<PAGE>
PROSPECTUS - JULY 28, 1999
Morgan Stanley Dean Witter
COMPETITIVE EDGE FUND
"BEST IDEAS" PORTFOLIO
[COVER PHOTO]
A MUTUAL FUND THAT SEEKS LONG-TERM CAPITAL GROWTH
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon
the adequacy of this Prospectus. Any representation to the contrary is a
criminal offense.
<PAGE>
CONTENTS
<TABLE>
<S> <C> <C>
The Portfolio Investment Objective........................................ 1
Principal Investment Strategies............................. 1
Principal Risks............................................. 2
Fees and Expenses........................................... 5
Additional Investment Strategy Information.................. 6
Additional Risk Information................................. 6
Management of the Portfolio................................. 7
Shareholder Information Pricing Portfolio Shares.................................... 8
How to Buy Shares........................................... 8
How to Exchange Shares...................................... 10
How to Sell Shares.......................................... 11
Distributions............................................... 13
Tax Consequences............................................ 14
Share Class Arrangements.................................... 15
Financial Highlights ............................................................ 22
Our Family of Funds ............................................................ Inside Back Cover
THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE MORGAN STANLEY DEAN
WITTER COMPETITIVE EDGE FUND -- "BEST IDEAS" PORTFOLIO. PLEASE READ IT CAREFULLY
AND KEEP IT FOR FUTURE REFERENCE.
</TABLE>
<PAGE>
[Sidebar]
CAPITAL GROWTH
An investment objective having the goal of selecting securities with the
potential to rise in price rather than pay out income.
[End Sidebar]
THE PORTFOLIO
[ICON] INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter Competitive Edge Fund -- "Best
Ideas" Portfolio seeks long-term capital growth.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
The Portfolio will normally invest at least 80% of its
assets in common stock (including depository receipts) of
companies included in the "Best Ideas" subgroup of "Global
Investing: The Competitive Edge List," a research
compilation assembled by Morgan Stanley Dean Witter ("MSDW")
Equity Research -- or such supplemental companies as
selected by the Portfolio's "Investment Manager," Morgan
Stanley Dean Witter Advisors Inc.
THE COMPETITIVE EDGE "BEST IDEAS" LIST. MSDW Equity Research
is recognized as a world leader in global financial research
and provides comprehensive research and in-depth knowledge
about general markets and specific companies from around the
world. It believes that companies with a sustainable
competitive edge in the operations of their businesses are
worth more than their weaker competitors. Through its
ongoing research and analysis, MSDW Equity Research has
developed and undertaken a comprehensive study which it
calls "Global Investing: The Competitive Edge" which
represents the list of those companies.
MSDW Equity Research group's research analysts and
strategists presently evaluate approximately 2,100 companies
in 21 industry sectors worldwide. An initial comprehensive
review was conducted in October 1996 and identified 238 of
these companies as having a long-term sustainable
competitive advantage in the global arena (the "Competitive
Edge List"). The criteria used to select companies that have
a global competitive advantage vary according to industry
sector. The Competitive Edge List is currently updated
quarterly. From the Competitive Edge List, MSDW Equity
Research then assembles a subgroup of approximately 40
companies which it considers at that time to be the most
attractive investment opportunities of the companies
identified as having a long-term sustainable competitive
advantage in the global arena (the "Competitive Edge 'Best
Ideas' List"). The Competitive Edge "Best Ideas" List is
updated continuously; a list of the companies contained on
the Competitive Edge "Best Ideas".
The Investment Manager intends to invest at least 1% and not
more than 5% of the Portfolio's assets in each company on
the Competitive Edge "Best Ideas" List. The Portfolio will
purchase any security which is added to the Competitive Edge
"Best Ideas" List, and generally will sell a security which
is eliminated from the Competitive Edge "Best Ideas" List as
soon as practicable after the List has been updated.
Accordingly, securities may be purchased and sold by the
Portfolio when such purchases and sales would not be made
under traditional investment criteria.
1
<PAGE>
In addition to or in replace of companies on the Competitive
Edge "Best Ideas" List, the Investment Manager may at times
purchase supplemental securities that are not included on
the Competitive Edge "Best Ideas" List but are on the
Competitive Edge List or, in the event that the Investment
Manager believes that there are no suitable companies on the
Competitive Edge List, the Investment Manager may purchase
securities of companies outside the list. Supplemental
companies will be selected from the same or similar industry
as the company they are supplementing or replacing.
Securities that are not on the Competitive Edge "Best Ideas"
List generally will not exceed 35% of the Portfolio's total
assets.
Common Stock is a share ownership or equity interest in a
corporation. It may or may not pay dividends, as some
companies reinvest all of their profits back into their
businesses, while others pay out some of their profits to
shareholders as dividends. A depository receipt is generally
issued by a bank or financial institution and represents an
ownership interest in the common stock or other equity
securities of a foreign company.
