<PAGE>
PROSPECTUS - NOVEMBER 29, 1999
Morgan Stanley Dean Witter
FUND OF FUNDS
DOMESTIC PORTFOLIO AND INTERNATIONAL PORTFOLIO
[COVER PHOTO]
A MUTUAL FUND THAT CONSISTS OF TWO SEPARATE PORTFOLIOS
THE DOMESTIC PORTFOLIO SEEKS TO MAXIMIZE TOTAL
INVESTMENT RETURN THE INTERNATIONAL PORTFOLIO 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
<TABLE>
<S> <C> <C>
The Fund Overview............................ 1
The Domestic Portfolio.............. 1
Investment Objective.............. 1
Principal Investment Strategies... 1
Principal Risks................... 11
Past Performance.................. 15
Fees and Expenses................. 16
Additional Risk Information....... 18
The International Portfolio......... 21
Investment Objective.............. 21
Principal Investment Strategies... 21
Principal Risks................... 24
Past Performance.................. 28
Fees and Expenses................. 29
Additional Risk Information....... 30
Fund Management..................... 33
Shareholder Information Pricing Portfolio Shares............ 35
How to Buy Shares................... 35
How to Exchange Shares.............. 36
How to Sell Shares.................. 38
Distributions....................... 40
Tax Consequences.................... 40
Share Class Arrangements............ 41
Financial Highlights .................................... 49
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.
</TABLE>
<PAGE>
[Sidebar]
TOTAL RETURN
An investment objective having the goal of selecting securities with the
potential to rise in price and pay out income.
[End Sidebar]
OVERVIEW
Morgan Stanley Dean Witter Fund of Funds (the "Fund") is an
open-end, non-diversified mutual fund that consists of two
separate portfolios (each, a "Portfolio") --
Domestic Portfolio
International Portfolio
Each Portfolio invests primarily in shares of other Morgan
Stanley Dean Witter Funds (the "Underlying Funds").
Beginning on the next page is a summary of each Portfolio.
THE DOMESTIC PORTFOLIO
[ICON] INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The Domestic Portfolio seeks to maximize total investment
return.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
The Domestic Portfolio normally invests at least 65% of its
total assets in shares of the Underlying Funds described
below. These Underlying Funds are intended to give the
Portfolio broad exposure to the U.S. equity and fixed-income
markets. At any time the Portfolio's "Investment Manager,"
Morgan Stanley Dean Witter Advisors Inc., may add or
substitute Underlying Funds in which the Portfolio may
invest. In deciding how to allocate the Portfolio's assets
among the selected Underlying Funds, the Investment Manager
considers its outlook for the U.S. economy and financial
markets, and the relative market valuations of the
Underlying Funds. The Portfolio normally expects to invest
between 50%-100% of its assets in Underlying Funds which
invest primarily in equity securities and between 0%-50% of
its assets in Underlying Funds which invest primarily in
fixed-income securities. There are no minimum or maximum
percentages in which the Portfolio must invest in any
Underlying Fund.
THE UNDERLYING MORGAN STANLEY DEAN WITTER FUNDS
The following is a brief summary of the investment
objectives and principal investment strategies of the
Underlying Funds that the Investment Manager presently
considers for investment. The Portfolio's Investment Manager
also serves as the Investment Manager to each of the
Underlying Funds. For a complete description of an
Underlying Fund, please see its prospectus, which is
available free of charge by calling (877) 937-MSDW
(toll-free).
1
<PAGE>
------------------------------------------------------------
AGGRESSIVE EQUITY FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Capital growth.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks and other equity securities (which may
include convertible securities) of U.S. or foreign
companies that (i) are covered by Morgan Stanley
Dean Witter Equity Research and (ii) offer the
potential for superior earnings growth in the
opinion of the fund's Investment Manager. The
Investment Manager utilizes a process, known as
sector rotation, that emphasizes industry selection
over individual company selection. In addition, the
fund may invest in foreign securities, equity
securities that are not covered by Equity Research,
fixed-income securities, and options and futures.
</TABLE>
------------------------------------------------------------
AMERICAN OPPORTUNITIES FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term capital growth consistent with an effort
to reduce volatility.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
a diversified portfolio of common stocks. The fund's
Investment Manager invests in companies that it
believes have earnings growth potential. The
Investment Manager utilizes a process, known as
sector rotation, that emphasizes industry selection
over individual company selection. In addition, the
fund may invest in convertible debt and preferred
securities, fixed-income securities such as U.S.
government securities and investment grade corporate
debt securities, and foreign securities.
</TABLE>
------------------------------------------------------------
CAPITAL GROWTH SECURITIES
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks. The fund's Investment Manager
currently utilizes a two-stage computerized
screening process designed to find companies that
have demonstrated a history of consistent growth in
earnings and revenues over the past several years,
and that have solid future earnings growth
characteristics and attractive valuations. In
addition, the fund may invest in U.S. government
securities, investment grade fixed-income
securities, preferred securities, convertible
securities, real estate investment trusts known as
"REITs" and foreign securities.
</TABLE>
2
<PAGE>
------------------------------------------------------------
COMPETITIVE EDGE FUND -- "BEST IDEAS" PORTFOLIO
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 80% of its assets in
common stock including depository receipts of
companies included in the "Best Ideas" subgroup of
"Global Investing: The Competitive Edge List," a
research compilation assembled by Morgan Stanley
Dean Witter Equity Research -- or such supplemental
companies as selected by the fund's Investment
Manager. This subgroup consists of approximately 40
companies (including foreign companies) that Equity
Research believes have a long-term sustainable
competitive advantage in the global arena. In
addition, the fund may at times purchase securities
that are not included on the Competitive Edge "Best
Ideas" List.
</TABLE>
------------------------------------------------------------
CONVERTIBLE SECURITIES TRUST
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE High total return through a combination of current
income and capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
convertible securities. The fund's convertible
securities may include lower rated fixed-income
securities commonly known as "junk bonds," and
"enhanced" and "synthetic" convertible securities.
In selecting fund investments, the fund's Investment
Manager considers market, economic and political
conditions. In addition, the fund may invest in
common stocks directly, non-convertible fixed-
income securities and foreign securities.
</TABLE>
------------------------------------------------------------
DEVELOPING GROWTH SECURITIES TRUST
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks and other equity securities of
companies that the fund's Investment Manager
believes have the potential to grow much more
rapidly than the economy. The fund will invest
primarily in smaller and medium-sized companies. In
addition, the fund may invest in fixed-income
securities issued or guaranteed by the United States
government, its agencies or instrumentalities,
investment grade debt securities, and foreign
securities.
</TABLE>
3
<PAGE>
------------------------------------------------------------
DIVIDEND GROWTH SECURITIES INC.
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Reasonable current income and long-term growth of
income and capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 70% of its total assets in
common stocks of companies with a record of paying
dividends and the potential for increasing
dividends. The fund's Investment Manager initially
employs a quantitative screening process in an
attempt to identify a number of common stocks which
are undervalued and which have a record of paying
dividends. The Investment Manager then applies a
qualitative analysis to determine which stocks it
believes have the potential to increase dividends.
In addition, the fund may invest in fixed-income,
convertible and foreign securities.
</TABLE>
------------------------------------------------------------
FINANCIAL SERVICES TRUST
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
a diversified portfolio of common stocks and other
equity securities of companies engaged in financial
services and related industries. The fund's
Investment Manager seeks to identify companies which
it believes show good appreciation prospects and
value. In addition, the fund may invest in common
stock and other equity securities of companies not
in the financial services or related industries,
fixed-income, convertible, U.S. government and
foreign securities.
</TABLE>
------------------------------------------------------------
GROWTH FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks and convertible securities primarily
of companies having stock market values or
capitalizations of at least $1 billion. The fund's
"Sub-Advisor," Morgan Stanley Dean Witter Investment
Management Inc., invests the fund's assets by
pursuing an "equity growth" philosophy. That
strategy involves a process that seeks to identify
companies that exhibit strong or accelerating
earnings growth. In addition, the fund may invest in
foreign securities.
</TABLE>
4
<PAGE>
------------------------------------------------------------
HEALTH SCIENCES TRUST
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks of health sciences companies that are
located throughout the world. In deciding which
securities to buy, hold or sell, the fund's
Investment Manager invests in companies based on its
view of business, economic and political conditions.
In addition, the fund may invest in common stocks of
non-health sciences companies, preferred stock and
investment grade fixed-income securities.
</TABLE>
------------------------------------------------------------
HIGH YIELD SECURITIES INC.
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVES High current income and, secondarily, capital
appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
fixed-income securities (including zero coupon
securities) rated lower than investment grade,
commonly known as "junk bonds," or in non-rated
securities considered by the fund's Investment
Manager to be appropriate investments for the fund.
In deciding which securities to buy, hold or sell,
the Investment Manager considers an issuer's
creditworthiness, economic developments, interest
rate trends and other factors it deems relevant. In
addition, the fund may invest in securities rated
investment grade or higher (or, if not rated,
determined to be of comparable quality) when the
Investment Manager believes that such securities may
produce attractive yields.
</TABLE>
------------------------------------------------------------
INCOME BUILDER FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVES Reasonable income and, secondarily, growth of
capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
income-producing equity securities, including common
stock, preferred stock and convertible securities.
The fund's Investment Manager uses a value-oriented
style in the selection of securities. In addition,
the fund may invest in fixed-income securities
(which may include U.S. government securities, junk
bonds and zero coupon securities), REITs and foreign
securities.
</TABLE>
5
<PAGE>
------------------------------------------------------------
INFORMATION FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks and investment grade convertible
securities of companies engaged in the
communications and information industry that are
located throughout the world. In addition, the fund
may invest in investment grade fixed-income
securities.
</TABLE>
------------------------------------------------------------
INTERMEDIATE INCOME SECURITIES
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE High current income consistent with safety of
principal.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
intermediate term, investment grade fixed-income
securities, including mortgage-backed and zero
coupon securities. These securities may include
corporate debt securities, preferred stocks, U.S.
government securities, and U.S. dollar-denominated
securities issued by foreign governments or
corporations. In deciding which securities to buy,
hold or sell, the fund's Investment Manager
considers domestic and international economic
developments, interest rate trends and other
factors. The fund will normally maintain an average
weighted maturity of between three to seven years.
In addition, the fund may invest in fixed-income
securities rated lower than investment grade.
</TABLE>
------------------------------------------------------------
MARKET LEADER TRUST
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks and other equity securities (which may
include foreign or convertible securities) of
companies that the fund's Investment Manager
believes are established market leaders in growing
industries. The Investment Manager considers
companies to be "market leaders" if they are
nationally-known and have established a strong
reputation for quality management, products and
services in the United States and/or globally. In
addition, the fund may invest in equity securities
of other companies, corporate debt and U.S.
government securities.
</TABLE>
6
<PAGE>
------------------------------------------------------------
MID-CAP DIVIDEND GROWTH SECURITIES
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Total return.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
a diversified portfolio of common stocks and other
equity securities of companies whose capitalization
falls within the range of companies comprising the
Standard & Poor's Mid-Cap 400 Index, that currently
pay dividends and that have the potential for
increasing dividends. In addition, the fund may
invest in certain other common stocks, and fixed-
income, convertible and foreign securities.
</TABLE>
------------------------------------------------------------
MID-CAP EQUITY TRUST
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks and convertible securities of
medium-sized companies with market capitalizations
within the capitalization range of companies
comprising the Standard & Poor's Mid-Cap 400 Index.
The fund's "Sub-Advisor," TCW Funds
Management, Inc., invests the fund's assets in
companies that it believes exhibit superior earnings
growth prospects and attractive stock market
valuations. In addition, the fund may invest in
equity securities of small capitalization and large
capitalization companies, foreign securities and
fixed-income securities.
</TABLE>
------------------------------------------------------------
NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Capital growth.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks of domestic and foreign companies
engaged in natural resource and related businesses.
In addition, the fund may invest in common stocks of
companies not in the natural resource areas,
investment grade corporate debt securities and U.S.
government securities.
</TABLE>
7
<PAGE>
------------------------------------------------------------
PRECIOUS METALS AND MINERALS TRUST
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks and other securities of foreign and
domestic companies principally engaged in the
precious metals and minerals business. The fund also
may invest a portion of its assets in gold, silver,
platinum and palladium bullion and coins. In
addition, the fund may invest in common stocks of
companies that are not primarily engaged in the
precious metals and minerals business and long-term
U.S. government securities.
