<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 2000
REGISTRATION NO. 333-56609
811-8809
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 3 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
AMENDMENT NO. 4 [X]
---------------------
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
(A MASSACHUSETTS BUSINESS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
BARRY FINK, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
---------------------
COPY TO:
STUART M. STRAUSS, ESQ.
MAYER, BROWN & PLATT
1675 BROADWAY
NEW YORK, NEW YORK 10019
---------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Post-Effective Amendment becomes effective.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
immediately upon filing pursuant to paragraph (b)
----
X on April 28, 2000 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)
----
on (date) pursuant to paragraph (a) of rule 485.
----
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS - APRIL 28, 2000
MORGAN STANLEY DEAN WITTER
----------------------------------------------------------------
S&P 500 SELECT FUND
[GRAPHIC OMITTED]
A MUTUAL FUND THAT SEEKS TO PROVIDE A TOTAL RETURN
(BEFORE EXPENSES) THAT EXCEEDS THE TOTAL RETURN OF
THE STANDARD & POOR'S (REGISTERED TRADEMARK)
500 COMPOSITE STOCK PRICE INDEX
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
CONTENTS
The Fund Investment Objective ........................ 1
Principal Investment Strategies ............. 1
Principal Risks ............................. 2
Past Performance ............................ 3
Fees and Expenses ........................... 4
Additional Investment Strategy Information .. 5
Additional Risk Information ................. 6
Fund Management ............................. 7
Shareholder Information Pricing Fund Shares ......................... 8
How to Buy Shares ........................... 8
How to Exchange Shares ...................... 10
How to Sell Shares .......................... 12
Distributions ............................... 14
Tax Consequences ............................ 14
Share Class Arrangements .................... 15
Financial Highlights ............................................ 23
Our Family of Funds ............................... Inside Back Cover
This Prospectus contains important information about the Fund.
Please read it carefully and keep it for future reference.
<PAGE>
THE FUND
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- --------------------
Morgan Stanley Dean Witter S&P 500 Select Fund seeks to provide a total return
(before expenses) that exceeds the total return of the Standard & Poor's
(Registered Trademark) 500 Composite Stock Price Index.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
- -------------------------------
(sidebar)
TOTAL RETURN
An investment objective having the goal of selecting securities with the
potential to rise in price and pay out income.
(end sidebar)
The Fund will normally invest at least 80% of its total assets in common stocks
of selected companies included in the Standard & Poor's (Registered Trademark)
500 Composite Stock Price Index. The S&P 500 is a well known stock market index
that includes common stocks of 500 companies. The companies represent a
significant portion of the market value of all publicly traded common stocks in
the United States. The S&P 500 may include some foreign companies. Unlike the
S&P 500, however, the Fund is actively managed by its "Investment Manager,"
Morgan Stanley Dean Witter Advisors Inc. As such, the Fund's performance will
differ from the performance of the S&P 500.
In buying and selling securities for the Fund, the Investment Manager seeks to
identify those companies listed in the S&P 500 that have favorable investment
recommendations from the equity research departments of recognized investment
banking firms, including Morgan Stanley Dean Witter & Co. The Investment Manager
will consider the available analytical research reports and investment
recommendations concerning each of the companies included in the S&P 500,
together with its own investment analysis, to select or overweight favorable
companies. The Investment Manager will consider investing in all of the
industries represented in the S&P 500; but may not do so if the companies within
an industry do not meet its investment criteria. The Fund will not purchase
shares of Morgan Stanley Dean Witter & Co.
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.
In addition to common stocks, the Fund may invest in stock index futures on the
S&P 500 and Standard & Poor's Depository Receipts ("SPDRs").
----------------
"Standard & Poor's (Registered Trademark) ," "S&P (Registered Trademark) ," "S&P
500 (Registered Trademark) ," "Standard & Poor's 500," and "500" are trademarks
of the McGraw-Hill Companies, Inc. and have been licensed for use by the Fund.
The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's, a
division of the McGraw Hill Companies, Inc. and Standard & Poor's makes no
representation regarding the advisability of investing in the Fund.
In pursuing the Fund's investment objective, the Investment Manager has
considerable leeway in deciding which investments it buys, holds or sells on a
day-to-day basis -- and
1
<PAGE>
which trading or investment strategies it uses. For example, the Investment
Manager in its discretion may determine to use some permitted trading or
investment strategies while not using others.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
- ---------------
There is no assurance that the Fund will achieve its investment objective. The
Fund's share price will fluctuate with changes in the market value of the Fund's
portfolio securities. When you sell Fund shares, they may be worth less than
what you paid for them and, accordingly, you can lose money investing in this
Fund.
A principal risk of investing in the Fund is associated with its common stock
investments. In general, stock values fluctuate in response to activities
specific to the company as well as general market, economic and political
conditions. Stock prices can fluctuate widely in response to these factors.
The performance of the Fund also will depend on whether the Investment Manager
is successful in pursuing the Fund's investment strategy. The Fund is also
subject to other risks from its permissible investments including the risks
associated with its futures, SPDRs and foreign securities investments. For more
information about these risks, see the "Additional Risk Information" section.
Shares of the Fund are not bank deposits and are not guaranteed or insured by
the FDIC or any other government agency.
2
<PAGE>
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------
The bar chart and table below provide some indication of the risks of investing
in the Fund. The Fund's past performance does not indicate how the Fund will
perform in the future.
(sidebar)
ANNUAL TOTAL RETURNS
This chart shows the performance of the Fund's Class B shares in the past
calendar year.
(end sidebar)
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
[GRAPHIC OMITTED]
1999 19.28%
This 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 March 31, 2000 was 2.30%.
During the periods shown in the bar chart, the highest return for a calendar
quarter was 14.93% (quarter ended December 31, 1999), and the lowest return for
a calendar quarter was -6.48% (quarter ended September 30, 1999).
(sidebar)
TOTAL RETURNS
This table compares the Fund's returns with those of a broad measure of market
performance over time. The Fund's returns include the maximum applicable sales
charge for each Class and assume you sold your shares at the end of each
period.
(end sidebar)
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999)
LIFE OF FUND
PAST 1 YEAR (SINCE 9/28/98)
Class A 13.81% 26.20%
Class B 14.28% 27.80%
Class C 18.28% 30.76%
Class D 20.46% 32.09%
S&P 500 Index(1) 21.04% 32.46%
(1) The Standard & Poor's (Registered Trademark) 500 Stock Index (S&P 500) is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The performance of the Index
does not include any expenses, fees or charges. The Index is unmanaged and
should not be considered an investment.
3
<PAGE>
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------
The table below briefly describes the fees and expenses that you may pay if you
buy and hold shares of the Fund. The Fund offers four classes of shares: Classes
A, B, C and D. Each Class has a different combination of fees, expenses and
other features. The Fund does not charge account or exchange fees. See the
"Share Class Arrangements" section for further fee and expense information.
(sidebar)
SHAREHOLDER FEES
These fees are paid directly from your investment.
(end sidebar)
(sidebar)
ANNUAL FUND OPERATING EXPENSES
These expenses are deducted from the Fund's assets and are estimated based on
expenses paid for the fiscal year ended February 29, 2000.
(end sidebar)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
- ------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 0.60% 0.60% 0.60% 0.60%
- ------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.25% 1.00% 1.00% None
- ------------------------------------------------------------------------------------------------------
Other expenses 0.37% 0.37% 0.37% 0.37%
- ------------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 1.22% 1.97% 1.97% 0.97%
- ------------------------------------------------------------------------------------------------------
</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.
4
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund, your investment has a
5% return each year, and the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, the tables below show your
costs at the end of each period based on these assumptions depending upon
whether or not you sell your shares at the end of each period.
IF YOU SOLD YOUR IF YOU HELD YOUR
SHARES: SHARES:
- --------------------------------- ------------------
1 YEAR 3 YEARS 1 YEAR 3 YEARS
- --------------------------------- ------------------
CLASS A $643 $892 $643 $892
- --------------------------------- ------------------
CLASS B $700 $918 $200 $618
- --------------------------------- ------------------
CLASS C $300 $618 $200 $618
- --------------------------------- ------------------
CLASS D $ 99 $309 $ 99 $309
- --------------------------------- ------------------
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.
[GRAPHIC OMITTED]
ADDITIONAL INVESTMENT STRATEGY INFORMATION
- ------------------------------------------
This section provides additional information relating to the Fund's principal
strategies.
Stock Index Futures. The Fund may invest in stock index futures with respect to
the S&P 500 Index. Stock index futures may be used to simulate investment in
the S&P 500 while retaining a cash balance for fund management purposes, to
facilitate trading, to reduce transaction costs or to seek higher investment
returns.
SPDRs. The Fund may invest in securities referred to as SPDRs (known as
"spiders") that are designed to track the S&P 500 Index. SPDRs represent an
ownership interest in the SPDR Trust, which holds a portfolio of common stocks
that closely tracks the price performance and dividend yield of the S&P 500
Index. SPDRs trade on the American Stock Exchange like shares of common stock.
The Fund may invest up to 10% of its assets in SPDRs and up to 5% of its assets
in SPDRs issued by a single unit investment trust.
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 total 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
5
<PAGE>
reducing the benefit from any upswing in the market. When the Fund takes a
defensive position, it may not achieve its investment objective.
The percentage limitations relating to the composition of the Fund's portfolio
apply at the time the Fund acquires an investment and refer to the Fund's net
assets, unless otherwise noted. Subsequent percentage changes that result from
market fluctuations will not require the Fund to sell any portfolio security.
The Fund may change its principal investment strategies without shareholder
approval; however, you would be notified of any changes.
[GRAPHIC OMITTED]
ADDITIONAL RISK INFORMATION
- ---------------------------
This section provides additional information relating to the principal risks of
investing in the Fund.
Foreign Securities. The Fund's investments in foreign securities (including
depository receipts) may involve risks in addition to the risks associated with
domestic securities. One additional risk is currency risk.
Foreign securities also have risks related to economic and political
developments abroad. 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.
Futures. If the Fund invests in futures, its participation in these markets
would subject the Fund's portfolio to certain risks. The Investment Manager's
predictions of movements in the direction of the stock market may be
inaccurate, and the adverse consequences to the Fund (e.g., a reduction in the
Fund's net asset value or a reduction in the amount of income available for
distribution) may leave the Fund in a worse position than if these strategies
were not used. Other risks inherent in the use of futures include, for example,
the possible imperfect correlation between the price of futures contracts and
movements in the prices of the securities, and the possible absence of a liquid
secondary market for any particular instrument.
SPDRs. SPDRs, which the Fund may hold, have many of the same risks as direct
investments in common stocks. The market value of SPDRs is expected to rise and
fall as the S&P 500 Index rises and falls. If the Fund invests in SPDRs, it
would, in addition to its own expenses, indirectly bear its ratable share of
the SPDR's expenses.
6
<PAGE>
[GRAPHIC OMITTED]
FUND MANAGEMENT
- ---------------
(sidebar)
MORGAN STANLEY DEAN WITTER ADVISORS INC.
The Investment Manager is widely recognized as a leader in the mutual fund
industry and together with Morgan Stanley Dean Witter Services Company Inc.,
its wholly-owned subsidiary, had approximately $155 billion in assets under
management as of March 31, 2000.
(end sidebar)
The Fund has retained the Investment Manager -- Morgan Stanley Dean Witter
Advisors Inc. -- to provide administrative services, manage its business
affairs and invest its assets, including the placing of orders for the purchase
and sale of portfolio securities. The Investment Manager is a wholly-owned
subsidiary of Morgan Stanley Dean Witter & Co., a preeminent global financial
services firm that maintains leading market positions in each of its three
primary businesses: securities, asset management and credit services. Its main
business office is located at Two World Trade Center, New York, NY 10048.
The Fund's portfolio is managed within the Investment Manager's Growth Group.
Guy G. Rutherfurd, Jr., a Senior Vice President and Director of the Growth
Group of the Investment Manager, is the primary portfolio manager of the Fund.
Mr. Rutherfurd has been a portfolio manager with the Investment Manager since
February 1997. During the period from May 1992 to February 1997, Mr. Rutherfurd
was the Executive Vice President and Chief Investment Officer of Nomura Asset
Management (U.S.A.) Inc. Mr. Rutherfurd is assisted by Jason Norris, an
Intermediate Research Analyst with the Investment Manager. Mr. Norris has been
an Intermediate Research Analyst with the Investment Manager since June 1998.
The Fund pays the Investment Manager a monthly management fee as full
compensation for the services and facilities furnished to the Fund, and for
Fund expenses assumed by the Investment Manager. The fee is based on the Fund's
average daily net assets. For the fiscal year ended February 29, 2000, the Fund
accrued total compensation to the Investment Manager amounting to 0.60% of the
Fund's average daily net assets.
7
<PAGE>
SHAREHOLDER INFORMATION
[GRAPHIC OMITTED]
PRICING FUND SHARES
- -------------------
The price of Fund shares (excluding sales charges), called "net asset value,"
is based on the value of the Fund's portfolio securities. The net asset value
of each Class, however, will differ because the Classes have different ongoing
distribution fees.
The net asset value per share of the Fund is determined once daily at 4:00 p.m.
Eastern time on each day that the New York Stock Exchange is open (or, on days
when the New York Stock Exchange closes prior to 4:00 p.m., at such earlier
time). Shares will not be priced on days that the New York Stock Exchange is
closed.
The value of the Fund's portfolio securities is based on the securities' market
price when available. When a market price is not readily available, including
circumstances under which the Investment Manager determines that a security's
market price is not accurate, a portfolio security is valued at its fair value,
as determined under procedures established by the Fund's Board of Trustees. In
these cases, the Fund's net asset value will reflect certain portfolio
securities' fair value rather than their market price. With respect to
securities that are primarily listed on foreign exchanges, the value of the
Fund's portfolio securities may change on days when you will not be able to
purchase or sell your shares.
An exception to the Fund's general policy of using market prices concerns its
short-term debt portfolio securities. Debt securities with remaining maturities
of sixty days or less at the time of purchase are valued at amortized cost.
However, if the cost does not reflect the securities' market value, these
securities will be valued at their fair value.
[GRAPHIC OMITTED]
HOW TO BUY SHARES
- -----------------
(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)
You may open a new account to buy Fund shares or buy additional Fund shares for
an existing account by contacting your Morgan Stanley Dean Witter Financial
Advisor or other authorized financial representative. Your Financial Advisor
will assist you, step-by-step, with the procedures to invest in the Fund. You
may also purchase shares directly by calling the Fund's transfer agent and
requesting an application.
Because every investor has different immediate financial needs and long-term
investment goals, the Fund offers investors four Classes of shares: Classes A,
B, C and D. Class D shares are only offered to a limited group of investors.
Each Class of shares offers a distinct structure of sales charges, distribution
and service fees, and other features that are designed to address a variety of
needs. Your Financial Advisor or other authorized financial representative can
help you decide which Class may be most appropriate for you. When purchasing
Fund shares, you must specify which Class of shares you wish to purchase.
8
<PAGE>
When you buy Fund shares, the shares are purchased at the next share price
calculated, less any applicable front-end sales charge, after we receive your
purchase order. Your payment is due on the third business day after you place
your purchase order. We reserve the right to reject any order for the purchase
of Fund shares.
(sidebar)
EASYINVEST(SM)
A purchase plan that allows you to transfer money automatically from your
checking or savings account or from a Money Market Fund on a semi-monthly,
monthly or quarterly basis. Contact your Morgan Stanley Dean Witter Financial
Advisor for further information about this service.
(end sidebar)
MINIMUM INVESTMENT AMOUNTS
- -------------------------------------------------------------------------------
MINIMUM INVESTMENT
-----------------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
- -------------------------------------------------------------------------------
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*
- -------------------------------------------------------------------------------
* Provided your schedule of investments totals $1,000 in twelve months.
There is no minimum investment amount if you purchase Fund shares through: (1)
the Investment Manager's mutual fund asset allocation plan, (2) a program,
approved by the Fund's distributor, in which you pay an asset-based fee for
advisory, administrative and/or brokerage services, or (3) employer-sponsored
employee benefit plan accounts.
Investment Options for Certain Institutional and Other Investors/Class D
Shares. To be eligible to purchase Class D shares, you must qualify under one
of the investor categories specified in the "Share Class Arrangements" section
of this Prospectus.
Subsequent Investments Sent Directly to the Fund. In addition to buying
additional Fund shares for an existing account by contacting your Morgan
Stanley Dean Witter Financial Advisor, you may send a check directly to the
Fund. To buy additional shares in this manner:
o Write a "letter of instruction" to the Fund specifying the name(s) on the
account, the account number, the social security or tax identification number,
the Class of shares you wish to purchase, and the investment amount (which
would include any applicable front-end sales charge). The letter must be
signed by the account owner(s).
o Make out a check for the total amount payable to: Morgan Stanley Dean Witter
S&P 500 Select Fund.
o Mail the letter and check to Morgan Stanley Dean Witter Trust FSB at P.O. Box
1040, Jersey City, NJ 07303.
9
<PAGE>
[GRAPHIC OMITTED]
HOW TO EXCHANGE SHARES
- ----------------------
Permissible Fund Exchanges. You may exchange shares of any Class of the Fund
for the same Class of any other continuously offered Multi-Class Fund, or for
shares of a No-Load Fund, a Money Market Fund, North American Government Income
Trust or Short-Term U.S. Treasury Trust, without the imposition of an exchange
fee or sales charge. See the inside back cover of this Prospectus for each
Morgan Stanley Dean Witter Fund's designation as a Multi-Class Fund, a No-Load
Fund or a Money Market Fund. If a Morgan Stanley Dean Witter Fund is not
listed, consult the inside back cover of that Fund's prospectus for its
designation. For purposes of exchanges, shares of FSC Funds (subject to a
front-end sales charge) are treated as Class A shares of a Multi-Class Fund.
Exchanges may be made after shares of the Fund acquired by purchase have been
held for thirty days. There is no waiting period for exchanges of shares
acquired by exchange or dividend reinvestment. The current prospectus for each
fund describes its investment objective(s), policies and investment minimums,
and should be read before investment.
Since exchanges are available only into continuously offered Morgan Stanley
Dean Witter Funds, exchanges are not available into any new Morgan Stanley Dean
Witter Fund during its initial offering period, or when shares of a particular
Morgan Stanley Dean Witter Fund are not being offered for purchase.
Exchange Procedures. You can process an exchange by contacting your Morgan
Stanley Dean Witter Financial Advisor or other authorized financial
representative. Otherwise, you must forward an exchange privilege authorization
form to the Fund's transfer agent -- Morgan Stanley Dean Witter Trust FSB --
and then write the transfer agent or call (800) 869-NEWS to place an exchange
order. You can obtain an exchange privilege authorization form by contacting
your Financial Advisor or other authorized financial representative or by
calling (800) 869-NEWS. If you hold share certificates, no exchanges may be
processed until we have received all applicable share certificates.
An exchange to any Morgan Stanley Dean Witter Fund (except a Money Market Fund)
is made on the basis of the next calculated net asset values of the Funds
involved after the exchange instructions are accepted. When exchanging into a
Money Market Fund, the Fund's shares are sold at their next calculated net
asset value and the Money Market Fund's shares are purchased at their net asset
value on the following business day.
The Fund may terminate or revise the exchange privilege upon required notice.
The check writing privilege is not available for Money Market Fund shares you
acquire in an exchange.
10
<PAGE>
Telephone Exchanges. For your protection when calling Morgan Stanley Dean
Witter Trust FSB, we will employ reasonable procedures to confirm that exchange
instructions communicated over the telephone are genuine. These procedures may
include requiring various forms of personal identification such as name,
mailing address, social security or other tax identification number. Telephone
instructions also may be recorded.
Telephone instructions will be accepted if received by the Fund's transfer
agent between 9:00 a.m. and 4:00 p.m. Eastern time on any day the New York
Stock Exchange is open for business. During periods of drastic economic or
market changes, it is possible that the telephone exchange procedures may be
difficult to implement, although this has not been the case with the Fund in
the past.
Margin Accounts. If you have pledged your Fund shares in a margin account,
contact your Morgan Stanely Dean Witter Financial Advisor or other authorized
financial representative regarding restrictions on the exchange of such shares.
Tax Considerations of Exchanges. If you exchange shares of the Fund for shares
of another Morgan Stanley Dean Witter Fund there are important tax
considerations. For tax purposes, the exchange out of the Fund is considered a
sale of the Fund's shares -- and the exchange into the other Fund is considered
a purchase. As a result, you may realize a capital gain or loss.
You should review the "Tax Consequences" section and consult your own tax
professional about the tax consequences of an exchange.
Limitations on Exchanges. Certain patterns of past exchanges and/or purchase or
sale transactions involving the Fund or other Morgan Stanley Dean Witter Funds
may result in the Fund limiting or prohibiting, at its discretion, additional
purchases and/or exchanges. Determinations in this regard may be made based on
the frequency or dollar amount of 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.
11
<PAGE>
[GRAPHIC OMITTED]
HOW TO SELL SHARES
- ------------------
You can sell some or all of your Fund shares at any time. If you sell Class A,
Class B or Class C shares, your net sale proceeds are reduced by the amount of
any applicable CDSC. Your shares will be sold at the next price calculated
after we receive your order to sell as described below.
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Contact Your To sell your shares, simply call your Morgan Stanley Dean Witter Financial Advisor or other
Financial Advisor authorized financial representative.
-----------------------------------------------------------------------------------------------
[GRAPHIC OMITTED] Payment will be sent to the address to which the account is registered or deposited in your
brokerage account.
- ---------------------------------------------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of instruction" that includes:
o your account number;
[GRAPHIC OMITTED] o the dollar amount or the number of shares
o you wish to sell;
o the Class of shares you wish to sell; and
o the signature of each owner as it appears on the account.
-----------------------------------------------------------------------------------------------
If you are requesting payment to anyone other than the registered owner(s) or that payment
be sent to any address other than the address of the registered owner(s) or pre-designated
bank account, you will need a signature guarantee. You can obtain a signature guarantee from
an eligible guarantor acceptable to Morgan Stanley Dean Witter Trust FSB. (You should
contact Morgan Stanley Dean Witter Trust FSB at (800) 869-NEWS for a determination as to
whether a particular institution is an eligible guarantor.) A notary public cannot provide a
signature guarantee. Additional documentation may be required for shares held by a
corporation, partnership, trustee or executor.
-----------------------------------------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at P.O. Box 983, Jersey City, NJ
07303. If you hold share certificates, you must return the certificates, along with the letter
and any required additional documentation.
-----------------------------------------------------------------------------------------------
A check will be mailed to the name(s) and address in which the account is registered, or
otherwise according to your instructions.
-----------------------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter Family of Funds has a total
Withdrawal Plan market value of at least $10,000, you may elect to withdraw amounts of $25 or more, or in
any whole percentage of a Fund's balance (provided the amount is at least $25), on a
[GRAPHIC OMITTED] monthly, quarterly, semi-annual or annual basis, from any Fund with a balance of at least
$1,000. Each time you add a Fund to the plan, you must meet the plan requirements.
-----------------------------------------------------------------------------------------------
Amounts withdrawn are subject to any applicable CDSC. A CDSC may be waived under
certain circumstances. See the Class B waiver categories listed in the "Share Class
Arrangements" section of this Prospectus.
-----------------------------------------------------------------------------------------------
To sign up for the systematic withdrawal plan, contact your Morgan Stanley Dean Witter
Financial Advisor or call (800) 869-NEWS. You may terminate or suspend your plan at any
time. Please remember that withdrawals from the plan are sales of shares, not Fund
"distributions," and ultimately may exhaust your account balance. The Fund may terminate or
revise the plan at any time.
-----------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Payment for Sold Shares. After we receive your complete instructions to sell as
described above, a check will be mailed to you within seven days, although we
will attempt to make payment within one business day. Payment may also be sent
to your brokerage account.
Payment may be postponed or the right to sell your shares suspended, however,
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 Fund shares is subject to federal
and state income tax. You should review the "Tax Consequences" section of this
Prospectus and consult your own tax professional about the tax consequences of
a sale.
Reinstatement Privilege. If you sell Fund shares and have not previously
exercised the reinstatement privilege, you may, within 35 days after the date
of sale, invest any portion of the proceeds in the same Class of Fund shares at
their net asset value and receive a pro rata credit for any CDSC paid in
connection with the sale.
Involuntary Sales. The Fund reserves the right, on sixty days' notice, to sell
the shares of any shareholder (other than shares held in an IRA or 403(b)
Custodial Account) whose shares, due to sales by the shareholder, have a value
below $100, or in the case of an account opened through EasyInvestSM, if after
12 months the shareholder has invested less than $1,000 in the account.
However, before the Fund sells your shares in this manner, we will notify you
and allow you sixty days to make an additional investment in an amount that
will increase the value of your account to at least the required amount before
the sale is processed. No CDSC will be imposed on any involuntary sale.
Margin Accounts. If you have pledged your Fund shares in a margin account,
contact your Morgan Stanley Dean Witter Financial Advisor or other authorized
financial representative regarding restrictions on the sale of such shares.
13
<PAGE>
[GRAPHIC OMITTED]
DISTRIBUTIONS
- -------------
(sidebar)
TARGETED DIVIDENDS(SM)
You may select to have your Fund distributions automatically invested in other
Classes of Fund shares or Classes of another Morgan Stanley Dean Witter Fund
that you own. Contact your Morgan Stanley Dean Witter Financial Advisor for
further information about this service.
(end sidebar)
The Fund passes substantially all of its earnings from income and capital gains
along to its investors as "distributions." The Fund earns income from stocks
and interest from fixed-income investments. These amounts are passed along to
Fund shareholders as "income dividend distributions." The Fund realizes capital
gains whenever it sells securities for a higher price than it paid for them.
These amounts are passed along as "capital gain distributions."
The Fund declares income dividends separately for each Class. Distributions
paid on Class A and Class D shares will be higher than for Class B and Class C
because distribution fees that Class B and Class C pay are higher. Normally,
income dividends are distributed to shareholders semi-annually. Capital gains,
if any, are usually distributed in June and December. The Fund, however, may
retain and reinvest any long-term capital gains. The Fund may at times make
payments from sources other than income or capital gains that represent a
return of a portion of your investment.
Distributions are reinvested automatically in additional shares of the same
Class and automatically credited to your account, unless you request in writing
that all distributions be paid in cash. If you elect the cash option, the Fund
will mail a check to you no later than seven business days after the
distribution is declared. No interest will accrue on uncashed checks. If you
wish to change how your distributions are paid, your request should be received
by the Fund's transfer agent, Morgan Stanley Dean Witter Trust FSB, at least
five business days prior to the record date of the distributions.
[GRAPHIC OMITTED]
TAX CONSEQUENCES
- ----------------
As with any investment, you should consider how your Fund investment will be
taxed. The tax information in this Prospectus is provided as general
information. You should consult your own tax professional about the tax
consequences of an investment in the Fund.
Unless your investment in the Fund is through a tax-deferred retirement
account, such as a 401(k) plan or IRA, you need to be aware of the possible tax
consequences when:
o The Fund makes distributions; and
o You sell Fund shares, including an exchange to another Morgan Stanley Dean
Witter Fund.
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
14
<PAGE>
Fund shares. A distribution also may be subject to local income tax. Any income
dividend distributions and any short-term capital gain distributions are
taxable to you as ordinary income. Any long-term capital gain distributions are
taxable as long-term capital gains, no matter how long you have owned shares in
the Fund.
Every January, you will be sent a statement (IRS Form 1099-DIV) showing the
taxable distributions paid to you in the previous year. The statement provides
information on your dividends and capital gains for tax purposes.
Taxes on Sales. Your sale of Fund shares normally is subject to federal and
state income tax and may result in a taxable gain or loss to you. A sale also
may be subject to local income tax. Your exchange of Fund shares for shares of
another Morgan Stanley Dean Witter Fund is treated for tax purposes like a sale
of your original shares and a purchase of your new shares. Thus, the exchange
may, like a sale, result in a taxable gain or loss to you and will give you a
new tax basis for your new shares.
When you open your Fund account, you should provide your Social Security or tax
identification number on your investment application. By providing this
information, you will avoid being subject to a federal backup withholding tax
of 31% on taxable distributions and redemption proceeds. Any withheld amount
would be sent to the IRS as an advance tax payment.
[GRAPHIC OMITTED]
SHARE CLASS ARRANGEMENTS
- ------------------------
The Fund offers several Classes of shares having different distribution
arrangements designed to provide you with different purchase options according
to your investment needs. Your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative can help you decide which Class may
be appropriate for you.
The general public is offered three Classes: Class A shares, Class B shares and
Class C shares, which differ principally in terms of sales charges and ongoing
expenses. A fourth Class, Class D shares, is offered only to a limited category
of investors. Shares that you acquire through reinvested distributions will not
be subject to any front-end sales charge or CDSC -- contingent deferred sales
charge. Sales personnel may receive different compensation for selling each
Class of shares. The sales charges applicable to each Class provide for the
distribution financing of shares of that Class.
15
<PAGE>
The chart below compares the sales charge and the annual 12b-1 fees applicable
to each Class:
<TABLE>
<CAPTION>
MAXIMUM
CLASS SALES CHARGE ANNUAL 12b-1 FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A Maximum 5.25% initial sales charge reduced for purchase of $25,000 or more;
shares sold without an initial sales charge are generally subject to a 1.0% CDSC
during first year. 0.25%
- -----------------------------------------------------------------------------------------------------------------------------------
B Maximum 5.0% CDSC during the first year decreasing to 0% after six years. 1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
C 1.0% CDSC during first year 1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
D None None
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CLASS A SHARES Class A shares are sold at net asset value plus an initial sales
charge of up to 5.25%. The initial sales charge is reduced for purchases of
$25,000 or more according to the schedule below. Investments of $1 million or
more are not subject to an initial sales charge, but are generally subject to a
contingent deferred sales charge, or CDSC, of 1.0% on sales made within one
year after the last day of the month of purchase. The CDSC will be assessed in
the same manner and with the same CDSC waivers as with Class B shares. Class A
shares are also subject to a distribution (12b-1) fee of up to 0.25% of the
average daily net assets of the Class.
The offering price of Class A shares includes a sales charge (expressed as a
percentage of the offering price) on a single transaction as shown in the
following table:
(sidebar)
FRONT-END SALES CHARGE OR FSC
An initial sales charge you pay when purchasing Class A shares that is based on
a percentage of the offering price. The percentage declines based upon the
dollar value of Class A shares you purchase. We offer three ways to reduce your
Class A sales charges -- the Combined Purchase Privilege, Right of Accumulation
and Letter of Intent.
(end sidebar)
<TABLE>
<CAPTION>
FRONT-END SALES CHARGE
----------------------------------------------------------
PERCENTAGE OF APPROXIMATE PERCENTAGE OF
AMOUNT OF SINGLE TRANSACTION PUBLIC OFFERING PRICE NET AMOUNT INVESTED
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $25,000 5.25% 5.54%
- ------------------------------------------------------------------------------------------------
$25,000 but less than $50,000 4.75% 4.99%
- ------------------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.00% 4.17%
- ------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.00% 3.09%
- ------------------------------------------------------------------------------------------------
$250,000 but less than $1 million 2.00% 2.04%
- ------------------------------------------------------------------------------------------------
$1 million and over 0 0
- ------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
The reduced sales charge schedule is applicable to purchases of Class A shares
in a single transaction by:
o A single account (including an individual, trust or fiduciary account).
o Family member accounts (limited to husband, wife and children under the age
of 21).
o Pension, profit sharing or other employee benefit plans of companies and
their affiliates.
o Tax-exempt organizations.
o Groups organized for a purpose other than to buy mutual fund shares.
Combined Purchase Privilege. You also will have the benefit of reduced sales
charges by combining purchases of Class A shares of the Fund in a single
transaction with purchases of Class A shares of other Multi-Class Funds and
shares of FSC Funds.
Right of Accumulation. You also may benefit from a reduction of sales charges,
if the cumulative net asset value of Class A shares of the Fund purchased in a
single transaction, together with shares of other Funds you currently own which
were previously purchased at a price including a front-end sales charge
(including shares acquired through reinvestment of distributions), amounts to
$25,000 or more. Also, if you have a cumulative net asset value of all your
Class A and Class D shares equal to at least $5 million (or $25 million for
certain employee benefit plans), you are eligible to purchase Class D shares of
any Fund subject to the Fund's minimum initial investment requirement.
You must notify your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative, (or Morgan Stanley Dean Witter Trust FSB
if you purchase directly through the Fund) at the time a purchase order is
placed, that the purchase qualifies for the reduced charge under the Right of
Accumulation. Similar notification must be made in writing when an order is
placed by mail. The reduced sales charge will not be granted if: (i)
notification is not furnished at the time of the order; or (ii) a review of the
records of Dean Witter Reynolds or other authorized dealer of Fund shares or
the Fund's transfer agent does not confirm your represented holdings.
Letter of Intent. The schedule of reduced sales charges for larger purchases
also will be available to you if you enter into a written "letter of intent." A
letter of intent provides for the purchase of Class A shares of the Fund or
other Multi-Class Funds or shares of FSC Funds within a thirteen-month period.
The initial purchase under a letter of intent must be at least 5% of the stated
investment goal. To determine the applicable sales charge reduction, you may
also include: (1) the cost of shares of other Morgan Stanley Dean Witter Funds
which were previously purchased at a price including a front-end sales charge
during the 90-day period prior to the distributor receiving the letter of
intent, and (2) the cost of shares of other Funds you currently own acquired in
17
<PAGE>
exchange for shares of Funds purchased during that period at a price including
a front-end sales charge. You can obtain a letter of intent by contacting your
Morgan Stanley Dean Witter Financial Advisor or other authorized financial
representative, or by calling (800) 869-NEWS. If you do not achieve the stated
investment goal within the thirteen-month period, you are required to pay the
difference between the sales charges otherwise applicable and sales charges
actually paid, which may be deducted from your investment.
