MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND, 497, 2001-01-08

MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
497, 2001-01-08

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<PAGE>
PROSPECTUS - DECEMBER 29, 2000

Morgan Stanley Dean Witter
INTERNATIONAL FUND

[COVER PHOTO]

A MUTUAL FUND THAT SEEKS LONG-TERM CAPITAL GROWTH

The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon
the adequacy of this PROSPECTUS. Any representation to the contrary is a
criminal offense.
<PAGE>
CONTENTS

<TABLE>
<S> <C> <C>
The Fund Investment Objective.................................. 1
Principal Investment Strategies....................... 1
Principal Risks....................................... 2
Fees and Expenses..................................... 4
Additional Investment Strategy Information............ 5
Additional Risk Information........................... 6
Fund Management....................................... 7

Shareholder Information Pricing Fund Shares................................... 9
How to Buy Shares..................................... 9
How to Exchange Shares................................ 11
How to Sell Shares.................................... 12
Distributions......................................... 14
Tax Consequences...................................... 15
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.
</TABLE>
<PAGE>
[Sidebar]
CAPITAL GROWTH
AN INVESTMENT OBJECTIVE HAVING THE GOAL OF SELECTING SECURITIES WITH THE
POTENTIAL TO RISE IN PRICE RATHER THAN PAY OUT INCOME.
MSCI EAFE COUNTRIES
INCLUDE AUSTRALIA, JAPAN, NEW ZEALAND, MOST NATIONS IN WESTERN EUROPE, HONG KONG
AND SINGAPORE.
[End Sidebar]

THE FUND

[ICON] INVESTMENT OBJECTIVE
--------------------------------------------------------------------------------
Morgan Stanley Dean Witter International Fund seeks long-term capital
growth.

[ICON] PRINCIPAL INVESTMENT STRATEGIES
--------------------------------------------------------------------------------
The Fund will normally invest at least 65% of its assets in a
diversified portfolio of international common stocks and other equity
securities. The Fund's "Investment Manager," Morgan Stanley Dean
Witter Advisors Inc., and its "Sub-Advisor" -- Morgan Stanley Dean
Witter Investment Management Inc. -- use a "top-down" approach that
emphasizes country and sector selection and weightings over
individual stock selection.

COUNTRY AND SECTOR SELECTION. The Sub-Advisor first considers the
countries and sectors represented in the Morgan Stanley Capital
International EAFE (Europe, Australia and Far East) Index. The
Sub-Advisor -- on an ongoing basis -- establishes the proportion or
weighting for each country and/or sector (eg., overweight,
underweight or neutral) relative to the Index for investment by the
Fund. The Sub-Advisor may also choose to overweight or underweight
particular sectors, such as telecommunications or banking, within
each country or region. In making its determinations, it evaluates
factors such as valuation, economic outlook, corporate earnings
growth, inflation, liquidity and risk characteristics, investor
sentiment, interest rates, and currency outlook. The Fund invests in
at least three separate countries.

STOCK SELECTION. The Sub-Advisor invests the Fund's assets within
each country and/or sector based on its assigned weighting. Within
each country or sector, the Sub-Advisor will try to match the
performance of a broad local market index by investing in optimized
"baskets" of common stocks and other equity securities, which may
include depository receipts, preferred securities and convertible
securities. In most cases, the MSCI Index for that country will be
used as the benchmark index.

In addition to the securities discussed above, the Fund may also
invest in equity and/or fixed-income and convertible securities of
issuers located anywhere in the world, including the United States;
securities of other investment companies; forward currency contracts
and futures on stock indexes. The Fund may invest up to 10% of its
net assets in securities of companies located in emerging market
countries.

Common stock is a share ownership or equity interest in a
corporation. It may or may not pay dividends, as some companies
reinvest all of their profits back into their businesses, while
others pay out some of their profits to shareholders as dividends. A

1
<PAGE>
depository receipt is generally issued by a bank or financial
institution and represents an ownership interest in the common stock
or other equity securities of a foreign company.

In pursuing the Fund's investment objective, the Investment Manager
and/or Sub-Advisor have considerable leeway in deciding which
investments they buy, hold or sell on a day-to-day basis -- and which
trading strategies they use. For example, the Investment Manager
and/or Sub-Advisor in their discretion may determine to use some
permitted trading strategies while not using others.

[ICON] 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.

FOREIGN SECURITIES. The Fund's investments in foreign securities
involve risks that are in addition to the risks associated with
domestic securities. One additional risk is currency risk. While the
price of Fund shares is quoted in U.S. dollars, the Fund generally
converts U.S. dollars to a foreign market's local currency to
purchase a security in that market. If the value of that local
currency falls relative to the U.S. dollar, the U.S. dollar value of
the foreign security will decrease. This is true even if the foreign
security's local price remains unchanged.

Foreign securities (including depository receipts) also have risks
related to economic and political developments abroad, including
expropriations, confiscatory taxation, exchange control regulation,
limitation on the use or transfer of Fund assets and any effects of
foreign social, economic or political instability. In particular,
adverse political or economic developments in a particular region
and/or country in which the Fund invests could cause a substantial
decline in value of the portfolio. Foreign companies, in general, are
not subject to the regulatory requirements of U.S. companies and, as
such, there may be less publicly available information about these
companies. Moreover, foreign accounting, auditing and financial
reporting standards generally are different from those applicable to
U.S. companies. Finally, in the event of a default of any foreign
debt obligations, it may be more difficult for the Fund to obtain or
enforce a judgment against the issuers of the securities.

Securities of foreign issuers may be less liquid than comparable
securities of U.S. issuers and, as such, their price changes may be
more volatile. Furthermore, foreign

2
<PAGE>
exchanges and broker-dealers are generally subject to less government
and exchange scrutiny and regulation than their U.S. counterparts. In
addition, differences in clearance and settlement procedures in
foreign markets may occasion delays in settlement of the Fund's
trades effected in those markets and could result in losses to the
Fund due to subsequent declines in the value of the securities
subject to the trades. Delays in purchasing securities may result in
the Fund losing investment opportunities. The inability to dispose of
foreign securities due to settlement delays could result in losses to
the Fund due to subsequent declines in value of the securities.

The foreign securities in which the Fund invests may be issued by
companies located in emerging market countries. Compared to the
United States and other developed countries, emerging market
countries may have relatively unstable governments, economies based
on only a few industries and securities markets that trade a small
number of securities. Prices of these securities tend to be
especially volatile and, in the past, securities in these countries
have been characterized by greater potential loss than securities of
companies located in developed countries.

OTHER RISKS. The performance of the Fund also will depend on whether
the Investment Manager and/or Sub-Advisor are 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 investments in the securities of other investment
companies, fixed-income and convertible securities, forward currency
contracts and futures on stock indexes. 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.

3
<PAGE>
[Sidebar]
SHAREHOLDER FEES
THESE FEES ARE PAID DIRECTLY FROM YOUR INVESTMENT.
ANNUAL FUND
OPERATING EXPENSES
THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES
PAID FOR THE FISCAL YEAR ENDED OCTOBER 31, 2000.
[End Sidebar]

[ICON] FEES AND EXPENSES
--------------------------------------------------------------------------------
The table below briefly describes the fees and expenses that you may
pay if you buy and hold shares of the 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.

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
-------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 5.25%(1) None None None
-------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None(2) 5.00%(3) 1.00%(4) None
-------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
-------------------------------------------------------------------------------------------------
Management fee 1.00% 1.00% 1.00% 1.00%
-------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.25% 1.00% 1.00% None
-------------------------------------------------------------------------------------------------
Other expenses 0.22% 0.22% 0.22% 0.22%
-------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 1.47% 2.22% 2.22% 1.22%
-------------------------------------------------------------------------------------------------
</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.

<TABLE>
<CAPTION>
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES:
---------------------------------- ----------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------- ----------------------------------
CLASS A $667 $965 $1,286 $2,190 $667 $965 $1,286 $2,190
--------------------------------------------------- ----------------------------------
CLASS B $725 $994 $1,390 $2,554 $225 $694 $1,190 $2,554
--------------------------------------------------- ----------------------------------
CLASS C $325 $694 $1,190 $2,554 $225 $694 $1,190 $2,554
--------------------------------------------------- ----------------------------------
CLASS D $124 $387 $ 670 $1,477 $124 $387 $ 670 $1,477
--------------------------------------------------- ----------------------------------
</TABLE>

Long-term shareholders of Class B and Class C may pay more in sales
charges, including distribution fees, than the economic equivalent of
the maximum front-end sales charges permitted by the NASD.

The Fund was recently organized and, as of the date of this
PROSPECTUS, had no historical performance to report.

[ICON] ADDITIONAL INVESTMENT STRATEGY INFORMATION
--------------------------------------------------------------------------------

This section provides additional information relating to the Fund's
principal investment strategies.

OTHER GLOBAL SECURITIES. The Fund may invest up to 35% of its net
assets in equity and/ or fixed-income and convertible securities of
issuers located anywhere in the world, including the United States.

INVESTMENT COMPANIES. The Fund may invest up to 10% of its net assets
in securities issued by other investment companies. The Investment
Manager and/or Sub-Advisor may view these investments as necessary to
participate in certain foreign markets where direct investment by the
Fund may be difficult or impracticable.

EMERGING MARKET COUNTRIES. The Fund may invest up to 10% of its net
assets in securities of companies located in emerging market
countries. These are countries that major financial institutions,
such as the World Bank, generally consider to be less economically
mature than developed nations. Emerging market countries can include
every nation in the world except the United States, Canada, Japan,
Hong Kong, Singapore, Australia, New Zealand and most nations located
in Western Europe. With regard to investments in emerging market
countries, the Fund may make global and regional allocations to
emerging markets, as well as allocations to specific emerging market
countries.

5
<PAGE>
FORWARD CURRENCY CONTRACTS. The Fund's investments also may include
forward currency contracts, which involve the purchase or sale of a
specific amount of foreign currency at the current price with
delivery at a specified future date. The Fund may use these contracts
to hedge against adverse price movements in its portfolio securities
and the currencies in which they are denominated or to gain exposure
to currencies underlying various securities or financial instruments
held in its portfolio.

FUTURES ON STOCK INDEXES. The Fund may invest in futures on stock
indexes. Futures on stock indexes may be used to facilitate
allocation of the Fund's investments among asset classes, to increase
or decrease the Fund's exposure to the stock or bond markets, to
generate income, or to seek to protect against decline in securities
prices or increases in prices of securities that may be purchased.

DEFENSIVE INVESTING. The Fund may take temporary "defensive"
positions in attempting to respond to adverse market conditions. The
Fund may invest any amount of its assets in cash or money market
instruments in a defensive posture when the Investment Manager and/or
Sub-Advisor believe it is advisable to do so. Although taking a
defensive posture is designed to protect the Fund from an anticipated
market downturn, it could have the effect of reducing the benefit
from any upswing in the market. When the Fund takes a defensive
position, it may not achieve its investment objective.

The percentage limitations relating to the composition of the Fund's
portfolio apply at the time the Fund acquires an investment.
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.

[ICON] ADDITIONAL RISK INFORMATION
--------------------------------------------------------------------------------
This section provides additional information relating to the
principal risks of investing in the Fund.

FIXED-INCOME AND CONVERTIBLE SECURITIES. All fixed-income securities,
such as corporate debt, are subject to two types of risk: credit risk
and interest rate risk. Credit risk refers to the possibility that
the issuer of a security will be unable to make interest payments
and/or repay the principal on its debt.

Interest rate risk refers to fluctuations in the value of a
fixed-income security resulting from changes in the general level of
interest rates. When the general level of interest rates goes up, the
prices of most fixed-income securities go down. When the general
level of interest rates goes down, the prices of most fixed-income
securities go up. (Zero coupon securities are typically subject to
greater price fluctuations than comparable securities that pay
interest.)

6
<PAGE>
[Sidebar]
MORGAN STANLEY DEAN WITTER ADVISORS INC.
THE INVESTMENT MANAGER IS WIDELY RECOGNIZED AS A LEADER IN THE MUTUAL FUND
INDUSTRY AND TOGETHER WITH MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC., ITS
WHOLLY-OWNED SUBSIDIARY, HAD APPROXIMATELY $150 BILLION IN ASSETS UNDER
MANAGEMENT AS OF NOVEMBER 30, 2000.
[End Sidebar]

A portion of the fixed-income convertible securities in which the
Fund may invest may be rated below investment grade. Securities rated
below investment grade are commonly known as "junk bonds" and have
speculative credit risk characteristics.

FORWARD CURRENCY CONTRACTS. The Fund's participation in forward
currency contracts also involves risks. If the Investment Manager
and/or Sub-Advisor employs a strategy that does not correlate well
with the Fund's investments or the currencies in which the
investments are denominated, currency contracts could result in a
loss. The contracts also may increase the Fund's volatility and may
involve significant risk.

FUTURES ON STOCK INDEXES. If the Fund invests in futures on stock
indexes, its participation in these markets would subject the Fund to
investment risks to which the Fund would not be subject absent the
use of these strategies. If the Investment Manager's and/or
Sub-Advisor's predictions of movements in the direction of the stock
index are inaccurate, 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 on stock indexes include, for example, the
possible imperfect correlation between the price of futures contracts
and movements in the prices of the securities being hedged, and the
possible absence of a liquid secondary market for any particular
instrument.

[ICON] FUND MANAGEMENT
--------------------------------------------------------------------------------
The Fund has retained the Investment Manager -- Morgan Stanley Dean
Witter Advisors Inc. -- to provide administrative services, manage
its business affairs and supervise the investment of its assets. The
Investment Manager has, in turn, contracted with the Sub-Advisor --
Morgan Stanley Dean Witter Investment Management Inc. - to invest the
Fund's 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 Sub-Advisor managed approximately $97 billion as of October 31,
2000 primarily for employee benefit plans, investment companies,
endowments, foundations and wealthy individuals. The Sub-Advisor also
is a subsidiary of Morgan Stanley Dean Witter & Co. Its main business
office is located at 1221 Avenue of the Americas, New York, NY 10020.

7
<PAGE>

Ann D. Thivierge and Barton M. Biggs are the primary portfolio
managers of the Fund. Ann D. Thivierge is a Managing Director of the
Sub-Advisor. She is primarily responsible for managing the Active
International Allocation EAFE strategy. Barton M. Biggs has been the
Chairman and a Director of the Sub-Advisor since 1980 and a Managing
Director of Morgan Stanley & Co. Incorporated since 1975. He is also
a director and chairman of various registered investment companies to
which the Sub-Advisor and certain of its affiliates provide
investment advisory services.

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. The Investment Manager
pays the Sub-Advisor monthly compensation equal to 40% of this fee.
For the fiscal year ended October 31, 2000, the Fund accrued total
compensation to the Investment Manager amounting to 1.00% of the
Fund's average daily net assets.

8
<PAGE>
[Sidebar]
CONTACTING A FINANCIAL ADVISOR
IF YOU ARE NEW TO THE MORGAN STANLEY DEAN WITTER FAMILY OF FUNDS AND WOULD LIKE
TO CONTACT A FINANCIAL ADVISOR, CALL (877) 937-MSDW
(TOLL-FREE) FOR THE TELEPHONE NUMBER OF THE MORGAN STANLEY DEAN WITTER OFFICE
NEAREST YOU. YOU MAY ALSO ACCESS OUR OFFICE LOCATOR ON OUR INTERNET SITE AT:
WWW.MSDWADVICE.COM/FUNDS
[End Sidebar]

SHAREHOLDER INFORMATION

[ICON] PRICING 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.
While the assets of each Class are invested in a single portfolio of
securities, the net asset value of each Class will differ because the
Classes have different ongoing distribution fees.

The net asset value per share of the 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 and/or Sub-Advisor 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.

[ICON] HOW TO BUY SHARES
--------------------------------------------------------------------------------
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.

9
<PAGE>
[Sidebar]
EASYINVEST-SM-
A PURCHASE PLAN THAT ALLOWS YOU TO TRANSFER MONEY AUTOMATICALLY FROM YOUR
CHECKING OR SAVINGS ACCOUNT OR FROM A MONEY MARKET FUND ON A SEMI-MONTHLY,
MONTHLY OR QUARTERLY BASIS. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL
ADVISOR FOR FURTHER INFORMATION ABOUT THIS SERVICE.
[End Sidebar]

When you buy Fund shares, the shares are purchased at the next share price
calculated (less any applicable front-end sales charge for Class A shares)
after we receive your purchase order. Your payment is due on the third
business day after you place your purchase order. We reserve the right to
reject any order for the purchase of Fund shares.

<TABLE>
<CAPTION>
MINIMUM INVESTMENT AMOUNTS
--------------------------------------------------------------------------------------------
MINIMUM INVESTMENT
-------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------
Regular Accounts $1,000 $100
--------------------------------------------------------------------------------------------
Individual Retirement Accounts: Regular IRAs $1,000 $100
Education IRAs $ 500 $100
--------------------------------------------------------------------------------------------
EASYINVEST-SM-
(Automatically from your checking
or savings account or Money
Market Fund) $ 100* $100*
--------------------------------------------------------------------------------------------
</TABLE>

* Provided your schedule of investments
totals $1,000 in twelve months.

There is no minimum investment amount if you purchase 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, (3) the
following programs approved by the Fund's distributor: (i) qualified state
tuition plans described in Section 529 of the Internal Revenue Code and
(ii) certain other investment programs that do not charge an asset-based
fee, or (4) employer-sponsored employee benefit plan accounts.

INVESTMENT OPTIONS FOR CERTAIN INSTITUTIONAL AND OTHER INVESTORS/CLASS D
SHARES. To be eligible to purchase Class D shares, you must qualify under
one of the investor categories specified in the "Share Class Arrangements"
section of this PROSPECTUS.

SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In addition to buying
additional 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:

- 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).

- Make out a check for the total amount payable to: Morgan Stanley Dean
Witter International Fund.

- Mail the letter and check to Morgan Stanley Dean Witter Trust FSB at
P.O. Box 1040, Jersey City, NJ 07303.

10
<PAGE>
[ICON] 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. In addition, Class A shares of the Fund may be exchanged for
shares of an FSC fund (funds subject to a front-end sales charge). See the
inside back cover of this PROSPECTUS for each Morgan Stanley Dean Witter
Fund's designation as a Multi-Class Fund, No-Load Fund, Money Market Fund or
FSC Fund. If a Morgan Stanley Dean Witter Fund is not listed, consult the
inside back cover of that fund's current prospectus for its designation.

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.

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.

11
<PAGE>
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 Stanley Dean Witter Financial Advisor or other
authorized financial representative regarding restrictions on the exchange
of such shares.

TAX CONSIDERATIONS OF EXCHANGES. If you exchange shares of 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 Fund shares -- and the exchange into the other fund is considered
a purchase. As a result, you may realize a capital gain or loss.

You should review the "Tax Consequences" section and consult your own tax
professional about the tax consequences of an exchange.

LIMITATIONS ON EXCHANGES. Certain patterns of past exchanges and/or purchase
or sale transactions involving the Fund or other Morgan Stanley Dean Witter
Funds may result in the Fund limiting or prohibiting, at its discretion,
additional purchases and/or exchanges. Determinations in this regard may be
made based on the frequency or dollar amount of the previous exchanges or
purchase or sale transactions. You will be notified in advance of
limitations on your exchange privileges.

CDSC CALCULATIONS ON EXCHANGES. See the "Share Class Arrangements" section
of this PROSPECTUS for a discussion of how applicable contingent deferred
sales charges (CDSCs) are calculated for shares of one Morgan Stanley Dean
Witter Fund that are exchanged for shares of another.

For further information regarding exchange privileges, you should contact
your Morgan Stanley Dean Witter Financial Advisor or call (800) 869-NEWS.

[ICON] HOW TO SELL SHARES
--------------------------------------------------------------------------------
You can sell some or all of your 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 (redeem) your shares, simply call your Morgan
Financial Advisor Stanley Dean Witter Financial Advisor or other authorized
financial representative.
------------------------------------------------------------
ICON Payment will be sent to the address to which the account is
registered or deposited in your brokerage account.
--------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of
instruction" that includes:
ICON - your account number;
- the dollar amount or the number of shares you wish to
sell;
- the Class of shares you wish to sell; and
- the signature of each owner as it appears on the account.
------------------------------------------------------------
</TABLE>

12
<PAGE>
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
--------------------------------------------------------------------------------
<S> <C>
By Letter, If you are requesting payment to anyone other than the
continued registered owner(s) or that payment be sent to any address
other than the address of the registered owner(s) or
pre-designated bank account, you will need a signature
guarantee. You can obtain a signature guarantee from an
eligible guarantor acceptable to Morgan Stanley Dean Witter
Trust FSB. (You should contact Morgan Stanley Dean Witter
Trust FSB at (800) 869-NEWS for a determination as to
whether a particular institution is an eligible guarantor.)
A notary public CANNOT provide a signature guarantee.
Additional documentation may be required for shares held by
a corporation, partnership, trustee or executor.
------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at
P.O. Box 983, Jersey City, NJ 07303. If you hold share
certificates, you must return the certificates, along with
the letter and any required additional documentation.
------------------------------------------------------------
A check will be mailed to the name(s) and address in which
the account is registered, or otherwise according to your
instructions.
--------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter
Withdrawal Plan Family of Funds has a total market value of at least
ICON $10,000, you may elect to withdraw amounts of $25 or more,
or in any whole percentage of a fund's balance (provided the
amount is at least $25), on a monthly, quarterly,
semi-annual or annual basis, from any fund with a balance of
at least $1,000. Each time you add a fund to the plan, you
must meet the plan requirements.
------------------------------------------------------------
Amounts withdrawn are subject to any applicable CDSC. A CDSC
may be waived under certain circumstances. See the Class B
waiver categories listed in the "Share Class Arrangements"
section of this PROSPECTUS.
------------------------------------------------------------
To sign up for the Systematic Withdrawal Plan, contact your
Morgan Stanley Dean Witter Financial Advisor or call
(800) 869-NEWS. You may terminate or suspend your plan at
any time. Please remember that withdrawals from the plan are
sales of shares, not Fund "distributions," and ultimately
may exhaust your account balance. The Fund may terminate or
revise the plan at any time.
--------------------------------------------------------------------------------
</TABLE>

PAYMENT FOR SOLD SHARES. After we receive your complete instructions to sell
as described above, a check will be mailed to you within seven days,
although we will attempt to make payment within one business day. Payment
may also be sent to your brokerage account.

