
[GRAPHIC OMITTED]
DISTRIBUTIONS
- ------------------------
{sidebar}
TARGETED DIVIDENDS(SM)
You may select to have your Fund distributions automatically invested in
other Classes of Fund shares or Classes of another Morgan Stanley Dean
Witter Fund that you own. Contact your Morgan Stanley Dean Witter Financial
Advisor for further information about this service.
{end sidebar}
The Fund passes substantially all of its earnings from income and capital
gains along to its investors as "distributions." The Fund earns income from
stocks and interest from fixed-income investments. These amounts are passed
along to Fund shareholders as "income dividend distributions." The Fund
realizes capital gains whenever it sells securities for a higher price than
it paid for them. These amounts may be passed along as "capital gain
distributions."
The Fund declares income dividends separately for each Class. Distributions
paid on Class A and Class D shares usually will be higher than for Class B
and Class C because distribution fees that Class B and Class C pay are
higher. Normally, income dividends are distributed to shareholders
annually. Capital gains, if any, are distributed in December. The Fund,
however, may retain and reinvest any long-term capital gains. The Fund may
at times make payments from sources other than income or capital gains that
represent a return of a portion of your investment.
Distributions are reinvested automatically in additional shares of the same
Class and automatically credited to your account, unless you request in
writing that all distributions be paid in cash. If you elect the cash
option, the Fund will mail a check to you no later than seven business days
after the distribution is declared. No interest will accrue on uncashed
checks. If you wish to change how your distributions are paid, your request
should be received by the Fund's transfer agent, Morgan Stanley Dean Witter
Trust FSB, at least five business days prior to the record date of the
distributions.
[GRAPHIC OMITTED]
TAX CONSEQUENCES
- ----------------------------
As with any investment, you should consider how your Fund investment will
be taxed. The tax information in this Prospectus is provided as general
information. You should consult your own tax professional about the tax
consequences of an investment in the Fund.
Unless your investment in the Fund is through a tax-deferred retirement
account, such as a 401(k) plan or IRA, you need to be aware of the possible
tax consequences when:
o The Fund makes distributions; and
o You sell Fund shares, including an exchange to another Morgan Stanley
Dean Witter Fund.
15
<PAGE>
Taxes on Distributions. Your distributions are normally subject to federal
and state income tax when they are paid, whether you take them in cash or
reinvest them in Fund shares. A distribution also may be subject to local
income tax. Any income dividend distributions and any short-term capital
gain distributions are taxable to you as ordinary income. Any long-term
capital gain distributions are taxable as long-term capital gains, no
matter how long you have owned shares in the Fund.
Every January, you will be sent a statement (IRS Form 1099-DIV) showing the
taxable distributions paid to you in the previous year. The statement
provides full information on your dividends and capital gains for tax
purposes.
Taxes on Sales. Your sale of Fund shares normally is subject to federal and
state income tax and may result in a taxable gain or loss to you. A sale
also may be subject to local income tax. Your exchange of Fund shares for
shares of another Morgan Stanley Dean Witter Fund is treated for tax
purposes like a sale of your original shares and a purchase of your new
shares. Thus, the exchange may, like a sale, result in a taxable gain or
loss to you and will give you a new tax basis for your new shares.
When you open your Fund account, you should provide your social security or
tax identification number on your investment application. By providing this
information, you will avoid being subject to a federal backup withholding
tax of 31% on taxable distributions and redemption proceeds. Any withheld
amount would be sent to the IRS as an advance tax payment.
[GRAPHIC OMITTED]
SHARE CLASS ARRANGEMENTS
- --------------------------------------
The Fund offers several Classes of shares having different distribution
arrangements designed to provide you with different purchase options
according to your investment needs. Your Morgan Stanley Dean Witter
Financial Advisor or other authorized financial representative can help you
decide which Class may be appropriate for you.
The general public is offered three Classes: Class A shares, Class B shares
and Class C shares, which differ principally in terms of sales charges and
ongoing expenses. A fourth Class, Class D shares, is offered only to a
limited category of investors. Shares that you acquire through reinvested
distributions will not be subject to any front-end sales charge or CDSC --
contingent deferred sales charge. Sales personnel may receive different
compensation for selling each Class of shares. The sales charges applicable
to each Class provide for the distribution financing of shares of that
Class.