Other Sales Charge Waivers. In addition to investments of $1 million or more,
your purchase of Class A shares is not subject to a front-end sales charge (or
a CDSC upon sale) if your account qualifies under one of the following
categories:
o A trust for which Morgan Stanley Dean Witter Trust FSB provides discretionary
trustee services.
o Persons participating in a fee-based investment program (subject to all of
its terms and conditions, including termination fees, mandatory sale or
transfer restrictions on termination) approved by the Fund's distributor
pursuant to which they pay an asset based fee for investment advisory,
administrative and/or brokerage services.
o Employer-sponsored employee benefit plans, whether or not qualified under the
Internal Revenue Code, for which Morgan Stanley Dean Witter Trust FSB serves
as trustee or Dean Witter Reynold's Retirement Plan Services serves as
recordkeeper under a written Recordkeeping Services Agreement ("MSDW Eligible
Plans") which have at least 200 eligible employees.
o 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.
o A client of a Morgan Stanley Dean Witter Financial Advisor who joined us from
another investment firm within six months prior to the date of purchase of
Fund shares, and you used the proceeds from the sale of shares of a
proprietary mutual fund of that Financial Advisor's previous firm that imposed
either a front-end or deferred sales charge to purchase Class A shares,
provided that: (1) you sold the shares not more than 60 days prior to
purchase, and (2) the sale proceeds were maintained in the interim in cash or
a money market fund.
o Current or retired Directors/Trustees of the Morgan Stanley Dean Witter
Funds, such persons' spouses and children under the age of 21, and trust
accounts for which any of such persons is a beneficiary.
o Current or retired directors, officers and employees of Morgan Stanley Dean
Witter & Co. and any of its subsidiaries, such persons' spouses and children
under the age of 21, and trust accounts for which any of such persons is a
beneficiary.
18
<PAGE>
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.
(sidebar)
CONTINGENT DEFERRED SALES CHARGE OR CDSC
A fee you pay when you sell shares of certain Morgan Stanley Dean Witter Funds
purchased without an initial sales charge. This fee declines the longer you
hold your shares as set forth in the table.
(end sidebar)
CDSC AS A PERCENTAGE
YEAR SINCE PURCHASE PAYMENT MADE OF AMOUNT REDEEMED
- -------------------------------------------------------------------------------
First 5.0%
- -------------------------------------------------------------------------------
Second 4.0%
- -------------------------------------------------------------------------------
Third 3.0%
- -------------------------------------------------------------------------------
Fourth 2.0%
- -------------------------------------------------------------------------------
Fifth 2.0%
- -------------------------------------------------------------------------------
Sixth 1.0%
- -------------------------------------------------------------------------------
Seventh and thereafter None
- -------------------------------------------------------------------------------
Each time you place an order to sell or exchange shares, shares with no CDSC
will be sold or exchanged first, then shares with the lowest CDSC will be sold
or exchanged next. For any shares subject to a CDSC, the CDSC will be assessed
on an amount equal to the lesser of the current market value or the cost of the
shares being sold.
CDSC Waivers. A CDSC, if otherwise applicable, will be waived in the case of:
o Sales of shares held at the time you die or become disabled (within the
definition in Section 72(m)(7) of the Internal Revenue Code which relates to
the ability to engage in gainful employment), if the shares are: (i)
registered either in your name (not a trust) or in the names of you and your
spouse as joint tenants with right of survivorship; or (ii) held in a
qualified corporate or self-employed retirement plan, IRA or 403(b) Custodial
Account, provided in either case that the sale is requested within one year
of your death or initial determination of disability.
o Sales in connection with the following retirement plan "distributions:" (i)
lump-sum or other distributions from a qualified corporate or self-employed
retirement plan following retirement (or, in the case of a "key employee" of
a "top heavy" plan, following attainment of age 59 1/2); (ii) distributions
from an IRA or 403(b) Custodial Account following attainment of age 59 1/2;
or (iii) a tax-free return of an excess IRA contribution (a "distribution"
does not include a direct transfer of IRA, 403(b) Custodial Account or
retirement plan assets to a successor custodian or trustee).
o Sales of shares held for you as a participant in a MSDW Eligible Plan.
o Sales of shares in connection with the Systematic Withdrawal Plan of up to
12% annually of the value of each Fund from which plan sales are made. The
percentage is
19
<PAGE>
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.
o 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 also subject to an annual distribution
(12b-1) fee of 1.0% of the average daily net assets of Class B shares.
Conversion Feature. After ten (10) years, Class B shares will convert
automatically to Class A shares of the Fund with no initial sales charge. The
ten year period runs from the last day of the month in which the shares were
purchased, or in the case of Class B shares acquired through an exchange, from
the last day of the month in which the original Class B shares were purchased;
the shares will convert to Class A shares based on their relative net asset
values in the month following the ten year period. At the same time, an equal
proportion of Class B shares acquired through automatically reinvested
distributions will convert to Class A shares on the same basis. (Class B shares
held before May 1, 1997, however, will convert to Class A shares in May 2007.)
In the case of Class B shares held in 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,
20
<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 Fund shares that are subject to a CDSC. When determining the length of
time you held the shares and the corresponding CDSC rate, any period (starting
at the end of the month) during which you held shares of a fund that does not
charge a CDSC will not be counted. Thus, in effect the "holding period" for
purposes of calculating the CDSC is frozen upon exchanging into a fund that
does not charge a CDSC.
For example, if you held Class B shares of the Fund for one year, exchanged to
Class B of another Morgan Stanley Dean Witter Multi-Class Fund for another
year, then sold your shares, a CDSC rate of 4% would be imposed on the shares
based on a two year holding period -- one year for each Fund. However, if you
had exchanged the shares of the Fund for a Money Market Fund (which does not
charge a CDSC) instead of the Multi-Class Fund, then sold your shares, a CDSC
rate of 5% would be imposed on the shares based on a one year holding period.
The one year in the Money Market Fund would not be counted. Nevertheless, if
shares subject to a CDSC are exchanged for a fund that does not charge a CDSC,
you will receive a credit when you sell the shares equal to the distribution
(12b-1) fees 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 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 categories of investors:
21
<PAGE>
o 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.
o Persons participating in a fee-based investment program (subject to all of
its terms and conditions, including termination fees, mandatory sale or
transfer restrictions on termination) approved by the Fund's distributor
pursuant to which they pay an asset based fee for investment advisory,
administrative and/or brokerage services.
o Employee benefit plans maintained by Morgan Stanley Dean Witter & Co. or
any of its subsidiaries for the benefit of certain employees of Morgan
Stanley Dean Witter & Co. and its subsidiaries.
o Certain unit investment trusts sponsored by Dean Witter Reynolds.
o Certain other open-end investment companies whose shares are distributed by
the Fund's distributor.
o Investors who were shareholders of the Dean Witter Retirement Series on
September 11, 1998 for additional purchases for their former Dean Witter
Retirement Series accounts.
Meeting Class D Eligibility Minimums. To meet the $5 million ($25 million for
MSDW Eligible Plans) initial investment to qualify to purchase Class D shares
you may combine: (1) purchases in a single transaction of Class D shares of the
Fund and other Morgan Stanley Dean Witter Multi-Class Funds and/or (2) previous
purchases of Class A and Class D shares of Multi-Class Funds and shares of FSC
Funds you currently own, along with shares of Morgan Stanley Dean Witter Funds
you currently own that you acquired in exchange for those shares.
NO SALES CHARGES FOR REINVESTED CASH DISTRIBUTIONS If you receive a cash
payment representing an income dividend or capital gain and you reinvest that
amount in the applicable Class of shares by returning the check within 30 days
of the payment date, the purchased shares would not be subject to an initial
sales charge or CDSC.
PLAN OF DISTRIBUTION (RULE 12B-1 FEES) The Fund has adopted a Plan of
Distribution in accordance with Rule 12b-1 under the Investment Company Act of
1940 with respect to the distribution of Class A, Class B and Class C shares.
The Plan allows the Fund to pay distribution fees for the sale and distribution
of these shares. It also allows the Fund to pay for services to shareholders of
Class A, Class B and Class C shares. Because these fees are paid out of the
Fund's assets on an ongoing basis, over time these fees will increase the cost
of your investment in these Classes and may cost you more than paying other
types of sales charges.
22
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance over the life of the Fund. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate an investor would have earned or lost on an investment in
the Fund (assuming reinvestment of all dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Fund's financial statements, is
included in the annual report, which is available upon request.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 28, 1998*
ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999
- --------------------------------------------------------------------------------------------------
CLASS A SHARES++
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
SELECTED PER SHARE DATA
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.79 $10.00
- --------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01 0.02
Net realized and unrealized gain 1.34 1.81
------ ------
Total income from investment operations 1.35 1.83
- --------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income -- (0.02)
Net realized gain (0.04) (0.02)
------ ------
Total dividends and distributions (0.04) (0.04)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $13.10 $11.79
- --------------------------------------------------------------------------------------------------
TOTAL RETURN+ 11.50% 18.32%(1)
- --------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(4)
- --------------------------------------------------------------------------------------------------
Expenses 1.22% 1.23%(2)(3)
- --------------------------------------------------------------------------------------------------
Net investment income 0.11% 0.38%(2)(3)
- --------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $4,703 $3,269
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 3%(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) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and the net investment
income ratios would have been 1.55% and 0.06%, respectively, for the
period ended February 28, 1999.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
23
<PAGE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 28, 1998*
ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999
- --------------------------------------------------------------------------------------------------
CLASS B SHARES++
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
SELECTED PER SHARE DATA
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.76 $10.00
- --------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.08) (0.02)
Net realized and unrealized gain 1.34 1.80
-------- -------
Total income from investment operations 1.26 1.78
- --------------------------------------------------------------------------------------------------
Less distributions from net realized gain (0.04) (0.02)++
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $12.98 $11.76
- --------------------------------------------------------------------------------------------------
TOTAL RETURN+ 10.67% 17.96%(1)
- --------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(4)
- --------------------------------------------------------------------------------------------------
Expenses 1.97% 1.98%(2)(3)
- --------------------------------------------------------------------------------------------------
Net investment loss (0.64)% (0.37)%(2)(3)
- --------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $106,070 $ 83,021
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 3%(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.
++ Includes $0.002 of dividends from net investment income.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and the net investment
income ratios would have been 2.30% and (0.69)%, respectively, for the
period ended February 28, 1999.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
24
<PAGE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 28, 1998*
ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999
- --------------------------------------------------------------------------------------------------
CLASS C SHARES++
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
SELECTED PER SHARE DATA
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.77 $10.00
- --------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.08) (0.02)
Net realized and unrealized gain 1.33 1.81
------- -------
Total income from investment operations 1.25 1.79
- --------------------------------------------------------------------------------------------------
Less distributions from net realized gain (0.04) (0.02)++
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $12.98 $11.77
- --------------------------------------------------------------------------------------------------
TOTAL RETURN+ 10.67% 17.94%(1)
- --------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(4)
- --------------------------------------------------------------------------------------------------
Expenses 1.97% 1.98%(2)(3)
- --------------------------------------------------------------------------------------------------
Net investment loss (0.64)% (0.37)%(2)(3)
- --------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $9,131 $6,417
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 3%(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.
++ Includes $.000859 of dividends from net investment income.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and the net investment
income ratios would have been 2.30% and (0.69)%, respectively, for the
period ended February 28, 1999.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
25
<PAGE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 28, 1998*
ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999
- --------------------------------------------------------------------------------------------------
CLASS D SHARES++
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
SELECTED PER SHARE DATA
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.79 $10.00
- --------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.04 0.02
Net realized and unrealized gain 1.35 1.81
------- -------
Total income from investment operations 1.39 1.83
- --------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income -- (0.02)
Net realized gains (0.04) (0.02)
------- -------
Total dividends and distributions (0.04) (0.04)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $13.14 $11.79
- --------------------------------------------------------------------------------------------------
TOTAL RETURN+ 11.84% 18.38%(1)
- --------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(4)
- --------------------------------------------------------------------------------------------------
Expenses 0.97% 0.98%(2)(3)
- --------------------------------------------------------------------------------------------------
Net investment income 0.36% 0.63%(2)(3)
- --------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,153 $203
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 3%(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) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and the net investment
income ratios would have been 1.30% and 0.31%, respectively, for the
period ended February 28, 1999.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
26
<PAGE>
NOTES
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27
<PAGE>
MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS
The Morgan Stanley Dean Witter Family of Funds offers
investors a wide range of investment choices. Come on
in and meet the family!
<TABLE>
<CAPTION>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
GROWTH FUNDS Aggressive Equity Fund THEME FUNDS
American Opportunities Fund Financial Services Trust
Capital Growth Securities Health Sciences Trust
Developing Growth Securities Information Fund
Growth Fund Natural Resource Development Securities
Market Leader Trust GLOBAL/INTERNATIONAL FUNDS
Mid-Cap Equity Trust Competitive Edge Fund - "Best Ideas"
Next Generation Trust Portfolio
Small Cap Growth Fund European Growth Fund
Special Value Fund Fund of Funds - International Portfolio
Tax-Managed Growth Fund International Fund
21st Century Trend Fund International SmallCap Fund
Japan Fund
Latin American Growth Fund
Pacific Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
GROWTH & INCOME FUNDS Balanced Growth Fund Total Market Index Fund
Balanced Income Fund Total Return Trust
Convertible Securities Trust Value Fund
Dividend Growth Securities Value-Added Market Series/Equity Portfolio
Equity Fund THEME FUNDS
Fund of Funds - Domestic Portfolio Real Estate Fund
Income Builder Fund Utilities Fund
Mid-Cap Dividend Growth Securities GLOBAL FUNDS
S&P 500 Index Fund Global Dividend Growth Securities
S&P 500 Select Fund Global Utilities Fund
Strategist Fund
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME FUNDS GOVERNMENT INCOME FUNDS GLOBAL INCOME FUNDS
Federal Securities Trust North American Government Income Trust
Short-Term U.S. Treasury Trust World Wide Income Trust
U.S. Government Securities Trust TAX-FREE INCOME FUNDS
DIVERSIFIED INCOME FUNDS California Tax-Free Income Fund
Diversified Income Trust Hawaii Municipal Trust(FSC)
CORPORATE INCOME FUNDS Limited Term Municipal Trust(NL)
High Yield Securities Multi-State Municipal Series Trust(FSC)
Intermediate Income Securities New York Tax-Free Income Fund
Short-Term Bond Fund(NL) Tax-Exempt Securities Trust
- ----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS TAXABLE MONEY MARKET FUNDS TAX-FREE MONEY MARKET FUNDS
Liquid Asset Fund(MM) California Tax-Free Daily Income Trust(MM)
U.S. Government Money Market Trust(MM) New York Municipal Money Market Trust(MM)
Tax-Free Daily Income Trust(MM)
</TABLE>
There may be Funds created after this Prospectus was published. Please consult
the inside back cover of a new Fund's prospectus for its designations, e.g.,
Multi-Class Fund or Money Market Fund.
Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund except for
North American Government Income Trust and Short-Term U.S. Treasury Trust, is a
Multi-Class Fund. A Multi-Class Fund is a mutual fund offering multiple Classes
of shares. The other types of Funds are: NL -- No-Load (Mutual) Fund; MM --
Money Market Fund; FSC -- A mutual fund sold with a front-end sales charge and
a distribution (12b-1) fee.
<PAGE>
PROSPECTUS - APRIL 28, 2000
Additional information about the Fund's investments is available in the Fund's
Annual and Semi-Annual Reports to Shareholders. In the Fund's Annual Report,
you will find a discussion of the market conditions and investment strategies
that significantly affected the Fund's performance during its last fiscal year.
The Fund's Statement of Additional Information also provides additional
information about the Fund. The Statement of Additional Information is
incorporated herein by reference (legally is part of this Prospectus). For a
free copy of any of these documents, to request other information about the
Fund, or to make shareholder inquiries, please call:
(800) 869-NEWS
You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:
WWW.MSDW.COM/INDIVIDUAL/FUNDS
Information about the Fund (including the Statement of Additional Information)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (202) 942-8090. Reports and
other information about the Fund are available on the EDGAR Database on the
SEC's Internet site (www.sec.gov), and copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the
following 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 811-8809)
MORGAN STANLEY DEAN WITTER
S&P 500 SELECT FUND
[GRAPHIC OMITTED]
A MUTUAL FUND THAT SEEKS TO PROVIDE A TOTAL RETURN (BEFORE EXPENSES) THAT
EXCEEDS THE TOTAL RETURN OF THE STANDARD & POOR'S (REGISTERED TRADEMARK) 500
COMPOSITE STOCK PRICE INDEX
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Morgan Stanley Dean Witter
S&P 500 Select Fund
April 28, 2000
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a Prospectus. The
Prospectus dated April 28, 2000 for the Morgan Stanley Dean Witter S&P 500
Select Fund may be obtained without charge from the Fund at its address or
telephone number listed below or from Dean Witter Reynolds at any of its branch
offices.
Morgan Stanley Dean Witter S&P 500 Select Fund
Two World Trade Center
New York, New York 10048
(800) 869-NEWS
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
I. Fund History ................................................... 4
II. Description of the Fund and Its Investments and Risks .......... 4
A. Classification .............................................. 4
B. Investment Strategies and Risks ............................. 4
C. Fund Policies/Investment Restrictions ....................... 8
III. Management of the Fund ......................................... 9
A. Board of Trustees ........................................... 9
B. Management Information ...................................... 10
C. Compensation ................................................ 14
IV. Control Persons and Principal Holders of Securities ............ 16
V. Investment Management and Other Services ....................... 16
A. Investment Manager .......................................... 16
B. Principal Underwriter ....................................... 17
C. Services Provided by the Investment Manager ................. 17
D. Dealer Reallowances ......................................... 18
E. Rule 12b-1 Plan ............................................. 18
F. Other Service Providers ..................................... 22
G. Codes of Ethics ............................................. 23
VI. Brokerage Allocation and Other Practices ....................... 23
A. Brokerage Transactions ...................................... 23
B. Commissions ................................................. 23
C. Brokerage Selection ......................................... 24
D. Directed Brokerage .......................................... 25
E. Regular Broker-Dealers ...................................... 25
VII. Capital Stock and Other Securities ............................. 25
VIII. Purchase, Redemption and Pricing of Shares ..................... 25
A. Purchase/Redemption of Shares ............................... 25
B. Offering Price .............................................. 26
IX. Taxation of the Fund and Shareholders .......................... 27
X. Underwriters ................................................... 28
XI. Calculation of Performance Data ................................ 29
XII. Financial Statements ........................................... 30
</TABLE>
2
<PAGE>
Glossary of Selected Defined Terms
- --------------------------------------------------------------------------------
The terms defined in this glossary are frequently used in this Statement
of Additional Information (other terms used occasionally are defined in the
text of the document).
"Custodian" - The Bank of New York.
"Dean Witter Reynolds" - Dean Witter Reynolds Inc., a wholly-owned
broker-dealer subsidiary of MSDW.
"Distributor" - Morgan Stanley Dean Witter Distributors Inc., a
wholly-owned broker-dealer subsidiary of MSDW.
"Financial Advisors" - Morgan Stanley Dean Witter authorized financial
services representatives.
"Fund" - Morgan Stanley Dean Witter S&P 500 Select Fund, a registered
open-end investment company.
"Independent Trustees" - Trustees who are not "interested persons" (as
defined by the Investment Company Act) of the Fund.
"Investment Manager" - Morgan Stanley Dean Witter Advisors Inc., a
wholly-owned investment advisor subsidiary of MSDW.
"Morgan Stanley & Co." - Morgan Stanley & Co. Incorporated, a wholly-owned
broker-dealer subsidiary of MSDW.
"Morgan Stanley Dean Witter Funds" - Registered investment companies (i)
for which the Investment Manager serves as the investment advisor; and (ii)
that hold themselves out to investors as related companies for investment and
investor services.
"MSDW" - Morgan Stanley Dean Witter & Co., a preeminent global financial
services firm.
"MSDW Services Company" - Morgan Stanley Dean Witter Services Company Inc.,
a wholly-owned fund services subsidiary of the Investment Manager.
"Transfer Agent" - Morgan Stanley Dean Witter Trust FSB, a wholly-owned
transfer agent subsidiary of MSDW.
"Trustees" - The Board of Trustees of the Fund.
3
<PAGE>
I. FUND HISTORY
- --------------------------------------------------------------------------------
The Fund was organized as a Massachusetts business trust, under a
Declaration of Trust, on June 8, 1998, with the name Morgan Stanley Dean Witter
S&P 500 Select Fund.
II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
- --------------------------------------------------------------------------------
A. CLASSIFICATION
The Fund is an open-end, diversified management investment company whose
investment objective is to provide a total return (before expenses) that
exceeds the total return of the S&P 500 Composite Stock Price Index.
B. INVESTMENT STRATEGIES AND RISKS
The following discussion of the Fund's investment strategies and risks
should be read with the sections of the Fund's Prospectus titled "Principal
Investment Strategies," "Principal Risks," "Additional Investment Strategy
Information" and "Additional Risk Information."
DISCLAIMER. The Fund is not sponsored, endorsed, sold or promoted by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P
makes no representation or warranty, express or implied, to the owners of
shares of the Fund or any member of the public regarding the advisability of
investing in securities generally or in the Fund particularly or the ability of
the S&P 500 Index to track general stock market performance. S&P's only
relationship to the Fund is the licensing of certain trademarks and trade names
of S&P and of the S&P 500 Index which is determined, composed and calculated by
S&P without regard to the Fund. S&P is not responsible for and has not
participated in the determination of the prices and amount of the Fund or the
timing of the issuance or sale of shares of the Fund or in the determination or
calculation of the equation by which shares of the Fund are to be converted
into cash. S&P has no obligation or liability in connection with the
administration, marketing or trading of the Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein, and S&P shall have no liability for any
errors, omissions or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Fund, owners of shares of the
Fund, or any other person or entity from the use of the S&P 500 Index or any
data included therein. S&P makes no express or implied warranties, and
expressly disclaims all warranties of merchantability or fitness for a
particular purpose or use with respect to the S&P 500 Index or any data
included therein. Without limiting any of the foregoing, in no event shall S&P
have any liability for any special, punitive, indirect, or consequential
damages (including lost profits), even if notified of the possibility of such
damages.
STOCK INDEX FUTURES TRANSACTIONS. The Fund may invest in stock index
futures.
A futures contract purchaser incurs an obligation to take delivery of a
specified amount of the obligation underlying the contract at a specified time
in the future for a specified price. A seller of a futures contract incurs an
obligation to deliver the specified amount of the underlying obligation at a
specified time in return for an agreed upon price.
Index futures contracts provide for the delivery of an amount of cash
equal to a specified dollar amount times the difference between the index value
at the open or close of the last trading day of the contract and the futures
contract price. A futures contract sale is closed out by effecting a futures
contract purchase for the same aggregate amount of the specific type of
security and the same delivery date. If the sale price exceeds the offsetting
purchase price, the seller would be paid the difference and would realize a
gain. If the offsetting purchase price exceeds the sale price, the seller would
pay the difference and would realize a loss. Similarly, a futures contract
purchase is closed out by effecting a futures contract sale for the same
aggregate amount of the specific type of security and the same delivery date.
If the offsetting sale price exceeds the purchase price, the purchaser would
realize a gain, whereas if the
4
<PAGE>
purchase price exceeds the offsetting sale price, the purchaser would realize a
loss. There is no assurance that the Fund will be able to enter into a closing
transaction.
Margin. If the Fund enters into a futures contract, it is initially
required to deposit an "initial margin" of cash or U.S. Government securities
or other liquid portfolio securities ranging from approximately 2% to 5% of the
contract amount. Initial margin requirements are established by the exchanges
on which futures contracts trade and may, from time to time, change. In
addition, brokers may establish margin deposit requirements in excess of those
required by the exchanges.
Initial margin in futures transactions is different from margin in
securities transactions in that initial margin does not involve the borrowing
of funds by a broker's client but is, rather, a good faith deposit on the
futures contract which will be returned to the Fund upon the proper termination
of the futures contract. The margin deposits made are marked to market daily
and the Fund may be required to make subsequent deposits of cash or U.S.
Government securities, called "variation margin," which are reflective of price
fluctuations in the futures contract.
Limitations on Futures Contracts. The Fund may not enter into futures
contracts if, immediately thereafter, the amount committed to margin plus the
amount paid for premiums for unexpired options on futures contracts exceeds 5%
of the value of the Fund's total assets, after taking into account unrealized
gains and unrealized losses on such contracts it has entered into. However,
there is no overall limitation on the percentage of the Fund's net assets which
may be subject to a hedge position.
Risks of Transactions in Futures Contracts. The prices of securities and
indexes subject to futures contracts (and thereby the futures contract prices)
may correlate imperfectly with the behavior of the cash prices of the Fund's
portfolio securities. Also, prices of futures contracts may not move in tandem
with the changes in prevailing market movements against which the Fund seeks a
hedge. A correlation may also be distorted (a) temporarily, by short-term
traders' seeking to profit from the difference between a contract or security
price objective and their cost of borrowed funds; (b) by investors in futures
contracts electing to close out their contracts through offsetting transactions
rather than meet margin deposit requirements; (c) by investors in futures
contracts opting to make or take delivery of underlying securities rather than
engage in closing transactions, thereby reducing liquidity of the futures
market; and (d) temporarily, by speculators who view the deposit requirements
in the futures markets as less onerous than margin requirements in the cash
market. Due to the possibility of price distortion in the futures market and
because of the possible imperfect correlation between movements in the prices
of securities and movements in the prices of futures contracts, a correct
forecast of market movement trends by the Investment Manager may still not
result in a successful hedging transaction.
There is no assurance that a liquid secondary market will exist for
futures contracts in which the Fund may invest. In the event a liquid market
does not exist, it may not be possible to close out a futures position and, in
the event of adverse price movements, the Fund would continue to be required to
make daily cash payments of variation margin. The absence of a liquid market in
futures contracts might cause the Fund to make or take delivery of the
underlying securities at a time when it may be disadvantageous to do so.
Exchanges also limit the amount by which the price of a futures contract
may move on any day. If the price moves equal the daily limit on successive
days, then it may prove impossible to liquidate a futures position until the
daily limit moves have ceased. In the event of adverse price movements, the
Fund would continue to be required to make daily cash payments of variation
margin on open futures positions. In these situations, if the Fund has
insufficient cash, it may have to sell portfolio securities to meet daily
variation margin requirements at a time when it may be disadvantageous to do
so. The inability to close out options and futures positions could also have an
adverse impact on the Fund's ability to effectively hedge its portfolio.
In the event of the bankruptcy of a broker through which the Fund engages
in transactions in futures, the Fund could experience delays and/or losses in
liquidating open positions purchased or sold through the broker and/or incur a
loss of all or part of its margin deposits with the broker.
5
<PAGE>
If the Fund maintains a short position in a futures contract it will cover
this position by holding, in a segregated account maintained on the books of
the Fund, cash, U.S. government securities or other liquid portfolio securities
equal in value (when added to any initial or variation margin on deposit) to
the market value of the securities underlying the futures contract. Such a
position may also be covered by owning the securities underlying the futures
contract (in the case of a stock index futures contract a portfolio of
securities substantially replicating the relevant index).
In addition, if the Fund holds a long position in a futures contract it
will hold cash, U.S. government securities or other liquid portfolio securities
equal to the purchase price of the contract (less the amount of initial or
variation margin on deposit) in a segregated account maintained on the books of
the Fund.
MONEY MARKET SECURITIES. The Fund may invest in various money market
securities for cash management purposes or when assuming a temporary defensive
position, which among others may include commercial paper, bank acceptances,
bank obligations, corporate debt securities, certificates of deposit, U.S.
Government securities, obligations of savings institutions and repurchase
agreements. Such securities are limited to:
U.S. Government Securities. Obligations issued or guaranteed as to
principal and interest by the United States or its agencies (such as the
Export-Import Bank of the United States, Federal Housing Administration and
Government National Mortgage Association) or its instrumentalities (such as the
Federal Home Loan Bank), including Treasury bills, notes and bonds;
Bank Obligations. Obligations (including certificates of deposit, time
deposits and bankers' acceptances) of banks subject to regulation by the U.S.
Government and having total assets of $1 billion or more, and instruments
secured by such obligations, not including obligations of foreign branches of
domestic banks except to the extent below;
Eurodollar Certificates of Deposit. Eurodollar certificates of deposit
issued by foreign branches of domestic banks having total assets of $1 billion
or more;
Obligations of Savings Institutions. Certificates of deposit of savings
banks and savings and loan associations, having total assets of $1 billion or
more;
Fully Insured Certificates of Deposit. Certificates of deposit of banks
and savings institutions, having total assets of less than $1 billion, if the
principal amount of the obligation is federally insured by the Bank Insurance
Fund or the Savings Association Insurance Fund (each of which is administered
by the FDIC), limited to $100,000 principal amount per certificate and to 10%
or less of the Fund's total assets in all such obligations and in all illiquid
assets, in the aggregate;
Commercial Paper. Commercial paper rated within the two highest grades by
Standard & Poor's Corporation ("S&P") or the two highest grade by Moody's
Investors Service, Inc. ("Moody's") or, if not rated, issued by a company
having an outstanding debt issue rated at least AA by S&P or Aa by Moody's; and
Repurchase Agreements. The Fund may invest in repurchase agreements. When
cash may be available for only a few days, it may be invested by the Fund in
repurchase agreements until such time as it may otherwise be invested or used
for payments of obligations of the Fund. These agreements, which may be viewed
as a type of secured lending by the Fund, typically involve the acquisition by
the Fund of debt securities from a selling financial institution such as a
bank, savings and loan association or broker-dealer. The agreement provides
that the Fund will sell back to the institution, and that the institution will
repurchase, the underlying security serving as collateral at a specified price
and at a fixed time in the future, usually not more than seven days from the
date of purchase. The collateral will be marked-to-market daily to determine
that the value of the collateral, as specified in the agreement, does not
decrease below the purchase price plus accrued interest. If such decrease
occurs, additional collateral will be requested and, when received, added to
the account to maintain full collateralization. The Fund will accrue interest
from the institution until the time when the repurchase is to occur. Although
this date is deemed by the Fund to be the maturity date of a repurchase
agreement, the maturities of securities subject to repurchase agreements are
not subject to any limits.
6
<PAGE>
While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed to
minimize such risks. These procedures include effecting repurchase transactions
only with large, well-capitalized and well-established financial institutions
whose financial condition will be continually monitored by the Investment
Manager subject to procedures established by the Trustees. In addition, as
described above, the value of the collateral underlying the repurchase
agreement will be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement. In the event of a default or
bankruptcy by a selling financial institution, the Fund will seek to liquidate
such collateral. However, the exercising of the Fund's right to liquidate such
collateral could involve certain costs or delays and, to the extent that
proceeds from any sale upon a default of the obligation to repurchase were less
than the repurchase price, the Fund could suffer a loss. It is the current
policy of the Fund not to invest in repurchase agreements that do not mature
within seven days if any such investment, together with any other illiquid
assets held by the Fund, amounts to more than 15% of its total assets.
LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities
to brokers, dealers and other financial institutions, provided that the loans
are callable at any time by the Fund, and are at all times secured by cash or
cash equivalents, which are maintained in a segregated account pursuant to
applicable regulations and that are equal to at least 100% of the market value,
determined daily, of the loaned securities. The advantage of these loans is
that the Fund continues to receive the income on the loaned securities while at
the same time earning interest on the cash amounts deposited as collateral,
which will be invested in short-term obligations. The Fund will not lend more
than 20% of the value of its total assets.
As with any extensions of credit, there are risks of delay in recovery
and, in some cases, even loss of rights in the collateral should the borrower
of the securities fail financially. However, these loans of portfolio
securities will only be made to firms deemed by the Fund's management to be
creditworthy and when the income which can be earned from such loans justifies
the attendant risks. Upon termination of the loan, the borrower is required to
return the securities to the Fund. Any gain or loss in the market price during
the loan period would inure to the Fund.
When voting or consent rights which accompany loaned securities pass to
the borrower, the Fund will follow the policy of calling the loaned securities,
to be delivered within one day after notice, to permit the exercise of the
rights if the matters involved would have a material effect on the Fund's
investment in the loaned securities. The Fund will pay reasonable finder's,
administrative and custodial fees in connection with a loan of its securities.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS. From
time to time the Fund may purchase securities on a when-issued or delayed
delivery basis or may purchase or sell securities on a forward commitment
basis. When these transactions are negotiated, the price is fixed at the time
of the commitment, but delivery and payment can take place a month or more
after the date of commitment. While the Fund will only purchase securities on a
when-issued, delayed delivery or forward commitment basis with the intention of
acquiring the securities, the Fund may sell the securities before the
settlement date, if it is deemed advisable. The securities so purchased or sold
are subject to market fluctuation and no interest or dividends accrue to the
purchaser prior to the settlement date.
At the time the Fund makes the commitment to purchase or sell securities
on a when-issued, delayed delivery or forward commitment basis, it will record
the transaction and thereafter reflect the value, each day, of such security
purchased, or if a sale, the proceeds to be received, in determining its net
asset value. At the time of delivery of the securities, their value may be more
or less than the purchase or sale price. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility of its net
asset value. The Fund will also establish a segregated account on the Fund's
books in which it will continually maintain cash or cash equivalents or other
liquid portfolio securities equal in value to commitments to purchase
securities on a when-issued, delayed delivery or forward commitment basis.
WHEN, AS AND IF ISSUED SECURITIES. The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security depends
upon the occurrence of a subsequent
7
<PAGE>
event, such as approval of a merger, corporate reorganization or debt
restructuring. The commitment for the purchase of any such security will not be
recognized in the portfolio of the Fund until the Investment Manager determines
that issuance of the security is probable. At that time, the Fund will record
the transaction and, in determining its net asset value, will reflect the value
of the security daily. At that time, the Fund will also establish a segregated
account on the Fund's books in which it will maintain cash or cash equivalents
or other liquid portfolio securities equal in value to recognized commitments
for such securities.
The value of the Fund's commitments to purchase the securities of any one
issuer, together with the value of all securities of such issuer owned by the
Fund, may not exceed 5% of the value of the Fund's total assets at the time the
initial commitment to purchase such securities is made. An increase in the
percentage of the Fund's total assets committed to the purchase of securities
on a "when, as and if issued" basis may increase the volatility of its net
asset value. The Fund may also sell securities on a "when, as and if issued"
basis provided that the issuance of the security will result automatically from
the exchange or conversion of a security owned by the Fund at the time of sale.
YEAR 2000. The investment management services provided to the Fund by the
Investment Manager and the services provided to shareholders by the Distributor
and the Transfer Agent depend on the smooth functioning of their computer
systems. Many computer software systems in use today were designed in such a
way that they may not be able to recognize the year 2000, but revert to 1900 or
some other date, due to the manner in which dates were encoded and calculated.
That failure could have a negative impact on the handling of securities trades,
pricing and account services.
Improperly functioning trading systems may result in settlement problems
and liquidity issues. Corporate and governmental data processing errors could
result in production problems for individual issuers and overall economic
uncertainties. Operations ran smoothly from the last week in December through
the first quarter of 2000, but the year 2000 issue may yet have an adverse
impact on financial market participants and other entities, including the
issuers whose securities are contained in the Fund's portfolio.