Payment may be postponed or the right to sell your shares suspended under
unusual circumstances. If you request to sell shares that were recently
purchased by check, your sale will not be effected until it has been
verified that the check has been honored.

TAX CONSIDERATIONS. Normally, your sale of 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)

13
<PAGE>
[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]

whose shares, due to sales by the shareholder, have a value below
$100, or in the case of an account opened through EASYINVEST -SM-, if
after 12 months the shareholder has invested less than $1,000 in the
account.

However, before the Fund sells your shares in this manner, we will
notify you and allow you sixty days to make an additional investment
in an amount that will increase the value of your account to at least
the required amount before the sale is processed. No CDSC will be
imposed on any involuntary sale.

MARGIN ACCOUNTS. If you have pledged your 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.

[ICON] DISTRIBUTIONS
--------------------------------------------------------------------------------
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 may be passed along as "capital gain distributions."

The Fund declares income dividends separately for each Class.
Distributions paid on Class A and Class D shares usually 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 annually. Capital gains, if any, are
usually distributed in 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. However,
if you purchase Fund shares through a Financial Advisor within three
business days prior to the record date for the distribution, the
distribution will automatically be paid to you in cash, even if you
did not request to receive all distributions in cash. No interest
will accrue on uncashed checks. If you wish to change how your
distributions are paid, your request should be received by the Fund's
transfer agent, Morgan Stanley Dean Witter Trust FSB, at least five
business days prior to the record date of the distributions.

14
<PAGE>
[ICON] 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:

- The Fund makes distributions; and

- 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 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.

If more than 50% of the Fund's assets are invested in foreign
securities at the end of any fiscal year, the Fund may elect to
permit shareholders to take a credit or deduction on their federal
income tax return for foreign taxes paid by 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.

[ICON] 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.

15
<PAGE>
[Sidebar]
FRONT-END SALES
CHARGE OR FSC
AN INITIAL SALES CHARGE YOU PAY WHEN PURCHASING CLASS A SHARES THAT IS BASED ON
A PERCENTAGE OF THE OFFERING PRICE. THE PERCENTAGE DECLINES BASED UPON THE
DOLLAR VALUE OF CLASS A SHARES YOU PURCHASE. WE OFFER THREE WAYS TO REDUCE YOUR
CLASS A SALES CHARGES - THE COMBINED PURCHASE PRIVILEGE, RIGHT OF ACCUMULATION
AND LETTER OF INTENT.
[End Sidebar]

The general public is offered three Classes: Class A shares, Class B
shares and Class C shares, which differ principally in terms of sales
charges and ongoing expenses. A fourth Class, Class D shares, is
offered only to a limited category of investors. Shares that you
acquire through reinvested distributions will not be subject to any
front-end sales charge or CDSC -- contingent deferred sales charge.
Sales personnel may receive different compensation for selling each
Class of shares. The sales charges applicable to each Class provide
for the distribution financing of shares of that Class.

The chart below compares the sales charge and annual 12b-1 fee
applicable to each Class:

<TABLE>
<CAPTION>
MAXIMUM
CLASS SALES CHARGE ANNUAL 12B-1 FEE
<S> <C> <C>
-----------------------------------------------------------------
A Maximum 5.25% initial sales charge
reduced for purchase of $25,000 or more;
shares sold without an initial sales
charge are generally subject to a 1.0%
CDSC during the first year 0.25%
-----------------------------------------------------------------
B Maximum 5.0% CDSC during the first year
decreasing to 0% after six years 1.0%
-----------------------------------------------------------------
C 1.0% CDSC during the 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:

<TABLE>
<CAPTION>
FRONT-END SALES CHARGE
---------------------------------------------
PERCENTAGE OF APPROXIMATE PERCENTAGE
AMOUNT OF SINGLE TRANSACTION PUBLIC OFFERING PRICE OF NET AMOUNT INVESTED
<S> <C> <C>
---------------------------------------------------------------------------------------
Less than $25,000 5.25% 5.54%
---------------------------------------------------------------------------------------
$25,000 but less than $50,000 4.75% 4.99%
---------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.00% 4.17%
---------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.00% 3.09%
---------------------------------------------------------------------------------------
$250,000 but less than $1 million 2.00% 2.04%
---------------------------------------------------------------------------------------
$1 million and over 0.00% 0.00%
---------------------------------------------------------------------------------------
</TABLE>

16
<PAGE>
The reduced sales charge schedule is applicable to purchases of
Class A shares in a single transaction by:

- A single account (including an individual, trust or fiduciary
account).

- Family member accounts (limited to husband, wife and children under
the age of 21).

- Pension, profit sharing or other employee benefit plans of
companies and their affiliates.

- Tax-exempt organizations.

- Groups organized for a purpose other than to buy mutual fund
shares.

COMBINED PURCHASE PRIVILEGE. You also will have the benefit of
reduced sales charges by combining purchases of Class A shares of the
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 sales charge under the Right of Accumulation. Similar
notification must be made in writing when an order is placed by mail.
The reduced sales charge will not be granted if: (i) notification is
not furnished at the time of the order; or (ii) a review of the
records of Dean Witter Reynolds or other authorized dealer of Fund
shares or the Fund's transfer agent does not confirm your represented
holdings.

LETTER OF INTENT. The schedule of reduced sales charges for larger
purchases also will be available to you if you enter into a written
"Letter of Intent." A Letter of Intent provides for the purchase of
Class A shares of 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 exchange for
shares of funds purchased during that period at a price

17
<PAGE>
including a front-end sales charge. You can obtain a Letter of Intent
by contacting your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative or by calling
(800) 869-NEWS. If you do not achieve the stated investment goal
within the thirteen-month period, you are required to pay the
difference between the sales charges otherwise applicable and sales
charges actually paid, which may be deducted from your investment.

OTHER SALES CHARGE WAIVERS. In addition to investments of $1 million
or more, your purchase of Class A shares is not subject to a
front-end sales charge (or CDSC upon sale) if your account qualifies
under one of the following categories:

- A trust for which Morgan Stanley Dean Witter Trust FSB provides
discretionary trustee services.

- Qualified state tuition plans described in Section 529 of the
Internal Revenue Code (subject to all applicable terms and
conditions) and certain other investment programs that do not
charge an asset-based fee and have been approved by the Fund's
distributor.

- Employer-sponsored employee benefit plans, whether or not qualified
under the Internal Revenue Code, for which Morgan Stanley Dean
Witter Trust FSB serves as trustee or Morgan Stanley Dean Witter's
Retirement Plan Services serves as recordkeeper under a written
Recordkeeping Services Agreement ("MSDW Eligible Plans") which have
at least 200 eligible employees.

- An MSDW Eligible Plan whose Class B shares have converted to
Class A shares, regardless of the plan's asset size or number of
eligible employees.

- 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 the purchase of Fund
shares, and (2) the sale proceeds were maintained in the interim in
cash or a money market fund.

- Current or retired Directors or Trustees of the Morgan Stanley Dean
Witter Funds, such persons' spouses and children under the age of
21, and trust accounts for which any of such persons is a
beneficiary.

- Current or retired directors, officers and employees of Morgan
Stanley Dean Witter & Co. and any of its subsidiaries, such
persons' spouses and children under the age of 21, and trust
accounts for which any of such persons is a beneficiary.

18
<PAGE>
[Sidebar]
CONTINGENT DEFERRED SALES CHARGE OR CDSC
A FEE YOU PAY WHEN YOU SELL SHARES OF CERTAIN MORGAN STANLEY DEAN WITTER FUNDS
PURCHASED WITHOUT AN INITIAL SALES CHARGE. THIS FEE DECLINES THE LONGER YOU HOLD
YOUR SHARES AS SET FORTH IN THE TABLE.
[End Sidebar]

CLASS B SHARES Class B shares are offered at net asset value with no
initial sales charge but are subject to a contingent deferred sales
charge, or CDSC, as set forth in the table below. For the purpose of
calculating the CDSC, shares are deemed to have been purchased on the
last day of the month during which they were purchased.

<TABLE>
<CAPTION>
CDSC AS A PERCENTAGE
YEAR SINCE PURCHASE PAYMENT MADE OF AMOUNT REDEEMED
<S> <C>
--------------------------------------------------------------
First 5.0%
--------------------------------------------------------------
Second 4.0%
--------------------------------------------------------------
Third 3.0%
--------------------------------------------------------------
Fourth 2.0%
--------------------------------------------------------------
Fifth 2.0%
--------------------------------------------------------------
Sixth 1.0%
--------------------------------------------------------------
Seventh and thereafter None
--------------------------------------------------------------
</TABLE>

Each time you place an order to sell or exchange shares, shares with
no CDSC will be sold or exchanged first, then shares with the lowest
CDSC will be sold or exchanged next. For any shares subject to a
CDSC, the CDSC will be assessed on an amount equal to the lesser of
the current market value or the cost of the shares being sold.

CDSC WAIVERS. A CDSC, if otherwise applicable, will be waived in the
case of:

- Sales of shares held at the time you die or become disabled (within
the definition in Section 72(m)(7) of the Internal Revenue Code
which relates to the ability to engage in gainful employment), if
the shares are: (i) registered either in your name (not a trust) or
in the names of you and your spouse as joint tenants with right of
survivorship; or (ii) held in a qualified corporate or
self-employed retirement plan, IRA or 403(b) Custodial Account,
provided in either case that the sale is requested within one year
of your death or initial determination of disability.

- Sales in connection with the following retirement plan
"distributions:" (i) lump-sum or other distributions from a
qualified corporate or self-employed retirement plan following
retirement (or, in the case of a "key employee" of a "top heavy"
plan, following attainment of age 59 1/2); (ii) distributions from
an IRA or 403(b) Custodial Account following attainment of age 59
1/2; or (iii) a tax-free return of an excess IRA contribution (a
"distribution" does not include a direct transfer of IRA,
403(b) Custodial Account or retirement plan assets to a successor
custodian or trustee).

- Sales of shares held for you as a participant in an MSDW Eligible
Plan.

- Sales of shares in connection with the Systematic Withdrawal Plan
of up to 12% annually of the value of each fund from which plan
sales are made. The percentage is determined on the date you
establish the Systematic Withdrawal Plan and based on the next
calculated share price. You may have this CDSC waiver applied in
amounts up to 1% per month, 3% per quarter, 6% semi-annually or 12%
annually. Shares with no CDSC will be sold first, followed by those
with the lowest CDSC. As such, the waiver

19
<PAGE>
benefit will be reduced by the amount of your shares that are not
subject to a CDSC. If you suspend your participation in the plan,
you may later resume plan payments without requiring a new
determination of the account value for the 12% CDSC waiver.

- Sales of shares if you simultaneously invest the proceeds in the
Investment Manager's mutual fund asset allocation program, pursuant
to which investors pay an asset-based fee. Any shares you acquire
in connection with the Investment Manager's mutual fund asset
allocation program are subject to all of the terms and conditions
of that program, including termination fees, mandatory sale or
transfer restrictions on termination.

All waivers will be granted only following the Fund's distributor
receiving confirmation of your entitlement. If you believe you are
eligible for a CDSC waiver, please contact your Financial Advisor or
call (800) 869-NEWS.

DISTRIBUTION FEE. Class B shares are subject to an annual
distribution (12b-1) fee of 1.0% of the average daily net assets of
Class B.

CONVERSION FEATURE. After ten (10) years, Class B shares will convert
automatically to Class A shares of the 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 acquired in exchange for shares of another
Morgan Stanley Dean Witter Fund originally purchased before May 1,
1997, however, will convert to Class A shares in May 2007.

In the case of Class B shares held in an MSDW Eligible Plan, the plan
is treated as a single investor and all Class B shares will convert
to Class A shares on the conversion date of the Class B shares of a
Morgan Stanley Dean Witter Fund purchased by that plan.

Currently, the Class B share conversion is not a taxable event; the
conversion feature may be cancelled if it is deemed a taxable event
in the future by the Internal Revenue Service.

If you exchange your Class B shares for shares of a Money Market
Fund, a No-Load Fund, North American Government Income Trust or
Short-Term U.S. Treasury Trust, the holding period for conversion is
frozen as of the last day of the month of the exchange and resumes on
the last day of the month you exchange back into Class B shares.

EXCHANGING SHARES SUBJECT TO A CDSC. There are special considerations
when you exchange 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.

20
<PAGE>
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, if any, you paid
on those shares while in that fund up to the amount of any applicable
CDSC.

In addition, shares that are exchanged into or from a Morgan Stanley
Dean Witter Fund subject to a higher CDSC rate will be subject to the
higher rate, even if the shares are re-exchanged into a fund with a
lower CDSC rate.

CLASS C SHARES Class C shares are sold at net asset value with no
initial sales charge but are subject to a CDSC of 1.0% on sales made
within one year after the last day of the month of purchase. The CDSC
will be assessed in the same manner and with the same CDSC waivers as
with Class B shares.

DISTRIBUTION FEE. Class C shares are subject to an annual
distribution (12b-1) fee of up to 1.0% of the average daily net
assets of that Class. The Class C shares' distribution fee may cause
that Class to have higher expenses and pay lower dividends than
Class A or Class D shares. Unlike Class B shares, Class C shares have
no conversion feature and, accordingly, an investor that purchases
Class C shares may be subject to distribution (12b-1) fees applicable
to Class C shares for an indefinite period.

CLASS D SHARES Class D shares are offered without any sales charge on
purchases or sales and without any distribution (12b-1) fee. Class D
shares are offered only to investors meeting an initial investment
minimum of $5 million ($25 million for MSDW Eligible Plans) and the
following investor categories:

- Investors participating in the Investment Manager's mutual fund
asset allocation program (subject to all of its terms and
conditions, including termination fees, mandatory sale or transfer
restrictions on termination) pursuant to which they pay an
asset-based fee.

- 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. With respect to Class D shares held through the Morgan
Stanley Dean Witter Choice Program, at such time as those Fund
shares are no longer held through the program,
21
<PAGE>
the shares will be automatically converted into Class A shares
(which are subject to higher expenses than Class D shares) based on
the then current relative net asset values of the two classes.

- Certain investment programs that do not charge an asset-based fee
and have been approved by the Fund's distributor. However, Class D
shares are not offered for investments made through Section 529
plans (regardless of the size of the investment).

- Employee benefit plans maintained by Morgan Stanley Dean Witter &
Co. or any of its subsidiaries for the benefit of certain employees
of Morgan Stanley Dean Witter & Co. and its subsidiaries.

- Certain unit investment trusts sponsored by Dean Witter Reynolds.

- Certain other open-end investment companies whose shares are
distributed by the Fund's distributor.

- Investors who were shareholders of the Dean Witter Retirement
Series on September 11, 1998 for additional purchases for their
former Dean Witter Retirement Series accounts.

MEETING CLASS D ELIGIBILITY MINIMUMS. To meet the $5 million
($25 million for certain MSDW Eligible Plans) initial investment to
qualify to purchase Class D shares you may combine: (1) purchases in
a single transaction of Class D shares of 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 for the periods indicated. Certain information reflects
financial results for a single Fund share throughout the period. The total
return 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).

The information for the fiscal year ended October 31, 2000 has been audited by
Deloitte & Touche LLP, independent auditors, whose report, along with the Fund's
financial statements, is included in the annual report, which is available upon
request. The financial highlights for prior fiscal periods have been audited by
other independent accountants.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD JUNE 28, 1999*
OCTOBER 31, 2000 THROUGH OCTOBER 31, 1999
<S> <C> <C>
-------------------------------------------------------------------------------------------
CLASS A SHARES ++
-------------------------------------------------------------------------------------------

SELECTED PER SHARE DATA:
-------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.57 $10.00
-------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income 0.11 0.01
Net realized and unrealized gain
(loss) (0.39) 0.56
------ ------
Total income (loss) from investment
operations (0.28) 0.57
-------------------------------------------------------------------------------------------
Net asset value, end of period $10.29 $10.57
-------------------------------------------------------------------------------------------

TOTAL RETURN+ (2.65)% 5.70%(1)
-------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS(3):
-------------------------------------------------------------------------------------------
Expenses 1.47 % 1.81%(2)
-------------------------------------------------------------------------------------------
Net investment income 0.95 % 0.31%(2)
-------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA:
-------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $46,535 $38,506
-------------------------------------------------------------------------------------------
Portfolio turnover rate 84 % 14%(1)
-------------------------------------------------------------------------------------------
</TABLE>

* Commencement of operations.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

23
<PAGE>

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD JUNE 28, 1999*
OCTOBER 31, 2000 THROUGH OCTOBER 31, 1999
<S> <C> <C>
-------------------------------------------------------------------------------------------
CLASS B SHARES ++
-------------------------------------------------------------------------------------------

SELECTED PER SHARE DATA:
-------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.55 $10.00
-------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income (loss) 0.02 (0.02)
Net realized and unrealized gain
(loss) (0.38) 0.57
------ ------
Total income (loss) from investment
operations (0.36) 0.55
-------------------------------------------------------------------------------------------
Net asset value, end of period $10.19 $10.55
-------------------------------------------------------------------------------------------

TOTAL RETURN+ (3.41)% 5.50 %(1)
-------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS(3):
-------------------------------------------------------------------------------------------
Expenses 2.22 % 2.56 %(2)
-------------------------------------------------------------------------------------------
Net investment income (loss) 0.20 % (0.44)%(2)
-------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA:
-------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $561,375 $465,258
-------------------------------------------------------------------------------------------
Portfolio turnover rate 84 % 14 %(1)
-------------------------------------------------------------------------------------------
</TABLE>

24
<PAGE>

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD JUNE 28, 1999*
OCTOBER 31, 2000 THROUGH OCTOBER 31, 1999
<S> <C> <C>
-------------------------------------------------------------------------------------------
CLASS C SHARES ++
-------------------------------------------------------------------------------------------

TOTAL RETURN+ (3.41)% 5.50 %(1)
-------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA:
-------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $69,640 $69,811
-------------------------------------------------------------------------------------------
Portfolio turnover rate 84 % 14 %(1)
-------------------------------------------------------------------------------------------
</TABLE>

25
<PAGE>

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD JUNE 28, 1999*
OCTOBER 31, 2000 THROUGH OCTOBER 31, 1999
<S> <C> <C>
-------------------------------------------------------------------------------------------
CLASS D SHARES ++
-------------------------------------------------------------------------------------------

SELECTED PER SHARE DATA:
-------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.58 $10.00
-------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.15 0.01
Net realized and unrealized gain
(loss) (0.41) 0.57
------ ------
Total income (loss) from investment
operations (0.26) 0.58
-------------------------------------------------------------------------------------------
Net asset value, end of period $10.32 $10.58
-------------------------------------------------------------------------------------------

TOTAL RETURN+ (2.46)% 5.80(1)
-------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS(3):
-------------------------------------------------------------------------------------------
Expenses 1.22 % 1.56(2)
-------------------------------------------------------------------------------------------
Net investment income 1.20 % 0.56(2)
-------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA:
-------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $98,465 $1,336
-------------------------------------------------------------------------------------------
Portfolio turnover rate 84 % 14(1)
-------------------------------------------------------------------------------------------
</TABLE>

26
<PAGE>
NOTES

----------------------------------------------------------

----------------------------------------------------------
<PAGE>
NOTES

----------------------------------------------------------

----------------------------------------------------------
<PAGE>
MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS
The Morgan Stanley Dean Witter Family of Funds offers investors a wide
range of investment choices. Come on in and meet the family!
--------------------------------------------------------------------------------
GROWTH FUNDS
---------------------------------

GROWTH FUNDS
Aggressive Equity Fund
All Star Growth Fund
American Opportunities Fund
Capital Growth Securities
Developing Growth Securities
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust
New Discoveries Fund
Next Generation Trust
Small Cap Growth Fund
Special Value Fund
Tax-Managed Growth Fund
21st Century Trend Fund

THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities
Technology Fund

GLOBAL/INTERNATIONAL FUNDS
Competitive Edge Fund - "Best Ideas"
Portfolio
European Growth Fund
Fund of Funds - International Portfolio
International Fund
International SmallCap Fund
Japan Fund
Latin American Growth Fund
Pacific Growth Fund
--------------------------------------------------------------------------------
GROWTH & INCOME FUNDS
---------------------------------

GROWTH & INCOME FUNDS
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Equity Fund
Fund of Funds - Domestic Portfolio
Income Builder Fund
S&P 500 Index Fund
S&P 500 Select Fund
Strategist Fund
Total Market Index Fund
Total Return Trust
Value Fund
Value-Added Market Series/Equity Portfolio

THEME FUNDS
Real Estate Fund
Utilities Fund

GLOBAL FUNDS
Global Dividend Growth Securities
Global Utilities Fund
--------------------------------------------------------------------------------
INCOME FUNDS
---------------------------------

GOVERNMENT INCOME FUNDS
Federal Securities Trust
Short-Term U.S. Treasury Trust
U.S. Government Securities Trust

DIVERSIFIED INCOME FUNDS
Diversified Income Trust

CORPORATE INCOME FUNDS
High Yield Securities
Intermediate Income Securities
Short-Term Bond Fund (NL)

GLOBAL INCOME FUNDS
North American Government Income Trust
World Wide Income Trust

TAX-FREE INCOME FUNDS
California Tax-Free Income Fund
Hawaii Municipal Trust (FSC)
Limited Term Municipal Trust (NL)
Multi-State Municipal Series Trust (FSC)
New York Tax-Free Income Fund
Tax-Exempt Securities Trust
--------------------------------------------------------------------------------
MONEY MARKET FUNDS
---------------------------------

TAXABLE MONEY MARKET FUNDS
Liquid Asset Fund (MM)
U.S. Government Money Market Trust (MM)

TAX-FREE MONEY MARKET FUNDS
California Tax-Free Daily Income Trust (MM)
New York Municipal Money Market Trust (MM)
Tax-Free Daily Income Trust (MM)
There may be funds created after this PROSPECTUS was published. Please consult
the inside back cover of a new fund's prospectus for its designation, e.g.,
Multi-Class Fund or Money Market Fund.
Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund, except for
North American Government Income Trust and Short-Term U.S. Treasury Trust, is a
Multi-Class Fund. A Multi-Class Fund is a mutual fund offering multiple Classes
of shares. The other types of funds are: NL - No-Load (Mutual) Fund; MM - Money
Market Fund; FSC - A mutual fund sold with a front-end sales charge and a
distribution (12b-1) fee.
<PAGE>
PROSPECTUS - DECEMBER 29, 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.msdwadvice.com/funds
Information about the Fund (including the STATEMENT OF ADDITIONAL INFORMATION)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (202) 942-8090. Reports and
other information about the Fund are available on the 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.
TICKER SYMBOLS:

CLASS A: INLAX CLASS C: INLCX
-------------------- --------------------

CLASS B: INLBX CLASS D: INLDX
-------------------- --------------------

(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-09081)

MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND

[BACK COVER PHOTO]

A MUTUAL FUND THAT SEEKS
LONG-TERM CAPITAL GROWTH
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

DECEMBER 29, 2000
MORGAN STANLEY DEAN WITTER
INTERNATIONAL FUND

----------------------------------------------------------------------

This STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. The PROSPECTUS
dated (December 29, 2000) for Morgan Stanley Dean Witter International 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
International Fund
Two World Trade Center
New York, NY 10048
(800) 869-NEWS
<PAGE>
TABLE OF CONTENTS
--------------------------------------------------------------------------------

<TABLE>
<C> <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.................... 13

III. Management of the Fund...................................... 14

A. Board of Trustees........................................ 14

B. Management Information................................... 15

C. Compensation............................................. 19

IV. Control Persons and Principal Holders of Securities......... 21

V. Investment Management and Other Services.................... 21

A. Investment Manager and Sub-Advisor....................... 21

B. Principal Underwriter.................................... 22

C. Services Provided by the Investment Manager and
Sub-Advisor.............................................. 22

D. Dealer Reallowances...................................... 23

E. Rule 12b-1 Plan.......................................... 23

F. Other Service Providers.................................. 27

G. Codes of Ethics.......................................... 28

VI. Brokerage Allocation and Other Practices.................... 28

A. Brokerage Transactions................................... 28

B. Commissions.............................................. 28

C. Brokerage Selection...................................... 29

D. Directed Brokerage....................................... 30

E. Regular Broker-Dealers................................... 30

VII. Capital Stock and Other Securities.......................... 30

VIII. Purchase, Redemption and Pricing of Shares.................. 31

A. Purchase/Redemption of Shares............................ 31

B. Offering Price........................................... 31

IX. Taxation of the Fund and Shareholders....................... 32

X. Underwriters................................................ 34

XI. Calculation of Performance Data............................. 35

XII. Financial Statements........................................ 36
</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 Chase Manhattan Bank.

