MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC, 485BPOS, 2000-10-30

MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC
485BPOS, 2000-10-30

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 2000

REGISTRATION NOS.: 2-64782
811-2932
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 26 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
AMENDMENT NO. 27 /X/

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

MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
(A MARYLAND CORPORATION)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600

BARRY FINK, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)

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

COPY TO:
STUART M. STRAUSS, ESQ.
MAYER, BROWN & PLATT
1675 BROADWAY
NEW YORK, NEW YORK 10019

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

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Post-Effective Amendment becomes effective.

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)

<TABLE>
<C> <S>
immediately upon filing pursuant to paragraph (b)
-------
X on October 31, 2000 pursuant to paragraph (b)
-------
60 days after filing pursuant to paragraph (a)
-------
on (date) pursuant to paragraph (a) of rule 485.
-------
</TABLE>

AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS

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

PROSPECTUS - OCTOBER 31, 2000

Morgan Stanley Dean Witter
HIGH YIELD SECURITIES

[COVER PHOTO]

A MUTUAL FUND WHOSE PRIMARY INVESTMENT OBJECTIVE IS TO EARN
A HIGH LEVEL OF CURRENT INCOME. AS A SECONDARY OBJECTIVE,
THE FUND SEEKS CAPITAL APPRECIATION BUT ONLY TO THE
EXTENT CONSISTENT WITH ITS PRIMARY OBJECTIVE.

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 Objectives........ 1
Principal Investment
Strategies................... 1
Principal Risks.............. 2
Past Performance............. 3
Fees and Expenses............ 5
Additional Investment
Strategy Information......... 6
Additional Risk
Information.................. 7
Fund Management.............. 8

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]
INCOME
AN INVESTMENT OBJECTIVE HAVING THE GOAL OF SELECTING SECURITIES TO PAY OUT
INCOME RATHER THAN RISE IN PRICE.
[End Sidebar]

THE FUND

[ICON] INVESTMENT OBJECTIVES

--------------------------------------------------------------------------------
Morgan Stanley Dean Witter High Yield Securities Inc. (the "Fund")
seeks as a primary investment objective to earn a high level of
current income. As a secondary objective, the Fund seeks capital
appreciation but only to the extent consistent with its primary
objective.

[ICON] PRINCIPAL INVESTMENT STRATEGIES
--------------------------------------------------------------------------------
The Fund will normally invest at least 65% of its total assets in
fixed-income securities (including zero coupon securities) rated Baa
or lower by Moody's Investors Service ("Moody's") or BBB or lower by
Standard & Poor's Corporation ("S&P") or in non-rated securities
considered by the Fund's "Investment Manager," Morgan Stanley Dean
Witter Advisors Inc., to be appropriate investments for the Fund.
Securities rated below Baa or BBB are commonly known as "junk bonds."
They may also include "Rule 144A" securities, which are subject to
resale restrictions. There are no minimum quality ratings for
investments, and as such the Fund may invest in securities which no
longer make payments of interest or principal.

In deciding which securities to buy, hold or sell, the Investment
Manager considers an issuer's creditworthiness, economic
developments, interest rate trends and other factors it deems
relevant. In evaluating an issuer's creditworthiness, the Investment
Manager relies principally on its own analysis. A security's credit
rating is simply one factor that may be considered by the Investment
Manager in this regard.

Fixed-income securities are debt securities such as bonds, notes or
commercial paper. The issuer of the debt security borrows money from
the investor who buys the security. Most debt securities pay either
fixed or adjustable rates of interest at regular intervals until they
mature, at which point investors get their principal back. The Fund's
fixed-income investments may include zero coupon securities and
payment-in-kind bonds. Zero coupon securities are purchased at a
discount and either (i) pay no interest, or (ii) accrue interest, but
make no payments until maturity; payment-in-kind bonds are purchased
at the face amount of the bond and accrue additional principal but
make no payments until maturity.

In addition, the Fund may invest in securities rated higher than Baa
or BBB (or, if not rated, determined to be of comparable quality)
when the Investment Manager believes that such securities may produce
attractive yields. The Fund may also invest in common stocks,
warrants and foreign securities.

In pursuing the Fund's investment objectives, the Investment Manager
has considerable leeway in deciding which investments it buys, holds
or sells on a day-to-day basis -- and which trading strategies it
uses. For example, the Investment Manager in its discretion may
determine to use some permitted trading strategies while not using
others.

1
<PAGE>
[ICON] PRINCIPAL RISKS
--------------------------------------------------------------------------------

There is no assurance that the Fund will achieve its investment
objectives. The Fund's share price and yield 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.

FIXED-INCOME SECURITIES. Principal risks of investing in the Fund are
associated with its junk bond investments. All fixed-income
securities, such as junk bonds, 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.) As merely illustrative of the relationship between fixed-
income securities and interest rates, the following table shows how
interest rates affect bond prices.

<TABLE>
<CAPTION>
HOW INTEREST RATES AFFECT BOND PRICES
PRICE PER $1,000 OF A BOND
IF INTEREST RATES:
------------------------------
INCREASE DECREASE
-------------- --------------
BOND MATURITY COUPON 1% 2% 1% 2%
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
1 year N/A $1,000 $1,000 $1,000 $1,000
-----------------------------------------------------------------------------
5 years 5.875% $951 $920 $1,018 $1,054
-----------------------------------------------------------------------------
10 years 6.00% $910 $853 $1,038 $1,110
-----------------------------------------------------------------------------
30 years 6.125% $841 $748 $1,093 $1,264
-----------------------------------------------------------------------------
</TABLE>

Coupons reflect yields on Treasury securities as of December 31,
1999. The table is not representative of price changes for junk
bonds. In addition, the table is an illustration and does not
represent expected yields or share price changes of any Morgan
Stanley Dean Witter mutual fund.

JUNK BONDS. Junk bonds are subject to greater risk of loss of income
and principal than higher rated securities. The prices of junk bonds
are likely to be more sensitive to adverse economic changes or
individual corporate developments than higher rated securities.
During an economic downturn or substantial period of rising interest
rates, junk bond issuers and, in particular, highly leveraged issuers
may experience financial stress that would adversely affect their
ability to service their principal and interest payment obligations,
to meet their projected business goals or to obtain additional
financing. In the event of a default, the Fund may incur additional
expenses to seek recovery. The secondary market for junk bonds may be
less liquid than the markets for higher quality securities and, as
such, may have an adverse effect on the market prices of certain
securities. The Rule 144A securities could have the effect of
increasing the

2
<PAGE>
[Sidebar]
ANNUAL TOTAL RETURNS
THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S CLASS D
SHARES HAS VARIED FROM YEAR TO YEAR OVER THE PAST 10 CALENDAR YEARS.
[End Sidebar]

level of Fund illiquidity to the extent the Fund may be unable to
find qualified institutional buyers interested in purchasing the
securities. The illiquidity of the market may also adversely affect
the ability of the Fund's Directors to arrive at a fair value for
certain junk bonds at certain times and could make it difficult for
the Fund to sell certain securities. In addition, periods of economic
uncertainty and change probably would result in an increased
volatility of market prices of high yield securities and a
corresponding volatility in the Fund's net asset value. In addition
to junk bonds, the Fund may also invest in certain investment grade
fixed-income securities. Some of these securities have speculative
characteristics.

The performance of the Fund also will depend on whether or not the
Investment Manager is successful in pursuing the Fund's investment
strategy. The Fund is subject to other risks from its permissible
investments including the risks associated with its investments in
common stocks and foreign securities. 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.

[ICON] PAST PERFORMANCE
--------------------------------------------------------------------------------
The bar chart and table below provide some indication of the risks of
investing in the Fund. The Fund's past performance does not indicate
how the Fund will perform in the future.

ANNUAL TOTAL RETURNS - CALENDAR YEARS

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

The bar chart reflects the performance of Class D shares; the performance of the
other Classes will differ because the Classes have different ongoing fees. The
performance information in the bar chart does not reflect the deduction of sales
charges; if these amounts were reflected, returns would be less than shown.
Year-to-date total return as of September 30, 2000 was -13.81%.

During the periods shown in the bar chart, the highest return for a
calendar quarter was 30.61% (quarter ended March 31, 1991) and the
lowest return for a calendar quarter was -25.84% (quarter ended
December 31, 1990).

3
<PAGE>

[Sidebar]
AVERAGE ANNUAL
TOTAL RETURNS
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS WITH THOSE OF A
BROAD MEASURE OF MARKET PERFORMANCE OVER TIME. THE FUND'S RETURNS
INCLUDE THE MAXIMUM APPLICABLE SALES CHARGE FOR EACH CLASS AND ASSUME YOU SOLD
YOUR SHARES AT THE END OF EACH PERIOD.

[End Sidebar]

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999)
-----------------------------------------------------------------------------
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
-----------------------------------------------------------------------------
Class A(1) -1.77% 7.25% 7.85%
-----------------------------------------------------------------------------
Class B(2) -2.68% -- --
-----------------------------------------------------------------------------
Class C(2) 0.99% -- --
-----------------------------------------------------------------------------
Class D(3) 2.77% 8.43% 8.58%
-----------------------------------------------------------------------------
Lehman Brothers U.S. Corporate
High Yield Index(4) 2.39% 9.31% 10.72%
-----------------------------------------------------------------------------
</TABLE>

1 Prior to July 28, 1997 the Fund offered only one
class of shares. Because the distribution
arrangement for Class A most closely resembled the
distribution arrangement applicable prior to the
implementation of multiple classes (i.e., Class A
is sold with a front-end sales charge), historical
performance information has been restated to
reflect the actual maximum sales charge applicable
to Class A (i.e., 4.25%) as compared to the 5.50%
sales charge in effect prior to July 28, 1997. In
addition, Class A shares are now subject to an
ongoing 12b-1 fee which is reflected in the
restated performance for that class.

2 Classes B and C commenced operations on July 28,
1997.

3 Because all shares of the Fund held prior to
July 28, 1997 were designated Class D shares, the
Fund's historical performance has been restated to
reflect the absence of any sales charge.

4 The Lehman Brothers U.S. Corporate High Yield
Index tracks the performance of all below
investment-grade securities which have at least
$100 million in outstanding issuance, a maturity
greater than one year, and are issued in
fixed-rate U.S. dollar denominations. The Index
does not include any expenses, fees or charges.
The Index is unmanaged and should not be
considered an investment.

4
<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 AUGUST 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) 4.25%(1) None None None
---------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load)
(as a percentage based on the lesser of
the offering price or net asset value at redemption) None(2) 5.00%(3) 1.00%(4) None
---------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
---------------------------------------------------------------------------------------------------
Management fee 0.39% 0.39% 0.39% 0.39%
---------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.20% 0.75% 0.85% None
---------------------------------------------------------------------------------------------------
Other expenses 0.11% 0.11% 0.11% 0.11%
---------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 0.70% 1.25% 1.35% 0.50%
---------------------------------------------------------------------------------------------------
</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.