C. FUND POLICIES/INVESTMENT RESTRICTIONS
The investment objective, policies and restrictions listed below have been
adopted by the Fund as fundamental policies. Under the Investment Company Act
of 1940 (the "Investment Company Act"), a fundamental policy may not be changed
without the vote of a majority of the outstanding voting securities of the
Fund. The Investment Company Act defines a majority as the lesser of (a) 67% or
more of the shares present at a meeting of shareholders, if the holders of 50%
of the outstanding shares of the Fund are present or represented by proxy; or
(b) more than 50% of the outstanding shares of the Fund. For purposes of the
following restrictions: (i) all percentage limitations apply immediately after
a purchase or initial investment; and (ii) any subsequent change in any
applicable percentage resulting from market fluctuations or other changes in
total or net assets does not require elimination of any security from the
portfolio.
The Fund will:
1. Seek to provide a total return (before expenses) that exceeds the total
return of the S&P 500 Composite Stock Price Index.
The Fund may not:
1. As to 75% of its total assets, invest more than 5% of the value of its
total assets in the securities of any one issuer (other than obligations
issued, or guaranteed by, the United States Government, its agencies or
instrumentalities), except that the Fund may invest all or substantially
all of its assets in another registered investment company having the
same investment objective and policies and substantially the same
investment restrictions as the Fund.
2. As to 75% of its total assets, purchase more than 10% of all
outstanding voting securities or any class of securities of any one
issuer, except that the Fund may invest all or substantially
8
<PAGE>
all of its assets in another registered investment company having the
same investment objective and policies and substantially the same
investment restrictions as the Fund.
3. Invest 25% or more of the value of its total assets in securities of
issuers in any one industry. This restriction does not apply to
obligations issued or guaranteed by the United States Government or its
agencies or instrumentalities.
4. Purchase or sell real estate or interests therein (including limited
partnership interests), although the Fund may purchase securities of
issuers which engage in real estate operations and securities secured by
real estate or interests therein.
5. Purchase or sell commodities or commodities contracts except that the
Fund may purchase or sell index futures contracts.
6. Purchase oil, gas or other mineral leases, rights or royalty contracts
or exploration or development programs, except that the Fund may invest
in the securities of companies which operate, invest in, or sponsor such
programs.
7. Borrow money, except that the Fund may borrow from a bank for temporary
or emergency purposes in amounts not exceeding 5% (taken at the lower of
cost or current value) of its total assets (not including the amount
borrowed).
8. Pledge its assets or assign or otherwise encumber them except to secure
permitted borrowings.
9. Issue senior securities as defined in the Investment Company Act except
insofar as the Fund may be deemed to have issued a senior security by
reason of: (a) entering into any repurchase agreement; (b) purchasing or
selling futures contracts or options; (c) borrowing money in accordance
with restrictions described above; (d) purchasing any securities on a
when-issued or delayed delivery basis; or (e) lending portfolio
securities.
10. Make loans of money or securities, except: (a) by the purchase of debt
obligations in which the Fund may invest consistent with its investment
objective and policies; (b) by investment in repurchase agreements; or
(c) by lending its portfolio securities.
11. Make short sales of securities.
12. Purchase securities on margin, except for such short-term loans as are
necessary for the clearance of portfolio securities. The deposit or
payment by the Fund of initial or variation margin in connection with
futures contracts or related options is not considered the purchase of a
security on margin.
13. Invest more than 15% of its total assets in "illiquid securities"
(securities for which market quotations are not readily available),
restricted securities and repurchase agreements which have a maturity of
longer than seven days.
14. Engage in the underwriting of securities, except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security.
15. Invest for the purpose of exercising control or management of any other
issuer, except that the Fund may invest all or substantially all of its
assets in another registered investment company having the same
investment objective and policies and substantially the same investment
restrictions as the Fund.
III. MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
A. BOARD OF TRUSTEES
The Board of Trustees of the Fund oversees the management of the Fund but
does not itself manage the Fund. The Trustees review various services provided
by or under the direction of the Investment Manager to ensure that the Fund's
general investment policies and programs are properly carried out. The Trustees
also conduct their review to ensure that administrative services are provided
to the Fund in a satisfactory manner.
9
<PAGE>
Under state law, the duties of the Trustees are generally characterized as
a duty of loyalty and a duty of care. The duty of loyalty requires a Trustee to
exercise his or her powers in the interest of the Fund and not the Trustee's
own interest or the interest of another person or organization. A Trustee
satisfies his or her duty of care by acting in good faith with the care of an
ordinarily prudent person and in a manner the Trustee reasonably believes to be
in the best interest of the Fund and its shareholders.
B. MANAGEMENT INFORMATION
TRUSTEES AND OFFICERS. The Board of the Fund consists of eight (8)
Trustees. These same individuals also serve as directors or trustees for all of
the Morgan Stanley Dean Witter Funds. Six Trustees (75% of the total number)
have no affiliation or business connection with the Investment Manager or any
of its affiliated persons and do not own any stock or other securities issued
by the Investment Manager's parent company, MSDW. These are the
"non-interested" or "independent" Trustees. The other two Trustees (the
"management Trustees") are affiliated with the Investment Manager.
The Trustees and executive officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with the
Investment Manager, and with the Morgan Stanley Dean Witter Funds (there were
93 such Funds as of the calendar year ended December 31, 1999), are shown
below.
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
Michael Bozic (59) ........................ Vice Chairman of Kmart Corporation (since
Trustee December 1998); Director or Trustee of the Morgan
c/o Kmart Corporation Stanley Dean Witter Funds; formerly Chairman
3100 West Big Beaver Road and Chief Executive Officer of Levitz Furniture
Troy, Michigan Corporation (November 1995-November 1998) and
President and Chief Executive Officer of Hills
Department Stores (May 1991-July 1995); formerly
variously Chairman, Chief Executive Officer,
President and Chief Operating Officer (1987-1991)
of the Sears Merchandise Group of Sears, Roebuck
and Co.; Director of Weirton Steel Corporation.
Charles A. Fiumefreddo* (66) .............. Chairman, Director or Trustee and Chief Executive
Chairman of the Board, Chief Officer of the Morgan Stanley Dean Witter Funds;
Executive Officer and Trustee formerly Chairman, Chief Executive Officer and
Two World Trade Center Director of the Investment Manager, the Distributor
New York, New York and MSDW Services Company; Executive Vice
President and Director of Dean Witter Reynolds;
Chairman and Director of the Transfer Agent;
formerly Director and/or officer of various MSDW
subsidiaries (until June 1998).
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
Edwin J. Garn (67) ........................ Director or Trustee of the Morgan Stanley Dean
Trustee Witter Funds; formerly United States Senator (R-
c/o Huntsman Corporation Utah) (1974-1992) and Chairman, Senate Banking
500 Huntsman Way Committee (1980-1986); formerly Mayor of Salt
Salt Lake City, Utah Lake City, Utah (1971-1974); formerly Astronaut,
Space Shuttle Discovery (April 12-19, 1985); Vice
Chairman, Huntsman Corporation (chemical
company); Director of Franklin Covey (time
management systems), BMW Bank of North
America, Inc. (industrial loan corporation), United
Space Alliance (joint venture between Lockheed
Martin and the Boeing Company) and Nuskin Asia
Pacific (multilevel marketing); member of the board
of various civic and charitable organizations.
Wayne E. Hedien (66) ...................... Retired; Director or Trustee of the Morgan Stanley
Trustee Dean Witter Funds; Director of The PMI Group,
c/o Mayer, Brown & Platt Inc. (private mortgage insurance); Trustee and
Counsel to the Independent Trustees Vice Chairman of The Field Museum of Natural
1675 Broadway History; formerly associated with the Allstate
New York, New York Companies (1966-1994), most recently as
Chairman of The Allstate Corporation (March 1993-
December 1994) and Chairman and Chief
Executive Officer of its wholly-owned subsidiary,
Allstate Insurance Company (July 1989-December
1994); director of various other business and
charitable organizations.
Dr. Manuel H. Johnson (51) ................ Senior Partner, Johnson Smick International, Inc.,
Trustee a consulting firm; Co-Chairman and a founder of
c/o Johnson Smick International, Inc. the Group of Seven Council (G7C), an international
1133 Connecticut Avenue, N.W. economic commission; Chairman of the Audit
Washington, D.C. Committee and Director or Trustee of the Morgan
Stanley Dean Witter Funds; Director of Greenwich
Capital Markets, Inc. (broker-dealer) and NVR, Inc.
(home construction); Chairman and Trustee of the
Financial Accounting Foundation (oversight
organization of the Financial Accounting Standards
Board); formerly Vice Chairman of the Board of
Governors of the Federal Reserve System (1986-
1990) and Assistant Secretary of the U.S. Treasury.
Michael E. Nugent (63) .................... General Partner, Triumph Capital, L.P., a private
Trustee investment partnership; Chairman of the Insurance
c/o Triumph Capital, L.P. Committee and Director or Trustee of the Morgan
237 Park Avenue Stanley Dean Witter Funds; formerly Vice
New York, New York President, Bankers Trust Company and BT Capital
Corporation (1984-1988); director of various
business organizations.
Philip J. Purcell* (56) ................... Chairman of the Board of Directors and Chief
Trustee Executive Officer of MSDW, Dean Witter Reynolds
1585 Broadway and Novus Credit Services Inc.; Director of the
New York, New York Distributor; Director or Trustee of the Morgan
Stanley Dean Witter Funds; Director of American
Airlines, Inc. and its parent company, AMR
Corporation; Director and/or officer of various
MSDW subsidiaries.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
John L. Schroeder (69) .................... Retired; Chairman of the Derivatives Committee
Trustee and Director or Trustee of the Morgan Stanley
c/o Mayer, Brown & Platt Dean Witter Funds; Director of Citizens Utilities
Counsel to the Independent Trustees Company (telecommunications, gas, electric and
1675 Broadway water utilities company); formerly Executive Vice
New York, New York President and Chief Investment Officer of
the Home Insurance Company (August 1991-
September 1995).
Mitchell M. Merin (46) .................... President and Chief Operating Officer of Asset
President Management of MSDW (since December 1998);
Two World Trade Center President and Director (since April 1997) and Chief
New York, New York Executive Officer (since June 1998) of the
Investment Manager and MSDW Services
Company; Chairman, Chief Executive Officer and
Director of the Distributor (since June 1998);
Chairman and Chief Executive Officer (since June
1998) and Director (since January 1998) of the
Transfer Agent; Director of various MSDW
subsidiaries; President of the Morgan Stanley Dean
Witter Funds (since May 1999); Trustee of various
Van Kampen investment companies (since
December 1999); previously Chief Strategic Officer
of the Investment Manager and MSDW Services
Company and Executive Vice President of the
Distributor (April 1997-June 1998), Vice President
of the Morgan Stanley Dean Witter Funds;
(May 1997-April 1999), and Executive Vice
President of Dean Witter, Discover & Co.
Barry Fink (45) ........................... Executive Vice President (since December 1999)
Vice President, and Secretary and General Counsel (since
Secretary and General Counsel February 1997) and Director (since July 1998) of
Two World Trade Center the Investment Manager and MSDW Services
New York, New York Company; Executive Vice President (since
December 1999) and Assistant Secretary and
Assistant General Counsel (since February 1997)
of the Distributor; Assistant Secretary of Dean
Witter Reynolds (since August 1996); Vice
President, Secretary and General Counsel of the
Morgan Stanley Dean Witter Funds (since February
1997); previously Senior Vice President
(March 1997-December 1999), First Vice President
(June 1993-February 1997), Vice President and
Assistant Secretary and Assistant General Counsel
of the Investment Manager and MSDW Services
Company and Assistant Secretary of the Morgan
Stanley Dean Witter Funds.
Guy G. Rutherfurd, Jr. (60) ............... Senior Vice President and Director of the Growth
Vice President Group of the Investment Manager (since February
Two World Trade Center 1997); formerly Executive Vice President and Chief
New York, New York Investment Officer of Nomura Asset Management
(U.S.A.) Inc. (May 1992-February 1997).
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
Jason Norris (28) ......................... Intermediate Research Analyst with MSDW
Assistant Vice President Advisors (since June 1998).
Two World Trade Center
New York, New York
Thomas F. Caloia (53) ..................... First Vice President and Assistant Treasurer of the
Treasurer Investment Manager, the Distributor and MSDW
Two World Trade Center Services Company; Treasurer of the Morgan
New York, New York Stanley Dean Witter Funds.
</TABLE>
- ----------
* Denotes Trustees who are "interested persons" of the Fund, as defined in the
Investment Company Act.
In addition, Ronald E. Robison, Executive Vice President, Chief
Administrative Officer and Director of the Investment Manager and MSDW Services
Company, Robert S. Giambrone, Senior Vice President of the Investment Manager,
MSDW Services Company, the Distributor and the Transfer Agent and Director of
the Transfer Agent, Joseph J. McAlinden, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer Agent,
Peter Hermann and Teresa McRoberts, Vice Presidents of the Investment Manager,
are Vice Presidents of the Fund and Kevin Jung and Alice Weiss, Vice Presidents
of the Investment Manager, are Assistant Vice Presidents of the Fund.
In addition, Marilyn K. Cranney, Todd Lebo, Lou Anne D. McInnis, Carsten
Otto and Ruth Rossi, First Vice Presidents and Assistant General Counsels of
the Investment Manager and MSDW Services Company, and Natasha Kassian,
Assistant Vice President and Assistant General Counsel of the Investment
Manager and MSDW Services Company, are Assistant Secretaries of the Fund.
INDEPENDENT DIRECTORS/TRUSTEES AND THE COMMITTEES. Law and regulation
establish both general guidelines and specific duties for the independent
directors/trustees. The Morgan Stanley Dean Witter Funds seek as independent
directors/trustees individuals of distinction and experience in business and
finance, government service or academia; these are people whose advice and
counsel are in demand by others and for whom there is often competition. To
accept a position on the Funds' boards, such individuals may reject other
attractive assignments because the Funds make substantial demands on their
time. All of the independent directors/trustees serve as members of the Audit
Committee. In addition, three of the directors/trustees, including two
independent directors/trustees, serve as members of the Derivatives Committee
and the Insurance Committee.
The independent directors/trustees are charged with recommending to the
full board approval of management, advisory and administration contracts, Rule
12b-1 plans and distribution and underwriting agreements; continually reviewing
Fund performance; checking on the pricing of portfolio securities, brokerage
commissions, transfer agent costs and performance, and trading among Funds in
the same complex; and approving fidelity bond and related insurance coverage
and allocations, as well as other matters that arise from time to time. The
independent directors/trustees are required to select and nominate individuals
to fill any independent director/trustee vacancy on the board of any Fund that
has a Rule 12b-1 plan of distribution. Most of the Morgan Stanley Dean Witter
Funds have a Rule 12b-1 plan.
The Audit Committee is charged with recommending to the full board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing engagement;
approving professional services provided by the independent accountants and
other accounting firms prior to the performance of the services; reviewing the
independence of the independent accountants; considering the range of audit and
non-audit fees; reviewing the adequacy of the Fund's system of internal
controls; and preparing and submitting Committee meeting minutes to the full
board.
The board of each Fund has a Derivatives Committee to approve parameters
for and monitor the activities of the Fund with respect to derivative
investments, if any, made by the Fund.
13
<PAGE>
Finally, the board of each Fund has formed an Insurance Committee to
review and monitor the insurance coverage maintained by the Fund.
ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT DIRECTORS/TRUSTEES
FOR ALL MORGAN STANLEY DEAN WITTER FUNDS. The independent directors/trustees
and the Funds' management believe that having the same independent
directors/trustees for each of the Morgan Stanley Dean Witter Funds avoids the
duplication of effort that would arise from having different groups of
individuals serving as independent directors/trustees for each of the Funds or
even of sub-groups of Funds. They believe that having the same individuals
serve as independent directors/trustees of all the Funds tends to increase
their knowledge and expertise regarding matters which affect the Fund complex
generally and enhances their ability to negotiate on behalf of each Fund with
the Fund's service providers. This arrangement also precludes the possibility
of separate groups of independent directors/trustees arriving at conflicting
decisions regarding operations and management of the Funds and avoids the cost
and confusion that would likely ensue. Finally, having the same independent
directors/trustees serve on all Fund boards enhances the ability of each Fund
to obtain, at modest cost to each separate Fund, the services of independent
directors/trustees, of the caliber, experience and business acumen of the
individuals who serve as independent directors/trustees of the Morgan Stanley
Dean Witter Funds.
TRUSTEE AND OFFICER INDEMNIFICATION. The Fund's Declaration of Trust
provides that no Trustee, officer, employee or agent of the Fund is liable to
the Fund or to a shareholder, nor is any Trustee, officer, employee or agent
liable to any third persons in connection with the affairs of the Fund, except
as such liability may arise from his/her or its own bad faith, willful
misfeasance, gross negligence or reckless disregard of his/her or its duties.
It also provides that all third persons shall look solely to the Fund property
for satisfaction of claims arising in connection with the affairs of the Fund.
With the exceptions stated, the Declaration of Trust provides that a Trustee,
officer, employee or agent is entitled to be indemnified against all liability
in connection with the affairs of the Fund.
C. COMPENSATION
The Fund pays each Independent Trustee an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Trustees, the Independent
Trustees or Committees of the Board of Trustees attended by the Trustee (the
Fund pays the Chairman of the Audit Committee an additional annual fee of $750,
and the Chairmen of the Derivatives and Insurance Committees additional annual
fees of $500). If a Board meeting and a meeting of the Independent Trustees or
a Committee meeting, or a meeting of the Independent Trustees and/or more than
one Committee meeting, take place on a single day, the Trustees are paid a
single meeting fee by the Fund. The Fund also reimburses such Trustees for
travel and other out-of-pocket expenses incurred by them in connection with
attending such meetings. Trustees and officers of the Fund who are or have been
employed by the Investment Manager or an affiliated company receive no
compensation or expense reimbursement from the Fund for their services as
Trustee.
The following table illustrates the compensation that the Fund paid to its
Independent Trustees for the fiscal year ended February 29, 2000.
FUND COMPENSATION
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
- ------------------------------- --------------
Michael Bozic ................. $1,600
Edwin J. Garn ................. 1,650
Wayne E. Hedien ............... 1,650
Dr. Manuel H. Johnson ......... 2,338
Michael E. Nugent ............. 2,108
John L. Schroeder ............. 2,108
14
<PAGE>
The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1999 for services
to the 93 Morgan Stanley Dean Witter Funds that were in operation at December
31, 1999.
CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS
TOTAL CASH
COMPENSATION
FOR SERVICES
TO 93
MORGAN STANLEY
DEAN WITTER
NAME OF INDEPENDENT TRUSTEE FUNDS
- ------------------------------- ---------------
Michael Bozic ................. $134,600
Edwin J. Garn ................. 138,700
Wayne E. Hedien ............... 138,700
Dr. Manuel H. Johnson ......... 208,638
Michael E. Nugent ............. 193,324
John L. Schroeder ............. 193,324
As of the date of this Statement of Additional Information, 55 of the
Morgan Stanley Dean Witter Funds, not including the Fund, have adopted a
retirement program under which an independent director/trustee who retires
after serving for at least five years (or such lesser period as may be
determined by the Board) as an independent director/trustee of any Morgan
Stanley Dean Witter Fund that has adopted the retirement program (each such
Fund referred to as an "Adopting Fund" and each such director/trustee referred
to as an "Eligible Trustee") is entitled to retirement payments upon reaching
the eligible retirement age (normally, after attaining age 72). Annual payments
are based upon length of service.
Currently, upon retirement, each Eligible Trustee is entitled to receive
from the Adopting Fund, commencing as of his or her retirement date and
continuing for the remainder of his or her life, an annual retirement benefit
(the "Regular Benefit") equal to 30.22% of his or her Eligible Compensation
plus 0.5036667% of such Eligible Compensation for each full month of service as
an independent director/trustee of any Adopting Fund in excess of five years up
to a maximum of 60.44% after ten years of service. The foregoing percentages
may be changed by the Board(1). "Eligible Compensation" is one-fifth of the
total compensation earned by such Eligible Trustee for service to the Adopting
Fund in the five year period prior to the date of the Eligible Trustee's
retirement. Benefits under the retirement program are accrued as expenses on
the books of the Adopting Funds. Such benefits are not secured or funded by the
Adopting Funds.
The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees by the Fund for the fiscal year ended December 31,
1999 and by the 55 Morgan Stanley Dean Witter Funds (not including the Fund)
for the calendar year ended December 31, 1999, and the estimated retirement
benefits for the Fund's Independent Trustees, to commence upon their
retirement, from the 55 Morgan Stanley Dean Witter Funds as of the calendar
year ended December 31, 1999.
- ----------
(1) An Eligible Trustee may elect alternative payments of his or her
retirement benefits based upon the combined life expectancy of the
Eligible Trustee and his or her spouse on the date of such Eligible
Trustee's retirement. In addition, the Eligible Trustee may elect that
the surviving spouse's periodic payment of benefits will be equal to a
lower percentage of the periodic amount when both spouses were alive. The
amount estimated to be payable under this method, through the remainder
of the later of the lives of the Eligible Trustee and spouse, will be the
actuarial equivalent of the Regular Benefit.
15
<PAGE>
RETIREMENT BENEFITS FROM ALL MORGAN STANLEY DEAN WITTER FUNDS
<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS
----------------------------------
ESTIMATED
CREDITED YEARS ESTIMATED RETIREMENT ESTIMATED
OF SERVICE AT PERCENTAGE OF BENEFITS ACCRUED ANNUAL BENEFITS UPON
NAME OF RETIREMENT ELIGIBLE AS EXPENSES BY ALL RETIREMENT FROM ALL
INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION ADOPTING FUNDS ADOPTING FUNDS(2)
- ------------------------------- ---------------- --------------- -------------------- ---------------------
<S> <C> <C> <C> <C>
Michael Bozic ................. 10 60.44% $20,933 $50,588
Edwin J. Garn ................. 10 60.44 31,737 50,675
Wayne E. Hedien ............... 9 51.37 39,566 43,000
Dr. Manuel H. Johnson ......... 10 60.44 13,129 75,520
Michael E. Nugent ............. 10 60.44 23,175 67,209
John L. Schroeder ............. 8 50.37 41,558 52,994
</TABLE>
- ----------
(2) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Eligible Trustee's elections described in
Footnote (1) on page 15.
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
The following persons owned 5% or more of the outstanding Class A shares
of the Fund on April 6, 2000: Donald P. Shiley & Darlene Shiley, Trustees for
the Donald P. & Darlene V. Shiley Trust dated 3/15/84, P.O. Box 207, Pauma
Valley, CA 92061-0207 - 27.858%; Ernest M. Aguilar & Kerry H. Aguilar, Trustees
of the Aguilar Family Trust dated 5/18/94 account #2, 27015 Roswell Court,
Valencia, CA 91354-2435 - 8.459%. The following owned 5% or more of the
outstanding Class D shares of the Fund on April 6, 2000: Douglas Frontier Corp.
401K Savings Plan dated 1/1/94 for the benefit of Pooled Account, 5963 La Place
Court, Suite 200, Carlsbad, CA 92008-8822 - 7.444%; Robert W. Clow & Cheri L.
Clow JTWROS, 949 Calle Ruiz, Thousand Oaks, CA 91360-6125 - 6.941%; Dean Witter
Reynolds Custodian for Marvin L. Sherron IRA Standard dated 1/5/00, 207
Mockingbird Lane, Wake Forest, NC 27587-7624 - 5.575%; Dean Witter Reynolds
Custodian for Andrew J. Barrett IRA Standard dated 2/16/00, 2513 Constitution
Drive, Raleigh, NC 27615-5380 - 5.386%; Richard C. Brunell, 500 Spanish Fort
Boulevard #154, Spanish Fort, AL 36527-5008 - 5.313%; Robert C. McLaughlin and
Lou Ann McLaughlin JTWROS, 602 Wilmes Drive, Austin, TX 78752-4140 - 5.162%;
Dean Witter Reynolds Custodian for Arlester Andrews IRA Standard dated
11/18/99, P.O. Box 58724, Raleigh, NC 27658-8724 - 5.155%.
As of the date of this Statement of Additional Information, the aggregate
number of shares of beneficial interest of the Fund owned by the Fund's
officers and Trustees as a group was less than 1% of the Fund's shares of
beneficial interest outstanding.
V. INVESTMENT MANAGEMENT AND OTHER SERVICES
- --------------------------------------------------------------------------------
A. INVESTMENT MANAGER
The Investment Manager to the Fund is Morgan Stanley Dean Witter Advisors
Inc., a Delaware corporation, whose address is Two World Trade Center, New
York, NY 10048. The Investment Manager is a wholly-owned subsidiary of MSDW, a
Delaware corporation. MSDW is a preeminent global financial services firm that
maintains leading market positions in each of its three primary businesses:
securities, asset management and credit services.
Pursuant to an Investment Management Agreement (the "Management
Agreement") with the Investment Manager, the Fund has retained the Investment
Manager to provide administrative services and manage the investment of the
Fund's assets, including the placing of orders for the purchase and sale of
portfolio securities. The Fund pays the Investment Manager monthly compensation
calculated daily by applying the following annual rate to the net assets of the
Fund determined as of the close of each business day: 0.60%. The management fee
is allocated among the Classes pro rata based on the
16
<PAGE>
net assets of the Fund attributable to each Class. For the period September 28,
1998 (commencement of operations) through February 28, 1999 and for the fiscal
year ended February 29, 2000 the Investment Manager accrued total compensation
under the Management Agreement in the amounts of $132,990 and $705,671,
respectively. These amounts take into account that the Investment Manager had
agreed to assume all expenses (except for brokerage and 12b-1 fees) and to
waive the compensation provided for in its Management Agreement until such time
as the Fund had $50 million of net assets or until six months from the date of
commencement of the Fund's operations, whichever occurred first. This waiver
and assumption is no longer in effect.
The Investment Manager has retained its wholly-owned subsidiary, MSDW
Services Company, to perform administrative services for the Fund.
B. PRINCIPAL UNDERWRITER
The Fund's principal underwriter is the Distributor (which has the same
address as the Investment Manager). In this capacity, the Fund's shares are
distributed by the Distributor. The Distributor has entered into a selected
dealer agreement with Dean Witter Reynolds, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into similar agreements with other selected broker-dealers. The Distributor, a
Delaware corporation, is a wholly-owned subsidiary of MSDW.
The Distributor bears all expenses it may incur in providing services
under the Distribution Agreement. These expenses include the payment of
commissions for sales of the Fund's shares and incentive compensation to
Financial Advisors, the cost of educational and/or business-related trips, and
educational and/or promotional and business-related expenses. The Distributor
also pays certain expenses in connection with the distribution of the Fund's
shares, including the costs of preparing, printing and distributing advertising
or promotional materials, and the costs of printing and distributing
prospectuses and supplements thereto used in connection with the offering and
sale of the Fund's shares. The Fund bears the costs of initial typesetting,
printing and distribution of prospectuses and supplements thereto to
shareholders. The Fund also bears the costs of registering the Fund and its
shares under federal and state securities laws and pays filing fees in
accordance with state securities laws.
The Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. Under the
Distribution Agreement, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment or
mistake of law or for any act or omission or for any losses sustained by the
Fund or its shareholders.
C. SERVICES PROVIDED BY THE INVESTMENT MANAGER
The Investment Manager manages the investment of the Fund's assets,
including the placing of orders for the purchase and sale of portfolio
securities. The Investment Manager obtains and evaluates the information and
advice relating to the economy, securities markets, and specific securities as
it considers necessary or useful to continuously manage the assets of the Fund
in a manner consistent with its investment objective.
Under the terms of the Management Agreement, in addition to managing the
Fund's investments, the Investment Manager maintains certain of the Fund's
books and records and furnishes, at its own expense, the office space,
facilities, equipment, clerical help, bookkeeping and certain legal services as
the Fund may reasonably require in the conduct of its business, including the
preparation of prospectuses, proxy statements and reports required to be filed
with federal and state securities commissions (except insofar as the
participation or assistance of independent accountants and attorneys is, in the
opinion of the Investment Manager, necessary or desirable). In addition, the
Investment Manager pays the salaries of all personnel, including officers of
the Fund, who are employees of the Investment Manager. The Investment Manager
also bears the cost of telephone service, heat, light, power and other
utilities provided to the Fund.
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Expenses not expressly assumed by the Investment Manager under the
Management Agreement or by the Distributor, will be paid by the Fund. These
expenses will be allocated among the four Classes of shares pro rata based on
the net assets of the Fund attributable to each Class, except as described
below. Such expenses include, but are not limited to: expenses of the Plan of
Distribution pursuant to Rule 12b-1; charges and expenses of any registrar,
custodian, stock transfer and dividend disbursing agent; brokerage commissions;
taxes; engraving and printing share certificates; registration costs of the
Fund and its shares under federal and state securities laws; the cost and
expense of printing, including typesetting, and distributing prospectuses of
the Fund and supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing of
proxy statements and reports to shareholders; fees and travel expenses of
Trustees or members of any advisory board or committee who are not employees of
the Investment Manager or any corporate affiliate of the Investment Manager;
all expenses incident to any dividend, withdrawal or redemption options;
charges and expenses of any outside service used for pricing of the Fund's
shares; fees and expenses of legal counsel, including counsel to the Trustees
who are not interested persons of the Fund or of the Investment Manager (not
including compensation or expenses of attorneys who are employees of the
Investment Manager); fees and expenses of the Fund's independent accountants;
membership dues of industry associations; interest on Fund borrowings; postage;
insurance premiums on property or personnel (including officers and Trustees)
of the Fund which inure to its benefit; extraordinary expenses (including, but
not limited to, legal claims and liabilities and litigation costs and any
indemnification relating thereto); and all other costs of the Fund's operation.
The 12b-1 fees relating to a particular Class will be allocated directly to
that Class. In addition, other expenses associated with a particular Class
(except advisory or custodial fees) may be allocated directly to that Class,
provided that such expenses are reasonably identified as specifically
attributable to that Class and the direct allocation to that Class is approved
by the Trustees.
The Management Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Investment Manager is not liable to the Fund or any
of its investors for any act or omission by the Investment Manager or for any
losses sustained by the Fund or its investors.
The Management Agreement will remain in effect from year to year, provided
continuance of the Management Agreement is approved at least annually by the
vote of the holders of a majority, as defined in the Investment Company Act, of
the outstanding shares of the Fund, or by the Trustees; provided that in either
event such continuance is approved annually by the vote of a majority of the
Trustees, including a majority of the independent Trustees.
D. DEALER REALLOWANCES
Upon notice to selected broker-dealers, the Distributor may reallow up to
the full applicable front-end sales charge during periods specified in such
notice. During periods when 90% or more of the sales charge is reallowed, such
selected broker-dealers may be deemed to be underwriters as that term is
defined in the Securities Act.
E. RULE 12b-1 PLAN
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under
the Investment Company Act (the "Plan") pursuant to which each Class, other
than Class D, pays the Distributor compensation accrued daily and payable
monthly at the annual rate of 0.25% of the average daily net assets of Class A
and 1.0% of the average daily net assets of each of Class B and Class C.
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The Distributor also receives the proceeds of front-end sales charges
("FSCs") and of contingent deferred sales charges ("CDSCs") imposed on certain
redemptions of shares, which are separate and apart from payments made pursuant
to the Plan. The Distributor has informed the Fund that it and/or Dean Witter
Reynolds received the proceeds of CDSCs and FSCs, for the fiscal year ended
February 29, 2000, and for the period September 28, 1998 (commencement of
operations) through February 28, 1999, in approximate amounts as provided in
the table below (the Distributor did not retain any of these amounts).
FOR THE PERIOD
SEPTEMBER 28, 1998
THROUGH
2000 FEBRUARY 28, 1999
------------------------ ---------------------
Class A ......... FSCs:(1) $ 34,477 FSCs: $21,224
CDSCs: $ 4,005 CDSCs: $ 0
Class B ......... CDSCs: $328,400 CDSCs: $34,119
Class C ......... CDSCs: $ 8,903 CDSCs: $ 3,891
- ----------
(1) FSCs apply to Class A only.
The Distributor has informed the Fund that the entire fee payable by Class
A and a portion of the fees payable by each of Class B and Class C each year
pursuant to the Plan equal to 0.25% of such Class' average daily net assets are
currently each characterized as a "service fee" under the Rules of the National
Association of Securities Dealers, Inc. (of which the Distributor is a member).
The "service fee" is a payment made for personal service and/or the maintenance
of shareholder accounts. The remaining portion of the Plan fees payable by a
Class, if any, is characterized as an "asset-based sales charge" as such is
defined by the Rules of the Association.
Under the Plan and as required by Rule 12b-1, the Trustees receive and
review promptly after the end of each calendar quarter a written report
provided by the Distributor of the amounts expended under the Plan and the
purpose for which such expenditures were made. For the fiscal year ended
February 29, 2000, Class A, Class B and Class C shares of the Fund accrued
payments under the Plan amounting to $10,747, $1,040,513 and $87,813,
respectively, which amounts are equal to 0.25%, 1.00% and 1.00% of the average
daily net assets of Class A, Class B and Class C, respectively, for the fiscal
year.
The Plan was adopted in order to permit the implementation of the Fund's
method of distribution. Under this distribution method the Fund offers four
Classes, each with a different distribution arrangement.
With respect to Class A shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from proceeds of the FSC, commissions for
the sale of Class A shares, currently a gross sales credit of up to 5.0% of the
amount sold (except as provided in the following sentence) and an annual
residual commission, currently a residual of up to 0.25% of the current value
of the respective accounts for which they are the Financial Advisors or dealers
of record in all cases. On orders of $1 million or more (for which no sales
charge was paid) or net asset value purchases by employer-sponsored employee
benefit plans, whether or not qualified under the Internal Revenue Code, for
which the Transfer Agent serves as Trustee or Dean Witter Reynolds Retirement
Plan Services serves as recordkeeper pursuant to a written Recordkeeping
Services Agreement ("MSDW Eligible Plans"), the Investment Manager compensates
Financial Advisors by paying them, from its own funds, a gross sales credit of
1.0% of the amount sold.
With respect to Class B shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class B shares, currently a gross sales credit of up to 5.0% of the amount
sold (except as provided in the following sentence) and an annual residual
commission, currently a residual of up to 0.25% of the current value (not
including reinvested dividends or distributions) of the amount sold in all
cases. In the case of Class B shares purchased by MSDW Eligible Plans, Dean
Witter Reynolds compensates its Financial Advisors by paying them, from its own
funds, a gross sales credit of 3.0% of the amount sold.