"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 International 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.

"SUB-ADVISOR"--Morgan Stanley Dean Witter Investment Management Inc., a
subsidiary of MSDW.

"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 October 23, 1998.

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 long-term capital growth.

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."

U.S. GOVERNMENT SECURITIES. Securities issued by the U.S. Government, its
agencies or instrumentalities in which the Fund may invest include:

(1) U.S. Treasury bills (maturities of one year or less), U.S. Treasury
notes (maturities of one to ten years) and U.S. Treasury bonds (generally
maturities of greater than ten years), all of which are direct obligations
of the U.S. Government and, as such, are backed by the "full faith and
credit" of the United States.

(2) Securities issued by agencies and instrumentalities of the U.S.
Government which are backed by the full faith and credit of the United
States. Among the agencies and instrumentalities issuing such obligations
are the Federal Housing Administration, the Government National Mortgage
Association ("GNMA"), the Department of Housing and Urban Development, the
Export-Import Bank, the Farmers Home Administration, the General Services
Administration, the Maritime Administration and the Small Business
Administration. The maturities of such obligations range from three months
to 30 years.

Neither the value nor the yield of the U.S. Government securities which may
be invested in by the Fund are guaranteed by the U.S. Government. Such values
and yield will fluctuate with changes in prevailing interest rates and other
factors. Generally, as prevailing interest rates rise, the value of any U.S.
Government securities held by the Fund will fall. Such securities with longer
maturities generally tend to produce higher yields and are subject to greater
market fluctuation as a result of changes in interest rates than debt securities
with shorter maturities.

CONVERTIBLE SECURITIES. The Fund may invest in fixed-income securities
and/or equity securities which are convertible into common stock. Convertible
securities rank senior to common stocks in a corporation's capital structure
and, therefore, entail less risk than the corporation's common stock. The value
of a convertible security is a function of its "investment value" (its value as
if it did not have a conversion privilege), and its "conversion value" (the
security's worth if it were to be exchanged for the underlying security, at
market value, pursuant to its conversion privilege).

To the extent that a convertible security's investment value is greater than
its conversion value, its price will be primarily a reflection of such
investment value and its price will be likely to increase when interest rates
fall and decrease when interest rates rise, as with a fixed-income security (the
credit standing of the issuer and other factors may also have an effect on the
convertible security's value). If the conversion value exceeds the investment
value, the price of the convertible security will rise above its investment
value and, in addition, will sell at some premium over its conversion value.
(This premium represents the price investors are willing to pay for the
privilege of purchasing a fixed-income security with a possibility of capital
appreciation due to the conversion privilege.) At such times the price of the
convertible security will tend to fluctuate directly with the price of the
underlying equity security. Convertible securities may be purchased by the Fund
at varying price levels above their investment values and/or

4
<PAGE>
their conversion values in keeping with the Fund's objective. Up to 5% of the
Fund's net assets may be invested in fixed-income convertible securities rated
below investment grade or, if unrated, of comparable quality as determined by
the Sub-Advisor or the Investment Manager. Securities rated below investment
grade are the equivalent of high yield, high risk bonds (commonly known as "junk
bonds").

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may enter into
forward foreign currency exchange contracts ("forward contracts") as a hedge
against fluctuations in future foreign exchange rates. The Fund may conduct its
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
entering into forward contracts to purchase or sell foreign currencies. A
forward contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded in the interbank market conducted directly between
currency traders (usually large, commercial and investment banks) and their
customers. Forward contracts only will be entered into with United States banks
and their foreign branches, insurance companies and other dealers or foreign
banks whose assets total $1 billion or more. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage for trades.

The Fund may enter into forward contracts under various circumstances. The
typical use of a forward contract is to "lock in" the price of a security in
U.S. dollars or some other foreign currency which the Fund is holding in its
portfolio. By entering into a forward contract for the purchase or sale, for a
fixed amount of dollars or other currency, of the amount of foreign currency
involved in the underlying security transactions, the Fund may be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar or other currency which is being used for
the security purchase and the foreign currency in which the security is
denominated during the period between the date on which the security is
purchased or sold and the date on which payment is made or received.

The Investment Manager also may from time to time utilize forward contracts
for other purposes. For example, they may be used to hedge a foreign security
held in the portfolio or a security which pays out principal tied to an exchange
rate between the U.S. dollar and a foreign currency, against a decline in value
of the applicable foreign currency. They also may be used to lock in the current
exchange rate of the currency in which those securities anticipated to be
purchased are denominated. At times, the Fund may enter into "cross-currency"
hedging transactions involving currencies other than those in which securities
are held or proposed to be purchased are denominated.

The Fund will not enter into forward currency contracts or maintain a net
exposure to these contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's portfolio securities.

Although the Fund values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. It will, however, do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the spread
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer.

The Fund may be limited in its ability to enter into hedging transactions
involving forward contracts by the Internal Revenue Code requirements relating
to qualification as a regulated investment company.

Forward currency contracts may limit gains on portfolio securities that
could otherwise be realized had they not been utilized and could result in
losses. The contracts also may increase the Fund's volatility and may involve a
significant amount of risk relative to the investment of cash.

OPTION AND FUTURES TRANSACTIONS. The Fund may engage in transactions in
listed options. Listed options are issued or guaranteed by the exchange on which
they are traded or by a clearing corporation such as the Options Clearing
Corporation ("OCC"). Ownership of a listed call option gives the Fund the right
to buy from the OCC (in the U.S.) or other clearing corporation or exchange, the
underlying security

5
<PAGE>
or currency covered by the option at the stated exercise price (the price per
unit of the underlying security) by filing an exercise notice prior to the
expiration date of the option. The writer (seller) of the option would then have
the obligation to sell to the OCC (in the U.S.) or other clearing corporation or
exchange, the underlying security or currency at that exercise price prior to
the expiration date of the option, regardless of its then current market price.
Ownership of a listed put option would give the Fund the right to sell the
underlying security or currency to the OCC (in the U.S.) or other clearing
corporation or exchange, at the stated exercise price. Upon notice of exercise
of the put option, the writer of the put would have the obligation to purchase
the underlying security or currency from the OCC (in the U.S.) or other clearing
corporation or exchange, at the exercise price.

COVERED CALL WRITING. The Fund is permitted to write covered call options
on portfolio securities and on the U.S. dollar and foreign currencies in which
they are denominated, without limit. The Fund will receive from the purchaser,
in return for a call it has written, a "premium;" i.e., the price of the option.
Receipt of these premiums may better enable the Fund to earn a higher level of
current income than it would earn from holding the underlying securities (or
currencies) alone. Moreover, the premium received will offset a portion of the
potential loss incurred by the Fund if the securities (or currencies) underlying
the option decline in value.

The Fund may be required, at any time during the option period, to deliver
the underlying security (or currency) against payment of the exercise price on
any calls it has written. This obligation is terminated upon the expiration of
the option period or at such earlier time when the writer effects a closing
purchase transaction. A closing purchase transaction is accomplished by
purchasing an option of the same series as the option previously written.
However, once the Fund has been assigned an exercise notice, the Fund will be
unable to effect a closing purchase transaction.

A call option is "covered" if the Fund owns the underlying security subject
to the option or has an absolute and immediate right to acquire that security
without additional cash consideration (or for additional consideration (in cash,
Treasury bills or other liquid portfolio securities) held in a segregated
account on the Fund's books) upon conversion or exchange of other securities
held in its portfolio. A call option is also covered if the Fund holds a call on
the same security as the call written where the exercise price of the call held
is (i) equal to or less than the exercise price of the call written, or
(ii) greater than the exercise price of the call written if the difference is
maintained by the Fund in cash, Treasury bills or other liquid portfolio
securities in a segregated account on the Fund's books.

Options written by the Fund normally have expiration dates of from up to
eighteen months from the date written. The exercise price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.

COVERED PUT WRITING. A writer of a covered put option incurs an obligation
to buy the security underlying the option from the purchaser of the put, at the
option's exercise price at any time during the option period, at the purchaser's
election. Through the writing of a put option, the Fund would receive income
from the premium paid by purchasers. The potential gain on a covered put option
is limited to the premium received on the option (less the commissions paid on
the transaction). During the option period, the Fund may be required, at any
time, to make payment of the exercise price against delivery of the underlying
security (or currency). A put option is "covered" if the Fund maintains cash,
Treasury bills or other liquid portfolio securities with a value equal to the
exercise price in a segregated account on the Fund's books, or holds a put on
the same security as the put written where the exercise price of the put held is
equal to or greater than the exercise price of the put written. The aggregate
value of the obligations underlying puts may not exceed 50% of the Fund's
assets. The operation of and limitations on covered put options in other
respects are substantially identical to those of call options.

PURCHASING CALL AND PUT OPTIONS. The Fund may purchase listed and OTC call
and put options in amounts equaling up to 5% of its total assets. The purchase
of a call option would enable the Fund, in return for the premium paid to lock
in a purchase price for a security or currency during the term of the option.
The purchase of a put option would enable the Fund, in return for a premium
paid, to lock in a price at which it may sell a security or currency during the
term of the option.

6
<PAGE>
OPTIONS ON FOREIGN CURRENCIES. The Fund may purchase and write options on
foreign currencies for purposes similar to those involved with investing in
forward foreign currency exchange contracts.

OTC OPTIONS. OTC options are purchased from or sold (written) to dealers or
financial institutions which have entered into direct agreements with the Fund.
With OTC options, such variables as expiration date, exercise price and premium
will be agreed upon between the Fund and the transacting dealer, without the
intermediation of a third party such as the OCC. The Fund will engage in OTC
option transactions only with member banks of the Federal Reserve Bank System or
primary dealers in U.S. Government securities or with affiliates of such banks
or dealers.

RISKS OF OPTIONS TRANSACTIONS. The successful use of options depends on the
ability of the Investment Manager to forecast correctly interest rates, currency
exchange rates and/or market movements. If the market value of the portfolio
securities (or the currencies in which they are denominated) upon which call
options have been written increases, the Fund may receive a lower total return
from the portion of its portfolio upon which calls have been written than it
would have had such calls not been written. During the option period, the
covered call writer has, in return for the premium on the option, given up the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security (or the value of its denominated currency)
increase, but has retained the risk of loss should the price of the underlying
security (or the value of its denominated currency) decline. The covered put
writer also retains the risk of loss should the market value of the underlying
security decline below the exercise price of the option less the premium
received on the sale of the option. In both cases, the writer has no control
over the time when it may be required to fulfill its obligation as a writer of
the option. Prior to exercise or expiration, an option position can only be
terminated by entering into a closing purchase or sale transaction. Once an
option writer has received an exercise notice, it cannot effect a closing
purchase transaction in order to terminate its obligation under the option and
must deliver or receive the underlying securities at the exercise price.

The Fund's ability to close out its position as a writer of an option is
dependent upon the existence of a liquid secondary market on option exchanges.
There is no assurance that such a market will exist, particularly in the case of
OTC options.

In the event of the bankruptcy of a broker through which the Fund engages in
transactions in options, 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. In the case of OTC
options, if the transacting dealer fails to make or take delivery of the
securities underlying an option it has written, in accordance with the terms of
that option, due to insolvency or otherwise, the Fund would lose the premium
paid for the option as well as any anticipated benefit of the transaction.

Each of the exchanges has established limitations governing the maximum
number of call or put options on the same underlying security which may be
written by a single investor, whether acting alone or in concert with others
(regardless of whether such options are written on the same or different
exchanges or are held or written on one or more accounts or through one or more
brokers). An exchange may order the liquidation of positions found to be in
violation of these limits and it may impose other sanctions or restrictions.
These position limits may restrict the number of listed options which the Fund
may write.

The hours of trading for options may not conform to the hours during which
the underlying securities are traded. To the extent that the option markets
close before the markets for the underlying securities, significant price and
rate movements can take place in the underlying markets that cannot be reflected
in the option markets.

The markets in foreign currency options are relatively new and the Fund's
ability to establish and close out positions on such options is subject to the
maintenance of a liquid secondary market. There can be no assurance that a
liquid secondary market will exist for a particular option at any specific time.

The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of the
option position may vary with changes in the value of either or both currencies
and have no relationship to the investment merits of a foreign security. Because
foreign

7
<PAGE>
currency transactions occurring in the interbank market involve substantially
larger amounts than those that may be involved in the use of foreign currency
options, investors may be disadvantaged by having to deal in an odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.

There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information available is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
(i.e., less than $1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around-the-clock market. To the extent
that the U.S. options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that are not reflected in the options market.

FUTURES CONTRACTS. The Fund may purchase and sell interest rate, currency
and index futures contracts that are traded on U.S. and foreign commodity
exchanges on such underlying securities as U.S. Treasury bonds, notes, bills and
GNMA Certificates and/or any foreign government fixed-income security, on
various currencies and on such indexes of U.S. and foreign securities as may
exist or come into existence.

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. The purchase of a futures
contract enables the Fund, during the term of the contract, to lock in a price
at which it may purchase a security or currency and protect against a rise in
prices pending purchase of portfolio securities. The sale of a futures contract
enables the Fund to lock in a price at which it may sell a security or currency
and protect against declines in the value of portfolio securities.

Although most futures contracts call for actual delivery or acceptance of
securities, the contracts usually are closed out before the settlement date
without the making or taking of delivery. 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 (currency) 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 (currency) and the same delivery date. If the offsetting sale price
exceeds the purchase price, the purchaser would realize a gain, whereas if the
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, U.S. Government
securities or other liquid portfolio securities, called "variation margin,"
which are reflective of price fluctuations in the futures contract.

8
<PAGE>
OPTIONS ON FUTURES CONTRACTS. The Fund may purchase and write call and put
options on futures contracts and enter into closing transactions with respect to
such options to terminate an existing position. An option on a futures contract
gives the purchaser the right (in return for the premium paid), and the writer
the obligation, to assume a position in a futures contract (a long position if
the option is a call and a short position if the option is a put) at a specified
exercise price at any time during the term of the option. Upon exercise of the
option, the delivery of the futures position by the writer of the option to the
holder of the option is accompanied by delivery of the accumulated balance in
the writer's futures margin account, which represents the amount by which the
market price of the futures contract at the time of exercise exceeds, in the
case of a call, or is less than, in the case of a put, the exercise price of the
option on the futures contract.

The writer of an option on a futures contract is required to deposit initial
and variation margin pursuant to requirements similar to those applicable to
futures contracts. Premiums received from the writing of an option on a futures
contract are included in initial margin deposits.

LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Fund may not
enter into futures contracts or purchase related options thereon 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, provided, however, that in the case of an
option that is in-the-money (the exercise price of the call (put) option is less
(more) than the market price of the underlying security) at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%.
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 AND RELATED OPTIONS. 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 (and the currencies in which they are
denominated). Also, prices of futures contracts may not move in tandem with the
changes in prevailing interest rates, market movements and/or currency exchange
rates 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 interest rate, currency
exchange rate and/or 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 and related options 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 (currencies) 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. In addition, the
Fund may be required to take or make delivery of the instruments underlying
interest rate futures

9
<PAGE>
contracts it holds at a time when it is 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.

Futures contracts and options thereon which are purchased or sold on foreign
commodities exchanges may have greater price volatility than their U.S.
counterparts. Furthermore, foreign commodities exchanges may be less regulated
and under less governmental scrutiny than U.S. exchanges. Brokerage commissions,
clearing costs and other transaction costs may be higher on foreign exchanges.
Greater margin requirements may limit the Fund's ability to enter into certain
commodity transactions on foreign exchanges. Moreover, differences in clearance
and delivery requirements on foreign exchanges may occasion delays in the
settlement of the Fund's transactions effected on foreign exchanges.

In the event of the bankruptcy of a broker through which the Fund engages in
transactions in futures or options thereon, 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.

If the Fund maintains a short position in a futures contract or has sold a
call option 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 or the exercise price of the option.
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), or by holding a call
option permitting the Fund to purchase the same contract at a price no higher
than the price at which the short position was established.

In addition, if the Fund holds a long position in a futures contract or has
sold a put option on a futures contract, it will hold cash, U.S. government
securities or other liquid portfolio securities equal to the purchase price of
the contract or the exercise price of the put option (less the amount of initial
or variation margin on deposit) in a segregated account maintained on the books
of the Fund. Alternatively, the Fund could cover its long position by purchasing
a put option on the same futures contract with an exercise price as high or
higher than the price of the contract held by 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

10
<PAGE>
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 grades 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.

While repurchase agreements involve certain risks not associated with direct
investments in debt securities, the Fund follows procedures approved by the
Trustees 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 Sub-Advisor. 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.

REVERSE REPURCHASE AGREEMENTS. The Fund may also use reverse repurchase
agreements for purposes of meeting redemptions or as part of its investment
strategy. Reverse repurchase agreements involve sales by the Fund of portfolio
assets concurrently with an agreement by the Fund to repurchase the same assets
at a later date at a fixed price. Generally, the effect of such a transaction is
that the Fund can recover all or most of the cash invested in the portfolio
securities involved during the term of the reverse repurchase agreement, while
it will be able to keep the interest income associated with those portfolio
securities. These transactions are only advantageous if the interest cost to the
Fund of the reverse repurchase transaction is less than the cost of obtaining
the cash otherwise. Opportunities to achieve this advantage may not always be
available, and the Fund intends to use the reverse repurchase technique only
when it will be to its advantage to do so.

The Fund will establish a segregated account in which it will maintain cash,
U.S. Government securities or other appropriate liquid portfolio securities
equal in value to its obligations in respect of reverse repurchase agreements.
Reverse repurchase agreements may not exceed 10% of the Fund's total assets. The
Fund will make no purchases of portfolio securities while it is still subject to
a reverse repurchase agreement.

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

11
<PAGE>
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 25% of the value of its net 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 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 Sub-Advisor 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 net 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.

12
<PAGE>
PRIVATE PLACEMENTS. The Fund may invest up to 15% of its net assets in
securities which are subject to restrictions on resale because they have not
been registered under the Securities Act of 1933 (the "Securities Act"), or
which are otherwise not readily marketable. (Securities eligible for resale
pursuant to Rule 144A under the Securities Act, and determined to be liquid
pursuant to the procedures discussed in the following paragraph, are not subject
to the foregoing restriction.) These securities are generally referred to as
private placements or restricted securities. Limitations on the resale of these
securities may have an adverse effect on their marketability, and may prevent
the Fund from disposing of them promptly at reasonable prices. The Fund may have
to bear the expense of registering the securities for resale and the risk of
substantial delays in effecting the registration.

Rule 144A permits the Fund to sell restricted securities to qualified
institutional buyers without limitation. The Sub-Advisor, pursuant to procedures
adopted by the Trustees, will make a determination as to the liquidity of each
restricted security purchased by the Fund. If a restricted security is
determined to be "liquid," the security will not be included within the category
"illiquid securities," which may not exceed 15% of the Fund's net assets.
However, investing in Rule 144A securities could have the effect of increasing
the level of Fund illiquidity to the extent the Fund, at a particular point in
time, may be unable to find qualified institutional buyers interested in
purchasing such securities.

WARRANTS AND SUBSCRIPTION RIGHTS. The Fund may acquire warrants and
subscription rights attached to other securities. A warrant is, in effect, an
option to purchase equity securities at a specific price, generally valid for a
specific period of time, and has no voting rights, pays no dividends and has no
rights with respect to the corporation issuing it.

