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PROSPECTUS - NOVEMBER 30, 2000
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.
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CONTENTS
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The Fund Overview..................... 1
The Domestic Portfolio....... 1
Investment Objective....... 1
Principal Investment
Strategies................. 1
Principal Risks............ 14
Past Performance........... 18
Fees and Expenses.......... 19
Additional Risk
Information................ 21
The International
Portfolio.................... 22
Investment Objective....... 22
Principal Investment
Strategies................. 22
Principal Risks............ 25
Past Performance........... 29
Fees and Expenses.......... 30
Additional Risk
Information................ 31
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 ............................. 48
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.
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[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 this page is a summary of each Portfolio.
THE DOMESTIC PORTFOLIO
[ICON] INVESTMENT OBJECTIVE
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The Domestic Portfolio seeks to maximize total investment
return.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
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The Domestic Portfolio normally invests at least 65% of its
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
net assets in Underlying Funds which invest primarily in
equity securities and between 0%-50% of its net 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
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AGGRESSIVE EQUITY FUND
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INVESTMENT OBJECTIVE Capital growth.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its assets in
common stocks and other equity securities (which
may include convertible securities) of U.S. or
foreign companies that 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,
fixed-income securities, and options and futures.
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AMERICAN OPPORTUNITIES FUND
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INVESTMENT OBJECTIVE Long-term capital growth consistent with an
effort to reduce volatility.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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CAPITAL GROWTH SECURITIES
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INVESTMENT OBJECTIVE Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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COMPETITIVE EDGE FUND -- "BEST IDEAS" PORTFOLIO
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INVESTMENT OBJECTIVE Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 80% of its 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.
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CONVERTIBLE SECURITIES TRUST
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INVESTMENT OBJECTIVE High total return through a combination of
current income and capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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DEVELOPING GROWTH SECURITIES TRUST
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INVESTMENT OBJECTIVE Long-term capital growth.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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DIVIDEND GROWTH SECURITIES INC.
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INVESTMENT OBJECTIVE Reasonable current income and long-term growth of
income and capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 70% of its 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.
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EQUITY FUND
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INVESTMENT OBJECTIVE Total return.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its assets in
common stock and other equity securities,
including depository receipts. The fund's "Sub-
Advisor," Miller Anderson & Sherrerd, LLP,
invests the fund's assets by pursuing an
investing strategy that combines both value and
growth styles. The Sub-Advisor's investment
process is designed to identify growing companies
whose stock in the Sub-Advisor's opinion is
attractively valued and has low but rising
expectations, and to diversify holdings across
market sectors. Individual securities are
selected based on, among other things,
quantitative screens and fundamental research by
in-house industry analysts. In addition, the fund
may invest up to 25% of its assets in foreign
securities.
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4
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FINANCIAL SERVICES TRUST
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INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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GROWTH FUND
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INVESTMENT OBJECTIVE Long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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HEALTH SCIENCES TRUST
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INVESTMENT OBJECTIVE Capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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5
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HIGH YIELD SECURITIES INC.
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INVESTMENT OBJECTIVES High current income and, secondarily, capital
appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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INCOME BUILDER FUND
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INVESTMENT OBJECTIVES Reasonable income and, secondarily, growth of
capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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INFORMATION FUND
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INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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6
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INTERMEDIATE INCOME SECURITIES
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INVESTMENT OBJECTIVE High current income consistent with safety of
principal.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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MARKET LEADER TRUST
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INVESTMENT OBJECTIVE Long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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7
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MID-CAP EQUITY TRUST
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INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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 Investment Management Company, 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.
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NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
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INVESTMENT OBJECTIVE Capital growth.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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NEXT GENERATION TRUST
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INVESTMENT OBJECTIVE Long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its assets in
common stocks of companies of any asset size
which manufacture products or provide services,
or which develop or assist in the development of
products and services, which, in the opinion of
the Investment Manager, may be used by, or appeal
to, children, teenagers and/or young adults. In
addition, up to 35% of the fund's net assets may
be invested in foreign securities.
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8
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REAL ESTATE FUND
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INVESTMENT OBJECTIVE High current income and long-term capital
appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its assets in
income producing common stocks and other equity
securities (which may include convertible
securities) of companies that are principally
engaged in the U.S. real estate industry. In
addition, the fund may invest up to 25% of its
assets in foreign securities.
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S&P 500 INDEX FUND
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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 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.
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SHORT-TERM BOND FUND
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INVESTMENT OBJECTIVE High current income consistent with the
preservation of capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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9
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S&P 500 SELECT FUND
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INVESTMENT OBJECTIVE Total return (before expenses) that exceeds 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 assets in
common stocks of selected companies included in
the Standard & Poor's-Registered Trademark- 500
Composite Stock Price Index. In addition to
common stocks, the fund may invest in stock index
futures on the S&P 500 and Standard & Poor's
Depository Receipts ("SPDRs").