16
<PAGE>
The chart below compares the sales charge and maximum annual 12b-1 fee
applicable to each Class:
<TABLE>
<CAPTION>
MAXIMUM
CLASS SALES CHARGE ANNUAL 12B-1 FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A Maximum 5.25% initial sales charge reduced for purchase of $25,000 or
more; shares sold without an initial sales charge are generally
subject to a 1.0% CDSC during the first year 0.25%
- ------------------------------------------------------------------------------------------------------------
B Maximum 5.0% CDSC during the first year decreasing to 0% after six years 1.0%
- ------------------------------------------------------------------------------------------------------------
C 1.0% CDSC during the first year 1.0%
- ------------------------------------------------------------------------------------------------------------
D None None
- ------------------------------------------------------------------------------------------------------------
</TABLE>
CLASS A SHARES Class A shares are sold at net asset value plus an initial
sales charge of up to 5.25%. The initial sales charge is reduced for
purchases of $25,000 or more according to the schedule below. Investments
of $1 million or more are not subject to an initial sales charge, but are
generally subject to a contingent deferred sales charge, or CDSC, of 1.0%
on sales made within one year after the last day of the month of purchase.
The CDSC will be assessed in the same manner and with the same CDSC waivers
as with Class B shares. Class A shares are also subject to a distribution
(12b-1) fee of up to 0.25% of the average daily net assets of the Class.
The offering price of Class A shares includes a sales charge (expressed as
a percentage of the offering price) on a single transaction as shown in the
following table:
{sidebar}
FRONT-END SALES CHARGE OR FSC An initial sales charge you pay when
purchasing Class A shares that is based on a percentage of the offering
price. The percentage declines based upon the dollar value of Class A
shares you purchase. We offer three ways to reduce your Class A sales
charges -- the Combined Purchase Privilege, Right of Accumulation and
Letter of Intent.
{end sidebar}
<TABLE>
<CAPTION>
FRONT-END SALES CHARGE
----------------------
PERCENTAGE OF PUBLIC APPROXIMATE PERCENTAGE OF
AMOUNT OF SINGLE TRANSACTION OFFERING PRICE NET AMOUNT INVESTED
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Less than $25,000 5.25% 5.54%
- ---------------------------------------------------------------------------------------
$25,000 but less than $50,000 4.75% 4.99%
- ---------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.00% 4.17%
- ---------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.00% 3.09%
- ---------------------------------------------------------------------------------------
$250,000 but less than $1 million 2.00% 2.04%
- ---------------------------------------------------------------------------------------
$1 million and over 0 0
- ---------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
The reduced sales charge schedule is applicable to purchases of Class
A shares in a single transaction by:
o A single account (including an individual, trust or fiduciary account).
o Family member accounts (limited to husband, wife and children under the
age of 21).
o Pension, profit sharing or other employee benefit plans of companies
and their affiliates.
o Tax-exempt organizations.
o Groups organized for a purpose other than to buy mutual fund shares.
Combined Purchase Privilege. You also will have the benefit of reduced
sales charges by combining purchases of Class A shares of the Fund in a
single transaction with purchases of Class A shares of other Multi-Class
Funds and shares of FSC Funds.
Right of Accumulation. You also may benefit from a reduction of sales
charges if the cumulative net asset value of Class A shares of the Fund
purchased in a single transaction, together with shares of other Funds you
currently own which were previously purchased at a price including a
front-end sales charge (including shares acquired through reinvestment of
distributions), amounts to $25,000 or more. Also, if you have a cumulative
net asset value of all your Class A and Class D shares equal to at least $5
million (or $25 million for certain employee benefit plans), you are
eligible to purchase Class D shares of any Fund subject to the Fund's
minimum initial investment requirement.
You must notify your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative (or Morgan Stanley Dean Witter Trust
FSB if you purchase directly through the Fund), at the time a purchase
order is placed, that the purchase qualifies for the reduced charge under
the Right of Accumulation. Similar notification must be made in writing
when an order is placed by mail. The reduced sales charge will not be
granted if: (i) notification is not furnished at the time of the order; or
(ii) a review of the records of Dean Witter Reynolds or other authorized
dealer of Fund shares or the Fund's transfer agent does not confirm your
represented holdings.