</TABLE>
------------------------------------------------------------
S&P 500 INDEX FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To provide investment results that, before expenses,
correspond to the total return of the Standard &
Poor's-Registered Trademark- 500 Composite Stock
Price Index.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 80% of its total assets in
common stocks of companies included in the S&P 500
Index. The Investment Manager "passively" manages
the fund's assets by investing in common stocks in
approximately the same proportion as they are
represented in the Index. In addition, the fund may
invest in stock index futures on the S&P 500 Index
and Standard & Poor's Depository Receipts.
</TABLE>
------------------------------------------------------------
SHORT-TERM BOND FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE High current income consistent with the preservation
of capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
bonds issued or guaranteed as to principal and
interest by the U.S. government, its agencies or
instrumentalities (which may include mortgage-
backed and zero coupon securities), and investment
grade corporate and other types of bonds. In
selecting fund investments, the Investment Manager
considers both domestic and international economic
developments, interest rate trends and other factors
and seeks to maintain an overall weighted average
maturity for the fund of three years or less. In
addition, the fund may invest in foreign,
asset-backed and restricted securities, and junk
bonds.
</TABLE>
8
<PAGE>
------------------------------------------------------------
SPECIAL VALUE FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks of small capitalization companies
(generally between $100 million and $1 billion) that
the fund's Investment Manager believes are
undervalued relative to the marketplace or similar
companies. In addition, the fund may invest in
common stocks of companies which have medium or
large market capitalizations, convertible and non-
convertible fixed-income securities, and foreign
securities (including depository receipts).
</TABLE>
------------------------------------------------------------
U.S. GOVERNMENT SECURITIES TRUST
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE High current income consistent with safety of
principal.
PRINCIPAL INVESTMENT STRATEGY Invests all of its assets in U.S. government
securities (which may include mortgage-backed or
zero coupon securities). In making investment
decisions, the fund's Investment Manager considers
economic developments, interest rate trends and
other factors. The fund is not limited as to the
maturities of the U.S. government securities in
which it may invest.
</TABLE>
------------------------------------------------------------
UTILITIES FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Capital appreciation and current income.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stock, other equity and investment grade
fixed-income securities of companies that are
engaged in the utilities industry. The fund's
Investment Manager will shift the fund's assets
between different types of utilities and between
equity and fixed-income securities, based on
prevailing market, economic and financial
conditions. In addition, the fund may invest in
foreign securities.
</TABLE>
9
<PAGE>
------------------------------------------------------------
VALUE FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Total return.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stock and other equity securities that the
fund's "Sub-Advisor," Miller Anderson &
Sherrerd, LLP, believes are undervalued based
primarily on price/earnings ratios, as well as
price/ book ratios and various other value measures.
In addition, the fund may invest in foreign,
convertible and fixed-income securities.
</TABLE>
------------------------------------------------------------
VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE High total return through capital appreciation and
current income.
PRINCIPAL INVESTMENT STRATEGY Invests in a diversified portfolio of common stocks
represented in the Standard &
Poor's-Registered Trademark- 500 Composite Stock
Price Index. The fund generally invests in each
stock included in the S&P 500 in equal proportion.
In addition, the fund may purchase and sell stock
index futures to simulate investment in the S&P 500.
</TABLE>
In addition to the principal investment strategies of the
Underlying Funds described above, the Portfolio may use the
following investment strategies:
DEFENSIVE INVESTING. The Portfolio may take temporary
"defensive" positions in attempting to respond to adverse
market conditions. The Portfolio may invest any amount of
its assets in cash or money market instruments in a
defensive posture when the Investment Manager believes it is
advisable to do so. Although taking a defensive posture is
designed to protect the Portfolio from an anticipated market
downturn, it could have the effect of reducing the benefit
from any upswing in the market. When the Portfolio takes a
defensive position, it may not achieve its investment
objective.
PORTFOLIO TURNOVER. The Portfolio may engage in active and
frequent trading of Underlying Funds to achieve its
principal investment strategies. The portfolio turnover rate
is not expected to exceed 300% annually under normal
circumstances. A high turnover rate, such as 300%, may
increase the Portfolio's capital gains, which are passed
along to shareholders of the Portfolio as distributions.
This, in turn, may increase your tax liability as a
shareholder of the Portfolio. See the sections on
"Distributions" and "Tax Consequences." A high turnover rate
would not result in the Portfolio incurring higher sales
charges/brokerage commissions because the Portfolio would be
trading Class D shares of the Underlying Funds which are
sold without any sales charges.
The percentage limitations relating to the composition of
the Portfolio apply at the time the Portfolio acquires an
investment and refer to the Portfolio's net assets, unless
otherwise noted. Subsequent percentage changes that result
from market
10
<PAGE>
fluctuations will not require the Portfolio to sell any
security. The Portfolio may change its principal investment
strategies without shareholder approval; however, you would
be notified of any changes.
[ICON] PRINCIPAL RISKS
- --------------------------------------------------------------------------------
There is no assurance that the Portfolio will achieve its
investment objective. The Portfolio's share price will
fluctuate with changes in the market value of the
Portfolio's investments in Underlying Funds. When you sell
Portfolio shares, they may be worth less than what you paid
for them and, accordingly, you can lose money investing in
this Portfolio. In addition, the performance of the
Portfolio may be adversely affected because in allocating
Portfolio assets among the Underlying Funds the Investment
Manager may consider the impact of the allocation decision
on the Underlying Funds.
Set forth below are the principal risks associated with
investing in the Underlying Funds described above. For more
information about the risks of investing in the Underlying
Funds, please see their prospectuses, which are available
free of charge by calling (877) 937-MSDW (toll-free).
COMMON STOCKS. A principal risk of investing in certain
Underlying Funds is associated with common stock
investments. In general, stock values fluctuate in response
to activities specific to the company as well as general
market, economic and political conditions. Stock prices can
fluctuate widely in response to these factors.
Certain Underlying Funds may invest in stocks of small and
medium-sized companies. Investing in securities of these
companies involves greater risk than is customarily
associated with investing in more established companies.
These companies' stocks may be more volatile and less liquid
than the stocks of more established companies. These stocks
may have returns that vary, sometimes significantly, from
the overall stock market.
FOREIGN SECURITIES. Certain Underlying Funds invest in
foreign securities (including depository receipts) which
involve risks in addition to the risks associated with
domestic securities. One additional risk is currency risk.
While the price of Underlying Fund shares is quoted in U.S.
dollars, Underlying Funds generally convert 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 sercurity'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 Underlying 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. Moreover,
foreign accounting, auditing and financial reporting
standards generally are different from
11
<PAGE>
those applicable to U.S. companies. Finally, in the event of
a default of any foreign debt obligations, it may be more
difficult for an Underlying Fund to obtain or enforce a
judgement against the issuers of the securities.
Securities of foreign issuers may be less liquid than
comparable securities of U.S. issuers and, as such, their
price changes may be more volatile. Furthermore, foreign
exchanges and broker-dealers are generally subject to less
government and exchange scrutiny and regulation than their
U.S. counterparts. In addition, differences in clearance and
settlement procedures in foreign markets may occasion delays
in settlements of an Underlying Fund's trades effected in
those markets. Delays in purchasing securities may result in
the Underlying Fund losing investment opportunities. The
inability to dispose of foreign securities due to settlement
delays could result in losses to the Underlying Fund due to
subsequent declines in the value of the securities.
Many European countries have adopted or are in the process
of adopting a single European currency, referred to as the
"euro." The long-term consequences of the euro conversion
for foreign exchange rates, interest rates and the value of
European securities that an Underlying Fund may purchase are
unclear. The consequences may adversely affect the value
and/or increase the volatility of securities held by an
Underlying Fund.
FIXED-INCOME SECURITIES. Certain Underlying Funds invest in
fixed-income securities (which may include zero coupon
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.
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. The Fund's
fixed-income investments may include zero coupon securities,
which are purchased at a discount and either (i) pay no
interest, or (ii) accrue interest, but make no payments
until maturity. As merely illustrative of the relationship
between fixed-income securities and interest rates, the
following table shows how interest rates affect bond prices.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------
1 year N/A $ 1,000 $ 1,000 $ 1,000 $ 1,000
--------------------------------------------------------------------------------------------------
5 years 4.25% $ 967 $ 934 $ 1,038 $ 1,076
--------------------------------------------------------------------------------------------------
10 years 4.75% $ 930 $ 867 $ 1,074 $ 1,155
--------------------------------------------------------------------------------------------------
30 years 5.25% $ 865 $ 756 $ 1,166 $ 1,376
--------------------------------------------------------------------------------------------------
</TABLE>
Coupons reflect yields on Treasury securities as of December
31, 1998. The table is an illustration and does not
represent expected yields or share price changes of any
Morgan Stanley Dean Witter mutual fund.
CONVERTIBLE SECURITIES. Certain Underlying Funds may invest
in convertible securities, which are securities that
generally pay dividends or interest and may be converted
into common stock. These securities may carry 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 be
12
<PAGE>
likely to increase when interest rates fall and decrease
when interest rates rise, as with a fixed-income security.
If the conversion value exceeds the investment value, the
price of the convertible security will tend to fluctuate
directly with the price of the underlying equity security.
With respect to certain Underlying Funds, there are no
minimum rating or quality requirements as to their
convertible securities investments and, thus, all or some of
such securities may be rated below investment grade. These
"junk bonds" have speculative risk characteristics which are
described below.
There are also special risks associated with Convertible
Securities Trust's investments in "enhanced" and "synthetic"
convertible securities. These securities may be more
volatile and less liquid than traditional convertible
securities.
JUNK BONDS. Certain Underlying Funds may invest in junk
bonds, i.e., fixed-income securities rated lower than
investment grade or, if not rated, determined to be of
comparable quality. Junk bonds are subject to greater risk
of loss of income and principal than higher rated
securities. The prices of junk bonds are likely to be more
sensitive to adverse economic changes or individual
corporate developments than higher rated securities. 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, an Underlying Fund may incur additional
expenses to seek recovery. The secondary market for junk
bonds may be less liquid than the markets for higher quality
securities and, as such, may have an adverse effect on the
market prices of certain securities. The illiquidity of the
market may also adversely affect the ability of an
Underlying Fund's directors/trustees to arrive at a fair
value for certain junk bonds at certain times and could make
it difficult for the Underlying Fund to sell certain
securities. In addition, periods of economic uncertainty and
change probably would result in an increased volatility of
market prices of high yield securities and a corresponding
volatility in an Underlying Fund's net asset value.
MORTGAGE-BACKED SECURITIES. Certain Underlying Funds may
invest in mortgage-backed securities, which have different
risk characteristics than traditional debt securities.
Although the value of fixed-income securities generally
increases during periods of falling interest rates and
decreases during periods of rising interest rates, this is
not always the case with mortgage-backed securities. This is
due to the fact that the principal on underlying mortgages
may be prepaid at any time as well as other factors.
Generally, prepayments will increase during a period of
falling interest rates and decrease during a period of
rising interest rates. The rate of prepayments also may be
influenced by economic and other factors. Prepayment risk
includes the possibility that, as interest rates fall,
securities with stated interest rates may have the principal
prepaid earlier than expected, requiring the Underlying Fund
to invest the proceeds at generally lower interest rates.
Investments in mortgage-backed securities are made based
upon, among other things, expectations regarding the rate of
prepayments on underlying mortgage
13
<PAGE>
pools. Rates of prepayment, faster or slower than expected
by the Investment Manager and/or Sub-Advisor, could reduce
an Underlying Fund's yield, increase the volatility of the
Underlying Fund and/or cause a decline in net asset value.
Certain mortgage-backed securities may be more volatile and
less liquid than other traditional types of debt securities.
CONCENTRATION POLICY. Unlike most industry diversified
mutual funds, certain Underlying Funds are subject to risks
associated with concentrating their assets in a particular
industry. These Underlying Funds' portfolios may decline in
value due to developments specific to the industry in which
the Underlying Funds concentrate their assets. As a result,
these Underlying Funds may be more volatile than mutual
funds that do not similarly concentrate their investments.
OTHER RISKS. The performance of each Underlying Fund also
will depend on whether the Investment Manager and/or
Sub-Advisor is successful in pursuing the Underlying Fund's
investment strategy. The Underlying Funds are also subject
to other risks from their permissible investments, including
the risks associated with investments in options and
futures, REITs, SPDRs and asset-backed securities. For more
information about these risks, see the "Additional Risk
Information" section.