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<PAGE>
With respect to Class C shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class C shares, currently a gross sales credit of up to 1.0% of the amount
sold and an annual residual commission, currently up to 1.0% of the current
value of the respective accounts for which they are the Financial Advisors of
record.
With respect to Class D shares other than shares held by participants in
the Investment Manager's mutual fund asset allocation program, the Investment
Manager compensates Dean Witter Reynolds's Financial Advisors by paying them,
from its own funds, commissions for the sale of Class D shares, currently a
gross sales credit of up to 1.0% of the amount sold. There is a chargeback of
100% of the amount paid if the Class D shares are redeemed in the first year
and a chargeback of 50% of the amount paid if the Class D shares are redeemed
in the second year after purchase. The Investment Manager also compensates Dean
Witter Reynolds's Financial Advisors by paying them, from its own funds, an
annual residual commission, currently up to 0.10% of the current value of the
respective accounts for which they are the Financial Advisors of record (not
including accounts of participants in the Investment Manager's mutual fund
asset allocation program).
The gross sales credit is a charge which reflects commissions paid by Dean
Witter Reynolds to its Financial Advisors and Dean Witter Reynolds's
Fund-associated distribution-related expenses, including sales compensation,
and overhead and other branch office distribution-related expenses including
(a) the expenses of operating Dean Witter Reynolds's branch offices in
connection with the sale of Fund shares, including lease costs, the salaries
and employee benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies; (b) the costs of
client sales seminars; (c) travel expenses of mutual fund sales coordinators to
promote the sale of Fund shares; and (d) other expenses relating to branch
promotion of Fund sales.
The Investment Manager pays a retention fee to Financial Advisors at an
annual rate of 0.05% of the value of shares of the Fund sold after January 1,
2000 and held for at least one year. Shares purchased through the reinvestment
of dividends will be eligible for a retention fee, provided that such dividends
were earned on shares otherwise eligible for a retention fee payment. Shares
owned in variable annuities, closed-end fund shares and shares held in 401(k)
plans where the Transfer Agent or Dean Witter Reynolds's Retirement Plan
Services is either recordkeeper or trustee are not eligible for a retention
fee.
For the first year only, the retention fee is paid on any shares of the
Fund sold after January 1, 2000 and held by shareholders on December 31, 2000.
The retention fees are paid by the Investment Manager from its own assets,
which may include profits from investment management fees payable under the
Management Agreement, as well as from borrowed funds.
The distribution fee that the Distributor receives from the Fund under the
Plan, in effect, offsets distribution expenses incurred under the Plan on
behalf of the Fund and, in the case of Class B shares, opportunity costs, such
as the gross sales credit and an assumed interest charge thereon ("carrying
charge"). These expenses may include the cost of Fund-related educational
and/or business-related trips or payment of Fund-related educational and/or
promotional expenses of Financial Advisors. In the Distributor's reporting of
the distribution expenses to the Fund, in the case of Class B shares, such
assumed interest (computed at the "broker's call rate") has been calculated on
the gross credit as it is reduced by amounts received by the Distributor under
the Plan and any contingent deferred sales charges received by the Distributor
upon redemption of shares of the Fund. No other interest charge is included as
a distribution expense in the Distributor's calculation of its distribution
costs for this purpose. The broker's call rate is the interest rate charged to
securities brokers on loans secured by exchange-listed securities.
The Fund is authorized to reimburse expenses incurred or to be incurred in
promoting the distribution of the Fund's Class A and Class C shares and in
servicing shareholder accounts. Reimbursement will be made through payments at
the end of each month. The amount of each monthly payment may in no event
exceed an amount equal to a payment at the annual rate of 0.25%, in the case of
Class A, and 1.0%, in the case of Class C, of the average net assets of the
respective Class during the month. No interest or other financing charges, if
any, incurred on any distribution expenses on behalf
20
<PAGE>
of Class A and Class C will be reimbursable under the Plan. With respect to
Class A, in the case of all expenses other than expenses representing the
service fee, and, with respect to Class C, in the case of all expenses other
than expenses representing a gross sales credit or a residual to Financial
Advisors and other authorized financial representatives, such amounts shall be
determined at the beginning of each calendar quarter by the Trustees,
including, a majority of the Independent Trustees. Expenses representing the
service fee (for Class A) or a gross sales credit or a residual to Financial
Advisors and other authorized financial representatives (for Class C) may be
reimbursed without prior determination. In the event that the Distributor
proposes that monies shall be reimbursed for other than such expenses, then in
making quarterly determinations of the amounts that may be reimbursed by the
Fund, the Distributor will provide and the Trustees will review a quarterly
budget of projected distribution expenses to be incurred on behalf of the Fund,
together with a report explaining the purposes and anticipated benefits of
incurring such expenses. The Trustees will determine which particular expenses,
and the portions thereof, that may be borne by the Fund, and in making such a
determination shall consider the scope of the Distributor's commitment to
promoting the distribution of the Fund's Class A and Class C shares.
Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the fiscal year ended February 29, 2000 to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $5,761,072 on behalf of Class B since the inception of the Plan. It
is estimated that this amount was spent in approximately the following ways:
(i) 13.96% ($804,175)-advertising and promotional expenses; (ii) 2.42%
($139,671)-printing of prospectuses for distribution to other than current
shareholders; and (iii) 83.62% ($4,817,226)-other expenses, including the gross
sales credit and the carrying charge, of which 4.50% ($216,540) represents
carrying charges, 39.54% ($1,904,684) represents commission credits to Dean
Witter Reynolds branch offices and other selected broker-dealers for payments
of commissions to Financial Advisors and other authorized financial
representatives, and 55.96% ($2,696,002) represents overhead and other branch
office distribution-related expenses. The amounts accrued by Class A and a
portion of the amounts accrued by Class C under the Plan during the fiscal year
ended February 29, 2000 were service fees. The remainder of the amounts accrued
by Class C were for expenses which relate to compensation of sales personnel
and associated overhead expenses.
In the case of Class B shares, at any given time, the expenses of
distributing shares of the Fund may be more or less than the total of (i) the
payments made by the Fund pursuant to the Plan; and (ii) the proceeds of CDSCs
paid by investors upon redemption of shares. For example, if $1 million in
expenses in distributing Class B shares of the Fund had been incurred and
$750,000 had been received as described in (i) and (ii) above, the excess
expense would amount to $250,000. The Distributor has advised the Fund that in
the case of Class B shares the excess distribution expenses, including the
carrying charge designed to approximate the opportunity costs incurred by Dean
Witter Reynolds which arise from it having advanced monies without having
received the amount of any sales charges imposed at the time of sale of the
Fund's Class B shares, totaled $4,107,961 as of February 29, 2000 (the end of
the Fund's fiscal year), which was equal to 0.23% of the net assets of Class B
on such date. Because there is no requirement under the Plan that the
Distributor be reimbursed for all distribution expenses with respect to Class B
shares or any requirement that the Plan be continued from year to year, this
excess amount does not constitute a liability of the Fund. Although there is no
legal obligation for the Fund to pay expenses incurred in excess of payments
made to the Distributor under the Plan and the proceeds of CDSCs paid by
investors upon redemption of shares, if for any reason the Plan is terminated,
the Trustees will consider at that time the manner in which to treat such
expenses. Any cumulative expenses incurred, but not yet recovered through
distribution fees or CDSCs, may or may not be recovered through future
distribution fees or CDSCs.
In the case of Class A and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales commission credited to Morgan Stanley Dean Witter Financial
Advisors and other authorized financial representatives at the time of sale may
be reimbursed in the subsequent calendar year. The Distributor has advised the
Fund that there were no such expenses that may be
21
<PAGE>
reimbursed in the subsequent year in the case of Class A or Class C at December
31, 1999 (end of the calendar year). No interest or other financing charges
will be incurred on any Class A or Class C distribution expenses incurred by
the Distributor under the Plan or on any unreimbursed expenses due to the
Distributor pursuant to the Plan.
No interested person of the Fund nor any Independent Trustee has any
direct financial interest in the operation of the Plan except to the extent
that the Distributor, the Investment Manager, Dean Witter Reynolds, MSDW
Services Company or certain of their employees may be deemed to have such an
interest as a result of benefits derived from the successful operation of the
Plan or as a result of receiving a portion of the amounts expended thereunder
by the Fund.
On an annual basis the Trustees, including a majority of the Independent
Trustees, consider whether the Plan should be continued. Prior to approving the
last continuation of the Plan, the Trustees requested and received from the
Distributor and reviewed all the information which they deemed necessary to
arrive at an informed determination. In making their determination to continue
the Plan, the Trustees considered: (1) the Fund's experience under the Plan and
whether such experience indicates that the Plan is operating as anticipated;
(2) the benefits the Fund had obtained, was obtaining and would be likely to
obtain under the Plan, including that: (a) the Plan is essential in order to
give Fund investors a choice of alternatives for payment of distribution and
service charges and to enable the Fund to continue to grow and avoid a pattern
of net redemptions which, in turn, are essential for effective investment
management; and (b) without the compensation to individual brokers and the
reimbursement of distribution and account maintenance expenses of Dean Witter
Reynolds's branch offices made possible by the 12b-1 fees, Dean Witter Reynolds
could not establish and maintain an effective system for distribution,
servicing of Fund shareholders and maintenance of shareholder accounts; and (3)
what services had been provided and were continuing to be provided under the
Plan to the Fund and its shareholders. Based upon their review, the Trustees,
including each of the Independent Trustees, determined that continuation of the
Plan would be in the best interest of the Fund and would have a reasonable
likelihood of continuing to benefit the Fund and its shareholders. In the
Trustees' quarterly review of the Plan, they will consider its continued
appropriateness and the level of compensation provided therein.
The Plan may not be amended to increase materially the amount to be spent
for the services described therein without approval by the shareholders of the
affected Class or Classes of the Fund, and all material amendments to the Plan
must also be approved by the Trustees in the manner described above. The Plan
may be terminated at any time, without payment of any penalty, by vote of a
majority of the Independent Trustees or by a vote of a majority of the
outstanding voting securities of the Fund (as defined in the Investment Company
Act) on not more than thirty days' written notice to any other party to the
Plan. So long as the Plan is in effect, the election and nomination of
Independent Trustees shall be committed to the discretion of the Independent
Trustees.
F. OTHER SERVICE PROVIDERS
(1) TRANSFER AGENT/DIVIDEND-PAYING AGENT
Morgan Stanley Dean Witter Trust FSB is the Transfer Agent for the Fund's
shares and the Dividend Disbursing Agent for payment of dividends and
distributions on Fund shares and Agent for shareholders under various
investment plans. The principal business address of the Transfer Agent is
Harborside Financial Center, Plaza Two, Jersey City, NJ 07311.
(2) CUSTODIAN AND INDEPENDENT ACCOUNTANTS
The Bank of New York, 100 Church Street, New York, NY 10007, is the
Custodian of the Fund's assets. Any of the Fund's cash balances with the
Custodian in excess of $100,000 are unprotected by federal deposit insurance.
These balances may, at times, be substantial.
PricewaterhouseCoopers LLP, serves as the independent accountants of the
Fund. The independent accountants are responsible for auditing the annual
financial statements of the Fund.
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(3) AFFILIATED PERSONS
The Transfer Agent is an affiliate of the Investment Manager, and of the
Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer
Agent's responsibilities include maintaining shareholder accounts, disbursing
cash dividends and reinvesting dividends, processing account registration
changes, handling purchase and redemption transactions, mailing prospectuses
and reports, mailing and tabulating proxies, processing share certificate
transactions, and maintaining shareholder records and lists. For these
services, the Transfer Agent receives a per shareholder account fee from the
Fund and is reimbursed for its out-of-pocket expenses in connection with such
services.
G. CODES OF ETHICS
The Fund, the Investment Manager and the Distributor have each adopted a
Code of Ethics pursuant to Rule 17j-1 under the Investment Company Act. The
Codes of Ethics are designed to detect and prevent improper personal trading.
The Codes of Ethics permit personnel subject to the Codes to invest in
securities, including securities that may be purchased, sold or held by the
Fund, subject to a number of restrictions and controls including prohibitions
against purchases of securities in an Initial Public Offering and a preclerance
requirement with respect to personal securities transactions.
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
- --------------------------------------------------------------------------------
A. BROKERAGE TRANSACTIONS
Subject to the general supervision of the Trustees, the Investment Manager
is responsible for decisions to buy and sell securities for the Fund, the
selection of brokers and dealers to effect the transactions, and the
negotiation of brokerage commissions, if any. Purchases and sales of securities
on a stock exchange are effected through brokers who charge a commission for
their services. In the over-the-counter market, securities are generally traded
on a "net" basis with dealers acting as principal for their own accounts
without a stated commission, although the price of the security usually
includes a profit to the dealer. The Fund also expects that securities will be
purchased at times in underwritten offerings where the price includes a fixed
amount of compensation, generally referred to as the underwriter's concession
or discount. Futures transactions will usually be effected through a broker and
a commission will be charged. On occasion, the Fund may also purchase certain
money market instruments directly from an issuer, in which case no commissions
or discounts are paid.
For the period September 28, 1998 (commencement of operations) through
February 28, 1999 and for the fiscal year ended February 29, 2000, the Fund
paid a total of $44,371 and $50,346, respectively, in brokerage commissions.
B. COMMISSIONS
Pursuant to an order of the SEC, the Fund may effect principal
transactions in certain money market instruments with Dean Witter Reynolds. The
Fund will limit its transactions with Dean Witter Reynolds to U.S. Government
and government agency securities, bank money instruments (i.e., certificates of
deposit and bankers' acceptances) and commercial paper. The transactions will
be effected with Dean Witter Reynolds only when the price available from Dean
Witter Reynolds is better than that available from other dealers.
During the period September 28, 1998 (commencement of operations) through
February 28, 1999 and for the fiscal year ended February 29, 2000, the Fund did
not effect any principal transactions with Dean Witter Reynolds.
Brokerage transactions in securities listed on exchanges or admitted to
unlisted trading privileges may be effected through Dean Witter Reynolds,
Morgan Stanley & Co. and other affiliated brokers and dealers. In order for an
affiliated broker or dealer to effect any portfolio transactions on an exchange
for the Fund, the commissions, fees or other remuneration received by the
affiliated broker or dealer must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers
23
<PAGE>
in connection with comparable transactions involving similar securities being
purchased or sold on an exchange during a comparable period of time. This
standard would allow the affiliated broker or dealer to receive no more than
the remuneration which would be expected to be received by an unaffiliated
broker in a commensurate arm's-length transaction. Furthermore, the Trustees,
including the Independent Trustees, have adopted procedures which are
reasonably designed to provide that any commissions, fees or other remuneration
paid to an affiliated broker or dealer are consistent with the foregoing
standard. The Fund does not reduce the management fee it pays to the Investment
Manager by any amount of the brokerage commissions it may pay to an affiliated
broker or dealer.
During the period September 28, 1998 (commencement of operations) through
February 28, 1999 and for the fiscal year ended February 29, 2000, the Fund did
not pay any brokerage commissions to Dean Witter Reynolds.
During the period September 28, 1998 (commencement of operations) through
February 28, 1999 and for the fiscal year ended February 29, 2000, the Fund did
not pay any brokerage commissions to Morgan Stanley & Co.
C. BROKERAGE SELECTION
The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with this
policy, when securities transactions are effected on a stock exchange, the
Fund's policy is to pay commissions which are considered fair and reasonable
without necessarily determining that the lowest possible commissions are paid
in all circumstances. The Fund believes that a requirement always to seek the
lowest possible commission cost could impede effective portfolio management and
preclude the Fund and the Investment Manager from obtaining a high quality of
brokerage and research services. In seeking to determine the reasonableness of
brokerage commissions paid in any transaction, the Investment Manager relies
upon its experience and knowledge regarding commissions generally charged by
various brokers and on its judgment in evaluating the brokerage and research
services received from the broker effecting the transaction. These
determinations are necessarily subjective and imprecise, as in most cases an
exact dollar value for those services is not ascertainable.
In seeking to implement the Fund's policies, the Investment Manager
effects transactions with those brokers and dealers who the Investment Manager
believes provide the most favorable prices and are capable of providing
efficient executions. If the Investment Manager believes the prices and
executions are obtainable from more than one broker or dealer, it may give
consideration to placing portfolio transactions with those brokers and dealers
who also furnish research and other services to the Fund or the Investment
Manager. The services may include, but are not limited to, any one or more of
the following: information as to the availability of securities for purchase or
sale; statistical or factual information or opinions pertaining to investment;
wire services; and appraisals or evaluations of portfolio securities. The
information and services received by the Investment Manager from brokers and
dealers may be of benefit to the Investment Manager in the management of
accounts of some of its other clients and may not in all cases benefit the Fund
directly.
The Investment Manager currently serves as investment manager to a number
of clients, including other investment companies, and may in the future act as
investment manager or advisor to others. It is the practice of the Investment
Manager to cause purchase and sale transactions to be allocated among the Fund
and others whose assets it manages in such manner as it deems equitable. In
making such allocations among the Fund and other client accounts, various
factors may be considered, including the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held and the opinions of the persons responsible for managing the
portfolios of the Fund and other client accounts. In the case of certain
initial and secondary public offerings, the Investment Manager utilizes a pro
rata allocation process based on the size of the Morgan Stanley Dean Witter
Funds involved and the number of shares available from the public offering.
24
<PAGE>
D. DIRECTED BROKERAGE
During the fiscal year ended February 29, 2000, the Fund did not pay any
brokerage commissions to brokers because of research services provided.
E. REGULAR BROKER-DEALERS
During the fiscal year ended February 29, 2000, the Fund did not purchase
securities issued by brokers or dealers that were among the ten brokers or ten
dealers that executed transactions for or with the Fund in the largest dollar
amounts during the year.
VII. CAPITAL STOCK AND OTHER SECURITIES
- --------------------------------------------------------------------------------
The shareholders of the Fund are entitled to a full vote for each full
share of beneficial interest held. The Fund is authorized to issue an unlimited
number of shares of beneficial interest. All shares of beneficial interest of
the Fund are of $0.01 par value and are equal as to earnings, assets and voting
privileges except that each Class will have exclusive voting privileges with
respect to matters relating to distribution expenses borne solely by such Class
or any other matter in which the interests of one Class differ from the
interests of any other Class. In addition, Class B shareholders will have the
right to vote on any proposed material increase in Class A's expenses, if such
proposal is submitted separately to Class A shareholders. Also, Class A, Class
B and Class C bear expenses related to the distribution of their respective
shares.
The Fund's Declaration of Trust permits the Trustees to authorize the
creation of additional series of shares (the proceeds of which would be
invested in separate, independently managed portfolios) and additional Classes
of shares within any series. The Trustees have not presently authorized any
such additional series or Classes of shares other than as set forth in the
Prospectus.
The Fund is not required to hold annual meetings of shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the Investment Company Act or the Declaration of
Trust. Under certain circumstances the Trustees may be removed by action of the
Trustees. In addition, under certain circumstances the shareholders may call a
meeting to remove Trustees and the Fund is required to provide assistance in
communicating with shareholders about such a meeting. The voting rights of
shareholders are not cumulative, so that holders of more than 50 percent of the
shares voting can, if they choose, elect all Trustees being selected, while the
holders of the remaining shares would be unable to elect any Trustees.
Under Massachusetts law, shareholders of a business trust may, under
certain limited circumstances, be held personally liable as partners for the
obligations of the Fund. However, the Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Fund,
requires that notice of such Fund obligations include such disclaimer, and
provides for indemnification out of the Fund's property for any shareholder
held personally liable for the obligations of the Fund. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund itself would be unable to meet its
obligations. Given the above limitations on shareholder personal liability, and
the nature of the Fund's assets and operations, the possibility of the Fund
being unable to meet its obligations is remote and thus, in the opinion of
Massachusetts counsel to the Fund, the risk to Fund shareholders of personal
liability is remote.
The Trustees themselves have the power to alter the number and the terms
of office of the Trustees (as provided for in the Declaration of Trust), and
they may at any time lengthen or shorten their own terms or make their terms of
unlimited duration and appoint their own successors, provided that always at
least a majority of the Trustees has been elected by the shareholders of the
Fund.
VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
- --------------------------------------------------------------------------------
A. PURCHASE/REDEMPTION OF SHARES
Information concerning how Fund shares are offered to the public (and how
they are redeemed and exchanged) is provided in the Fund's Prospectus.
25
<PAGE>
TRANSFER AGENT AS AGENT. With respect to the redemption or repurchase of
Fund shares, the application of proceeds to the purchase of new shares in the
Fund or any other Morgan Stanley Dean Witter Funds and the general
administration of the exchange privilege, the Transfer Agent acts as agent for
the Distributor and for the shareholder's authorized broker-dealer, if any, in
the performance of such functions. With respect to exchanges, redemptions or
repurchases, the Transfer Agent shall be liable for its own negligence and not
for the default or negligence of its correspondents or for losses in transit.
The Fund shall not be liable for any default or negligence of the Transfer
Agent, the Distributor or any authorized broker-dealer.
The Distributor and any authorized broker-dealer have appointed the
Transfer Agent to act as their agent in connection with the application of
proceeds of any redemption of Fund shares to the purchase of shares of any
other Morgan Stanley Dean Witter Fund and the general administration of the
exchange privilege. No commission or discounts will be paid to the Distributor
or any authorized broker-dealer for any transactions pursuant to the exchange
privilege.
TRANSFERS OF SHARES. In the event a shareholder requests a transfer of
Fund shares to a new registration, the shares will be transferred without sales
charge at the time of transfer. With regard to the status of shares which are
either subject to a CDSC or free of such charge (and with regard to the length
of time shares subject to the charge have been held), any transfer involving
less than all of the shares in an account will be made on a pro rata basis
(that is, by transferring shares in the same proportion that the transferred
shares bear to the total shares in the account immediately prior to the
transfer). The transferred shares will continue to be subject to any applicable
CDSC as if they had not been so transferred.
B. OFFERING PRICE
The Fund's Class B, Class C and Class D shares are offered at net asset
value per share and the Class A shares are offered at net asset value per share
plus any applicable FSC which is distributed among the Fund's Distributor, Dean
Witter Reynolds and other authorized dealers as described in Section "V.
Investment Management and Other Services-E. Rule 12b-1 Plan."
The price of Fund shares, called "net asset value," is based on the value
of the Fund's portfolio securities. Net asset value per share of each Class is
calculated by dividing the value of the portion of the Fund's securities and
other assets attributable to that Class, less the liabilities attributable to
that Class, by the number of shares of that Class outstanding. The assets of
each Class of shares are invested in a single portfolio. The net asset value of
each Class, however, will differ because the Classes have different ongoing
fees.
In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
stock exchange is valued at its latest sale price on that exchange, prior to
the time when assets are valued; if there were no sales that day, the security
is valued at the latest bid price (in cases where a security is traded on more
than one exchange, the security is valued on the exchange designated as the
primary market pursuant to procedures adopted by the Trustees); and (2) all
other portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest bid price. When market quotations
are not readily available, including circumstances under which it is determined
by the Investment Manager that sale or bid prices are not reflective of a
security's market value, portfolio securities are valued at their fair value as
determined in good faith under procedures established by and under the general
supervision of the Fund's Trustees. For valuation purposes, quotations of
foreign portfolio securities, other assets and liabilities and forward
contracts stated in foreign currency are translated into U.S. dollar
equivalents at the prevailing market rates prior to the close of the New York
Stock Exchange.
Short-term debt securities with remaining maturities of sixty days or less
at the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees.
26
<PAGE>
Futures are valued at the latest sale price on the commodities exchange on
which they trade unless the Trustees determine such price does not reflect
their market value, in which case they will be valued at their fair value as
determined in good faith under procedures established by and under the
supervision of the Trustees.
IX. TAXATION OF THE FUND AND SHAREHOLDERS
- --------------------------------------------------------------------------------
The Fund generally will make two basic types of distributions: ordinary
dividends and long-term capital gain distributions. These two types of
distributions are reported differently on a shareholder's income tax return and
they are also subject to different rates of tax. The tax treatment of the
investment activities of the Fund will affect the amount and timing and
character of the distributions made by the Fund. The following discussion is
only a summary of certain tax considerations generally affecting the Fund and
shareholders of the Fund, and is not intended as a substitute for careful tax
planning. Tax issues relating to the Fund are not generally a consideration for
shareholders such as tax-exempt entities and tax-advantaged retirement vehicles
such as an IRA or 401(k) plan. Shareholders are urged to consult their own tax
professionals regarding specific questions as to federal, state or local taxes.
INVESTMENT COMPANY TAXATION. The Fund intends to remain qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986. As such, the Fund will not be subject to federal income tax on its net
investment income and capital gains, if any, to the extent that it distributes
such income and capital gains to its shareholders.
The Fund generally intends to distribute sufficient income and gains so
that the Fund will not pay corporate income tax on its earnings. The Fund also
generally intends to distribute to its shareholders in each calendar year a
sufficient amount of ordinary income and capital gains to avoid the imposition
of a 4% excise tax. However, the Fund may instead determine to retain all or
part of any net long-term capital gains in any year for reinvestment. In such
event, the Fund will pay federal income tax (and possibly excise tax) on such
retained income gains.
Gains or losses on sales of securities by the Fund will be long-term
capital gains or losses if the securities have a tax holding period of more
than one year. Gains or losses on the sale of securities with a tax holding
period of one year or less will be short-term gains or losses.
Gains or losses on the Fund's transactions in listed futures generally are
treated as 60% long-term and 40% short-term. When the Fund engages in futures
transactions, various tax rules may accelerate or defer recognition of certain
gains and losses, change the character of certain gains or losses, or alter the
holding period of other investments held by the Fund. The application of these
rules would therefore also affect the amount, timing and character of
distributions made by the Fund.
Under certain tax rules, the Fund may be required to accrue a portion of
any discount at which certain securities are purchased as income each year even
though the Fund receives no payments in cash on the security during the year.
To the extent that the Fund invests in such securities, it would be required to
pay out such accrued discount as an income distribution in each year in order
to avoid taxation at the Fund level. Such distributions will be made from the
available cash of the Fund or by liquidation of portfolio securities if
necessary. If a distribution of cash necessitates the liquidation of portfolio
securities, the Investment Manager will select which securities to sell. The
Fund may realize a gain or loss from such sales. In the event the Fund realizes
net capital gains from such transactions, its shareholders may receive a larger
capital gain distribution, if any, than they would in the absence of such
transactions.
TAXATION OF DIVIDENDS AND DISTRIBUTIONS. Shareholders normally will have
to pay federal income taxes, and any state and/or local income taxes, on the
dividends and other distributions they receive from the Fund. Such dividends
and distributions, to the extent that they are derived from net investment
income or short-term capital gains, are taxable to the shareholder as ordinary
income regardless of whether the shareholder receives such payments in
additional shares or in cash.
Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder
has held the Fund's shares and regardless of whether the distribution is
received in additional shares or in cash. The maximum tax rate on long-term
capital gains realized by non-corporate shareholders is 20%.
27
<PAGE>
Shareholders are generally taxed on any ordinary dividend or capital gain
distributions from the Fund in the year they are actually distributed. However,
if any such dividends or distributions are declared in October, November or
December and paid in January then such amounts will be treated for tax purposes
as received by the shareholders on December 31, to shareholders of record of
such month.
Subject to certain exceptions, a corporate shareholder may be eligible for
a 70% dividends received deduction to the extent that the Fund earns and
distributes qualifying dividends from its investments. Distributions of net
capital gains by the Fund will not be eligible for the dividends received
deduction.
Shareholders who are not citizens or residents of the United States and
certain foreign entities may be subject to withholding of United States tax on
distributions made by the Fund of investment income and short-term capital
gains.
After the end of each calendar year, shareholders will be sent information
on their dividends and capital gain distributions for tax purposes, including
the portion taxable as ordinary income, the portion taxable as long-term
capital gains and the amount of any dividends eligible for the federal
dividends received deduction for corporations.
PURCHASES AND REDEMPTIONS AND EXCHANGES OF FUND SHARES. Any dividend or
capital gains distribution received by a shareholder from any investment
company will have the effect of reducing the net asset value of the
shareholder's stock in that company by the exact amount of the dividend or
capital gains distribution. Furthermore, such dividends and capital gains
distributions are subject to federal income taxes. If the net asset value of
the shares should be reduced below a shareholder's cost as a result of the
payment of dividends or the distribution of realized long-term capital gains,
such payment or distribution would be in part a return of the shareholder's
investment but nonetheless would be taxable to the shareholder. Therefore, an
investor should consider the tax implications of purchasing Fund shares
immediately prior to a distribution record date.
In general, a sale of shares results in capital gain or loss, and for
individual shareholders, is taxable at a federal rate dependent upon the length
of time the shares were held. A redemption of a shareholder's Fund shares is
normally treated as a sale for tax purposes. Fund shares held for a period of
one year or less will, for tax purposes, generally result in short-term gains
or losses and those held for more than one year generally result in long-term
gain or loss. Under current law, the maximum tax rate on long-term capital
gains realized by non-corporate shareholders is 20%. Any loss realized by
shareholders upon a sale or redemption of shares within six months of the date
of their purchase will be treated as a long-term capital loss to the extent of
any distributions of net long-term capital gains with respect to such shares
during the six-month period.
Gain or loss on the sale or redemption of shares in the Fund is measured
by the difference between the amount received and the tax basis of the shares.
Shareholders should keep records of investments made (including shares acquired
through reinvestment of dividends and distributions) so they can compute the
tax basis of their shares. Under certain circumstances a shareholder may
compute and use an average cost basis in determining the gain or loss on the
sale or redemption of shares.
Exchanges of Fund shares for shares of another fund, including shares of
other continuously offered Morgan Stanley Dean Witter Funds, are also subject
to similar tax treatment. Such an exchange is treated for tax purposes as a
sale of the original shares in the first fund, followed by the purchase of
shares in the second fund.
If a shareholder realizes a loss on the redemption or exchange of a fund's
shares and reinvests in that fund's shares within 30 days before or after the
redemption or exchange, the transactions may be subject to the "wash sale"
rules, resulting in a postponement of the recognition of such loss for tax
purposes.
X. UNDERWRITERS
- --------------------------------------------------------------------------------
The Fund's shares are offered to the public on a continuous basis. The
Distributor, as the principal underwriter of the shares, has certain
obligations under the Distribution Agreement concerning the distribution of the
shares. These obligations and the compensation the Distributor receives are
described above in the sections titled "Principal Underwriter" and "Rule 12b-1
Plan."
28
<PAGE>
XI. CALCULATION OF PERFORMANCE DATA
- --------------------------------------------------------------------------------
From time to time, the Fund may quote its "total return" in advertisements
and sales literature. These figures are computed separately for Class A, Class
B, Class C and Class D shares. The Fund's "average annual total return"
represents an annualization of the Fund's total return over a particular period
and is computed by finding the annual percentage rate which will result in the
ending redeemable value of a hypothetical $1,000 investment made at the
beginning of a one, five or ten year period, or for the period from the date of
commencement of operations, if shorter than any of the foregoing. The ending
redeemable value is reduced by any contingent deferred sales charge ("CDSC") at
the end of the one, five, ten year or other period. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involved a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment (which in the case of Class A shares is reduced by the Class A
initial sales charge), taking a root of the quotient (which the root is
equivalent to the number of years in the period) and subtracting 1 from the
result. The average annual total returns of Class A for the one year and the
life of the Fund (which commenced on September 28, 1998) periods ended February
29, 2000 were 5.65% and 17.01%, respectively. The average annual total returns
of Class B for the one year and the life of the Fund periods ended February 29,
2000 were 5.67% and 18.02%, respectively. The average annual total returns of
Class C for the one year and the life of the Fund periods ended February 29,
2000 were 9.67% and 20.62%, respectively. The average annual total returns of
Class D for the one year and the life of the Fund periods ended February 29,
2000 were 11.84% and 21.84%, respectively.
In addition, the Fund may advertise its total return for each Class over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. These calculations may or may not reflect the
imposition of the maximum front-end sales charge for class A or the deduction
of the CDSC for each of Class B and Class C which, if reflected, would reduce
the performance quoted. For example, the average annual total return of the
Fund may be calculated in the manner described above, but without deduction for
any applicable sales charge. Based on this calculation, the average annual
total returns of Class A for the one year and the life of the Fund periods
ended February 29, 2000 were 11.50% and 21.53%, respectively. The average
annual total returns of Class B for the one year and the life of the Fund
periods ended February 29, 2000 were 10.67% and 20.63%, respectively. The
average annual total returns of Class C for the one year and the life of the
Fund periods ended February 29, 2000 were 10.67% and 20.62%, respectively. The
average annual total returns of Class D for the one year and the life of the
Fund periods ended February 29, 2000 were 11.84% and 21.84%, respectively.
In addition, the Fund may compute its aggregate total return for each
Class for specified periods by determining the aggregate percentage rate which
will result in the ending value of a hypothetical $1,000 investment made at the
beginning of the period. For the purpose of this calculation, it as assumed
that all dividends and distribution are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value (without reduction for any sale charge) by the initial $1,000 investment
and subtracting 1 from the result. Based on the foregoing calculation, the
total returns of Class A for the one year and the life of the Fund periods
ended February 29, 2000 were 11.50% and 31.93%, respectively. The total returns
of Class B for the one year and the life of the Fund periods ended February 29,
2000 were 10.67% and 30.55%, respectively. The total returns of Class C for the
one year and the life of the Fund periods ended February 29, 2000 were 10.67%
and 30.53%, respectively. The total returns of Class D for the one year and the
life of the Fund periods ended February 29, 2000 were 11.84% and 32.40%,
respectively.
The Fund may also advertise the growth of hypothetical investment of
$10,000, $50,000 and $100,000 in each Class of shares of the Fund by adding 1
to the Fund's aggregate total return to date (expressed as a decimal and
without taking into account the effect of any applicable CDSC) and multiplying
by $9,475, $48,000 and $97,000 in the case of Class A (investments of $10,000,
$50,000 and $100,000 adjusted for the initial sales charge) or by $10,000,
$50,000 and $100,000 in the case of each of Class B, Class C and Class D, as
the case may be. Investments of $10,000, $50,000 and $100,000 in each Class at
inception of the Class would have grown to the following amounts at February
29, 2000:
29
<PAGE>
INVESTMENT AT INCEPTION OF:
INCEPTION -----------------------------------
CLASS DATE: $10,000 $50,000 $100,000
- ----------------- ---------- --------- --------- -----------
Class A ......... 9/28/98 $12,500 $63,326 $127,972
Class B ......... 9/28/98 13,055 65,275 130,550
Class C ......... 9/28/98 13,053 65,265 130,530
Class D ......... 9/28/98 13,240 66,200 132,400
The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by recognized organizations.