5
<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 $493 $638 $796 $1,253 $493 $638 $796 $1,253
------------------------------------------------------------------ ----------------------------------
CLASS B $627 $695 $884 $1,507 $127 $395 $684 $1,507
------------------------------------------------------------------ ----------------------------------
CLASS C $237 $426 $737 $1,619 $137 $426 $737 $1,619
------------------------------------------------------------------ ----------------------------------
CLASS D $ 51 $159 $277 $ 623 $ 51 $159 $277 $ 623
------------------------------------------------------------------ ----------------------------------
</TABLE>

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

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

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

COMMON STOCKS. The Fund may invest up to 20% of its total assets in
common stocks.

FOREIGN SECURITIES. The Fund may invest up to 20% of its total assets
in fixed-income securities issued by foreign governments and other
foreign issuers (including American depository receipts or other
similar securities convertible into securities of foreign issuers)
but not more than 10% of its total assets in these securities may be
denominated in foreign currencies.

WARRANTS. The Fund may acquire warrants which may or may not be
attached to common stock. Warrants are options to purchase equity
securities at a specific price for a specific period of time.

UNIT OFFERINGS. The Fund may purchase units which combine debt
securities with equity securities and/or warrants.

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

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

6
<PAGE>
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.

COMMON STOCKS. In general, stock values fluctuate in response to
activities specific to the company as well as general market,
economic and political conditions. These prices can fluctuate widely.

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. In
particular, the price of securities could be adversely affected by
changes in the exchange rate between U.S. dollars and a foreign
market's local currency.

Foreign securities (including depository receipts) also have risks
related to economic and political developments abroad, including any
effects of foreign social, economic or political instability. 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 exchanges and broker-dealers are
generally subject to less government and exchange scrutiny and
regulation than their U.S. counterparts. In addition, differences in
clearance and settlement procedures in foreign markets may occasion
delays in settlements of the Fund's trades effected in those markets.

UNIT OFFERINGS. Any Fund investments in unit offerings may carry
risks associated with fixed-income and equity securities.

7
<PAGE>

[Sidebar]
MORGAN STANLEY DEAN WITTER ADVISORS INC.
THE INVESTMENT MANAGER IS WIDELY RECOGNIZED AS A LEADER IN THE MUTUAL FUND
INDUSTRY AND TOGETHER WITH MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC., ITS
WHOLLY-OWNED SUBSIDIARY, HAD APPROXIMATELY $155 BILLION IN ASSETS UNDER
MANAGEMENT AS OF SEPTEMBER 30, 2000.

[End Sidebar]

[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 invest its assets, including the placing of
orders for the purchase and sale of portfolio securities. The
Investment Manager is a wholly-owned subsidiary of Morgan Stanley
Dean Witter & Co., a preeminent global financial services firm that
maintains leading market positions in each of its three primary
businesses: securities, asset management and credit services. Its
main business office is located at Two World Trade Center, New York,
NY 10048.

The Fund's portfolio is managed within the Investment Manager's
Taxable Income Group. Peter M. Avelar, a Senior Vice President and
Director of the High Yield Group of the Investment Manager, has been
the primary portfolio manager of the Fund since January 1991 and a
portfolio manager with the Investment Manager for over five years.

The Fund pays the Investment Manager a monthly management fee as full
compensation for the services and facilities furnished to the Fund,
and for Fund expenses assumed by the Investment Manager. The fee is
based on the Fund's average daily net assets. For the fiscal year
ended August 31, 2000 the Fund accrued total compensation to the
Investment Manager amounting to 0.39% 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 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 Directors. 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 High Yield Securities Inc.

- 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 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.

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

11
<PAGE>
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 further 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 your shares, simply call your Morgan Stanley Dean
Financial Advisor Witter Financial Advisor or other authorized financial
representative.
------------------------------------------------------------
[ICON]
Payment will be sent to the address to which the account is
registered or deposited in your brokerage account.
--------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of
instruction" that includes:
[ICON]
- your account number;
- the dollar amount or the number of shares you wish to
sell;
- the Class of shares you wish to sell; and
- the signature of each owner as it appears on the account.
------------------------------------------------------------
</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
$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.
------------------------------------------------------------
[ICON]
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.

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]

INVOLUNTARY SALES. The Fund reserves the right, on sixty days'
notice, to sell the shares of any shareholder (other than shares held
in an IRA or 403(b) Custodial Account) whose shares, due to sales by
the shareholder, have a value below $100, or in the case of an
account opened through EASYINVEST-SM-, if after 12 months the
shareholder has invested less than $1,000 in the account.

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

[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 monthly. 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.

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
ANNUAL
CLASS SALES CHARGE 12b-1 FEE
<S> <C> <C>
---------------------------------------------------------------------------------------------
A Maximum 4.25% 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 0.75%
---------------------------------------------------------------------------------------------
C 1.0% CDSC during the first year 0.85%
---------------------------------------------------------------------------------------------
D None None
---------------------------------------------------------------------------------------------
</TABLE>

CLASS A SHARES Class A shares are sold at net asset value plus an
initial sales charge of up to 4.25%. The initial sales charge is
reduced for purchases of $25,000 or more according to the schedule
below. Investments of $1 million or more are not subject to an initial
sales charge, but are generally subject to a contingent deferred sales
charge, or CDSC, of 1.0% on sales made within one year after the last
day of the month of purchase. The CDSC will be assessed in the same
manner and with the same CDSC waivers as with Class B shares. Class A
shares are also subject to a distribution (12b-1) fee of up to 0.25% of
the average daily net assets of the Class.
The offering price of Class A shares includes a sales charge (expressed as a
percentage of the offering price) on a single transaction as shown in the
following table:

<TABLE>
<CAPTION>
FRONT-END SALES CHARGE
-----------------------------------------------
AMOUNT OF PERCENTAGE OF PUBLIC APPROXIMATE PERCENTAGE OF
SINGLE TRANSACTION OFFERING PRICE NET AMOUNT INVESTED
<S> <C> <C>
-----------------------------------------------------------------------------------------
Less than $25,000 4.25% 4.44%
-----------------------------------------------------------------------------------------
$25,000 but less than $50,000 4.00% 4.17%
-----------------------------------------------------------------------------------------
$50,000 but less than $100,000 3.50% 3.63%
-----------------------------------------------------------------------------------------
$100,000 but less than $250,000 2.75% 2.83%
-----------------------------------------------------------------------------------------
$250,000 but less than $1 million 1.75% 1.78%
-----------------------------------------------------------------------------------------
$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 including a
front-end sales

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

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

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

- Persons participating in a fee-based investment program (subject to
all of its terms and conditions, including termination fees,
mandatory sale or transfer restrictions on termination) approved by
the Fund's distributor pursuant to which they pay an asset-based
fee for investment advisory, administrative and/or brokerage
services.

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

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

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

- 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/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 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

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

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

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

DISTRIBUTION FEE. Class B shares are subject to an annual 12b-1 fee
of 0.75% 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.

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 0.85% 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.

21
<PAGE>

- 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 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 each year. The total
returns in the table represent the rate an investor would have earned or lost on
an investment in the Fund (assuming reinvestment of all dividends and
distributions).

The information for the fiscal year ended August 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 the fiscal year ended August 31, 1999 and
all periods presented prior thereto have been audited by other independent
accountants.

<TABLE>
<CAPTION>
FOR THE PERIOD JULY 28, 1997*
FOR THE YEAR ENDED AUGUST 31, 2000 1999 1998 THROUGH AUGUST 31, 1997
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES++
-----------------------------------------------------------------------------------------------------------------------

SELECTED PER SHARE DATA
-----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $5.51 $6.16 $6.82 $6.83
-----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.69 0.72 0.76 0.07
Net realized and unrealized loss (1.13) (0.63) (0.71) (0.03)
------- ------- ------- ------
Total income (loss) from investment
operations (0.44) 0.09 0.05 0.04
-----------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.72) (0.74) (0.71) (0.05)
-----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.35 $5.51 $6.16 $6.82
-----------------------------------------------------------------------------------------------------------------------

TOTAL RETURN+ (8.88)% 1.47% 0.40% 0.65%(1)
-----------------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS
-----------------------------------------------------------------------------------------------------------------------
Expenses 0.70%(3) 0.68%(3) 0.75%(3) 0.93%(2)
-----------------------------------------------------------------------------------------------------------------------
Net investment income 13.62%(3) 12.42%(3) 11.30%(3) 11.80%(2)
-----------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $57,273 $68,667 $30,678 $1,996
-----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 20% 36% 66% 113%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

* The date shares were first issued.
++ 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 PERIOD JULY 28, 1997*
FOR THE YEAR ENDED AUGUST 31, 2000 1999 1998 THROUGH AUGUST 31, 1997
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES++
--------------------------------------------------------------------------------------------------------------------------------

SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $5.50 $6.15 $6.82 $6.83
--------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.66 0.69 0.73 0.07
Net realized and unrealized loss (1.13) (0.64) (0.72) (0.03)
---------- ---------- ---------- -------
Total income (loss) from investment
operations (0.47) 0.05 0.01 0.04
--------------------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.69) (0.70) (0.68) (0.05)
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.34 $5.50 $6.15 $6.82
--------------------------------------------------------------------------------------------------------------------------------

TOTAL RETURN+ (9.39)% 0.92% (0.23)% 0.62%(1)
--------------------------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS
--------------------------------------------------------------------------------------------------------------------------------
Expenses 1.25%(3) 1.24%(3) 1.25%(3) 1.42%(2)
--------------------------------------------------------------------------------------------------------------------------------
Net investment income 13.07%(3) 11.86%(3) 10.80%(3) 11.28%(2)
--------------------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,381,008 $1,927,186 $1,761,147 $15,828
--------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 20% 36% 66% 113%
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

24
<PAGE>

<TABLE>
<CAPTION>
FOR THE PERIOD JULY 28, 1997*
FOR THE YEAR ENDED AUGUST 31, 2000 1999 1998 THROUGH AUGUST 31, 1997
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES++
------------------------------------------------------------------------------------------------------------------------

SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $5.51 $6.15 $6.82 $6.83
------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.66 0.68 0.72 0.07
Net realized and unrealized loss (1.14) (0.62) (0.72) (0.03)
------- -------- ------- ------
Total income (loss) from investment
operations (0.48) 0.06 0.00 0.04
------------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.69) (0.70) (0.67) (0.05)
------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.34 $5.51 $6.15 $6.82
------------------------------------------------------------------------------------------------------------------------

TOTAL RETURN+ (9.66)% 0.99% (0.34)% 0.62%(1)
------------------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS
------------------------------------------------------------------------------------------------------------------------
Expenses 1.35%(3) 1.34%(3) 1.36%(3) 1.52%(2)
------------------------------------------------------------------------------------------------------------------------
Net investment income 12.97%(3) 11.76%(3) 10.69%(3) 11.18%(2)
------------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $86,951 $109,142 $56,626 $5,225
------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 20% 36% 66% 113%
------------------------------------------------------------------------------------------------------------------------
</TABLE>

25
<PAGE>

<TABLE>
<CAPTION>
FOR THE YEAR ENDED AUGUST 31, 2000++ 1999++ 1998++ 1997* 1996
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
CLASS D SHARES
-------------------------------------------------------------------------------------------------------------------

SELECTED PER SHARE DATA
-------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $5.51 $6.16 $6.82 $6.71 $6.77
-------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.70 0.74 0.78 0.79 0.83
Net realized and unrealized gain (loss) (1.13) (0.64) (0.71) 0.15 (0.12)
-------- -------- -------- -------- --------
Total income (loss) from investment
operations (0.43) 0.10 0.07 0.94 0.71
-------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.73) (0.75) (0.73) (0.83) (0.77)
-------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.35 $5.51 $6.16 $6.82 $6.71
-------------------------------------------------------------------------------------------------------------------

TOTAL RETURN+ (8.69)% 1.67% 0.63% 15.01% 11.07%
-------------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS
-------------------------------------------------------------------------------------------------------------------
Expenses 0.50%(1) 0.49%(1) 0.51%(1) 0.68% 0.66%
-------------------------------------------------------------------------------------------------------------------
Net investment income 13.82%(1) 12.61%(1) 11.54%(1) 11.78% 12.27%
-------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $246,941 $333,714 $400,582 $479,020 $460,203
-------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 20% 36% 66% 113% 49%
-------------------------------------------------------------------------------------------------------------------
</TABLE>

* Prior to July 28, 1997, the Fund issued one class of shares. All shares of the
Fund held prior to that date have been designated Class D shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Reflects overall Fund ratios for investment income and non-class specific
expenses.