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SMALL CAP GROWTH FUND
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INVESTMENT OBJECTIVE Capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its assets in a
diversified portfolio of common stocks (including
depository receipts) and securities convertible
into common stocks of small companies with market
capitalizations, at the time of purchase, within
the capitalization range of securities comprising
the Standard & Poor's Small Cap 600 Index
(currently approximately $37 million to
$6 billion as of April 19, 2000). The fund's
"Sub-Advisor," TCW Investment Management Company,
invests in companies that it believes exhibit
superior earnings growth potential and attractive
stock market valuations. In addition, the fund
also may invest up to 35% of its net assets in
equity securities of medium-sized or large
companies, and up to 25% of its net assets in
foreign equity securities. The fund also may
invest in options and futures.
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SPECIAL VALUE FUND
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INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its assets in
common stocks of small capitalization companies
(generally between $100 million and
$1.5 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).
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10
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TOTAL MARKET INDEX FUND
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INVESTMENT OBJECTIVE Investment results that, before expenses,
correspond to the total return of the U.S. stock
market as measured by the Wilshire 5000 Total
Market Index.
PRINCIPAL INVESTMENT STRATEGY The fund will normally invest at least 80% of its
assets in stocks included in the Wilshire 5000
Total Market Index. Statistical sampling is used
in an attempt to recreate the Index in terms of
industry, size, dividend yield and other
characteristics. In addition, the fund may invest
in options and futures contracts and may make
temporary investments in money market instruments
to manage cash flows into and out of the fund.
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TOTAL RETURN TRUST
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INVESTMENT OBJECTIVE High total return from capital growth and income.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its assets in
common stocks and convertible securities of
domestic and foreign companies. In selecting
investments to buy, hold or sell, the fund's
"Sub-Advisor," TCW Investment Management Company,
typically uses a "top-down" investment process
that considers the overall economic outlook, the
development of industry/sector preferences, and,
lastly, specific stock selections. Generally, at
least 85% of the fund's assets will be invested
in companies that have a market capitalization of
at least $1 billion, and the Sub-Advisor
anticipates that such companies may pay dividend
or interest income. Up to 5% of the fund's
convertible securities investments may be rated
below investment grade. In addition, the fund's
investments may include fixed-income securities.
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11
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21st CENTURY TREND FUND
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INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its assets in
common stocks of companies of any asset size
that, in the opinion of the Investment Manager,
are expected to benefit from the development of a
modern worldwide economy which will be driven by
changing economic, demographic and social trends
in the new millennium. The fund's investments
will include companies in a broad range of
enterprises which are expected to experience
growth that may be generated by contemporary
spending habits, the information age explosion,
technological advances and a sizeable aging
population. In seeking to identify companies
which may be potential beneficiaries of such
trends, the Investment Manager will examine
various worldwide changing social attitudes,
legislative actions, demographics and economic
factors to determine underlying movements that
shape the marketplace. The Investment Manager
will utilize fundamental research to focus on
industries and companies that, as a result of
these trends, are believed to demonstrate
potential for above-average long-term growth in
revenue and earnings.
In addition, up to 35% of the fund's net assets
may be invested in foreign securities, including
emerging market securities.
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U.S. GOVERNMENT SECURITIES TRUST
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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.
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12
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UTILITIES FUND
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INVESTMENT OBJECTIVE Capital appreciation and current income.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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VALUE FUND
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INVESTMENT OBJECTIVE Total return.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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.
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VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
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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.
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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.
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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. 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
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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.
SMALL AND MEDIUM COMPANIES. Certain Underlying Funds may
invest in stocks of small and medium-sized companies which
include emerging growth companies. Investing in securities of
these companies involves greater risk than is customarily
associated with investing in larger, more established
companies. These companies may have limited product lines,
markets, distribution channels or financial resources and the
management of such companies may be dependent upon one or a
few key people. Additionally, the stocks of these companies
may be more volatile and less liquid than the stocks of more
established companies and may be subject to more abrupt and
erratic price movements. These stocks may also have returns
that vary, sometimes significantly, from the overall stock
market. Often smaller and medium capitalization
14
<PAGE>
companies and the industries in which they are focused are
still evolving and, while this may offer better growth
potential than larger, more established companies, it also
may make them more sensitive to changing market conditions.
FOREIGN SECURITIES. Certain Underlying Funds invest in
foreign securities 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 security's local price remains
unchanged.
Foreign securities (including depository receipts) 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
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.
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. Accordingly, a
rise in the general level of interest rates may cause the
price of the Fund's fixed-income securities to fall
substantially. 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. (Zero coupon
securities are typically subject to greater price
fluctuations than comparable securities
15
<PAGE>
that pay current interest.) 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>
HOW INTEREST RATES AFFECT BOND PRICES
PRICE PER $1,000 OF A BOND IF INTEREST RATES:
-----------------------------------------------------
INCREASE DECREASE
-----------------------------------------------------------------------------------------------------
----------------------- -----------------------
BOND MATURITY COUPON 1% 2% 1% 2%
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------
1 year N/A $1,000 $1,000 $1,000 $1,000
-----------------------------------------------------------------------------------------------------
5 years 5.875% $ 951 $ 920 $1,018 $1,054
-----------------------------------------------------------------------------------------------------
10 years 6.00% $ 910 $ 853 $1,038 $1,110
-----------------------------------------------------------------------------------------------------
30 years 6.125% $ 841 $ 748 $1,093 $1,264
-----------------------------------------------------------------------------------------------------
</TABLE>
Coupons reflect yields on Treasury securities as of December
31, 1999. 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 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.