Letter of Intent. The schedule of reduced sales charges for larger
purchases also will be available to you if you enter into a written "letter
of intent." A letter of intent provides for the purchase of Class A shares
of the Fund or other Multi-Class Funds or shares of FSC Funds within a
thirteen-month period. The initial purchase under a letter of intent must
be at least 5% of the stated investment goal. To determine the applicable
sales charge reduction, you may also include: (1) the cost of shares of
other Morgan Stanley Dean Witter Funds which were previously purchased at a
price including a front-end sales charge during the 90-day period prior to
the distributor receiving the letter of intent, and (2) the cost of shares
of other Funds you currently own acquired in
18
<PAGE>
exchange for shares of Funds purchased during that period at a price
including a front-end sales charge. You can obtain a letter of intent by
contacting your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative, or by calling (800) 869-NEWS. If you
do not achieve the stated investment goal within the thirteen-month period,
you are required to pay the difference between the sales charges otherwise
applicable and sales charges actually paid, which may be deducted from your
investment.
Other Sales Charge Waivers. In addition to investments of $1 million or
more, your purchase of Class A shares is not subject to a front-end sales
charge (or a CDSC upon sale) if your account qualifies under one of the
following categories:
o A trust for which Morgan Stanley Dean Witter Trust FSB provides
discretionary trustee services.
o Persons participating in a fee-based investment program (subject to all
of its terms and conditions, including mandatory sale or transfer
restrictions on termination) approved by the Fund's distributor
pursuant to which they pay an asset-based fee for investment advisory,
administrative and/or brokerage services.
o Employer-sponsored employee benefit plans, whether or not qualified
under the Internal Revenue Code, for which Morgan Stanley Dean Witter
Trust FSB serves as trustee or Dean Witter Reynolds' Retirement Plan
Services serves as recordkeeper under a written Recordkeeping Services
Agreement ("MSDW Eligible Plans") which have at least 200 eligible
employees.
o An MSDW Eligible Plan whose Class B shares have converted to Class A
shares, regardless of the plan's asset size or number of eligible
employees.
o A client of a Morgan Stanley Dean Witter Financial Advisor who joined
us from another investment firm within six months prior to the date of
purchase of Fund shares, and you used the proceeds from the sale of
shares of a proprietary mutual fund of that Financial Advisor's
previous firm that imposed either a front-end or deferred sales charge
to purchase Class A shares, provided that: (1) you sold the shares not
more than 60 days prior to the purchase of Fund shares, and (2) the
sale proceeds were maintained in the interim in cash or a money market
fund.
o Current or retired Directors/Trustees of the Morgan Stanley Dean Witter
Funds, such persons' spouses and children under the age of 21, and
trust accounts for which any of such persons is a beneficiary.
o Current or retired directors, officers and employees of Morgan Stanley
Dean Witter & Co. and any of its subsidiaries, such persons' spouses
and children under the age of 21, and trust accounts for which any of
such persons is a beneficiary.
19
<PAGE>
Class B SHARES Class B shares are offered at net asset value with no
initial sales CLASS B charge but are subject to a contingent deferred sales
charge, or CDSC, as set forth in the table below. For the purpose of
calculating the CDSC, shares are deemed to have been purchased on the last
day of the month during which they were purchased.
{sidebar}
CONTINGENT DEFERRED SALES CHARGE OR CDSC
A fee you pay when you sell shares of certain Morgan Stanley Dean Witter
Funds purchased without an initial sales charge. This fee declines the
longer you hold your shares as set forth in the table.
{end sidebar}
CDSC AS A PERCENTAGE
YEAR SINCE PURCHASE PAYMENT MADE OF AMOUNT REDEEMED
- ----------------------------------------------------------
First 5.0%
- ----------------------------------------------------------
Second 4.0%
- ----------------------------------------------------------
Third 3.0%
- ----------------------------------------------------------
Fourth 2.0%
- ----------------------------------------------------------
Fifth 2.0%
- ----------------------------------------------------------
Sixth 1.0%
- ----------------------------------------------------------
Seventh and thereafter None
- ----------------------------------------------------------
Each time you place an order to sell or exchange shares, shares with no
CDSC will be sold or exchanged first, then shares with the lowest CDSC will
be sold or exchanged next. For any shares subject to a CDSC, the CDSC will
be assessed on an amount equal to the lesser of the current market value or
the cost of the shares being sold.