In addition to the principal risks associated with the
Underlying Funds, the Portfolio also will be subject to the
following risks:
NON-DIVERSIFIED STATUS. The Portfolio is a "non-diversified"
mutual fund and, as such, its investments are not required
to meet certain diversification requirements under federal
law. Compared with "diversified" funds, the Portfolio may
invest a greater percentage of its assets in the securities
of an individual issuer, in this case any Underlying Fund.
Thus, the Portfolio's assets may be concentrated in fewer
securities than other funds. A decline in the value of those
investments would cause the Portfolio's overall value to
decline to a greater degree.
The performance of the Portfolio also will depend on whether
the Investment Manager is successful in pursuing the
Portfolio's investment strategy.
Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the FDIC or any other government
agency.
14
<PAGE>
[SIDEBAR]
ANNUAL TOTAL RETURN
This chart shows how the performance of the Portfolio's Class B shares over the
past calendar year.
AVERAGE ANNUAL
TOTAL RETURNS
This table compares the Portfolio's average annual returns with those of broad
measures of market performance over time, as well as with an index of funds with
similar investment objectives. The Portfolio'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]
[ICON] PAST PERFORMANCE
- --------------------------------------------------------------------------------
The bar chart and table below provide some indication of the
risks of investing in the Domestic Portfolio. The
Portfolio's past performance does not indicate how the
Portfolio will perform in the future.
ANNUAL TOTAL RETURN - CALENDAR YEAR
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1998 11.21%
</TABLE>
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, the
return would be less than shown. Year-to-date total return
as of September 30, 1999 was 6.51%.
During the period shown in the bar chart, the highest return
for a calendar quarter was 16.39% (quarter ended
December 31, 1998) and the lowest return for a calendar
quarter was -11.45% (quarter ended September 30, 1998).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
---------------------------------------------------------------------------------------
LIFE OF
PORTFOLIO
PAST 1 YEAR (SINCE 11/25/97)
<S> <C> <C>
---------------------------------------------------------------------------------------
Class A 6.16% 7.22%
---------------------------------------------------------------------------------------
Class B 6.21% 8.25%
---------------------------------------------------------------------------------------
Class C 10.26% 11.90%
---------------------------------------------------------------------------------------
Class D 12.34% 12.89%
---------------------------------------------------------------------------------------
S&P 500 Index(1) 28.58% 28.44%
---------------------------------------------------------------------------------------
Lehman Brothers Government/Corporate Bond
Index(2) 9.47% 9.75%
---------------------------------------------------------------------------------------
Lipper Flexible Portfolio Funds Index(3) 16.52% 16.77%
---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
1 The Standard & Poor's 500 Stock 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.
2 The Lehman Brothers Government/Corporate Bond Index tracks
the performance of government and corporate obligations,
including U.S. government agency and U.S. treasury
securities and corporate and yankee bonds with maturities of
one to ten years. The Index is unmanaged and should not be
considered an investment.
3 The Lipper Flexible Portfolio Funds Index is an
equally-weighted performance index of the largest qualifying
funds (based on net assets) in the Lipper Flexible Portfolio
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.
</TABLE>
15
<PAGE>
[Sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
ANNUAL PORTFOLIO
OPERATING EXPENSES
These expenses are deducted from the Portfolio's assets and are based on
expenses paid for the fiscal year ended September 30, 1999.
[End Sidebar]
[ICON] FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below briefly describes the fees and expenses that
you may pay if you buy and hold shares of the Domestic
Portfolio. The Portfolio offers four Classes of shares:
Classes A, B, C and D. Each Class has a different
combination of fees, expenses and other features. The
Portfolio does not charge account or exchange fees. See the
"Share Class Arrangements" section for further fee and
expense information.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
SHAREHOLDER FEES
------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price) 5.25%(1) None None None
------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a
percentage based on the lesser of the
offering price or net asset value at
redemption) None(2) 5.00%(3) 1.00%(4) None
------------------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
------------------------------------------------------------------------------------------
Management fee None None None None
------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.23% 1.00% 0.54% None
------------------------------------------------------------------------------------------
Other expenses(5) 0.44% 0.44% 0.44% 0.44%
------------------------------------------------------------------------------------------
Total annual Portfolio operating expenses(5) 0.67% 1.44% 0.98% 0.44%
------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
1 Reduced for purchases of $25,000 and over.
2 Investments that are not subject to any sales charge at the
time of purchase are subject to a contingent deferred sales
charge ("CDSC") of 1.00% that will be imposed if you sell
your shares within one year after purchase, except for
certain specific circumstances.
3 The CDSC is scaled down to 1.00% during the sixth year,
reaching zero thereafter. See "Share Class Arrangements" for
a complete discussion of the CDSC.
4 Only applicable if you sell your shares within one year
after purchase.
5 The Investment Manager has agreed to assume all operating
expenses (except for brokerage and 12b-1 fees) for the
Portfolio until such time as the Portfolio has $50 million
of net assets or until November 30, 2000, whichever occurs
first. The Investment Manager had agreed to assume all
operating expenses (except for brokerage and 12b-1 fees) for
each Portfolio until such time as the respective Portfolio
had $50 million of net assets or until six months from
commencement of the Fund's operations, whichever occurred
first, and has agreed to extend such expense assumption
through November 30, 2000. As a result of such assumption of
other expenses, for the fiscal period ended September 30,
1999, the actual "Other Expenses" amounted to 0.00% for each
Class of the Domestic Portfolio and "Total Fund Operating
Expenses" amounted to 0.23%, 1.00%, 0.54% and 0.00% for
Class A, B, C and D respectively of the Domestic Portfolio.
</TABLE>
16
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of
investing in the Portfolio with the cost of investing in
other mutual funds.
This example shows what expenses you could pay over time.
The example assumes that you invest $10,000 in the
Portfolio, your investment has a 5% return each year, and
the Portfolio'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:
----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
-----------------------------------------------------------------
CLASS A $590 $728 $ 879 $1,316
-----------------------------------------------------------------
CLASS B $647 $756 $ 987 $1,724
-----------------------------------------------------------------
CLASS C $200 $312 $ 542 $1,201
-----------------------------------------------------------------
CLASS D $ 45 $141 $ 246 $ 555
-----------------------------------------------------------------
<CAPTION>
IF YOU HELD YOUR SHARES:
----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
--------------------- ----------------------------------------
CLASS A $590 $728 $ 879 $1,316
--------------------- ----------------------------------------
CLASS B $147 $456 $ 787 $1,724
--------------------- ----------------------------------------
CLASS C $100 $312 $ 542 $1,201
--------------------- ----------------------------------------
CLASS D $ 45 $141 $ 246 $ 555
--------------------- ----------------------------------------
</TABLE>
Long-term shareholders of Class B and Class C may pay more
in sales charges, including distribution fees, than the
economic equivalent of the maximum front-end sales charges
permitted by the NASD.
17
<PAGE>
UNDERLYING FUND EXPENSES
The Portfolio will not pay any sales load or 12b-1 fee in
connection with its investments in shares of Underlying
Funds. However, the Portfolio will indirectly bear its pro
rata share of the expenses incurred by the Underlying Funds
that are borne by Class D shareholders of the Underlying
Funds. These expenses are set forth in the table below (as
of each Underlying Fund's most recent fiscal year end).
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL
FEES EXPENSES EXPENSES
<S> <C> <C> <C>
------------------------------------------------------------------------------------------
Aggressive Equity Fund 0.75% 0.31% 1.06%
------------------------------------------------------------------------------------------
American Opportunities Fund 0.49% 0.12% 0.61%
------------------------------------------------------------------------------------------
Capital Growth Securities 0.64% 0.20% 0.84%
------------------------------------------------------------------------------------------
Competitive Edge Fund - "Best Ideas" Portfolio 0.64% 0.22% 0.86%
------------------------------------------------------------------------------------------
Convertible Securities Trust 0.60% 0.21% 0.81%
------------------------------------------------------------------------------------------
Developing Growth Securities Trust 0.49% 0.20% 0.69%
------------------------------------------------------------------------------------------
Dividend Growth Securities 0.35% 0.08% 0.43%
------------------------------------------------------------------------------------------
Financial Services Trust 0.75% 0.22% 0.97%
------------------------------------------------------------------------------------------
Growth Fund 0.79% 0.15% 0.94%
------------------------------------------------------------------------------------------
Health Sciences Trust 1.00% 0.27% 1.27%
------------------------------------------------------------------------------------------
High Yield Securities 0.39% 0.10% 0.49%
------------------------------------------------------------------------------------------
Income Builder Fund 0.75% 0.17% 0.92%
------------------------------------------------------------------------------------------
Information Fund 0.75% 0.26% 1.01%
------------------------------------------------------------------------------------------
Intermediate Income Securities 0.60% 0.30% 0.90%
------------------------------------------------------------------------------------------
Market Leader Trust 0.75% 0.24% 0.99%
------------------------------------------------------------------------------------------
Mid-Cap Dividend Growth Securities 0.75% 0.30% 1.05%
------------------------------------------------------------------------------------------
Mid-Cap Equity Trust 0.75% 0.30% 1.05%
------------------------------------------------------------------------------------------
Natural Resource Development Securities 0.62% 0.28% 0.90%
------------------------------------------------------------------------------------------
Precious Metals and Minerals Trust 0.80% 0.98% 1.78%
------------------------------------------------------------------------------------------
S&P 500 Index Fund 0.31% 0.19% 0.50%
------------------------------------------------------------------------------------------
Short-Term Bond Fund 0.70% 0.18% 0.88%
------------------------------------------------------------------------------------------
Special Value Fund 0.75% 0.24% 0.99%
------------------------------------------------------------------------------------------
U.S. Government Securities Trust 0.43% 0.09% 0.52%
------------------------------------------------------------------------------------------
Utilities Fund 0.54% 0.11% 0.65%
------------------------------------------------------------------------------------------
Value Fund 1.00% 0.30% 1.30%
------------------------------------------------------------------------------------------
Value-Added Market Series - Equity Portfolio 0.46% 0.13% 0.59%
------------------------------------------------------------------------------------------
</TABLE>
[ICON] ADDITIONAL RISK INFORMATION
- --------------------------------------------------------------------------------
This section provides additional information relating to the
principal risks of investing in the Underlying Funds
described above.
OPTIONS AND FUTURES. If an Underlying Fund invests in
options and/or futures (including stock index futures or
options on stock indexes or on stock index futures), its
participation in these markets would subject the Underlying
Fund's portfolio to certain risks. If the Investment
Manager's and/or Sub-Advisor's predictions of movements in
the direction of the stock, currency or interest rate
markets are inaccurate, the adverse consequences to the
Underlying Fund (e.g., a reduction in the Underlying Fund's
net asset value or a reduction in the amount of
18
<PAGE>
income available for distribution) may leave the Underlying
Fund in a worse position than if these strategies were not
used. Other risks inherent in the use of options and futures
include, for example, the possible imperfect correlation
between the price of options and futures contracts and
movements in the prices of the securities or indexes being
hedged, and the possible absence of a liquid secondary
market for any particular instrument. Certain options may be
over-the-counter options, which are options negotiated with
dealers; there is no secondary market for these investments.
REITS. Real estate investment trusts, known as "REITs," pool
investors' funds for investments primarily in commercial
real estate properties. Like mutual funds, REITs have
expenses, including advisory and administration fees, that
are paid by their shareholders. As a result, the Underlying
Fund would absorb duplicate levels of fees when it invests
in REITs. The performance of any REIT holdings ultimately
depends on the types of real property in which the REIT
invests and how well the property is managed. A general
downturn in real estate values also can hurt REIT
performance.
SPDRS. S&P 500 Index Fund may invest in Standard & Poor's
Depository Receipts, securities referred to as SPDRs (known
as "Spiders"), that are designed to track the S&P 500 Index.
SPDRs represent an ownership interest in the SPDR Trust,
which holds a portfolio of common stocks that closely tracks
the price performance and dividend yield of the S&P 500
Index. SPDRs trade on the American Stock Exchange like
shares of common stock and have many of the same risks as
direct investments in common stocks. The market value of
SPDRs is expected to rise and fall as the S&P 500 Index
rises and falls. If the Underlying Fund invests in SPDRs, it
would, in addition to its own expenses, indirectly bear its
ratable share of the SPDR's expenses.
ASSET-BACKED SECURITIES. Asset-backed securities have risk
characteristics similar to mortgage-backed securities. Like
mortgage-backed securities, they generally decrease in value
as a result of interest rate increases, but may benefit less
than other fixed-income securities from declining interest
rates, principally because of prepayments. Also, as in the
case of mortgage-backed securities, prepayments generally
increase during a period of declining interest rates
although other factors, such as changes in credit use and
payment patterns, may also influence prepayment rates.