16
<PAGE>
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 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.
17
<PAGE>
[SIDEBAR]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Portfolio's Class B shares has
varied from year to year over the past 2 calendar years.
AVERAGE ANNUAL
TOTAL RETURNS
This table compares the Portfolio's average annual total returns with those of
broad measures of market performance over time. 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 YEARS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1998 11.21%
'99 19.70%
</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, 2000 was 6.14%.
During the periods 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, 1999)
-----------------------------------------------------------------------------------------
LIFE OF PORTFOLIO
PAST 1 YEAR (SINCE 11/25/97)
<S> <C> <C>
-----------------------------------------------------------------------------------------
Class A 14.30% 13.42%
-----------------------------------------------------------------------------------------
Class B 14.70% 14.31%
-----------------------------------------------------------------------------------------
Class C 19.17% 15.78%
-----------------------------------------------------------------------------------------
Class D 20.88% 16.64%
-----------------------------------------------------------------------------------------
S&P 500 Index(1) 21.04% 24.86%
-----------------------------------------------------------------------------------------
Lehman Brothers U.S. Government/Credit
Index(2) -2.15% 3.90%
-----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
1 The Standard and Poor's 500 Index (S&P 500
-Registered Trademark-) is a broad-based index, the
performance of which is based on the perfomance of 500
widely-held common stocks chosen for market size, liquidity
and industry group representation. 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 U.S. Government/Credit Index (formerly
Lehman Brothers Government/Corporate Index) tracks the
performance of government and corporate obligations,
including U.S. government agency and Treasury securities and
corporate and Yankee bonds. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should
not be considered an investment.
</TABLE>
18
<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, 2000.
[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 0.24% 1.00% 1.00% None
----------------------------------------------------------------------------------------------
Other expenses(5) 0.43% 0.43% 0.43% 0.43%
----------------------------------------------------------------------------------------------
Total annual Portfolio operating
expenses(5) 0.67% 1.43% 1.43% 0.43%
----------------------------------------------------------------------------------------------
</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 and has agreed to extend such expense assumption
through December 31, 2001. As a result of such assumption of
other expenses, for the fiscal period ended September 30,
2000, the actual "Other Expenses" amounted to 0.00% for each
Class of the Portfolio and "Total Fund Operating Expenses"
amounted to 0.24%, 1.00%, 1.00% and 0.00% for Class A, B, C
and D respectively of the 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.
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 $646 $752 $ 982 $1,713
--------------------------------------------------------------------
CLASS C $246 $452 $ 782 $1,713
--------------------------------------------------------------------
CLASS D $ 44 $138 $ 241 $ 542
--------------------------------------------------------------------
<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 $146 $452 $ 782 $1,713
--------------------- -------------------------------------------
CLASS C $146 $452 $ 782 $1,713
--------------------- -------------------------------------------
CLASS D $ 44 $138 $ 241 $ 542
--------------------- -------------------------------------------
</TABLE>
19
<PAGE>
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>
-------------------------------------------------------------------------------------------
Aggressive Equity Fund 0.75% 0.18% 0.93%
-------------------------------------------------------------------------------------------
American Opportunities Fund 0.46% 0.13% 0.59%
-------------------------------------------------------------------------------------------
Capital Growth Securities 0.64% 0.22% 0.86%
-------------------------------------------------------------------------------------------
Competitive Edge Fund - "Best Ideas" Portfolio 0.64% 0.19% 0.83%
-------------------------------------------------------------------------------------------
Convertible Securities Trust 0.60% 0.20% 0.80%
-------------------------------------------------------------------------------------------
Developing Growth Securities Trust 0.49% 0.12% 0.61%
-------------------------------------------------------------------------------------------
Dividend Growth Securities 0.35% 0.08% 0.43%
-------------------------------------------------------------------------------------------
Equity Fund 0.85% 0.19% 1.04%
-------------------------------------------------------------------------------------------
Financial Services Trust 0.75% 0.21% 0.96%
-------------------------------------------------------------------------------------------
Growth Fund 0.79% 0.10% 0.89%
-------------------------------------------------------------------------------------------
Health Sciences Trust 1.00% 0.20% 1.20%
-------------------------------------------------------------------------------------------
High Yield Securities 0.39% 0.11% 0.50%
-------------------------------------------------------------------------------------------
Income Builder Fund 0.75% 0.22% 0.97%
-------------------------------------------------------------------------------------------
Information Fund 0.73% 0.16% 0.89%
-------------------------------------------------------------------------------------------
Intermediate Income Securities 0.60% 0.32% 0.92%
-------------------------------------------------------------------------------------------
Market Leader Trust 0.75% 0.18% 0.93%
-------------------------------------------------------------------------------------------
Mid-Cap Equity Trust 0.75% 0.18% 0.93%
-------------------------------------------------------------------------------------------
Natural Resource Development Securities 0.62% 0.27% 0.89%
-------------------------------------------------------------------------------------------
Next Generation Trust 0.75% 0.70% 1.45%