26
<PAGE>
NOTES

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

27
<PAGE>
NOTES

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

28
<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
---------------------------------
Aggressive Equity Fund
American Opportunities Fund
Capital Growth Securities
Developing Growth Securities
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust

New Discoveries Fund

Next Generation Trust
Small Cap Growth Fund
Special Value Fund

Tax-Managed Growth Fund

21st Century Trend Fund

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

Technology Fund

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

GROWTH & INCOME FUNDS

---------------------------------
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Equity Fund
Fund of Funds - Domestic Portfolio
Income Builder Fund

S&P 500 Index Fund

S&P 500 Select Fund
Strategist Fund
Total Market Index Fund
Total Return Trust
Value Fund
Value-Added Market Series/Equity Portfolio

THEME FUNDS

Real Estate Fund

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 - OCTOBER 31, 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 EDGAR Database on the
SEC's Internet site (www.sec.gov) and copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the following
E-mail address: [email protected], or by writing the Public Reference Section
of the SEC, Washington, DC 20549-0102.

TICKER SYMBOLS:

<TABLE>
<S> <C>
CLASS A: HYLAX CLASS C: HYLCX
--------------------- ---------------------

CLASS B: HYLBX CLASS D: HYLDX
--------------------- ---------------------
</TABLE>

(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-2932)

Morgan Stanley Dean Witter
HIGH YIELD SECURITIES

[BACK COVER PHOTO]

A MUTUAL FUND WHOSE PRIMARY
INVESTMENT OBJECTIVE IS TO EARN
A HIGH LEVEL OF CURRENT INCOME.
AS A SECONDARY OBJECTIVE,
THE FUND SEEKS CAPITAL
APPRECIATION BUT ONLY TO
THE EXTENT CONSISTENT WITH
ITS PRIMARY OBJECTIVE.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

OCTOBER 31, 2000

MORGAN STANLEY
DEAN WITTER
HIGH YIELD
SECURITIES INC.

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

This STATEMENT OF ADDITIONAL INFORMATION is not a PROSPECTUS. The PROSPECTUS
(dated October 31, 2000) for Morgan Stanley Dean Witter High Yield Securities
Inc. (the "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
High Yield Securities Inc.
Two World Trade Center
New York, New York 10048
(800) 869-NEWS
<PAGE>
TABLE OF CONTENTS
--------------------------------------------------------------------------------

<TABLE>
<S> <C>
I. Fund History............................................. 4

II. Description of the Fund and Its Investments and Risks... 4
A. Classification......................................... 4
B. Investment Strategies and Risks........................ 4
C. Fund Policies/Investment Restrictions.................. 10

III. Management of the Fund................................. 11
A. Board of Directors..................................... 11
B. Management Information................................. 12
C. Compensation........................................... 16

IV. Control Persons and Principal Holders of Securities..... 18

V. Investment Management and Other Services................. 18
A. Investment Manager..................................... 18
B. Principal Underwriter.................................. 19
C. Services Provided by the Investment Manager............ 19
D. Dealer Reallowances.................................... 20
E. Rule 12b-1 Plan........................................ 20
F. Other Service Providers................................ 24
G. Codes of Ethics........................................ 25

VI. Brokerage Allocation and Other Practices................ 25
A. Brokerage Transactions................................. 25
B. Commissions............................................ 25
C. Brokerage Selection.................................... 26
D. Directed Brokerage..................................... 26
E. Regular Broker-Dealers................................. 27

VII. Capital Stock and Other Securities..................... 27

VIII. Purchase, Redemption and Pricing of Shares............ 27
A. Purchase/Redemption of Shares.......................... 27
B. Offering Price......................................... 28

IX. Taxation of the Fund and Shareholders................... 29

X. Underwriters............................................. 31

XI. Calculation of Performance Data......................... 31

XII. Financial Statements................................... 33
</TABLE>

2
<PAGE>
GLOSSARY OF SELECTED DEFINED TERMS
--------------------------------------------------------------------------------

The terms defined in this glossary are frequently used in this STATEMENT OF
ADDITIONAL INFORMATION (other terms used occasionally are defined in the text of
the document).

"CUSTODIAN"--The Bank of New York.

"DEAN WITTER REYNOLDS"--Dean Witter Reynolds Inc., a wholly-owned broker-dealer
subsidiary of MSDW.

"DIRECTORS"--The Board of Directors of the Fund.

"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 High Yield Securities Inc., a registered
open-end investment company.

"INDEPENDENT DIRECTORS"--Directors who are not "interested persons" (as defined
by the Investment Company Act) of the Fund.

"INVESTMENT MANAGER"--Morgan Stanley Dean Witter Advisors Inc., a wholly-owned
investment advisor subsidiary of MSDW.

"MORGAN STANLEY & CO."--Morgan Stanley & Co. Incorporated, a wholly-owned
broker-dealer subsidiary of MSDW.

"MORGAN STANLEY DEAN WITTER FUNDS"--Registered investment companies (i) for
which the Investment Manager serves as the investment advisor and (ii) that hold
themselves out to investors as related companies for investment and investor
services.

"MSDW"--Morgan Stanley Dean Witter & Co., a preeminent global financial services
firm.

"MSDW SERVICES COMPANY"--Morgan Stanley Dean Witter Services Company Inc., a
wholly-owned fund services subsidiary of the Investment Manager.

"TRANSFER AGENT"--Morgan Stanley Dean Witter Trust FSB, a wholly-owned transfer
agent subsidiary of MSDW.

3
<PAGE>
I. FUND HISTORY
--------------------------------------------------------------------------------

The Fund was incorporated in the state of Maryland on June 14, 1979 under
the name InterCapital High Yield Securities Inc. On March 21, 1983, the Fund's
name was changed to Dean Witter High Yield Securities Inc. On June 22, 1998, the
name of the Fund was changed to Morgan Stanley Dean Witter High Yield Securities
Inc.

II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
--------------------------------------------------------------------------------

A. CLASSIFICATION

The Fund is an open-end, diversified management investment company whose
investment objective is to earn a high level of current income. As a secondary
objective, the Fund seeks capital appreciation but only to the extent consistent
with its primary objective.

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."

FUTURES TRANSACTIONS. The Fund may purchase and sell interest rate
contracts that are traded on U.S. and foreign commodity exchanges.

The Fund may sell a futures contract or a call option thereon or purchase a
put option on such futures contract, if the Investment Manager anticipates
interest rates to rise, as a hedge against a decrease in the value of the Fund's
portfolio securities. If the Investment Manager anticipates that interest rates
will decline, the Fund may purchase a futures contract or a call option thereon
or sell a put option on such futures contract to protect against an increase in
the price of the securities the Fund intends to purchase. These futures
contracts and related options thereon will be used only as a hedge against
anticipated interest rate changes.

Although the terms of future contracts specify actual delivery or receipt of
securities, in most instances the contracts are closed out before the settlement
date without the making or taking of delivery of the securities. Closing out of
a futures contract is usually effected by entering into an offsetting
transaction. An offsetting transaction for a futures contract sale is effected
by the Fund entering into a futures contract purchase for the same aggregate
amount of the specific type of financial instrument and same delivery date. If
the price in the sale exceeds the price in the offsetting purchase, the Fund is
immediately paid the difference and thus realizes a gain. If the offsetting
purchase price exceeds the sale price, the Fund pays the difference and realizes
a loss. Similarly, the closing out of the futures contract purchase is effected
by the Fund entering into a futures contract sale. If the offsetting sale price
exceeds the purchase price, the Fund realizes a gain, and if the offsetting sale
price is less than the purchase price, the Fund realizes a loss.

MARGIN. If the Fund enters into a futures contract, it is initially
required to deposit an "initial margin" of cash or U.S. Government securities or
other liquid portfolio securities ranging from approximately 2% to 5% of the
contract amount. Initial margin requirements are established by the exchanges on
which futures contracts trade and may, from time to time, change. In addition,
brokers may establish margin deposit requirements in excess of those required by
the exchanges.

Initial margin in futures transactions is different from margin in
securities transactions in that initial margin does not involve the borrowing of
funds by a broker's client but is, rather, a good faith deposit on the futures
contract which will be returned to the Fund upon the proper termination of the
futures contract. The margin deposits made are marked to market daily and the
Fund may be required to make subsequent deposits of cash or U.S. Government
securities, called "variation margin," which are reflective of price
fluctuations in the futures contract.

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

4
<PAGE>
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%.

RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS. A risk in
employing futures contracts to protect against the price volatility of portfolio
securities is that the prices of securities subject to futures contracts may
correlate imperfectly with the behavior of the cash prices of the Fund's
portfolio securities. The correlation may be distorted by the fact that the
futures market is dominated by short-term traders seeking to profit from the
difference between a contract or security price objective and their cost of
borrowed funds. This would reduce their value for hedging purposes over a short
time period. Such distortions are generally minor and would diminish as the
contract approached maturity. Another risk is that the Fund's manager could be
incorrect in its expectations as to the direction or extent of various interest
rate movements or the time span within which the movements take place. For
example, if the Fund sold futures contracts for the sale of securities in
anticipation of an increase in interest rates, and then interest rates went down
instead, causing bond prices to rise, the Fund would lose money on the sale.

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 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 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 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 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
hedges 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.

5
<PAGE>
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, 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.

OPTIONS. The Fund may purchase or sell (write) options on debt securities
as a means of achieving additional return or hedging the value of the Fund's
portfolio. The Fund may only buy options listed on national securities
exchanges. The Fund will not purchase options if, as a result, the aggregate
cost of all outstanding options exceeds 10% of the Fund's total assets.

A call option is a contract that gives the holder of the option the right to
buy from the writer of the call option, in return for a premium, the security
underlying the option at a specified exercise price at any time during the term
of the option. The writer of the call option has the obligation, upon exercise
of the option, to deliver the underlying security upon payment of the exercise
price during the option period. A put option is a contract that gives the holder
of the option the right to sell to the writer, in return for a premium, the
underlying security at a specified price during the term of the option. The
writer of the put has the obligation to buy the underlying security upon
exercise, at the exercise price during the option period.