XII. FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
EXPERTS. The financial statements of the Fund for the fiscal year ended
February 29, 2000 included in this Statement of Additional Information and
incorporated by reference in the Prospectus have been so included and
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
* * * * *
This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the SEC. The complete Registration Statement may be obtained from
the SEC.
30
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 29, 2000
NUMBER OF
SHARES VALUE
- ----------------- -------------------
COMMON STOCKS (96.3%)
Accident & Health Insurance (0.1%)
1,567 Torchmark Corp. ....................... $ 31,046
2,957 UNUMProvident Corp. ................... 39,550
------------
70,596
------------
Advertising (0.3%)
2,318 Interpublic Group of Companies,
Inc. .................................. 93,155
1,914 Omnicom Group, Inc. ................... 180,275
854 Young & Rubicam, Inc. ................. 43,127
------------
316,557
------------
Aerospace (0.6%)
8,794 Boeing Co. ............................ 324,279
1,230 Goodrich (B.F.) Co. (The) ............. 29,443
642 Northrop Grumman Corp. ................ 29,171
5,920 United Technologies Corp. ............. 301,550
------------
684,443
------------
Airlines (0.2%)
1,337 AMR Corp.* ............................ 70,694
1,297 Delta Air Lines, Inc. ................. 59,176
5,912 Southwest Airlines Co. ................ 109,002
------------
238,872
------------
Alcoholic Beverages (0.3%)
5,371 Anheuser-Busch Companies, Inc. ........ 344,415
564 Coors (Adolph) Co. (Class B) .......... 24,745
------------
369,160
------------
Aluminum (0.3%)
2,519 Alcan Aluminium, Ltd. (Canada) ........ 83,127
4,220 Alcoa, Inc. ........................... 289,070
------------
372,197
------------
Apparel (0.0%)
738 Liz Claiborne, Inc. ................... 27,629
------------
Auto Parts: O.E.M. (0.3%)
1,947 Dana Corp. ............................ 41,495
8,622 Delphi Automotive Systems Corp. 143,880
896 Eaton Corp. ........................... 67,144
770 Johnson Controls, Inc. ................ 41,099
1,560 TRW Inc. .............................. 74,880
------------
368,498
------------
Beverages - Non-Alcoholic (1.3%)
20,554 Coca Cola Co.** ....................... 995,584
4,453 Coca-Cola Enterprises Inc. ............ 104,089
15,654 PepsiCo, Inc. ......................... 504,841
------------
1,604,514
------------
NUMBER OF
SHARES VALUE
- ----------------- -------------------
Biotechnology (0.8%)
11,056 Amgen Inc.* ........................... $ 753,190
1,430 Biogen, Inc. .......................... 154,351
------------
907,541
------------
Books/Magazines (0.0%)
708 Harcourt General, Inc. ................ 24,382
528 Meredith Corp. ........................ 15,114
------------
39,496
------------
Broadcasting (0.6%)
8,207 CBS Corp.* ............................ 488,829
3,759 Clear Channel Communications,
Inc.* ................................. 250,443
------------
739,272
------------
Building Materials (0.0%)
505 Owens Corning ......................... 7,322
------------
Building Materials/DIY Chains (1.4%)
24,862 Home Depot, Inc. (The) ................ 1,437,334
4,239 Lowe's Companies, Inc. ................ 201,882
------------
1,639,216
------------
Building Products (0.1%)
253 Armstrong World Industries, Inc. ...... 4,807
5,026 Masco Corp. ........................... 89,840
------------
94,647
------------
Cable Television (0.7%)
9,367 Comcast Corp. (Class A Special)* ...... 398,097
5,098 MediaOne Group, Inc.* ................. 400,193
------------
798,290
------------
Casino/Gambling (0.0%)
2,042 Harrah's Entertainment, Inc.* ......... 39,053
------------
Cellular Telephone (0.8%)
3,971 Nextel Communications, Inc.
(Class A)* ............................ 543,034
8,728 Sprint Corp. (PCS Group)* ............. 451,674
------------
994,708
------------
Clothing/Shoe/Accessory Stores (0.5%)
8,562 Gap, Inc. (The) ....................... 413,652
2,416 Limited (The), Inc. ................... 82,144
1,475 Nordstrom, Inc. ....................... 31,436
3,391 TJX Companies, Inc. ................... 54,044
------------
581,276
------------
Computer Communications (4.2%)
2,925 3Com Corp.* ........................... 287,198
874 Adaptec, Inc.* ........................ 35,779
1,641 Cabletron Systems, Inc.* .............. 80,409
35,432 Cisco Systems, Inc.* .................. 4,681,453
------------
5,084,839
------------
SEE NOTES TO FINANCIAL STATEMENTS
31
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 29, 2000, continued
NUMBER OF
SHARES VALUE
- ----------------- -------------------
Computer Software (7.0%)
4,243 Adobe Systems, Inc. .................. $ 432,521
669 Autodesk, Inc. ....................... 29,770
2,100 BMC Software, Inc.* .................. 96,600
2,150 Citrix Systems, Inc. ................. 226,691
5,816 Computer Associates
International, Inc. .................. 374,041
3,838 Compuware Corp.* ..................... 84,916
53,018 Microsoft Corp.* ** .................. 4,735,170
3,514 Novell, Inc.* ........................ 116,182
31,200 Oracle Corp.* ........................ 2,314,650
2,862 Parametric Technology Corp.* ......... 86,754
------------
8,497,295
------------
Computer/Video Chains (0.2%)
2,156 Best Buy Co., Inc.* .................. 117,232
2,133 Circuit City Stores, Inc. - Circuit
City Group ........................... 86,120
2,121 Tandy Corp. .......................... 80,731
------------
284,083
------------
Construction/Agricultural
Equipment/Trucks (0.2%)
3,030 Caterpillar, Inc. .................... 106,239
1,966 Deere & Co. .......................... 70,284
1,627 Navistar International Corp.* ........ 53,284
------------
229,807
------------
Consumer Electronics/
Appliances (0.0%)
666 Maytag Corp. ......................... 17,607
612 Whirlpool Corp. ...................... 33,239
------------
50,846
------------
Consumer Sundries (0.0%)
862 American Greetings Corp.
(Class A) ............................ 14,869
------------
Containers/Packaging (0.1%)
368 Ball Corp. ........................... 9,913
294 Bemis Company, Inc. .................. 8,746
1,956 Owens-Illinois, Inc.* ................ 27,017
1,839 Pactiv Corp.* ........................ 15,287
951 Sealed Air Corp.* .................... 47,253
563 Temple-Inland, Inc. .................. 28,783
------------
136,999
------------
Contract Drilling (0.1%)
919 Rowan Companies, Inc.* ............... 23,090
2,345 Transocean Sedco Forex Inc. .......... 92,481
------------
115,571
------------
NUMBER OF
SHARES VALUE
- ----------------- -------------------
Department Stores (0.3%)
2,740 Federated Department Stores,
Inc.* ................................ $ 100,524
2,063 Kohl's Corp.* ........................ 156,401
3,311 May Department Stores Co. ............ 86,707
------------
343,632
------------
Discount Chains (2.5%)
646 Consolidated Stores Corp.* ........... 7,267
5,018 Costco Wholesale Corp.* .............. 249,645
2,765 Dollar General Corp. ................. 57,892
4,341 Kmart Corp.* ......................... 38,255
4,925 Target Corp. ......................... 290,575
49,584 Wal-Mart Stores, Inc.** .............. 2,414,121
------------
3,057,755
------------
Diversified Commercial Services (0.1%)
2,383 Paychex, Inc. ........................ 119,299
------------
Diversified Financial Services (2.3%)
4,322 American Express Co. ................. 579,958
41,204 Citigroup, Inc. ...................... 2,129,732
1,531 Providian Financial Corp. ............ 99,228
------------
2,808,918
------------
Diversified Manufacturing (1.1%)
1,640 Danaher Corp. ........................ 66,932
2,351 Dover Corp. .......................... 90,660
8,092 Honeywell International, Inc. ........ 389,427
704 ITT Industries, Inc. ................. 17,072
1,863 Thermo Electron Corp.* ............... 29,109
20,820 Tyco International Ltd. (Bermuda) 789,859
------------
1,383,059
------------
Drugstore Chains (0.3%)
4,409 CVS Corp. ............................ 154,315
9,123 Walgreen Co. ......................... 235,487
------------
389,802
------------
E.D.P. Peripherals (1.3%)
11,000 EMC Corp.* ........................... 1,309,000
1,368 Lexmark International Group, Inc.
(Class A)* ........................... 163,134
455 Network Appliance, Inc.* ............. 85,881
------------
1,558,015
------------
E.D.P. Services (1.0%)
5,221 Automatic Data Processing, Inc. ...... 227,440
15,530 Ceridian Corp.* ...................... 307,688
1,746 Computer Sciences Corp.* ............. 137,607
5,167 Electronic Data Systems Corp. ........ 334,563
4,495 First Data Corp. ..................... 202,275
------------
1,209,573
------------
SEE NOTES TO FINANCIAL STATEMENTS
32
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 29, 2000, continued
NUMBER OF
SHARES VALUE
- ----------------- -------------------
Electric Utilities (1.4%)
2,342 AES Corp. (The)* ...................... $ 196,289
1,780 CMS Energy Corp. ...................... 29,815
3,257 Consolidated Edison, Inc. ............. 89,771
2,583 Constellation Energy Group, Inc. ...... 76,844
2,757 Dominion Resources, Inc. .............. 101,147
6,681 Duke Energy Corp. ..................... 324,028
5,351 Edison International .................. 140,798
3,603 Entergy Corp. ......................... 72,961
2,990 FPL Group, Inc. ....................... 115,489
3,570 PECO Energy Co. ....................... 133,206
1,196 Pinnacle West Capital Corp. ........... 33,039
4,784 Reliant Energy, Inc. .................. 98,371
4,643 Texas Utilities Co. ................... 151,478
3,610 Unicom Corp. .......................... 136,503
------------
1,699,739
------------
Electrical Products (0.2%)
3,670 Emerson Electric Co. .................. 167,214
1,422 Molex Inc. ............................ 79,276
599 Thomas & Betts Corp. .................. 13,440
------------
259,930
------------
Electronic Components (0.2%)
484 Andrew Corp.* ......................... 11,918
3,143 Solectron Corp.* ...................... 205,866
------------
217,784
------------
Electronic Data Processing (5.9%)
4,187 Apple Computer, Inc.* ................. 479,935
14,245 Compaq Computer Corp. ................. 354,344
27,589 Dell Computer Corp.* .................. 1,124,252
3,478 Gateway, Inc. ......................... 239,112
11,081 Hewlett-Packard Co. ................... 1,490,395
19,667 International Business Machines
Corp. ................................. 2,006,034
812 NCR Corp.* ............................ 30,805
13,819 Sun Microsystems, Inc.* ............... 1,316,260
3,498 Unisys Corp.* ......................... 104,721
------------
7,145,858
------------
Electronic Production
Equipment (1.4%)
5,739 Applied Materials, Inc.* .............. 1,049,520
6,118 KLA-Tencor Corp.* ..................... 476,822
1,964 Teradyne, Inc.* ....................... 170,868
------------
1,697,210
------------
Environmental Services (0.1%)
11,707 Allied Waste Industries, Inc.* ........ 65,852
------------
NUMBER OF
SHARES VALUE
- ----------------- -------------------
Finance Companies (1.4%)
8,872 Associates First Capital Corp.
(Class A) ............................. $ 176,331
2,110 Capital One Financial Corp. ........... 77,674
1,082 Countrywide Credit Industries,
Inc. .................................. 26,982
12,421 Fannie Mae ............................ 658,313
8,411 Freddie Mac ........................... 351,159
5,047 Household International, Inc. ......... 161,189
8,737 MBNA Corp. ............................ 198,767
1,465 SLM Holding Corp. ..................... 45,873
------------
1,696,288
------------
Financial Publishing/Services (0.1%)
1,533 Dun & Bradstreet Corp. ................ 40,145
1,329 Equifax, Inc. ......................... 28,158
2,084 McGraw-Hill Companies, Inc. ........... 106,024
------------
174,327
------------
Fluid Controls (0.3%)
8,972 Parker-Hannifin Corp. ................. 325,235
------------
Food Chains (0.4%)
551 Great Atlantic & Pacific Tea Co.,
Inc. .................................. 12,914
12,949 Kroger Co.* ........................... 192,616
7,593 Safeway Inc.* ......................... 292,805
------------
498,335
------------
Food Distributors (0.1%)
1,606 Supervalu, Inc. ....................... 27,603
3,472 SYSCO Corp. ........................... 113,925
------------
141,528
------------
Forest Products (0.1%)
1,452 Georgia-Pacific Corp. ................. 50,366
2,051 Weyerhaeuser Co. ...................... 105,242
------------
155,608
------------
Generic Drugs (0.0%)
1,075 Watson Pharmaceuticals, Inc.* ......... 43,000
------------
Home Building (0.0%)
594 Centex Corp. .......................... 11,694
598 Kaufman & Broad Home Corp. ............ 11,437
707 Pulte Corp. ........................... 11,886
------------
35,017
------------
SEE NOTES TO FINANCIAL STATEMENTS
33
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 29, 2000, continued
NUMBER OF
SHARES VALUE
- ----------------- -------------------
Home Furnishings (0.1%)
2,071 Leggett & Platt, Inc. ................. $ 34,819
2,480 Newell Rubbermaid, Inc. ............... 57,350
608 Tupperware Corp. ...................... 10,450
---------
102,619
---------
Hospital/Nursing Management (0.2%)
6,173 Columbia/HCA Healthcare Corp. ......... 119,216
621 Manor Care, Inc. ...................... 5,395
3,506 Tenet Healthcare Corp.* ............... 61,355
---------
185,966
---------
Hotels/Resorts (0.2%)
7,203 Carnival Corp. ........................ 207,536
2,339 Marriott International, Inc.
(Class A) ............................. 64,469
---------
272,005
---------
Industrial Machinery/Components (0.2%)
4,092 Illinois Tool Works Inc. .............. 211,505
1,917 Ingersoll-Rand Co. .................... 73,445
---------
284,950
---------
Industrial Specialties (0.1%)
1,704 Ecolab, Inc. .......................... 48,138
1,332 Pall Corp. ............................ 26,307
---------
74,445
---------
Insurance Brokers/Services (0.2%)
2,786 AON Corp. ............................. 58,332
2,838 Marsh & McLennan Companies,
Inc. .................................. 219,590
---------
277,922
---------
Integrated Oil Companies (3.5%)
1,312 Amerada Hess Corp. .................... 66,338
6,592 Chevron Corp. ......................... 492,340
10,953 Conoco, Inc. (Class B) ................ 215,637
28,672 Exxon Mobil Corp.** ................... 2,159,360
3,701 Phillips Petroleum Co. ................ 141,563
17,850 Royal Dutch Petroleum Co. (ADR)
(Netherlands) ......................... 937,125
4,511 Texaco, Inc. .......................... 213,991
2,153 Unocal Corp. .......................... 57,593
---------
4,283,947
---------
Internet Services (1.9%)
24,360 America Online, Inc.* ................. 1,437,240
5,670 Yahoo! Inc.* .......................... 905,428
---------
2,342,668
---------
NUMBER OF
SHARES VALUE
- ----------------- -------------------
Investment Bankers/Brokers/
Services (0.8%)
1,203 Bear Stearns Companies, Inc. .......... $ 47,218
1,153 Lehman Brothers Holdings, Inc. ........ 83,593
4,183 Merrill Lynch & Co., Inc. ............. 428,758
1,292 Paine Webber Group, Inc. .............. 49,419
9,513 Schwab (Charles) Corp. ................ 397,762
---------
1,006,750
---------
Investment Managers (0.1%)
2,093 Franklin Resources, Inc. .............. 56,903
857 Price (T.) Rowe Associates, Inc. ...... 28,227
---------
85,130
---------
Life Insurance (0.3%)
3,667 American General Corp. ................ 191,372
4,291 Conseco, Inc. ......................... 62,756
2,331 Lincoln National Corp. ................ 64,831
---------
318,959
---------
Major Banks (3.8%)
23,915 Bank of America Corp. ................. 1,101,585
10,079 Bank of New York Co., Inc. ............ 335,757
3,631 BB&T Corp. ............................ 85,329
11,613 Chase Manhattan Corp. (The) ........... 924,685
1,905 Comerica, Inc. ........................ 70,366
12,638 FleetBoston Financial Corp. ........... 344,386
7,059 Mellon Financial Corp. ................ 212,652
3,201 PNC Bank Corp. ........................ 123,839
2,069 SouthTrust Corp. ...................... 47,458
1,794 State Street Corp. .................... 130,738
4,366 SunTrust Banks, Inc. .................. 221,847
7,731 U.S. Bancorp .......................... 141,574
2,268 Wachovia Corp. ........................ 129,701
22,260 Wells Fargo & Co. ..................... 735,971
---------
4,605,888
---------
Major Chemicals (0.8%)
13,557 Du Pont (E.I.) de Nemours & Co.,
Inc. .................................. 684,629
5,223 Monsanto Co. .......................... 202,718
2,858 Rohm & Haas Co. ....................... 115,392
---------
1,002,739
---------
Major Pharmaceuticals (5.9%)
16,592 Abbott Laboratories ................... 543,388
10,901 American Home Products Corp. .......... 474,194
16,553 Bristol-Myers Squibb Co. .............. 940,417
15,039 Johnson & Johnson ..................... 1,079,048
9,051 Lilly (Eli) & Co. ..................... 537,969
SEE NOTES TO FINANCIAL STATEMENTS
34
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 29, 2000, continued
NUMBER OF
SHARES VALUE
- ----------------- -------------------
19,465 Merck & Co., Inc.** .................... $ 1,198,314
32,000 Pfizer, Inc.** ......................... 1,028,000
4,250 Pharmacia & Upjohn, Inc. ............... 202,406
14,847 Schering-Plough Corp. .................. 517,789
7,117 Warner-Lambert Co. ..................... 608,948
-----------
7,130,473
-----------
Major U.S. Telecommunications (6.3%)
3,347 ALLTEL Corp. ........................... 194,126
34,374 AT&T Corp. ............................. 1,699,365
16,898 Bell Atlantic Corp. .................... 826,946
15,506 BellSouth Corp. ........................ 631,870
10,537 GTE Corp. .............................. 621,683
30,665 MCI WorldCom, Inc.* .................... 1,368,426
37,225 SBC Communications, Inc. ............... 1,414,550
9,386 Sprint Corp. (FON Group) ............... 572,546
4,232 U.S. West, Inc. ........................ 307,349
-----------
7,636,861
-----------
Managed Health Care (0.4%)
1,301 Aetna Inc. ............................. 53,504
6,628 United HealthCare Corp. ................ 338,857
751 Wellpoint Health Networks, Inc.* ....... 50,693
-----------
443,054
-----------
Meat/Poultry/Fish (0.1%)
6,160 ConAgra, Inc. .......................... 100,870
-----------
Media Conglomerates (1.8%)
17,102 Disney (Walt) Co. ...................... 572,917
14,029 Time Warner Inc. ....................... 1,199,480
7,578 Viacom, Inc. (Class B)* ................ 422,474
-----------
2,194,871
-----------
Medical Equipment & Supplies (0.5%)
12,978 Medtronic, Inc. ........................ 628,622
-----------
Medical Specialties (0.8%)
1,094 ALZA Corp. (Class A)* .................. 40,136
350 Bard (C.R.), Inc. ...................... 13,825
621 Bausch & Lomb, Inc. .................... 32,758
3,192 Baxter International, Inc. ............. 173,964
2,207 Becton, Dickinson & Co. ................ 68,555
1,307 Biomet, Inc. ........................... 43,131
3,378 Boston Scientific Corp.* ............... 61,649
3,365 Guidant Corp. .......................... 226,717
2,312 PE Corporation-PE Biosystems
Group .................................. 243,916
688 St. Jude Medical, Inc.* ................ 17,974
-----------
922,625
-----------
NUMBER OF
SHARES VALUE
- ----------------- -------------------
Medical/Dental Distributors (0.1%)
3,522 Cardinal Health, Inc. .................. $ 145,283
-----------
Mid-Sized Banks (0.5%)
4,572 AmSouth Bancorporation ................. 66,294
3,587 Fifth Third Bancorp .................... 186,524
13,371 Firstar Corp. .......................... 238,171
1,218 Old Kent Financial Corp. ............... 31,896
1,513 Union Planters Corp. ................... 41,418
-----------
564,303
-----------
Military/Gov't/Technical (0.2%)
2,405 General Dynamics Corp. ................. 104,016
684 PerkinElmer, Inc. ...................... 44,204
2,903 Raytheon Co. (Class B) ................. 53,706
-----------
201,926
-----------
Motor Vehicles (0.7%)
17,436 Ford Motor Co. ......................... 725,774
1,851 Harley-Davidson, Inc. .................. 126,099
-----------
851,873
-----------
Movies/Entertainment (0.2%)
4,762 Seagram Co. Ltd. (Canada) .............. 279,768
-----------
Multi-Line Insurance (1.6%)
8,592 Allstate Corp. ......................... 167,544
16,793 American International Group,
Inc. ................................... 1,485,131
2,077 CIGNA Corp. ............................ 153,309
2,390 Hartford Financial Services
Group, Inc. ............................ 74,688
-----------
1,880,672
-----------
Multi-Sector Companies (4.1%)
623 Crane Co. .............................. 12,382
1,719 Fortune Brands, Inc. ................... 37,603
36,185 General Electric Co. ................... 4,783,205
3,328 McDermott International, Inc. .......... 31,200
422 National Service Industries, Inc. ...... 8,651
1,426 Textron, Inc. .......................... 86,986
-----------
4,960,027
-----------
Natural Gas (0.0%)
341 Nicor Inc. ............................. 10,358
454 ONEOK, Inc. ............................ 10,300
357 Peoples Energy Corp. ................... 10,331
-----------
30,989
-----------
Newspapers (0.3%)
767 Dow Jones & Co., Inc. .................. 47,842
2,308 Gannett Co., Inc. ...................... 150,453
708 Knight-Ridder, Inc. .................... 33,188
SEE NOTES TO FINANCIAL STATEMENTS
35
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 29, 2000, continued
NUMBER OF
SHARES VALUE
- ----------------- -------------------
1,987 New York Times Co. (The)
(Class A) ............................ $ 83,951
450 Times Mirror Co. (Class A) ........... 22,950
-----------
338,384
-----------
Office Equipment/Supplies (0.3%)
967 Avery Dennison Corp. ................. 58,685
2,799 Pitney Bowes, Inc. ................... 138,551
5,913 Xerox Corp. .......................... 128,238
-----------
325,474
-----------
Oil & Gas Production (0.2%)
1,491 Anardarko Petroleum Corp. ............ 45,848
1,172 Apache Corp. ......................... 42,778
2,400 Burlington Resources, Inc. ........... 66,300
790 Kerr-McGee Corp. ..................... 35,353
3,017 Union Pacific Resources Group,
Inc. ................................. 26,964
-----------
217,243
-----------
Oil Refining/Marketing (0.4%)
1,238 Sunoco, Inc. ......................... 30,563
2,026 Tosco Corp. .......................... 54,196
18,050 USX-Marathon Group ................... 390,331
-----------
475,090
-----------
Oil/Gas Transmission (0.9%)
2,529 Coastal Corp. ........................ 106,376
721 Columbia Energy Group ................ 42,539
2,714 El Paso Energy Corp. ................. 100,588
8586 Enron Corp. .......................... 592,434
5,298 Williams Companies, Inc. ............. 221,523
-----------
1,063,460
-----------
Oilfield Services/Equipment (0.6%)
3,097 Baker Hughes Inc. .................... 80,135
4,825 Halliburton Co. ...................... 184,255
6,005 Schlumberger Ltd. (Netherlands) ...... 443,619
-----------
708,009
-----------
Other Consumer Services (0.2%)
1,230 Block (H.&R.), Inc. .................. 53,966
8,294 Cendant Corp.* ....................... 147,737
-----------
201,703
-----------
Other Metals/Minerals (0.1%)
974 Allegheny Technologies Inc. .......... 16,497
1,679 Inco Ltd. (Canada)* .................. 29,383
598 Phelps Dodge Corp. ................... 28,231
-----------
74,111
-----------
Other Specialty Stores (0.2%)
1,457 AutoZone, Inc.* ...................... 35,788
1,705 Bed Bath & Beyond Inc.* .............. 48,273
NUMBER OF
SHARES VALUE
- ----------------- -------------------
3,806 Office Depot, Inc.* .................. $ 46,386
5,222 Staples, Inc.* ....................... 140,994
-----------
271,441
-----------
Other Telecommunications (0.4%)
1,467 CenturyTel, Inc. ..................... 49,328
8,182 Global Crossing Ltd. (Bermuda)* ...... 381,486
-----------
430,814
-----------
Package Goods/Cosmetics (1.9%)
380 Alberto-Culver Co. (Class B) ......... 8,123
2,308 Avon Products, Inc. .................. 62,460
2,521 Clorox Co. ........................... 101,943
4,848 Colgate-Palmolive Co. ................ 253,005
8,888 Gillette Co. ......................... 313,302
1,122 International Flavors &
Fragrances, Inc. ..................... 33,660
5,913 Kimberly-Clark Corp. ................. 305,628
14,265 Procter & Gamble Co. ................. 1,255,320
-----------
2,333,441
-----------
Packaged Foods (0.9%)
4,119 Bestfoods ............................ 172,741
3,508 General Mills, Inc. .................. 115,545
4,160 Heinz (H.J.) Co. ..................... 132,860
4,308 Nabisco Group Holdings Corp. ......... 37,157
4,142 Ralston-Ralston Purina Group ......... 117,270
11,283 Sara Lee Corp. ....................... 169,245
6,998 Unilever N.V. (Netherlands) .......... 318,409
-----------
1,063,227
-----------
Paints/Coatings (0.1%)
1,760 PPG Industries, Inc. ................. 86,900
1,555 Sherwin-Williams Co. ................. 29,739
-----------
116,639
-----------
Paper (0.3%)
491 Boise Cascade Corp. .................. 14,638
1,033 Champion International Corp. ......... 53,458
1,935 Fort James Corp. ..................... 36,402
4,268 International Paper Co. .............. 157,116
1,176 Mead Corp. ........................... 35,207
1,167 Westavaco Corp. ...................... 32,165
889 Willamette Industries, Inc. .......... 30,170
-----------
359,156
-----------
Photographic Products (0.2%)
3,571 Eastman Kodak Co. .................... 204,663
-----------
Precious Metals (0.1%)
4,900 Barrick Gold Corp. (Canada) .......... 79,931
1,868 Freeport-McMoran Copper &
Gold, Inc. (Class B) ................. 25,685
SEE NOTES TO FINANCIAL STATEMENTS
36
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 29, 2000, continued
NUMBER OF
SHARES VALUE
- ----------------- -------------------
1,807 Newmont Mining Corp. .................... $ 39,980
3,869 Placer Dome Inc. (Canada) ............... 33,854
-----------
179,450
-----------
Precision Instruments (0.0%)
271 Tektronix, Inc. ......................... 15,718
-----------
Printing/Forms (0.0%)
1,686 Deluxe Corp. ............................ 39,516
-----------
Property - Casualty Insurers (0.1%)
1,837 Chubb Corp. ............................. 90,357
856 Loews Corp. ............................. 38,092
2,314 St. Paul Companies, Inc. ................ 51,776
-----------
180,225
-----------
Railroads (0.3%)
9,489 Burlington Northern Santa Fe
Corp. ................................... 186,815
2,163 Kansas City Southern Industries,
Inc. .................................... 170,336
-----------
357,151
-----------
Recreational Products/Toys (0.1%)
1,865 Brunswick Corp. ......................... 32,987
4,078 Hasbro, Inc. ............................ 64,229
-----------
97,216
-----------
Rental/Leasing Companies (0.0%)
435 Ryder System, Inc. ...................... 8,102
-----------
Restaurants (0.3%)
1,099 Darden Restaurants, Inc. ................ 14,493
11,220 McDonald's Corp. ........................ 354,131
1,358 Tricon Global Restaurants, Inc.* ........ 36,157
984 Wendy's International, Inc. ............. 15,498
-----------
420,279
-----------
Savings & Loan Associations (0.1%)
6,427 Washington Mutual, Inc. ................. 142,197
-----------
Semiconductors (5.7%)
1,174 Advanced Micro Devices, Inc.* ........... 45,933
1,899 Analog Devices, Inc.* ................... 298,143
1,624 Conexant Systems, Inc.* ................. 159,558
36,089 Intel Corp.** ........................... 4,078,057
3,270 LSI Logic Corp.* ........................ 209,484
2,210 Micron Technology, Inc.* ................ 216,718
1,906 National Semiconductor Corp.* ........... 143,188
8,668 Texas Instruments, Inc. ................. 1,443,222
3,595 Xilinx, Inc.* ........................... 286,701
-----------
6,881,004
-----------
NUMBER OF
SHARES VALUE
- ----------------- -------------------
Services to the Health Industry (0.1%)
3,784 IMS Health Inc. ......................... $ 76,153
2,006 Quintiles Transnational Corp.* .......... 59,553
208 Shared Medical Systems Corp. ............ 8,099
-----------
143,805
-----------
Shoe Manufacturing (0.1%)
3,049 Nike, Inc. (Class B) .................... 86,706
-----------
Specialty Chemicals (0.1%)
2,877 Air Products & Chemicals, Inc. .......... 74,083
1,494 Engelhard Corp. ......................... 20,356
172 FMC Corp.* .............................. 8,310
941 Grace (W. R.) & Co. ..................... 9,469
1,279 Sigma-Aldrich Corp. ..................... 30,376
-----------
142,594
-----------
Specialty Insurers (0.1%)
1,294 MBIA, Inc. .............................. 49,657
1,448 MGIC Investment Corp. ................... 54,119
-----------
103,776
-----------
Specialty Steels (0.0%)
1,058 Nucor Corp. ............................. 52,569
-----------
Steel/Iron Ore (0.0%)
1,377 Bethlehem Steel Corp.* .................. 7,832
1,000 USX-U.S. Steel Group .................... 21,875
-----------
29,707
-----------
Telecommunication Equipment (5.7%)
3,372 ADC Telecommunications, Inc.* ........... 151,319
803 Comverse Technology, Inc.* .............. 157,639
3,407 Corning Inc. ............................ 640,516
33,823 Lucent Technologies Inc. ................ 2,012,469
7,436 Motorola, Inc. .......................... 1,267,838
14,488 Nortel Networks Corp. (Canada) .......... 1,615,412
5,457 QUALCOMM Inc.* .......................... 777,281
960 Scientific-Atlanta, Inc. ................ 98,580
4,300 Tellabs, Inc.* .......................... 206,400
-----------
6,927,454
-----------
Textiles (0.0%)
286 Springs Industries, Inc. (Class A) ...... 10,135
-----------
Tobacco (0.4%)
21,140 Philip Morris Companies, Inc. ........... 424,121
-----------
Tools/Hardware (0.1%)
1,354 Black & Decker Corp. .................... 44,597
208 Briggs & Stratton Corp. ................. 6,955
574 Snap-On, Inc. ........................... 12,520
-----------
64,072
-----------
SEE NOTES TO FINANCIAL STATEMENTS
37
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 29, 2000, continued
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------- ----------------------------------------------------------
TOTAL COMMON STOCKS
(Identified Cost $94,885,634) .......... $116,638,217
------------
SHORT-TERM INVESTMENT (3.4%)
REPURCHASE AGREEMENT
$ 4,092 The Bank of New York 5.688%
due 03/01/00 (dated 02/29/00;
proceeds $4,093,539) (a)
(Identified Cost $4,092,892)............ 4,092,892
------------
TOTAL INVESTMENTS
(Identified Cost $98,978,526) (b) ......... 99.7% 120,731,109
OTHER ASSETS IN EXCESS OF
LIABILITIES ............................... 0.3 326,159
----- -----------
NET ASSETS ................................ 100.0% $121,057,268
===== ============
- --------------------------------
* Non-income producing security.
** Some or all of these securities are segregated in connection with
open futures contracts.
(a) Collateralized by $4,151,800 Federal National Mortgage Assoc.
7.392% due 05/01/24 valued at $4,174,765.
(b) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$31,054,546 and the aggregate gross unrealized depreciation is
$9,301,963, resulting in net unrealized appreciation of
$21,752,583.