The percentage limitations relating to the composition of
the Portfolio apply at the time the Portfolio acquires an
investment and refer to the Portfolio's net assets, unless
otherwise noted. Subsequent percentage changes that result
from market fluctuations will not require the Portfolio to
sell any portfolio 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 its portfolio
securities. 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.
COMMON STOCK. A principal risk of investing in the Portfolio
is associated with its investments in common stock. In
particular the prices of common stocks may fluctuate widely
in response to activities specific to the company as well as
general market, economic and political conditions.
COMPETITIVE EDGE "BEST IDEAS" LIST. The Portfolio invests
principally in securities included on the Competitive Edge
"Best Ideas" List which currently consists of 40 companies.
As a result of the small universe of stocks in which the
Portfolio invests, it may be subject to greater risks than
would a more diversified company. In addition, performance
of the securities included in the List cannot be used to
predict the performance of the Portfolio, an actively
managed mutual fund.
The Competitive Edge "Best Ideas" List and the Competitive
Edge List are not compiled with any particular client or
product in mind and are not, and will not be, compiled with
the Fund in mind. When selecting the companies for the
lists, MSDW Equity Research does not take into account
country or currency risks, and country or industry sector
diversification concerns. MSDW publishes other lists of
recommended securities that could be appropriate for
Portfolio investors but which will not be used by the
Investment Manager for choosing securities for the
Portfolio.
2
<PAGE>
MSDW Equity Research could at any time cease publishing the
Competitive Edge "Best Ideas" List or the Competitive Edge
List. In that event the Board of Trustees will make a
determination of how to proceed in the best interest of
shareholders of the Portfolio consistent with the
Portfolio's investment objective.
The activities of affiliates of the Investment Manager,
including but not limited to Dean Witter Reynolds Inc. or
Morgan Stanley & Co. Incorporated, may from time to time
limit the Portfolio's ability to purchase or sell securities
on the Competitive Edge "Best Ideas" List. In addition, the
List is available to other clients of MSDW and its
affiliates, including the Investment Manager, as well as the
Portfolio. The list is also subject to restrictions related
to MSDW's other businesses, and particular securities may or
may not be on the list due to other business concerns of, or
legal restrictions applicable to, MSDW.
As a diversified financial services firm, with three primary
businesses -- securities, asset management and credit
services -- MSDW provides a wide range of financial services
to issuers of securities and investors in securities. MSDW
and others associated with it may create markets or
specialize in, have positions in and affect transactions in,
securities of companies included on its research lists and
may also perform or seek to perform investment banking
services for those companies. Within the last three years,
MSDW may have managed or co-managed public security
offerings for companies included on the research lists, and
they or their employees may have a long or short position on
holdings in the securities, or options on securities, or
other related investments of companies included on their
research lists.
FOREIGN SECURITIES. The Portfolio may invest a substantial
portion of its assets in foreign securities (including
depository receipts). Foreign securities involve risks in
addition to the risks associated with domestic securities.
One additional risk is currency risk. While the price of
Portfolio shares is quoted in U.S. dollars, the Portfolio
generally converts U.S. dollars to a foreign market's local
currency to purchase a security in that market. If the value
of that local currency falls relative to the U.S. dollar,
the U.S. dollar value of the foreign security will decrease.
This is true even if the foreign security's local price
remains unchanged.
Foreign securities also have risks related to economic and
political developments abroad, including expropriations,
confiscatory taxation, exchange control regulation,
limitations on the use or transfer of Portfolio 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 the Portfolio invests could cause a substantial
decline in value of the 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 the
Portfolio to obtain or enforce a judgment against the
issuers of the securities.
3
<PAGE>
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.
The foreign securities in which the Portfolio may invest may
be issued by companies located in emerging market countries.
Compared to the United States and other developed countries,
emerging market 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 offered
greater potential loss (as well as gain) than securities of
companies located in developed countries.
Many European countries have adopted or are in the process
of adopting a single European currency, referred to as the
"euro." The consequences of the euro conversion for foreign
exchange rates, interest rates and the value of European
securities the Portfolio may purchase are presently unclear.
The consequences may adversely affect the value and/or
increase the volatility of securities held by the Portfolio.
OTHER RISKS. The performance of the Portfolio also will
depend on whether the Investment Manager is successful in
pursuing the Portfolio's investment strategy. The Portfolio
is also subject to other risks from its permissible
investments. For more information about these risks, see the
"Additional Risk Information" section.
Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the FDIC or any other government
agency.
4
<PAGE>
[Sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted from the Portfolio's assets and are based on
expenses paid for the fiscal year ended May 31, 1999.
[End Sidebar]
[ICON] FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below briefly describes the fees and expenses that
you may pay if you buy and hold shares of the 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 FUND OPERATING EXPENSES
- ------------------------------------------------------------------------------------------------------------
Management fee 0.64% 0.64% 0.64% 0.64%
- ------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.24% 1.00% 0.83% None
- ------------------------------------------------------------------------------------------------------------
Other expenses 0.22% 0.22% 0.22% 0.22%
- ------------------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 1.10% 1.86% 1.69% 0.86%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
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.