CDSC Waivers. A CDSC, if otherwise applicable, will be waived in the case
of:
o Sales of shares held at the time you die or become disabled (within the
definition in Section 72(m)(7) of the Internal Revenue Code which
relates to the ability to engage in gainful employment), if the shares
are: (i) registered either in your name (not a trust) or in the names
of you and your spouse as joint tenants with right of survivorship; or
(ii) held in a qualified corporate or self-employed retirement plan,
IRA or 403(b) Custodial Account, provided in either case that the sale
is requested within one year of your death or initial determination of
disability.
o Sales in connection with the following retirement plan "distributions":
(i) lump-sum or other distributions from a qualified corporate or
self-employed retirement plan following retirement (or, in the case of
a "key employee" of a "top heavy" plan, following attainment of age
59 1/2); (ii) distributions from an IRA or 403(b) Custodial Account
following attainment of age 59 1/2; or (iii) a tax-free return of an
excess IRA contribution (a "distribution" does not include a direct
transfer of IRA, 403(b) Custodial Account or retirement plan assets to
a successor custodian or trustee).
o Sales of shares held for you as a participant in an MSDW Eligible Plan.
o Sales of shares in connection with the Systematic Withdrawal Plan of up
to 12% annually of the value of each Fund from which plan sales are
made. The percentage is determined on the date you establish the
Systematic Withdrawal Plan and based on the next calculated share
price. You may have this CDSC waiver applied in amounts up to 1% per
month, 3% per quarter, 6% semi-annually or 12% annually. Shares with
20
<PAGE>
no CDSC will be sold first, followed by those with the lowest CDSC.
As such, the waiver benefit will be reduced by the amount of your
shares that are not subject to a CDSC. If you suspend your
participation in the plan, you may later resume plan payments without
requiring a new determination of the account value for the 12% CDSC
waiver.
o Sales of shares that (i) certain unit investment trusts
purchased (on which a sales charge has been paid) or (ii) are
attributable to reinvested distributions from, or the proceeds
of, certain unit investment trusts.
All waivers will be granted only following the Fund's distributor
receiving confirmation of your entitlement. If you believe you are
eligible for a CDSC waiver, please contact your Financial Advisor or call
(800) 869-NEWS.
Distribution Fee. Class B shares are subject to an annual distribution
(12b-1) fee of 1.0% of the average daily net assets of Class B.
Conversion Feature. After ten (10) years, Class B shares will convert
automatically to Class A shares of the Fund with no initial sales charge.
The ten year period runs from the last day of the month in which the
shares were purchased, or in the case of Class B shares acquired through
an exchange, from the last day of the month in which the original Class B
shares were purchased; the shares will convert to Class A shares based on
their relative net asset values in the month following the ten year
period. At the same time, an equal proportion of Class B shares acquired
through automatically reinvested distributions will convert to Class A
shares on the same basis. (Class B shares held before May 1, 1997,
however, will convert to Class A shares in May 2007.)
In the case of Class B shares held in an MSDW Eligible Plan, the plan is
treated as a single investor and all Class B shares will convert to Class
A shares on the conversion date of the Class B shares of a Morgan Stanley
Dean Witter Fund purchased by that plan.
Currently, the Class B share conversion is not a taxable event; the
conversion feature may be cancelled if it is deemed a taxable event in the
future by the Internal Revenue Service.
If you exchange your Class B shares for shares of a Money Market Fund, a
No-Load Fund, North American Government Income Trust or Short-Term U.S.
Treasury Trust, the holding period for conversion is frozen as of the last
day of the month of the exchange and resumes on the last day of the month
you exchange back into Class B shares.
Exchanging Shares Subject to a CDSC. There are special considerations when
you exchange Fund shares that are subject to a CDSC. When determining the
length of time you held the shares and the corresponding CDSC rate, any
period (starting at the end of
21
<PAGE>
the month) during which you held shares of a fund that does not charge a
CDSC will not be counted. Thus, in effect the "holding period" for
purposes of calculating the CDSC is frozen upon exchanging into a fund
that does not charge a CDSC.
For example, if you held Class B shares of the Fund in a regular account
for one year, exchanged to Class B of another Morgan Stanley Dean Witter
Multi-Class Fund for another year, then sold your shares, a CDSC rate of
4% would be imposed on the shares based on a two year holding period --
one year for each Fund. However, if you had exchanged the shares of the
Fund for a Money Market Fund (which does not charge a CDSC) instead of the
Multi-Class Fund, then sold your shares, a CDSC rate of 5% would be
imposed on the shares based on a one year holding period. The one year in
the Money Market Fund would not be counted. Nevertheless, if shares
subject to a CDSC are exchanged for a Fund that does not charge a CDSC,
you will receive a credit when you sell the shares equal to the
distribution (12b-1) fees, if any, you paid on those shares while in that
Fund up to the amount of any applicable CDSC.