Asset-backed securities also involve the risk that various
federal and state consumer laws and other legal and economic
factors may result in the collateral backing the securities
being insufficient to support payment on the securities.
YEAR 2000. The Portfolio could be adversely affected if the
computer systems necessary for the efficient operation of
the Investment Manager, the Portfolio's other service
providers and the Underlying Funds (and their respective
portfolio securities) in which the Portfolio 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 Portfolio and
an Underlying 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.
19
<PAGE>
In addition, it is possible that the markets for securities
in which the Underlying Funds and/or Portfolio invest may be
detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000.
Improperly functioning trading systems may result in
settlement problems and liquidity issues. In addition,
governmental data processing errors also may result in
overall economic uncertainties. Earnings of individual
issuers will be affected by remediation costs, which may be
substantial. Accordingly, the Portfolio's investments may be
adversely affected.
20
<PAGE>
[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 INTERNATIONAL PORTFOLIO
[ICON] INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The International Portfolio seeks long-term capital
appreciation.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
The International Portfolio normally invests at least 65% of
its total assets in shares of the Underlying Funds described
below. These Underlying Funds are intended to give the
Portfolio broad international exposure. At any time the
Portfolio's "Investment Manager," Morgan Stanley Dean Witter
Advisors Inc., may add or substitute Underlying Funds in
which the Portfolio may invest. In deciding how to allocate
the Portfolio's assets among the selected Underlying Funds,
the Investment Manager considers its outlook for the various
economies and financial markets worldwide, and the relative
market valuations of the Underlying Funds. There are no
minimum or maximum percentages in which the Portfolio must
invest in any Underlying Fund.
THE UNDERLYING MORGAN STANLEY DEAN WITTER FUNDS
The following is a brief summary of the investment
objectives and principal investment strategies of the
Underlying Funds that the Investment Manager presently
considers for investment. The Portfolio's Investment Manager
also serves as the Investment Manager to each of the
Underlying Funds. For a complete description of an
Underlying Fund, please see its prospectus, which is
available free of charge by calling (877) 937-MSDW
(toll-free).
------------------------------------------------------------
EUROPEAN GROWTH FUND INC.
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
securities of issuers located in European countries.
The principal countries in which the fund invests
are France, the United Kingdom, Germany, the
Netherlands, Spain, Sweden, Switzerland and Italy.
The fund generally invests in equity securities but
may also invest without limitation in fixed-income
securities issued or guaranteed by European
governments. The fund's Investment Manager and/or
"Sub-Advisor," Morgan Stanley Dean Witter Investment
Management Inc., generally invest fund assets in
companies they believe have a high rate of earnings
growth potential. In addition, the fund may invest
in equity securities of non-European issuers,
</TABLE>
21
<PAGE>
<TABLE>
<S> <C>
government and convertible securities issued by non-
European governmental or private issuers, forward
currency contracts, options on currencies and
warrants.
</TABLE>
------------------------------------------------------------
INTERNATIONAL SMALLCAP FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks and other equity securities of small
capitalization companies located outside the United
States. The fund may invest more than 25% of its
total assets in securities of companies located in
each of the United Kingdom and Japan. The fund's
"Sub-Advisor," Morgan Stanley Dean Witter Investment
Management Inc., seeks securities of companies with
long-term growth prospects, attractive valuation
comparisons and adequate market liquidity. In
addition, the fund may invest in equity securities
of companies which have medium or large market
capitalizations, fixed-income securities issued or
guaranteed by foreign governments, lower-rated
convertible securities and forward currency
contracts.
</TABLE>
------------------------------------------------------------
JAPAN FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common or preferred stocks of companies which are
located in Japan. The fund's "Sub-Advisor," Morgan
Stanley Dean Witter Investment Management Inc.,
generally invests fund assets in companies it
believes have earnings growth potential and are
attractively priced. The fund also may invest in
convertible securities and fixed-income securities
of companies located in Japan or guaranteed by the
Japanese government, and in equity or fixed-income
securities of companies located in, or governments
of, developed countries in Asia, Europe or North
America (including the U.S.). In addition, the fund
may invest in forward currency contracts and options
on foreign currencies.
</TABLE>
22
<PAGE>
------------------------------------------------------------
LATIN AMERICAN GROWTH FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks and other equity securities of Latin
American companies. In determining which securities
to buy, hold or sell, the fund's "Sub-Advisor," TCW
Funds Management, Inc., selects securities based on
its view of their potential for capital
appreciation. The fund will normally invest in at
least three Latin American countries. In addition,
the fund may invest in Latin American convertible
and debt securities (including junk bonds), other
investment companies, options and futures, and
forward currency contracts.
</TABLE>
------------------------------------------------------------
PACIFIC GROWTH FUND
------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its total assets in
common stocks and other securities of companies
which have a principal place of business in, or
which derive a majority of their revenues from
business in, Asia, Australia and New Zealand. The
principal Asian countries include: Japan, Malaysia,
Singapore, Hong Kong, Thailand, the Philippines,
India, Indonesia, Taiwan and South Korea. The fund
may invest more than 25% of its assets in each of
Japan, Hong Kong, Malaysia, South Korea and/or
Taiwan. The fund's Investment Manager and/or
"Sub-Advisor," Morgan Stanley Dean Witter Investment
Management Inc., generally invest fund assets in
companies they believe have a high rate of earnings
growth potential. In addition, the fund may invest
in securities of other investment companies, forward
currency contracts, and options and futures.
</TABLE>
In addition to the principal investment strategies of the
Underlying Funds described above, the Portfolio may use the
following investment strategies:
DEFENSIVE INVESTING. The Portfolio may take temporary
"defensive" positions in attempting to respond to adverse
market conditions. The Portfolio may invest any amount of
its assets in cash or money market instruments in a
defensive posture when the Investment Manager believes it is
advisable to do so. Although taking a defensive posture is
designed to protect the Portfolio from an anticipated market
downturn, it could have the effect of reducing the benefit
from any upswing in the market. When the Portfolio takes a
defensive position, it may not achieve its investment
objective.
23
<PAGE>
PORTFOLIO TURNOVER. The Portfolio may engage in active and
frequent trading of Underlying Funds to achieve its
principal investment strategies. The portfolio turnover rate
is not expected to exceed 300% annually under normal
circumstances. A high turnover rate, such as 300%, may
increase the Portfolio's capital gains, which are passed
along to shareholders of the Portfolio as distributions.
This, in turn, may increase your tax liability as a
shareholder of the Portfolio. See the sections on
"Distributions" and "Tax Consequences." A high turnover rate
would not result in the Portfolio incurring higher sales
charges/brokerage commissions because the Portfolio would be
trading Class D shares of the Underlying Funds which are
sold without any sales charges.
The percentage limitations relating to the composition of
the Portfolio apply at the time the Portfolio acquires an
investment and refer to the Portfolio's net assets, unless
otherwise noted. Subsequent percentage changes that result
from market fluctuations will not require the Portfolio to
sell any security. The Portfolio may change its principal
investment strategies without shareholder approval; however,
you would be notified of any changes.
[ICON] PRINCIPAL RISKS
- --------------------------------------------------------------------------------
There is no assurance that the Portfolio will achieve its
investment objective. The Portfolio's share price will
fluctuate with changes in the market value of the
Portfolio's investments in Underlying Funds. When you sell
Portfolio shares, they may be worth less than what you paid
for them and, accordingly, you can lose money investing in
this Portfolio. In addition, the performance of the
Portfolio may be adversely affected because in allocating
Portfolio assets among the Underlying Funds the Investment
Manager may consider the impact of the allocation decision
on the Underlying Funds.
Set forth below are the principal risks associated with
investing in the Underlying Funds described above. For more
information about the risks of investing in the Underlying
Funds, please see their prospectuses, which are available
free of charge by calling (877) 937-MSDW (toll-free).
FOREIGN SECURITIES. A principal risk of investing in each of
the Underlying Funds is associated with foreign stock
investments. In general, stock values fluctuate in response
to activities specific to the company as well as general
market, economic and political conditions. Stock prices can
fluctuate widely in response to these factors.
The Underlying Funds' investments in foreign securities
(including depository receipts) involve risks in addition to
the risks associated with domestic securities. One
additional risk is currency risk. While the price of
Underlying Fund shares is quoted in U.S. dollars, the
Underlying Funds generally convert 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.
24
<PAGE>
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 Underlying Fund assets
and any effects of foreign social, economic or political
instability. In particular, adverse political or economic
developments in a geographic region or a particular country
in which an Underlying Fund invests could cause a
substantial decline in the value of the Underlying Fund's
portfolio. 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 an Underlying Fund to obtain or enforce a
judgment against the issuers of the securities.
Securities of foreign issuers may be less liquid than
comparable securities of U.S. issuers and, as such, their
price changes may be more volatile. Furthermore, foreign
exchanges and broker-dealers are generally subject to less
government and exchange scrutiny and regulation than their
U.S. counterparts. In addition, differences in clearance and
settlement procedures in foreign markets may occasion delays
in settlements of an Underlying Fund's trades effected in
those markets. Delays in purchasing securities may result in
the Underlying Fund losing investment opportunities. The
inability to dispose of foreign securities due to settlement
delays could result in losses to the Underlying Fund due to
subsequent declines in the value of the securities.
Many European countries have adopted or are in the process
of adopting a single European currency, referred to as the
"euro." The long-term consequences of the euro conversion
for foreign exchange rates, interest rates and the value of
European securities that an Underlying Fund may purchase are
unclear. The consequences may adversely affect the value
and/or increase the volatility of securities held by an
Underlying Fund.
Certain Underlying Funds may invest in foreign securities
issued by companies located in developing or emerging
countries. Compared to the United States and other developed
countries, developing or emerging countries may have
relatively unstable governments, economies based on only a
few industries and securities markets that trade a small
number of securities. Prices of these securities tend to be
especially volatile and, in the past, securities in these
countries have been characterized by greater potential loss
(as well as gain) than securities of companies located in
developed countries.
Certain Underlying Funds may invest in foreign small
capitalization securities. Investing in lesser-known,
smaller capitalized companies may involve greater risk of
volatility of the fund's share price than is customarily
associated with investing in larger, more established
companies. There is typically less publicly available
information concerning smaller companies than for larger,
more established companies. Some small companies have
limited product lines, distribution channels and financial
and managerial resources and tend to concentrate on fewer
geographical markets than do larger companies. Also, because
smaller companies
25
<PAGE>
normally have fewer shares outstanding than larger companies
and trade less frequently, it may be more difficult for the
fund to buy and sell significant amounts of shares without
an unfavorable impact on prevailing market prices. Some of
the companies in which the fund may invest may distribute,
sell or produce products which have recently been brought to
market and may be dependent on key personnel with varying
degrees of experience.
LATIN AMERICAN SECURITIES. Latin American Growth Fund
concentrates its investments in the common stock of Latin
American companies. Consequently, the fund's share price may
be more volatile than that of mutual funds not sharing this
geographic concentration. Economic and political
developments in Latin America may have profound effects upon
the value of the fund's portfolio. In the event of
expropriation, nationalization or other complications, the
fund could lose its entire investment in any one country. In
addition, individual Latin American countries may place
restrictions on the ability of foreign entities such as the
fund to invest in particular segments of the local
economies.
The securities markets of Latin American countries are
substantially smaller, less developed, less liquid and more
volatile than the major securities markets in the United
States. The limited size of many Latin American securities
markets and limited trading volume in issuers compared to
volume of trading in U.S. securities could cause prices to
be erratic for reasons apart from factors that affect the
quality of the securities. For example, limited market size
may cause prices to be unduly influenced by traders who
control large positions. Adverse publicity and investors'
perceptions, whether or not based on fundamental analysis,
may decrease the value and liquidity of securities,
especially in these markets.
In addition, many of the currencies of Latin American
countries have experienced steady devaluations relative to
the U.S. dollar, and major devaluations have historically
occurred in certain countries. Any devaluations in the
currencies in which the fund's portfolio securities are
denominated may have a detrimental impact on the fund. There
is also a risk that certain Latin American countries may
restrict the free conversion of their currencies into other
currencies. Further, certain Latin American currencies may
not be internationally traded.
Most Latin American countries have experienced substantial,
and in some periods extremely high, rates of inflation for
many years. Inflation and rapid fluctuations in inflation
rates have had and may continue to have very negative
effects on the economies and securities markets of certain
Latin American countries.
Latin American securities are also subject to the more
general risks associated with foreign securities which are
discussed above.