EXAMPLE
This example is intended to help you compare the cost of
investing in the Portfolio with the cost of investing in
other mutual funds.
This example shows what expenses you could pay over time.
The example assumes that you invest $10,000 in the
Portfolio, your investment has a 5% return each year, and
the Portfolio's operating expenses remain the same. Although
your actual costs may be higher or lower, the tables below
show your costs at the end of each period based on these
assumptions depending upon whether or not you sell your
shares at the end of each period.
<TABLE>
<CAPTION>
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES:
----------------------------------------- -----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------- -----------------------------------------
CLASS A $631 $856 $1099 $1795 $631 $856 $1099 $1795
- ---------------------------------------------------------- -----------------------------------------
CLASS B $689 $885 $1206 $2180 $189 $585 $1006 $2180
- ---------------------------------------------------------- -----------------------------------------
CLASS C $272 $533 $ 918 $1998 $172 $533 $ 918 $1998
- ---------------------------------------------------------- -----------------------------------------
CLASS D $ 88 $274 $ 477 $1061 $ 88 $274 $ 477 $1061
- ---------------------------------------------------------- -----------------------------------------
</TABLE>
Long-term shareholders of Class B and Class C may pay more
in sales charges, including distribution fees, than the
economic equivalent of the maximum front-end sales charges
permitted by the National Association of Securities Dealers.
5
<PAGE>
[ICON] ADDITIONAL INVESTMENT STRATEGY INFORMATION
- --------------------------------------------------------------------------------
This section provides additional information relating to the
Fund's principal strategies.
DEFENSIVE INVESTING. The Fund may take temporary "defensive"
positions in attempting to respond to adverse market
conditions. The Fund may invest any amount of its assets in
cash or money market instruments in a defensive posture when
the Investment Manager believes it is advisable to do so.
Although taking a defensive posture is designed to protect
the Fund from an anticipated market downturn, it could have
the effect of reducing the benefit from any upswing in the
market. When the Fund takes a defensive position, it may not
achieve its investment objective.
[ICON] ADDITIONAL RISK INFORMATION
- --------------------------------------------------------------------------------
This section provides additional information relating to the
principal risks of investing in the Portfolio.
YEAR 2000. The Portfolio could be adversely affected if the
computer systems necessary for the efficient operation of
the Investment Manager, the Portfolio's other service
providers and the markets and corporate and governmental
issuers in which the Portfolio invests do not properly
process and calculate date-related information from and
after January 1, 2000. While year 2000-related computer
problems could have a negative effect on the Portfolio, the
Investment Manager and its affiliates are working hard to
avoid any problems and to obtain assurances from their
service providers that they are taking similar steps.
In addition, it is possible that the markets for securities
in which the Portfolio invests may be detrimentally affected
by computer failures throughout the financial services
industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and
liquidity issues. In addition, corporate and governmental
data processing errors also may result in production
problems for individual companies and overall economic
uncertainties. Earnings of individual issuers will be
affected by remediation costs, which may be substantial and
may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Portfolio's investments may be
adversely affected.
6
<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, has more than $136.9 billion in assets under management
or administration as of June 30, 1999.
[End Sidebar]
[ICON] MANAGEMENT OF THE PORTFOLIO
- --------------------------------------------------------------------------------
The 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 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, New York 10048.
The Portfolio is managed within the Investment Manager's
Growth Group. Mark Bavoso, a Senior Vice President of the
Investment Manager, has been the primary portfolio manager
of the Portfolio since it commenced operations in February
1998 and a portfolio manager with the Investment Manager for
over five years.
The Portfolio pays the Investment Manager a monthly
management fee as full compensation for the services and
facilities furnished to the Portfolio, and for Portfolio
expenses assumed by the Investment Manager. The fee is based
on the Portfolio's average daily net assets. For the fiscal
year ended May 31, 1999, the Fund accrued total compensation
to the Investment Manager amounting to 0.64% of the
Portfolio's average daily net assets.
7
<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 (800) THE-DEAN for the telephone number of
the Morgan Stanley Dean Witter office nearest you. You may also access our
office locator on our Internet site at:
www.deanwitter.com/funds
[End Sidebar]
SHAREHOLDER INFORMATION
[ICON] PRICING PORTFOLIO SHARES
- --------------------------------------------------------------------------------
The price of shares of the Portfolio (excluding sales
charges), called "net asset value," is based on the value of
its portfolio securities. While the assets of each Class are
invested in a single portfolio of securities, the net asset
value of each Class will differ because the Classes have
different ongoing distribution fees.
The net asset value per share of the 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 value of the Portfolio'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 Fund's Board of Trustees. In these cases,
the Portfolio's net asset value will reflect certain
portfolio securities' fair value rather than their market
price. In addition, if the Portfolio holds securities
primarily listed on foreign exchanges, the value of its
portfolio securities may change on days when you will not be
able to purchase or sell your shares.