-------------------------------------------------------------------------------------------
Real Estate Fund 1.00% 0.56% 1.56%
-------------------------------------------------------------------------------------------
S&P 500 Index Fund 0.38% 0.12% 0.50%
-------------------------------------------------------------------------------------------
S&P 500 Select Fund 0.60% 0.37% 0.97%
-------------------------------------------------------------------------------------------
Short-Term Bond Fund 0.70% 0.20% 0.90%
-------------------------------------------------------------------------------------------
Small Cap Growth Fund 1.00% 0.18% 1.18%
-------------------------------------------------------------------------------------------
Special Value Fund 0.75% 0.25% 1.00%
-------------------------------------------------------------------------------------------
Total Market Index Fund 0.25% 0.25% 0.50%
-------------------------------------------------------------------------------------------
Total Return Trust 0.75% 0.18% 0.93%
-------------------------------------------------------------------------------------------
21st Century Trend Fund 0.75% 0.29% 1.04%
-------------------------------------------------------------------------------------------
U.S. Government Securities Trust 0.44% 0.10% 0.54%
-------------------------------------------------------------------------------------------
Utilities Fund 0.54% 0.11% 0.65%
-------------------------------------------------------------------------------------------
Value Fund 1.00% 0.34% 1.34%
-------------------------------------------------------------------------------------------
Value-Added Market Series - Equity Portfolio 0.46% 0.13% 0.59%
-------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
[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 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.
21
<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 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 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,
government and convertible securities issued by
non-European governmental or private issuers,
forward currency contracts, options on currencies
and warrants.
</TABLE>
22
<PAGE>
-------------------------------------------------------------
INTERNATIONAL SMALLCAP FUND
-------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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 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 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>
23
<PAGE>
-------------------------------------------------------------
LATIN AMERICAN GROWTH FUND
-------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY Normally invests at least 65% of its 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 Investment Management Company,
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 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
net 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.
24
<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. 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
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.
Foreign securities (including depository receipts) 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
25
<PAGE>
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.
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 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
26
<PAGE>
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 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.
27
<PAGE>
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.
28
<PAGE>
[Sidebar]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Portfolio's Class B shares has
varied from year to year over the past 2 calendar years.
AVERAGE ANNUAL
TOTAL RETURNS
This table compares the Portfolio's average annual total returns with those of a
broad measure of market performance over time. 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 RETURNS - CALENDAR YEARS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1998 7.92%
'99 40.18%
</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, 2000 was -11.10%.
During the periods shown in the bar chart, the highest return
for a calendar quarter was 18.64% (quarter ended
December 31, 1999) 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, 1999)
------------------------------------------------------------------------------------------
LIFE OF PORTFOLIO
PAST 1 YEAR (SINCE 11/25/97)
<S> <C> <C>
------------------------------------------------------------------------------------------
Class A 33.63% 19.22%
------------------------------------------------------------------------------------------
Class B 35.18% 20.32%
------------------------------------------------------------------------------------------
Class C 39.68% 21.69%
------------------------------------------------------------------------------------------
Class D 41.53% 22.64%
------------------------------------------------------------------------------------------
Morgan Stanley Capital International EAFE Index(1) 26.96% 23.43%
------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
1 The Morgan Stanley Capital International (MSCI) EAFE Index
measures the performance for a diverse range of global stock
markets within Europe, Australasia, and the Far East. The
performance of the Index is listed in U.S. dollars and
assumes reinvestment of net dividends. "Net dividends"
reflects a reduction in dividends after taking into account
withholding of taxes by certain foreign countries
represented in the Index. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should
not be considered an investment.
</TABLE>
29
<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, 2000.
[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% 1.00% None
----------------------------------------------------------------------------------------------
Other expenses(5) 0.36% 0.36% 0.36% 0.36%
----------------------------------------------------------------------------------------------
Total annual Portfolio operating
expenses(5) 0.60% 1.36% 1.36% 0.36%
----------------------------------------------------------------------------------------------
</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 and has agreed to extend such expense assumption
through December 31, 2001. As a result of such assumption of
other expenses, for the fiscal period ended September 30,
2000, the actual "Other Expenses" amounted to 0.00% for each
Class of the Portfolio and "Total Fund Operating Expenses"
amounted to 0.24%, 1.00%, 1.00% and 0.00% for Class A, B, C
and D respectively of the 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.