In addition, shares that are exchanged into or from a Morgan Stanley Dean
Witter Fund subject to a higher CDSC rate will be subject to the higher
rate, even if the shares are re-exchanged into a Fund with a lower CDSC
rate.
CLASS C SHARES Class C shares are sold at net asset value with no initial
sales charge but are subject to a CDSC of 1.0% on sales made within one
year after the last day of the month of purchase. The CDSC will be
assessed in the same manner and with the same CDSC waivers as with Class B
shares.
Distribution Fee. Class C shares are subject to an annual distribution
(12b-1) fee of up to 1.0% of the average daily net assets of that Class.
The Class C shares' distribution fee may cause that Class to have higher
expenses and pay lower dividends than Class A or Class D shares. Unlike
Class B shares, Class C shares have no conversion feature and,
accordingly, an investor that purchases Class C shares may be subject to
distribution (12b-1) fees applicable to Class C shares for an indefinite
period.
CLASS D SHARESClass D shares are offered without any sales charge on
purchasesor sales and without any distribution (12b-1) fee. Class D shares
are offered only to investors meeting an initial investment minimum of $5
million ($25 million for MSDW Eligible Plans) and the following investor
categories:
o Investors participating in the Investment Manager's mutual fund
asset allocation program (subject to all of its terms and
conditions, including mandatory sale or transfer restrictions on
termination) pursuant to which they pay an asset-based fee.
o Persons participating in a fee-based investment program (subject
to all of its terms and conditions, including mandatory sale or
transfer restrictions on termination) approved by the Fund's
distributor pursuant to which they pay an asset-based fee for
investment advisory, administrative and/or brokerage services.
22
<PAGE>
o Employee benefit plans maintained by Morgan Stanley Dean Witter
& Co. or any of its subsidiaries for the benefit of certain
employees of Morgan Stanley Dean Witter & Co. and its
subsidiaries.
o Certain unit investment trusts sponsored by Dean Witter
Reynolds.
o Certain other open-end investment companies whose shares are
distributed by the Fund's distributor.
o Investors who were shareholders of the Dean Witter Retirement
Series on September 11, 1998 for additional purchases for their
former Dean Witter Retirement Series accounts.
Meeting Class D Eligibility Minimums. To meet the $5 million ($25 million
for MSDW Eligible Plans) initial investment to qualify to purchase Class D
shares you may combine: (1) purchases in a single transaction of Class D
shares of the Fund and other Morgan Stanley Dean Witter Multi-Class Funds
and/or (2) previous purchases of Class A and Class D shares of Multi-Class
Funds and shares of FSC Funds you currently own, along with shares of
Morgan Stanley Dean Witter Funds you currently own that you acquired in
exchange for those shares.
NO SALES CHARGES FOR REINVESTED CASH DISTRIBUTIONS If you receive a cash
payment representing an income dividend or capital gain and you reinvest
that amount in the applicable Class of shares by returning the check
within 30 days of the payment date, the purchased shares would not be
subject to an initial sales charge or CDSC.
PLAN OF DISTRIBUTION (RULE 12b-1 FEES) The Fund has adopted a Plan of
Distribution in accordance with Rule 12b-1 under the Investment Company
Act of 1940 with respect to the distribution of Class A, Class B and Class
C shares. The Plan allows the Fund to pay distribution fees for the sale
and distribution of these shares. It also allows the Fund to pay for
services to shareholders of Class A, Class B and Class C shares. Because
these fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment in these Classes
and may cost you more than paying other types of sales charges.
23
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the life of the Fund. Certain information
reflects financial results for a single Fund share throughout each year.
The total returns in the table represent the rate an investor would have
earned or lost on an investment in the Fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report, along with the Fund's financial
statements, is included in the annual report, which is available upon
request.