An exception to the Portfolio's general policy of using
market prices concerns its short-term debt portfolio
securities. Debt securities with remaining maturities of
sixty days or less at the time of purchase are valued at
amortized cost. However, if the cost does not reflect the
securities' market value, these securities will be valued at
their fair value.
[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 Portfolio's transfer agent and
requesting an application.
Because every investor has different immediate financial
needs and long-term investment goals, the 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.
8
<PAGE>
[Sidebar]
EASYINVEST-SM-
A purchase plan that allows you to transfer money automatically from your
checking or savings account or from a Money Market Fund on a semi-monthly,
monthly or quarterly basis. Contact your Morgan Stanley Dean Witter Financial
Advisor for further information about this service.
[End Sidebar]
When you buy Portfolio shares, the shares are purchased at
the next share price calculated (less any applicable
front-end sales charge for Class A shares) after we receive
your purchase order. Your payment is due on the third
business day after you place your purchase order. We reserve
the right to reject any order for the purchase of Portfolio
shares.
<TABLE>
<CAPTION>
MINIMUM INVESTMENT AMOUNTS
- ------------------------------------------------------------------------------------------------
MINIMUM INVESTMENT
----------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Regular Accounts $ 1,000 $ 100
- ------------------------------------------------------------------------------------------------
Individual Retirement Accounts: Regular IRAs $ 1,000 $ 100
Education IRAs $500 $ 100
- ------------------------------------------------------------------------------------------------
EASYINVEST-SM- (Automatically from your checking
or savings account or Money Market
Fund) $100* $ 100*
- ------------------------------------------------------------------------------------------------
</TABLE>
* Provided your schedule of investments totals $1,000 in twelve months.
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 Portfolio's distributor, in which you pay an
asset-based fee for advisory, administrative and/or
brokerage services, or (3) employer-sponsored employee
benefit plan accounts.
INVESTMENT OPTIONS FOR CERTAIN INSTITUTIONAL AND OTHER
INVESTORS/CLASS D SHARES. To be eligible to purchase Class D
shares, you must qualify under one of the investor
categories specified in the "Share Class Arrangements"
section of this PROSPECTUS.
SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In
addition to buying additional Portfolio shares for an
existing account by contacting your Morgan Stanley Dean
Witter Financial Advisor, you may send a check directly to
the Portfolio. To buy additional shares in this manner:
- Write a "letter of instruction" to the Portfolio
specifying the name(s) on the account, the account number,
the social security or tax identification number, the
Class of shares you wish to purchase and the investment
amount (which would include any applicable front-end sales
charge). The letter must be signed by the account
owner(s).
- Make out a check for the total amount payable to: Morgan
Stanley Dean Witter Competitive Edge Fund -- "Best Ideas"
Portfolio.
- Mail the letter and check to Morgan Stanley Dean Witter
Trust FSB at P.O. Box 1040, Jersey City, NJ 07303.
9
<PAGE>
[ICON] HOW TO EXCHANGE SHARES
- --------------------------------------------------------------------------------
PERMISSIBLE FUND EXCHANGES. You may exchange shares of any
Class of the Portfolio for the same Class of any other
continuously offered Multi-Class Fund, or for shares of a
No-Load Fund, Money Market Fund, North American Government
Income Trust or Short-Term U.S. Treasury Trust, without the
imposition of an exchange fee. See the inside back cover of
this PROSPECTUS for each Morgan Stanley Dean Witter Fund's
designation as a Multi-Class Fund, No-Load Fund or Money
Market Fund. If a Morgan Stanley Dean Witter Fund is not
listed, consult the inside back cover of that Fund's
PROSPECTUS for its designation. For purposes of exchanges,
shares of FSC Funds (subject to a front-end sales charge)
are treated as Class A shares of a Multi-Class Fund.
Exchanges may be made after shares of the 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.
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
Portfolio's transfer agent - Morgan Stanley Dean Witter
Trust FSB - and then write the transfer agent or call (800)
869-NEWS to place an exchange order. You can obtain an
exchange privilege authorization form by contacting your
Financial Advisor or other authorized financial
representative or by calling (800) 869-NEWS. If you hold
share certificates, no exchanges may be processed until we
have received all applicable share certificates.
An exchange to any Morgan Stanley Dean Witter Fund (except a
Money Market Fund) is made on the basis of the next
calculated net asset values of the Funds involved after the
exchange instructions are accepted. When exchanging into a
Money Market Fund, the 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 Portfolio 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
Portfolio'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 Portfolio in the past.
10
<PAGE>
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.
TAX CONSIDERATIONS OF EXCHANGES. If you exchange shares of
the Portfolio for shares of another Morgan Stanley Dean
Witter Fund there are important tax considerations. For tax
purposes, the exchange out of the Portfolio is considered a
sale of Fund shares - and the exchange into the other Fund
is considered a purchase. As a result, you may realize a
capital gain or loss.