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 $583 $707 $842 $1,236
---------------------------------------------------------------------
CLASS B $638 $731 $945 $1,635
---------------------------------------------------------------------
CLASS C $238 $431 $745 $1,635
---------------------------------------------------------------------
CLASS D $ 37 $116 $202 $ 456
---------------------------------------------------------------------
<CAPTION>
IF YOU HELD YOUR SHARES:
--------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
--------------------- --------------------------------------------
CLASS A $583 $707 $842 $1,236
--------------------- --------------------------------------------
CLASS B $138 $431 $745 $1,635
--------------------- --------------------------------------------
CLASS C $138 $431 $745 $1,635
--------------------- --------------------------------------------
CLASS D $ 37 $116 $202 $ 456
--------------------- --------------------------------------------
</TABLE>
30
<PAGE>
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% 0.22% 1.13%
------------------------------------------------------------------------------------------
International SmallCap Fund 1.15% 0.71% 1.86%
------------------------------------------------------------------------------------------
Japan Fund 0.95% 0.38% 1.33%
------------------------------------------------------------------------------------------
Latin American Growth Fund 1.25% 0.81% 2.06%
------------------------------------------------------------------------------------------
Pacific Growth Fund 0.95% 0.61% 1.56%
------------------------------------------------------------------------------------------
</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. Accordingly, a
rise in the general level of interest rates may cause the
price of the Fund's fixed-income securities to fall
substantially. (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 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.
31
<PAGE>
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 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.
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 $155 billion in assets under
management as of October 31, 2000.
[End Sidebar]
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.
[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, Pacific Growth
Fund and Real Estate Fund. TCW Investment Management Company
("TCW") serves as Sub-Advisor to Latin American Growth Fund,
Mid-Cap Equity Trust, Small Cap Growth Fund and Total Return
Trust. Miller Anderson & Sherrerd, LLP ("MAS") serves as Sub-
Advisor to Equity Fund and 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 manages more than $95 billion, as
of October 31, 2000, 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
33
<PAGE>
services. TCW's main business office is located at 865 South
Figueroa Street, Suite 1800, Los Angeles, CA 90017. As of
August 31, 2000, TCW Investment Management Company and its
affiliates had approximately $80 billion under management or
committed to management.
MAS manages assets of approximately $80 billion, as of
October 31, 2000, 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 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>
[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.msdwadvice.com/funds
[End Sidebar]
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.
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. With respect to Underlying
Funds holding 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.
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.
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]
<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, (3) the
following programs approved by the Fund's distributor: (i)
qualified state tuition plans described in Section 529 of the
Internal Revenue Code and (ii) certain other investment
programs that do not charge an asset-based fee, or
(4) 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 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. In addition, Class A shares of
the Fund may be exchanged for shares of an FSC Fund (funds
subject to a front-end sales charge). See the inside back
cover of this PROSPECTUS for each Morgan
36
<PAGE>
Stanley Dean Witter Fund's designation as a
Multi-Class Fund, No-Load Fund, Money Market Fund or FSC
Fund. If a Morgan Stanley Dean Witter Fund is not listed,
consult the inside back cover of that fund's prospectus for
its designation.
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 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.
37
<PAGE>
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 past exchanges
and/or purchase or sale transactions involving the Fund or
other Morgan Stanley Dean Witter Funds 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 the
previous exchanges or purchase or sale transactions. You will
be notified in advance of limitations on 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.
------------------------------------------------------------
If you are requesting payment to anyone other than the
registered owner(s) or that payment be sent to any address
other than the address of the registered owner(s) or
pre-designated bank account, you will need a signature
guarantee. You can obtain a signature guarantee from an
eligible guarantor acceptable to Morgan Stanley Dean Witter
Trust FSB. (You should contact Morgan Stanley Dean Witter
Trust FSB at (800) 869-NEWS for a determination as to
whether a particular institution is an eligible guarantor.)
A notary public CANNOT provide a signature guarantee.
Additional documentation may be required for shares held by
a corporation, partnership, trustee or executor.
------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at
P.O. Box 983, Jersey City, NJ 07303. If you hold share
certificates, you must return the certificates, along with
the letter and any required additional documentation.
------------------------------------------------------------
A check will be mailed to the name(s) and address in which
the account is registered, or otherwise according to your
instructions.
----------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
<S> <C>
----------------------------------------------------------------------------------
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.
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.
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]
[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. However, if you purchase
Portfolio shares through a Financial Advisor within three
business days prior to the record date for the distribution,
the distribution will automatically be paid to you in cash,
even if you did not request to receive all distributions in
cash. 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.
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.
40
<PAGE>
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 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. 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 annual 12b-1
fee applicable to each Class of a Portfolio:
<TABLE>
<CAPTION>
MAXIMUM
CLASS SALES CHARGE ANNUAL 12B-1 FEE
<S> <C> <C>
------------------------------------------------------------------------------------------------------
A Maximum 5.25% initial sales charge reduced for
purchase of $25,000 or more; shares sold without an
initial sales charge are generally subject to a 1.0%
CDSC during the first year 0.25%
------------------------------------------------------------------------------------------------------
B Maximum 5.0% CDSC during the first year decreasing
to 0% after six years 1.00%
------------------------------------------------------------------------------------------------------
C 1.0% CDSC during the first year 1.00%
------------------------------------------------------------------------------------------------------
D None None
------------------------------------------------------------------------------------------------------
</TABLE>
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]
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 0.00% 0.00%
-------------------------------------------------------------------------------------------
</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).
- 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
42
<PAGE>
directly through a Portfolio), at the time a purchase order
is placed, that the purchase qualifies for the reduced sales
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.
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.