A subscription right is a privilege granted to existing shareholders of a
corporation to subscribe to shares of a new issue of common stock before it is
offered to the public. A subscription right normally has a life of two to four
weeks and a subscription price lower than the current market value of the common
stock.

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, as amended (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 long-term capital growth.

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).

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.

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.

13
<PAGE>
4. Purchase or sell real estate or interests therein (including real estate
limited partnerships), 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 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 these programs.

6. Purchase or sell commodities or commodities contracts, except that the
Fund may purchase or sell (write) interest rate, currency and stock and bond
index futures contracts and related options thereon.

7. Borrow money (except insofar as the Fund may be deemed to have borrowed
by entrance into a reverse repurchase agreement up to an amount not exceeding
10% of the Fund's total assets), except that the Fund may borrow from a bank for
temporary or emergency purposes in amounts not exceeding 5% of its total assets
(not including the amount borrowed).

8. Pledge its assets or assign or otherwise encumber them except to secure
permitted borrowings. For the purpose of this restriction, collateral
arrangements with respect to the writing of options and collateral arrangements
with respect to initial or variation margin for futures are not deemed to be
pledges of assets.

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 or reverse repurchase agreement;
(b) purchasing any securities on a when-issued or delayed delivery basis; (c)
purchasing or selling futures contracts, forward foreign exchange contracts or
options; (d) borrowing money; or (e) lending portfolio securities.

10. Make loans of money or securities, except: (a) by the purchase of
publicly distributed debt obligations; (b) by investment in repurchase or
reverse repurchase agreements; or (c) by lending its portfolio securities.

11. Make short sales of securities or maintain a short position, unless at
all times when a short position is open it either owns an equal amount of such
securities or owns securities which, without payment of any further
consideration, are convertible into or exchangeable for securities of the same
issue as, and equal in amount to, the securities sold short.

12. Purchase securities on margin, except for 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 thereon is not considered the purchase of a security on margin.

13. Engage in the underwriting of securities, except insofar as the Fund may
be deemed an underwriter under the Securities Act in disposing of a portfolio
security.

14. Invest for the purpose of exercising control or management of any other
issuer.

Notwithstanding any other investment policy or restriction, the Fund may
seek to achieve its investment objective by investing all or substantially all
of its assets in another investment company having substantially the same
investment objective and policies 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.

14
<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 nine (9) Trustees.
These same individuals also serve as directors or trustees for all of the Morgan
Stanley Dean Witter Funds. Six Trustees (67% 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 three 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.

15
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
--------------------------------------------- -----------------------------------------------
<S> <C>
Edwin J. Garn (68) .......................... Director or Trustee of the Morgan Stanley Dean
Trustee Witter Funds; formerly United States Senator
c/o Summit Ventures LLC (R- Utah)(1974-1992) and Chairman, Senate
1 Utah Center Banking Committee (1980-1986); formerly Mayor
201 S. Main Street of Salt Lake City, Utah (1971-1974); formerly
Salt Lake City, Utah 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 ven-
ture between Lockheed Martin and the Boeing
Company) and Nuskin Asia Pacific (multilevel
marketing); member of the Utah Regional
Advisory Board of Pacific Corp.; member of the
board of various civic and charitable
organizations.
Wayne E. Hedien (66) ........................ Retired; Director or Trustee of the Morgan
Trustee Stanley Dean Witter Funds; Director of The PMI
c/o Mayer, Brown & Platt Group, Inc. (private mortgage insurance);
Counsel to the Independent Trustee Trustee and Vice Chairman of The Field Museum
1675 Broadway of Natural History; formerly associated with
New York, New York the Allstate 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.
James F. Higgins*(52) Chairman of the Private Client Group of MSDW
Trustee (since August 2000); Director of the Transfer
Two World Trade Center Agent and Dean Witter Realty Inc.; Director or
New York, New York Trustee of the Morgan Stanley Dean Witter Funds
(since June 2000); previously President and
Chief Operating Officer of the Private Client
Group of MSDW (May 1999-August 2000), President
and Chief Operating Officer of Individual
Securities of MSDW (February 1997-May 1999),
President and Chief Operating Officer of Dean
Witter Securities of MSDW (1995-February 1997),
and President and Chief Operating Officer of
Dean Witter Financial (1989-1995) and Director
(1985-1997) of Dean Witter Reynolds.
</TABLE>

16
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
--------------------------------------------- -----------------------------------------------
<S> <C>
Dr. Manuel H. Johnson (51) .................. Senior Partner, Johnson Smick
Trustee International, Inc., a consulting firm;
c/o Johnson Smick International, Inc. Co-Chairman and a founder of the Group of Seven
1133 Connecticut Avenue, N.W. Council (G7C), an international economic
Washington, D.C. commission; Chairman of the Audit Committee and
Director or Trustee of the Morgan Stanley Dean
Witter Funds, Director of Greenwich Capital
Markets, Inc. (broker-dealer), Independence
Standards Board (private sector organization
governing independence of auditors) 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 and Assistant Secretary
of the U.S. Treasury.
Michael E. Nugent (64) ...................... General Partner, Triumph Capital, L.P., a
Trustee private investment partnership; Chairman of the
c/o Triumph Capital, L.P. Insurance Committee and Director or Trustee of
237 Park Avenue the Morgan Stanley Dean Witter Funds; formerly
New York, New York Vice President, Bankers Trust Company and BT
Capital Corporation; director of various
business organizations.
Philip J. Purcell* (57) ..................... 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.
John L. Schroeder (70) ...................... 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
Counsel to the Independent Trustees Communications Company; (telecommunications
1675 Broadway company), formerly Executive Vice President and
New York, New York Chief Investment Officer of the Home Insurance
Company (August 1991-September 1995).
</TABLE>

17
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
--------------------------------------------- -----------------------------------------------
<S> <C>
Mitchell M. Merin (47) ...................... 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
New York, New York Chief 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) ............................. General Counsel of Asset Management of MSDW
Vice President, (since May 2000); Executive Vice President
Secretary and General Counsel (since December 1999) and Secretary and General
Two World Trade Center Counsel (since February 1997) and Director
New York, New York (since July 1998) of the Investment Manager and
MSDW Services Company, Vice President,
Secretary and General Counsel of the Morgan
Stanley Dean Witter Funds (since February
1997); Vice President and Secretary of the
Distributor, previously, Senior Vice President
(March 1997-December 1999), First Vice
President, Assistant Secretary and Assistant
General Counsel of the Investment Manager and
MSDW Services Company.
Thomas F. Caloia (54) ....................... First Vice President and Assistant Treasurer of
Treasurer the Investment Manager, the Distributor and
Two World Trade Center MSDW 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 and Chief Executive Officer and Director of the Transfer Agent, 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, and MARK
BAVOSO, Senior Vice President of the Investment Manager, are Vice Presidents of
the Fund.

In addition, LOU ANNE D. MCINNIS, CARSTEN OTTO and RUTH ROSSI, Senior Vice
Presidents and Assistant General Counsels of the Investment Manager and MSDW
Services Company, MARILYN K. CRANNEY and TODD LEBO, First Vice Presidents and
Assistant General Counsels of the Investment Manager and MSDW Services Company,
and NATASHA KASSIAN, 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,

18
<PAGE>
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 auditors; directing
investigations into matters within the scope of the independent auditors'
duties, including the power to retain outside specialists; reviewing with the
independent auditors the audit plan and results of the auditing engagement;
approving professional services provided by the independent auditors and other
accounting firms prior to the performance of the services; reviewing the
independence of the independent auditors; 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.

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

19
<PAGE>
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 Directors 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 October 31, 2000.

FUND COMPENSATION

<TABLE>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
------------------------------------------------------------ ------
<S> <C>

Michael Bozic............................................... $1,550
Edwin J. Garn............................................... 1,600
Wayne E. Hedien............................................. 1,600
Dr. Manuel H. Johnson....................................... 2,350
Michael E. Nugent........................................... 2,100
John L. Schroeder........................................... 2,050
</TABLE>

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

<TABLE>
TOTAL CASH
COMPENSATION
FOR SERVICES
TO 93 MORGAN
STANLEY DEAN
NAME OF INDEPENDENT TRUSTEE WITTER FUNDS
------------------------------------------------------------ --------
<S> <C>
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
</TABLE>

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 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.
------------------------
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.

20
<PAGE>
The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees 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 (not
including the Fund) as of the calendar year ended December 31, 1999.

RETIREMENT BENEFITS FROM ALL MORGAN STANLEY DEAN WITTER FUNDS

<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS
----------------------------
ESTIMATED
CREDITED
YEARS OF ESTIMATED RETIREMENT ESTIMATED ANNUAL
SERVICE AT PERCENTAGE OF BENEFITS ACCRUED BENEFITS UPON
RETIREMENT ELIGIBLE AS EXPENSES BY ALL RETIREMENT FROM ALL
NAME OF 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 Trustee's elections described in Footnote (1) on
page 20.

IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
--------------------------------------------------------------------------------

No persons owned 5% or more of the Shares of the Fund as of December 7,
2000.

As of the date of this STATEMENT OF ADDITIONAL INFORMATION, the aggregate
number of shares of common stock 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 AND SUB-ADVISOR

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.

The Sub-Advisor is Morgan Stanley Dean Witter Investment Management Inc., a
subsidiary of MSDW and an affiliate of the Investment Manager, whose address is
1221 Avenue of the Americas, New York, NY 10020. The Sub-Advisor was retained to
provide sub-advisory services to the Fund effective May 4, 1999.

Pursuant to an Investment Management Agreement (the "Management Agreement")
with the Investment Manager, the Fund has retained the Investment Manager to
provide administrative services, manage its business affairs and supervise the
investment of the Fund's assets. The Fund pays the Investment Manager monthly
compensation calculated daily by applying the annual rate of 1.00% to the net
assets of the Fund determined as of the close of each business day. The
management fee is allocated among the Classes pro rata based on the net assets
of the Fund attributable to each Class. For the period June 28, 1999
(commencement of operations) through October 31, 1999 and for the fiscal year
ended October 31, 2000, the Investment Manager accrued total compensation under
the Management Agreement in the amounts of $1,734,026 and $7,648,431,
respectively.

21
<PAGE>
Under a Sub-Advisory Agreement (the "Sub-Advisory Agreement") between the
Sub-Advisor and the Investment Manager, the Sub-Advisor provides the Fund with
investment advice and portfolio management relating to the Fund's investments,
subject to the overall supervision of the Investment Manager. The Investment
Manager pays the Sub-Advisor monthly compensation equal to 40% of the Investment
Manager's fee. For the period ended October 31, 1999 and for the fiscal year
ended October 31, 2000, the Sub-Advisor accrued total compensation under the
Sub-Advisory Agreement in the amounts of $693,610 and $3,059,372, respectively.

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 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 AND SUB-ADVISOR

The Investment Manager supervises the investment of the Fund's assets. 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 oversee the management of the assets of the
Fund in a manner consistent with its investment objective.

Under the terms of the Management Agreement, the Investment Manager also
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 auditors 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.

Pursuant to the Sub-Advisory Agreement, the Sub-Advisor has been retained,
subject to the overall supervision of the Investment Manager, to continuously
furnish investment advice concerning individual security selections, asset
allocations and overall economic trends with respect to International issuers.

22
<PAGE>
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 auditors; 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, who are not parties
to the Management Agreement or the Sub-Advisory Agreement or are "independent
Trustees," which votes must be cast in person at a meeting called for the
purpose of voting on such approval.

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 following annual rates: 0.25%, 1.0% and 1.0% of the average daily net assets
of Class A, Class B and Class C, respectively.

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 period
June 28, 1999

23
<PAGE>
(commencement of operations) through October 31, 1999 and for the fiscal year
ended October 31, 2000, in approximate amounts as provided in the table below
(the Distributor did not retain any of these amounts).

<TABLE>
<CAPTION>
2000 1999
-------------------- ------------------
<S> <C> <C> <C> <C>
Class A.............. FSCs:(1) $ 187,515 FSCs:(1) $103,705
CDSCs: $ 10,799 CDSCs: $ 1,100
Class B.............. CDSCs: $1,819,631 CDSCs: $235,698
Class C.............. CDSCs: $ 104,710 CDSCs: $ 29,401
</TABLE>

------------------------
(1) FSC applies 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 October 31, 2000,
Class A, Class B and Class C shares of the Fund accrued payments under the Plan
amounting to $115,305, $5,876,326 and $785,100, 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 period.

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 MSDW's 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.

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 and in the Morgan
Stanley Dean Witter Choice program, the

24
<PAGE>
Investment Manager compensates Dean Witter Reynolds' 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' 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 and in the Morgan Stanley Dean Witter
Choice program).

The gross sales credit is a charge which reflects commissions paid by Dean
Witter Reynolds to its Financial Advisors and Dean Witter Reynolds'
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' 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 MSDW'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. For example, the Distributor has implemented a
compensation program available only to Financial Advisors meeting specified
criteria under which certain marketing and/or promotional expenses of those
Financial Advisors are paid by the Distributor out of compensation it receives
under the Plan. 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 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

25
<PAGE>
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 October 31, 2000, to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $36,798,604 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)
14.26% ($5,248,382) - advertising and promotional expenses; (ii) 0.26% ($94,986)
-printing of prospectuses for distribution to other than current shareholders;
and (iii) 85.48% ($31,455,236) - other expenses, including the gross sales
credit and the carrying charge, of which 5.13% ($1,613,022) represents carrying
charges, 39.28% ($12,354,677) 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 55.59% ($17,487,537) 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 October 31, 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 $27,458,643 as of October 31, 2000 (the end of
the Fund's fiscal year), which was equal to 4.89% 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 unreimbursed expenses representing a gross sales commission credited to
Morgan Stanley Dean Witter Financial Advisors and other authorized financial

26
<PAGE>
representatives at the time of sale totaled $388,145 in the case of Class C at
December 31, 1999 (the end of the calendar year), which amount was equal to
0.47% of the net assets of Class C on such date, and that there were no such
expenses that may be reimbursed in the subsequent year in the case of Class A on
such date. 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' 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 Trustee's 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 AUDITORS

The Chase Manhattan Bank, One Chase Plaza, New York, NY 10005 is the
Custodian of the Fund's assets. The Custodian has contracted with various
foreign banks and depositaries to hold portfolio

27
<PAGE>
securities of non-U.S. issuers on behalf of the Fund. 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.

Deloitte & Touche LLP, Two World Financial Center, New York, NY 10281,
serves as the independent auditors of the Fund. The independent auditors are
responsible for auditing the annual financial statements of the Fund.

(3) AFFILIATED PERSONS

The Transfer Agent is an affiliate of the Investment Manager, Sub-Advisor
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, the Sub-Advisor 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
preclearance 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
and the Sub-Advisor are 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 non-affiliated 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. Options and 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 June 28, 1999 (commencement of operations) through
October 31, 1999 and for the fiscal year ended October 31, 2000, the Fund paid a
total of $452,413 and $665,187, 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.

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<PAGE>
During the fiscal period ended October 31, 1999 and for the fiscal year
ended October 31, 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 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 fiscal
period ended October 31, 1999 and the fiscal year ended October 31, 2000, the
Fund did not pay any brokerage commissions to Dean Witter Reynolds.

During the fiscal period ended October 31, 1999 and for the fiscal year
ended October 31, 2000, the Fund paid a total of $7,129 and $0, respectively, in
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 and/or the Sub-Advisor 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 and/or the Sub-Advisor rely upon their 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. The Fund anticipates that certain of its
transactions involving foreign securities will be effected on foreign securities
exchanges. Fixed commissions on such transactions are generally higher than
negotiated commissions on domestic transactions. There is also generally less
government supervision and regulation of foreign securities exchanges and
brokers than in the United States.

In seeking to implement the Fund's policies, the Investment Manager and/or
the Sub-Advisor effect transactions with those brokers and dealers who they
believe provide the most favorable prices and are capable of providing efficient
executions. If the Investment Manager and/or the Sub-Advisor believe 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 and/or the Sub-Advisor. 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 and/or the Sub-Advisor from brokers and dealers may be of benefit to
them in the management of accounts of some of its other clients and may not in
all cases benefit the Fund directly.

The Investment Manager and the Sub-Advisor currently serve as advisors to a
number of clients, including other investment companies, and may in the future
act as investment manager or advisor to

29
<PAGE>
others. It is the practice of the Investment Manager and the Sub-Advisor 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 and/or Sub-Advisor utilize a pro rata
allocation process based on the size of the relevant funds and/or client
accounts involved and the number of shares available from the public offering.

D. DIRECTED BROKERAGE

During the fiscal year ended October 31, 2000, the Fund paid $635,861 in
brokerage commissions in connection with transactions in the aggregate amount of
$1,113,521,238 to brokers because of research services provided.

E. REGULAR BROKER-DEALERS

During the fiscal year ended October 31, 2000, the Fund did not purchase
securities issued by brokers or dealers that were among the ten brokers or the
ten dealers which executed transactions for or with the Fund in the largest
dollar amounts during the period. As of October 31, 2000, the Fund did not own
any securities issued by any of such issuers.

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 the actions
of the Trustees. In addition, under certain circumstances, the shareholders may
call a meeting to remove the Trustees and the Fund is required to provide
assistance in communication 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

30
<PAGE>
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.

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 transaction 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 the 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.

OUTSIDE BROKERAGE ACCOUNTS. If a shareholder wishes to maintain his or her
fund account through a brokerage company other than Dean Witter Reynolds, he or
she may do so only if the Distributor has entered into a selected dealer
agreement with that brokerage company. Accounts maintained through a brokerage
company other than Dean Witter Reynolds may be subject to certain restrictions
on subsequent purchases and exchanges. Please contact your brokerage company or
the Transfer Agent for more information.

B. OFFERING PRICE

The Fund's Class B, Class C and Class D shares are offered at net asset
value 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

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<PAGE>
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, NASDAQ, or
other exchange is valued at its latest sale price, 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 or the
Sub-Advisor 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 Directors
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.

Certain of the Fund's portfolio securities may be valued by an outside
pricing service approved by the Fund's Trustees. The pricing service may utilize
a matrix system incorporating security quality, maturity and coupon as the
evaluation model parameters, and/or research evaluations by its staff, including
review of broker-dealer market price quotations in determining what it believes
is the fair valuation of the portfolio securities valued by such pricing
service.

Listed options on debt securities are valued at the latest sale price on the
exchange on which they are listed unless no sales of such options have taken
place that day, in which case they will be valued at the mean between their
latest bid and asked prices. Unlisted options on debt securities and all options
on equity securities are valued at the mean between their latest bid and asked
prices. 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.

Generally, trading in foreign securities, as well as corporate bonds, U.S.
Government securities and money market instruments, is substantially completed
each day at various times prior to the close of the New York Stock Exchange. The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events which may affect the values of such securities and such
exchange rates may occur between the times at which they are determined and the
close of the New York Stock Exchange and will therefore not be reflected in the
computation of the Fund's net asset value. If events that may affect the value
of such securities occur during such period, then these securities may 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. Tax issues relating to the Fund
are not generally a consideration for shareholders such as

32
<PAGE>
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 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 at the time of such sale. Gains or losses on the sale of securities with a
tax holding period of one year or less will be short-term capital gains or
losses. Special tax rules may change the normal treatment of gains and losses
recognized by the Fund when the Fund invests in forward foreign currency
exchange contracts, options, futures transactions, and non-U.S. corporations
classified as "passive foreign investment companies." Those special tax rules
can, among other things, affect the treatment of capital gain or loss as
long-term or short-term and may result in ordinary income or loss rather than
capital gain or loss. The application of these special rules would therefore
also affect the 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 income 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. Under current law, the maximum tax rate on long-
term capital gains realized by non-corporate shareholders generally is 20%. A
special lower tax rate of 18% on long-term capital gains is available to
non-corporate shareholders to the extent the distributions of long-term capital
gains are derived from securities which the Fund purchased after December 31,
2000, and held for more than five years.

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.

33
<PAGE>
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, and the portion taxable as long-term
capital gains.

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 at the time of such sale or redemption will, for tax purposes,
generally result in short-term capital gains or losses and those held for more
than one year generally result in long-term capital gains or losses. Under
current law, the maximum tax rate on long-term capital gains realized by
non-corporate shareholders generally is 20%. A special lower tax rate of 18% on
long-term capital gains is available for non-corporate shareholders who
purchased shares after December 31, 2000, and held such shares for more than
five years. This special lower tax rate of 18% for five-year property does not
apply to non-corporate shareholders holding Fund shares which were purchased on
or prior to December 31, 2000, unless such shareholders make an election to
treat the Fund shares as being sold and reacquired on January 1, 2001. A
shareholder making such election may realize capital gains or losses. 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 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."

34
<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 involves 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 (where 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 operations on June 28, 1999) periods ended
October 31, 2000 were -7.76% and -1.87%, respectively. The average annual total
returns of Class B for the one year and the life of the Fund periods ended
October 31, 2000 were -8.24% and -1.57%, respectively. The average annual total
returns of Class C for the one year and the life of the Fund periods ended
October 31, 2000 were -4.38% and 1.41%, respectively. The average annual total
returns of Class D for the one year and the life of the Fund periods ended
October 31, 2000 were -2.46% and 2.37%, 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
October 31, 2000 were -2.65% and 2.15%, respectively. The average annual total
returns of Class B for the one year and the life of the Fund periods ended
October 31, 2000 were -3.41% and 1.41%, respectively. The average annual total
returns of Class C for the one year and the life of the Fund periods ended
October 31, 2000 were -3.41% and 1.41%, respectively. The average annual total
returns of Class D for the one year and the life of the Fund periods ended
October 31, 2000 were -2.46% and 2.37%, 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 is assumed that
all dividends and distributions are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value (without reduction for any sales 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
October 31, 2000 were -2.65% and 2.90%, respectively. The total returns of Class
B for the one year and the life of the Fund periods ended October 31, 2000 were
-3.41% and 1.90%, respectively. The total returns of Class C for the one year
and the life of the Fund periods ended October 31, 2000 were -3.41% and 1.90%,
respectively. The total returns of Class D for the one year and the life of the
Fund periods ended October 31, 2000 were -2.46% and 3.20%, 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 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

35
<PAGE>
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 (declined) to the following
amounts at October 31, 2000:

<TABLE>
<CAPTION>
INVESTMENT AT INCEPTION OF:
INCEPTION -------------------------------
CLASS DATE: $10,000 $50,000 $100,000
----- --------- -------- -------- ---------
<S> <C> <C> <C> <C>
Class A............................................. 06/28/99 $ 9,750 $49,392 $ 99,813
Class B............................................. 06/28/99 10,190 50,950 101,900
Class C............................................. 06/28/99 10,190 50,950 101,900
Class D............................................. 06/28/99 10,320 51,600 103,200
</TABLE>

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
October 31, 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 Deloitte & Touche LLP, independent
auditors, 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.