The Fund may only write covered call or covered put options listed on
national exchanges. The Fund may not write covered options in an amount
exceeding 20% of the value of the total assets of the Fund. A call option is
"covered" if the Fund owns the underlying security covered by the call or has an
absolute and immediate right to acquire that security or futures contract
without additional cash consideration (or for additional cash consideration held
in a segregated account by its custodian) 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 or futures contract 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 with its custodian. 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 with its custodian, or else holds a put on the same security
or futures contract 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.

If the Fund has written an option, it may terminate its obligation by
effecting a closing purchase transaction. This 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

6
<PAGE>
a closing purchase transaction. Similarly, if the Fund is the holder of an
option, it may liquidate its position by effecting a closing sale transaction.
This is accomplished by selling an option of the same fund as the option
previously purchased. There can be no assurance that either a closing purchase
or sale transaction on behalf of the Fund can be effected when the Fund so
desires.

The Fund will realize a profit from a closing transaction if the price of
the transaction is less than the premium received from writing the option or is
more than the premium paid to purchase the option; the Fund will realize a loss
from a closing transaction if the price of the transaction is more than the
premium received from writing the option or is less than the premium paid to
purchase the option. Since call option prices generally reflect increases in the
price of the underlying security, any loss resulting from the purchase of a call
option may also be wholly or partially offset by unrealized appreciation of the
underlying security. If a put option written by the Fund is exercised, the Fund
may incur a loss equal to the difference between the exercise price of the
option and the sum of the sale price of the underlying security plus the
premiums received from the sale of the option. Other principal factors affecting
the market value of a put or a call option include supply and demand, interest
rates, the current market price and price volatility of the underlying security
and the time remaining until the expiration date.

An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although the Fund will
generally purchase or write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option. In such event, it might not be
possible to effect closing transactions in particular options, so that the Fund
would have to exercise its options in order to realize any profit and would
incur brokerage commission upon the exercise of call options and upon covered
call option writer is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise.

MONEY MARKET SECURITIES. In addition to the money market securities in
which the Fund may otherwise invest, the Fund may invest in various money market
securities for cash management purposes or when assuming a temporary defensive
position, which among others may include commercial paper, bank acceptances,
bank obligations, corporate debt securities, certificates of deposit, U.S.
Government securities, obligations of savings institutions and repurchase
agreements. Such securities are limited to:

U.S. GOVERNMENT SECURITIES. Obligations issued or guaranteed as to
principal and interest by the United States or its agencies (such as the
Export-Import Bank of the United States, Federal Housing Administration and
Government National Mortgage Association) or its instrumentalities (such as the
Federal Home Loan Bank), including Treasury bills, notes and bonds;

BANK OBLIGATIONS. Obligations (including certificates of deposit, time
deposits and bankers' acceptances) of banks subject to regulation by the U.S.
Government and having total assets of $1 billion or more, and instruments
secured by such obligations, not including obligations of foreign branches of
domestic banks except to the extent below;

EURODOLLAR CERTIFICATES OF DEPOSIT. Eurodollar certificates of deposit
issued by foreign branches of domestic banks having total assets of $1 billion
or more;

OBLIGATIONS OF SAVINGS INSTITUTIONS. Certificates of deposit of savings
banks and savings and loan associations, having total assets of $1 billion or
more;

FULLY INSURED CERTIFICATES OF DEPOSIT. Certificates of deposit of banks and
savings institutions, having total assets of less than $1 billion, if the
principal amount of the obligation is federally insured by the Bank Insurance
Fund or the Savings Association Insurance Fund (each of which is administered by
the FDIC), limited to $100,000 principal amount per certificate and to 10% or
less of the Fund's total assets in all such obligations and in all illiquid
assets, in the aggregate;

7
<PAGE>
COMMERCIAL PAPER. Commercial paper rated within the two highest grades by
Standard & Poor's Corporation ("S&P") or the two highest grade by Moody's
Investors Service, Inc. ("Moody's") or, if not rated, issued by a company having
an outstanding debt issue rated at least AA by S&P or Aa by Moody's; and

REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements. When
cash may be available for only a few days, it may be invested by the Fund in
repurchase agreements until such time as it may otherwise be invested or used
for payments of obligations of the Fund. These agreements, which may be viewed
as a type of secured lending by the Fund, typically involve the acquisition by
the Fund of debt securities from a selling financial institution such as a bank,
savings and loan association or broker-dealer. The agreement provides that the
Fund will sell back to the institution, and that the institution will
repurchase, the underlying security serving as collateral at a specified price
and at a fixed time in the future, usually not more than seven days from the
date of purchase. The collateral will be marked-to-market daily to determine
that the value of the collateral, as specified in the agreement, does not
decrease below the purchase price plus accrued interest. If such decrease
occurs, additional collateral will be requested and, when received, added to the
account to maintain full collateralization. The Fund will accrue interest from
the institution until the time when the repurchase is to occur. Although this
date is deemed by the Fund to be the maturity date of a repurchase agreement,
the maturities of securities subject to repurchase agreements are not subject to
any limits.

While repurchase agreements involve certain risks not associated with direct
investments in debt securities, the Fund follows procedures designed to minimize
such risks. These procedures include effecting repurchase transactions only with
large, well-capitalized and well-established financial institutions whose
financial condition will be continually monitored by the Investment Manager
subject to procedures established by the Directors. 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.

MUNICIPAL OBLIGATIONS. The Fund may invest up to 10% of its total assets in
municipal obligations that pay interest exempt from federal income tax.
Municipal obligations are securities issued by state and local governments and
regional government authorities. These securities typically are "general
obligation" or "revenue" bonds, notes or commercial paper. General obligation
securities are secured by the issuer's faith and credit, as well as its taxing
power, for payment of principal and interest. Revenue bonds, however, are
generally payable from a specific revenue source. They are issued to fund a wide
variety of public and private projects in sectors such as transportation,
education and industrial development. Included within the revenue bonds category
are participations in lease obligations and installment contracts of
municipalities.

PUBLIC UTILITIES. The Fund's investments in the utilities industry are
impacted by risks particular to that industry. Changing regulation constitutes
one of the key industry-specific risks for the Fund, especially with respect to
its investments in traditionally regulated public utilities and partially
regulated utility companies. State and other regulators monitor and control
utility revenues and costs, and therefore may limit utility profits. Regulatory
authorities also may restrict a company's access to new markets, thereby
diminishing the company's long-term prospects.

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

8
<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 total assets.

As with any extensions of credit, there are risks of delay in recovery and,
in some cases, even loss of rights in the collateral should the borrower of the
securities fail financially. However, these loans of portfolio securities will
only be made to firms deemed by the Fund's management to be creditworthy and
when the income which can be earned from such loans justifies the attendant
risks. Upon termination of the loan, the borrower is required to return the
securities to the Fund. Any gain or loss in the market price during the loan
period would inure to the Fund.

When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loaned securities, to
be delivered within one day after notice, to permit the exercise of the rights
if the matters involved would have a material effect on the Fund's investment in
the loaned securities. The Fund will pay reasonable finder's, administrative and
custodial fees in connection with a loan of its securities.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS. From
time to time the Fund may purchase securities on a when-issued or delayed
delivery basis or may purchase or sell securities on a forward commitment basis.
When these transactions are negotiated, the price is fixed at the time of the
commitment, but delivery and payment can take place a month or more after the
date of commitment. While the Fund will only purchase securities on a
when-issued, delayed delivery or forward commitment basis with the intention of
acquiring the securities, the Fund may sell the securities before the settlement
date, if it is deemed advisable. The securities so purchased or sold are subject
to market fluctuation and no interest or dividends accrue to the purchaser prior
to the settlement date.

At the time the Fund makes the commitment to purchase or sell securities on
a when-issued, delayed delivery or forward commitment basis, it will record the
transaction and thereafter reflect the value, each day, of such security
purchased, or if a sale, the proceeds to be received, in determining its net
asset value. At the time of delivery of the securities, their value may be more
or less than the purchase or sale price. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility of its net
asset value. The Fund will also establish a segregated account on the Fund's
books in which it will continually maintain cash or cash equivalents or other
liquid portfolio securities equal in value to commitments to purchase securities
on a when-issued, delayed delivery or forward commitment basis.

WHEN, AS AND IF ISSUED SECURITIES. The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security depends
upon the occurrence of a subsequent event, such as approval of a merger,
corporate reorganization or debt restructuring. The commitment for the purchase
of any such security will not be recognized in the portfolio of the Fund until
the Investment Manager determines that issuance of the security is probable. At
that time, the Fund will record the transaction and, in determining its net
asset value, will reflect the value of the security daily. At that time, the
Fund will also establish a segregated account on the Fund's books in which it
will maintain cash or cash equivalents or other liquid portfolio securities
equal in value to recognized commitments for such securities.

The value of the Fund's commitments to purchase the securities of any one
issuer, together with the value of all securities of such issuer owned by the
Fund, may not exceed 5% of the value of the Fund's total assets at the time the
initial commitment to purchase such securities is made. An increase in the
percentage of the Fund's 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.

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

9
<PAGE>
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 Investment Manager, pursuant to
procedures adopted by the Directors, 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. As a primary objective, seek to earn a high level of current income.

2. As a secondary objective, seek capital appreciation but only to the
extent consistent with its primary objective.

The Fund MAY not:

1. Acquire common stocks in excess of 20% of its total assets.

2. Invest more than 5% of its total assets in the securities of any one
issuer (other than obligations of, or guaranteed by, the United States
government, its agencies or instrumentalities).

3. Purchase more than 10% of the voting securities, or more than 10% of
any class of securities, of any issuer. For purposes of this restriction,
all outstanding debt securities of an issuer are considered as one class and
all preferred stocks of an issuer are considered as one class.

4. Invest more than 25% of its total assets in securities of issuers in
any one industry. For purposes of this restriction, gas, electric, water and
telephone utilities will each be treated as being a separate industry. This
restriction does not apply to obligations issued or guaranteed by the United
States government or its agencies or instrumentalities.

10
<PAGE>
5. Invest more than 5% of its total assets in securities of companies
having a record, together with predecessors, of less than three years of
continuous operation. This restriction shall not apply to any obligation of
the United States government, its agencies or instrumentalities.

6. Make short sales of securities.

7. Purchase securities on margin, except for such short-term loans as
are necessary for the clearance of purchases of portfolio securities.

8. Pledge its assets or assign or otherwise encumber them in excess of
4.5% of its net assets (taken at market value at the time of pledging) and
then only 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 margin for futures are
not deemed to be pledges of assets.

9. 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.

10. Purchase or sell real estate or interests therein, although it may
purchase securities of issuers which engage in real estate operations and
securities which are secured by real estate or interests therein.

11. Purchase or sell commodities except that the Fund may purchase
financial futures contracts and related options.

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

13. 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 invest in or sponsor such
programs.

14. Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets.

15. Invest for the purpose of exercising control or management of
another company.

16. Invest in securities of any company if, to the knowledge of the
Fund, any officer or director of the Fund or of the Investment Manager owns
more than 1/2 of 1% of the outstanding securities of such company, and such
officers and directors who own more than 1/2 of 1% own in the aggregate more
than 5% of the outstanding securities of such company.