- Qualified state tuition plans described in Section 529 of
the Internal Revenue Code (subject to all applicable terms
and conditions) and certain other investment programs that
do not charge an asset-based fee and have been approved by
the Fund's distributor.
- 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 Morgan
Stanley Dean Witter's 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.
43
<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]
- 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.
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>
YEAR SINCE PURCHASE PAYMENT MADE CDSC AS A PERCENTAGE 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,
44
<PAGE>
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 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.
45
<PAGE>
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 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,
46
<PAGE>
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.
- Certain investment programs that do not charge an
asset-based fee and have been approved by the Fund's
distributor. However, Class D shares are not offered for
investments made through Section 529 plans (regardless of
the size of the investment).
- 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.
47
<PAGE>
FINANCIAL HIGHLIGHTS - DOMESTIC PORTFOLIO
The financial highlights table is intended to help you understand the
Domestic Portfolio's financial performance for the periods indicated.
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).
The information for the fiscal year ended September 30, 2000 has been
audited by Deloitte & Touche LLP, independent auditors, whose report,
along with the Fund's financial statements, is included in the annual
report, which is available upon request. The financial highlights for
the fiscal year ended September 30, 1999 and all periods presented
prior thereto have been audited by other independent accountants.
<TABLE>
<CAPTION>
DOMESTIC PORTFOLIO++
------------------------------------
YEARS ENDED SEPTEMBER 30, 2000 1999 1998*
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------
CLASS A SHARES
-------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
-------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.54 $ 9.72 $10.00
-------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.38 0.46 0.21
Net realized and unrealized gain (loss) 1.83 1.93 (0.44)
------ ------ ------
Total from investment operations 2.21 2.39 (0.23)
-------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Dividends to shareholders (0.29) (0.36) (0.05)
Distributions to shareholders (1.09) (0.21) --
------ ------ ------
Total dividends and distributions (1.38) (0.57) (0.05)
-------------------------------------------------------------------------------------------------
Net asset value, end of period $12.37 $11.54 $ 9.72
-------------------------------------------------------------------------------------------------
TOTAL RETURN+ 20.16% 25.00% (2.33)%(1)
-------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (AFTER EXPENSES WERE
ASSUMED):(3)(4)
-------------------------------------------------------------------------------------------------
Expenses 0.24% 0.23% 0.22 %(2)
-------------------------------------------------------------------------------------------------
Net investment income 3.35% 3.92% 2.21 %(2)
-------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (BEFORE EXPENSES WERE
ASSUMED):(3)(4)
-------------------------------------------------------------------------------------------------
Expenses 0.67% 0.67% 1.15 %(2)
-------------------------------------------------------------------------------------------------
Net investment income 2.92% 3.48% 1.28 %(2)
-------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
-------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,493 $1,097 $1,359
-------------------------------------------------------------------------------------------------
Portfolio turnover rate 434% 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) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
DOMESTIC PORTFOLIO++
---------------------------------------
YEARS ENDED SEPTEMBER 30 2000 1999 1998*
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
CLASS B SHARES
----------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.46 $ 9.67 $10.00
----------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.30 0.35 0.14
Net realized and unrealized gain (loss) 1.81 1.94 (0.42)
------- ------- -------
Total from investment operations 2.11 2.29 (0.28)
----------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Dividends to shareholders (0.20) (0.29) (0.05)
Distributions to shareholders (1.09) (0.21) --
------- ------- -------
Total dividends and distributions (1.29) (0.50) (0.05)
----------------------------------------------------------------------------------------------------
Net asset value, end of period $12.28 $11.46 $ 9.67
----------------------------------------------------------------------------------------------------
TOTAL RETURN+ 19.29% 23.96% (2.83)%(1)
----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (AFTER EXPENSES WERE
ASSUMED):(3)(4)
----------------------------------------------------------------------------------------------------
Expenses 1.00% 1.00% 0.92 %(2)
----------------------------------------------------------------------------------------------------
Net investment income 2.59% 3.15% 1.51 %(2)
----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (BEFORE EXPENSES WERE ASSUMED):(3)(4)
----------------------------------------------------------------------------------------------------
Expenses 1.43% 1.44% 1.90 %(2)
----------------------------------------------------------------------------------------------------
Net investment income 2.16% 2.71% 0.53 %(2)
----------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
----------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $28,974 $26,007 $24,338
----------------------------------------------------------------------------------------------------
Portfolio turnover rate 434% 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) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
DOMESTIC PORTFOLIO++
--------------------------------------
YEARS ENDED SEPTEMBER 30 2000 1999 1998*
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------
CLASS C SHARES
---------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.52 $ 9.67 $10.00
---------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.31 0.40 0.13
Net realized and unrealized gain (loss) 1.80 1.94 (0.41)
------ ------ ------
Total from investment operations 2.11 2.34 (0.28)
---------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Dividends to shareholders (0.25) (0.28) (0.05)
Distributions to shareholders (1.09) (0.21) --
------ ------ ------
Total dividends and distributions (1.34) (0.49) (0.05)
---------------------------------------------------------------------------------------------------
Net asset value, end of period $12.29 $11.52 $ 9.67
