<PAGE>
PROSPECTUS - JULY 31, 2000
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
Past Performance............................................ 4
Fees and Expenses........................................... 5
Additional Investment Strategy Information.................. 6
Management of the Portfolio................................. 6
Shareholder Information Pricing Portfolio Shares.................................... 7
How to Buy Shares........................................... 7
How to Exchange Shares...................................... 8
How to Sell Shares.......................................... 10
Distributions............................................... 12
Tax Consequences............................................ 12
Share Class Arrangements.................................... 13
Financial Highlights ............................................................ 20
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 total
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.
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.
Substantially all of the orders for transactions in the
Portfolio's securities listed on exchanges are expected to be
placed with broker-dealers affiliated with the Investment
Manager including Morgan Stanley & Co. and Dean Witter
Reynolds Inc.
In addition to or in replacement of companies on the
Competitive Edge "Best Ideas" List, the Investment Manager
may at times purchase supplemental securities that are not
1
<PAGE>
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 Portfolio 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.
MSDW Equity Research could at any time cease publishing the
Competitive Edge "Best Ideas" List or the
2
<PAGE>
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. 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 (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
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.
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
3
<PAGE>
[Sidebar]
ANNUAL TOTAL RETURNS
This chart shows the performance of the Portfolio's Class B shares in the past
calendar year.
[End Sidebar]
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 the
Portfolio's trades effected in those markets.
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.
OTHER RISKS. 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.
[ICON] PAST PERFORMANCE
--------------------------------------------------------------------------------
The bar chart and table below provide some indication of the
risks of investing in the 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>
'99 28.30%
</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
June 30, 2000 was -2.16%.
During the period shown in the bar chart, the highest return
for a calendar quarter was 19.18% (quarter ended
December 31, 1999) and the lowest return for a calendar
quarter was -0.35% (quarter ended September 30, 1999).
4
<PAGE>
[Sidebar]
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.
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, 2000.
[End Sidebar]
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999)
-----------------------------------------------------------------------
LIFE OF THE FUND
PAST 1 YEAR (SINCE 2/25/98)
<S> <C> <C>
-----------------------------------------------------------------------
Class A 22.52% 14.97%
-----------------------------------------------------------------------
Class B 23.30% 15.56%
-----------------------------------------------------------------------
Class C 27.68% 17.65%
-----------------------------------------------------------------------
Class D 29.44% 18.60%
-----------------------------------------------------------------------
MSCI World Index(1) 24.93% 21.51%
-----------------------------------------------------------------------
</TABLE>
1 The Morgan Stanley Capital International World Index (MSCI) measures
performance from a diverse range of global stock markets including the
U.S., Canada, Europe, Australia, New Zealand, 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.
[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 PORTFOLIO OPERATING EXPENSES
------------------------------------------------------------------------------------------------
Management fee 0.64% 0.64% 0.64% 0.64%
------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.24% 1.00% 1.00% None
------------------------------------------------------------------------------------------------
Other expenses 0.19% 0.19% 0.19% 0.19%
------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 1.07% 1.83% 1.83% 0.83%
------------------------------------------------------------------------------------------------
</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
5
<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 $150 billion in assets under
management as of June 30, 2000.
[End Sidebar]
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 $628 $847 $1,084 $1,762 $628 $847 $1,084 $1,762
--------------------------------------------------- ----------------------------------
CLASS B $686 $876 $1,190 $2,148 $186 $576 $ 990 $2,148
--------------------------------------------------- ----------------------------------
CLASS C $286 $576 $ 990 $2,148 $186 $576 $ 990 $2,148
--------------------------------------------------- ----------------------------------
CLASS D $ 85 $265 $ 460 $1,025 $ 85 $265 $ 460 $1,025
--------------------------------------------------- ----------------------------------
</TABLE>
Long-term shareholders of Class B and Class C may pay more in
sales charges, including distribution fees, than the economic
equivalent of the maximum front-end sales charges permitted
by the NASD.
[ICON] ADDITIONAL INVESTMENT STRATEGY INFORMATION
--------------------------------------------------------------------------------
This section provides additional information relating to the
Portfolio's principal 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.
[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, NY 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, 2000, the Portfolio accrued total
compensation to the Investment Manager amounting to 0.64% of
the Portfolio's average daily net assets.
6
<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.msdw.com/individual/
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. With respect to
securities that are 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.
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.
7
<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>
* 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.
[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, 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 Portfolio may be exchanged for shares of an FSC fund
subject to a front-end sales charge. 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, 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.
8
<PAGE>
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.
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
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.
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.
9
<PAGE>
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 Portfolio
or other Morgan Stanley Dean Witter Funds may result in the
Portfolio 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 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>
10
<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 "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, 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 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.
11
<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
--------------------------------------------------------------------------------
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. However, if you purchase
Portfolio shares prior to the record date for the
distribution, and payment for such shares is received after
the record date, 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 Portfolio'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
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.
12
<PAGE>
If more than 50% of the Portfolio's assets are invested in
foreign securities at the end of any fiscal year, the
Portfolio may elect to permit shareholders to take a credit
or deduction on their federal income tax return for foreign
taxes paid by 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 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.
[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 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>
13
<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 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
TRANSACTION PUBLIC OFFERING PRICE OF NET AMOUNT INVESTED
<S> <C> <C>
---------------------------------------------------------------------------------------
Less than $25,000 5.25% 5.54%
---------------------------------------------------------------------------------------
$25,000 but less than $50,000 4.75% 4.99%
---------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.00% 4.17%
---------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.00% 3.09%
---------------------------------------------------------------------------------------
$250,000 but less than $1 million 2.00% 2.04%
---------------------------------------------------------------------------------------
$1 million and over 0 0
---------------------------------------------------------------------------------------
</TABLE>
The reduced sales charge schedule is applicable to purchases
of Class A shares in a single transaction by:
- A single account (including an individual, trust or
fiduciary account).