You should review the "Tax Consequences" section and consult
your own tax professional about the tax consequences of an
exchange.
FREQUENT EXCHANGES. A pattern of frequent exchanges may
result in the Portfolio limiting or prohibiting, at its
discretion, additional purchases and/or exchanges. The
Portfolio will notify you in advance of limiting your
exchange privileges.
CDSC CALCULATIONS ON EXCHANGES. See the "Share Class
Arrangements" section of this PROSPECTUS for a discussion of
how applicable contingent deferred sales charges (CDSCs) are
calculated for shares of one Morgan Stanley Dean Witter Fund
that are exchanged for shares of another.
FOR FURTHER INFORMATION REGARDING EXCHANGE PRIVILEGES, YOU
SHOULD CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL
ADVISOR OR CALL (800) 869-NEWS.
[ICON] HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You can sell some or all of your Portfolio shares at any
time. If you sell Class A, Class B or Class C shares, your
net sale proceeds are reduced by the amount of any
applicable CDSC. Your shares will be sold at the next share
price calculated after we receive your order to sell as
described below.
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
<S> <C>
- ------------------------------------------------------------------------------------------
Contact your To sell your shares, simply call your Morgan Stanley Dean Witter
Financial Advisor 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 Class of shares you wish to sell; and
- the signature of each owner as it appears on the account.
----------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
- ------------------------------------------------------------------------------------------
<S> <C>
By Letter, If you are requesting payment to anyone other than the registered
continued 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, New Jersey 07303. If you hold share certificates,
you must return the certificates, along with the letter and any
required additional documentation.
----------------------------------------------------------------------
A check will be mailed to the name(s) and address in which the account
is registered, or otherwise according to your instructions.
- ------------------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter Family of
Withdrawal Plan Funds has a total market value of at least $10,000, you may elect to
[ICON] 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 "distributions,"
and ultimately may exhaust your account balance. The Portfolio 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, payment
of the sale proceeds may be delayed for the minimum time
needed to verify that the check has been honored (not more
than fifteen days from the time we receive the check).
TAX CONSIDERATIONS. Normally, your sale of 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.
12
<PAGE>
[SIDEBAR]
TARGETED DIVIDENDS-SM-
You may select to have your Portfolio distributions automatically invested in
other Classes of Portfolio shares or Classes of another Morgan Stanley Dean
Witter Fund that you own. Contact your Morgan Stanley Dean Witter Financial
Advisor for further information about this service.
[End Sidebar]
INVOLUNTARY SALES. The Portfolio 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 Portfolio sells your shares in this
manner, we will notify you and allow you sixty days to make
an additional investment in an amount that will increase the
value of your account to at least the required amount before
the sale is processed. No CDSC will be imposed on any
involuntary sale.
MARGIN ACCOUNTS. If you have pledged your Portfolio shares
in a margin account, contact your Morgan Stanley Dean Witter
Financial Advisor or other authorized financial
representative regarding restrictions on the sale of such
shares.
[ICON] DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Portfolio passes substantially all of its earnings from
income and capital gains along to its investors as
"distributions." The Portfolio earns income from stocks and
interest from fixed-income investments. These amounts are
passed along to Portfolio shareholders as "income dividend
distributions." The 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."
The 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. The Portfolio, however, may retain and reinvest
any long-term capital gains. The 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 Portfolio will mail a check to you no later than seven
business days after the distribution is declared. No
interest will accrue on uncashed checks. If you wish to
change how your distributions are paid, your request should
be received by the Portfolio's transfer agent, Morgan
Stanley Dean Witter Trust FSB, at least five business days
prior to the record date of the distributions.
13
<PAGE>
[ICON] TAX CONSEQUENCES
- --------------------------------------------------------------------------------
As with any investment, you should consider how your
investment in the Portfolio will be taxed. The tax
information in this PROSPECTUS is provided as general
information. You should consult your own tax professional
about the tax consequences of an investment in the
Portfolio.
Unless your investment in the Portfolio is through a
tax-deferred retirement account, such as a 401(k) plan or
IRA, you need to be aware of the possible tax consequences
when:
- The Portfolio makes distributions; and
- You sell Portfolio shares, including an exchange to
another Morgan Stanley Dean Witter Fund.
TAXES ON DISTRIBUTIONS. Your distributions are normally
subject to federal and state income tax when they are paid,
whether you take them in cash or reinvest them in Portfolio
shares. A distribution also may be subject to local income
tax. Any income dividend distributions and any short-term
capital gain distributions are taxable to you as ordinary
income. Any long-term capital gain distributions are taxable
as long-term capital gains, no matter how long you have
owned shares in the Portfolio.
Every January, you will be sent a statement (IRS Form
1099-DIV) showing the taxable distributions paid to you in
the previous year. The statement provides full information
on your dividends and capital gains for tax purposes.