---------------------------------------------------------------------------------------------------
TOTAL RETURN+ 19.23% 24.55% (2.83)%(1)
---------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (AFTER EXPENSES WERE
ASSUMED):(3)(4)
---------------------------------------------------------------------------------------------------
Expenses 1.00% 0.54% 0.92 %(2)
---------------------------------------------------------------------------------------------------
Net investment income 2.59% 3.61% 1.51 %(2)
---------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (BEFORE EXPENSES WERE
ASSUMED):(3)(4)
---------------------------------------------------------------------------------------------------
Expenses 1.43% 0.98% 1.90 %(2)
---------------------------------------------------------------------------------------------------
Net investment income 2.16% 3.17% 0.53 %(2)
---------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
---------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,954 $1,364 $1,702
---------------------------------------------------------------------------------------------------
Portfolio turnover rate 434% 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) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
DOMESTIC PORTFOLIO++
--------------------------------------
YEARS ENDED SEPTEMBER 30 2000 1999 1998*
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------
CLASS D SHARES
---------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.56 $ 9.74 $10.00
---------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.48 0.46 0.22
Net realized and unrealized gain (loss) 1.75 1.96 (0.43)
------ ------ ------
Total from investment operations 2.23 2.42 (0.21)
---------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Dividends to shareholders (0.31) (0.39) (0.05)
Distributions to shareholders (1.09) (0.21) --
------ ------ ------
Total dividends and distributions (1.40) (0.60) (0.05)
---------------------------------------------------------------------------------------------------
Net asset value, end of period $12.39 $11.56 $ 9.74
---------------------------------------------------------------------------------------------------
TOTAL RETURN+ 20.39% 25.28% (2.13)%(1)
---------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (AFTER EXPENSES WERE
ASSUMED):(3)(4)
---------------------------------------------------------------------------------------------------
Expenses -- -- --
---------------------------------------------------------------------------------------------------
Net investment income 3.59% 4.15% 2.43 %(2)
---------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (BEFORE EXPENSES WERE
ASSUMED):(3)(4)
---------------------------------------------------------------------------------------------------
Expenses 0.43% 0.44% 0.90 %(2)
---------------------------------------------------------------------------------------------------
Net investment income 3.16% 3.71% 1.53 %(2)
---------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
---------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $37 $15 $12
---------------------------------------------------------------------------------------------------
Portfolio turnover rate 434% 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.
+ Calculated based on the net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
51
<PAGE>
FINANCIAL HIGHLIGHTS - INTERNATIONAL PORTFOLIO
The financial highlights table is intended to help you understand the
International Portfolio's financial performance for the periods
indicated. 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).
The information for the fiscal year ended September 30, 2000 has been
audited by Deloitte & Touche LLP, independent auditors, whose report,
along with the Fund's financial statements, is included in the annual
report, which is available upon request. The financial highlights for
the fiscal year ended September 30, 1999 and all periods presented
prior thereto have been audited by other independent accountants.
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO++
------------------------------------
YEARS ENDED SEPTEMBER 30 2000 1999 1998*
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------
CLASS A SHARES
-------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
-------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.74 $ 9.08 $10.00
-------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.03 0.10 0.05
Net realized and unrealized gain (loss) 0.85 3.56 (0.88)
------ ------ ------
Total from investment operations 0.88 3.66 (0.83)
-------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Dividends to shareholders (0.04) -- (0.09)
Distributions to shareholders (0.99) -- --
------ ------ ------
Total dividends and distributions (1.03) -- (0.09)
-------------------------------------------------------------------------------------------------
Net asset value, end of period $12.59 $12.74 $ 9.08
-------------------------------------------------------------------------------------------------
TOTAL RETURN+ 6.19 % 40.31 % (8.36)%(1)
-------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (AFTER EXPENSES WERE
ASSUMED):(3)(4)
-------------------------------------------------------------------------------------------------
Expenses 0.24 % 0.24 % 0.25 %(2)
-------------------------------------------------------------------------------------------------
Net investment income (loss) 0.12 % 0.91 % 1.01 %(2)
-------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (BEFORE EXPENSES WERE
ASSUMED):(3)(4)
-------------------------------------------------------------------------------------------------
Expenses 0.60 % 1.34 % 6.16 %(2)
-------------------------------------------------------------------------------------------------
Net investment income (loss) (0.24)% (0.19)% (4.90)%(2)
-------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
-------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $3,366 $1,074 $596
-------------------------------------------------------------------------------------------------
Portfolio turnover rate 85 % 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) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO++
-------------------------------------
YEARS ENDED SEPTEMBER 30 2000 1999 1998*
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------
CLASS B SHARES
--------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
--------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.56 $ 9.03 $10.00
--------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.08) 0.02 0.03
Net realized and unrealized gain (loss) 0.86 3.51 (0.91)
------- ------ ------
Total from investment operations 0.78 3.53 (0.88)
--------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Dividends to shareholders (0.01) -- (0.09)
Distributions to shareholders (0.99) -- --
------- ------ ------
Total dividends and distributions (1.00) -- (0.09)
--------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.34 $12.56 $ 9.03