FUTURES CONTRACTS OPEN AT FEBRUARY 29, 2000:
DESCRIPTION UNDERLYING
NUMBER OF DELIVERY MONTH, FACE AMOUNT UNREALIZED
CONTRACTS AND YEAR AT VALUE LOSS
- ----------- ----------------- ------------- --------------
13 S&P 500 Index/ $4,459,000 $(212,242)
March 2000
SEE NOTES TO FINANCIAL STATEMENTS
38
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value
(identified cost $98,978,526) ................................... $120,731,109
Cash .............................................................. 31,417
Receivable for:
Shares of beneficial interest sold ............................. 558,394
Dividends ...................................................... 124,612
Variation margin on futures contracts .......................... 78,975
Prepaid expenses and other assets ................................. 70,487
------------
TOTAL ASSETS ................................................... 121,594,994
------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased ...................... 328,457
Plan of distribution fee ....................................... 93,950
Investment management fee ...................................... 58,580
Accrued expenses and other payables ............................... 56,739
------------
TOTAL LIABILITIES .............................................. 537,726
------------
NET ASSETS ..................................................... $121,057,268
============
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................................... $100,992,421
Net unrealized appreciation ....................................... 21,540,341
Accumulated net realized loss ..................................... (1,475,494)
------------
NET ASSETS ..................................................... $121,057,268
============
CLASS A SHARES:
Net Assets ........................................................ $4,703,158
Shares Outstanding (unlimited authorized, $.01 par value) ......... 359,040
NET ASSET VALUE PER SHARE ...................................... $13.10
======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) ................ $13.83
======
CLASS B SHARES:
Net Assets ........................................................ $106,069,839
Shares Outstanding (unlimited authorized, $.01 par value) ......... 8,174,825
NET ASSET VALUE PER SHARE ...................................... $12.98
======
CLASS C SHARES:
Net Assets ........................................................ $9,130,844
Shares Outstanding (unlimited authorized, $.01 par value) ......... 703,585
NET ASSET VALUE PER SHARE ...................................... $12.98
======
CLASS D SHARES:
Net Assets ........................................................ $1,153,427
Shares Outstanding (unlimited authorized, $.01 par value) ......... 87,812
NET ASSET VALUE PER SHARE ...................................... $13.14
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
39
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the year ended February 29, 2000
NET INVESTMENT LOSS:
INCOME
Dividends (net of $13,542 foreign withholding tax) ......... $ 1,323,296
Interest ................................................... 240,030
------------
TOTAL INCOME ............................................ 1,563,326
------------
EXPENSES
Plan of distribution fee (Class A shares) .................. 10,747
Plan of distribution fee (Class B shares) .................. 1,040,513
Plan of distribution fee (Class C shares) .................. 87,813
Investment management fee .................................. 705,671
Transfer agent fees and expenses ........................... 144,803
Offering costs ............................................. 77,629
Registration fees .......................................... 59,587
Professional fees .......................................... 43,173
Custodian fees ............................................. 37,584
Shareholder reports and notices ............................ 28,736
Trustees' fees and expenses ................................ 13,477
Other ...................................................... 28,050
------------
TOTAL EXPENSES .......................................... 2,277,783
------------
NET INVESTMENT LOSS ..................................... (714,457)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain/loss on:
Investments ............................................. (1,729,802)
Futures contracts ....................................... 138,987
------------
NET LOSS ................................................ (1,590,815)
------------
Net change in unrealized appreciation/depreciation on:
Investments ............................................. 13,151,412
Futures contracts ....................................... (95,717)
------------
NET APPRECIATION ........................................ 13,055,695
------------
NET GAIN ................................................ 11,464,880
------------
NET INCREASE ............................................... $10,750,423
===========
SEE NOTES TO FINANCIAL STATEMENTS
40
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 28, 1998*
ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999
------------------- --------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss ............................. $ (714,457) $ (92,893)
Net realized gain (loss) ........................ (1,590,815) 685,459
Net change in unrealized appreciation ........... 13,055,695 8,484,646
------------ -----------
NET INCREASE ................................. 10,750,423 9,077,212
------------ -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares ............................... - (3,651)
Class B shares ............................... - (13,797)
Class C shares ............................... - (301)
Class D shares ............................... - (252)
Net realized gain
Class A shares ............................... (16,029) (4,603)
Class B shares ............................... (368,751) (128,154)
Class C shares ............................... (29,852) (8,097)
Class D shares ............................... (910) (235)
------------ -----------
TOTAL DIVIDENDS AND DISTRIBUTIONS ............ (415,542) (159,090)
------------ -----------
Net increase from transactions in shares of
beneficial interest ........................... 17,812,441 83,891,824
------------ -----------
NET INCREASE ................................. 28,147,322 92,809,946
NET ASSETS:
Beginning of period ............................. 92,909,946 100,000
------------ -----------
END OF PERIOD ................................ $121,057,268 $92,909,946
============ ===========
</TABLE>
- ---------------------
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
41
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
NOTES TO FINANCIAL STATEMENTS February 29, 2000
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter S&P 500 Select Fund (the "Fund") is registered under
the Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund's investment objective is to
provide a total return (before expenses) that exceeds the total return of the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index"). The
Fund seeks to achieve its objective by investing, under normal circumstances,
at least 80% of the value of its net assets in common stocks of selected
companies included in the S&P 500 Index. The Fund was organized as a
Massachusetts business trust on June 8, 1998 and had no operations other than
those relating to organizational matters and the issuance of 2,500 shares of
beneficial interest by each class for $25,000 of each class to Morgan Stanley
Dean Witter Advisors Inc. (the "Investment Manager") to effect the Fund's
initial capitalization. The Fund commenced operations on September 28, 1998.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year,
six years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS - (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price
(in cases where a security is traded on more than one exchange, the security is
valued on the exchange designated as the primary market pursuant to procedures
adopted by the Trustees); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by the Investment Manager that sale or bid prices are not reflective
of a security's market value, portfolio securities are valued at their fair
value as determined in good faith under procedures established by and under the
general supervision of the Trustees; and (4) short-term debt securities having
a maturity date of more than sixty days at time of
42
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
NOTES TO FINANCIAL STATEMENTS February 29, 2000, continued
purchase are valued on a mark-to-market basis until sixty days prior to
maturity and thereafter at amortized cost based on their value on the 61st day.
Short-term debt securities having a maturity date of sixty days or less at the
time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS - Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS - Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date
such items are recognized. Distribution fees are charged directly to the
respective class.
D. FUTURES CONTRACTS - A futures contract is an agreement between two parties
to buy and sell financial instruments at a set price on a future date. Upon
entering into such a contract, the Fund is required to pledge to the broker
cash, U.S. Government securities or other liquid portfolio securities equal to
the minimum initial margin requirements of the applicable futures exchange.
Pursuant to the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contract,
which is known as variation margin. Such receipts or payments are recorded by
the Fund as unrealized gains or losses. Upon closing of the contract, the Fund
realizes a gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
E. FEDERAL INCOME TAX STATUS - It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - The Fund records dividends and
distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which
may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
43
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
NOTES TO FINANCIAL STATEMENTS February 29, 2000, continued
G. OFFERING COSTS - The Investment Manager incurred offering costs on behalf of
the Fund in the amount of approximately $143,000 and was reimbursed for the
full amount thereof. Such expenses were deferred and fully amortized as of
September 28, 1999.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
annual rate of 0.60% to the net assets of the Fund determined as of the close
of each business day.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services,
heat, light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund will pay the Distributor a fee which is
accrued daily and paid monthly at the following annual rates: (i) Class A - up
to 0.25% of the average daily net assets of Class A; (ii) Class B - 1.0% of the
average daily net assets of Class B; and (iii) Class C - up to 1.0% of the
average daily net assets of Class C. In the case of Class A shares, amounts
paid under the Plan are paid to the Distributor for services provided. In the
case of Class B and Class C shares, amounts paid under the Plan are paid to the
Distributor for (1) services provided and the expenses borne by it and others
in the distribution of the shares of these Classes, including the payment of
commissions for sales of these Classes and incentive compensation to, and
expenses of, Morgan Stanley Dean Witter Financial Advisors and others who
engage in or support distribution of the shares or who service shareholder
accounts, including overhead and telephone expenses; (2) printing and
distribution of prospectuses and reports used in connection with the offering
of these shares to other than current shareholders; and (3) preparation,
printing and distribution of sales literature and advertising materials. In
addition, the Distributor may utilize fees paid pursuant to the Plan, in the
case of Class B shares, to compensate Dean Witter Reynolds Inc. ("DWR"), an
affiliate of the Investment Manager and Distributor, and other selected
broker-dealers for their opportunity costs in advancing such amounts, which
compensation would be in the form of a carrying charge on any unreimbursed
expenses.
44
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
NOTES TO FINANCIAL STATEMENTS FEBRUARY 29, 2000, continued
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. Although there is no legal obligation for
the Fund to pay expenses incurred in excess of payments made to the Distributor
under the Plan and the proceeds of contingent deferred sales charges paid by
investors upon redemption of shares, if for any reason the Plan is terminated,
the Trustees will consider at that time the manner in which to treat such
expenses. The Distributor has advised the Fund that such excess amounts,
including carrying charges, totaled $216,540 at February 29, 2000.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended February 29, 2000, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.25% and
1.0%, respectively.
The Distributor has informed the Fund that for the year ended February 29,
2000, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A shares, Class B shares and Class C shares of $4,005,
$328,400 and $8,903, respectively and received $34,477 in front-end sales
charges from sales of the Fund's Class A shares. The respective shareholders
pay such charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the year ended February 29, 2000
aggregated $51,187,669 and $30,922,884, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager
and Distributor, is the Fund's transfer agent.
45
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
NOTES TO FINANCIAL STATEMENTS February 29, 2000, continued
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 28, 1998*
ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999
--------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ................................................ 195,682 $ 2,483,357 287,669 $ 3,063,240
Reinvestment of dividends and distributions ......... 1,113 14,063 696 8,153
Redeemed ............................................ (115,113) (1,473,680) (13,507) (148,699)
-------- ------------- ------- ------------
Net increase - Class A .............................. 81,682 1,023,740 274,858 2,922,694
-------- ------------- ------- ------------
CLASS B SHARES
Sold ................................................ 3,616,854 45,961,205 7,352,876 78,346,802
Reinvestment of dividends and distributions ......... 26,589 334,485 11,216 131,227
Redeemed ............................................ (2,525,828) (32,424,065) (309,382) (3,536,821)
---------- ------------- --------- ------------
Net increase - Class B .............................. 1,117,615 13,871,625 7,054,710 74,941,208
---------- ------------- --------- ------------
CLASS C SHARES
Sold ................................................ 379,260 4,809,371 590,107 6,366,780
Reinvestment of dividends and distributions ......... 2,318 29,166 691 8,077
Redeemed ............................................ (223,405) (2,877,016) (47,886) (514,807)
---------- ------------- --------- ------------
Net increase - Class C .............................. 158,173 1,961,521 542,912 5,860,050
---------- ------------- --------- ------------
CLASS D SHARES
Sold ................................................ 76,694 1,032,652 14,665 167,520
Reinvestment of dividends and distributions ......... 54 685 42 488
Redeemed ............................................ (6,132) (77,782) (11) (136)
---------- ------------- --------- ------------
Net increase - Class D .............................. 70,616 955,555 14,696 167,872
---------- ------------- --------- ------------
Net increase in Fund ................................ 1,428,086 $ 17,812,441 7,887,176 $ 83,891,824
========== ============= ========= ============
</TABLE>
- ---------------
* Commencement of operations.
6. FEDERAL INCOME TAX STATUS
At February 29, 2000, the Fund had a net capital loss carryover of
approximately $746,000 which will be available through February 29, 2008 to
offset future capital gains to the extent provided by regulations.
46
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
NOTES TO FINANCIAL STATEMENTS February 29, 2000, continued
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $612,000 during fiscal 2000.
As of February 29, 2000, the Fund had temporary book/tax differences primarily
attributable to post-October losses, the mark-to-market of futures contracts
and capital loss deferrals on wash sales and permanent book/tax differences
primarily attributable to nondeductible expenses and a net operating loss. To
reflect reclassifications arising from the permanent differences,
paid-in-capital was charged $715,639, undistributed net realized gain was
credited $1,182 and net investment loss was credited $714,457.
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Fund may purchase and sell stock index futures ("futures contracts") for
the following reasons: to simulate full investment in the S&P 500 Index while
retaining a cash balance for fund management purposes; to facilitate trading;
to reduce transaction costs; or to seek higher investment returns when a
futures contract is priced more attractively than stocks comprising the S&P 500
Index.
These futures contracts involve elements of market risk in excess of the amount
reflected in the Statement of Assets and Liabilities. The Fund bears the risk
of an unfavorable change in the value of the underlying securities.
At February 29, 2000, the Fund had outstanding futures contracts.
47
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 28, 1998*
ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999
------------------- ----------------------
<S> <C> <C>
CLASS A SHARES#
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $11.79 $10.00
------ ------
Income from investment operations:
Net investment income .......................... 0.01 0.02
Net realized and unrealized gain ............... 1.34 1.81
------ ------
Total income from investment operations ......... 1.35 1.83
------ ------
Less dividends and distributions from:
Net investment income .......................... -- (0.02)
Net realized gains ............................. (0.04) (0.02)
------- ------
Total dividends and distributions ............... (0.04) (0.04)
------- ------
Net asset value, end of period .................. $13.10 $11.79
======= ======
TOTAL RETURN+ .................................. 11.50% 18.32%(1)
RATIOS TO AVERAGE NET ASSETS(4):
Expenses ........................................ 1.22% 1.23%(2)(3)
Net investment income ........................... 0.11% 0.38%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $4,703 $3,269
Portfolio turnover rate ......................... 26% 3%(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) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and the net investment
income ratios would have been 1.55% and 0.06%, respectively, for the
period ended February 28, 1999.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
48
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 28, 1998*
ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999
------------------- ------------------------
<S> <C> <C>
CLASS B SHARES#
SELECTED PER SHARE DATA:
Net asset value, beginning of period .............. $11.76 $10.00
------ -----
Income (loss) from investment operations:
Net investment loss .............................. (0.08) (0.02)
Net realized and unrealized gain ................. 1.34 1.80
------ ------
Total income from investment operations ........... 1.26 1.78
------ ------
Less distributions from net realized gain ......... (0.04) (0.02)++
------ ------
Net asset value, end of period .................... $12.98 $11.76
====== ======
TOTAL RETURN+ .................................... 10.67% 17.96 %(1)
RATIOS TO AVERAGE NET ASSETS(4):
Expenses .......................................... 1.97% 1.98 %(2)(3)
Net investment loss ............................... (0.64)% (0.37)%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $106,070 $83,021
Portfolio turnover rate ........................... 26% 3%(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.
++ Includes $0.002 of dividends from net investment income.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and the net investment
income ratios would have been 2.30% and (0.69)%, respectively, for period
ended February 28, 1999.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
49
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 28, 1998*
ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999
------------------- ------------------------
<S> <C> <C>
CLASS C SHARES#
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............... $11.77 $10.00
------ ------
Income (loss) from investment operations:
Net investment loss ............................... (0.08) (0.02)
Net realized and unrealized gain .................. 1.33 1.81
------ ------
Total income from investment operations ............ 1.25 1.79
------ ------
Less distributions from net realized gains ......... (0.04) (0.02)++
------ ------
Net asset value, end of period ..................... $12.98 $11.77
====== ======
TOTAL RETURN+ ..................................... 10.67% 17.94 %(1)
RATIOS TO AVERAGE NET ASSETS(4):
Expenses ........................................... 1.97% 1.98%(2)(3)
Net investment loss ................................ (0.64)% (0.37)%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ............ $9,131 $6,417
Portfolio turnover rate ............................ 26% 3%(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.
++ Includes $.000859 of dividends from net investment income.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and the net investment
income ratios would have been 2.30% and (0.69)%, respectively, for the
period ended February 28, 1999.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
50
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR SEPTEMBER 28, 1998*
ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999
------------------- ----------------------
<S> <C> <C>
CLASS D SHARES#
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $11.79 $10.00
------ ------
Income from investment operations:
Net investment income .......................... 0.04 0.02
Net realized and unrealized gain ............... 1.35 1.81
------ ------
Total income from investment operations ......... 1.39 1.83
------ ------
Less dividends and distributions from:
Net investment income .......................... -- (0.02)
Net realized gains ............................. (0.04) (0.02)
------ ------
Total dividends and distributions ............... (0.04) (0.04)
------ ------
Net asset value, end of period .................. $13.14 $11.79
TOTAL RETURN+ .................................. 11.84% 18.38%(1)
RATIOS TO AVERAGE NET ASSETS(4):
Expenses ........................................ 0.97% 0.98%(2)(3)
Net investment income ........................... 0.36% 0.63%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $1,153 $203
Portfolio turnover rate ......................... 26% 3%(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) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and the net investment
income ratios would have been 1.30% and 0.31%, respectively, for the
period ended February 28, 1999.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
51
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter S&P 500
Select Fund (the "Fund") at February 29, 2000, the results of its operations
for the year then ended, and the changes in its net assets and the financial
highlights for the year then ended and for the period September 28, 1998
(commencement of operations) through February 28, 1999, in conformity with
accounting principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States, which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at February 29, 2000 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
April 17, 2000
2000 FEDERAL TAX NOTICE (unaudited)
For the period ended February 29, 2000, the Fund paid to shareholders
$0.03 per share from long-term capital gains. For such period, 97.46% of
the income paid qualified for the dividends received deduction available
to corporations.
52
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PART C OTHER INFORMATION
Item 23. Exhibits
- -------- -------------------------------------------------------
1. Declaration of Trust of the Registrant, dated June 8, 1998, is
incorporated by reference to Exhibit 1 of the Initial
Registration Statement on Form N-1A, filed on June 11, 1998.
2. Amended and Restated By-Laws of the Registrant, dated May 1,
1999, is incorporated by reference to Exhibit 2 of Post-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on April 30, 1999.
3. Not Applicable.
4 . Investment Management Agreement between the Registrant and Morgan
Stanley Dean Witter Advisors Inc., dated July 22, 1998, is
incorporated by reference to Exhibit 5 of Pre-Effective Amendment
No. 1 to the Registration Statement on Form N-1A, filed on July
27, 1998.
5 (a). Amended Multi-Class Distribution Agreement between the
Registrant and Morgan Stanley Dean Witter Distributors Inc.,
dated June 22, 1998, is incorporated by reference to Exhibit 6
(a) of Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-1A, filed on July 27, 1998.
5 (b). Selected Dealers Agreement between Morgan Stanley Dean Witter
Distributors Inc. and Dean Witter Reynolds Inc., dated July 22,
1998, is incorporated by reference to Exhibit 6(b) of
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A, filed on July 27, 1998.
5 (c). Omnibus Selected Dealer Agreement between Morgan Stanley Dean
Witter Distributors Inc. and National Financial Services
Corporation, dated October 17, 1998, is incorporated by reference
to Exhibit 5 of Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on April 30, 1999.
6. Not Applicable.
7. Custody Agreement between The Bank of New York and the
Registrant, dated July 22, 1998, is incorporated by reference to
Exhibit 8(a) of Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-1A, filed on July 27, 1998.
8 (a). Amended and Restated Transfer Agency and Service Agreement
between the Registrant and Morgan Stanley Dean Witter Trust FSB,
dated June 22, 1998, is incorporated by reference to Exhibit 8
(b) of Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-1A, filed on July 27, 1998.
8 (b). Amended Services Agreement between the Registrant and Morgan
Stanley Dean Witter Services Company Inc., dated June 22, 1998,
is incorporated by reference to Exhibit 9 of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on July 27, 1998.
1
<PAGE>
9 (a). Opinion of Barry Fink, Esq., dated July 23, 1998, is incorporated
by reference to Exhibit 10(a) of Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-1A, filed on July 27, 1998.
9 (b). Opinion of Lane Altman & Owens LLP, Massachusetts Counsel, dated
July 23, 1998, is incorporated by reference to Exhibit 10(b) of
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A, filed on July 27, 1998.
10. Consent of Independent Accountants, filed herein.
11. Not Applicable.
12. Not Applicable.
13. Plan of Distribution pursuant to Rule 12b-1 between the
Registrant and Morgan Stanley Dean Witter Distributors Inc.,
dated July 22, 1998, is incorporated by reference to Exhibit 15
of Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A, filed on July 27, 1998.
14. Amended Multi-Class Plan pursuant to Rule 18f-3, dated June 22,
1998, is incorporated by reference to Exhibit 18 of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on July 27, 1998.
15. Not Applicable.
16(a). Code of Ethics of Morgan Stanley Dean Witter Advisors Inc.,
Morgan Stanley Dean Witter Services Company Inc. and Morgan
Stanley Dean Witter Distributors Inc., filed herein.
16(b). Code of Ethics of the Morgan Stanley Dean Witter Funds, filed
herein.
Other Powers of Attorney of Trustees, dated July 22, 1998, are
incorporated by reference to Exhibit (Other) of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on July 27, 1998.
2
<PAGE>
Item 24. Persons Controlled by or Under Common Control with the Fund.
-----------------------------------------------------------
None
Item 25. Indemnification.
---------------
Pursuant to Section 5.3 of the Registrant's Declaration of Trust and under
Section 4.8 of the Registrant's By-Laws, the indemnification of the Registrant's
trustees, officers, employees and agents is permitted if it is determined that
they acted under the belief that their actions were in or not opposed to the
best interest of the Registrant, and, with respect to any criminal proceeding,
they had reasonable cause to believe their conduct was not unlawful. In
addition, indemnification is permitted only if it is determined that the actions
in question did not render them liable by reason of willful misfeasance, bad
faith or gross negligence in the performance of their duties or by reason of
reckless disregard of their obligations and duties to the Registrant. Trustees,
officers, employees and agents will be indemnified for the expense of litigation
if it is determined that they are entitled to indemnification against any
liability established in such litigation. The Registrant may also advance money
for these expenses provided that they give their undertakings to repay the
Registrant unless their conduct is later determined to permit indemnification.
Pursuant to Section 5.2 of the Registrant's Declaration of Trust and
paragraph 8 of the Registrant's Investment Management Agreement, neither the
Investment Manager nor any trustee, officer, employee or agent of the Registrant
shall be liable for any action or failure to act, except in the case of bad
faith, willful misfeasance, gross negligence or reckless disregard of duties to
the Registrant.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer, or controlling person of the Registrant
in connection with the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such trustee, officer or controlling person
in connection with the shares being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act, and will
be governed by the final adjudication of such issue.
The Registrant hereby undertakes that it will apply the indemnification
provision of its by-laws in a manner consistent with Release 11330 of the
Securities and Exchange Commission under the Investment Company Act of 1940, so
long as the interpretation of Sections 17(h) and 17(i) of such Act remains in
effect.
Registrant, in conjunction with the Investment Manager, Registrant's
Trustees, and other registered investment management companies managed by the
Investment Manager, maintains insurance on behalf of any person who is or was a
Trustee, officer, employee, or agent of Registrant, or who is or was serving at
the request of Registrant as a trustee, director, officer, employee or agent of
another trust or corporation, against any liability asserted against him and
incurred by him or arising out of his position. However, in no event will
Registrant
3
<PAGE>
maintain insurance to indemnify any such person for any act for which Registrant
itself is not permitted to indemnify him.
Item 26. Business and Other Connections of Investment Advisor
----------------------------------------------------
See "The Fund and Its Management" in the Prospectus regarding the business
of the investment advisor. The following information is given regarding officers
of Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"). MSDW Advisors is
a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.
The term "Morgan Stanley Dean Witter Funds" refers to the following
registered investment companies:
Closed-End Investment Companies
- -------------------------------
(1) Morgan Stanley Dean Witter California Insured Municipal Income Trust
(2) Morgan Stanley Dean Witter California Quality Municipal Securities
(3) Morgan Stanley Dean Witter Government Income Trust
(4) Morgan Stanley Dean Witter High Income Advantage Trust
(5) Morgan Stanley Dean Witter High Income Advantage Trust II
(6) Morgan Stanley Dean Witter High Income Advantage Trust III
(7) Morgan Stanley Dean Witter Income Securities Inc.
(8) Morgan Stanley Dean Witter Insured California Municipal Securities
(9) Morgan Stanley Dean Witter Insured Municipal Bond Trust
(10) Morgan Stanley Dean Witter Insured Municipal Income Trust
(11) Morgan Stanley Dean Witter Insured Municipal Securities
(12) Morgan Stanley Dean Witter Insured Municipal Trust
(13) Morgan Stanley Dean Witter Municipal Income Opportunities Trust
(14) Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
(15) Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
(16) Morgan Stanley Dean Witter Municipal Income Trust
(17) Morgan Stanley Dean Witter Municipal Income Trust II
(18) Morgan Stanley Dean Witter Municipal Income Trust III
(19) Morgan Stanley Dean Witter Municipal Premium Income Trust
(20) Morgan Stanley Dean Witter New York Quality Municipal Securities
(21) Morgan Stanley Dean Witter Prime Income Trust
(22) Morgan Stanley Dean Witter Quality Municipal Income Trust
(23) Morgan Stanley Dean Witter Quality Municipal Investment Trust
(24) Morgan Stanley Dean Witter Quality Municipal Securities
Open-end Investment Companies
- -----------------------------
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Institutional Money Trust
(4) Active Assets Money Trust
(5) Active Assets Premier Money Trust
(6) Active Assets Tax-Free Trust
(7) Morgan Stanley Dean Witter 21st Century Trend Fund
(8) Morgan Stanley Dean Witter Aggressive Equity Fund
(9) Morgan Stanley Dean Witter American Opportunities Fund
(10) Morgan Stanley Dean Witter Balanced Growth Fund
(11) Morgan Stanley Dean Witter Balanced Income Fund
4
<PAGE>
(12) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(13) Morgan Stanley Dean Witter California Tax-Free Income Fund
(14) Morgan Stanley Dean Witter Capital Growth Securities
(15) Morgan Stanley Dean Witter Competitive Edge Fund, "Best Ideas Portfolio"
(16) Morgan Stanley Dean Witter Convertible Securities Trust
(17) Morgan Stanley Dean Witter Developing Growth Securities Trust
(18) Morgan Stanley Dean Witter Diversified Income Trust
(19) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(20) Morgan Stanley Dean Witter Equity Fund
(21) Morgan Stanley Dean Witter European Growth Fund Inc.
(22) Morgan Stanley Dean Witter Federal Securities Trust
(23) Morgan Stanley Dean Witter Financial Services Trust
(24) Morgan Stanley Dean Witter Fund of Funds
(25) Morgan Stanley Dean Witter Global Dividend Growth Securities
(26) Morgan Stanley Dean Witter Global Utilities Fund
(27) Morgan Stanley Dean Witter Growth Fund
(28) Morgan Stanley Dean Witter Hawaii Municipal Trust
(29) Morgan Stanley Dean Witter Health Sciences Trust
(30) Morgan Stanley Dean Witter High Yield Securities Inc.
(31) Morgan Stanley Dean Witter Income Builder Fund
(32) Morgan Stanley Dean Witter Information Fund
(33) Morgan Stanley Dean Witter Intermediate Income Securities
(34) Morgan Stanley Dean Witter International Fund
(35) Morgan Stanley Dean Witter International SmallCap Fund
(36) Morgan Stanley Dean Witter Japan Fund
(37) Morgan Stanley Dean Witter Latin American Growth Fund
(38) Morgan Stanley Dean Witter Limited Term Municipal Trust
(39) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(40) Morgan Stanley Dean Witter Market Leader Trust
(41) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(42) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(43) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(44) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(45) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(46) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(47) Morgan Stanley Dean Witter Next Generation Trust
(48) Morgan Stanley Dean Witter North American Government Income Trust
(49) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(50) Morgan Stanley Dean Witter Real Estate Fund
(51) Morgan Stanley Dean Witter S&P 500 Index Fund
(52) Morgan Stanley Dean Witter S&P 500 Select Fund
(53) Morgan Stanley Dean Witter Select Dimensions Investment Series
(54) Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
(55) Morgan Stanley Dean Witter Short-Term Bond Fund
(56) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(57) Morgan Stanley Dean Witter Small Cap Growth Fund
(58) Morgan Stanley Dean Witter Special Value Fund
(59) Morgan Stanley Dean Witter Strategist Fund
(60) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(61) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(62) Morgan Stanley Dean Witter Tax-Managed Growth Fund
5
<PAGE>
(63) Morgan Stanley Dean Witter Total Market Index Fund
(64) Morgan Stanley Dean Witter Total Return Trust
(65) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(66) Morgan Stanley Dean Witter U.S. Government Securities Trust
(67) Morgan Stanley Dean Witter Utilities Fund
(68) Morgan Stanley Dean Witter Value-Added Market Series
(69) Morgan Stanley Dean Witter Value Fund
(70) Morgan Stanley Dean Witter Variable Investment Series
(71) Morgan Stanley Dean Witter World Wide Income Trust
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Mitchell M. Merin President and Chief Operating Officer of Asset
President, Chief Management of Morgan Stanley Dean Witter & Co.
Executive Officer and ("MSDW); Chairman, Chief Executive Officer and
Director Director of Morgan Stanley Dean Witter Distributors
Inc. ("MSDW Distributors") and Morgan Stanley Dean
Witter Trust FSB ("MSDW Trust"); President, Chief
Executive Officer and Director of Morgan Stanley
Dean Witter Services Company Inc. ("MSDW Services");
President of the Morgan Stanley Dean Witter Funds;
Executive Vice President and Director of Dean Witter
Reynolds Inc. ("DWR"); Director of various MSDW
subsidiaries; Trustee of various Van Kampen
investment companies.
Barry Fink Assistant Secretary of DWR; Executive Vice
Executive Vice President, President, Secretary, General Counsel and Director
Secretary, General of MSDW Services; Executive Vice President,
Counsel and Director Assistant Secretary and Assistant General Counsel of
MSDW Distributors; Vice President, Secretary and
General Counsel of the Morgan Stanley Dean Witter
Funds.
Joseph J. McAlinden Vice President of the Morgan Stanley Dean Witter
Executive Vice President Funds; Director of MSDW Trust.
and Chief Investment
Officer
Ronald E. Robison Executive Vice President, Chief Administrative
Executive Vice President, Officer and Director of MSDW Services; Vice
Chief Administrative President of the Morgan Stanley Dean Witter Funds.
Officer and Director
Edward C. Oelsner, III
Executive Vice President
Joseph R. Arcieri Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
6
<PAGE>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Peter M. Avelar Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the High
Yield Group
Mark Bavoso Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Douglas Brown
Senior Vice President
Rosalie Clough
Senior Vice President
and Director of Marketing
Richard Felegy
Senior Vice President
Sheila A. Finnerty Vice President of Morgan Stanley Dean Witter Prime
Senior Vice President Income Trust.
Edward F. Gaylor Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Robert S. Giambrone Senior Vice President of MSDW Services, MSDW
Senior Vice President Distributors and MSDW Trust and Director of MSDW
Trust; Vice President of the Morgan Stanley Dean
Witter Funds.
Rajesh K. Gupta Vice President of various Morgan Stanley Dean Witter
Senior Vice President, Funds.
Director of the Taxable
Fixed Income Group and
Chief Administrative
Officer - Investments
Kenton J. Hinchliffe Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Kevin Hurley Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Jenny Beth Jones Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Michelle Kaufman Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
7
<PAGE>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
John B. Kemp, III President of MSDW Distributors.
Senior Vice President
Anita H. Kolleeny Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of Sector
Rotation
Jonathan R. Page Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the
Money Market Group
Ira N. Ross Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Guy G. Rutherfurd, Jr. Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the
Growth Group
Rochelle G. Siegel Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
James Solloway
Senior Vice President
Katherine H. Stromberg Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Paul D. Vance Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the
Growth and Income Group
Elizabeth A. Vetell
Senior Vice President
and Director of
Shareholder Communication
James F. Willison Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the
Tax-Exempt Fixed
Income Group
8
<PAGE>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Raymond A. Basile
First Vice President
Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President MSDW Services; Assistant Treasurer of MSDW
and Assistant Distributors; Treasurer and Chief Financial and
Treasurer Accounting Officer of the Morgan Stanley Dean
Witter Funds.
Thomas Chronert
First Vice President
Marilyn K. Cranney Assistant Secretary of DWR; First Vice President and
First Vice President Assistant Secretary of MSDW Services; Assistant
and Assistant Secretary Secretary of MSDW Distributors and the Morgan
Stanley Dean Witter Funds.
Salvatore DeSteno First Vice President of MSDW Services.
First Vice President
Peter W. Gurman
First Vice President
Michael Interrante First Vice President and Controller of MSDW
First Vice President Services; Assistant Treasurer of MSDW Distributors;
and Controller First Vice President and Treasurer of MSDW Trust.
David Johnson
First Vice President
Stanley Kapica
First Vice President
Douglas J. Ketterer
First Vice President
Todd Lebo First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW
Assistant Secretary Distributors and the Morgan Stanley Dean Witter
Funds.
Lou Anne D. McInnis First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors
Assistant Secretary and the Morgan Stanley Dean Witter Funds.
Carsten Otto First Vice President and Assistant Secretary of MSDW
First Vice President Services; Assistant Secretary of MSDW Distributors
and Assistant and Secretary the Morgan Stanley Dean Witter Funds.
9
<PAGE>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Carl F. Sadler
First Vice President
Ruth Rossi First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors
Assistant Secretary and the Morgan Stanley Dean Witter Funds.
James P. Wallin
First Vice President
Robert Abreu
Vice President
Dale Albright
Vice President
Joan G. Allman
Vice President
Andrew Arbenz Vice President of Morgan Stanley Dean Witter Global
Vice President Utilities Fund.
Armon Bar-Tur Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Maurice Bendrihem
Vice President and
Assistant Controller
Thomas A. Bergeron
Vice President
Philip Bernstein
Vice President
Dale Boettcher
Vice President
Michelina Calandrella
Vice President
Ronald Caldwell
Vice President
Joseph Cardwell
Vice President
10
<PAGE>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Liam Carroll
Vice President
Philip Casparius
Vice President
Annette Celenza
Vice President
Aaron Clark
Vice President
William Connerly
Vice President
Michael J. Davey
Vice President
David Dineen Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Glen H. Frey Vice President of Morgan Stanley Dean Witter
Vice President Information Fund.
Jeffrey D. Geffen
Vice President
Sandra Gelpieryn
Vice President
Charmaine George
Vice President
Michael Geringer
Vice President
Gail Gerrity-Burke
Vice President
Peter Gewirtz
Vice President
Ellen Gold
Vice President
Stephen Greenhut
Vice President
11
<PAGE>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Trey Hancock
Vice President
Laury A. Haskamp
Vice President
Matthew T. Haynes Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Peter Hermann Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
David T. Hoffman
Vice President
Thomas G. Hudson II
Vice President
Kevin Jung Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Carol Espejo-Kane
Vice President
Nancy Karole-Kennedy
Vice President
Paula LaCosta Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Kimberly LaHart
Vice President
Thomas Lawlor
Vice President
Gerard J. Lian Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Cameron J. Livingstone
Vice President
Nancy Login
Vice President
Sharon Loguercio
Vice President
12
<PAGE>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Steven MacNamara
Vice President
Catherine Maniscalco Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Peter R. McDowell
Vice President
Albert McGarity
Vice President
Teresa McRoberts Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Mark Mitchell
Vice President
Julie Morrone Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Mary Beth Mueller
Vice President
David Myers Vice President of Morgan Stanley Dean Witter Natural
Vice President Resource Development Securities Inc.
James Nash
Vice President
Richard Norris
Vice President
Hilary A. O'Neill
Vice President
Mori Paulson
Vice President
Anne Pickrell
Vice President
Frances Roman
Vice President
Dawn Rorke
Vice President
13
<PAGE>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
John Roscoe Vice President of Morgan Stanley Dean Witter
Vice President Real Estate Fund.
Hugh Rose
Vice President
Robert Rossetti Vice President of Morgan Stanley Dean Witter
Vice President Competitive Edge Fund.
Sally Sancimino
Vice President
Deborah Santaniello
Vice President
Patrice Saunders
Vice President
Howard A. Schloss Vice President of Morgan Stanley Dean Witter Federal
Vice President Securities Trust.