TAXES ON SALES. Your sale of Portfolio shares normally is
subject to federal and state income tax and may result in a
taxable gain or loss to you. A sale also may be subject to
local income tax. Your exchange of Portfolio shares for
shares of another Morgan Stanley Dean Witter Fund is treated
for tax purposes like a sale of your original shares and a
purchase of your new shares. Thus, the exchange may, like a
sale, result in a taxable gain or loss to you and will give
you a new tax basis for your new shares.
When you open your Portfolio 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.
14
<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]
[ICON] SHARE CLASS ARRANGEMENTS
- --------------------------------------------------------------------------------
The 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 maximum annual
12b-1 fee applicable to each Class:
<TABLE>
<CAPTION>
MAXIMUM ANNUAL
CLASS SALES CHARGE 12b-1 FEE
<S> <C> <C>
- ------------------------------------------------------------------
A Maximum 5.25% initial sales charge
reduced for purchase of $25,000 or more;
shares sold without an initial sales
charge are generally subject to a 1.0%
CDSC during the first year 0.25%
- ------------------------------------------------------------------
B Maximum 5.0% CDSC during the first year
decreasing to 0% after six years 1.00%
- ------------------------------------------------------------------
C 1.0% CDSC during the first year 1.00%
- ------------------------------------------------------------------
D None None
- ------------------------------------------------------------------
</TABLE>
CLASS A SHARES Class A shares 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
-------------------------------------------------
PERCENTAGE OF APPROXIMATE PERCENTAGE OF
AMOUNT OF SINGLE TRANSACTION PUBLIC OFFERING PRICE AMOUNT INVESTED
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Less than $25,000 5.25% 5.54%
- -------------------------------------------------------------------------------------------
$25,000 but less than $50,000 4.75% 4.99%
- -------------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.00% 4.17%
- -------------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.00% 3.09%
- -------------------------------------------------------------------------------------------
$250,000 but less than $1 million 2.00% 2.04%
- -------------------------------------------------------------------------------------------
$1 million and over 0% 0%
- -------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
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 the Portfolio in a single transaction with
purchases of Class A shares of other Multi-Class Funds and
shares of FSC Funds.
RIGHT OF ACCUMULATION. You also may benefit from a reduction
of sales charges if the cumulative net asset value of Class
A shares of the Portfolio purchased in a single transaction,
together with shares of other Funds you currently own which
were previously purchased at a price including a front-end
sales charge (including shares acquired through reinvestment
of distributions), amounts to $25,000 or more. Also, if you
have a cumulative net asset value of all your Class A and
Class D shares equal to at least $5 million (or $25 million
for certain employee benefit plans), you are eligible to
purchase Class D shares of any Fund subject to the Fund's
minimum initial investment requirement.
You must notify your Morgan Stanley Dean Witter Financial
Advisor or other authorized financial representative (or
Morgan Stanley Dean Witter Trust FSB if you purchase
directly through the Morgan Stanley Dean Witter Competitive
Edge Fund -- "Best Ideas" Portfolio), at the time a purchase
order is placed, that the purchase qualifies for the reduced
charge under the Right of Accumulation. Similar notification
must be made in writing when an order is placed by mail. The
reduced sales charge will not be granted if: (i)
notification is not furnished at the time of the order; or
(ii) a review of the records of Dean Witter Reynolds or
other authorized dealer of Portfolio shares or the
Portfolio's transfer agent does not confirm your represented
holdings.
LETTER OF INTENT. The schedule of reduced sales charges for
larger purchases also will be available to you if you enter
into a written "letter of intent." A letter of intent
provides for the purchase of Class A shares of the 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
16
<PAGE>
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
mandatory sale or transfer restrictions on termination)
approved by the Portfolio's distributor pursuant to which
they pay an asset-based fee for investment advisory,
administrative and/or brokerage services.
- Employer-sponsored employee benefit plans, whether or not
qualified under the Internal Revenue Code, for which
Morgan Stanley Dean Witter Trust FSB serves as trustee or
Dean Witter Reynolds' Retirement Plan Services serves as
recordkeeper under a written Recordkeeping Services
Agreement ("MSDW Eligible Plans") which have at least 200
eligible employees.
- A MSDW Eligible Plan whose Class B shares have converted
to Class A shares, regardless of the plan's asset size or
number of eligible employees.
- A client of a Morgan Stanley Dean Witter Financial Advisor
who joined us from another investment firm within six
months prior to the date of purchase of Portfolio shares,
and you used the proceeds from the sale of shares of a
proprietary mutual fund of that Financial Advisor's
previous firm that imposed either a front-end or deferred
sales charge to purchase Class A shares, provided that:
(1) you sold the shares not more than 60 days prior to the
purchase of Portfolio shares, and (2) the sale proceeds
were maintained in the interim in cash or a money market
fund.
- Current or retired Directors/Trustees of the Morgan
Stanley Dean Witter Funds, such persons' spouses and
children under the age of 21, and trust accounts for which
any of such persons is a beneficiary.