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
FOR THE YEAR ENDED JULY 31, 1999 1998 JULY 31, 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A SHARES++
- -----------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.68 $12.21 $12.10
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.06 0.03 --
Net realized and unrealized gain 0.38 0.32 0.11
---- ---- ----
Total income from investment operations 0.44 0.35 0.11
- -----------------------------------------------------------------------------------------------
Less distributions from net realized gain (1.23) (0.88) --
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $10.89 $11.68 $12.21
- -----------------------------------------------------------------------------------------------
TOTAL RETURN+ 4.94% 2.79% 0.91%(1)
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -----------------------------------------------------------------------------------------------
Expenses 1.22%(3) 1.20% 1.20%(2)
- -----------------------------------------------------------------------------------------------
Net investment income 0.59%(3) 0.25% 2.27%(2)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $6,689 $7,265 $10
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 74% 123% 57%(1)
- -----------------------------------------------------------------------------------------------
</TABLE>
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on
the net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class
specific expenses.
24
<PAGE>
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 29,
1996* THROUGH
FOR THE YEAR ENDED JULY 31, 1999 1998 JULY 31, 1997**
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS B SHARES++
- -----------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- -----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.59 $12.21 $10.00
- -----------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.02) (0.05) --
Net realized and unrealized gain 0.37 0.31 2.24
---- ---- ----
Total income from investment operations 0.35 0.26 2.24
- ----------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income -- -- (0.01)
Net realized gain (1.23) (0.88) (0.02)
---- ---- ----
Total dividends and distributions (1.23) (0.88) (0.03)
- ----------------------------------------------------------------------------------------------------
Net asset value, end of period $10.71 $11.59 $12.21
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN+ 4.14% 2.02% 22.41%(1)
- -----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -----------------------------------------------------------------------------------------------------
Expenses 1.99%(3) 1.94% 2.01%(2)
- -----------------------------------------------------------------------------------------------------
Net investment loss (0.18)%(3) (0.36)% (0.03)%(2)
- -----------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $269,916 $372,933 $280,288
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate 74% 123% 57%(1)
- -----------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All
shares of the Fund held prior to that date have been designated Class
B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class
specific expenses.
25
<PAGE>
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
FOR THE YEAR ENDED JULY 31, 1999 1998 JULY 31, 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS C SHARES++
- -----------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- -----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.59 $12.21 $12.10
- -----------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.01) (0.06) --
Net realized and unrealized gain 0.37 0.32 0.11
---- ---- ----
Total income from investment operations 0.36 0.26 0.11
- -----------------------------------------------------------------------------------------------------
Less distributions from net realized gain (1.23) (0.88) --
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $10.72 $11.59 $12.21
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN+ 4.24% 2.02% 0.91%(1)
- -----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -----------------------------------------------------------------------------------------------------
Expenses 1.88%(3) 1.95% 1.94%(2)
- -----------------------------------------------------------------------------------------------------
Net investment income (loss) (0.07)%(3) (0.50)% 1.49%(2)
- -----------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $4,962 $4,728 $11
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate 74% 123% 57%(1)
- -----------------------------------------------------------------------------------------------------
</TABLE>
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class
specific expenses.
26
<PAGE>
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
FOR THE YEAR ENDED JULY 31, 1999 1998 JULY 31, 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS D SHARES++
- -------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.71 $12.21 $12.10
- -------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.09 0.06 --
Net realized and unrealized gain 0.37 0.32 0.11
---- ---- ----
Total income from investment operations 0.46 0.38 0.11
- -------------------------------------------------------------------------------------------------
Less distributions from net realized gain (1.23) (0.88) --
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $10.94 $11.71 $12.21
- -------------------------------------------------------------------------------------------------
TOTAL RETURN+ 5.11% 3.04% 0.91%(1)
- -------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -------------------------------------------------------------------------------------------------
Expenses 0.99%(3) 0.94% 0.94%(2)
- -------------------------------------------------------------------------------------------------
Net investment income 0.82%(3) 0.50% 2.53%(2)
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,268 $1,448 $10
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate 74% 123% 57%(1)
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class
specific expenses.
27
<PAGE>
NOTES
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28
<PAGE>
MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS
The Morgan Stanley Dean Witter Family of Funds offers investors a wide
range of investment choices. Come on in and meet the family!