Alison M. Sharkey
Vice President
Peter J. Seeley Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Ronald B. Silvestri Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Robert Stearns
Vice President
Naomi Stein
Vice President
William Stevens
Vice President
Michael Strayhorn
Vice President
Marybeth Swisher
Vice President
Michael Thayer
Vice President
14
<PAGE>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
Robert Vanden Assem
Vice President
David Walsh
Vice President
Alice Weiss Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
John Wong
Vice President
The principal address of MSDW Advisors, MSDW Services, MSDW Distributors,
DWR, and the Morgan Stanley Dean Witter Funds is Two World Trade Center, New
York, New York 10048. The principal address of MSDW is 1585 Broadway, New York,
New York 10036. The principal address of MSDW Trust is 2 Harborside Financial
Center, Jersey City, New Jersey 07311.
Item 27. Principal Underwriters
----------------------
(a) Morgan Stanley Dean Witter Distributors Inc. ("MSDW Distributors"), a
Delaware corporation, is the principal underwriter of the Registrant. MSDW
Distributors is also the principal underwriter of the following investment
companies:
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Institutional Money Trust
(4) Active Assets Money Trust
(5) Active Assets Premier Money Trust
(6) Active Assets Tax-Free Trust
(7) Morgan Stanley Dean Witter 21st Century Trend Fund
(8) Morgan Stanley Dean Witter Aggressive Equity Fund
(9) Morgan Stanley Dean Witter American Opportunities Fund
(10) Morgan Stanley Dean Witter Balanced Growth Fund
(11) Morgan Stanley Dean Witter Balanced Income Fund
(12) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(13) Morgan Stanley Dean Witter California Tax-Free Income Fund
(14) Morgan Stanley Dean Witter Capital Growth Securities
(15) Morgan Stanley Dean Witter Competitive Edge Fund, "Best Ideas Portfolio"
(16) Morgan Stanley Dean Witter Convertible Securities Trust
(17) Morgan Stanley Dean Witter Developing Growth Securities Trust
(18) Morgan Stanley Dean Witter Diversified Income Trust
(19) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(20) Morgan Stanley Dean Witter Equity Fund
(21) Morgan Stanley Dean Witter European Growth Fund Inc.
(22) Morgan Stanley Dean Witter Federal Securities Trust
(23) Morgan Stanley Dean Witter Financial Services Trust
15
<PAGE>
(24) Morgan Stanley Dean Witter Fund of Funds
(25) Morgan Stanley Dean Witter Global Dividend Growth Securities
(26) Morgan Stanley Dean Witter Global Utilities Fund
(27) Morgan Stanley Dean Witter Growth Fund
(28) Morgan Stanley Dean Witter Hawaii Municipal Trust
(29) Morgan Stanley Dean Witter Health Sciences Trust
(30) Morgan Stanley Dean Witter High Yield Securities Inc.
(31) Morgan Stanley Dean Witter Income Builder Fund
(32) Morgan Stanley Dean Witter Information Fund
(33) Morgan Stanley Dean Witter Intermediate Income Securities
(34) Morgan Stanley Dean Witter International Fund
(35) Morgan Stanley Dean Witter International SmallCap Fund
(36) Morgan Stanley Dean Witter Japan Fund
(37) Morgan Stanley Dean Witter Latin American Growth Fund
(38) Morgan Stanley Dean Witter Limited Term Municipal Trust
(39) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(40) Morgan Stanley Dean Witter Market Leader Trust
(41) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(42) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(43) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(44) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(45) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(46) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(47) Morgan Stanley Dean Witter Next Generation Trust
(48) Morgan Stanley Dean Witter North American Government Income Trust
(49) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(50) Morgan Stanley Dean Witter Prime Income Trust
(51) Morgan Stanley Dean Witter Real Estate Fund
(52) Morgan Stanley Dean Witter S&P 500 Index Fund
(53) Morgan Stanley Dean Witter S&P 500 Select Fund
(54) Morgan Stanley Dean Witter Short-Term Bond Fund
(55) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(56) Morgan Stanley Dean Witter Small Cap Growth Fund
(57) Morgan Stanley Dean Witter Special Value Fund
(58) Morgan Stanley Dean Witter Strategist Fund
(59) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(60) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(61) Morgan Stanley Dean Witter Tax-Managed Growth Fund
(62) Morgan Stanley Dean Witter Total Market Index Fund
(63) Morgan Stanley Dean Witter Total Return Trust
(64) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(65) Morgan Stanley Dean Witter U.S. Government Securities Trust
(66) Morgan Stanley Dean Witter Utilities Fund
(67) Morgan Stanley Dean Witter Value-Added Market Series
(68) Morgan Stanley Dean Witter Value Fund
(69) Morgan Stanley Dean Witter Variable Investment Series
(70) Morgan Stanley Dean Witter World Wide Income Trust
(b) The following information is given regarding directors and officers of MSDW
Distributors not listed in Item 26 above. The principal address of MSDW
Distributors is Two World Trade
16
<PAGE>
Center, New York, New York 10048. Other than Mr. Purcell, who is a Trustee of
the Registrant, none of the following persons has any position or office with
the Registrant.
Name Positions and Office with MSDW Distributors
- ---- -------------------------------------------
Michael T. Gregg Vice President and Assistant Secretary.
James F. Higgins Director
Philip J. Purcell Director
John Schaeffer Director
Charles Vadala Senior Vice President and Financial Principal.
Item 28. Location of Accounts and Records
--------------------------------
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained by the Investment Manager at its offices, except records relating to
holders of shares issued by the Registrant, which are maintained by the
Registrant's Transfer Agent, at its place of business as shown in the
prospectus.
Item 29. Management Services
-------------------
Registrant is not a party to any such management-related service contract.
Item 30. Undertakings
------------
Registrant hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.
17
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York on the 28th day of April, 2000.
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
By /s/ Barry Fink
--------------------------------
Barry Fink
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 3 has been signed below by the following persons in
the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
(1) Principal Executive Officer Chairman, Chief Executive
Officer, and Trustee
By /s/ Charles A. Fiumefreddo 04/28/00
--------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By /s/ Thomas F. Caloia 04/28/00
--------------------------
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman)
Philip J. Purcell
By /s/ Barry Fink 04/28/00
--------------------------
Barry Fink
Attorney-in-Fact
Michael Bozic Manuel H. Johnson
Edwin J. Garn Michael E. Nugent
Wayne E. Hedien John L. Schroeder
By /s/ David M. Butowsky 04/28/00
--------------------
David M. Butowsky
Attorney-in-Fact
<PAGE>
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
EXHIBIT INDEX
-------------
10. Consent of Independent Accountants.
16(a). Code of Ethics of Morgan Stanley Dean Witter Advisors Inc., Morgan
Stanley Dean Witter Services Company Inc. and Morgan Stanley Dean
Witter Distributors Inc.
16(b). Code of Ethics of the Morgan Stanley Dean Witter Funds.
<PAGE>
Consent of Independent Accountants
We hereby consent to the use in this Registration Statement on form N-1A of our
report dated April 17, 2000, relating to the financial statements and financial
highlights of Morgan Stanley Dean Witter S&P 500 Select Fund, which appears in
such Registration Statement. We also consent to the references to us under the
headings "Custodian and Independent Accountants, " "Experts" and Financial
Highlights" in such Registration Statement.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
April 27, 2000
<PAGE>
CODE OF ETHICS
- ------------------------
(Print Name)
MORGAN STANLEY DEAN WITTER ADVISORS INC.
MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC.
MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
Effective September 1, 1994 (as amended through March 1, 2000)
I. INTRODUCTION
Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"), a subsidiary of
Morgan Stanley Dean Witter & Co., is an investment adviser or manager of a
group of investment companies, referred to herein as the "Morgan Stanley
Dean Witter Funds." MSDW Advisors also serves as investment adviser to other
clients, including corporate pension funds, other institutions and
individuals ("MSDW Advisors Managed Accounts").
This Code of Ethics is adopted by MSDW Advisors in keeping with the general
principles and objectives set forth in Sections II and III below, and to
enforce the highest legal and ethical standards in light of its fiduciary
obligations to the Morgan Stanley Dean Witter Fund shareholders and to MSDW
Advisors' other clients. It has also been adopted by Morgan Stanley Dean
Witter Services Company Inc. ("Services"), a wholly owned subsidiary of MSDW
Advisors, and by Morgan Stanley Dean Witter Distributors Inc.
("Distributors"), a wholly-owned subsidiary of Morgan Stanley Dean Witter &
Co.), to apply to their Directors, officers and employees.
Employees, officers and Directors of MSDW Advisors, Services and
Distributors are also referred to the Morgan Stanley Dean Witter Policy
Statement on Insider Trading (attached), which is incorporated in this Code.
II. GENERAL PRINCIPLES
A. SHAREHOLDER AND CLIENT INTERESTS COME FIRST
Every officer, director or employee of MSDW Advisors, Services and
Distributors owes a fiduciary duty to the shareholders of the Morgan
Stanley Dean Witter Funds and to all other clients of MSDW Advisors. This
means that in every decision relating to investments, employees and
affiliates must recognize the needs and interests of the Morgan Stanley
Dean Witter Fund shareholders and other MSDW Advisors clients, and be
certain that at all times the interests of the shareholders and other
clients are placed ahead of any personal interest.
B. AVOID ACTUAL AND POTENTIAL CONFLICTS OF INTEREST
The restrictions and requirements of this Code of Ethics are designed to
prevent behavior which conflicts, potentially conflicts or raises the
appearance of actual or potential conflict with the interests of the
shareholders of the Morgan Stanley Dean Witter Funds and MSDW Advisors
Managed Account clients. It is of the utmost importance that the
personal securities transactions of employees and affiliates be
conducted in a manner consistent with both the letter and spirit of this
Code of Ethics, including these principles. Only then can an individual,
and MSDW Advisors, Services and Distributors as a whole, be certain to
avoid any actual or potential conflict of interest or any abuse of an
individual's position of trust and responsibility.
<PAGE>
C. AVOID UNDUE PERSONAL BENEFIT
MSDW Advisors, Services and Distributors employees and affiliates should
ensure that they do not acquire undue personal benefit or advantage as a
result of the performance of their normal duties as they relate to the
Morgan Stanley Dean Witter Funds and other MSDW Advisors clients.
Consistent with the first principle that the interests of the Morgan
Stanley Dean Witter Fund shareholders and other MSDW Advisors clients
must always come first is the fundamental standard that undue personal
advantage deriving from the management by MSDW Advisors of other
people's money is to be avoided.
III. OBJECTIVE
The Securities and Exchange Commission's code of ethics rule contained in
the Investment Company Act of 1940 makes it unlawful for certain persons
associated with investment advisers or principal underwriters of investment
companies to engage in conduct which is deceitful, fraudulent, or
manipulative, or which involves false or misleading statements, in
connection with the purchase or sale of a security held or proposed to be
acquired by an investment company. In addition, Section 204A of the
Investment Advisers Act of 1940 requires investment advisers to establish,
maintain and enforce written policies and procedures designed to prevent
misuse of material non-public information. The objective of this Code is to
maintain the behavior of certain individuals associated with MSDW Advisors,
Services and Distributors (herein called "Access Persons") within the
general principles set forth above, as well as to prevent such persons from
engaging in conduct proscribed by the code of ethics rule and Section 204A
of the Investment Advisers Act. The Compliance Officer or Compliance
Coordinator in MSDW Advisors Risk Management Department will identify all
Access Persons and notify them of their reporting obligations at the time
they become an Access Person. Access Persons include all directors,
officers and employees of MSDW Advisors, Services or Distributors except
those directors and officers of Distributors who meet the following three
criteria: (i) they do not devote substantially all working time to the
activities of MSDW Advisors, Services or Distributors; (ii) they do not, in
connection with their regular functions and duties, participate in, obtain
information with respect to, or make recommendations as to, the purchase
and sale of securities; and (iii) they do not have access to information
regarding the day-to-day investment activities of MSDW Advisors, Services
or Distributors (those Directors and officers must, however, file quarterly
transaction reports pursuant to Section V., sub-section D., below). An
Officer or employee of MSDW Advisors, Distributors or Services on leave is
not considered an Access Person hereunder, provided that during the period
such person is on leave, subparagraphs (ii) and (iii) in the preceding
sentence are applicable.
IV. GROUNDS FOR DISQUALIFICATION FROM EMPLOYMENT
Pursuant to the terms of Section 9 of the Investment Company Act of 1940, no
director, officer or employee of MSDW Advisors, Services or Distributors may
become, or continue to remain, an officer, director or employee, without an
exemptive order issued by the Securities and Exchange Commission, if such
director, officer or employee is, or becomes:
A. within the past ten years convicted of any felony or misdemeanor
involving the purchase or sale of any security or arising out of the
officer's or employee's conduct as an affiliated person, salesman or
employee of any investment company, bank, insurance company or entity or
person required to be registered under the Commodity Exchange Act; or
B. permanently or temporarily enjoined by any court from acting as an
affiliated person, salesman or employee of any investment company, bank,
insurance company or entity or person required to be registered under the
Commodity Exchange Act, or from engaging in or continuing any conduct or
practice in connection with any such activity or in connection with the
purchase or sale of any security.
2
<PAGE>
It is your obligation to immediately report any conviction or injunction to
the General Counsel of MSDW Advisors.
V. PERSONAL TRANSACTIONS IN SECURITIES
A. PROHIBITED CONDUCT
No Access Person shall buy or sell any security for his own account or
for an account in which he has, or as a result of the transaction
acquires, any direct or indirect beneficial ownership (referred to herein
as a "personal transaction") unless:
1. advance clearance of the transaction has been obtained; and
2. the transaction is reported in writing to MSDW Advisors in accordance
with the requirements of sub-section D below.
B. RESTRICTIONS AND LIMITATIONS ON PERSONAL SECURITIES TRANSACTIONS
The following restrictions and limitations govern investments and
personal securities transactions by Access Persons. Unless otherwise
indicated, all restrictions and limitations are applicable to all Access
Persons:
1. Securities purchased may not be sold at a profit until at least 60
days from the purchase trade date. In addition, securities sold may
not be purchased at a lower price until at least 60 days from the
sale trade date. Any violation will result in disgorgement of all
profits from the transactions.
2. No foreign security may be purchased unless the security is listed on
a U.S. Stock Exchange or can be held as an American Depository
Receipt (ADR).
3. No short sales are permitted.
4. No transactions in options or futures are permitted.
5. No Access Person may acquire any security in an Initial Public
Offering (IPO).
6a. Private placements of any kind may only be acquired with special
permission of the Code of Ethics Review Committee, and, if approved,
will be subject to continuous monitoring for possible future
conflict. Any Access Person wishing to request approval for private
placements must complete an MSDW Advisors Private Placement Approval
Request Form and submit the form to MSDW Advisors' Risk Management
Department. A copy of MSDW Advisors Private Placement Approval
Request Form, which may be revised at any time, is attached as
Exhibit A. Where the Code of Ethics Review Committee approves any
acquisition of private placements, its decision and reasons for
supporting the decision will be documented in a written report, which
is to be kept for five years in MSDW Advisors' Risk Management
Department after the end of the fiscal year in which the approval was
granted.
6b. Any Access Person who has a personal position in an issuer through a
private placement must affirmatively disclose that interest if such
Access Person is involved in consideration of any subsequent
investment decision regarding any security of that issuer or an
affiliate by any Morgan Stanley Dean Witter Fund or MSDW Advisors
Managed Account. In such event, the final investment decision shall
be independently reviewed by MSDW Advisor's Chief Investment Officer.
Written records of any such circumstance shall be maintained and sent
to the MSDW Advisors' Risk Management Department.
7. Access Persons with MSDW Online accounts are permitted to trade ONLY
between the hours of 9:30 a.m. and 4:00 p.m. (New York time). Trading
after hours is prohibited.
3
<PAGE>
THE FOLLOWING RESTRICTIONS, 8a, 8b AND 8c, APPLY ONLY TO (I) PORTFOLIO
MANAGERS (AND ALL PERSONS REPORTING TO PORTFOLIO MANAGERS) AND (II)
PERSONNEL IN THE MSDW ADVISORS TRADING DEPARTMENT.
8a. No purchase or sale transactions may be made in any security by any
portfolio manager (or person reporting to a portfolio manager) for a
period of thirty (30) days before or after that security is bought or
sold by any Morgan Stanley Dean Witter Fund (other than Morgan
Stanley Dean Witter Value-Added Market Series, Morgan Stanley Dean
Witter Select Dimensions Investment Series--Value-Added Portfolio,
Morgan Stanley Dean Witter Index Funds, or Portfolios) or MSDW
Advisors Managed Account for which such portfolio manager (or the
portfolio manager to whom such person reports) serves in that
capacity.
8b. No purchase or sale transactions may be made in any security traded
through the MSDW Advisors trading department by any person employed
in the MSDW Advisors trading department for a period of seven (7)
days before or after that security is bought or sold by any Morgan
Stanley Dean Witter Fund (other than Morgan Stanley Dean Witter
Value-Added Market Series, Morgan Stanley Dean Witter Select
Dimensions Investment Series--Value-Added Portfolio, Morgan Stanley
Dean Witter Index Funds, or Portfolios) or MSDW Advisors Managed
Account.
8c. Any transactions by persons described in (a) and (b) above within
such enumerated period will be required to be reversed, if
applicable, and any profits or, at the discretion of the Code of
Ethics Review Committee, any differential between the sale price of
the individual security transaction and the subsequent purchase or
sale price by a relevant MSDW Fund during the enumerated period, will
be subject to disgorgement.
IMPORTANT: Regardless of the limited applicability of Restriction 8,
MSDW Advisors' Risk Management Department monitors all transactions
by ALL Access Persons in order to ascertain any pattern of conduct
which may evidence conflicts or potential conflicts with the
principles and objectives of this Code, including a pattern of
frontrunning. On a quarterly basis, MSDW Advisors' Risk Management
Department will provide the MSDW Funds Boards of Directors with a
written report that (i) describes issues that arose during the
previous quarter under this Code and if applicable, each MSDW Funds'
Sub-Adviser's Code, including but not limited to, information about
material violations and sanctions imposed in response to the material
violations, and (ii) certifies that MSDW Advisors has adopted
procedures reasonably necessary to prevent Access Persons from
violating this Code.
C. ADVANCE CLEARANCE REQUIREMENT
1. PROCEDURES
(a) FROM WHOM OBTAINED
Subject to the limitations and restrictions of B above, advance
clearance of a personal transaction in a security must be
obtained from any two of the following officers of MSDW Advisors:
(1) CEO/President
(2) Chief Investment Officer
(3) Chief Administrative Officer
(4) General Counsel
(5) any other person so designated by the CEO or President,
provided, however, that no more than ten persons, at any
time, may be Clearing Officers.
4
<PAGE>
These officers are referred to in this Code as "Clearing
Officers."
Prior to obtaining the two signatures from the Clearing Officers,
the form must be approved by the MSDW Advisors Department
responsible for the type of security for which permission is
being sought, as follows:
1. Equity Trading --Equity Trading Department
2. Fixed-Income Corporate --Manager,Corporate Fixed-Income
Bonds
3. Municipal Bonds --Manager, Municipal Fixed-Income
4. Non-Investment Grade --Manager, High Yield Fixed-Income
("Junk") Bonds
5. Collateralized Mortgage --Manager, Government Fixed-Income
Obligations (CMOs) and
other non-exempt Mortgage
and Asset-Backed Securities
6. Convertible Securities --Manager, Convertible Securities
Prior to obtaining the Clearing Officers' signatures the form
also must be reviewed and initialed by the MSDW Advisors' Risk
Management Department. A copy of MSDW Advisors Securities
Transaction Approval Form, which may be revised at any time, is
attached as Exhibit B.
The Clearing Officers will not sign unless the approvals of the
relevant investment department and MSDW Advisors' Risk Management
Department are indicated on the form. MSDW Advisors' Risk
Management Department has implemented procedures reasonably
designed to monitor purchases and sales effected pursuant to the
aforementioned pre-clearance procedures.
(b) TIME OF CLEARANCE
All approved securities transactions, whether executed through
an MSDW BROKERAGE ACCOUNT OR AN MSDW ONLINE ACCOUNT, must take
place, prior to 4:00 p.m. EST, on the same day that the complete
advance clearance is obtained. If the transaction is not
completed on the date of clearance, a new clearance must be
obtained, including one for any uncompleted portion.
Post-approval is NOT PERMITTED under the Code of Ethics. If it is
determined that a trade was completed before approval, it will be
considered a violation of the Code of Ethics.
(c) PERMITTED BROKERAGE ACCOUNTS
ALL SECURITIES TRANSACTIONS MUST BE THROUGH AN MSDW BROKERAGE
ACCOUNT OR AN MSDW ONLINE ACCOUNT; NO OTHER BROKERAGE ACCOUNTS
ARE PERMITTED UNLESS SPECIAL PERMISSION IS OBTAINED. If you
maintain accounts outside of MSDW, you must immediately transfer
your accounts to a MSDW branch. Failure to do so will be
considered a significant violation of the Code of Ethics. In the
event permission is granted to maintain an outside brokerage
account, it is the responsibility of the employee to arrange for
duplicate confirmations of all securities transactions and
monthly brokerage statements to be sent to the MSDW Advisors'
Risk Management Department.
Prior to opening an MSDW ONLINE ACCOUNT, Access Persons must
obtain approval from MSDW Advisors' Risk Management Department.
NO employee may open an MSDW Online account unless a completed
and signed copy of their MSDW Online account application and MSDW
Employee Account Request Form is submitted to MSDW Advisors' Risk
Management Department for approval. NO employee may apply for an
5
<PAGE>
MSDW ONLINE ACCOUNT ONLINE. A copy of the MSDW Employee Account
Request Form, which may be revised at any time, is attached as
Exhibit C.
(d) FORM
Clearance must be obtained by completing and signing the
Securities Transaction Approval Form provided for that purpose by
MSDW Advisors and obtaining the signature of the correct
Department indicated in sub-section C.1 (a) and any two of the
Clearing Officers. The form must also indicate the name of the
individual's Financial Advisor and the Branch Office Number,
whether the account is an MSDW Online Account, as well as other
required information.
If you have more than one account under your control, indicate on
the approval sheet for which account the trade is intended.
ADDITIONALLY, PLEASE ADVISE YOUR FINANCIAL ADVISOR OR MSDW ONLINE
TO SEND DUPLICATE COPIES OF YOUR CONFIRMATION SLIPS AND BROKER
STATEMENTS TO THE MSDW Advisors' Risk Management Department FOR
EACH ACCOUNT UNDER YOUR CONTROL.
(e) FILING
After all required signatures are obtained, the Securities
Transaction Approval Form must be filed with the Risk Management
Department of MSDW Advisors by noon of the day following
execution of the trade for filing in the respective individual's
Code of Ethics file. A copy is retained by the employee for his
or her records. (If a preclearance request is denied, a copy of
the form will be maintained with MSDW Advisors' Risk Management
Department.)
2. FACTORS CONSIDERED IN CLEARANCE OF PERSONAL TRANSACTIONS
In addition to the limitations and restrictions set forth under B
above, the Clearing Officers, in keeping with the general principles
and objectives of this Code of Ethics, may refuse to grant clearance
of a personal transaction in their sole discretion without being
required to specify any reason for the refusal. Generally, the
Clearing Officers will consider the following factors in determining
whether or not to clear a proposed transaction:
(a) Whether the amount or the nature of the transaction or person
making it is likely to affect the price or market of the
security.
(b) Whether the individual making the proposed purchase or sale is
likely to benefit from purchases or sales being made or
considered on behalf of any Morgan Stanley Dean Witter Fund or
client.
(c) Whether the transaction is non-volitional on the part of the
individual.
3. EXEMPT SECURITIES
(a) The securities listed below are exempt from the restrictions of
sub-sections (B) (1) and (7), the advance clearance requirement
of sub-section C AND the quarterly and annual reporting
requirements of sub-section D. Therefore, it is not necessary to
obtain advance clearance for personal transactions in any of the
following securities nor is it necessary to report such
securities in the quarterly transaction reports or annual
securities holdings list:
(i) U.S. Government Securities;
(ii) Bank Certificates of Deposit;
(iii) Bankers' Acceptances;
6
<PAGE>
(iv) Commercial Paper;
(v) Purchases which are part of an automatic dividend
reinvestment plan (All employees with dividend reinvestment
plans must submit a memorandum to MSDW Advisors' Risk
Management Department and sales must be pre-approved); and
(vi) Open-end investment companies (mutual funds) (Closed-end
funds must be pre-approved).
(b) In addition, the following securities are exempt from the
restrictions of sub-sections B (1) and (7) and the advance
clearance requirement of sub-section C, but are subject to the
quarterly and annual reporting requirements of sub-section D:
(i) Unit Investment Trusts; and
(ii) Morgan Stanley Dean Witter & Co. stock (including
exercise of stock option grants), due to the fact that
it may not be purchased by any actively managed Morgan
Stanley Dean Witter Fund (other than index-type funds)
or for any MSDW Advisors Managed Account. The restrictions
imposed by Morgan Stanley Dean Witter & Co. on Senior
Management and other persons in connection with
transactions in Morgan Stanley Dean Witter & Co. stock
are not affected by the exemption of Morgan Stanley Dean
Witter & Co. stock from the advance clearance requirements
of this Code, and continue in effect to the extent
applicable.
4. ACCOUNTS COVERED
Advance clearance must be obtained for any personal transaction in a
security by an Access Person if such Access Person has, or as a
result of the transaction acquires, any direct or indirect beneficial
ownership in the security.
The term "beneficial ownership" is defined by rules of the SEC which
will be applicable in all cases. Generally, under the SEC rules, a
person is regarded as having beneficial ownership of securities held
in the name of:
(a) a husband, wife or a minor child; OR
(b) a relative sharing the same house; OR
(c) anyone else if the Access Person:
(i) obtains benefits substantially equivalent to ownership
of the securities; or
(ii) can obtain ownership of the securities immediately or at
some future time.
5. EXEMPTION FROM CLEARANCE REQUIREMENT
Clearance is not required for any account over which the Access
Person has no influence or control. In case of doubt the Access
Person may state on the Securities Transaction Approval Form that he
or she disclaims any beneficial ownership in the securities involved.
D. REPORT OF TRANSACTIONS
1. TRANSACTIONS AND ACCOUNTS COVERED
(a) All securities transactions, except for transactions involving
exempt securities listed in Section V., sub-section C.3. (a) of
this Code must be reported in the next quarterly transaction
report after the transaction is effected. In addition, any new
brokerage account(s) opened during the quarter as well as the
date(s) the account(s) was opened must be reported.
7
<PAGE>
(b) EVERY ACCESS PERSON MUST FILE A REPORT WHEN DUE EVEN IF SUCH
PERSON MADE NO PURCHASES OR SALES OF SECURITIES DURING THE PERIOD
COVERED BY THE REPORT.
(c) Directors and officers who, pursuant to Section III, are exempt
from preclearance ARE subject to the quarterly reporting
requirements.
2. TIME OF REPORTING
(a) INITIAL HOLDINGS REPORT
Each Access Person must, at the time of becoming an Access
Person, provide an initial holdings report to the Compliance
Officer or Compliance Coordinator disclosing (i) all securities
beneficially owned by the Access Person listing the title of the
security, number of shares held, and principal amount of the
security (any privately-placed securities held must be reported)
(ii) the name of the broker dealer or financial institution where
the Access Person maintains a personal account and (iii) the date
the report is submitted by the Access Person. New employees will
be required to provide a listing of all non-exempt securities
holdings as of the date of commencement of employment as well as
a listing of all outside brokerage accounts. This report must be
provided no later than 10 days after a person becomes an Access
Person.
(b) QUARTERLY TRANSACTION REPORTS
Each Access Person must submit a quarterly report of all
securities transactions, except for transactions involving exempt
securities listed in Section V., sub-section C.3. (a) of this
Code, and any new accounts(s) opened during the quarter as well
as the date(s) the account(s) was opened within 10 calendar days
after the end of each calendar quarter.
(c) ANNUAL HOLDINGS REPORTS
The January Annual Listing of Securities Holdings Report requires
all Access Persons to provide an annual listing of holdings of
(i) all securities beneficially owned listing the title of the
security, number of shares held, and principal amount of the
security as of December 31 of the preceding year, except
securities exempt from pre-clearance AND reporting under Section
V., sub-section C. 3(a), (ii) the name of any broker dealer or
financial institution where the account(s) are maintained, as of
December 31 of the preceding year (a current listing will also be
required upon the effectiveness of this Code) and (iii) the date
the Report is submitted by the Access Person. The information
must be current as of a date not more than 30 days before the
report is submitted.
3. FORM OF REPORTING
The initial holdings report, quarterly transaction report and the
annual listing of holdings report must be on the appropriate forms
provided by MSDW Advisors or may consist of broker statements
(attached to the Report form or, if an MSDW account, the broker
statements formerly sent to MSDW Advisors' Risk Management
Department) which provide at least the same information. In the event
that MSDW Advisors already maintains a record of the required
information, an Access Person may satisfy this requirement by (i)
confirming in writing (which may include e-mail) the accuracy and
completeness of the record and disclose the beneficial ownership of
securities (if any) not listed on the account statement and (ii)
recording the date of the confirmation. Copies of MSDW Advisors'
initial holdings report, quarterly transaction report and the annual
listing of holdings report, which may be revised at any time, are
attached as Exhibits D, E, and F, respectively.
8
<PAGE>
4. RESPONSIBILITY TO REPORT
The responsibility for taking the initiative to report is imposed on
each individual required to make a report. Any effort by MSDW
Advisors to facilitate the reporting process does not change or alter
that responsibility.
5. WHERE TO FILE REPORT
All reports must be filed with the Risk Management Department of MSDW
Advisors.
6. RESPONSIBILITY TO REVIEW
MSDW Advisors' Risk Management Department's Compliance Officer or
Compliance Coordinator will review all initial holdings reports,
quarterly transaction reports, and annual listing of holdings reports
filed by Access Persons.
VI. REVIEW COMMITTEE
A Code of Ethics Review Committee, consisting of the CEO/ President, Chief
Investment Officer and the General Counsel of MSDW Advisors, will review and
consider any proper request of an Access Person for relief or exemption from
any restriction, limitation or procedure contained herein, which
restriction, limitation or procedure is claimed to cause a hardship for such
Access Person. The committee shall meet on an ad hoc basis, as deemed
necessary upon written request by an Access Person, stating the basis for
his or her request for relief. The committee's decision is solely within its
complete discretion.
VII. SERVICE AS DIRECTOR
No Access Person may serve on the board of any company without prior
approval of the Code of Ethics Review Committee. If such approval is
granted, it will be subject to the implementation of Chinese Wall
procedures to isolate investment personnel serving as directors from making
investment decisions for Morgan Stanley Dean Witter Funds or MSDW Advisors
Managed Accounts concerning the company in question.
VIII.GIFTS
No Access Person shall accept, directly or indirectly, anything of value,
including gifts and gratuities, in excess of $100 per year from any person
or entity that does business with any Morgan Stanley Dean Witter Fund or
MSDW Advisors Managed Account, not including occasional meals or tickets
to theater or sporting events or other similar entertainment.
IX. SANCTIONS
Upon discovering a violation of this Code, MSDW Advisors may impose such
sanctions as it deems appropriate, including, but not limited to, a
reprimand (orally or in writing), demotion, and suspension or termination of
employment. The CEO of MSDW Advisors, in his sole discretion, is authorized
to determine the choice of sanctions to be imposed in specific cases,
including termination of employment of any employee.
X. EFFECTIVE DATE
All employees, officers and Directors of MSDW Advisors, Services and
Distributors (whether or not Access Persons) are required to sign a copy
of this Code indicating their agreement to abide by the terms of this Code.
In addition, all employees, officers and Directors of MSDW Advisors,
Services and Distributors will be required to certify annually that (i)
they have read and understand the terms of this Code of Ethics and
recognize the responsibilities and obligations incurred by their being
subject to this Code, and (ii) they are in compliance with the requirements
of this Code of Ethics, including but
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<PAGE>
not limited to the reporting of all brokerage accounts, the preclearance for
Access Persons and all non-exempt personal securities transactions in
accordance with this Code.
XI. EMPLOYEE CERTIFICATION
I have read and understand the terms of the above Code of Ethics. I
recognize the responsibilities and obligations, including but not limited to
my quarterly transaction, annual listing of holdings, and initial holdings
reporting obligations, incurred by me as a result of my being subject to
this Code of Ethics. I hereby agree to abide by the above Code of Ethics.
- -------------------------------------- ------------------------
(Signature) (Date)
- --------------------------------------
(Print name)
10
<PAGE>
EXHIBIT A
MORGAN STANLEY DEAN WITTER ADVISORS
PRIVATE PLACEMENT APPROVAL REQUEST
(ATTACH A COPY OF THE PRIVATE PLACEMENT MEMORANDUM, OFFERING MEMORANDUM OR ANY
OTHER RELEVANT DOCUMENTS)
- ------------------------------ ----------------------------
NAME (PLEASE PRINT) DEPARTMENT & JOB TITLE
1. Name of the sponsor's corporation, partnership or other entity (the
"Private Placement"):
---------------------------------------------------------------------------
2. Is the sponsor's corporation or partnership: [ ] Public [ ] Private
3. Type of security or fund:
-------------------------------------------------
4. Nature of participation (e.g. Stockholder, General Partner, Limited
Partner). Indicate all applicable:
---------------------------------------------------------------------------
5. Planned date of transaction:
----------------------------------------------
6. Size of offering (if a fund, size of fund):
-------------------------------
7. Size of your participation (number of units/shares and dollar amount):
---------------------------------------------------------------------------
8. Would the investment carry limited or unlimited liability? [ ] Limited
[ ] Unlimited
9. Would the investment require any use of MSDW Advisors' premises, facilities
or materials? [ ] Yes [ ] No If "yes," please describe:
---------------------------------------------------------------------------
10. Are other MSDW Advisors' personnel or clients involved? [ ] Yes [ ] No
If "yes," please describe:
------------------------------------------------
11. Describe the business to be conducted by the Private Placement:
---------------------------------------------------------------------------
If Private Placement is a fund:
o Describe investment objectives of the fund (e.g. value, growth, core or
specialty)
-----------------------------------------------------------------------
o Is this a permissible investment for an account or fund that you
manage? [ ] Yes [ ] No
If "yes", please describe which client or fund:
-----------------------------------------------------------------------
12. Will you participate in any investment decisions for the Private Placement?
[ ] Yes [ ] No
If "Yes," please describe:
---------------------------------------------------------------------------
13. Describe how you became aware of this Private Placement:
---------------------------------------------------------------------------
14. Has this private placement been made available to an account or fund that
you manage? IF no, state why:
---------------------------------------------------------------------------
15. To the best of your knowledge, will this Private Placement result in an
initial public offering ("IPO")? [ ] YES [ ] NO
- --------------------------------------------------------------------------------
I understand that approval, if granted, is based upon the information provided
herein and I agree to observe any conditions imposed upon such approval, I will
notify MSDW Advisors Risk Management Department in writing if any aspect of the
Private Placement is proposed to be changed (e.g., investment focus of fund,
compensation, involvement in organization's management) and I hereby acknowledge
that such changes may require further approvals, or disinvestment by me.