36
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS, RIGHTS AND WARRANTS (81.1%)
AUSTRALIA (1.5%)
AIR FREIGHT/COURIERS
28,081 Mayne Nickless Ltd.................................................... $ 74,950
------------
BEVERAGES: ALCOHOLIC
127,993 Foster's Brewing Group Ltd............................................ 291,578
------------
BEVERAGES: NON-ALCOHOLIC
47,124 Coca-Cola Amatil Ltd.................................................. 96,470
------------
CASINO/GAMING
23,585 TABCORP Holdings Limited.............................................. 128,949
------------
CHEMICALS: SPECIALTY
11,632 Orica Ltd............................................................. 35,170
------------
CONTAINERS/PACKAGING
47,100 Amcor Ltd............................................................. 131,360
------------
ENGINEERING & CONSTRUCTION
19,776 Leighton Holdings Ltd................................................. 68,979
------------
FOOD RETAIL
79,696 Coles Myer Ltd........................................................ 290,403
83,646 Woolworth's Ltd....................................................... 335,145
------------
625,548
------------
FOOD: SPECIALTY/CANDY
88,267 Goodman Fielder Ltd................................................... 57,517
------------
GAS DISTRIBUTORS
38,594 Australian Gas Light Company Ltd...................................... 233,904
------------
INDUSTRIAL CONGLOMERATES
77,680 Pacific Dunlop Ltd.................................................... 62,362
46,286 Southcorp Holdings Ltd................................................ 120,258
13,941 Wesfarmers Limited.................................................... 107,042
------------
289,662
------------
LIFE/HEALTH INSURANCE
70,597 Amp Ltd............................................................... 639,991
------------
MAJOR BANKS
21,081 Commonwealth Bank of Australia........................................ 315,498
100,302 National Australia Bank Ltd........................................... 1,401,303
137,249 Westpac Banking Corp., Ltd............................................ 942,572
------------
2,659,373
------------
MAJOR TELECOMMUNICATIONS
80,283 Telstra Corp., Ltd.................................................... 263,497
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
MEDIA CONGLOMERATES
136,133 News Corporation Ltd.................................................. $ 1,432,097
120,900 News Corporation Ltd. (Pref.)......................................... 1,090,335
------------
2,522,432
------------
MISCELLANEOUS COMMERCIAL SERVICES
15,821 Brambles Industries, Ltd.............................................. 412,531
------------
OIL & GAS PRODUCTION
70,406 Santos Ltd............................................................ 225,354
------------
OTHER METALS/MINERALS
92,649 Broken Hill Proprietary Co., Ltd...................................... 903,171
23,162 OneSteel Ltd.*........................................................ 11,108
10,881 Rio Tinto Ltd......................................................... 150,213
103,021 WMC Ltd............................................................... 396,073
------------
1,460,565
------------
PHARMACEUTICALS: OTHER
7,681 CSL Limited........................................................... 137,413
9,112 FH Faulding & Company Ltd............................................. 48,451
------------
185,864
------------
PRECIOUS METALS
121,676 Normandy Mining Ltd................................................... 58,990
------------
PROPERTY - CASUALTY INSURERS
30,731 QBE Insurance Group Ltd............................................... 142,579
------------
PULP & PAPER
15,700 Paperlinx Ltd......................................................... 27,009
------------
REAL ESTATE DEVELOPMENT
28,402 AMP Diversified Property Trust........................................ 34,942
104,546 General Property Trust (Units)=/=..................................... 137,340
40,106 Lend Lease Corporation Ltd............................................ 472,190
23,205 Stockland Trust Group (Units)=/=...................................... 45,363
3,355 Westfield Trust....................................................... 5,562
98,188 Westfield Trust (Units)=/=............................................ 159,135
------------
854,532
------------
REGIONAL BANKS
22,915 Suncorp-Metway Ltd.................................................... 117,067
------------

TOTAL AUSTRALIA....................................................... 11,603,871
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
37
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
AUSTRIA (0.1%)
BEVERAGES: ALCOHOLIC
588 BBAG Oesterreichische Brau-Beteiligungs AG............................ $ 21,718
------------
BUILDING PRODUCTS
4,433 Wienerberger Baustoffindustrie AG..................................... 83,449
------------
CONTAINERS/PACKAGING
769 Mayr-Melnhof Karton AG................................................ 29,873
------------
ELECTRIC UTILITIES
1,959 Oesterreichische Elektrizitaetswirtschafts AG (Verbund) (A Shares).... 157,972
------------
ENGINEERING & CONSTRUCTION
302 Bau Holding AG........................................................ 7,667
963 VA Technologie AG..................................................... 39,004
------------
46,671
------------
MAJOR BANKS
4,522 Bank Austria AG....................................................... 244,776
------------
MISCELLANEOUS MANUFACTURING
1,080 BWT AG................................................................ 33,921
------------
MULTI-LINE INSURANCE
454 Generali Holding Vienna AG............................................ 66,497
------------
OTHER TRANSPORTATION
1,363 Flughafen Wien AG..................................................... 49,753
------------
STEEL
673 Boehler-Uddeholm AG................................................... 21,144
------------
TOBACCO
2,939 Austria Tabakwerke AG................................................. 134,757
------------
TOTAL AUSTRIA......................................................... 890,531
------------

BELGIUM (0.0%)
PHARMACEUTICALS: OTHER
1,600 UCB S.A............................................................... 57,060
------------
BRAZIL (1.2%)
BEVERAGES: ALCOHOLIC
2,110,000 Companhia de Bebidas das Americas (Pref.)*............................ 472,846
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
ELECTRIC UTILITIES
44,732,000 Centrais Electricas Brasileiras S.A................................... $ 797,693
19,826,000 Companhia Energetica de Minas Gerais S.A. (Pref.)..................... 302,240
------------
1,099,933
------------
FINANCE/RENTAL/LEASING
66,636,000 Bradespar S.A.*....................................................... 36,455
64,675,000 Bradespar S.A. (Pref.)*............................................... 38,104
------------
74,559
------------
FOOD RETAIL
10,219,000 Companhia Brasileira de Distribuicao Grupo Pao de Acucar (Pref.)...... 365,594
------------
INTEGRATED OIL
58,250 Petroleo Brasileiro S.A............................................... 1,700,618
43,830 Petroleo Brasileiro S.A. (Pref.)...................................... 1,166,879
------------
2,867,497
------------
MAJOR TELECOMMUNICATIONS
22,490,000 Tele Centro Sul Participacoes S.A. (Pref.)............................ 244,539
------------
METAL FABRICATIONS
6,859,000 Companhia Siderurgica Nacional........................................ 191,193
------------
OTHER METALS/MINERALS
35,000 Companhia Vale do Rio Doce (Pref.) (Class A).......................... 810,100
------------
PULP & PAPER
98,000 Aracruz Celulose S.A. (Pref.) (B Shares).............................. 145,376
------------
REGIONAL BANKS
66,636,000 Banco Bradesco S.A.................................................... 315,478
64,675,000 Banco Bradesco S.A. (Pref.)........................................... 413,362
8,659,000 Banco Itau S.A. (Pref.)............................................... 676,413
------------
1,405,253
------------
SPECIALTY TELECOMMUNICATIONS
22,237,000 Embratel Participacoes S.A. (Pref.)................................... 358,295
25,601,544 Tele Norte Leste Participacoes S.A. (Pref.)........................... 561,322
------------
919,617
------------
TOBACCO
32,000 Souza Cruz S.A........................................................ 156,213
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
38
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
WIRELESS COMMUNICATIONS
19,332,351 Telesp Celular Participacoes S.A. (Pref.)............................. $ 229,629
------------

TOTAL BRAZIL.......................................................... 8,982,349
------------
DENMARK (0.1%)
BEVERAGES: ALCOHOLIC
1,645 Carlsberg AS (Series A)............................................... 71,317
1,800 Carlsberg AS (Series B)............................................... 75,367
------------
146,684
------------
FOOD: SPECIALTY/CANDY
3,700 Danisco AS............................................................ 146,479
------------
PHARMACEUTICALS: MAJOR
800 Novo-Nordisk AS (Series B)............................................ 169,764
------------
TOTAL DENMARK......................................................... 462,927
------------
FINLAND (0.9%)
BEVERAGES: ALCOHOLIC
8,005 Hartwall Oyj ABP...................................................... 138,660
------------
FOOD RETAIL
18,773 Kesko Oyj (B Shares).................................................. 157,011
------------
FOOD: SPECIALTY/CANDY
17,441 Raisio Group PLC...................................................... 26,360
------------
INDUSTRIAL MACHINERY
16,819 Metso Oyj............................................................. 128,529
------------
INFORMATION TECHNOLOGY SERVICES
7,682 Tietoenator Oyj ABP................................................... 147,741
------------
MAJOR TELECOMMUNICATIONS
14,351 Sonera Oyj............................................................ 316,334
------------
OTHER METALS/MINERALS
12,313 Outokumpu Oyj......................................................... 85,731
------------
PROPERTY - CASUALTY INSURERS
11,435 Sampo Insurance Co. Ltd. (A Shares)................................... 466,054
------------
PULP & PAPER
29,009 UPM-Kymmene Oyj....................................................... 821,462
------------
TELECOMMUNICATION EQUIPMENT
105,427 Nokia Oyj+............................................................ 4,340,731
------------
TRUCKS/CONSTRUCTION/FARM MACHINERY
7,227 Wartsila Oyj (B Shares)............................................... 116,592
------------
TOTAL FINLAND......................................................... 6,745,205
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>

FRANCE (8.9%)
AEROSPACE & DEFENSE
13,917 Thomson CSF........................................................... $ 625,115
------------
AGRICULTURAL COMMODITIES/MILLING
4,438 Eridania Beghin-Say S.A............................................... 341,597
------------
AUTO PARTS: O.E.M.
7,722 Valeo S.A............................................................. 336,361
------------
AUTOMOTIVE AFTERMARKET
11,392 Compagnie Generale des Etablissements Michelin (B Shares)............. 329,847
------------
BEVERAGES: ALCOHOLIC
39,095 LVMH (Louis Vuitton Moet Hennessy)+................................... 2,854,819
8,558 Pernod-Ricard......................................................... 392,396
------------
3,247,215
------------
CABLE/SATELLITE TV
10,325 Canal Plus............................................................ 1,494,766
------------
CHEMICALS: SPECIALTY
8,568 Air Liquide S.A....................................................... 1,013,420
------------
CONSTRUCTION MATERIALS
783 Imetal S.A............................................................ 77,454
6,763 Lafarge S.A........................................................... 499,594
------------
577,048
------------
CONTAINERS/PACKAGING
8,087 Compagnie de Saint-Gobain............................................. 1,070,514
10,515 Pechiney S.A. (A Shares).............................................. 392,845
------------
1,463,359
------------
ELECTRICAL PRODUCTS
14,199 Schneider Electric S.A................................................ 925,326
------------
ENGINEERING & CONSTRUCTION
25,730 Bouygues S.A.......................................................... 1,310,841
12,952 Suez Lyonnaise des Eaux............................................... 1,977,358
------------
3,288,199
------------
FOOD RETAIL
49,586 Carrefour S.A.+....................................................... 3,330,385
6,736 Etablissements Economiques du Casino Guichard-Perrachon S.A........... 588,540
------------
3,918,925
------------
FOOD: MAJOR DIVERSIFIED
26,848 Groupe Danone......................................................... 3,756,886
------------
HOTELS/RESORTS/CRUISELINES
15,568 Accor S.A............................................................. 630,536
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
39
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
HOUSEHOLD/PERSONAL CARE
54,410 L'Oreal S.A.+......................................................... $ 4,157,958
------------
INFORMATION TECHNOLOGY SERVICES
5,910 Cap Gemini S.A........................................................ 943,418
2,769 Sodexho Alliance S.A.................................................. 433,789
------------
1,377,207
------------
MAJOR BANKS
13,865 BNP Paribas S.A.+..................................................... 1,196,114
16,700 Societe Generale (A Shares)........................................... 948,640
------------
2,144,754
------------
MAJOR TELECOMMUNICATIONS
13,870 France Telecom S.A.+.................................................. 1,450,928
------------
MEDICAL SPECIALTIES
613 Essilor International S.A............................................. 147,301
------------
MOTOR VEHICLES
3,645 PSA Peugeot Citroen................................................... 671,608
------------
MOVIES/ENTERTAINMENT
42,291 Vivendi S.A........................................................... 3,041,517
------------
MULTI-LINE INSURANCE
27,424 AXA+.................................................................. 3,632,572
------------
OIL REFINING/MARKETING
94,403 Total Fina Elf........................................................ 13,514,569
------------
OILFIELD SERVICES/EQUIPMENT
2,378 Coflexip S.A.......................................................... 275,615
------------
OTHER CONSUMER SPECIALTIES
5,655 Societe BIC S.A....................................................... 196,148
------------
PACKAGED SOFTWARE
6,970 Dassault Systemes S.A................................................. 531,753
------------
PHARMACEUTICALS: MAJOR
65,555 Aventis S.A........................................................... 4,731,334
64,933 Sanofi-Synthelabo S.A................................................. 3,418,346
------------
8,149,680
------------
PUBLISHING: BOOKS/MAGAZINES
12,432 Lagardere S.C.A....................................................... 706,197
------------
REAL ESTATE DEVELOPMENT
2,100 Fonciere Lyonnaise.................................................... 205,058
3,970 Gecina................................................................ 340,464
5,460 Klepierre............................................................. 440,428
6,854 Simco S.A............................................................. 424,840
1,764 Simco-CIF de Valeur Garant (Warrants due 10/31/03).................... 8,837
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
1,010 Societe Immobiliere de Location pour l'Industrie et le Commerce....... $ 135,328
5,170 Sophia (EX-SFI)....................................................... 127,130
6,270 Unibail............................................................... 835,846
------------
2,517,931
------------
SEMICONDUCTORS
21,403 STMicroelectronics NV................................................. 1,080,402
------------
SPECIALTY STORES
10,090 Pinault-Printemps-Redoute S.A......................................... 1,801,728
------------
STEEL
26,581 Usinor S.A............................................................ 290,024
------------
TELECOMMUNICATION EQUIPMENT
25,387 Alcatel+.............................................................. 1,549,884
718 Sagem S.A. (New)...................................................... 131,685
------------
1,681,569
------------

TOTAL FRANCE.......................................................... 69,318,061
------------

GERMANY (7.8%)
AIRLINES
19,550 Deutsche Lufthansa AG................................................. 386,778
------------
AUTO PARTS: O.E.M.
7,050 Continental AG........................................................ 107,451
------------
CHEMICALS: MAJOR DIVERSIFIED
75,700 BASF AG............................................................... 2,982,447
88,600 Bayer AG.............................................................. 3,844,266
------------
6,826,713
------------
CONSTRUCTION MATERIALS
2,300 Dyckerhoff AG (Pref.)................................................. 36,520
5,550 Heidelberger Zement AG................................................ 264,843
------------
301,363
------------
DEPARTMENT STORES
7,850 Karstadquelle AG...................................................... 258,286
------------
HOUSEHOLD/PERSONAL CARE
14,500 Beiersdorf AG......................................................... 1,428,186
------------
INDUSTRIAL CONGLOMERATES
99,280 E. ON AG.............................................................. 5,049,489
7,800 MAN AG................................................................ 205,975
60,200 RWE AG................................................................ 2,422,890
2,050 RWE AG (Pref.)........................................................ 64,404
55,550 Siemens AG (Registered Shares)........................................ 7,075,126
</TABLE>

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40
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
67,450 ThyssenKrupp AG....................................................... $ 967,893
------------
15,785,777
------------
INDUSTRIAL MACHINERY
11,900 Linde AG.............................................................. 520,371
------------
INDUSTRIAL SPECIALTIES
1,000 SGL Carbon AG*........................................................ 60,965
------------
MAJOR BANKS
23,350 Bayerische Hypo - und Vereinsbank AG+................................. 1,282,774
33,450 Deutsche Bank AG (Registered Shares)+................................. 2,755,032
26,500 Dresdner Bank AG...................................................... 1,101,431
------------
5,139,237
------------
MAJOR TELECOMMUNICATIONS
41,150 Deutsche Telecom AG+.................................................. 1,539,128
------------
MEDICAL DISTRIBUTORS
4,150 Gehe AG............................................................... 150,465
------------
MEDICAL/NURSING SERVICES
8,050 Fresenius Medical Care AG............................................. 642,514
------------
MOTOR VEHICLES
81,450 DaimlerChrylser AG (Registered Shares)+............................... 3,758,802
25,800 Volkswagen AG......................................................... 1,290,309
3,650 Volkswagen AG (Pref.)................................................. 104,753
------------
5,153,864
------------
MOVIES/ENTERTAINMENT
5,600 EM. TV & Merchandising AG............................................. 168,801
------------
MULTI-LINE INSURANCE
23,900 Allianz AG (Registered Shares)+....................................... 8,127,543
16,650 Muenchener Rueckver AG (Registered Shares)+........................... 5,259,156
------------
13,386,699
------------
OTHER CONSUMER SERVICES
15,450 Preussag AG........................................................... 503,754
------------
PACKAGED SOFTWARE
18,000 SAP AG................................................................ 2,948,245
12,750 SAP AG (Pref.)........................................................ 2,582,007
------------
5,530,252
------------
PHARMACEUTICALS: MAJOR
11,200 Merck KGaA............................................................ 427,471
12,600 Schering AG........................................................... 702,902
------------
1,130,373
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
REAL ESTATE DEVELOPMENT
30,007 IVG Holding AG........................................................ $ 331,226
8,550 WCM Beteiligungs-und Grundbesitz AG................................... 170,605
------------
501,831
------------
RESTAURANTS
5,100 Kamps AG.............................................................. 80,113
------------
SPECIALTY STORES
5,400 Douglas Holding AG.................................................... 161,397
27,200 Metro AG.............................................................. 1,097,037
------------
1,258,434
------------

TOTAL GERMANY......................................................... 60,861,355
------------

HONG KONG (1.5%)
AIRLINES
226,000 Cathay Pacific Airways, Ltd........................................... 410,071
------------
BROADCASTING
31,000 Television Broadcasts Ltd............................................. 169,740
------------
ELECTRIC UTILITIES
154,000 CLP Holdings Ltd...................................................... 718,814
------------
ENGINEERING & CONSTRUCTION
135,004 New World Development Co., Ltd........................................ 160,134
------------
GAS DISTRIBUTORS
326,300 Hong Kong & China Gas Co., Ltd........................................ 412,143
------------
HOTELS/RESORTS/CRUISELINES
38,000 Shangri-La Asia Ltd................................................... 37,520
------------
INDUSTRIAL CONGLOMERATES
271,900 Hutchison Whampoa, Ltd................................................ 3,373,298
99,000 Swire Pacific Ltd. (Class A).......................................... 610,625
------------
3,983,923
------------
MAJOR BANKS
128,500 Hang Seng Bank Ltd.................................................... 1,511,832
------------
MISCELLANEOUS MANUFACTURING
250,000 Johnson Electric Holdings Ltd......................................... 498,500
------------
REAL ESTATE DEVELOPMENT
92,000 Henderson Land Development Co., Ltd................................... 396,389
42,000 Hysan Development Co., Ltd............................................ 53,319
336,996 Sino Land Co., Ltd.................................................... 150,167
</TABLE>

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41
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
156,000 Sun Hung Kai Properties Ltd........................................... $ 1,275,262
168,000 Wharf (Holdings) Ltd. (The)........................................... 342,532
------------
2,217,669
------------
REGIONAL BANKS
98,338 Bank of East Asia, Ltd................................................ 221,936
------------
SPECIALTY TELECOMMUNICATIONS
941,056 Pacific Century CyberWorks Ltd.*...................................... 724,038
------------
WHOLESALE DISTRIBUTORS
416,000 Li & Fung Limited..................................................... 773,492
------------
TOTAL HONG KONG....................................................... 11,839,812
------------

IRELAND (0.0%)
FOOD: SPECIALTY/CANDY
2,623 Kerry Group PLC (A Shares)............................................ 32,762
------------