17. Write, purchase or sell puts, calls, or combinations thereof except
options on futures contracts or options on debt securities.

18. Borrow money, except that the Fund may borrow for temporary
purposes in amounts not exceeding 5% (taken at the lower of cost or current
value) of its total assets (not including the amount borrowed).

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 DIRECTORS

The Board of Directors of the Fund oversees the management of the Fund but
does not itself manage the Fund. The Directors review various services provided
by or under the direction of the

11
<PAGE>
Investment Manager to ensure that the Fund's general investment policies and
programs are properly carried out. The Directors also conduct their review to
ensure that administrative services are provided to the Fund in a satisfactory
manner.

Under state law, the duties of the Directors are generally characterized as
a duty of loyalty and a duty of care. The duty of loyalty requires a Director to
exercise his or her powers in the interest of the Fund and not the Director's
own interest or the interest of another person or organization. A Director
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 Director reasonably believes to be
in the best interest of the Fund and its shareholders.

B. MANAGEMENT INFORMATION

DIRECTORS AND OFFICERS. The Board of the Fund consists of nine (9)
Directors. These same individuals also serve as directors or trustees for all of
the Morgan Stanley Dean Witter Funds. Six Directors (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" Directors. The other three Directors (the "Management Directors")
are affiliated with the Investment Manager.

The Directors and executive officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with the
Investment Manager, and with the Morgan Stanley Dean Witter Funds (there were 93
such Funds as of the calendar year ended December 31, 1999), are shown below.

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
--------------------------------------------- -----------------------------------------------
<S> <C>
Michael Bozic (59) .......................... Retired; Director or Trustee of the Morgan
Director Stanley Dean Witter Funds; formerly Vice
c/o Mayer, Brown & Platt Chairman of Kmart Corporation (since
Counsel to the Independent Directors December 1998-October 2000), Chairman and Chief
1675 Broadway Executive Officer of Levitz Furniture
New York, New York Corporation (November 1995-November 1998) and
President and Chief Executive Officer of Hills
Department Stores (May 1991-July 1995);
formerly variously Chairman, Chief Executive
Officer, President and Chief Operating Officer
(1987-1991) of the Sears Merchandise Group of
Sears, Roebuck and Co.; Director of Weirton
Steel Corporation.
Charles A. Fiumefreddo* (67) ................ Chairman, Director or Trustee and Chief
Chairman of the Board, Executive Officer of the Morgan Stanley Dean
Chief Executive Officer and Director Witter Funds; formerly Chairman, Chief
Two World Trade Center Executive Officer and Director of the
New York, New York Investment Manager, the Distributor and MSDW
Services Company; Executive Vice President and
Director of Dean Witter Reynolds; Chairman and
Director of the Transfer Agent; formerly
Director and/ or officer of various MSDW
subsidiaries (until June 1998).
</TABLE>

12
<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
Director 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
Director Stanley Dean Witter Funds; Director of The PMI
c/o Mayer, Brown & Platt Group, Inc. (private mortgage insurance);
Counsel to the Independent Directors 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
Director (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 Direc-
tor (1985-1997) of Dean Witter Reynolds.
</TABLE>

13
<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
Director 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 com-
Washington, D.C. mission; 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
Director 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
Director 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 vari-
ous MSDW subsidiaries.
John L. Schroeder (70) ...................... Retired; Chairman of the Derivatives Committee
Director and Director or Trustee of the Morgan Stanley
c/o Mayer, Brown & Platt Dean Witter Funds; Director of Citizens
Counsel to the Independent Directors 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).
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.
</TABLE>

14
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
--------------------------------------------- -----------------------------------------------
<S> <C>
Barry Fink (45) ............................. General Counsel of Asset Management of MSDW
Vice President, Secretary (since May 2000); Executive Vice President
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.
Peter M. Avelar (42) ........................ Senior Vice President of the Investment Manager
Vice President and Director of the High Yield Group of the
Two World Trade Center Investment Manager.
New York, New York
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 Directors who are "interested persons" of the Fund as defined by the
Investment Company Act.

In addition, RONALD E. ROBISON, Executive Vice President, Chief
Administrative Officer and Director of the Investment Manager and MSDW Services
Company, ROBERT S. GIAMBRONE, Senior Vice President of the Investment Manager,
MSDW Services Company, the Distributor and the Transfer Agent and Director of
the Transfer Agent, and JOSEPH J. MCALINDEN, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer Agent,
and JONATHAN R. PAGE, Director of the Money Market Group of the Investment
Manager and JAMES F. WILLISON, Director of the Tax-Exempt Fixed Income Group of
the Investment Manager, Senior Vice Presidents of the Investment Manager, are
Vice Presidents of the Fund.

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

INDEPENDENT DIRECTORS/TRUSTEES AND THE COMMITTEES. Law and regulation
establish both general guidelines and specific duties for the independent
directors/trustees. The Morgan Stanley Dean Witter Funds seek as independent
directors/trustees individuals of distinction and experience in business and
finance, government service or academia; these are people whose advice and
counsel are in demand by others and for whom there is often competition. To
accept a position on the Funds' boards, such individuals may reject other
attractive assignments because the Funds make substantial demands on their time.
All of the independent directors/trustees serve as members of the Audit
Committee. In addition, three of the directors/trustees, including two
independent directors/trustees, serve as members of the Derivatives Committee
and the Insurance Committee.

The independent directors/trustees are charged with recommending to the full
board approval of management, advisory and administration contracts, Rule 12b-1
plans and distribution and underwriting agreements; continually reviewing Fund
performance; checking on the pricing of portfolio securities, brokerage
commissions, transfer agent costs and performance, and trading among Funds in
the same complex; and approving fidelity bond and related insurance coverage and
allocations, as well as other

15
<PAGE>
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.

DIRECTOR AND OFFICER INDEMNIFICATION. The Fund's By-Laws provides that no
Director, officer, employee or agent of the Fund is liable to the Fund or to a
shareholder, nor is any Director, 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 By-Laws provides that a Director, 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 Director an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Directors, the Independent
Directors or Committees of the Board of Directors attended by the Director (the
Fund pays the Chairman of the Audit Committee an additional annual fee of $750,
and the Chairmen of the Derivatives and Insurance Committees additional annual
fees of $500). If a Board meeting and a meeting of the Independent Directors or
a Committee meeting, or a meeting of the Independent Directors 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 Directors for
travel and other out-of-pocket expenses incurred by them in connection with
attending such meetings. Directors 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
Director.

16
<PAGE>

The following table illustrates the compensation that the Fund paid to its
Independent Directors for the fiscal year ended August 31, 2000.

FUND COMPENSATION

<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT DIRECTOR FROM THE FUND
---------------------------- -------------
<S> <C>
Michael Bozic............................................... $1,500
Edwin J. Garn............................................... 1,550
Wayne E. Hedien............................................. 1,550
Dr. Manuel H. Johnson....................................... 2,300
Michael E. Nugent........................................... 2,050
John L. Schroeder........................................... 2,000
</TABLE>

The following table illustrates the compensation paid to the Fund's
Independent Directors 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>
<CAPTION>
TOTAL CASH
COMPENSATION
FOR SERVICES TO
93 MORGAN
STANLEY DEAN
NAME OF INDEPENDENT DIRECTOR 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, including the Fund, have adopted a retirement program
under which an independent director/ trustee who retires after serving for at
least five years (or such lesser period as may be determined by the board) as an
independent director/trustee of any Morgan Stanley Dean Witter Fund that has
adopted the retirement program (each such Fund referred to as an "Adopting Fund"
and each such director referred to as an "Eligible Director") 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 Director 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 Director for service to the Adopting Fund
in the five year period prior to the date of the Eligible Director'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 Director may elect alternative payments of his or her retirement
benefits based upon the combined life expectancy of the Eligible Director
and his or her spouse on the date of such Eligible Director's retirement. In
addition, the Eligible Director 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 Director and spouse, will be the actuarial equivalent of the
Regular Benefit.

17
<PAGE>

The following table illustrates the retirement benefits accrued to the
Fund's Independent Directors by the Fund for the fiscal year ended August 31,
2000 and by the 55 Morgan Stanley Dean Witter Funds (including the Fund) for the
calendar year ended December 31, 1999, and the estimated retirement benefits for
the Independent Directors, to commence upon their retirement, from the Fund as
of August 31, 2000 and from the 55 Morgan Stanley Dean Witter Funds as of
calendar year ended December 31, 1999.

RETIREMENT BENEFITS FROM THE FUND AND ALL MORGAN STANLEY DEAN WITTER FUNDS

<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS
---------------------------- ESTIMATED ANNUAL
ESTIMATED RETIREMENT BENEFITS BENEFITS
CREDITED ACCRUED AS EXPENSES UPON RETIREMENT(2)
YEARS ESTIMATED --------------------- ---------------------
OF SERVICE AT PERCENTAGE OF BY ALL FROM FROM ALL
RETIREMENT ELIGIBLE BY THE ADOPTING THE ADOPTING
NAME OF INDEPENDENT DIRECTOR (MAXIMUM 10) COMPENSATION FUND FUNDS FUND FUNDS
---------------------------- ------------- ------------- ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Michael Bozic............. 10 60.44% $ 361 $20,933 $ 907 $50,588
Edwin J. Garn............. 10 60.44 497 31,737 909 50,675
Wayne E. Hedien........... 9 51.37 684 39,566 771 43,000
Dr. Manuel H. Johnson..... 10 60.44 324 13,129 1,360 75,520
Michael E. Nugent......... 10 60.44 540 23,175 1,209 67,209
John L. Schroeder......... 8 50.37 1,023 41,558 960 52,994
</TABLE>

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

(2) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Director's elections described in Footnote (1) on
page 17.

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

The following owned 5% or more of the outstanding Class D shares of the Fund
as of October 10, 2000: Mellon Bank N.A., Mutual Funds, P.O. Box 3198,
Pittsburgh, PA 15230, as trustee of the Morgan Stanley Dean Witter START Plan,
an employee benefit plan established under Sections 401(a) and 401(k) of the
Internal Revenue Code for the benefit of certain employees of MSDW and its
subsidiaries--11.072%.

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
Directors as a group was less than 1% of the Fund's shares of common stock
outstanding.

V. INVESTMENT MANAGEMENT AND OTHER SERVICES
--------------------------------------------------------------------------------

A. INVESTMENT MANAGER

The Investment Manager to the Fund is Morgan Stanley Dean Witter Advisors
Inc., a Delaware corporation, whose address is Two World Trade Center, New York,
NY 10048. The Investment Manager is a wholly-owned subsidiary of MSDW, a
Delaware corporation. MSDW is a preeminent global financial services firm that
maintains leading market positions in each of its three primary businesses:
securities, asset management and credit services.