JAPANESE SECURITIES. Japan Fund concentrates its investments
in the common stock (including depository receipts) of
Japanese companies. Consequently, the fund's share price may
be more volatile than that of mutual funds not sharing this
geographic concentration. The value of the fund's shares may
vary widely in response to political and economic factors
affecting companies in Japan. Securities in Japan are
denominated and quoted in yen. As a result, the value of the
fund's Japanese securities, as measured in U.S. dollars, may
be affected by fluctuations in
26
<PAGE>
the value of the Japanese yen relative to the U.S. dollar.
Securities traded on Japanese stock exchanges have exhibited
significant volatility in recent years. In addition,
Japanese securities that are not traded on the first
sections of the three main Japanese exchanges may be more
volatile and less liquid than those traded on the first
sections. The decline in the Japanese markets since 1989 has
contributed to a weakness in the Japanese economy. Continued
economic weakness could result in further declines in the
Japanese securities markets. Japan's economy may be
significantly affected by any strains in its trade
relations, particularly with the U.S.
Japanese securities are also subject to the more general
risks associated with foreign securities which are discussed
above.
PACIFIC BASIN SECURITIES. Pacific Growth Fund concentrates
its investments in the common stock of companies located in
Asia, Australia and New Zealand. Consequently, the fund's
share price may be more volatile than that of mutual funds
not sharing this geographic concentration. Economic and
political developments in the Pacific Basin region of the
world may have profound effects upon the value of the fund's
portfolio.
OTHER RISKS. The performance of each Underlying Fund also
will depend on whether the Investment Manager and/or
Sub-Advisor is successful in pursuing the Underlying Fund's
investment strategy. The Underlying Funds are also subject
to other risks from their permissible investments, including
the risks associated with investments in fixed-income
securities, convertible securities, junk bonds, securities
of other investment companies, options and futures, and
forward currency contracts. For more information about these
risks, see the "Additional Risk Information" section.
In addition to the principal risks associated with the
Underlying Funds, the Portfolio also will be subject to the
following risks:
NON-DIVERSIFIED STATUS. The Portfolio is a "non-diversified"
mutual fund and, as such, its investments are not required
to meet certain diversification requirements under federal
law. Compared with "diversified" funds, the Portfolio may
invest a greater percentage of its assets in the securities
of an individual issuer, in this case any Underlying Fund.
Thus, the Portfolio's assets may be concentrated in fewer
securities than other funds. A decline in the value of those
investments would cause the Portfolio's overall value to
decline to a greater degree.
The performance of the Portfolio also will depend on whether
the Investment Manager is successful in pursuing the
Portfolio's investment strategy.
Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the FDIC or any other government
agency.
27
<PAGE>
[SIDEBAR]
ANNUAL TOTAL RETURN
This chart shows how the performance of the Portfolio's Class B shares over the
past calendar year.
AVERAGE ANNUAL
TOTAL RETURNS
This table compares the Portfolio'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 Portfolio'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]
[ICON] PAST PERFORMANCE
- --------------------------------------------------------------------------------
The bar chart and table below provide some indication of the
risks of investing in the International Portfolio. The
Portfolio's past performance does not indicate how the
Portfolio will perform in the future.
ANNUAL TOTAL RETURN - CALENDAR YEAR
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1998 7.92%
</TABLE>
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
September 30, 1999 was 18.16%.
During the period shown in the bar chart, the highest return
for a calendar quarter was 17.72% (quarter ended
December 31, 1998) and the lowest return for a calendar
quarter was -11.38% (quarter ended September 30, 1998).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
--------------------------------------------------------------------------------------
LIFE OF
PORTFOLIO
PAST 1 YEAR (SINCE 11/25/97)
<S> <C> <C>
--------------------------------------------------------------------------------------
Class A 3.12% 2.28%
--------------------------------------------------------------------------------------
Class B 2.92% 2.99%
--------------------------------------------------------------------------------------
Class C 6.92% 6.61%
--------------------------------------------------------------------------------------
Class D 9.04% 7.62%
--------------------------------------------------------------------------------------
Morgan Stanley Capital International EAFE Index(1) 20.33% 20.62%
--------------------------------------------------------------------------------------
Lipper International Funds Index(2) 12.66% 13.09%
--------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
1 The Morgan Stanley Capital International Europe, Australia,
Far East Index measures the performance for a diverse range
of global stock markets within Europe, Australia, and the
Far East. The Index does not include any expenses, fees,
charges or reinvestment of dividends. The Index is unmanaged
and should not be considered an investment.
2 The Lipper International Funds Index is an equally-weighted
performance index of the largest qualifying funds (based on
net assets) in the Lipper International 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.
</TABLE>
28
<PAGE>
[Sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
ANNUAL PORTFOLIO
OPERATING EXPENSES
These expenses are deducted from the Portfolio's assets and
are based on expenses paid for the fiscal year ended September 30, 1999.
[End Sidebar]
[ICON] FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below briefly describes the fees and expenses that
you may pay if you buy and hold shares of the International
Portfolio. The Portfolio offers four Classes of shares:
Classes A, B, C and D. Each Class has a different
combination of fees, expenses and other features. The
Portfolio does not charge account or exchange fees. See the
"Share Class Arrangements" section for further fee and
expense information.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
SHAREHOLDER FEES
------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price) 5.25%(1) None None None
------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a
percentage based on the lesser of the
offering price or net asset value at
redemption) None(2) 5.00%(3) 1.00%(4) None
------------------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
------------------------------------------------------------------------------------------
Management fee None None None None
------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.24% 1.00% 0.77% None
------------------------------------------------------------------------------------------
Other expenses(5) 1.10% 1.10% 1.10% 1.10%
------------------------------------------------------------------------------------------
Total annual Portfolio operating expenses(5) 1.34% 2.10% 1.87% 1.10%
------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
1 Reduced for purchases of $25,000 and over.
2 Investments that are not subject to any sales charge at the
time of purchase are subject to a contingent deferred sales
charge ("CDSC") of 1.00% that will be imposed if you sell
your shares within one year after purchase, except for
certain specific circumstances.
3 The CDSC is scaled down to 1.00% during the sixth year,
reaching zero thereafter. See "Share Class Arrangements" for
a complete discussion of the CDSC.
4 Only applicable if you sell your shares within one year
after purchase.
5 The Investment Manager has agreed to assume all operating
expenses (except for brokerage and 12b-1 fees) for the
Portfolio until such time as the Portfolio has $50 million
of net assets or until November 30, 2000, whichever occurs
first. The Investment Manager had agreed to assume all
operating expenses (except for brokerage and 12b-1 fees) for
each Portfolio until such time as the respective Portfolio
had $50 million of net assets or until six months from
commencement of the Fund's operations, whichever occurred
first and has agreed to extend such expense assumption
through November 30, 2000. As a result of such assumption of
other expenses, for the fiscal period ended September 30,
1999, the actual "Other Expenses" amounted to 0.00% for each
Class of the International Portfolio and "Total Fund
Operating Expenses" amounted to 0.24%, 1.00%, 0.77% and
0.00% for Class A, B, C and D respectively of the
International Portfolio.
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of
investing in the Portfolio with the cost of investing in
other mutual funds.
This example shows what expenses you could pay over time.
The example assumes that you invest $10,000 in the
Portfolio, your investment has a 5% return each year, and
the Portfolio's operating expenses remain the same. Although
your actual costs
29
<PAGE>
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:
----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
-----------------------------------------------------------------
CLASS A $654 $927 $1,221 $2,053
-----------------------------------------------------------------
CLASS B $713 $958 $1,329 $2,431
-----------------------------------------------------------------
CLASS C $290 $588 $1,011 $2,190
-----------------------------------------------------------------
CLASS D $112 $350 $ 606 $1,340
-----------------------------------------------------------------
<CAPTION>
IF YOU HELD YOUR SHARES:
----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
--------------------- ----------------------------------------
CLASS A $654 $927 $1,221 $2,053
--------------------- ----------------------------------------
CLASS B $213 $658 $1,129 $2,431
--------------------- ----------------------------------------
CLASS C $190 $588 $1,011 $2,190
--------------------- ----------------------------------------
CLASS D $112 $350 $ 606 $1,340
--------------------- ----------------------------------------
</TABLE>
Long-term shareholders of Class B and Class C may pay more
in sales charges, including distribution fees, than the
economic equivalent of the maximum front-end sales charges
permitted by the NASD.
UNDERLYING FUND EXPENSES
The Portfolio will not pay any sales load or 12b-1 fee in
connection with its investments in shares of Underlying
Funds. However, the Portfolio will indirectly bear its pro
rata share of the expenses incurred by the Underlying Funds
that are borne by Class D shareholders of the Underlying
Funds. These expenses are set forth in the table below (as
of each Underlying Fund's most recent fiscal year end).
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL
FEES EXPENSES EXPENSES
<S> <C> <C> <C>
------------------------------------------------------------------------------------------
European Growth Fund 0.91% 0.23% 1.14%
------------------------------------------------------------------------------------------
International SmallCap Fund 1.15% 0.97% 2.12%
------------------------------------------------------------------------------------------
Japan Fund 0.95% 0.63% 1.58%
------------------------------------------------------------------------------------------
Latin America Growth Fund 1.25% 0.73% 1.98%
------------------------------------------------------------------------------------------
Pacific Growth Fund 0.95% 0.65% 1.60%
------------------------------------------------------------------------------------------
</TABLE>
[ICON] ADDITIONAL RISK INFORMATION
- --------------------------------------------------------------------------------
This section provides additional information relating to the
principal risks of investing in the Underlying Funds
described above.
FIXED-INCOME SECURITIES. Certain Underlying Funds invest in
fixed-income securities (which may include zero coupon
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.
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. (Zero
coupon securities are typically subject to greater price
fluctuations than comparable securities that pay interest.)
CONVERTIBLE SECURITIES. Certain Underlying Funds may invest
in convertible securities, which are securities that
generally pay dividends or interest and may be
30
<PAGE>
converted into common stock. These securities may carry
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 be likely to increase when interest rates fall
and decrease when interest rates rise, as with a
fixed-income security. If the conversion value exceeds the
investment value, the price of the convertible security will
tend to fluctuate directly with the price of the underlying
equity security.
With respect to certain Underlying Funds, there are no
minimum rating or quality requirements as to their
convertible securities investments and, thus, all or some of
such securities may be rated below investment grade. These
"junk bonds" have speculative risk characteristics which are
described below.
JUNK BONDS. Certain Underlying Funds may invest in junk
bonds, i.e., fixed-income securities rated lower than
investment grade or, if not rated, determined to be of
comparable quality. Junk bonds are subject to greater risk
of loss of income and principal than higher rated
securities. The prices of junk bonds are likely to be more
sensitive to adverse economic changes or individual
corporate developments than higher rated securities. 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, an Underlying Fund may incur additional
expenses to seek recovery. The secondary market for junk
bonds may be less liquid than the markets for higher quality
securities and, as such, may have an adverse effect on the
market prices of certain securities. The illiquidity of the
market may also adversely affect the ability of an
Underlying Fund's directors/trustees to arrive at a fair
value for certain junk bonds at certain times and could make
it difficult for the Underlying Fund to sell certain
securities. In addition, periods of economic uncertainty and
change probably would result in an increased volatility of
market prices of high yield securities and a corresponding
volatility in an Underlying Fund's net asset value.
LATIN AMERICAN SOVEREIGN DEBT SECURITIES. Latin American
Growth Fund's investments in Latin American sovereign debt
are subject to unique credit risks. Certain Latin American
countries are among the largest debtors to commercial banks
and foreign governments. At times, certain Latin American
countries have declared a moratorium on the payment of
principal and/or interest on external debt. The governmental
entities that control the repayment also may not be willing
or able to repay the principal and/or interest on the debt
when it becomes due. Latin American governments may default
on their sovereign debt, which may require holders of that
debt to participate in debt rescheduling or additional
lending to defaulting governments. There is no bankruptcy
proceeding by which defaulted sovereign debt may be
collected. These risks could have a severely negative impact
on the fund's sovereign debt holdings and cause the value of
the fund's shares to decline drastically.
INVESTMENT COMPANIES. Any Underlying Fund investment in an
investment company is subject to the underlying risk of that
investment company's portfolio
31
<PAGE>
securities. For example, if the investment company held
common stocks, the Underlying Fund also would be exposed to
the risk of investing in common stocks. In addition to the
Underlying Fund's fees and expenses, the Underlying Fund
would bear its share of the investment company's fees and
expenses.