ITALY (2.7%)
APPAREL/FOOTWEAR
102,548 Benetton Group SpA.................................................... 186,337
------------
AUTO PARTS: O.E.M.
139,536 Pirelli SpA........................................................... 405,202
------------
BROADCASTING
72,886 Mediaset SpA.......................................................... 1,055,182
------------
CONSTRUCTION MATERIALS
4,227 Italcementi SpA....................................................... 33,594
------------
ELECTRIC UTILITIES
765,943 Enel SpA+............................................................. 2,842,083
------------
ENGINEERING & CONSTRUCTION
24,787 Impregilo SpA......................................................... 13,301
11,209 Sirti SpA............................................................. 16,085
------------
29,386
------------
FOOD RETAIL
12,811 La Rinascente SpA..................................................... 65,484
------------
FOOD: MEAT/FISH/DAIRY
202,003 Parmalat Finanziara SpA............................................... 291,585
------------
GAS DISTRIBUTORS
50,128 Italgas SpA........................................................... 207,285
------------
INDUSTRIAL SPECIALTIES
32,601 Snia SpA.............................................................. 67,543
------------
INTEGRATED OIL
852,103 ENI SpA+.............................................................. 4,616,062
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
LIFE/HEALTH INSURANCE
78,112 Assicurazioni Generali+............................................... $ 2,570,090
------------
MAJOR BANKS
155,370 Banca di Roma SpA..................................................... 163,850
171,364 Banca Intesa SpA...................................................... 711,520
50,952 San Paolo - IMI SpA................................................... 826,330
159,934 Unicredito Italiano SpA............................................... 814,800
------------
2,516,500
------------
MAJOR TELECOMMUNICATIONS
52,110 Olivetti SpA.......................................................... 157,960
56,579 Telecom Italia SpA.................................................... 655,763
8,820 Telecom Italia SpA - RNC.............................................. 48,005
------------
861,728
------------
MOTOR VEHICLES
16,389 Fiat SpA.............................................................. 381,296
3,384 Fiat SpA (Pref.)...................................................... 50,514
------------
431,810
------------
MULTI-LINE INSURANCE
35,095 Riunione Adriatica di Sicurta SpA..................................... 460,993
4,084 Societa Assicuratrice Industriale SpA (SAI)........................... 67,794
------------
528,787
------------
PULP & PAPER
7,485 Reno de Medici SpA.................................................... 15,507
------------
REGIONAL BANKS
13,047 Banca Popolare di Milano.............................................. 81,979
22,718 Mediobanca SpA........................................................ 252,890
------------
334,869
------------
RESTAURANTS
13,310 Autogrill SpA......................................................... 147,033
------------
WIRELESS COMMUNICATIONS
95,611 Telecom Italia Mobile SpA-RNC......................................... 507,396
402,165 Telecom Italia Mobile SpA............................................. 3,421,613
------------
3,929,009
------------

TOTAL ITALY........................................................... 21,135,076
------------

JAPAN (16.4%)
AIR FREIGHT/COURIERS
70,000 Nippon Express Co., Ltd............................................... 420,026
4,000 Yamato Transport Co., Ltd............................................. 80,799
------------
500,825
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
42
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
AIRLINES
42,000 Japan Airlines Company, Ltd........................................... $ 168,138
------------
APPAREL/FOOTWEAR
23,000 Onward Kashiyama Co., Ltd............................................. 170,667
------------
APPAREL/FOOTWEAR RETAIL
200 Shimamura Co., Ltd.................................................... 15,170
------------
AUTO PARTS: O.E.M.
33,000 Denso Corporation..................................................... 752,748
35,000 NGK Spark Plug Co., Ltd............................................... 538,338
------------
1,291,086
------------
AUTOMOTIVE AFTERMARKET
58,000 Bridgestone Corp...................................................... 574,899
------------
BEVERAGES: ALCOHOLIC
31,000 Asahi Breweries, Ltd.................................................. 306,138
143,000 Kirin Brewery Co., Ltd................................................ 1,490,784
3,000 Takara Shuzo Co., Ltd................................................. 50,540
------------
1,847,462
------------
BROADCASTING
19,000 Tokyo Broadcasting System, Inc........................................ 743,221
------------
BUILDING PRODUCTS
3,000 Nippon Sheet Glass Company, Ltd....................................... 45,621
3,000 Tostem Corporation.................................................... 43,697
69,000 Toto Ltd.............................................................. 523,379
------------
612,697
------------
CHEMICALS: SPECIALTY
86,000 Asahi Chemical Industry Co., Ltd...................................... 532,576
5,000 Kaneka Corp........................................................... 48,553
4,000 Kuraray Co., Ltd...................................................... 37,560
123,000 Mitsubishi Chemical Corp.............................................. 388,741
13,000 Shin-Etsu Chemical Co., Ltd........................................... 533,529
129,000 Sumitomo Chemical Co Ltd.............................................. 635,782
------------
2,176,741
------------
COMMERCIAL PRINTING/FORMS
69,000 Dai Nippon Printing Co., Ltd.......................................... 1,080,890
57,000 Toppan Printing Co. Ltd............................................... 503,371
------------
1,584,261
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
COMPUTER PROCESSING HARDWARE
105,000 Fujitsu Ltd.+......................................................... $ 1,869,916
------------
CONSTRUCTION MATERIALS
128,000 Ube Industries, Ltd................................................... 257,970
------------
CONTAINERS/PACKAGING
3,000 Toyo Seikan Kaisha, Ltd............................................... 50,843
------------
DATA PROCESSING SERVICES
200 Trans Cosmos Inc...................................................... 14,456
------------
DEPARTMENT STORES
21,400 Marui Co., Ltd........................................................ 315,628
56,000 Mitsukoshi Ltd.*...................................................... 199,560
------------
515,188
------------
ELECTRIC UTILITIES
98,600 Kansai Electric Power Co. Inc......................................... 1,614,128
35,700 Tohoku Electric Power Co., Inc........................................ 480,753
127,800 Tokyo Electric Power Co............................................... 3,102,510
------------
5,197,391
------------
ELECTRICAL PRODUCTS
56,000 Furukawa Electric Co., Ltd............................................ 1,472,334
47,000 NGK Insulators, Ltd................................................... 622,160
2,400 Nidec Corp............................................................ 147,087
101,000 Sumitomo Electric Industries.......................................... 1,864,373
7,000 Taiyo Yuden Co., Ltd.................................................. 267,406
------------
4,373,360
------------
ELECTRONIC COMPONENTS
1,600 Hirose Electric Co., Ltd.............................................. 184,683
10,700 Murata Manufacturing Co., Ltd......................................... 1,280,158
7,000 Omron Corp............................................................ 172,499
------------
1,637,340
------------
ELECTRONIC DISTRIBUTORS
16,000 Softbank Corp......................................................... 960,059
------------
ELECTRONIC EQUIPMENT/INSTRUMENTS
35,000 Canon, Inc............................................................ 1,388,329
8,400 Kyocera Corp.......................................................... 1,092,708
134,000 Matsushita Electric Industrial Co., Ltd.+............................. 3,891,352
60,000 NEC Corp. (Japan)..................................................... 1,143,276
167,000 Sanyo Electric Co. Ltd................................................ 1,269,787
121,000 Toshiba Corp.......................................................... 864,602
12,000 Yokogawa Electric Corp................................................ 94,100
------------
9,744,154
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
43
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
ELECTRONIC PRODUCTION EQUIPMENT
4,100 Advantest Corp........................................................ $ 534,472
15,000 Nikon Corporation..................................................... 217,937
7,600 Tokyo Electron Ltd.................................................... 594,577
------------
1,346,986
------------
ELECTRONICS/APPLIANCES
65,000 Casio Computer Co., Ltd............................................... 655,002
16,000 Pioneer Corp.......................................................... 495,420
49,000 Sharp Corp............................................................ 623,946
51,400 Sony Corp............................................................. 4,105,973
------------
5,880,341
------------
ENGINEERING & CONSTRUCTION
130,000 Kajima Corp........................................................... 338,219
3,000 Kinden Corp........................................................... 19,678
17,000 Obayashi Corp......................................................... 70,392
96,000 Shimizu Corporation................................................... 262,074
131,000 Taisei Corporation.................................................... 187,211
------------
877,574
------------
FINANCE/RENTAL/LEASING
9,800 Acom Co., Ltd......................................................... 792,726
2,200 Credit Saison Co., Ltd................................................ 46,556
5,400 Nichiei Co., Ltd...................................................... 23,745
3,800 Orix Corp............................................................. 398,589
7,700 Promise Co., Ltd...................................................... 577,712
9,900 Takefuji Corporation.................................................. 979,480
------------
2,818,808
------------
FLUID CONTROLS
45,000 Ebara Corp............................................................ 698,745
------------
FOOD RETAIL
78,000 Daiei, Inc.*.......................................................... 132,906
32,000 Ito-Yokado Co., Ltd.+................................................. 1,445,218
30,000 Jusco Co.............................................................. 563,393
22,000 Mycal Corporation..................................................... 50,788
------------
2,192,305
------------
FOOD: MEAT/FISH/DAIRY
30,000 Nippon Meat Packers, Inc.............................................. 380,359
------------
FOOD: SPECIALTY/CANDY
94,000 Ajinomoto Co., Inc.................................................... 1,050,568
1,400 Nissin Food Products Co., Ltd......................................... 36,744
------------
1,087,312
------------
GAS DISTRIBUTORS
214,000 Osaka Gas Co. Ltd..................................................... 527,354
208,000 Tokyo Gas Co., Ltd.................................................... 543,056
------------
1,070,410
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
HOME BUILDING
68,000 Daiwa House Industry Co., Ltd......................................... $ 426,713
3,000 Sekisui Chemical Co., Ltd............................................. 8,657
69,000 Sekisui House Ltd..................................................... 729,443
------------
1,164,813
------------
HOUSEHOLD/PERSONAL CARE
63,000 Kao Corp.............................................................. 1,887,230
30,000 Shiseido Company, Ltd................................................. 387,505
1,100 Uni-Charm Corp........................................................ 47,059
------------
2,321,794
------------
INDUSTRIAL CONGLOMERATES
124,000 Hitachi Ltd.+......................................................... 1,329,058
13,000 Kawasaki Heavy Industries, Ltd.*...................................... 13,457
------------
1,342,515
------------
INDUSTRIAL MACHINERY
4,000 Daikin Industries, Ltd................................................ 77,318
17,500 Fanuc, Ltd.+.......................................................... 1,571,088
3,000 Minebea Co., Ltd...................................................... 29,956
338,000 Mitsubishi Heavy Industries Ltd.+..................................... 1,312,862
------------
2,991,224
------------
INDUSTRIAL SPECIALTIES
140,000 Asahi Glass Company, Ltd.............................................. 1,436,424
2,000 Hoya Corp............................................................. 165,262
2,000 Nitto Denko Corp...................................................... 67,607
------------
1,669,293
------------
INVESTMENT BANKS/BROKERS
88,000 Daiwa Securities Co., Ltd............................................. 974,643
135,000 Nomura Securities Co., Ltd............................................ 2,862,999
------------
3,837,642
------------
MAJOR BANKS
187,000 Asahi Bank Ltd. (The)................................................. 736,625
33,000 Bank of Fukuoka, Ltd. (The)........................................... 162,037
241,000 Bank of Tokyo-Mitsubishi, Ltd......................................... 2,889,969
82,000 Bank of Yokohama Ltd.................................................. 401,887
202,000 Daiwa Bank Ltd........................................................ 410,810
13,000 Joyo Bank, Ltd. (The)................................................. 44,421
95,000 Mitsubishi Trust & Banking+........................................... 770,200
369 Mizuho Holdings, Inc.+................................................ 2,836,121
239,000 Sakura Bank, Ltd. (The)............................................... 1,740,610
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
44
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
60,000 Shizuoka Bank, Ltd. (The)............................................. $ 544,705
164,000 Sumitomo Bank Ltd. (The).............................................. 1,990,656
163,000 Tokai Bank Ltd. (The)................................................. 873,534
------------
13,401,575
------------
MAJOR TELECOMMUNICATIONS
356 Nippon Telegraph & Telephone Corp..................................... 3,238,439
------------
MARINE SHIPPING
120,000 Nippon Yusen Kabushiki Kaisha......................................... 562,844
------------
MEDICAL SPECIALTIES
4,000 Olympus Optical Co., Ltd.............................................. 55,258
21,000 Terumo Corp........................................................... 594,449
------------
649,707
------------
METAL FABRICATIONS
86,000 Mitsubishi Materials Corp............................................. 252,895
8,000 NSK Ltd............................................................... 57,604
------------
310,499
------------
MISCELLANEOUS COMMERCIAL SERVICES
22,000 Secom Co., Ltd........................................................ 1,567,974
------------
MISCELLANEOUS MANUFACTURING
177,000 Kubota Corp........................................................... 595,081
183,000 Mitsubishi Electric Corp.............................................. 1,314,328
------------
1,909,409
------------
MOTOR VEHICLES
38,000 Honda Motor Co.+...................................................... 1,312,385
133,000 Nissan Motor Co., Ltd.*............................................... 912,578
162,000 Toyota Motor Corp..................................................... 6,470,502
------------
8,695,465
------------
MOVIES/ENTERTAINMENT
700 Namco Ltd............................................................. 18,084
6,400 Oriental Land Co. Ltd................................................. 386,955
100 Toho Co., Ltd......................................................... 14,410
------------
419,449
------------
OIL REFINING/MARKETING
12,000 Japan Energy Corp.*................................................... 15,940
187,000 Nippon Mitsubishi Oil Corp............................................ 1,005,579
11,000 Showa Shell Sekiyu K.K................................................ 55,322
------------
1,076,841
------------
OTHER CONSUMER SERVICES
13,000 Benesse Corporation................................................... 714,547
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
OTHER METALS/MINERALS
42,000 Sumitomo Metal Mining Co.............................................. $ 216,618
------------
PACKAGED SOFTWARE
2,900 Fuji Soft ABC Inc..................................................... 190,748
500 Konami Co., Ltd....................................................... 42,140
------------
232,888
------------
PHARMACEUTICALS: MAJOR
51,000 Sankyo Co., Ltd....................................................... 1,123,626
106,000 Takeda Chemical Industries, Ltd....................................... 6,981,861
------------
8,105,487
------------
PHARMACEUTICALS: OTHER
35,000 Chugai Pharmaceutical Co.............................................. 593,807
7,000 Daiichi Pharmaceutical Co., Ltd....................................... 198,791
13,000 Eisai Co., Ltd........................................................ 400,147
10,000 Kyowa Hakko Kogyo Co., Ltd............................................ 79,974
13,000 Shionogi & Co., Ltd................................................... 253,664
42,000 Taisho Pharmaceutical Co., Ltd........................................ 1,208,135
40,000 Yamanouchi Pharmaceutical Co., Ltd.................................... 1,810,187
------------
4,544,705
------------
PROPERTY - CASUALTY INSURERS
6,000 Mitsui Marine & Fire Insurance Co., Ltd............................... 30,451
4,000 Sumitomo Marine & Fire Insurance Co., Ltd. (The)...................... 24,405
112,000 Tokio Marine & Fire Insurance Co...................................... 1,237,376
------------
1,292,232
------------
PUBLISHING: BOOKS/MAGAZINES
100 Kadokawa Shoten Publishing Co., Ltd................................... 3,280
100 Kadokawa Shoten Publishing Co., Ltd. (New) (Rights)................... 3,298
------------
6,578
------------
PULP & PAPER
11,000 Nippon Paper Industries Co., Ltd...................................... 62,679
141,000 Oji Paper Co. Ltd..................................................... 820,218
------------
882,897
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
45
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
RAILROADS
152 Central Japan Railway Co.............................................. $ 925,980
345 East Japan Railway Co.+............................................... 1,981,632
119,000 Kinki Nippon Railway Co............................................... 515,638
73,000 Tobu Railway Co., Ltd................................................. 215,335
79,000 Tokyu Corp............................................................ 408,171
------------
4,046,756
------------
REAL ESTATE DEVELOPMENT
70,000 Mitsubishi Estate Co., Ltd............................................ 743,862
45,000 Mitsui Fudosan Co., Ltd............................................... 544,980
------------
1,288,842
------------
RECREATIONAL PRODUCTS
46,000 Fuji Photo Film Co., Ltd.+............................................ 1,706,669
9,600 Nintendo Co., Ltd..................................................... 1,587,395
13,000 Sega Enterprises Ltd.*................................................ 92,296
10,200 Shimano, Inc.......................................................... 205,103
------------
3,591,463
------------
REGIONAL BANKS
3,000 77 Bank, Ltd. (The)................................................... 22,206
42,000 Chuo Mitsui Trust & Banking Co., Ltd. (The)........................... 128,124
18,000 Gunma Bank Ltd. (The)................................................. 91,517
------------
241,847
------------
RESTAURANTS
19,000 Skylark Co., Ltd...................................................... 670,117
------------
SEMICONDUCTORS
4,800 Rohm Co., Ltd......................................................... 1,209,674
------------
STEEL
121,400 Kawasaki Steel Corp................................................... 118,998
573,000 Nippon Steel Co....................................................... 929,104
45,000 Sumitomo Metal Industries, Ltd.*...................................... 24,734
------------
1,072,836
------------
TEXTILES
76,000 Teijin Ltd............................................................ 343,935
85,000 Toray Industries Inc.................................................. 330,936
------------
674,871
------------
TOBACCO
116 Japan Tobacco, Inc.................................................... 796,995
------------
TRUCKS/CONSTRUCTION/FARM MACHINERY
115,000 Komatsu Ltd........................................................... 509,894
5,600 SMC Corporation....................................................... 792,085
------------
1,301,979
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
WHOLESALE DISTRIBUTORS
5,000 Itochu Corp........................................................... $ 21,299
8,000 Marubeni Corporation.................................................. 18,688
23,000 Mitsubishi Corp....................................................... 189,630
25,000 Mitsui & Co........................................................... 166,041
14,000 Sumitomo Corporation.................................................. 123,122
600 World Co., Ltd........................................................ 22,316
------------
541,096
------------

TOTAL JAPAN........................................................... 127,250,595
------------

NETHERLANDS (5.8%)
AIR FREIGHT/COURIERS
43,087 TNT Post Group NV..................................................... 913,166
------------
BEVERAGES: ALCOHOLIC
62,030 Heineken NV+.......................................................... 3,370,859
------------
ELECTRONIC EQUIPMENT/INSTRUMENTS
114,027 Koninklijke (Royal) Philips Electronics NV+........................... 4,483,749
1,922 OCE NV................................................................ 28,641
------------
4,512,390
------------
ELECTRONIC PRODUCTION EQUIPMENT
2,269 ASM Lithography Holding NV*........................................... 62,056
------------
FINANCIAL CONGLOMERATES
87,089 ING Groep NV.......................................................... 5,983,813
------------
FINANCIAL PUBLISHING/SERVICES
58,780 Elsevier NV........................................................... 751,147
24,966 Wolters Kluwer NV..................................................... 562,188
------------
1,313,335
------------
FOOD RETAIL
58,199 Koninklijke Ahold NV.................................................. 1,691,536
------------
FOOD: MAJOR DIVERSIFIED
113,120 Unilever NV........................................................... 5,676,566
------------
INDUSTRIAL SPECIALTIES
12,192 Akzo Nobel NV......................................................... 555,397
------------
INFORMATION TECHNOLOGY SERVICES
12,114 Getronics NV.......................................................... 136,290
------------
INTEGRATED OIL
226,786 Royal Dutch Petroleum Co.............................................. 13,458,297
------------
LIFE/HEALTH INSURANCE
106,015 Aegon N.V. +.......................................................... 4,212,811
------------
MAJOR BANKS
66,244 ABN-AMRO Holding NV+.................................................. 1,535,564
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
46
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
MAJOR TELECOMMUNICATIONS
144 Koninklijke (Royal) Kpn NV............................................ $ 2,919
------------
PERSONNEL SERVICES
8,887 Vedior NV............................................................. 132,432
------------
REAL ESTATE DEVELOPMENT
17,200 Rodamco Continental Europe NV......................................... 617,771
25,885 Uni-Invest NV......................................................... 248,362
------------
866,133
------------
WHOLESALE DISTRIBUTORS
7,306 Buhrmann NV........................................................... 199,754
9,643 Hagemeyer NV.......................................................... 228,032
------------
427,786
------------
TOTAL NETHERLANDS..................................................... 44,851,350
------------

NORWAY (0.0%)
FOOD: SPECIALTY/CANDY
13,400 Orkla ASA............................................................. 241,630
------------

PORTUGAL (0.3%)
ELECTRIC UTILITIES
383,765 Electricidade de Portugal, S.A........................................ 1,042,735
------------
FOOD RETAIL
8,898 Jeronimo Martins SGPS, S.A............................................ 85,828
------------
INVESTMENT BANKS/BROKERS
53,030 Banco SGPS S.A. (Rights).............................................. 59,887
53,030 BPI-SGPS, S.A. (Registered Shares).................................... 172,456
------------
232,343
------------
OTHER TRANSPORTATION
33,885 Brisa-Auto Estradas de Portugal, S.A.................................. 262,111
------------
PULP & PAPER
10,383 Portucel Industrial Empresa........................................... 58,540
------------
REGIONAL BANKS
65,530 Banco Comercial Portugues, S.A........................................ 327,729
10,252 Banco Espirito Santo e Comercial de Lisboa, S.A. (Registered Shares).. 155,819
------------
483,548
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
SPECIALTY STORES
104,360 Sonae, SGPA S.A....................................................... $ 126,715
------------
TELECOMMUNICATIONS
21,042 Portugal Telecom, S.A. (Registered Shares)............................ 187,601
------------

TOTAL PORTUGAL........................................................ 2,479,421
------------

SINGAPORE (1.9%)
AEROSPACE & DEFENSE
669,000 Singapore Technologies Engineering Ltd................................ 1,078,663
------------
AIRLINES
256,000 Singapore Airlines Ltd................................................ 2,567,001
------------
BEVERAGES: ALCOHOLIC
72,000 Fraser & Neave Ltd.................................................... 250,228
------------
COMPUTER PERIPHERALS
5,000 Creative Technology, Ltd.............................................. 81,187
------------
ELECTRONIC COMPONENTS
13,000 Venture Manufacturing Ltd............................................. 125,912
------------
ENGINEERING & CONSTRUCTION
409,000 Sembcorp Industries Ltd............................................... 393,807
------------
FINANCIAL CONGLOMERATES
183,000 Keppel Corp., Ltd..................................................... 364,916
------------
HOSPITAL/NURSING MANAGEMENT
97,000 Parkway Holdings Ltd.................................................. 198,952
------------
HOTELS/RESORTS/CRUISELINES
192,000 Hotel Properties Ltd.................................................. 164,084
162,000 United Overseas Land, Ltd............................................. 143,061
------------
307,145
------------
MAJOR BANKS
262,115 DBS Group Holdings Ltd................................................ 3,091,260
------------
MAJOR TELECOMMUNICATIONS
109,100 Singapore Telecommunications Ltd...................................... 180,880
------------
MARINE SHIPPING
146,000 Neptune Orient Lines Ltd.*............................................ 123,940
------------
PUBLISHING: NEWSPAPERS
83,000 Singapore Press Holdings Ltd.......................................... 1,186,930
------------
REAL ESTATE DEVELOPMENT
157,000 City Developments Ltd................................................. 724,533
301,750 DBS Land Ltd.......................................................... 459,020
66,000 First Capital Corporation Ltd......................................... 53,396
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
47
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
352,000 United Industrial Corp................................................ $ 162,443
------------
1,399,392
------------
REGIONAL BANKS
263,950 Overseas - Chinese Banking Corp., Ltd................................. 1,684,275
210,104 United Overseas Bank Ltd.............................................. 1,556,149
------------
3,240,424
------------
SPECIALTY STORES
63,000 Cycle and Carriage Ltd................................................ 114,859
------------