I represent (i) that I have read and understand the MSDW Advisors' Code of
Ethics (the "Code") with respect to personal trading and recognize that I am
subject thereto; (ii) that the above trade is in compliance with the Code; (iii)
that to the best of my knowledge that the above trade does not represent a
conflict of interest, or an appearance of a conflict of interest, with any MSDW
Client or MSDW Fund; and (iv) that I have no knowledge of any pending client
orders in this security nor is the above trade in a related security which
indirectly would result in a transaction in a security in which there are
pending client orders. Furthermore, I acknowledge that no action should be taken
by me to effect the trade(s) listed above until I have received formal approval.
Signature Date:
------------------------------------ --------------------
Date Received by Risk Management:
------------
Approved: Disapproved: Date:
----------- ----------- --------------------
<PAGE>
EXHIBIT B
SECURITIES TRANSACTION APPROVAL FORM
MORGAN STANLEY DEAN WITTER ADVISORS INC.
MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC.
MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
PRINT NAME DEPARTMENT NAME OF PORTFOLIO MANAGER TO WHOM YOU REPORT
IF INVESTMENT DEPARTMENT COMPLETE BOX ->
- ---------------------------------------------------------------------------------------------------------------------------
DEAN WITTER ACCOUNT NO./MSDW NAME OF FINANCIAL ADVISOR DEANWITTER BRANCH/MSDW ONLINE
ONLINE ACCOUNT NO.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
REQUEST FOR PERMISSION TO ENGAGE IN PERSONAL TRANSACTION
--------------------------------------------------------
I hereby request permission to effect a transaction in the security as
indicated below for my own account or other account in which I have a beneficial
interest or legal title. THE APPROVAL WILL BE EFFECTIVE ONLY FOR A TRANSACTION
COMPLETED PRIOR TO THE CLOSE OF BUSINESS ON THE DAY OF APPROVAL. ANY
TRANSACTION, OR PORTION THEREOF, NOT SO COMPLETED WILL REQUIRE A NEW APPROVAL.
NOTE: A SEPARATE FORM MUST BE USED FOR EACH SECURITY TRANSACTION. ADVISE YOUR
FINANCIAL ADVISOR/MSDW ONLINE TO SUPPLY DUPLICATE CONFIRMS AND STATEMENTS ON ALL
TRANSACTIONS TO: MORGAN STANLEY DEAN WITTER ADVISORS INC., RISK MANAGEMENT
DEPARTMENT, TWO WORLD TRADE CENTER, NEW YORK, N.Y. 10048
I AM FAMILIAR WITH AND AGREE TO ABIDE BY THE REQUIREMENTS SET FORTH IN THE
MORGAN STANLEY DEAN WITTER ADVISORS INC. CODE OF ETHICS AND PARTICULARLY THE
FOLLOWING:
1. In the case of a purchase, I agree that I will not sell the security at
a profit for a minimum of sixty days from the date of the purchase
transaction. In the case of a sale, I agree that I will not purchase
the security at a profit for a minimum of sixty days from the date of
the sale transaction. Any violation will result in disgorgement of all
profits from the transaction.
2. I represent that this security: (A) is not involved in an Initial
Public Offering (IPO); (B) does not involve a short sale, futures or
option transaction and (c) is not a foreign security, unless (i) traded
on a U.S. Stock Exchange or (ii) an American Depository Receipt (ADR).
3. For any private placement, I am aware that specific pre-approval must
be obtained from the Morgan Stanley Dean Witter Advisors Inc. Code of
Ethics Review Committee.
4. For (A) EQUITY PORTFOLIO MANAGERS AND PERSONS REPORTING TO EQUITY
PORTFOLIO MANAGERS: I am aware that I must obtain the equity
security's description page from Bloomberg and attach the
description to this preapproval form and a signature from Joe
McAlinden or Rajesh Gupta as one of my Approving Officers (in
their absence I shall obtain the initials of my immediate
supervisor). I am aware that in certain cases I may be
required to disgorge any profits from a transaction if a
Morgan Stanley Dean Witter Fund buys or sells the same
security within 30 days preceding or subsequent to my
transaction (see Section V.B. (8) of the Code of Ethics for a
complete description of the scope of this restriction).
(B) PORTFOLIO MANAGERS AND PERSONS REPORTING TO PORTFOLIO
MANAGERS: I am aware that I must obtain a signature from Joe
McAlinden or Rajesh Gupta as one of my Approving Officers (in
their absence I shall obtain the initials of my immediate
supervisor). I am aware that in certain cases I may be
required to disgorge any profits from a transaction if a
Morgan Stanley Dean Witter Fund buys or sells the same
security within 30 days preceding or subsequent to my
transaction (see Section V.B. (8) of the Code of Ethics for a
complete description of the scope of this restriction).
(C) PERSONNEL IN THE MORGAN STANLEY DEAN WITTER ADVISORS INC.
TRADING DEPARTMENT: I am aware that in certain cases I may be
required to disgorge any profits from a transaction if a
Morgan Stanley Dean Witter Fund buys or sells the same
security within 7 days preceding or subsequent to my
transaction (see Section V.B.(8) of the Code of Ethics for a
complete description of the scope of this restriction).
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
A. PURCHASE
-----------------------------------------------------------------------------------------------------------
NAME OF SECURITY/SYMBOL CUSIP NUMBER FOR FIXED INCOME SECURITIES ONLY
-----------------------------------------------------------------------------------------------------------
NUMBER OF SHARES OR ORDER PRICE EXECUTION PRICE TOTAL PRICE
PRINCIPAL AMOUNT
-----------------------------------------------------------------------------------------------------------
HAVE YOU SOLD ANY SHARES OF THIS SECURITY WITHIN THE PAST SIXTY DAYS? NO [ ] YES [ ] IF YES, AT WHAT PRICE PER SHARE? $
- -----------------------------------------------------------------------------------------------------------------------------------
B. SALE
-----------------------------------------------------------------------------------------------------------
NAME OF SECURITY/SYMBOL CUSIP NUMBER FOR FIXED INCOME SECURITIES ONLY
-----------------------------------------------------------------------------------------------------------
NUMBER OF SHARES OR ORDER PRICE EXECUTION PRICE TOTAL PRICE DATE ACQUIRED UNIT PRICE AT
PRINCIPAL AMOUNT ACQUISITION
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] CHECK BOX IF THE SECURITY IS OFFERED THROUGH A PRIVATE DATE: YOUR SIGNATURE:
PLACEMENT. IF SO, CONTACT THE MORGAN STANLEY DEAN WITTER
ADVISORS INC. RISK MANAGEMENT DEPARTMENT FIRST.
- ------------------------------------------------------------------------------------------------------------------------------------
PERMISSION: GRANTED: DATE: TRADING DEPARTMENT SIGNATURE: IF APPLICABLE, RISK MANAGEMENT
-------- DEPARTMENT REVIEW:
DENIED: ---------------
--------
- ------------------------------------------------------------------------------------------------------------------------------------
DATE: SIGNATURE - APPROVING OFFICER: DATE: SIGNATURE - APPROVING OFFICER:
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* IF SHARES BEING SOLD WERE PURCHASED ON MORE THAN ONE DATE, EACH ACQUISITION
DATE MUST BE LISTED FOR PURPOSES OF DETERMINING THE 60-DAY HOLDING PERIOD.
THE WHITE COPY OF THIS PREAPPROVAL FORM MUST BE RETURNED TO THE RISK
MANAGEMENT DEPARTMENT BY NOON OF THE DAY FOLLOWING EXECUTION OF THE TRADE.
WHITE -- RISK MANAGEMENT PINK -- EMPLOYEE COPY
<PAGE>
EXHIBIT C
MORGAN STANLEY DEAN WITTER ADVISORS ("MSDW ADVISORS")
MSDW EMPLOYEE REQUEST FORM FOR
OPENING AN MSDW ONLINE BROKERAGE ACCOUNT
Please complete this form for all "employee accounts" you intend to maintain at
Morgan Stanley Dean Witter Online, Inc. ("MSDW Online"). Please make additional
copies of this page as necessary in order to include information for all your
accounts. After MSDW Advisors' Risk Management Department's review, this form
will be returned to you.
- ------------------------------ ----------------------- ---------------------
PRINT NAME EMPLOYEE ID # FAX #
- ------------------------------ -----------------------------------------------
SOCIAL SECURITY # DEPARTMENT/BRANCH #
Check one of the following:
[ ] I am an MSDW employee [ ] I am a subcontractor/vendor
---------------------------------------------------------------------------
ACCOUNT INFORMATION
---------------------------------------------------------------------------
The following MSDW Online account is currently open or will be opened.
Account Title:
---------------------------------------------------------
MSDW Online Account Number:
--------------------------------------------
(TO BE COMPLETED BY MSDW ONLINE)
Employee's relationship to account owner:
------------------------------
[ ] This account is NOT independently managed; I am involved in the
investment decisions.(2)
[ ] This account is independently managed; I am NOT involved in the
investment decisions.(3)
Name of investment manager and relationship, if any:
------------------------------------------------------------------------
By signing below, you agree to abide by MSDW Advisors Employee Trading Policy
and any desk or division trading policy applicable to you with respect to any
account maintained at MSDW Online.
DATE: SIGNATURE:
----------------------- --------------------------
PLEASE SEND DUPLICATE STATEMENTS & TRADE CONFIRMATIONS TO:
----------------------------------------------------------
MSDW ADVISORS
2 WORLD TRADE CENTER, 70TH FLOOR
NEW YORK, NY 10048
ATTN: RISK MANAGEMENT DEPARTMENT
- --------------------------------------------------------------------------------
TO MSDW ONLINE:
Pursuant to NYSE Rule 407, please accept this form as notification that MSDW
Advisors has approved the employee named above to maintain the account titled
above with your firm. The employee has a beneficial interest in such account.
This account must be placed in the appropriate employee account range, i.e.,
MSDW Advisors, Morgan Stanley Dean Witter Services Company and Morgan Stanley
Dean Witter Distributors, in order to permit appropriate review by MSDW
Advisors.
DATE: APPROVED BY:
----------------------- ---------------------------------
SIGNATURE
-------------------------------
PRINT NAME
MSDW ADVISORS RISK MANAGEMENT
(1) An "employee" account means any brokerage account owned or controlled, in
whole or in part, directly or indirectly by you, whether held in your name
individually, or jointly with others, or not in your name at all. Refer to
Section V. subsection C.4 Accounts Covered under MSDW Advisors' Code of
Ethics for further clarification. If you are unsure as to whether an account
is an employee account, MSDW Advisors, MSDW Services Company and MSDW
Distributors employees should call the Risk Management Department at
212-392-6532.
(2) Your participation in the selection of any investment, including mutual
funds, means that the account is NOT independently managed.
(3) You must not be involved in investment selections through recommendation,
advice, and prior review or otherwise, or you must be a passive beneficiary
of the account in order to represent that you are not involved in investment
decisions for the account.
<PAGE>
EXHIBIT D
MORGAN STANLEY DEAN WITTER ADVISORS INC.
MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC.
LISTING OF SECURITIES HOLDINGS AND BROKERAGE ACCOUNTS (INITIAL)
---------------------------------------------------------------
I hereby certify that the following is a complete listing of all
securities beneficially owned by me AS OF THE DATE HEREOF. I also hereby certify
that, set forth below, is a listing of all brokerage accounts and any other
accounts holding securities maintained by me.
NOTE: The term "securities" includes all stocks, bonds, derivatives,
private placements, limited partnership interests, etc. Failure to fully
disclose all securities, whether or not held in a Morgan Stanley Dean Witter
brokerage account or Morgan Stanley Dean Witter Online account, will be
considered a violation of the Code of Ethics.
<TABLE>
<CAPTION>
=================================================================================================
TYPE OF SECURITY NUMBER OF
SHARES AND YEAR
I. TITLE OF SECURITY (Indicate if security PRINCIPAL ACQUIRED
is a Private AMOUNT
Placement etc.)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
(Use additional sheet if necessary)
</TABLE>
<TABLE>
<CAPTION>
=================================================================================================
II. NAME OF BROKERAGE ACCOUNT LOCATION ACCOUNT NUMBER
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
(Use additional sheet if necessary)
</TABLE>
- ------------------------------- --/--/--
(Sign Name) (Date)
- -------------------------------
(Print Name)
<PAGE>
EXHIBIT E
MORGAN STANLEY DEAN WITTER ADVISORS INC.
MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC.
QUARTERLY SECURITIES TRANSACTIONS - CONFIDENTIAL REPORT
-------------------------------------------------------
XXXXQUARTER 2000/ XXX.,XXX.,XXX.
--------------------------------
The following lists all transactions in securities in which I had any direct or
indirect beneficial ownership during the last calendar quarter (excluding
securities exempted by Section V., sub-section C.3.(a) of the Morgan Stanley
Dean Witter Advisors Code of Ethics (revised March 1, 2000).
ANY TRANSACTIONS IN UNIT INVESTMENT TRUSTS OR MORGAN STANLEY DEAN WITTER & CO.
STOCK (INCLUDING EXERCISE OF STOCK OPTION GRANTS) MUST BE REPORTED ON THIS FORM.
IF ALL TRANSACTIONS LISTED BELOW WERE EXECUTED THROUGH MSDW AND ALL THE
APPLICABLE INFORMATION IS REFLECTED IN THE CONFIRMS PREVIOUSLY SENT, INDICATE SO
ON THIS FORM. *Use reverse side if additional space is needed.
IF NO TRANSACTIONS TOOK PLACE, WRITE "NONE".
<TABLE>
<CAPTION>
DATE OF NUMBER OF TITLE OF SECURITY UNIT PRICE TOTAL PRICE BROKER
TRANSACTION SHARES/ (INCLUDING, IF APPLICABLE,
PRINCIPAL INTEREST AND MATURITY RATE)
AMOUNT
<S> <C> <C> <C> <C> <C>
Purchases and Acquisitions
--------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Sales and Other Acquisitions
----------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
1) Did you submit a pre-approval request form for each of the securities
transactions listed above? YES NO
--- ---
2) Which DWR branch maintains your account?
-------------------------------------
3) Who is your Financial Advisor at the Branch?
---------------------------------
4) (For MSDW Advisors and Distributors Directors and Officers only) To your
knowledge, are you the beneficial owner of more than 1/2 of 1% of the
outstanding securities of any issuer? YES NO
--- ---
If yes, please specify:
------------------------------------------------------
-----------------------------------------------------------------------------
5) HAVE YOU RECEIVED WRITTEN PERMISSION TO MAINTAIN BROKERAGE ACCOUNT FOR YOU OR
A MEMBER OF YOUR IMMEDIATE FAMILY AT A BROKER-DEALER OTHER THAN DWR?
YES NO
--- ---
6) IF "YES", HAVE ALL TRANSACTIONS BEEN PRECLEARED AND REPORTED AS
REQUIRED BY THE CODE OF ETHICS? YES NO
--- ---
7) HAVE YOU OPENED ANY NEW ACCOUNTS THIS QUARTER? YES___ NO___ IF "YES", WHAT
DATE WAS THIS ACCOUNT(S) OPENED?
---------------------------------------------
-----------------------------------------------------------------------------
WHAT IS THE NAME OF THE BROKER DEALER OR FINANCIAL INSTITUTION WITH WHOM YOU
ESTABLISHED THE ACCOUNT?
-----------------------------------------------------
Date: / / Name: Signed:
---- ---- ---- --------------------- ----------------------
RETURN THIS FORM TO: MORGAN STANLEY DEAN WITTER ADVISORS RISK MANAGEMENT
DEPARTMENT, 2 WTC/7O, BY 00/00/00. REV (03/00)
<PAGE>
EXHIBIT F
MORGAN STANLEY DEAN WITTER ADVISORS INC.
MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC.
ANNUAL LISTING OF SECURITIES HOLDINGS AND BROKERAGE ACCOUNTS
------------------------------------------------------------
I hereby certify that the following is a complete listing of all securities
(other than open-end mutual funds and other exempt securities as described in
Section V., sub-section C.3. (a) of the Code of Ethics) beneficially owned (as
defined in Section V., sub-section C.4 of the Code of Ethics) by me AS OF THE
DATE HEREOF. I also hereby certify that, set forth below, is a listing of all
brokerage accounts and any other accounts holding securities maintained by me. I
also hereby certify that, the information contained below is current as of the
date indicated below.
NOTE: The term "securities" includes all stocks, bonds, derivatives,
private placements, limited partnership interests, etc. ANY TRANSACTIONS IN UNIT
INVESTMENT TRUSTS OR MORGAN STANLEY DEAN WITTER & CO. STOCK (INCLUDING EXERCISE
OF STOCK OPTION GRANTS) MUST BE REPORTED ON THIS FORM. Failure to fully disclose
all securities holdings, whether or not held in a Morgan Stanley Dean Witter
brokerage account or MSDW Online Account, will be considered a violation of the
Code of Ethics.
<TABLE>
<CAPTION>
NUMBER OF
SHARES AND YEAR
I. TITLE OF SECURITY TYPE OF SECURITY PRINCIPAL ACQUIRED
AMOUNT
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
(Use additional sheet if necessary)
</TABLE>
<TABLE>
<CAPTION>
II. NAME OF BROKERAGE ACCOUNT LOCATION ACCOUNT NUMBER
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
(Use additional sheet if necessary)
</TABLE>
- ------------------------------ --/--/--
(Sign Name) (Date)
- ------------------------------
(Print Name)
PLEASE RETURN THIS FORM TO : MORGAN STANLEY DEAN WITTER ADVISORS' RISK
MANAGEMENT DEPARTMENT, 2 WTC /7O, BY 00/10/00.
<PAGE>
MORGAN STANLEY DEAN WITTER FUNDS
CODE OF ETHICS
I. INTRODUCTION
This Code of Ethics is adopted by the investment companies listed on
Schedule A attached hereto, which list may be amended from time to time
(each a "Fund" and collectively the "Morgan Stanley Dean Witter Funds" or
the "Funds"), in compliance with Rule 17j-1 promulgated by the Securities
and Exchange Commission ("SEC") under the Investment Company Act of 1940, as
amended. This Code covers all persons who are "Access Persons," as that term
is defined in Rule 17j-1. To the extent that any such individuals are
"Access Persons" under the Code of Ethics of the Funds' Investment Advisor,
Investment Manager, or Sub-Advisor, as applicable (any such entity herein
referred to as "Investment Advisor"), whose Codes have also been established
pursuant to Rule 17j-1, compliance by such individuals with the provisions
of the Code of the applicable Investment Advisor shall constitute compliance
with this Code.
II. PERSONAL TRANSACTIONS
A. REPORTS OF TRANSACTIONS - INDEPENDENT DIRECTORS/TRUSTEES
An Independent Director/Trustee of a Morgan Stanley Dean Witter Fund
shall report quarterly to the Fund any personal transaction in a security if
he or she knows or should know at the time of entering into the transaction
that: (a) the Fund has engaged in a transaction in the same security within
the last 15 days, or is engaging in such transaction or is going to engage
in a transaction in the same security in the next 15 days, or (b) the Fund
or its Investment Advisor has within the last 15 days considered a
transaction in the same security or is considering a transaction in the
security or within the next 15 days is going to consider a transaction in
the security.
B. REPORTS OF TRANSACTIONS, BROKERAGE ACCOUNTS AND HOLDINGS - ACCESS
PERSONS WHO ARE NOT INDEPENDENT DIRECTORS/ TRUSTEES
An Access Person who is not an Independent Director/Trustee of a Morgan
Stanley Dean Witter Fund shall report all non-exempt securities transactions
and new brokerage accounts on a quarterly basis.
An Access Person who is not an Independent Director/Trustee of a Morgan
Stanley Dean Witter Fund shall provide an annual listing of holdings of (i)
all securities beneficially owned as of December 31 of the preceding year,
except securities exempt from pre-clearance and reporting under Section D.,
(2) hereof listing the title of the security, number of shares held, and
principal amount of the security, (ii) the name of any broker dealer or
financial institution where the account(s) are maintained, as of December 31
of the preceding year (a current listing will also be required upon the
effectiveness of this Code) and (iii) the date the Report is submitted by
the Access Person. The information must be current as of a date not more
than 30 days before the report is submitted. New Access Persons, who are not
Independent Directors/Trustees of a Morgan Stanley Dean Witter Fund, will be
required to provide a listing of all non-exempt securities holdings, with
the information set forth above, as of the date of commencement of
employment as well as a listing of all outside brokerage accounts no later
than ten days after that person becomes an Access Person.
C. REPORTS OF TRANSACTIONS, BROKERAGE ACCOUNTS AND HOLDINGS - GENERAL
Any quarterly report required under A or B above must be made within ten
days after the end of the calendar quarter in which the personal transaction
occurred. The report may be made on the form provided by the Investment
Advisor or may consist of a broker statement that provides at least the same
information. In the event that MSDW Advisors already maintains a record of
the required information, an Access Person may satisfy this requirement by
(i) confirming in writing (which may include e-mail) the accuracy and
completeness of the record and disclose the beneficial ownership of
<PAGE>
securities (if any) not listed on the account statement and (ii) recording
the date of the confirmation. Copies of the Investment Advisor's forms,
which may be revised at any time, are attached.
The Funds' Compliance Officer will identify and advise all Access
Persons, including the Independent Directors/Trustees, subject to the
reporting requirement under A or B above, of their reporting requirement.
Each report required under A or B above will be submitted for review by the
Compliance Officer or Compliance Coordinator in the Risk Management
Department of the Investment Advisor.
D. DEFINITIONS AND EXEMPTIONS
(1) DEFINITIONS
For purposes of this Code the term "personal transaction" means the
purchase or sale, or other acquisition or disposition, of a security for
the account of the individual making the transaction or for an account in
which he or she has, or as a result of the transaction acquires, any
direct or indirect beneficial ownership in a security.
The term "beneficial ownership" is defined by rules of the SEC.
Generally, under SEC rules a person is regarded as having beneficial
ownership of securities held in the name of:
(a) a husband, wife, or minor child;
(b) a relative sharing the same house;
(c) anyone else if the access person -
(i) obtains benefits substantially equivalent to ownership of the
securities; or
(ii)can obtain ownership of the securities immediately or at
some future time.
The term "Access Person" is defined by rules of the SEC as (i) any
director, officer, or general partner of a fund or of a fund's investment
adviser, or any employee of a fund or of a fund's investment adviser who,
in connection with his or her regular functions or duties, participates
in the selection of a fund's portfolio securities or who has access to
information regarding a fund's future purchases or sales of portfolio
securities; or (ii) any director, officer, or general partner of a
principal underwriter who in the ordinary course of business, makes,
participates in or obtains information regarding, the purchase or sale of
securities for the fund for which the principal underwriter acts, or
whose functions or duties in the ordinary course of business relate to
the making of any recommendation to the fund regarding the purchase or
sale of securities.
(2) EXEMPTIONS
No report is required for a personal transaction in any of the
following securities:
(i) Securities issued by the U.S. Government;
(ii) Bank certificates of deposit;
(iii) Bankers' acceptances;
(iv) Commercial paper;
(v) Open-end mutual fund shares.
Also, no report is required with respect to any account over which
the access person has no influence or control.
III. CODE VIOLATIONS
Any officer of a Morgan Stanley Dean Witter Fund who discovers a
violation or apparent violation of this Code by an access person shall bring
the matter to the attention of the Chief Executive Officer or General
Counsel of the Fund who shall then report the matter to the Board of
Directors or the Board of Trustees, as the case may be, of the fund. The
Board shall determine
<PAGE>
whether a violation has occurred and, if it so finds, may impose such
sanctions, if any, as it considers appropriate.
IV. ADMINISTRATION OF CODE OF ETHICS
On a quarterly basis, the Board of Directors or the Board of Trustees of
each of the Funds shall be provided with a written report by each of the
Funds and the Investment Advisors, that describes any new issues arising
under the Code of Ethics, including information on material violations of
the Code of Ethics or procedures and sanctions imposed, and certifies that
each Fund and the Investment Advisors have adopted procedures reasonably
necessary to prevent Access Persons from violating the Code of Ethics.
Rev. March 1, 2000
<PAGE>
MORGAN STANLEY DEAN WITTER FUNDS
AT
FEBRUARY 29, 2000
MONEY MARKET FUNDS
1. Active Assets California Tax-Free Trust ("AA CALIFORNIA")
2. Active Assets Government Securities Trust ("AA GOVERNMENT")
3. Active Assets Institutional Money Trust ("AA INSTITUTIONAL")
4. Active Assets Money Trust ("AA MONEY")
5. Active Assets Premier Money Trust ("AA PREMIER")
6. Active Assets Tax-Free Trust ("AA TAX-FREE")
7. Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
("CALIFORNIA TAX-FREE DAILY")
8. Morgan Stanley Dean Witter Liquid Asset Fund Inc. ("LIQUID ASSET")
9. Morgan Stanley Dean Witter New York Municipal Money Market Trust ("NEW
YORK MONEY")
10. Morgan Stanley Dean Witter Tax-Free Daily Income Trust ("TAX-FREE
DAILY")
11. Morgan Stanley Dean Witter U.S. Government Money Market Trust
("GOVERNMENT MONEY")
EQUITY FUNDS
12. Morgan Stanley Dean Witter Aggressive Equity Fund ("AGGRESSIVE EQUITY")
13. Morgan Stanley Dean Witter American Opportunities Fund ("AMERICAN
OPPORTUNITIES")
14. Morgan Stanley Dean Witter Capital Growth Securities ("CAPITAL GROWTH")
15. Morgan Stanley Dean Witter Competitive Edge Fund ("COMPETITIVE EDGE")
16. Morgan Stanley Dean Witter Developing Growth Securities Trust
("DEVELOPING GROWTH")
17. Morgan Stanley Dean Witter Dividend Growth Securities Inc. ("DIVIDEND
GROWTH")
18. Morgan Stanley Dean Witter Equity Fund ("EQUITY FUND")
19. Morgan Stanley Dean Witter European Growth Fund Inc. ("EUROPEAN
GROWTH")
20. Morgan Stanley Dean Witter Financial Services Trust ("FINANCIAL
SERVICES")
21. Morgan Stanley Dean Witter Fund of Funds ("FUND OF FUNDS")
22. Morgan Stanley Dean Witter Global Dividend Growth Securities ("GLOBAL
DIVIDEND GROWTH")
23. Morgan Stanley Dean Witter Global Utilities Fund ("GLOBAL UTILITIES")
24. Morgan Stanley Dean Witter Growth Fund ("GROWTH FUND")
25. Morgan Stanley Dean Witter Health Sciences Trust ("HEALTH SCIENCES")
26. Morgan Stanley Dean Witter Income Builder Fund ("INCOME BUILDER")
27. Morgan Stanley Dean Witter Information Fund ("INFORMATION FUND")
28. Morgan Stanley Dean Witter International Fund ("INTERNATIONAL FUND")
29. Morgan Stanley Dean Witter International SmallCap Fund ("INTERNATIONAL
SMALLCAP")
30. Morgan Stanley Dean Witter Japan Fund ("JAPAN FUND")
<PAGE>
31. Morgan Stanley Dean Witter Latin American Growth Fund ("LATIN
AMERICAN")
32. Morgan Stanley Dean Witter Market Leader Trust ("MARKET LEADER")
33. Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities ("MID-CAP
DIVIDEND GROWTH")
34. Morgan Stanley Dean Witter Mid-Cap Equity Trust ("MID-CAP EQUITY")
35. Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
("NATURAL RESOURCE")
36. Morgan Stanley Dean Witter Next Generation Trust ("NEXT GENERATION")
37. Morgan Stanley Dean Witter Pacific Growth Fund Inc. ("PACIFIC GROWTH")
38. Morgan Stanley Dean Witter Real Estate Fund ("REAL ESTATE")
39. Morgan Stanley Dean Witter Small Cap Growth Fund ("SMALL CAP GROWTH")
40. Morgan Stanley Dean Witter S&P 500 Index Fund ("S&P500 INDEX")
41. Morgan Stanley Dean Witter S&P 500 Select Fund ("S&P 500 SELECT")
42. Morgan Stanley Dean Witter Special Value Fund ("SPECIAL VALUE")
43. Morgan Stanley Dean Witter Tax-Managed Growth Fund ("TAX-MANAGED
GROWTH")
44. Morgan Stanley Dean Witter Total Market Index Fund ("TOTAL MARKET
INDEX")
45. Morgan Stanley Dean Witter Total Return Trust ("TOTAL RETURN")
46. Morgan Stanley Dean Witter 21st Century Trend Fund ("21ST CENTURY
TREND")
47. Morgan Stanley Dean Witter Utilities Fund ("UTILITIES FUND")
48. Morgan Stanley Dean Witter Value-Added Market Series ("VALUE-ADDED")
49. Morgan Stanley Dean Witter Value Fund ("VALUE FUND")
BALANCED FUNDS
50. Morgan Stanley Dean Witter Balanced Growth Fund ("BALANCED GROWTH")
51. Morgan Stanley Dean Witter Balanced Income Fund ("BALANCED INCOME")
ASSET ALLOCATION FUND
52. Morgan Stanley Dean Witter Strategist Fund ("STRATEGIST FUND")
FIXED-INCOME FUNDS
53. Morgan Stanley Dean Witter California Tax-Free Income Fund ("CALIFORNIA
TAX-FREE")
54. Morgan Stanley Dean Witter Convertible Securities Trust ("CONVERTIBLE
SECURITIES")
55. Morgan Stanley Dean Witter Diversified Income Trust ("DIVERSIFIED
INCOME")
56. Morgan Stanley Dean Witter Federal Securities Trust ("FEDERAL
SECURITIES")
57. Morgan Stanley Dean Witter Hawaii Municipal Trust ("HAWAII MUNICIPAL")
58. Morgan Stanley Dean Witter High Yield Securities Inc ("HIGH YIELD")
59. Morgan Stanley Dean Witter Intermediate Income Securities
("INTERMEDIATE INCOME")
60. Morgan Stanley Dean Witter Limited Term Municipal Trust ("LIMITED TERM
MUNICIPAL")
61. Morgan Stanley Dean Witter Multi-State Municipal Series Trust
("MULTI-STATE SERIES")
<PAGE>
62. Morgan Stanley Dean Witter New York Tax-Free Income Fund ("NEW YORK
TAX-FREE")
63. Morgan Stanley Dean Witter North American Government Income Trust
("NORTH AMERICAN GOVERNMENT")
64. Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
("MUNICIPAL REINVESTMENT")
65. Morgan Stanley Dean Witter Short-Term Bond Fund ("SHORT-TERM BOND")
66. Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust ("SHORT-TERM
TREASURY")
67. Morgan Stanley Dean Witter Tax-Exempt Securities Trust ("TAX-EXEMPT
SECURITIES")
68. Morgan Stanley Dean Witter U.S. Government Securities Trust
("GOVERNMENT SECURITIES")
69. Morgan Stanley Dean Witter World Wide Income Trust ("WORLD WIDE
INCOME")
SPECIAL PURPOSE FUNDS
70. Morgan Stanley Dean Witter Select Dimensions Investment Series ("SELECT
DIMENSIONS")
71. Morgan Stanley Dean Witter Variable Investment Series ("VARIABLE
INVESTMENT")
CLOSED-END FUNDS
72. Morgan Stanley Dean Witter California Insured Municipal Income Trust
("CALIFORNIA INSURED MUNICIPAL")
73. Morgan Stanley Dean Witter California Quality Municipal Securities
("CALIFORNIA QUALITY MUNICIPAL")
74. Morgan Stanley Dean Witter Government Income Trust ("GOVERNMENT
INCOME")
75. Morgan Stanley Dean Witter High Income Advantage Trust ("HIGH INCOME")
76. Morgan Stanley Dean Witter High Income Advantage Trust II ("HIGH
INCOME II")
77. Morgan Stanley Dean Witter High Income Advantage Trust III ("HIGH
INCOME III")
78. Morgan Stanley Dean Witter Income Securities Inc. ("INCOME SECURITIES")
79. Morgan Stanley Dean Witter Insured California Municipal Securities
("INSURED CALIFORNIA SECURITIES")
80. Morgan Stanley Dean Witter Insured Municipal Bond Trust ("INSURED
MUNICIPAL BOND")
81. Morgan Stanley Dean Witter Insured Municipal Income Trust ("INSURED
MUNICIPAL INCOME")
82. Morgan Stanley Dean Witter Insured Municipal Securities ("INSURED
MUNICIPAL SECURITIES")
83. Morgan Stanley Dean Witter Insured Municipal Trust ("INSURED MUNICIPAL
TRUST")
84. Morgan Stanley Dean Witter Municipal Income Opportunities Trust
("MUNICIPAL OPPORTUNITIES")
85. Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
("MUNICIPAL OPPORTUNITIES II")
86. Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
("MUNICIPAL OPPORTUNITIES III")
87. Morgan Stanley Dean Witter Municipal Income Trust ("MUNICIPAL INCOME")
88. Morgan Stanley Dean Witter Municipal Income Trust II ("MUNICIPAL INCOME
II")
89. Morgan Stanley Dean Witter Municipal Income Trust III ("MUNICIPAL
INCOME III")
90. Morgan Stanley Dean Witter Municipal Premium Income Trust ("MUNICIPAL
PREMIUM")
<PAGE>
91. Morgan Stanley Dean Witter New York Quality Municipal Securities ("NEW
YORK QUALITY MUNICIPAL")
92. Morgan Stanley Dean Witter Prime Income Trust ("PRIME INCOME")
93. Morgan Stanley Dean Witter Quality Municipal Income Trust ("QUALITY
MUNICIPAL INCOME")
94. Morgan Stanley Dean Witter Quality Municipal Investment Trust ("QUALITY
MUNICIPAL INVESTMENT")
95. Morgan Stanley Dean Witter Quality Municipal Securities ("QUALITY
MUNICIPAL SECURITIES")
TCW/DW TERM TRUSTS
AT
FEBRUARY 29, 2000
1. TCW/DW Term Trust 2000 ("TERM TRUST 2000")
2. TCW/DW Term Trust 2002 ("TERM TRUST 2002")
3. TCW/DW Term Trust 2003 ("TERM TRUST 2003")