- Family member accounts (limited to husband, wife and
children under the age of 21).
- 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.
14
<PAGE>
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 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 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 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 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 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.
15
<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 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
16
<PAGE>
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 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.
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,
17
<PAGE>
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 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 termination fees, mandatory sale
or transfer restrictions on termination) pursuant to which
they pay an asset-based fee.
18
<PAGE>
- 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 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.
- 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.
19
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Portfolio's financial performance for the life 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 YEAR ENDED MAY 31,
-------------------------------- FOR THE PERIOD FEBRUARY 25, 1998*
2000 1999 THROUGH MAY 31, 1998
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
CLASS A SHARES++
------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.84 $10.37 $10.00
------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.01) 0.02 0.05
Net realized and unrealized gain 1.88 0.49 0.32
--------- --------- ---------
Total income from investment
operations 1.87 0.51 0.37
------------------------------------------------------------------------------------------------------------
Less dividends from net investment
income -- (0.04) --
------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.71 $10.84 $10.37
------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 17.25 % 5.01% 3.70%(1)
------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
------------------------------------------------------------------------------------------------------------
Expenses 1.07 %(3) 1.10%(3) 1.13%(2)
------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.10)%(3) 0.18%(3) 1.66%(2)
------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
------------------------------------------------------------------------------------------------------------
Net assets, end of period, in
thousands $97,057 $98,784 $117,750
------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75 % 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 Fund ratios for investment income and non-class specific
expenses.
20
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
-------------------------------- FOR THE PERIOD FEBRUARY 25, 1998*
2000 1999 THROUGH MAY 31, 1998
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
CLASS B SHARES++
----------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
----------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $10.76 $10.35 $10.00
----------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.11) (0.06) 0.03
Net realized and unrealized
gain 1.87 0.50 0.32
---------- ---------- ----------
Total income from investment
operations 1.76 0.44 0.35
----------------------------------------------------------------------------------------------------
Less dividends from net
investment income -- (0.03) --
----------------------------------------------------------------------------------------------------
Net asset value, end of period $12.52 $10.76 $10.35
----------------------------------------------------------------------------------------------------
TOTAL RETURN+ 16.36 % 4.27 % 3.50%(1)
----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
----------------------------------------------------------------------------------------------------
Expenses 1.83 %(3) 1.86 %(3) 1.88%(2)
----------------------------------------------------------------------------------------------------
Net investment income (loss) (0.86)%(3) (0.58)%(3) 0.92%(2)
----------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
----------------------------------------------------------------------------------------------------
Net assets, end of period, in
thousands $1,688,392 $1,614,229 $1,711,433
----------------------------------------------------------------------------------------------------
Portfolio turnover rate 75 % 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 Fund ratios for investment income and non-class specific
expenses.
21
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
------------------------------ FOR THE PERIOD FEBRUARY 25, 1998*
2000 1999 THROUGH MAY 31, 1998
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
CLASS C SHARES++
----------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
----------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $10.78 $10.35 $10.00
----------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.11) (0.04) 0.03
Net realized and unrealized
gain 1.88 0.50 0.32
--------- --------- ---------
Total income from investment
operations 1.77 0.46 0.35
----------------------------------------------------------------------------------------------------
Less dividends from net
investment income -- (0.03) --
----------------------------------------------------------------------------------------------------
Net asset value, end of period $12.55 $10.78 $10.35
----------------------------------------------------------------------------------------------------
TOTAL RETURN+ 16.42 % 4.44 % 3.50%(1)
----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
----------------------------------------------------------------------------------------------------
Expenses 1.83 %(3) 1.69 %(3) 1.88%(2)
----------------------------------------------------------------------------------------------------
Net investment income (loss) (0.86)%(3) (0.41)%(3) 0.91%(2)
----------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
----------------------------------------------------------------------------------------------------
Net assets, end of period, in
thousands $138,694 $142,048 $176,497
----------------------------------------------------------------------------------------------------
Portfolio turnover rate 75 % 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 Fund ratios for investment income and non-class specific
expenses.
22
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
------------------------------------ FOR THE PERIOD FEBRUARY 25, 1998*
2000 1999 THROUGH MAY 31, 1998
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
CLASS D SHARES++
--------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
--------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $10.87 $10.38 $10.00
--------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income -- 0.03 0.08
Net realized and unrealized
gain 1.90 0.51 0.30
------ ------ ------
Total income from investment
operations 1.90 0.54 0.38
--------------------------------------------------------------------------------------------------------
Less dividends from net
investment income -- (0.05) --
--------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.77 $10.87 $10.38
--------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 17.48% 5.26% 3.80%(1)
--------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
--------------------------------------------------------------------------------------------------------
Expenses 0.83%(3) 0.86%(3) 0.92%(2)
--------------------------------------------------------------------------------------------------------
Net investment income 0.14%(3) 0.42%(3) 2.94%(2)
--------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
--------------------------------------------------------------------------------------------------------
Net assets, end of period, in
thousands $1,247 $3,611 $5,407
--------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75% 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 Fund ratios for investment income and non-class specific
expenses.
23
<PAGE>
NOTES
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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
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust
Next Generation Trust
SmallCap 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
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
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
COMPETITIVE EDGE FUND "BEST IDEAS" PORTFOLIO
[Sidebar]
TICKER SYMBOLS:
Class A: EDGAX
-------------------
Class B: EDGBX
-------------------
Class C: EDGCX
-------------------
Class D: EDGDX
-------------------
[End Sidebar]
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.msdw.com/individual/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
(202) 942-8090. Reports and other information about the
Portfolio 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 E-mail 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 811-8455)