TOTAL SINGAPORE....................................................... 14,705,496
------------

SPAIN (2.1%)
BUILDING PRODUCTS
4,506 Zardoya Otis S.A...................................................... 34,243
------------
ELECTRIC UTILITIES
106,340 Endesa S.A.+.......................................................... 1,733,631
102,348 Iberdrola S.A......................................................... 1,252,282
33,683 Union Electrica Fenosa, S.A........................................... 623,199
------------
3,609,112
------------
ENGINEERING & CONSTRUCTION
5,599 ACS, Actividades de Construccion y Servicios, S.A..................... 122,608
8,524 Fomento de Construcciones y Contratas S.A............................. 156,697
13,521 Grupo Dragados, S.A................................................... 131,454
------------
410,759
------------
FOOD: SPECIALTY/CANDY
2,973 Azucarera Ebro Agricolas, S.A......................................... 36,225
------------
GAS DISTRIBUTORS
46,281 Gas Natural SDG, S.A.................................................. 793,803
------------
HOTELS/RESORTS/CRUISELINES
8,922 Sol Melia S.A......................................................... 81,666
------------
MAJOR BANKS
232,464 Banco Bilbao Vizcaya Argentaria, S.A.+................................ 3,098,947
213,780 Banco Santander Central Hispano, S.A.+................................ 2,072,965
------------
5,171,912
------------
MAJOR TELECOMMUNICATIONS
49,790 Telefonica S.A.*...................................................... 949,957
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
OIL REFINING/MARKETING
131,584 Repsol-YPF, S.A....................................................... $ 2,091,548
------------
OTHER TRANSPORTATION
24,178 Autopistas Concesionaria Espanola S.A................................. 183,945
------------
PROPERTY - CASUALTY INSURERS
6,856 Corporacion Mapfre S.A................................................ 120,795
------------
REAL ESTATE DEVELOPMENT
6,792 Corporacion Financiera Alba, S.A...................................... 173,013
26,420 Inmobiliaria Colonial, S.A............................................ 314,514
28,983 Metrovacesa S.A....................................................... 392,275
26,470 Prima Inmobiliaria, S.A.*............................................. 250,379
111,430 Vallehermoso S.A...................................................... 631,083
------------
1,761,264
------------
RESTAURANTS
20,667 TelePizza, S.A.*...................................................... 79,143
------------
STEEL
4,740 Acerinox S.A.......................................................... 131,971
------------
TOBACCO
22,074 Altadis, S.A.......................................................... 330,815
------------
WATER UTILITIES
16,442 Sociedad General de Aguas de Barcelona, S.A........................... 202,433
------------

TOTAL SPAIN........................................................... 15,989,591
------------

SWEDEN (2.1%)
APPAREL/FOOTWEAR RETAIL
80,800 Hennes & Mauritz AB (B Shares)........................................ 1,510,809
------------
CONTAINERS/PACKAGING
2,548 Assidoman............................................................. 43,184
------------
ELECTRONICS/APPLIANCES
30,400 Electrolux AB (Series B).............................................. 383,002
------------
ENGINEERING & CONSTRUCTION
19,400 JM AB (B Shares)...................................................... 442,276
12,600 Skanska AB (B Shares)................................................. 498,910
------------
941,186
------------
HOUSEHOLD/PERSONAL CARE
27,387 Svenska Cellulosa AB (B Shares)....................................... 561,377
------------
INDUSTRIAL MACHINERY
12,700 Atlas Copco AB (A Shares)............................................. 269,213
6,700 Atlas Copco AB (B Shares)............................................. 138,341
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
48
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
27,600 Sandvik AB (B Shares)................................................. $ 608,519
------------
1,016,073
------------
INFORMATION TECHNOLOGY SERVICES
35,000 WM-Data AB (B Shares)................................................. 121,788
------------
INVESTMENT BANKS/BROKERS
7,300 OM Gruppen AB......................................................... 260,584
------------
LIFE/HEALTH INSURANCE
101,800 Skandia Forsakrings AB................................................ 1,725,338
------------
MAJOR BANKS
27,900 ForeningsSparbanken AB................................................ 400,325
31,700 Skandinaviska Enskilda Banken......................................... 374,023
34,100 Svenska Handelsbanken AB (A Shares)................................... 535,317
------------
1,309,665
------------
MAJOR TELECOMMUNICATIONS
2,060 NetCom AB (B Shares)*................................................. 96,604
------------
METAL FABRICATIONS
8,600 SKF AB (B Shares)..................................................... 127,697
------------
MISCELLANEOUS COMMERCIAL SERVICES
38,700 Securitas AB (Series "B" Free)........................................ 824,228
------------
MISCELLANEOUS MANUFACTURING
14,400 Trelleborg AB (Series B).............................................. 80,632
------------
REAL ESTATE DEVELOPMENT
54,160 Castellum AB.......................................................... 576,746
56,445 Drott AB (B Shares)................................................... 663,162
29,600 Wihlborgs Fastigheter AB (B Shares)................................... 42,324
------------
1,282,232
------------
REGIONAL BANKS
58,006 Nordic Baltic Holding AB.............................................. 438,351
------------
STEEL
8,200 SSAB Svenskt Stal AB (Series A)....................................... 66,413
------------
TELECOMMUNICATION EQUIPMENT
368,100 Telefonaktiebolaget LM Ericsson AB (Series "B" Free).................. 4,895,241
------------
TOBACCO
28,800 Swedish Match AB...................................................... 98,774
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
TRUCKS/CONSTRUCTION/FARM MACHINERY
6,000 Volvo AB (A Shares)................................................... $ 89,991
22,500 Volvo AB (B Shares)................................................... 346,465
------------
436,456
------------
TOTAL SWEDEN.......................................................... 16,219,634
------------
SWITZERLAND (7.7%)
AIRLINES
1,210 SAirGroup............................................................. 163,550
------------
CONSTRUCTION MATERIALS
780 Holderbank Financiere Glarus AG (B Shares)............................ 819,568
400 Holderbank Financiere Glarus AG (Registered Shares)................... 117,700
------------
937,268
------------
FOOD: MAJOR DIVERSIFIED
8,205 Nestle S.A. (Registered Shares)+...................................... 17,000,570
------------
HOUSEHOLD/PERSONAL CARE
746 Givaudan (Registered Shares)*......................................... 178,844
------------
INDUSTRIAL CONGLOMERATES
32,200 ABB Ltd.+............................................................. 2,861,247
410 Sulzer AG (Registered Shares)......................................... 264,774
------------
3,126,021
------------
MAJOR BANKS
14,300 Credit Suisse Group (Registered Shares)+.............................. 2,680,554
22,260 UBS AG (Registered Shares)+........................................... 3,083,068
------------
5,763,622
------------
MAJOR TELECOMMUNICATIONS
3,770 Swisscom AG (Registered Shares)+...................................... 957,284
------------
METAL FABRICATIONS
240 Georg Fischer AG (Registered Shares).................................. 65,146
------------
MULTI-LINE INSURANCE
8,318 Zurich Financial Services AG+......................................... 4,025,287
------------
OTHER CONSUMER SPECIALTIES
550 The Swatch Group AG................................................... 728,112
700 The Swatch Group AG (Registered Shares)............................... 190,399
------------
918,511
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
49
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
PERSONNEL SERVICES
2,010 Adecco S.A. (Registered Shares)....................................... $ 1,389,715
------------
PHARMACEUTICALS: MAJOR
8,035 Novartis AG (Registered Shares)+...................................... 12,187,921
854 Roche Holdings AG+.................................................... 7,799,911
178 Roche Holdings AG - Bearer+........................................... 1,923,267
------------
21,911,099
------------
PROPERTY - CASUALTY INSURERS
1,590 Schweizerische Rueckversicherungs-Gesellschaft (Registered Shares)+... 3,135,249
------------
SPECIALTY STORES
480 Valora Holding AG..................................................... 97,586
------------
TOTAL SWITZERLAND..................................................... 59,669,752
------------
UNITED KINGDOM (20.1%)
ADVERTISING/MARKETING SERVICES
82,366 WPP Group PLC......................................................... 1,104,963
------------
AEROSPACE & DEFENSE
291,960 BAE Systems PLC....................................................... 1,657,727
138,948 Marconi PLC........................................................... 1,753,192
------------
3,410,919
------------
AIRLINES
153,107 British Airways PLC................................................... 683,917
------------
AUTO PARTS: O.E.M.
142,936 GKN PLC............................................................... 1,637,671
------------
BEVERAGES: ALCOHOLIC
115,032 Bass PLC.............................................................. 1,125,275
507,971 Diageo PLC............................................................ 4,792,301
------------
5,917,576
------------
BUILDING PRODUCTS
3,964 Caradon PLC........................................................... 10,923
------------
CABLE/SATELLITE TV
166,887 British Sky Broadcasting Group PLC*................................... 2,408,260
------------
CASINO/GAMING
218,025 Hilton Group PLC...................................................... 605,526
------------
CATALOG/SPECIALTY DISTRIBUTION
112,955 Great Universal Stores PLC............................................ 779,777
------------
CHEMICALS: MAJOR DIVERSIFIED
138,961 Imperial Chemicals Industries PLC..................................... 850,478
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
CHEMICALS: SPECIALTY
64,603 Boc Group PLC......................................................... $ 899,460
------------
COMPUTER PROCESSING HARDWARE
7,322 Psion PLC............................................................. 44,282
------------
CONSTRUCTION MATERIALS
2,652 Hanson PLC............................................................ 13,981
------------
DEPARTMENT STORES
290,358 Marks & Spencer, PLC.................................................. 808,524
------------
DRUGSTORE CHAINS
78,638 Boots Co. PLC......................................................... 627,268
------------
ELECTRIC UTILITIES
143,472 National Grid Group PLC............................................... 1,243,263
76,753 National Power PLC.................................................... 309,455
178,763 Scottish Power PLC.................................................... 1,341,670
73,306 United Utilities PLC.................................................. 736,768
------------
3,631,156
------------
ELECTRONIC EQUIPMENT/INSTRUMENTS
430,153 Invensys PLC.......................................................... 1,026,235
------------
ELECTRONICS/APPLIANCE STORES
175,334 New Dixons Group PLC.................................................. 521,288
------------
ENGINEERING & CONSTRUCTION
2,739 Balfour Beatty PLC.................................................... 4,648
2,699 Taylor Woodrow PLC.................................................... 7,046
------------
11,694
------------
FINANCIAL CONGLOMERATES
81,354 Abbey National PLC+................................................... 1,122,063
532,657 HSBC Holdings PLC..................................................... 7,586,072
300,959 Lloyds TSB Group PLC.................................................. 3,064,096
------------
11,772,231
------------
FINANCIAL PUBLISHING/SERVICES
137,883 Reuters Group PLC..................................................... 2,683,620
------------
FOOD RETAIL
184,002 Sainsbury (J.) PLC.................................................... 1,033,408
674,590 Tesco PLC............................................................. 2,570,635
------------
3,604,043
------------
FOOD: MAJOR DIVERSIFIED
427,841 Unilever PLC.......................................................... 2,893,071
------------
FOOD: SPECIALTY/CANDY
287,769 Cadbury Schweppes PLC................................................. 1,777,917
34,945 Tate & Lyle PLC....................................................... 111,751
------------
1,889,668
------------
GAS DISTRIBUTORS
362,468 Centrica PLC.......................................................... 1,245,879
------------
INDUSTRIAL SPECIALTIES
7,243 Pilkington PLC........................................................ 10,321
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
50
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
INFORMATION TECHNOLOGY SERVICES
35,362 Logica PlC............................................................ $ 1,045,712
64,536 Misys PLC............................................................. 672,023
40,237 SEMA Group PLC........................................................ 507,695
------------
2,225,430
------------
INTEGRATED OIL
2,889,122 BP Amoco PLC.......................................................... 24,491,097
------------
INVESTMENT BANKS/BROKERS
26,709 Schroders PLC......................................................... 483,039
------------
INVESTMENT MANAGERS
70,719 Amvescap PLC.......................................................... 1,579,482
------------
INVESTMENT TRUSTS/MUTUAL FUNDS
74,421 3i Group PLC.......................................................... 1,689,148
------------
LIFE/HEALTH INSURANCE
177,091 Prudential Corp....................................................... 2,380,861
------------
MAJOR BANKS
111,420 Barclays PLC.......................................................... 3,186,603
133,171 Halifax PLC........................................................... 1,046,807
140,030 Royal Bank of Scotland Group PLC...................................... 3,141,733
------------
7,375,143
------------
MAJOR TELECOMMUNICATIONS
579,748 British Telecommunications PLC........................................ 6,793,733
------------
MARINE SHIPPING
60,817 Peninsular & Orient Princess Cruises.................................. 238,809
60,817 Peninsular & Orient Steam Navigation Co............................... 250,496
------------
489,305
------------
MEDICAL SPECIALTIES
67,264 Nycomed Amersham PLC.................................................. 601,902
41,657 Smith & Nephew PLC.................................................... 170,975
------------
772,877
------------
MISCELLANEOUS COMMERCIAL SERVICES
93,804 Capita Group PLC...................................................... 714,231
178,839 Hays PLC.............................................................. 975,880
197,045 Rentokil Initial PLC.................................................. 454,381
------------
2,144,492
------------
MISCELLANEOUS MANUFACTURING
2,453 TI Group PLC.......................................................... 13,234
------------
MOVIES/ENTERTAINMENT
70,121 Carlton Communications PLC............................................ 564,416
76,206 Emi Group PLC......................................................... 570,291
3,486 Rank Group PLC........................................................ 8,645
------------
1,143,352
------------
<CAPTION>
SHARES VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
MULTI-LINE INSURANCE
217,828 CGU PLC............................................................... $ 2,912,745
541,681 Legal & General Group PLC............................................. 1,347,304
------------
4,260,049
------------
OIL & GAS PIPELINES
381,113 BG Group PLC.......................................................... 1,525,530
381,113 Lattice Group PLC*.................................................... 812,510
------------
2,338,040
------------
OIL & GAS PRODUCTION
8,472 LASMO PLC............................................................. 18,000
------------
OTHER METALS/MINERALS
115,344 Rio Tinto PLC (Registered Shares)..................................... 1,865,210
------------
OTHER TRANSPORTATION
111,922 British Airport Authority PLC......................................... 930,096
------------
PACKAGED SOFTWARE
118,585 Sage Group (The) PLC.................................................. 865,079
------------
PHARMACEUTICALS: MAJOR
152,867 AstraZeneca Group PLC+................................................ 7,156,573
313,701 Glaxo Wellcome PLC.................................................... 9,026,418
485,991 SmithKline Beecham PLC................................................ 6,273,011
------------
22,456,002
------------
PUBLISHING: BOOKS/MAGAZINES
53,116 Pearson PLC........................................................... 1,424,361
98,301 Reed International PLC................................................ 908,145
------------
2,332,506
------------
PULP & PAPER
2,592 Rexam PLC............................................................. 8,759
------------
RAILROADS
46,596 Railtrack Group PLC................................................... 720,383
------------
REAL ESTATE DEVELOPMENT
194,500 British Land Company PLC.............................................. 1,162,183
129,700 Burford Holdings PLC.................................................. 186,223
31,041 Canary Wharf Finance PLC*............................................. 242,201
51,545 Chelsfied PLC......................................................... 272,858
116,550 Grantchester Holdings PLC............................................. 309,329
71,466 Great Port Land Estate PLC............................................ 266,632
65,960 Hammerson PLC......................................................... 390,539
120,097 Land Securities PLC................................................... 1,236,654
99,726 Slough Estates PLC.................................................... 533,694
------------
4,600,313
------------
RESTAURANTS
251,669 Granada Compass PLC*.................................................. 2,168,074
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
51
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

SHARES
-----------
<C> <S> <C>
SEMICONDUCTORS
86,632 ARM Holdings PLC*..................................................... $ 854,368
------------
SPECIALTY STORES
134,968 Kingfisher PLC........................................................ 806,466
------------
STEEL
5,500 Corus Group PLC....................................................... 4,946
------------
TOBACCO
332,075 British American Tobacco PLC.......................................... 2,326,168
------------
WATER UTILITIES
498 AWG PLC*.............................................................. 4,305
154,380 AWG PLC (Register Shares)*............................................ 134
2,675 Thames Water PLC...................................................... 46,865
------------
51,304
------------
WIRELESS COMMUNICATIONS
2,172,697 Vodafone AirTouch PLC................................................. 9,035,672
------------
TOTAL UNITED KINGDOM.................................................. 156,315,359
------------
TOTAL COMMON AND PREFERRED STOCKS, RIGHTS AND WARRANTS
(COST $669,096,014)................................................... 629,651,837
------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (20.1%)
U.S. GOVERNMENT AGENCY
$ 156,000 Student Loan Mortgage Assoc. 6.45% due 11/01/00
(COST $156,000,000)................................................. $$156,000,000
------------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(COST $825,096,014) (B)................................................................... 101.2% 785,651,837

LIABILITIES IN EXCESS OF OTHER ASSETS..................................................... (1.2) (9,636,753)
----- -------------
NET ASSETS................................................................................ 100.0% $ 776,015,084
----- -------------
----- -------------
</TABLE>

---------------------

ADR American Depository Receipt.
GDR Global Depository Receipt.
+ Some or all of these securities are segregated in connection with open
forward foreign currency contracts.
++ Consists of one or more class of securities traded together as unit; stock
with attached warrants.
* Non-income producing security.
(a) Purchased on a discount basis. The interest rate shown has been adjusted to
reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates the
aggregate cost for book purposes. The aggregate gross unrealized
appreciation is $32,102,479 and the aggregate gross unrealized depreciation
is $71,546,656, resulting in net unrealized depreciation of $39,444,177.

FUTURES CONTRACTS OPEN AT OCTOBER, 31, 2000:

<TABLE>
<CAPTION>
NUMBER OF DESCRIPTION, DELIVERY MONTH, UNDERLYING FACE UNREALIZED
CONTRACTS LONG/SHORT AND YEAR AMOUNT AT VALUE GAIN/LOSS
-------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
72 Long FTSE 100 December/2000 $ 6,971,685 $ (186,082)
391 Long TSE TOPIX December/2000 52,832,997 (3,438,622)
43 Long MIB 30 INDEX December/2000 8,848,514 (109,534)
52 Long EURX DAX INDEX December/2000 8,144,949 (281,264)
76 Long MTF CAC40 10EU December/2000 4,110,018 56,465
123 Long IBEX 35 Plus November/2000 10,741,419 122,880
-----------
Net unrealized loss.................................................... $(3,836,157)
===========
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
52
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCTOBER 31, 2000:

<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS IN EXCHANGE DELIVERY APPRECIATION
TO DELIVER FOR DATE (DEPRECIATION)
---------------------------------------------------------------------
<S> <C> <C> <C>
$ 24,402 EUR 28,923 11/1/00 $ 156
$ 82,026 SEK 824,357 11/1/00 402
$ 4,776,589 CHF 8,627,570 11/2/00 22,371
$ 213,623 DKK 1,885,738 11/2/00 1,518
$ 3,496,070 EUR 4,145,947 11/2/00 24,254
$ 684,118 GBP 477,703 11/2/00 8,694
$ 236,002 NOK 2,214,787 11/2/00 2,430
$ 94,089 SEK 946,841 11/2/00 585
$ 74,160 DKK 649,830 11/3/00 (22)
$ 374,342 EUR 443,912 11/3/00 2,584
$ 4,445,548 EUR 5,235,939 11/3/00 288
$ 155,990 SEK 1,559,086 11/3/00 (97)
$ 7,160 EUR 8,432 11/6/00 (1)
$ 4,535,578 GBP 3,122,730 11/6/00 (6,683)
$ 32,750 EUR 38,566 11/7/00 (4)
$ 423,079 GBP 291,648 11/7/00 (102)
$ 34,803,709 EUR 39,806,375 12/8/00 (944,672)
EUR 19,686,000 $ 17,209,993 12/8/00 465,213
$ 2,802,758 EUR 3,207,000 12/8/00 (74,905)
$ 1,822,018 EUR 2,084,880 12/8/00 (48,633)
$ 7,721,194 EUR 8,896,000 12/8/00 (154,316)
$ 6,774,930 GBP 4,708,000 12/8/00 58,230
$ 36,584,271 JPY 3,794,996,143 12/8/00 (1,577,665)
$ 27,269,146 JPY 2,822,629,334 12/8/00 (1,232,052)
JPY 949,635,000 $ 8,991,053 12/8/00 231,231
-----------
Net unrealized depreciation................... $(3,221,196)
===========
</TABLE>

CURRENCY ABBREVIATIONS:
------------------------

<TABLE>
<S> <C>
GBP British Pound.
DKK Danish Krone.
EUR Euro.
JPY Japanese Yen.
NOK Norwegian Krone.
SEK Swedish Krona.
CHF Swiss Franc.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
53
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
SUMMARY OF INVESTMENTS OCTOBER 31, 2000