Pursuant to an Investment Management Agreement (the "Management Agreement")
with the Investment Manager, the Fund has retained the Investment Manager to
provide administrative services and manage the investment of the Fund's assets,
including the placing of orders for the purchase and sale of portfolio
securities. The Fund pays the Investment Manager monthly compensation calculated
daily by applying the following annual rates to the net assets of the Fund
determined as of the close of each business day: 0.50% to the portion of daily
net assets not exceeding $500 million; 0.425% to the portion of daily net assets
exceeding $500 million but not exceeding $750 million; 0.375% to the portion of
daily net assets exceeding $750 million but not exceeding $1 billion; 0.35% to
the portion of daily net assets exceeding $1 billion but not exceeding
$2 billion; 0.325% to the portion of daily net assets exceeding $2 billion but
not exceeding $3 billion; and 0.30% to the portion of daily net assets exceeding

18
<PAGE>

$3 billion. The management fee is allocated among the Classes pro rata based on
the net assets of the Fund attributable to each Class. For the fiscal years
ended August 31, 1998, 1999 and 2000, the Investment Manager accrued total
compensation under the Management Agreement in the amounts of $7,756,546,
$9,355,335 and $8,439,728, 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 principal underwriter is the Distributor (which has the same
address as the Investment Manager). In this capacity, the Fund's shares are
distributed by the Distributor. The Distributor has entered into a selected
dealer agreement with Dean Witter Reynolds, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into similar agreements with other selected broker-dealers. The Distributor, a
Delaware corporation, is a wholly-owned subsidiary of MSDW.

The Distributor bears all expenses it may incur in providing services under
the Distribution Agreement. These expenses include the payment of commissions
for sales of the Fund's shares and incentive compensation to Financial Advisors,
the cost of educational and/or business-related trips, and educational and/or
promotional and business-related expenses. The Distributor also pays certain
expenses in connection with the distribution of the Fund's shares, including the
costs of preparing, printing and distributing advertising or promotional
materials, and the costs of printing and distributing prospectuses and
supplements thereto used in connection with the offering and sale of the Fund's
shares. The Fund bears the costs of initial typesetting, printing and
distribution of prospectuses and supplements thereto to shareholders. The Fund
also bears the costs of registering the Fund and its shares under federal and
state securities laws and pays filing fees in accordance with state securities
laws.

The Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. Under the
Distribution Agreement, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment or
mistake of law or for any act or omission or for any losses sustained by the
Fund or its shareholders.

C. SERVICES PROVIDED BY THE INVESTMENT MANAGER

The Investment Manager manages the investment of the Fund's assets,
including the placing of orders for the purchase and sale of portfolio
securities. The Investment Manager obtains and evaluates the information and
advice relating to the economy, securities markets, and specific securities as
it considers necessary or useful to continuously manage the assets of the Fund
in a manner consistent with its investment objective.

Under the terms of the Management Agreement, in addition to managing the
Fund's investments, the Investment Manager maintains certain of the Fund's books
and records and furnishes, at its own expense, the office space, facilities,
equipment, clerical help, bookkeeping and certain legal services as the Fund may
reasonably require in the conduct of its business, including the preparation of
prospectuses, proxy statements and reports required to be filed with federal and
state securities commissions (except insofar as the participation or assistance
of independent 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.

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

19
<PAGE>

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 Directors'
meetings and of preparing, printing and mailing of proxy statements and reports
to shareholders; fees and travel expenses of Directors 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 Directors 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 Directors) 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 Directors.

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 Directors, including a majority of
the Independent Directors; provided that in either event such continuance is
approved annually by the vote of a majority of the Directors, including a
majority of the Independent Directors.

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%, 0.75% and 0.85% 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

20
<PAGE>

Dean Witter Reynolds received the proceeds of CDSCs and FSCs, for the last three
fiscal periods ended August 31, in approximate amounts as provided in the table
below (the Distributor did not retain any of these amounts).

<TABLE>
<CAPTION>
2000 1999 1998
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Class A....................... FSCs:(1) $ 187,035 FSCs:(1) $ 465,568 FSCs:(1) $ 542,700
CDSCs: $ 26,734 CDSCs: $ 52,049 CDSCs: $ 4,765
Class B....................... CDSCs: $4,887,041 CDSCs: $4,084,168 CDSCs: $2,485,044
Class C....................... CDSCs: $ 86,304 CDSCs: $ 88,261 CDSCs: $ 62,533
</TABLE>

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

(1) FSCs apply to Class A only.

The Distributor has informed the Fund that the entire fee payable by
Class A and a portion of the fees payable by each of Class B and Class C each
year pursuant to the Plan equal to 0.20% of the average daily net assets of
Class B and 0.25% of the average daily net assets of Class C 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 Directors 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. During the fiscal year ended August 31, 2000,
Class A, Class B and Class C shares of the Fund accrued amounts payable to the
Distributor under the Plan of $135,074, $12,574,558 and $840,794, respectively,
which amounts are equal to 0.20%, 0.75% and 0.85% of the average daily net
assets of Class A, Class B and Class C, respectively.

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 4.0% of the
amount sold (except as provided in the following sentence) and an annual
residual commission, currently a residual of up to 0.20% 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 4.0% of the amount
sold (except as provided in the following sentence) and an annual residual
commission, currently a residual of up to 0.20% 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 0.85% of the current
value of the respective accounts for which they are the Financial Advisors of
record.

21
<PAGE>

With respect to Class D shares other than shares held by participants in the
Investment Manager's mutual fund asset allocation program, the Investment
Manager compensates Dean Witter Reynolds' 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).

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. 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 0.85%, 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 other than expenses representing a gross
sales credit or a residual to Financial Advisors and other

22
<PAGE>
authorized financial representatives, such amounts shall be determined at the
beginning of each calendar quarter by the Directors, including, a majority of
the Independent Directors. 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 Directors 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 Directors
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 August 31, 2000 to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $108,767,000 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) 3.03% ($3,296,135)--advertising and promotional expenses; (ii) 0.05%
($51,223)--printing of prospectuses for distribution to other than current
shareholders; and (iii) 96.92% ($105,419,642)--other expenses, including the
gross sales credit and the carrying charge, of which 7.38% ($7,782,621)
represents carrying charges, 23.89% ($25,189,156) 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, 33.81% ($35,654,217) represents overhead and other branch
office distribution-related expenses, and 34.90% ($36,793,648) represents excess
distribution expenses of Dean Witter High Income Securities, the net assets of
which were combined with those of the Fund on November 10, 1997 pursuant to an
Agreement and Plan of Reorganization. The amount accrued by Class A and a
portion of the amounts accrued by Class C under the Plan during the fiscal year
ended August 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 $59,549,106 as of August 31, 2000, which was
equal to 4.31% 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 Directors 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 0.85% 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

23
<PAGE>

sales commission credited to Morgan Stanley Dean Witter Financial Advisors and
other authorized financial representatives at the time of sale totaled $40,404
in the case of Class C at December 31, 1999 (end of the calendar year), which
was equal to 0.04% 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 Director 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 Directors, including a majority of the Independent
Directors, consider whether the Plan should be continued. Prior to approving the
last continuation of the Plan, the Directors 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 Directors 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 Directors, including
each of the Independent Directors, 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 Directors'
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 Directors 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 Directors 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 Directors shall be committed to the discretion of the Independent
Directors.

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 Bank of New York, 100 Church Street, New York, NY 10007 is the Custodian
of the Fund's assets. Any of the Fund's cash balances with the Custodian in
excess of $100,000 are unprotected by federal deposit insurance. These balances
may, at times, be substantial.

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<PAGE>

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, 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. CODE OF ETHICS

The Fund, the Investment Manager and the Distributor have each adopted a
Code of Ethics pursuant to Rule 17j-1 under the Investment Company Act. The
Codes of Ethics are designed to detect and prevent improper personal trading.
The Codes of Ethics permit personnel subject to the Codes to invest in
securities, including securities that may be purchased, sold or held by the
Fund, subject to a number of restrictions and controls including prohibitions
against purchases of securities in an Initial Public Offering and a preclearance
requirement with respect to personal securities transactions.

VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
--------------------------------------------------------------------------------

A. BROKERAGE TRANSACTIONS

Subject to the general supervision of the Directors, the Investment Manager
is responsible for decisions to buy and sell securities for the Fund, the
selection of brokers and dealers to effect the transactions, and the negotiation
of brokerage commissions, if any. Purchases and sales of securities on a stock
exchange are effected through brokers who charge a commission for their
services. In the over-the-counter market, securities are generally traded on a
"net" basis with dealers acting as principal for their own accounts without a
stated commission, although the price of the security usually includes a profit
to the dealer. The Fund also expects that securities will be purchased at times
in underwritten offerings where the price includes a fixed amount of
compensation, generally referred to as the underwriter's concession or discount.
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 fiscal years ended August 31, 1998, 1999 and 2000, the Fund paid a
total of $4,956, $6,672, and $0 respectively, in brokerage commissions.

B. COMMISSIONS

Pursuant to an order of the SEC, the Fund may effect principal transactions
in certain money market instruments with Dean Witter Reynolds. The Fund will
limit its transactions with Dean Witter Reynolds to U.S. Government and
government agency securities, bank money instruments (i.e., certificates of
deposit and bankers' acceptances) and commercial paper. The transactions will be
effected with Dean Witter Reynolds only when the price available from Dean
Witter Reynolds is better than that available from other dealers.

During the fiscal years ended August 31, 1998, 1999 and 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

25
<PAGE>
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 Directors, including the Independent
Directors, 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.

The Fund did not pay any brokerage commissions to any affiliated brokers or
dealers during the fiscal years ended August 31, 1998, 1999 and 2000.

C. BROKERAGE SELECTION

The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with this
policy, when securities transactions are effected on a stock exchange, the
Fund's policy is to pay commissions which are considered fair and reasonable
without necessarily determining that the lowest possible commissions are paid in
all circumstances. The Fund believes that a requirement always to seek the
lowest possible commission cost could impede effective portfolio management and
preclude the Fund and the Investment Manager from obtaining a high quality of
brokerage and research services. In seeking to determine the reasonableness of
brokerage commissions paid in any transaction, the Investment Manager relies
upon its experience and knowledge regarding commissions generally charged by
various brokers and on its judgment in evaluating the brokerage and research
services received from the broker effecting the transaction. These
determinations are necessarily subjective and imprecise, as in most cases an
exact dollar value for those services is not ascertainable.

In seeking to implement the Fund's policies, the Investment Manager effects
transactions with those brokers and dealers who the Investment Manager believes
provide the most favorable prices and are capable of providing efficient
executions. If the Investment Manager believes the prices and executions are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or the Investment Manager. The services
may include, but are not limited to, any one or more of the following:
information as to the availability of securities for purchase or sale;
statistical or factual information or opinions pertaining to investment; wire
services; and appraisals or evaluations of portfolio securities. The information
and services received by the Investment Manager from brokers and dealers may be
of benefit to the Investment Manager in the management of accounts of some of
its other clients and may not in all cases benefit the Fund directly.

The Investment Manager currently serves as investment manager to a number of
clients, including other investment companies, and may in the future act as
investment manager or advisor to others. It is the practice of the Investment
Manager to cause purchase and sale transactions to be allocated among the Fund
and others whose assets it manages in such manner as it deems equitable. In
making such allocations among the Fund and other client accounts, various
factors may be considered, including the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held and the opinions of the persons responsible for managing the
portfolios of the Fund and other client accounts. In the case of certain initial
and secondary public offerings, the Investment Manager utilizes a pro rata
allocation process based on the size of the 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 August 31, 2000, the Fund did not pay any
brokerage commissions to brokers because of research services provided.