--------------------------------------------------------------------------------------------------
TOTAL RETURN+ 5.48 % 39.09 % (8.87)%(1)
--------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (AFTER EXPENSES WERE
ASSUMED):(3)(4)
--------------------------------------------------------------------------------------------------
Expenses 1.00 % 1.00 % 0.94 %(2)
--------------------------------------------------------------------------------------------------
Net investment income (loss) (0.64)% 0.15 % 0.32 %(2)
--------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (BEFORE EXPENSES WERE
ASSUMED):(3)(4)
--------------------------------------------------------------------------------------------------
Expenses 1.36 % 2.10 % 6.91 %(2)
--------------------------------------------------------------------------------------------------
Net investment income (loss) (1.00)% (0.95)% (5.65)%(2)
--------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
--------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $43,697 $6,615 $3,241
--------------------------------------------------------------------------------------------------
Portfolio turnover rate 85 % 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) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO++
------------------------------------
YEARS ENDED SEPTEMBER 30 2000 1999 1998*
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------
CLASS C SHARES
-------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
-------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.61 $ 9.03 $10.00
-------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.08) 0.07 0.04
Net realized and unrealized gain (loss) 0.86 3.51 (0.92)
------ ------ ------
Total from investment operations 0.78 3.58 (0.88)
-------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Dividends to shareholders (0.03) -- (0.09)
Distributions to shareholders (0.99) -- --
------ ------ ------
Total dividends and distributions (1.02) -- (0.09)
-------------------------------------------------------------------------------------------------
Net asset value, end of period $12.37 $12.61 $ 9.03
-------------------------------------------------------------------------------------------------
TOTAL RETURN+ 5.46 % 39.65 % (8.87)%(1)
-------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (AFTER EXPENSES WERE
ASSUMED):(3)(4)
-------------------------------------------------------------------------------------------------
Expenses 1.00 % 0.77 % 0.92 %(2)
-------------------------------------------------------------------------------------------------
Net investment income (loss) (0.64)% 0.38 % 0.34 %(2)
-------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (BEFORE EXPENSES WERE
ASSUMED):(3)(4)
-------------------------------------------------------------------------------------------------
Expenses 1.36 % 1.87 % 6.91 %(2)
-------------------------------------------------------------------------------------------------
Net investment income (loss) (1.00)% (0.72)% (5.65)%(2)
-------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
-------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $4,246 $442 $105
-------------------------------------------------------------------------------------------------
Portfolio turnover rate 85 % 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) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO++
-------------------------------------
YEARS ENDED SEPTEMBER 30 2000 1999 1998*
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------
CLASS D SHARES
--------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
--------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.78 $ 9.09 $10.00
--------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.04 0.23 0.14
Net realized and unrealized gain (loss) 0.89 3.46 (0.96)
------- ------ ------
Total from investment operations 0.93 3.69 (0.82)
--------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Dividends to shareholders (0.06) -- (0.09)
Distributions to shareholders (0.99) -- --
------- ------ ------
Total dividends and distributions (1.05) -- (0.09)
--------------------------------------------------------------------------------------------------
Net asset value, end of period $12.66 $12.78 $ 9.09
--------------------------------------------------------------------------------------------------
TOTAL RETURN+ 6.56% 40.59% (8.26)%(1)
--------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (AFTER EXPENSES WERE
ASSUMED):(3)(4)
--------------------------------------------------------------------------------------------------
Expenses -- -- --
--------------------------------------------------------------------------------------------------
Net investment income (loss) 0.36% 1.15% 1.26 %(2)
--------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (BEFORE EXPENSES WERE
ASSUMED):(3)(4)
--------------------------------------------------------------------------------------------------
Expenses 0.36% 1.10% 5.91 %(2)
--------------------------------------------------------------------------------------------------
Net investment income (loss) 0.00% 0.05% (4.65)%(2)
--------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
--------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $43,645 $564 $11
--------------------------------------------------------------------------------------------------
Portfolio turnover rate 85% 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.
+ Calculated based on the net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
</TABLE>
55
<PAGE>
NOTES
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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
New Discoveries Fund
Next Generation Trust
Small Cap Growth Fund
Special Value Fund
Tax-Managed Growth Fund
21st Century Trend Fund
THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities
Technology Fund
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
--------------------------------------------------------------------------------
GROWTH & INCOME FUNDS
--------------------------------
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Equity Fund
Fund of Funds - Domestic Portfolio
Income Builder Fund
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
Real Estate Fund
<PAGE>
Utilities Fund
GLOBAL FUNDS
Global Dividend Growth Securities
Global Utilities Fund
--------------------------------------------------------------------------------
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)
New York 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
[Sidebar]
TICKER SYMBOLS:
DOMESTIC PORTFOLIO
-------------------
Class A: DOFAX
-------------------
Class B: DOFBX
-------------------
Class C: DOFCX
-------------------
Class D: DOFDX
-------------------
INTERNATIONAL PORTFOLIO
-------------------
Class A: IOFAX
-------------------
Class B: IOFBX
-------------------
Class C: IOFCX
-------------------
Class D: IOFDX
-------------------
[End Sidebar]
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.msdwadvice.com/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)