<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Advertising/Marketing Services....................................................
$ 1,104,963 0.1%
Aerospace & Defense............................................................... 5,114,697 0.7
Agricultural Commodities/Milling.................................................. 341,597 0.0
Air Freight/Couriers.............................................................. 1,488,941 0.2
Airlines.......................................................................... 4,379,455 0.6
Apparel/Footwear.................................................................. 357,004 0.1
Apparel/Footwear Retail........................................................... 1,525,979 0.2
Auto Parts: O.E.M................................................................. 3,777,771 0.5
Automotive Aftermarket............................................................ 904,746 0.1
Beverages: Alcoholic.............................................................. 15,704,826 2.0
Beverages: Non-Alcoholic.......................................................... 96,470 0.0
Broadcasting...................................................................... 1,968,143 0.3
Building Products................................................................. 741,312 0.1
Cable/Satellite TV................................................................ 3,903,026 0.5
Casino/Gaming..................................................................... 734,475 0.1
Catalog/Specialty Distribution.................................................... 779,777 0.1
Chemicals: Major Diversified...................................................... 7,677,191 1.0
Chemicals: Specialty.............................................................. 4,124,791 0.5
Commercial Printing/Forms......................................................... 1,584,261 0.2
Computer Peripherals.............................................................. 81,187 0.0
Computer Processing Hardware...................................................... 1,914,198 0.2
Construction Materials............................................................ 2,121,224 0.3
Containers/Packaging.............................................................. 1,718,619 0.2
Data Processing Services.......................................................... 14,456 0.0
Department Stores................................................................. 1,581,998 0.2
Drugstore Chains.................................................................. 627,268 0.1
Electric Utilities................................................................ 18,299,196 2.4
Electrical Products............................................................... 5,298,686 0.7
Electronic Components............................................................. 1,763,252 0.2
Electronic Distributors........................................................... 960,059 0.1
Electronic Equipment/Instruments.................................................. 15,282,779 2.0
Electronic Production Equipment................................................... 1,409,042 0.2
Electronics/Appliance Stores...................................................... 521,288 0.1
Electronics/Appliances............................................................ 6,263,343 0.8
Engineering & Construction........................................................ 6,228,389 0.8
Finance/Rental/Leasing............................................................ 2,893,367 0.4
Financial Conglomerates........................................................... 18,120,960 2.3
Financial Publishing/Services..................................................... 3,996,955 0.5
Fluid Controls.................................................................... 698,745 0.1
Food Retail....................................................................... 12,706,274 1.6
Food: Major Diversified........................................................... 29,327,093 3.8
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Food: Meat/Fish/Dairy............................................................. $ 671,944 0.1%
Food: Specialty/Candy............................................................. 3,517,953 0.5
Gas Distributors.................................................................. 3,963,424 0.5
Home Building..................................................................... 1,164,813 0.2
Hospital/Nursing Management....................................................... 198,952 0.0
Hotels/Resorts/Cruiselines........................................................ 1,056,867 0.1
Household/Personal Care........................................................... 8,648,159 1.1
Industrial Conglomerates.......................................................... 24,527,898 3.2
Industrial Machinery.............................................................. 4,656,197 0.6
Industrial Specialties............................................................ 2,363,519 0.3
Information Technology Services................................................... 4,008,456 0.5
Integrated Oil.................................................................... 45,432,953 5.9
Investment Banks/Brokers.......................................................... 4,813,608 0.6
Investment Managers............................................................... 1,579,482 0.2
Investment Trusts/Mutual Funds.................................................... 1,689,148 0.2
Life/Health Insurance............................................................. 11,529,091 1.5
Major Banks....................................................................... 51,865,213 6.7
Major Telecommunications.......................................................... 16,895,970 2.2
Marine Shipping................................................................... 1,176,089 0.2
Media Conglomerates............................................................... 2,522,432 0.3
Medical Distributors.............................................................. 150,465 0.0
Medical Specialties............................................................... 1,569,885 0.2
Medical/Nursing Services.......................................................... 642,514 0.1
Metal Fabrications................................................................ 694,535 0.1
Miscellaneous Commercial Services................................................. 4,949,225 0.6
Miscellaneous Manufacturing....................................................... 2,535,696 0.3
Motor Vehicles.................................................................... 14,952,747 1.9
Movies/Entertainment.............................................................. 4,773,119 0.6
Multi-Line Insurance.............................................................. 25,899,891 3.3
Oil & Gas Pipelines............................................................... 2,338,040 0.3
Oil & Gas Production.............................................................. 243,354 0.0
Oil Refining/Marketing............................................................ 16,682,958 2.1
Oilfield Services/Equipment....................................................... 275,615 0.0
Other Consumer Services........................................................... 1,218,301 0.2
Other Consumer Specialties........................................................ 1,114,659 0.1
Other Metals/Minerals............................................................. 4,438,224 0.6
Other Transportation.............................................................. 1,425,905 0.2
Packaged Software................................................................. 7,159,972 0.9
Personnel Services................................................................ 1,522,147 0.2
Pharmaceuticals: Major............................................................ 61,922,405 8.0
Pharmaceuticals: Other............................................................ 4,787,629 0.6
Precious Metals................................................................... 58,990 0.0
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
54
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
SUMMARY OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks..................................................................... $619,866,583 79.9%
Preferred Stocks.................................................................. 9,713,232 1.2
Rights............................................................................ 63,185 0.0
Short-Term Investment............................................................. 156,000,000 20.1
Warrants.......................................................................... 8,837 0.0
------------ -----
$$785,651,837 101.2%
------------ -----
------------ -----
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
55
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $825,096,014)....................................... $785,651,837
Cash (including $204,934 in foreign currency and $11,990,371 segregated in connection with
open futures contracts)..................................................................... 13,676,786
Receivable for:
Shares of beneficial interest sold........................................................ 6,436,505
Dividends................................................................................. 572,688
Foreign withholding taxes reclaimed....................................................... 451,534
Prepaid expenses and other assets............................................................. 81,370
------------
TOTAL ASSETS............................................................................. 806,870,720
------------
LIABILITIES:
Unrealized depreciation on forward foreign currency contracts................................. 3,221,196
Payable for:
Investments purchased..................................................................... 19,716,550
Variation margin on future contracts...................................................... 3,836,157
Shares of beneficial interest repurchased................................................. 2,629,116
Investment management fee................................................................. 679,031
Plan of distribution fee.................................................................. 563,890
Accrued expenses and other payables........................................................... 209,696
------------
TOTAL LIABILITIES........................................................................ 30,855,636
------------
NET ASSETS............................................................................... $776,015,084
============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................... $786,959,563
Net unrealized depreciation................................................................... (46,677,246)
Accumulated undistributed net investment income............................................... 3,001,759
Accumulated undistributed net realized gain................................................... 32,731,008
------------
NET ASSETS............................................................................... $776,015,084
============
CLASS A SHARES:
Net Assets.................................................................................... $46,534,548
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 4,522,012
NET ASSET VALUE PER SHARE................................................................ $10.29
============

MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)........................................ $10.86
============
CLASS B SHARES:
Net Assets.................................................................................... $561,374,970
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 55,087,343
NET ASSET VALUE PER SHARE................................................................ $10.19
============
CLASS C SHARES:
Net Assets.................................................................................... $69,640,182
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 6,833,673
NET ASSET VALUE PER SHARE................................................................ $10.19
============
CLASS D SHARES:
Net Assets.................................................................................... $98,465,384
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 9,538,299
NET ASSET VALUE PER SHARE................................................................ $10.32
============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
56
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000

<TABLE>
<S> <C>
NET INVESTMENT INCOME:

INCOME
Interest..................................................................................... $ 9,736,883
Dividends (net of $974,470 foreign withholding tax).......................................... 8,795,937
-------------

TOTAL INCOME............................................................................ 18,532,820
-------------

EXPENSES
Investment management fee.................................................................... 7,648,431
Plan of distribution fee (Class A shares).................................................... 115,305
Plan of distribution fee (Class B shares).................................................... 5,876,326
Plan of distribution fee (Class C shares).................................................... 785,100
Transfer agent fees and expenses............................................................. 842,975
Custodian fees............................................................................... 316,482
Registration fees............................................................................ 196,680
Shareholder reports and notices.............................................................. 105,931
Professional fees............................................................................ 77,740
Offering costs............................................................................... 72,374
Trustees' fees and expenses.................................................................. 11,111
Other........................................................................................ 70,020
-------------

TOTAL EXPENSES.......................................................................... 16,118,475
-------------

NET INVESTMENT INCOME:.................................................................. 2,414,345
-------------

NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain/loss on:
Investments.............................................................................. 44,577,268
Futures contracts........................................................................ 4,806,665
Foreign exchange transactions............................................................ (14,172,451)
-------------

NET GAIN................................................................................ 35,211,482
-------------
Net change in unrealized appreciation/depreciation on:
Investments.............................................................................. (70,360,149)
Futures contracts........................................................................ (4,777,736)
Translation of forward foreign currency contracts, other assets and liabilities
denominated in foreign currencies...................................................... (3,738,062)
-------------

NET DEPRECIATION........................................................................ (78,875,947)
-------------

NET LOSS................................................................................ (43,664,465)
-------------

NET DECREASE................................................................................. $ (41,250,120)
=============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
57
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JUNE 28, 1999*
ENDED THROUGH
OCTOBER 31, 2000 OCTOBER 31, 1999
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment income (loss)............................................ $ 2,414,345 $ (687,252)
Net realized gain (loss)................................................ 35,211,482 (3,486,865)
Net change in unrealized appreciation................................... (78,875,947) 32,198,701
------------ ------------

NET INCREASE (DECREASE)............................................ (41,250,120) 28,024,584
------------ ------------
Net increase from transactions in shares of beneficial interest......... 242,353,999 546,786,621
------------ ------------

NET INCREASE....................................................... 201,103,879 574,811,205

NET ASSETS:
Beginning of period..................................................... 574,911,205 100,000
------------ ------------

END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF 3,001,759 AND A
NET INVESTMENT LOSS OF $646,146, RESPECTIVELY)...................... $776,015,084 $574,911,205
============ ============
</TABLE>

---------------------

* Commencement of operations.

SEE NOTES TO FINANCIAL STATEMENTS
58
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000

1. ORGANIZATION AND ACCOUNTING POLICIES

Morgan Stanley Dean Witter International 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
long-term capital growth. The Fund seeks to achieve its objective by investing,
under normal circumstances, at least 65% of its total assets in a diversified
portfolio of international common stocks and other equity securities. The Fund
was organized as a Massachusetts business trust on October 23, 1998 and had no
operations others than those relating to organizational matters and issuance of
2,500 shares of beneficial interest by each class for $25,000 to Morgan Stanley
Dean Witter Advisors Inc. ("Investment Manager") to effect the Fund's initial
capitalization. The Fund commenced operations June 28, 1999.

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 portfolio security listed or traded
on the New York or American Stock Exchange, NASDAQ, or other 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 or Morgan Stanley Dean Witter Investment
Management Inc. (the "Sub-Advisor"), 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

59
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

the general supervision of the Trustees (valuation of debt securities for which
market quotations are not readily available may be based upon current market
prices of securities which are comparable in coupon, rating and maturity or an
appropriate matrix utilizing similar factors); and (4) short-term debt
securities having a maturity date of more than sixty days at time of 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
except for certain dividends on foreign securities which are recorded as soon as
the fund is informed after the ex-dividend date. Discounts are accreted over the
respective life of the 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 requirement 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. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward foreign currency
contracts ("forward contracts") are translated at the exchange rates prevailing
at the end of the period; and (2) purchases, sales, income and expenses are
translated at the exchange rates prevailing on the respective dates of such
transactions. The resultant exchange

60
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

gains and losses are included in the Statement of Operations as realized and
unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. Federal
income tax regulations, certain foreign exchange gains/losses included in
realized and unrealized gain/loss are included in or are a reduction of ordinary
income for federal income tax purposes. The Fund does not isolate that portion
of the results of operations arising as a result of changes in the foreign
exchange rates from the changes in the market prices of the securities.

F. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward
contracts which are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and losses are included in the Statement of
Operations as unrealized gain/loss on foreign exchange transactions. The Fund
records realized gains or losses on delivery of the currency or at the time the
forward contract is extinguished (compensated) by entering into a closing
transaction prior to delivery.

G. 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.

H. 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 tax purposes are reported as distributions of paid-in-capital.

I. OFFERING COSTS -- The Investment Manager incurred offering costs on behalf of
the Fund in the amount of approximately $153,000, which were reimbursed for the
full amount thereof. Such expenses were deferred and were fully amortized as of
June 27, 2000.

2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS

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 1.0% to the net assets of the Fund determined as of the close of
each business day.

61
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

Under a Sub-Advisory Agreement between the Sub-Advisor and the Investment
Manager, the Sub-Advisor provides the Fund with investment advice and portfolio
management relating to the Fund's investments in securities, subject to the
overall supervision of the Investment Manager. As compensation for its services
provided pursuant to the Sub-Advisory Agreement, the Investment Manager pays the
Sub-Advisor compensation equal to 40% of its monthly compensation.

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 and
Sub-Advisor. 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 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 totaled
$27,458,643 at October 31, 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 October 31, 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 October 31, 2000,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class A shares, Class B

62
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

shares and Class C shares of $10,799, $1,819,631, and $104,710, respectively and
received $187,515 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 October 31, 2000 aggregated
$665,427,287 and $506,849,177, respectively.

Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager,
Sub-Advisor and Distributor, is the Fund's transfer agent. At October 31, 2000,
the Fund had transfer agent fees and expenses payable of approximately $100.

5. SHARES OF BENEFICIAL INTEREST

Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JUNE 28, 1999*
ENDED THROUGH
OCTOBER 31, 2000 OCTOBER 31, 1999
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A
Sold............................................................. 14,921,256 $ 167,279,283 5,501,684 $ 55,679,553
Redeemed......................................................... (14,041,009) (157,908,926) (1,862,419) (19,164,117)
----------- ------------- ---------- ------------
Net increase - Class A........................................... 880,247 9,370,357 3,639,265 36,515,436
----------- ------------- ---------- ------------

CLASS B
Sold............................................................. 40,456,127 452,222,607 46,196,462 464,151,607
Redeemed......................................................... (29,483,811) (327,484,831) (2,083,935) (21,345,154)
----------- ------------- ---------- ------------
Net increase - Class B........................................... 10,972,316 124,737,776 44,112,527 442,806,453
----------- ------------- ---------- ------------

CLASS C
Sold............................................................. 3,739,861 41,364,492 7,186,009 72,115,535
Redeemed......................................................... (3,525,604) (38,882,026) (569,093) (5,816,388)
----------- ------------- ---------- ------------
Net increase - Class C........................................... 214,257 2,482,466 6,616,916 66,299,147
----------- ------------- ---------- ------------

CLASS D
Sold............................................................. 12,198,351 137,247,940 1,075,888 11,093,524
Redeemed......................................................... (2,786,381) (31,484,540) (952,059) (9,927,939)
----------- ------------- ---------- ------------
Net increase - Class D........................................... 9,411,970 105,763,400 123,829 1,165,585
----------- ------------- ---------- ------------
Net increase in Fund............................................. 21,478,790 $ 242,353,999 54,492,537 $546,786,621
=========== ============= ========== ============
</TABLE>

---------------------

* Commencement of operations.

63
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

6. FEDERAL INCOME TAX STATUS

As of October 31, 2000, the Fund had temporary book/tax differences primarily
attributable to the mark-to-market of passive foreign investment companies and
open forward foreign currency exchange contracts and capital loss deferals on
wash sales and permanent book/tax differences primarily attributable to foreign
currency losses and a net operating loss. To reflect reclassifications arising
from the permanent differences, paid-in-capital was charged $72,374, accumulated
undistributed net realized gain was charged $1,161,186 and accumulated
undistributed net investment income was credited $1,233,560.

7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS

The Fund may enter into forward contracts to facilitate settlement of foreign
currency denominated portfolio transactions or to manage foreign currency
exposure associated with foreign currency denominated securities. The Fund may
also purchase and sell interest rate, currency and index futures contracts
("futures contracts") that are traded on U.S. and foreign commodity exchanges on
such underlying securities as U.S. Treasury bonds, notes, bills and GNMA
Certificates and/or any foreign government fixed-income security, on various
currencies and on such indexes of U.S. and foreign securities as may exist or
come into existence.

Forward contracts and futures contracts involve elements of market risk in
excess of the amounts reflected in the Statement of Assets and Liabilities. The
Fund bears the risk of an unfavorable change in the foreign exchange rates
underlying the forward contracts or an unfavorable change in the value of the
underlying securities. Risks may also arise upon entering into these contracts
from the potential inability of the counterparties to meet the terms of their
contracts.

At October 31, 2000, there were outstanding forward contracts and outstanding
index futures contracts.

64
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
FINANCIAL HIGHLIGHTS

Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:

SELECTED PER SHARE DATA:

Net asset value, beginning of period........................ $ 10.57 $ 10.00
------- -------

Income (loss) from investment operations:
Net investment income.................................... 0.11 0.01
Net realized and unrealized gain (loss).................. (0.39) 0.56
------- -------

Total income (loss) from investment operations.............. (0.28) 0.57
------- -------

Net asset value, end of period.............................. $ 10.29 $ 10.57
======= =======

TOTAL RETURN+............................................... (2.65)% 5.70%(1)

RATIOS TO AVERAGE NET ASSETS (3):
Expenses.................................................... 1.47 % 1.81%(2)

Net investment income....................................... 0.95 % 0.31%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $46,535 $38,506

Portfolio turnover rate..................................... 84 % 14%(1)
</TABLE>

---------------------

SEE NOTES TO FINANCIAL STATEMENTS
65
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
FINANCIAL HIGHLIGHTS, CONTINUED

SELECTED PER SHARE DATA:

Net asset value, beginning of period........................ $ 10.55 $ 10.00
-------- --------

Income (loss) from investment operations:
Net investment income (loss)............................. 0.02 (0.02)
Net realized and unrealized gain (loss).................. (0.38) 0.57
-------- --------

Total income (loss) from investment operations.............. (0.36) 0.55
-------- --------

Net asset value, end of period.............................. $ 10.19 $ 10.55
======== ========

TOTAL RETURN+............................................... (3.41)% 5.50 %(1)

RATIOS TO AVERAGE NET ASSETS (3):

Expenses.................................................... 2.22 % 2.56 %(2)

Net investment income (loss)................................ 0.20 % (0.44)%(2)

SUPPLEMENTAL DATA:

Net assets, end of period, in thousands..................... $561,375 $465,258

Portfolio turnover rate..................................... 84 % 14 %(1)
</TABLE>

---------------------

SEE NOTES TO FINANCIAL STATEMENTS
66
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
FINANCIAL HIGHLIGHTS, CONTINUED

SELECTED PER SHARE DATA:

Net asset value, beginning of period........................ $ 10.55 $ 10.00
------- -------

Income (loss) from investment operations:
Net investment income (loss)............................. 0.02 (0.02)
Net realized and unrealized gain (loss).................. (0.38) 0.57
------- -------

Total income (loss) from investment operations.............. (0.36) 0.55
------- -------

Net asset value, end of period.............................. $ 10.19 $ 10.55
======= =======

TOTAL RETURN+............................................... (3.41)% 5.50 %(1)

RATIOS TO AVERAGE NET ASSETS (3):

Expenses.................................................... 2.22 % 2.56 %(2)

Net investment income (loss)................................ 0.20 % (0.44)%(2)

SUPPLEMENTAL DATA:

Net assets, end of period, in thousands..................... $69,640 $69,811

Portfolio turnover rate..................................... 84 % 14 %(1)
</TABLE>

---------------------

SEE NOTES TO FINANCIAL STATEMENTS
67
<PAGE>
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
FINANCIAL HIGHLIGHTS, CONTINUED

SELECTED PER SHARE DATA:

Net asset value, beginning of period........................ $ 10.58 $10.00
------- ------

Income from investment operations:
Net investment income.................................... 0.15 0.01
Net realized and unrealized gain (loss).................. (0.41) 0.57
------- ------

Total income (loss) from investment operations.............. (0.26) 0.58
------- ------

Net asset value, end of period.............................. $ 10.32 $10.58
======= ======

TOTAL RETURN+............................................... (2.46)% 5.80(1)

RATIOS TO AVERAGE NET ASSETS (3):

Expenses.................................................... 1.22 % 1.56(2)

Net investment income....................................... 1.20 % 0.56(2)

SUPPLEMENTAL DATA:

Net assets, end of period, in thousands..................... $98,465 $1,336

Portfolio turnover rate..................................... 84 % 14(1)
</TABLE>

---------------------

SEE NOTES TO FINANCIAL STATEMENTS
68
<PAGE>

INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
OF MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND:

We have audited the accompanying statement of assets and liabilities of Morgan
Stanley Dean Witter International Fund (the "Fund"), including the portfolio of
investments, as of October 31, 2000, and the related statements of operations
and changes in net assets, and the financial highlights for the year then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statement
of changes in net assets and the Financial Highlights for the period June 28,
1999 to October 31, 1999 were audited by other independent accountants whose
report, dated December 17, 1999, expressed an unqualified opinion on that
statement and financial highlights.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2000, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Morgan
Stanley Dean Witter International Fund as of October 31, 2000, the results of
its operations, the changes in its net assets, and the financial highlights for
the year then ended, in conformity with accounting principles generally accepted
in the United States of America.

Deloitte & Touche LLP
NEW YORK, NEW YORK
DECEMBER 11, 2000

69
<PAGE>

MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
CHANGE IN INDEPENDENT ACCOUNTANTS

On July 1, 2000 PricewaterhouseCoopers LLP resigned as independent accountants
of the Fund.

The report of PricewaterhouseCoopers LLP on the financial statements of the Fund
for the period ended October 31, 1999, contained no adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting principle.

In connection with its audit for the period ended October 31, 1999, and through
July 1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make
reference thereto in their report of the financial statements for such period.

The Fund, with the approval of its Board of Trustees and its Audit Committee,
engaged Deloitte & Touche LLP as its new independent auditors as of July 1,
2000.

70
<PAGE>

MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND
REPORT OF INDEPENDENT ACCOUNTANTS

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
MORGAN STANLEY DEAN WITTER INTERNATIONAL FUND

In our opinion, the statement of changes in net assets and the financial
highlights of Morgan Stanley Dean Witter International Fund (the "Fund") (not
presented separately herein) present fairly, in all material respects, the
changes in its net assets for the year ended October 31, 1999 and the financial
highlights for each of the years in the period ended October 31, 1999, in
conformity with generally accepted accounting principles. This financial
statement 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 generally
accepted auditing standards 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 provide a reasonable basis for the opinion expressed above. We have not
audited the financial statements or financial highlights of the Fund for any
period subsequent to October 31, 1999.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
DECEMBER 17, 1999