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<PAGE>
E. REGULAR BROKER-DEALERS

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

VII. CAPITAL STOCK AND OTHER SECURITIES
--------------------------------------------------------------------------------

The Fund is authorized to issue 2 billion shares of common stock of $0.01
par value for each Class. Shares of the Fund, when issued, are fully paid,
non-assessable, fully transferrable and redeemable at the option of the holder.
Except for agreements entered into by the Fund in its ordinary course of
business within the limitations of the Fund's fundamental investment policies
(which may be modified only by shareholder vote), the Fund will not issue any
securities other than common stock.

All shares of common stock 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, as discussed
herein, Class A, Class B and Class C bear the expenses related to the
distribution of their respective shares.

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
Directors may call special meetings of shareholders for action by shareholder
vote as may be required by the Investment Company Act or the Fund's By-Laws.
Under certain circumstances, the Directors may be removed by action of the
Directors. In addition, under certain circumstances, the shareholders may call a
meeting to remove Directors and the Fund is required to provide assistance in
communicating with shareholders about such a meeting. The voting rights of
shareholders are not cumulative, so that holders of more than 50 percent of the
shares voting can, if they choose, elect all Directors being selected, while the
holders of the remaining shares would be unable to elect any Directors.

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.

27
<PAGE>
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.

B. OFFERING PRICE

The Fund's Class B, Class C and Class D shares are offered at net asset
value per share and the Class A shares are offered at net asset value per share
plus any applicable FSC which is distributed among the Fund's Distributor, Dean
Witter Reynolds and other authorized dealers as described in Section "V.
Investment Management and Other Services -- E. Rule 12b-1 Plan." The price of
Fund shares, called "net asset value," is based on the value of the Fund's
portfolio securities. Net asset value per share of each Class is calculated by
dividing the value of the portion of the Fund's securities and other assets
attributable to that Class, less the liabilities attributable to that Class, by
the number of shares of that Class outstanding. The assets of each Class of
shares are invested in a single portfolio. The net asset value of each Class,
however, will differ because the Classes have different ongoing fees.

In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange, 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 Directors, and (2) all other portfolio securities
for which over-the-counter market quotations are readily available are valued at
the latest bid price. When market quotations are not readily available,
including circumstances under which it is determined by the Investment Manager
that sale or bid prices are not reflective of a security's market value,
portfolio securities are valued at their fair value as determined in good faith
under procedures established by and under the general supervision of the Fund's
Directors. 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
Directors.

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
closing bid and asked prices. Unlisted options on debt securities are valued at
the mean between their latest bid and asked price. Futures are valued at the
latest sale price on the commodities exchange on which they trade unless the
Directors determine that such price does not reflect their fair value, in which
case they will be value at their fair market value as determined by the
Directors. All other securities and other assets are valued at their fair value
as determined in good faith under procedures established by and under the
supervision of the Directors.

Certain of the Fund's portfolio securities may be valued by an outside
pricing service approved by the Fund's Directors. 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.

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

28
<PAGE>
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
Directors.

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 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. Gains or losses on the sale of securities with a tax holding period of one
year or less will be short-term gains or losses.

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. In
addition, if the Fund invests in an equity security of a non-U.S. corporation
classified as a "passive foreign investment company" for U.S. tax purposes, the
application of certain technical tax provisions applying to investments in such
companies may result in the Fund being required to accrue income in respect of
the security without any receipt of cash attributable to such income. To the
extent that the Fund invests in such securities, it would be required to pay out
such accrued discount as an income distribution in each year in order to avoid
taxation at the Fund level. Such distributions will be made from the available
cash of the Fund or by liquidation of portfolio securities if necessary. If a
distribution of cash necessitates the liquidation of portfolio securities, the
Investment Manager will select which securities to sell. The Fund may realize a
gain or loss from such sales. In the event the Fund realizes net capital gains
from such transactions, its shareholders may receive a larger capital gain
distribution, if any, than they would in the absence of such transactions.

TAXATION OF DIVIDENDS AND DISTRIBUTIONS. Shareholders normally will have to
pay federal income taxes, and any state and/or local income taxes, on the
dividends and other distributions they receive from the Fund. Such dividends and
distributions, to the extent that they are derived from net investment income or
short-term capital gains, are taxable to the shareholder as ordinary income
regardless of whether the shareholder receives such payments in additional
shares or in cash.

29
<PAGE>

Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash. The maximum tax rate on long-term capital gains
realized by non-corporate shareholders is 20%.

Shareholders are generally taxed on any ordinary dividend or capital gain
distributions from the Fund in the year they are actually distributed. However,
if any such dividends or distributions are declared in October, November or
December and paid in January then such amounts will be treated for tax purposes
as received by the shareholders on December 31, to shareholders of record of
such month.

Subject to certain exceptions, a corporate shareholder may be eligible for a
70% dividends received deduction to the extent that the Fund earns and
distributes qualifying dividends from its investments. Distributions of net
capital gains by the Fund will not be eligible for the dividends received
deduction.

Shareholders who are not citizens or residents of the United States and
certain foreign entities may be subject to withholding of United States tax on
distributions made by the Fund of investment income and short-term capital
gains.

After the end of each calendar year, shareholders will be sent information
on their dividends and capital gain distributions for tax purposes, including
the portion taxable as ordinary income, 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 will, for tax purposes, generally result in short-term gains or
losses and those held for more than one year generally result in long-term gain
or loss. Under current law, the maximum tax rate on long-term capital gains
realized by non-corporate shareholders is 20%. Any loss realized by shareholders
upon a sale or redemption of shares within six months of the date of their
purchase will be treated as a long-term capital loss to the extent of any
distributions of net long-term capital gains with respect to such shares during
the six-month period.

Gain or loss on the sale or redemption of shares in the Fund is measured by
the difference between the amount received and the tax basis of the shares.
Shareholders should keep records of investments made (including shares acquired
through reinvestment of dividends and distributions) so they can compute the tax
basis of their shares. Under certain circumstances a shareholder may compute and
use an average cost basis in determining the gain or loss on the sale or
redemption of shares.

Exchanges of Fund shares for shares of another fund, including shares of
other 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.

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<PAGE>
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."

XI. CALCULATION OF PERFORMANCE DATA
--------------------------------------------------------------------------------

Prior to July 28, 1997, the Fund offered only one Class of shares subject to
a maximum sales charge of 5.50% and no 12b-1 fee. Because the distribution
arrangement for Class A most closely resembles the distribution arrangement
applicable prior to the implementation of multiple classes (i.e., Class A is
sold with a front-end sales charge), historical performance information has been
restated to reflect (i) the actual maximum sales charge applicable to Class A
(i.e., 4.25%) and (ii) the ongoing 12b-1 fee applicable to Class A Shares.
Furthermore, because all shares of the Fund held prior to July 28, 1997 have
been designated Class D shares, the Fund's historical performance has also been
restated to reflect the absence of any sales charge in the case of Class D
shares. Also set forth below is the actual performance of Class A, Class B and
Class C as of their last fiscal year.

From time to time, the Fund may quote its "yield" and/or its "total return"
in advertisements and sales literature. These figures are computed separately
for Class A, Class B, Class C and Class D shares. Yield is calculated for any
30-day period as follows: the amount of interest income for each security in the
Fund's portfolio is determined in accordance with regulatory requirements; the
total for the entire portfolio constitutes the Fund's gross income for the
period. Expenses accrued during the period are subtracted to arrive at "net
investment income" of each Class. The resulting amount is divided by the product
of the maximum offering price per share on the last day of the period multiplied
by the average number of shares of the applicable Class outstanding during the
period that were entitled to dividends. This amount is added to 1 and raised to
the sixth power. 1 is then subtracted from the result and the difference is
multiplied by 2 to arrive at the annualized yield. The yields for the 30-day
period ended August 31, 2000, calculated pursuant to this formula, were 18.26%
for Class A, 18.55% for Class B, 18.45% for Class C and 19.38% for Class D.

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. Based on this calculation, the
average annual total returns of Class A and Class D for the fiscal year ended
August 31, 2000 were -12.75% and -8.69%, respectively; the average annual total
returns for Class A and Class D for the five year period ended August 31, 2000
were 2.47% and 3.60%, respectively; and the average annual total returns for
Class A and Class D for the ten year period ended August 31, 2000 were 8.14% and
8.87%, respectively. The average annual total returns of Class B for the fiscal
year ended August 31, 2000 and for the period July 28, 1997 (inception of the
Class) through

31
<PAGE>

August 31, 2000 were -13.33% and -3.16%, respectively. The average annual total
returns of Class C for the fiscal year ended August 31, 2000 and for the period
July 28, 1997 (inception of the Class) through August 31, 2000 were -10.45% and
-2.84%, respectively.

In addition, the Fund may advertise its total return for each Class over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. These calculations may or may not reflect the
imposition of the maximum front-end sales charge for Class A or the deduction of
the CDSC for each of Class B and Class C which, if reflected, would reduce the
performance quoted. For example, the average annual total return of the Fund may
be calculated in the manner described above, but without deduction for any
applicable sales charge. Based on the foregoing calculation, the Fund's average
annual total return for Class A shares for the year ended August 31, 2000 was
-8.88%, the average annual total return for the five years ended August 31, 2000
was 3.37%, and the average annual total return for the ten years ended
August 31, 2000 was 8.61%. Because the Class D shares are not subject to any
sales charge, the Fund would only advertise average annual returns as calculated
in the previous paragraph. The average annual total returns of Class B for the
fiscal year ended August 31, 2000 and for the period July 28, 1997 (inception of
the Class) through August 31, 2000 were -9.39% and -2.73%, respectively. The
average annual total returns of Class C for the fiscal year ended August 31,
2000 and for the period July 28, 1997 (inception of the Class) through
August 31, 2000 were -9.66% and -2.84%, respectively.

In addition, the Fund may compute its aggregate total return for each Class
for specified periods by determining the aggregate percentage rate which will
result in the ending value of a hypothetical $1,000 investment made at the
beginning of the period. For the purpose of this calculation, it is assumed that
all dividends and distributions are reinvested. The formula for computing
aggregated 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 this calculation, the total returns
for both Class A and Class D for the one year period ended August 31, 2000 were
-8.88% and -8.69%, respectively; the total returns for the five year period
ended August 31, 2000 were 18.00% and 19.34%, respectively; and the total
returns for the ten year period ended August 31, 2000 were 128.40% and 133.85%,
respectively. The total returns of Class B for the fiscal year ended August 31,
2000 and for the period July 28, 1997 (inception of the Class) through
August 31, 2000 were -9.39% and -8.19%, respectively. The total returns of
Class C for the fiscal year ended August 31, 2000 and for the period July 28,
1997 (inception of the Class) through August 31, 2000 were -9.66% and -8.51%,
respectively.

The Fund may also advertise the growth of hypothetical 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 multiplying by
$9,575, $48,250 and $97,250 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 (or declined) to the following amounts
at August 31, 2000:

<TABLE>
<CAPTION>
INVESTMENT AT INCEPTION OF:
INCEPTION --------------------------------
CLASS DATE: $10,000 $50,000 $100,000
----- --------- -------- --------- ---------
<S> <C> <C> <C> <C>
Class A................................ 9/26/79 $46,937 $236,526 $476,729
Class B................................ 7/28/97 9,181 45,905 91,810
Class C................................ 7/28/97 9,149 45,745 91,490
Class D................................ 9/26/79 51,572 257,860 515,720
</TABLE>

For purposes of restating the performance of Class A, the inception date set
forth in the above table is the inception date of the Fund. However, Class A did
not actually commence operation until July 28, 1997.