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
GROWTH FUNDS GROWTH FUNDS Health Sciences TrustInformation Fund
Aggressive Equity Fund Natural Resource Development Securities
American Opportunities Fund Precious Metals and Minerals Trust
Capital Growth Securities
Developing Growth Securities GLOBAL/INTERNATIONAL FUNDS
Growth Fund Competitive Edge Fund - "Best Ideas"
Market Leader Trust Portfolio
Mid-Cap Equity Trust European Growth Fund
Next Generation Trust Fund of Funds - International Portfolio
Small Cap Growth Fund International Fund
Special Value Fund International SmallCap Fund
Japan Fund
THEME FUNDS Latin American Growth Fund
Financial Services Trust Pacific Growth Fund
- ----------------------------------------------------------------------------------------------------------------
GROWTH & INCOME FUNDS Balanced Growth Fund Total Market Index Fund
Balanced Income Fund Total Return Trust
Convertible Securities Trust Value Fund
Dividend Growth Securities Value/Added Market Series/Equity Portfolio
Equity Fund
Fund of Funds - Domestic Portfolio THEME FUNDS
Income Builder Fund Global Utilities Fund
Mid-Cap Dividend Growth Securities Real Estate Fund
S&P 500 Index Fund Utilities Fund
S&P 500 Select Fund
Strategist Fund GLOBAL FUNDS
Global Dividend Growth Securities
- ----------------------------------------------------------------------------------------------------------------
INCOME FUNDS GOVERNMENT INCOME FUNDS GLOBAL INCOME FUNDS
Federal Securities Trust North American Government Income Trust
Short-Term U.S. Treasury Trust World Wide Income Trust
U.S. Government Securities Trust
TAX-FREE INCOME FUNDS
DIVERSIFIED INCOME FUNDS California Tax-Free Income Fund
Diversified Income Trust Hawaii Municipal Trust(FSC)
Limited Term Municipal Trust(NL)
CORPORATE INCOME FUNDS Multi-State Municipal Series Trust(FSC)
High Yield Securities New York Tax-Free Income Fund
Intermediate Income Securities Tax-Exempt Securities Trust
Short-Term Bond Fund(NL)
- ----------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS TAXABLE MONEY MARKET FUNDS TAX-FREE MONEY MARKET FUNDS
Liquid Asset Fund(MM) California Tax-Free Daily Income Trust(MM)
U.S. Government Money Market Trust(MM) New York Municipal Money Market Trust(MM)
Tax-Free Daily Income Trust(MM)
</TABLE>
There may be Funds created after this Prospectus was published. Please
consult the inside back cover of a new Fund's prospectus for its
designations, e.g., Multi-Class Fund or Money Market Fund.
Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund, except
for North American Government Income Trust and Short-Term U.S. Treasury
Trust is a Multi-Class Fund. A Multi-Class Fund is a mutual fund offering
multiple Classes of shares. The other types of Funds are: NL -- No-Load
(Mutual) Fund; MM -- Money Market Fund; FSC -- A mutual fund sold with a
front-end sales charge and a distribution (12b-1) fee.
<PAGE>
PROSPECTUS - SEPTEMBER 27, 1999
Additional information about the Fund's investments is available in the
Fund's Annual and Semi-Annual Reports to Shareholders. In the Fund's Annual
Report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during its
last fiscal year. The Fund's Statement of Additional Information also
providesadditional information about the Fund. The Statement of Additional
Information is incorporated herein by reference (legally is part of this
Prospectus). For a free copy of any of these documents, to request other
information about the Fund, or to make shareholder inquiries, please call:
(800) 869-NEWS
You also may obtain information about the Fund by calling your Morgan
Stanley Dean Witter Financial Advisor or by visiting our Internet site at:
WWW.MSDW.COM/INDIVIDUAL/FUNDS
Information about the Fund (including the Statement of Additional
Information) can be viewed and copied at the Securities and Exchange
Commission's Public Reference Room in Washington, DC. Information about the
Reference Room's operations may be obtained by calling the SEC at (800)
SEC-0330. Reports and other information about the Fund are available on the
SEC's Internet site (www.sec.gov), and copies of this information may be
obtained, upon payment of a duplicating fee, by writing to the Public
Reference Section of the SEC, Washington, DC 20549-6009.
TICKER SYMBOLS:
Class A: SVFAX Class C: SVFCX
- ------------------- ------------------
Class B: SVFBX Class D: SVFDX
- ------------------- ------------------
(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-7683)
Morgan Stanley Dean Witter
SPECIAL VALUE FUND
[GRAPHIC OMITTED]
A MUTUAL FUND
THAT SEEKS LONG-TERM
CAPITAL APPRECIATION