OPTIONS AND FUTURES. If an Underlying Fund invests in
options and/or futures (including options on currencies),
its participation in these markets would subject the
Underlying Fund's portfolio to certain risks. The Investment
Manager's and/or Sub-Advisor's predictions of movements in
the direction of the stock, currency or interest rate
markets may be inaccurate, and the adverse consequences to
the Underlying Fund (e.g., a reduction in the Underlying
Fund's net asset value or a reduction in the amount of
income available for distribution) may leave the Underlying
Fund in a worse position than if these strategies were not
used. Other risks inherent in the use of options and futures
include, for example, the possible imperfect correlation
between the price of options and futures contracts and
movements in the prices of the securities or currencies
being hedged, and the possible absence of a liquid secondary
market for any particular instrument. Certain options may be
over-the-counter options, which are options negotiated with
dealers; there is no secondary market for these investments.
FORWARD CURRENCY CONTRACTS. An Underlying Fund's
participation in forward currency contracts also involves
risks. If the Investment Manager and/or Sub-Advisor employ a
strategy that does not correlate well with the Underlying
Fund's investments or the currencies in which the
investments are denominated, currency contracts could result
in a loss. The contracts also may increase the Underlying
Fund's volatility and may involve a significant risk.
YEAR 2000. The Portfolio could be adversely affected if the
computer systems necessary for the efficient operation of
the Investment Manager, the Portfolio's other service
providers and the Underlying Funds (and their respective
portfolio securities) in which the Portfolio 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 Portfolio and
an Underlying 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 Underlying Funds and/or Portfolio invest may be
detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000.
Improperly functioning trading systems may result in
settlement problems and liquidity issues. 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 Portfolio's
investments may be adversely affected.
32
<PAGE>
[Sidebar]
MORGAN STANLEY DEAN WITTER ADVISORS INC.
The Investment Manager is widely recognized as a leader in the mutual fund
industry and together with Morgan Stanley Dean Witter Services Company Inc., its
wholly-owned subsidiary, had approximately $140 billion in assets under
management as of October 31, 1999.
[End Sidebar]
[ICON] FUND MANAGEMENT
- --------------------------------------------------------------------------------
Each Portfolio 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 also serves as the Investment Manager to each of the
Underlying Funds described above. In addition, with respect
to certain Underlying Funds, the Investment Manager has
retained a Sub-Advisor to invest Underlying Fund assets.
Morgan Stanley Dean Witter Investment Management Inc. ("MSDW
Investment Management") serves as Sub-Advisor to the
following Underlying Funds: Growth Fund, European Growth
Fund, International SmallCap Fund, Japan Fund and Pacific
Growth Fund. TCW Funds Management, Inc. ("TCW") serves as
Sub-Advisor to Latin American Growth Fund and Mid-Cap Equity
Trust. Miller Anderson & Sherrerd, LLP ("MAS") serves as
Sub-Advisor to Value Fund. 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.
MSDW Investment Management, together with its institutional
investment management affiliates, manages more than
$137 billion, as of July 31, 1999, primarily for employee
benefit plans, investment companies, endowments, foundations
and wealthy individuals. MSDW Investment Management also is
a subsidiary of Morgan Stanley Dean Witter & Co. Its main
business office is located at 1221 Avenue of the Americas,
New York, NY 10020.
TCW is a wholly-owned subsidiary of TCW Group, Inc., whose
direct and indirect subsidiaries provide a variety of trust,
investment management and investment advisory services.
TCW's main business office is located at 865 South Figueroa
Street, Suite 1800, Los Angeles, CA 90017. As of
September 30, 1999, TCW Funds Management, Inc. and its
affiliates had approximately $57 billion under management or
committed to management.
MAS manages assets of approximately $62.4 billion, as of
March 31, 1999, for investment companies, employee benefit
plans, endowments, foundations and other institutional
investors. MAS is an indirect subsidiary of Morgan Stanley
Dean Witter & Co. Its main business office is located at One
Tower Bridge, West Conshohocken, PA 19428.
Joseph McAlinden, Executive Vice President and Chief
Investment Officer (since April 1996) of the Investment
Manager, has been the primary portfolio manager of the
Domestic Portfolio and the International Portfolio since the
Fund's inception in November 1997. Mr. McAlinden was
formerly a Senior Vice President with the Investment Manager
(June 1995 - April 1996) and prior thereto was a Managing
Director of Dillon Read.
The Investment Manager does not receive a management fee
from either Portfolio or the Fund for the services and
facilities furnished to the Portfolio or the Fund. However,
each Portfolio, through its investments in the Underlying
Funds, will pay
33
<PAGE>
its pro rata share of the management fees and certain other
expenses that are borne by Class D shareholders of the
Underlying Funds. Each Underlying Fund pays the Investment
Manager a monthly management fee as full compensation for
the services and facilities furnished to the Underlying
Fund, and for expenses assumed by the Investment Manager.
The management fees paid by each Underlying Fund for its
most recent fiscal year are set forth in the "Fees and
Expenses" section for each of the Domestic Portfolio and the
International Portfolio.
34
<PAGE>
SHAREHOLDER INFORMATION
[ICON] PRICING PORTFOLIO SHARES
- --------------------------------------------------------------------------------
The price of each Portfolio's shares (excluding sales
charges), called "net asset value," is based on the value of
the Portfolio's 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.
[Sidebar]
CONTACTING A FINANCIAL ADVISOR
If you are new to the Morgan Stanley Dean Witter Family of Funds and would like
to contact a Financial Advisor, call (877) 937-MSDW (toll-free) for the
telephone number of the Morgan Stanley Dean Witter office nearest you. You may
also access our office locator on our Internet site at:
www.msdw.com/individual/funds
[End Sidebar]
The net asset value per share of each Portfolio 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 assets of each Portfolio consist primarily of the
Underlying Funds, which are valued at their respective net
asset values. The net asset value of each Underlying Fund's
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 Underlying
Fund's Board of Trustees. In these cases, an Underlying
Fund's net asset value will reflect certain portfolio
securities' fair value rather than their market price. In
addition, if an Underlying Fund holds securities that are
primarily listed on foreign exchanges, the value of the
Underlying Fund's securities may change on days when you
will not be able to purchase or sell your shares. The
Portfolio's other securities are valued in the same manner
as the Underlying Funds' securities.
A Portfolio's short-term 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.
[ICON] HOW TO BUY SHARES
- --------------------------------------------------------------------------------
You may open a new account to buy Portfolio shares or buy
additional Portfolio 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 Portfolio. You may also purchase shares
directly by calling the Fund's transfer agent and requesting
an application.
Because every investor has different immediate financial
needs and long-term investment goals, each Portfolio 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 Portfolio shares, you
must specify which Class of shares you wish to purchase.
35
<PAGE>
[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]
When you buy Portfolio 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 Portfolio
shares.
<TABLE>
<CAPTION>
MINIMUM INVESTMENT AMOUNTS
----------------------------------------------------------------------------------------
MINIMUM INVESTMENT
--------------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
<S> <C> <C> <C>
----------------------------------------------------------------------------------------
Regular Accounts $1,000 $100
----------------------------------------------------------------------------------------
Individual Retirement
Accounts: Regular IRAs $1,000 $100
Education IRAs $500 $100
----------------------------------------------------------------------------------------
EASYINVEST-SM-
(Automatically from your
checking or savings account
or Money Market Fund) $100* $100*
----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Provided your schedule of investments totals $1,000 in
twelve months.
</TABLE>
There is no minimum investment amount if you purchase
Portfolio 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 Portfolio shares for an
existing account by contacting your Morgan Stanley Dean
Witter Financial Advisor, you may send a check directly to a
Portfolio. To buy additional shares in this manner:
- 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 name of the
Portfolio, 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).
- Make out a check for the total amount payable to: Morgan
Stanley Dean Witter Fund of Funds--Domestic Portfolio or
Morgan Stanley Dean Witter Fund of Funds--International
Portfolio.
- Mail the letter and check to Morgan Stanley Dean Witter
Trust FSB at P.O. Box 1040, Jersey City, NJ 07303.
[ICON] HOW TO EXCHANGE SHARES
- --------------------------------------------------------------------------------
PERMISSIBLE FUND EXCHANGES. You may exchange shares of any
Class of a Portfolio for the same Class of any other
continuously offered Multi-Class Fund, or for shares
36
<PAGE>
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 a Portfolio 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
particular Morgan Stanley Dean Witter Fund are not being
offered for purchase.
EXCHANGE PROCEDURES. You can process an exchange by
contacting your Morgan Stanley Dean Witter Financial Advisor
or other authorized financial representative. Otherwise, you
must forward an exchange privilege authorization form to the
Fund's transfer agent -- Morgan Stanley Dean Witter Trust
FSB -- and then write the transfer agent or call (800)
869-NEWS to place an exchange order. You can obtain an
exchange privilege authorization form by contacting your
Financial Advisor or other authorized financial
representative or by calling (800) 869-NEWS. If you hold
share certificates, no exchanges may be processed until we
have received all applicable share certificates.
An exchange to any Morgan Stanley Dean Witter Fund (except a
Money Market Fund) is made on the basis of the next
calculated net asset values of the Funds involved after the
exchange instructions are accepted. When exchanging into a
Money Market Fund, a Portfolio'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 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
37
<PAGE>
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 Portfolio 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 a
Portfolio for shares of another Morgan Stanley Dean Witter
Fund there are important tax considerations. For tax
purposes, the exchange out of a Portfolio is considered a
sale of Portfolio shares -- and the exchange into the other
Fund is considered a purchase. As a result, you may realize
a capital gain or loss.
You should review the "Tax Consequences" section and consult
your own tax professional about the tax consequences of an
exchange.
LIMITATIONS ON EXCHANGES. Certain patterns of exchanges may
result in the Fund limiting or prohibiting, at its
discretion, additional purchases and/or exchanges.
Determinations in this regard may be made based on the
frequency or dollar amount of previous exchanges. The Fund
will notify you in advance of limiting your exchange
privileges.
CDSC CALCULATIONS ON EXCHANGES. See the "Share
Class Arrangements" section of this PROSPECTUS for a
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.
[ICON] HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You can sell some or all of your Portfolio 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 share
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
Financial Advisor Witter Financial Advisor or other authorized financial
representative.
------------------------------------------------------------
[ICON] 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:
[ICON] - your account number;
- the dollar amount or the number of shares you wish to
sell;
- the name of the Portfolio;
- the Class of shares you wish to sell; and
- the signature of each owner as it appears on the account.
------------------------------------------------------------
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
<S> <C>
----------------------------------------------------------------------------------
By Letter, If you are requesting payment to anyone other than the
continued 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
Withdrawal Plan Family of Funds has a total market value of at least
[ICON] $10,000, you may elect to withdraw amounts of $25 or more,
or in any whole percentage of a Fund's balance (provided the
amount is at least $25), on a monthly, quarterly,
semi-annual or annual basis, from any Fund with a balance of
at least $1,000. Each time you add a Fund to the plan, you
must meet the plan requirements.
------------------------------------------------------------
Amounts withdrawn are subject to any applicable CDSC. A CDSC
may be waived under certain circumstances. See the Class B
waiver categories listed in the "Share Class Arrangements"
section of this PROSPECTUS.
------------------------------------------------------------
To sign up for the Systematic Withdrawal Plan, contact your
Morgan Stanley Dean Witter Financial Advisor or call
(800) 869-NEWS. You may terminate or suspend your plan at
any time. Please remember that withdrawals from the plan are
sales of shares, not Fund "distributions," and ultimately
may exhaust your account balance. The Fund may terminate or
revise the plan at any time.
----------------------------------------------------------------------------------
</TABLE>
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, your sale
will not be effected until it has been verified that the
check has been honored.
TAX CONSIDERATIONS. Normally, your sale of Portfolio 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 Portfolio 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 Portfolio
shares at their net asset value and receive a pro rata
credit for any CDSC paid in connection with the sale.
39
<PAGE>
[Sidebar]
TARGETED DIVIDENDS-SM-
You may select to have your Portfolio distributions automatically invested in
other Classes of Portfolio 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]
INVOLUNTARY SALES. The Fund reserves the right, on sixty
days' notice, to sell the shares of any shareholder (other
than shares held in an IRA or 403(b) Custodial Account)
whose shares, due to sales by the shareholder, have a value
below $100, or in the case of an account opened through
EASYINVEST -SM-, if after 12 months the shareholder has
invested less than $1,000 in the account.
However, before the Fund sells your shares in this manner,
we will notify you and allow you sixty days to make an
additional investment in an amount that will increase the
value of your account to at least the required amount before
the sale is processed. No CDSC will be imposed on any
involuntary sale.