- Current or retired directors, officers and employees of
Morgan Stanley Dean Witter & Co. and any of its
subsidiaries, such persons' spouses and children under the
age of 21, and trust accounts for which any of such
persons is a beneficiary.
17
<PAGE>
[Sidebar]
CONTINGENT DEFERRED SALES CHARGE OR CDSC
A fee you pay when you sell shares of certain Morgan Stanley Dean Witter Funds
purchased without an initial sales charge. This fee declines the longer you hold
your shares as set forth in the table.
[End Sidebar]
CLASS B SHARES Class B shares 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, 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 a 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
18
<PAGE>
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.
All waivers will be granted only following the 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.
CONVERSION FEATURE. After ten (10) years, Class B shares
will convert automatically to Class A shares of the
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 a MSDW Eligible
Plan, the plan is treated as a single investor and all
Class B shares will convert to Class A shares on the
conversion date of the Class B shares of a Morgan Stanley
Dean Witter Fund purchased by that plan.
Currently, the Class B share conversion is not a taxable
event; the conversion feature may be cancelled if it is
deemed a taxable event in the future by the Internal
Revenue Service.
If you exchange your Class B shares for shares of a Money
Market Fund, a No-Load Fund, North American Government
Income Trust or Short-Term U.S. Treasury Trust, the
holding period for conversion is frozen as of the last day
of the month of the exchange and resumes on the last day
of the month you exchange back into Class B shares.
EXCHANGING SHARES SUBJECT TO A CDSC. There are special
considerations when you exchange Portfolio shares that are
subject to a CDSC. When determining the length of time you
held the shares and the corresponding CDSC rate, any
period (starting at the end of the month) during which you
held shares of a fund that does 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.
19
<PAGE>
For example, if you held Class B shares of the 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 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 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 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
mandatory sale or transfer restrictions on termination)
approved by the Portfolio's distributor pursuant to
which they pay an asset-based fee for investment
advisory, administrative and/or brokerage services.
- 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.
20
<PAGE>
- Certain unit investment trusts sponsored by Dean Witter
Reynolds.
- Certain other open-end investment companies whose
shares are distributed by the Portfolio'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 the 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 Portfolio 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 the Portfolio. The Plan allows the Portfolio
to pay distribution fees for the sale and distribution of
these shares. It also allows the Portfolio to pay for
services to shareholders of Class A, Class B and Class C
shares. Because these fees are paid out of the 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.
21
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance for the past fiscal year of the
Portfolio. Certain information reflects financial results for a single
Portfolio share. The total return in the table represents the rate an
investor would have earned or lost on an investment in the Portfolio
(assuming reinvestment of all dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report, along with the Portfolio's
financial statements, is included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 25,
FOR THE YEAR 1998*
ENDED THROUGH MAY 31,
MAY 31, 1999 1998
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
CLASS B SHARES++
- ------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.35 $ 10.00
- ------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.06) 0.03
Net realized and unrealized gain 0.50 0.32
------- -------
Total income from investment operations 0.44 0.35
- ------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.03) --
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.76 $ 10.35
- ------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 4.27% 3.50%(1)
- ------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ------------------------------------------------------------------------------------------------------
Expenses 1.86%(3) 1.88%(2)
- ------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.58)%(3) 0.92%(2)
- ------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,614,229 $1,711,433
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 19%(1)
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Portfolio ratios for investment income and non-class
specific expenses.
22
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD FEBRUARY 25, 1998*
MAY 31, 1999 THROUGH MAY 31, 1998
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
CLASS A SHARES++
- -------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.37 $10.00
- -------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.02 0.05
Net realized and unrealized gain 0.49 0.32
------ ------
Total income from investment
operations 0.51 0.37
- -------------------------------------------------------------------------------------------------
Less dividends from net investment
income (0.04) --
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $10.84 $10.37
- -------------------------------------------------------------------------------------------------
TOTAL RETURN+ 5.01% 3.70%(1)
- -------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -------------------------------------------------------------------------------------------------
Expenses 1.10%(3) 1.13%(2)
- -------------------------------------------------------------------------------------------------
Net investment income 0.18%(3) 1.66%(2)
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------
Net assets, end of period, in
thousands $98,784 $117,750
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 19%(1)
- -------------------------------------------------------------------------------------------------
CLASS C SHARES++
- -------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.35 $10.00
- -------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income (loss) (0.04) 0.03
Net realized and unrealized gain 0.50 0.32
------ ------
TOTAL INCOME FROM INVESTMENT
OPERATIONS 0.46 0.35
- -------------------------------------------------------------------------------------------------
Less dividends from net investment
income (0.03) --
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $10.78 $10.35
- -------------------------------------------------------------------------------------------------
TOTAL RETURN+ 4.44% 3.50%(1)
- -------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -------------------------------------------------------------------------------------------------
Expenses 1.69%(3) 1.88%(2)
- -------------------------------------------------------------------------------------------------
Net investment income (loss) (0.41)%(3) 0.91%(2)
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------
Net assets, end of period, in
thousands $142,048 $176,497
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 19%(1)
- -------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Portfolio ratios for investment income and non-class
specific expenses.