MARGIN ACCOUNTS. If you have pledged your Portfolio 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
shares.
[ICON] DISTRIBUTIONS
- --------------------------------------------------------------------------------
Each Portfolio passes substantially all of its earnings from
income and capital gains along to its investors as
"distributions." Each Portfolio earns income from its
Underlying Fund investments and interest from fixed-income
investments. These amounts are passed along to Portfolio
shareholders as "income dividend distributions." Each
Portfolio 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."
Each Portfolio declares income dividends separately for each
Class. Distributions paid on Class A and Class D shares will
usually 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 usually distributed in
December. Each Portfolio, however, may retain and reinvest
any long-term capital gains. Each Portfolio 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.
[ICON] TAX CONSEQUENCES
- --------------------------------------------------------------------------------
As with any investment, you should consider how your
Portfolio 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 a Portfolio in the Fund.
40
<PAGE>
Unless your investment in a Portfolio 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:
- The Portfolio makes distributions; and
- You sell Portfolio shares, including an exchange to
another Morgan Stanley Dean Witter Fund.
TAXES ON DISTRIBUTIONS. Your distributions are normally
subject to federal and state income tax when they are paid,
whether you take them in cash or reinvest them in Portfolio
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 Portfolio.
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 Portfolio 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 Portfolio 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.
[ICON] SHARE CLASS ARRANGEMENTS
- --------------------------------------------------------------------------------
Each Portfolio 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.
41
<PAGE>
[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]
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.
The chart below compares the sales charge and maximum annual
12b-1 fee applicable to each Class of a Portfolio:
<TABLE>
<CAPTION>
CLASS SALES CHARGE MAXIMUM 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 1.00%
----------------------------------------------------------------------------------------------------
C 1.0% CDSC during the first year 1.00%
----------------------------------------------------------------------------------------------------
D None None
----------------------------------------------------------------------------------------------------
</TABLE>
CLASS A SHARES Class A shares of each Portfolio 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:
<TABLE>
<CAPTION>
FRONT-END SALES CHARGE
--------------------------------------------------
AMOUNT OF SINGLE PERCENTAGE OF APPROXIMATE PERCENTAGE OF
TRANSACTION PUBLIC 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>
The reduced sales charge schedule is applicable to purchases
of Class A shares in a single transaction by:
- A single account (including an individual, trust or
fiduciary account).
- Family member accounts (limited to husband, wife and
children under the age of 21).
42
<PAGE>
- Pension, profit sharing or other employee benefit plans of
companies and their affiliates.
- Tax-exempt organizations.
- 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 a Portfolio 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 Portfolio 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 a Portfolio), 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 a Portfolio
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 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.
43
<PAGE>
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 CDSC upon sale) if
your account qualifies under one of the following
categories:
- A trust for which Morgan Stanley Dean Witter Trust FSB
provides discretionary trustee services.
- Persons participating in a fee-based investment program
(subject to all of its terms and conditions, including
termination fees, mandatory sale or transfer restrictions
on termination) approved by the Fund's distributor
pursuant to which they pay an asset-based fee for
investment advisory, administrative and/or brokerage
services.
- 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.
- 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.
- 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 Portfolio 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 Portfolio shares, and (2) the sale proceeds
were maintained in the interim in cash or a money market
fund.
- 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.
- 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.
44
<PAGE>
[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]
CLASS B SHARES Class B shares of each Portfolio are
offered at net asset value with no initial sales charge but
are subject to a contingent deferred sales charge, or CDSC,
as set forth in the table below. For the purpose of
calculating the CDSC, shares are deemed to have been
purchased on the last day of the month during which they
were purchased.
<TABLE>
<CAPTION>
CDSC AS A PERCENTAGE
YEAR SINCE PURCHASE PAYMENT MADE OF AMOUNT REDEEMED
<S> <C>
------------------------------------------------------------------------------------
First 5.0%
------------------------------------------------------------------------------------
Second 4.0%
------------------------------------------------------------------------------------
Third 3.0%
------------------------------------------------------------------------------------
Fourth 2.0%
------------------------------------------------------------------------------------
Fifth 2.0%
------------------------------------------------------------------------------------
Sixth 1.0%
------------------------------------------------------------------------------------
Seventh and thereafter None
------------------------------------------------------------------------------------
</TABLE>
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:
- 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.
- 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).
- Sales of shares held for you as a participant in an MSDW
Eligible Plan.
- 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 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
45
<PAGE>
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.
- Sales of shares if you simultaneously invest the proceeds
in the Investment Manager's mutual fund asset allocation
program, pursuant to which investors pay an asset-based
fee. Any shares you acquire in connection with the
Investment Manager's mutual fund asset allocation program
are subject to all of the terms and conditions of that
program, including termination fees, mandatory sale or
transfer restrictions on termination.
All waivers will be granted only following the Fund's
distributor receiving confirmation of your entitlement. If
you believe you are eligible for a CDSC waiver, please
contact your Financial Advisor or call (800) 869-NEWS.
DISTRIBUTION FEE. Class B shares are subject to an annual
12b-1 fee of 1.0% of the average daily net assets of
Class B shares.
CONVERSION FEATURE. After ten (10) years, Class B shares
will convert automatically to Class A shares of a Portfolio
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
acquired in exchange for shares of another Morgan Stanley
Dean Witter Fund originally purchased 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 Portfolio shares that are
subject to a CDSC. When determining the length of time you
held the shares and the corresponding CDSC rate, any period
(starting at the end of the month) during which you held
shares of a Fund that does
46
<PAGE>
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 a Portfolio 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
Portfolio 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 of each Portfolio 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 SHARES Class D shares of each Portfolio are
offered without any sales charge on purchases or sales and
without any distribution (12b-1) fee. Class D shares are
offered only to investors meeting an initial investment
minimum of $5 million ($25 million for MSDW Eligible Plans)
and the following investor categories:
- Investors participating in the Investment Manager's mutual
fund asset allocation program (subject to all of its terms
and conditions, including termination fees, mandatory sale
or transfer restrictions on termination) pursuant to which
they pay an asset-based fee.
- Persons participating in a fee-based investment program
(subject to all of its terms and conditions, including
termination fees, mandatory sale or transfer restrictions
on termination) approved by the Fund's distributor
pursuant to which they pay an asset-based fee for
investment advisory, administrative and/or brokerage
services.
47
<PAGE>
- 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.
- Certain unit investment trusts sponsored by Dean Witter
Reynolds.
- Certain other open-end investment companies whose shares
are distributed by the Fund's distributor.
- 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 certain 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 a Portfolio 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 of each Portfolio. The Plan allows each Portfolio to
pay distribution fees for the sale and distribution of these
shares. It also allows each Portfolio to pay for services to
shareholders of Class A, Class B and Class C shares. Because
these fees are paid out of each Portfolio'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.
48
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
Portfolio's financial performance over the life of each Portfolio.
Certain information reflects financial results for a single Portfolio
share. The total returns in the table represent the rate an investor
would have earned or lost on an investment in a Portfolio (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>
DOMESTIC PORTFOLIO
---------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 25, 1997*
ENDED THROUGH
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
<S> <C> <C>
------------------------------------------------------------------------------------------------------
CLASS A SHARES++
------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.72 $10.00
------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.46 0.21
Net realized and unrealized gain (loss) 1.93 (0.44)
------ ------
Total income (loss) from investment operations 2.39 (0.23)
------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.36) (0.05)
Net realized gain (0.21) --
------ ------
Total dividends and distributions (0.57) (0.05)
------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.54 $ 9.72
------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 25.00% (2.33)%(1)
------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:(3)(4)(5)
------------------------------------------------------------------------------------------------------
Expenses 0.23% 0.22%(2)
------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.92% 2.21%(2)
------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,097 $1,359
------------------------------------------------------------------------------------------------------
Portfolio turnover rate 295% 227%(1)
------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* For the period November 25, 1997 (commencement of operations) through September
30, 1998.
++ 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) If the Fund had borne all of its expenses that were reimbursed or waived by the
Investment Manager, the annualized expense and net investment income ratios
would have been 0.67% and 3.48%, respectively, for the year ended September 30,
1999 and 1.15% and 1.28%, respectively, for the period ended September 30, 1998,
for Class A shares; 1.44% and 2.71%, respectively, for the year ended
September 30, 1999 and 1.90% and 0.53%, respectively, for the period ended
September 30, 1998, for Class B shares; 0.98% and 3.17%, respectively, for the
year ended September 30, 1999 and 1.90% and 0.53%, respectively, for the period
ended September 30, 1998, for Class C shares; and 0.44% and 3.71%,
respectively, for the year ended September 30, 1999 and 0.90% and 1.53%,
respectively, for the period ended September 30, 1998, for Class D shares.
(4) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(5) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
DOMESTIC PORTFOLIO
-----------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 25, 1997*
ENDED THROUGH
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
<S> <C> <C>
--------------------------------------------------------------------------------------------------------
CLASS B SHARES++
--------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
--------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.67 $10.00
--------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.35 0.14
Net realized and unrealized gain (loss) 1.94 (0.42)
------ ------
Total income (loss) from investment operations 2.29 (0.28)
--------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.29) (0.05)
Net realized gain (0.21) --
------ ------
Total dividends and distributions (0.50) (0.05)
--------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.46 $ 9.67
--------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 23.96% (2.83)%(1)
--------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:(3)(4)(5)
--------------------------------------------------------------------------------------------------------
Expenses 1.00% 0.92%(2)
--------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.15% 1.51%(2)
--------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
--------------------------------------------------------------------------------------------------------
Net assets, end of period, in millions $26,007 $24,338
--------------------------------------------------------------------------------------------------------
Portfolio turnover rate 295% 227%(1)
--------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* For the period November 25, 1997 (commencement of operations) through September
30, 1998.
++ 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) If the Fund had borne all of its expenses that were reimbursed or waived by the
Investment Manager, the annualized expense and net investment income ratios
would have been 0.67% and 3.48%, respectively, for the year ended September 30,
1999 and 1.15% and 1.28%, respectively, for the period ended September 30, 1998,
for Class A shares; 1.44% and 2.71%, respectively, for the year ended
September 30, 1999 and 1.90% and 0.53%, respectively, for the period ended
September 30, 1998, for Class B shares; 0.98% and 3.17%, respectively, for the
year ended September 30, 1999 and 1.90% and 0.53%, respectively, for the period
ended September 30, 1998, for Class C shares; and 0.44% and 3.71%,
respectively, for the year ended September 30, 1999 and 0.90% and 1.53%,
respectively, for the period ended September 30, 1998, for Class D shares.
(4) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(5) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
DOMESTIC PORTFOLIO
---------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 25, 1997*
ENDED THROUGH
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
<S> <C> <C>
------------------------------------------------------------------------------------------------------
CLASS C SHARES++
------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.67 $10.00
------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.40 0.13
Net realized and unrealized gain (loss) 1.94 (0.41)
------ ------
Total income (loss) from investment operations 2.34 (0.28)
------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.28) (0.05)
Net realized gain (0.21) --
------ ------
Total dividends and distributions (0.49) (0.05)
------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.52 $ 9.67
------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 24.55% (2.83)%(1)
------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:(3)(4)(5)
------------------------------------------------------------------------------------------------------
Expenses 0.54% 0.92%(2)
------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.61% 1.51%(2)
------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,364 $1,702
------------------------------------------------------------------------------------------------------
Portfolio turnover rate 295% 227%(1)
------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* For the period November 25, 1997 (commencement of operations) through September
30, 1998.
++ 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) If the Fund had borne all of its expenses that were reimbursed or waived by the
Investment Manager, the annualized expense and net investment income ratios
would have been 0.67% and 3.48%, respectively, for the year ended September 30,
1999 and 1.15% and 1.28%, respectively, for the period ended September 30, 1998,
for Class A shares; 1.44% and 2.71%, respectively, for the year ended
September 30, 1999 and 1.90% and 0.53%, respectively, for the period ended
September 30, 1998, for Class B shares; 0.98% and 3.17%, respectively, for the
year ended September 30, 1999 and 1.90% and 0.53%, respectively, for the period
ended September 30, 1998, for Class C shares; and 0.44% and 3.71%,
respectively, for the year ended September 30, 1999 and 0.90% and 1.53%,
respectively, for the period ended September 30, 1998, for Class D shares.
(4) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(5) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
DOMESTIC PORTFOLIO
---------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 25, 1997*
ENDED THROUGH
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
<S> <C> <C>
------------------------------------------------------------------------------------------------------
CLASS D SHARES++
------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.74 $10.00
------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.46 0.22
Net realized and unrealized gain (loss) 1.96 (0.43)
------ ------
Total income (loss) from investment operations 2.42 (0.21)
------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.39) (0.05)
Net realized gain (0.21) --
------ ------
Total dividends and distributions (0.60) (0.05)
------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.56 $ 9.74
------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 25.28% (2.13)%(1)
------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:(3)(4)(5)
------------------------------------------------------------------------------------------------------
Expenses -- --
------------------------------------------------------------------------------------------------------
Net investment income (loss) 4.15% 2.43%(2)
------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $15 $12
------------------------------------------------------------------------------------------------------
Portfolio turnover rate 295% 227%(1)
------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* For the period November 25, 1997 (commencement of operations) through September
30, 1998.
++ 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) If the Fund had borne all of its expenses that were reimbursed or waived by the
Investment Manager, the annualized expense and net investment income ratios
would have been 0.67% and 3.48%, respectively, for the year ended September 30,
1999 and 1.15% and 1.28%, respectively, for the period ended September 30, 1998,
for Class A shares; 1.44% and 2.71%, respectively, for the year ended
September 30, 1999 and 1.90% and 0.53%, respectively, for the period ended
September 30, 1998, for Class B shares; 0.98% and 3.17%, respectively, for the
year ended September 30, 1999 and 1.90% and 0.53%, respectively, for the period
ended September 30, 1998, for Class C shares; and 0.44% and 3.71%,
respectively, for the year ended September 30, 1999 and 0.90% and 1.53%,
respectively, for the period ended September 30, 1998, for Class D shares.
(4) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(5) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
52
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
Portfolio's financial performance over the life of each Portfolio.
Certain information reflects financial results for a single Portfolio
share. The total returns in the table represent the rate an investor
would have earned or lost on an investment in a Portfolio (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>
INTERNATIONAL PORTFOLIO
-----------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 25, 1997*
ENDED THROUGH
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
<S> <C> <C>
--------------------------------------------------------------------------------------------------------
CLASS A SHARES++
--------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
--------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.08 $10.00
--------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.10 0.05
Net realized and unrealized gain (loss) 3.56 (0.88)
------ ------
Total income (loss) from investment operations 3.66 (0.83)
--------------------------------------------------------------------------------------------------------
Less dividends from net investment income -- (0.09)
--------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.74 $ 9.08
--------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 40.31% (8.36)%(1)
--------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:(3)(4)(5)
--------------------------------------------------------------------------------------------------------
Expenses 0.24% 0.25%(2)
--------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.91% 1.01%(2)
--------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
--------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,074 $596
--------------------------------------------------------------------------------------------------------
Portfolio turnover rate 154% 135%(1)
--------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* For the period November 25, 1997 (commencement of operations) through September
30, 1998.
++ 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) If the Fund had borne all of its expenses that were reimbursed or waived by the
Investment Manager, the annualized expense and net investment income (loss)
ratios would have been 1.34% and (0.19)%, respectively, for the year ended
September 30, 1999 and 6.16% and (4.90)%, respectively, for the period ended
September 30, 1998, for Class A shares; 2.10% and (0.95)%, respectively, for the
year ended September 30, 1999 and 6.91% and (5.65)%, respectively, for the
period ended September 30, 1998, for Class B shares; 1.87% and (0.72)%,
respectively, for the year ended September 30, 1999 and 6.91% and (5.65)%,
respectively, for the period ended September 30, 1998, for Class C shares; and
1.10% and 0.05%, respectively, for the year ended September 30, 1999 and 5.91%
and (4.65)%, respectively, for the period ended September 30, 1998, for Class D
shares.
(4) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(5) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
-----------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 25, 1997*
ENDED THROUGH
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
<S> <C> <C>
--------------------------------------------------------------------------------------------------------
CLASS B SHARES++
--------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
--------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.03 $10.00
--------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.02 0.03
Net realized and unrealized gain (loss) 3.51 (0.91)
------ ------
Total income (loss) from investment operations 3.53 (0.88)
--------------------------------------------------------------------------------------------------------
Less dividends from net investment income -- (0.09)
--------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.56 $ 9.03
--------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 39.09% (8.87)%(1)
--------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:(3)(4)(5)
--------------------------------------------------------------------------------------------------------
Expenses 1.00% 0.94%(2)
--------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.15% 0.32%(2)
--------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
--------------------------------------------------------------------------------------------------------
Net assets, end of period, in millions $6,615 $3,241
--------------------------------------------------------------------------------------------------------
Portfolio turnover rate 154% 135%(1)
--------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* For the period November 25, 1997 (commencement of operations) through September
30, 1998.
++ 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) If the Fund had borne all of its expenses that were reimbursed or waived by the
Investment Manager, the annualized expense and net investment income (loss)
ratios would have been 1.34% and (0.19)%, respectively, for the year ended
September 30, 1999 and 6.16% and (4.90)%, respectively, for the period ended
September 30, 1998, for Class A shares; 2.10% and (0.95)%, respectively, for the
year ended September 30, 1999 and 6.91% and (5.65)%, respectively, for the
period ended September 30, 1998, for Class B shares; 1.87% and (0.72)%,
respectively, for the year ended September 30, 1999 and 6.91% and (5.65)%,
respectively, for the period ended September 30, 1998, for Class C shares; and
1.10% and 0.05%, respectively, for the year ended September 30, 1999 and 5.91%
and (4.65)%, respectively, for the period ended September 30, 1998, for Class D
shares.
(4) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(5) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
---------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 25, 1997*
ENDED THROUGH
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
<S> <C> <C>
------------------------------------------------------------------------------------------------------
CLASS C SHARES++
------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.03 $10.00
------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.07 0.04
Net realized and unrealized gain (loss) 3.51 (0.92)
------ ------
Total income (loss) from investment operations 3.58 (0.88)
------------------------------------------------------------------------------------------------------
Less dividends from net investment income -- (0.09)
------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.61 $ 9.03
------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 39.65% (8.87)%(1)
------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:(3)(4)(5)
------------------------------------------------------------------------------------------------------
Expenses 0.77% 0.92%(2)
------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.38% 0.34%(2)
------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $442 $105
------------------------------------------------------------------------------------------------------
Portfolio turnover rate 154% 135%(1)
------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* For the period November 25, 1997 (commencement of operations) through September
30, 1998.
++ 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) If the Fund had borne all of its expenses that were reimbursed or waived by the
Investment Manager, the annualized expense and net investment income (loss)
ratios would have been 1.34% and (0.19)%, respectively, for the year ended
September 30, 1999 and 6.16% and (4.90)%, respectively, for the period ended
September 30, 1998, for Class A shares; 2.10% and (0.95)%, respectively, for the
year ended September 30, 1999 and 6.91% and (5.65)%, respectively, for the
period ended September 30, 1998, for Class B shares; 1.87% and (0.72)%,
respectively, for the year ended September 30, 1999 and 6.91% and (5.65)%,
respectively, for the period ended September 30, 1998, for Class C shares; and
1.10% and 0.05%, respectively, for the year ended September 30, 1999 and 5.91%
and (4.65)%, respectively, for the period ended September 30, 1998, for Class D
shares.
(4) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(5) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
---------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 25, 1997*
ENDED THROUGH
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
<S> <C> <C>
------------------------------------------------------------------------------------------------------
CLASS D SHARES++
------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.09 $10.00
------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.23 0.14
Net realized and unrealized gain (loss) 3.46 (0.96)
------ ------
Total income (loss) from investment operations 3.69 (0.82)
------------------------------------------------------------------------------------------------------
Less dividends from net investment income -- (0.09)
------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.78 $ 9.09
------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 40.59% (8.26)%(1)
------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:(3)(4)(5)
------------------------------------------------------------------------------------------------------
Expenses -- --
------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.15% 1.26%(2)
------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $564 $11
------------------------------------------------------------------------------------------------------
Portfolio turnover rate 154% 135%(1)
------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* For the period November 25, 1997 (commencement of operations) through September
30, 1998.
++ 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) If the Fund had borne all of its expenses that were reimbursed or waived by the
Investment Manager, the annualized expense and net investment income (loss)
ratios would have been 1.34% and (0.19)%, respectively, for the year ended
September 30, 1999 and 6.16% and (4.90)%, respectively, for the period ended
September 30, 1998, for Class A shares; 2.10% and (0.95)%, respectively, for the
year ended September 30, 1999 and 6.91% and (5.65)%, respectively, for the
period ended September 30, 1998, for Class B shares; 1.87% and (0.72)%,
respectively, for the year ended September 30, 1999 and 6.91% and (5.65)%,
respectively, for the period ended September 30, 1998, for Class C shares; and
1.10% and 0.05%, respectively, for the year ended September 30, 1999 and 5.91%
and (4.65)%, respectively, for the period ended September 30, 1998, for Class D
shares.
(4) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(5) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
56
<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!
- --------------------------------------------------------------------------------
GROWTH FUNDS
- --------------------------------
GROWTH FUNDS
Aggressive Equity Fund
American Opportunities Fund
Capital Growth Securities
Developing Growth Securities
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust
Next Generation Trust
Small Cap Growth Fund
Special Value Fund
THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities
Precious Metals and Minerals Trust
GLOBAL/INTERNATIONAL FUNDS
Competitive Edge Fund - "Best Ideas" Portfolio
European Growth Fund
Fund of Funds - International Portfolio
International Fund
International SmallCap Fund
Japan Fund
Latin American Growth Fund
Pacific Growth Fund
Strategic Fund
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUNDS
- --------------------------------
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Equity Fund
Fund of Funds - Domestic Portfolio
Income Builder Fund
Mid-Cap Dividend Growth Securities
S&P 500 Index Fund
S&P 500 Select Fund
Strategist Fund
Total Market Index Fund
Total Return Trust
Value Fund
Value-Added Market Series/Equity Portfolio
THEME FUNDS
Global Utilities Fund
Real Estate Fund
Utilities Fund
GLOBAL FUNDS
Global Dividend Growth Securities
- --------------------------------------------------------------------------------
INCOME FUNDS
- --------------------------------
GOVERNMENT INCOME FUNDS
Federal Securities Trust
Short-Term U.S. Treasury Trust
U.S. Government Securities Trust
DIVERSIFIED INCOME FUNDS
Diversified Income Trust
CORPORATE INCOME FUNDS
High Yield Securities
Intermediate Income Securities
Short-Term Bond Fund (NL)
GLOBAL INCOME FUNDS
North American Government Income Trust
World Wide Income Trust
TAX-FREE INCOME FUNDS
California Tax-Free Income Fund
Hawaii Municipal Trust (FSC)
Limited Term Municipal Trust (NL)
Multi-State Municipal Series Trust (FSC)
New York Tax-Free Income Fund
Tax-Exempt Securities Trust
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
- --------------------------------
TAXABLE MONEY MARKET FUNDS
Liquid Asset Fund (MM)
U.S. Government Money Market Trust (MM)
TAX-FREE MONEY MARKET FUNDS
California Tax-Free Daily Income Trust (MM)
N.Y. Municipal Money Market Trust (MM)
Tax-Free Daily Income Trust (MM)
There may be Funds created after this PROSPECTUS was published. Please consult
the inside back cover of a new Fund's prospectus for its designation, 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>
MORGAN STANLEY DEAN WITTER
FUND OF FUNDS
Additional information about each Portfolio'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 each Portfolio's
performance during its last fiscal year. The Fund's
Statement of Additional Information also provides additional
information about each Portfolio and the Fund. The Statement
of Additional Information is incorporated herein by
reference (legally is part of this PROSPECTUS). For a free
copy of any of these documents, to request other information
about the Fund, or to make shareholder inquiries, please
call:
(800) 869-NEWS
You also may obtain information about the Fund by calling
your Morgan Stanley Dean Witter Financial Advisor or by
visiting our Internet site at:
www.msdw.com/individual/funds
Information about the Fund (including the STATEMENT OF
ADDITIONAL INFORMATION) can be viewed and copied at the
Securities and Exchange Commission's Public Reference
Room in Washington, DC. Information about the Reference
Room's operations may be obtained by calling the SEC at
(202) 942-8090. Reports and other information about the Fund
are available on the EDGAR database on the SEC's Internet
site (www.sec.gov), and copies of this information may be
obtained, after paying a duplicating fee, by electronic
request at the following email address: [email protected]
or by writing the Public Reference Section of the SEC,
Washington, DC 20549-0102.
(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-8283)