23
<PAGE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 25,
1998*
FOR THE YEAR ENDED THROUGH MAY 31,
MAY 31, 1999 1998
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
CLASS D SHARES++
- --------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.38 $10.00
- --------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.08
Net realized and unrealized gain 0.51 0.30
------- -------
Total income from investment operations 0.54 0.38
- --------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.05) --
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.87 $10.38
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 5.26% 3.80%(1)
- --------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- --------------------------------------------------------------------------------------------------------
Expenses 0.86%(3) 0.92%(2)
- --------------------------------------------------------------------------------------------------------
Net investment income 0.42%(3) 2.94%(2)
- --------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $3,611 $5,407
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 97% 19%(1)
- --------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Portfolio ratios for investment income and non-class
specific expenses.
24
<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
Equity Fund
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust
SmallCap Growth Fund
Special Value Fund
Value Fund
THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities
Precious Metals and Minerals Trust
GLOBAL/INTERNATIONAL FUNDS
Competitive Edge Fund - "Best Ideas"
Portfolio
European Growth Fund
Fund of Funds - International Portfolio
International Fund
International SmallCap Fund
Latin American Growth Fund
Japan Fund
Pacific Growth Fund
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUNDS
- --------------------------------
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Fund of Funds - Domestic Portfolio
Income Builder Fund
Mid-Cap Dividend Growth Securities
S&P 500 Index Fund
S&P 500 Select Fund
Strategist Fund
Total Return Trust
Value-Added Market Series/Equity Portfolio
THEME FUNDS
Global Utilities Fund
Real Estate Fund
Utilities Fund
GLOBAL FUNDS
Global Dividend Growth Securities
- --------------------------------------------------------------------------------
INCOME FUNDS
- --------------------------------
GOVERNMENT INCOME FUNDS
Federal Securities Trust
Short-Term U.S. Treasury Trust
U.S. Government Securities Trust
DIVERSIFIED INCOME FUNDS
Diversified Income Trust
CORPORATE INCOME FUNDS
High Yield Securities
Intermediate Income Securities
Short-Term Bond Fund (NL)
GLOBAL INCOME FUNDS
North American Government Income Trust
World Wide Income Trust
TAX-FREE INCOME FUNDS
California Tax-Free Income Fund
Hawaii Municipal Trust (FSC)
Limited Term Municipal Trust (NL)
Multi-State Municipal Series Trust (FSC)
New York Tax-Free Income Fund
Tax-Exempt Securities Trust
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
- --------------------------------
TAXABLE MONEY MARKET FUNDS
Liquid Asset Fund (MM)
U.S. Government Money Market Trust (MM)
TAX-FREE MONEY MARKET FUNDS
California Tax-Free Daily Income Trust (MM)
N.Y. Municipal Money Market Trust (MM)
Tax-Free Daily Income Trust (MM)
There may be Funds created after this PROSPECTUS was published. Please consult
the inside back cover of a new Fund's prospectus for its designation, e.g.,
Multi-Class Fund or Money Market Fund.
Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund, except for
North American Government Income Trust and Short-Term U.S. Treasury Trust, is a
Multi-Class Fund. A Multi-Class Fund is a mutual fund offering multiple Classes
of shares. The other types of funds are: NL - No-Load (Mutual) Fund; MM - Money
Market Fund; FSC - A mutual fund sold with a front-end sales charge and a
distribution (12b-1) fee.
<PAGE>
MORGAN STANLEY DEAN WITTER
COMPETITIVE EDGE FUND
"BEST IDEAS" PORTFOLIO
Additional information about the Portfolio's investments is
available in the Portfolio's ANNUAL AND SEMI-ANNUAL REPORTS
TO SHAREHOLDERS. In the Portfolio's ANNUAL REPORT, you will
find a discussion of the market conditions and investment
strategies that significantly affected the Portfolio's
performance during its last fiscal year. The Portfolio's
Statement of Additional Information also provides additional
information about the Portfolio. 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 Portfolio,
or to make shareholder inquiries, please call:
(800) 869-NEWS
You also may obtain information about the Portfolio by
calling your Morgan Stanley Dean Witter Financial Advisor or
by visiting our Internet site at:
www.deanwitter.com/funds
Information about the Portfolio (including the STATEMENT OF
ADDITIONAL INFORMATION) can be viewed and copied at the
Securities and Exchange Commission's Public Reference Room
in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (800)
SEC-0330. Reports and other information about the Portfolio
are available on the SEC's Internet site (www.sec.gov), and
copies of this information may be obtained, upon payment of
a duplicating fee, by writing the Public Reference Section
of the SEC, Washington, DC 20549-6009.
(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-8455)