32
<PAGE>
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
August 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.

33
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (95.1%)
ADVERTISING/MARKETING SERVICES (0.5%)
$ 10,000 Interep National Radio Sales Inc........ 10.00 % 07/01/08 $ 8,900,000
--------------
AEROSPACE & DEFENSE (1.2%)
15,000 Loral Space & Communications Ltd........ 9.50 01/15/06 11,456,250
12,500 Sabreliner Corp. - 144A*................ 11.00 06/15/08 10,343,750
--------------
21,800,000
--------------
BEVERAGES: NON-ALCOHOLIC (0.4%)
10,000 Sparkling Spring Water (Canada)......... 11.50 11/15/07 7,800,000
--------------
BROADCAST/MEDIA (0.8%)
5,000 Jones International Networks Ltd........ 11.75 07/01/05 5,000,000
10,000 Tri-State Outdoor Media Group, Inc...... 11.00 05/15/08 8,650,000
--------------
13,650,000
--------------
BROADCASTING (2.4%)
10,000 Capstar Broadcasting Partners, Inc...... 12.75++ 02/01/09 9,400,000
6,000 Cumulus Media Inc....................... 10.375 07/01/08 5,460,000
14,000 STC Broadcasting, Inc................... 11.00 03/15/07 13,860,000
14,555 XM Satellite Radio Inc. (Units)++....... 14.00 03/15/10 13,390,600
--------------
42,110,600
--------------
CABLE/SATELLITE TV (4.0%)
50,687 Australis Holdings Property Ltd.
(Australia) (a)....................... 15.00++ 11/01/02 506,870
4,404 Australis Media Ltd. - 144A* (Australia)
(a)................................... 0.00 11/01/00 602,117
8,212 Classic Cable Inc....................... 10.50 03/01/10 6,815,960
19,000 Diva Systems Corp. (Series B)........... 12.625++ 03/01/08 7,790,000
9,955 FrontierVision Operating Partners,
L.P................................... 11.00 10/15/06 10,029,662
10,000 James Cable Partners L.P. (Series B).... 10.75 08/15/04 8,700,000
44,400 Knology Holdings, Inc................... 11.875++ 10/15/07 22,200,000
15,000 Ono Finance PLC (United Kingdom)........ 13.00 05/01/09 14,250,000
--------------
70,894,609
--------------
CASINO/GAMING (1.5%)
22,000 Aladdin Gaming Holdings/Capital Corp.
(Series B)............................ 13.50++ 03/01/10 12,320,000
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
34
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 20,500 Fitzgeralds Gaming Corp. (Series B)
(b)................................... 12.25 % 12/15/04 $ 11,275,000
3,850 Riviera Holdings Corp................... 10.00 08/15/04 3,542,000
--------------
27,137,000
--------------
CELLULAR TELEPHONE (4.8%)
8,000 Dobson Communications Corp. - 144A*..... 10.875 07/01/10 8,000,000
10,500 Dobson/Sygnet Communications............ 12.25 12/15/08 10,710,000
29,800 Dolphin Telecom PLC (United Kingdom)
(Series B)............................ 14.00++ 05/15/09 5,960,000
25,025 Dolphin Telecom PLC (United Kingdom).... 11.50++ 06/01/08 6,256,250
13,000 Nextel Communications, Inc.............. 10.65++ 09/15/07 10,497,500
11,050 Nextel Partners Inc..................... 14.00++ 02/01/09 7,735,000
13,000 Tritel PCS Inc.......................... 12.75++ 05/15/09 9,100,000
13,099 Triton PCS Inc.......................... 11.00++ 05/01/08 9,889,745
5,000 Voicestream Wireless Corp............... 11.50 09/15/09 5,600,000
10,000 Voicestream Wireless Corp............... 10.375 11/15/09 10,800,000
--------------
84,548,495
--------------
CHEMICALS: SPECIALTY (0.9%)
10,000 Lyondell Chemical Co. (Series B)........ 9.875 05/01/07 10,200,000
6,000 Octel Developments PLC (United
Kingdom).............................. 10.00 05/01/06 5,670,000
--------------
15,870,000
--------------
COMMERCIAL PRINTING/FORMS (0.1%)
13,000 Premier Graphics Inc. (b)............... 11.50 12/01/05 910,000
--------------
CONSUMER/BUSINESS SERVICES (2.9%)
28,000 Anacomp, Inc. (Series B)................ 10.875 04/01/04 6,440,000
5,900 Anacomp, Inc. (Series D)................ 10.875 04/01/04 1,357,000
13,000 Comforce Operating, Inc................. 12.00 12/01/07 7,020,000
23,500 MDC Communications Corp. (Canada)....... 10.50 12/01/06 22,560,000
15,200 Muzak LLC............................... 9.875 03/15/09 13,300,000
--------------
50,677,000
--------------
CONTAINERS/PACKAGING (3.5%)
11,900 Berry Plastics Corp..................... 12.25 04/15/04 11,483,500
13,250 Berry Plastics Corp..................... 11.00 07/15/07 12,057,500
27,081 Envirodyne Industries, Inc.............. 10.25 12/01/01 18,685,890
10,000 LLS Corp................................ 11.625 08/01/09 9,450,000
14,715 Packaging Resources, Inc. (b)........... 11.625 05/01/03 10,300,500
--------------
61,977,390
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
35
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
DIVERSIFIED MANUFACTURING (4.4%)
$ 19,650 Eagle-Picher Industries, Inc............ 9.375% 03/01/08 $ 16,309,500
6,200 Jordan Industries, Inc. (Class D)....... 10.375 08/01/07 5,828,000
20,000 Jordan Industries, Inc. (Series B)...... 10.375 08/01/07 18,800,000
57,338 Jordan Industries, Inc. (Series B)...... 11.75++ 04/01/09 37,269,700
--------------
78,207,200
--------------
DRUGSTORE CHAINS (1.1%)
10,000 Community Distributors, Inc.
(Series B)............................ 10.25 10/15/04 7,800,000
2,000 Rite Aid Corp........................... 6.875 08/15/13 800,000
20,675 Rite Aid Corp........................... 7.70 02/15/27 8,270,000
2,000 Rite Aid Corp. - 144A*.................. 6.625 12/15/08 820,000
5,060 Rite Aid Corp. - 144A*.................. 7.375 12/15/28 2,024,000
--------------
19,714,000
--------------
ELECTRONIC DISTRIBUTORS (0.0%)
20,000 CHS Electronics, Inc. (a) (b)........... 9.875 04/15/05 400,000
--------------
ELECTRONIC EQUIPMENT/INSTRUMENTS (1.0%)
15,450 High Voltage Engineering, Inc........... 10.75 08/15/04 10,660,500
8,000 Telecommunication Techniques Co......... 9.75 05/15/08 7,520,000
--------------
18,180,500
--------------
ELECTRONICS/APPLIANCES (1.3%)
84,930 International Semi-Tech
Microelectronics, Inc. (Canada) (a)
(b)................................... 11.50 08/15/03 849,300
10,000 Salton Inc.............................. 10.75 12/15/05 9,775,000
13,000 Windmere-Durable Holdings, Inc.......... 10.00 07/31/08 12,545,000
--------------
23,169,300
--------------
ENGINEERING & CONSTRUCTION (0.8%)
5,000 Metromedia Fiber Network, Inc........... 10.00 12/15/09 4,925,000
10,000 Metromedia Fiber Network, Inc.
(Series B)............................ 10.00 11/15/08 9,850,000
--------------
14,775,000
--------------
ENTERTAINMENT & LEISURE (0.1%)
10,850 AMF Bowling Worldwide Inc.
(Series B)............................ 10.875 03/15/06 2,278,500
--------------
ENVIRONMENTAL SERVICES (1.1%)
22,000 Allied Waste North America, Inc.
(Series B)............................ 10.00 08/01/09 19,745,000
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
36
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FINANCE/RENTAL/LEASING (0.3%)
$ 9,000 Neff Corp............................... 10.25 % 06/01/08 $ 5,040,000
--------------
FOOD DISTRIBUTORS (2.4%)
9,965 Fleming Companies, Inc. (Series B)...... 10.50 12/01/04 9,068,150
28,275 Fleming Companies, Inc. (Series B)...... 10.625 07/31/07 23,609,625
10,000 Volume Services America, Inc............ 11.25 03/01/09 9,150,000
--------------
41,827,775
--------------
FOOD RETAIL (1.0%)
8,062 Eagle Food Centers Inc.................. 11.00 04/15/05 5,240,462
16,500 Pueblo Xtra International, Inc.......... 9.50 08/01/03 7,755,000
9,748 Pueblo Xtra International, Inc.
(Series C)............................ 9.50 08/01/03 4,581,560
--------------
17,577,022
--------------
FOOD: SPECIALTY/CANDY (1.6%)
200,598 SFAC New Holdings Inc. (c).............. 13.00++ 06/15/09 28,083,671
--------------
HOTELS/RESORTS/CRUISELINES (0.3%)
13,000 Epic Resorts LLC (Series B)............. 13.00 06/15/05 5,720,000
--------------
HOUSEHOLD/PERSONAL CARE (0.5%)
8,868 J.B. Williams Holdings, Inc............. 12.00 03/01/04 8,779,320
--------------
INDUSTRIAL SPECIALTIES (2.3%)
10,000 Cabot Safety Corp....................... 12.50 07/15/05 10,200,000
14,500 Indesco International, Inc.............. 9.75 04/15/08 5,437,500
15,963 International Wire Group, Inc........... 11.75 06/01/05 16,042,815
10,500 Outsourcing Services Group, Inc.
(Series B)............................ 10.875 03/01/06 8,400,000
--------------
40,080,315
--------------
INTERNET SOFTWARE/SERVICES (4.5%)
12,500 Colo.com - 144A* (Units)++.............. 13.875 03/15/10 12,750,000
13,300 Cybernet Internet Services Inc.......... 14.00 07/01/09 5,719,000
31,600 Globix Corp............................. 12.50 02/01/10 23,700,000
11,000 PSINet, Inc............................. 10.50 12/01/06 9,460,000
14,500 PSINet, Inc............................. 11.00 08/01/09 12,470,000
3,120 Verio Inc............................... 10.375 04/01/05 3,433,685
5,000 Verio Inc............................... 11.25 12/01/08 5,884,550
5,000 Verio Inc............................... 10.625 11/15/09 5,908,700
--------------
79,325,935
--------------
MEDICAL SPECIALTIES (0.6%)
26,500 MEDIQ/PRN Life Support Services, Inc.
(b)................................... 11.00 06/01/08 795,000
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
37
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 3,000 Universal Hospital Services, Inc.
(Issued 01/26/99)..................... 10.25 % 03/01/08 $ 2,070,000
10,000 Universal Hospital Services, Inc.
(Issued 02/25/98)..................... 10.25 03/01/08 6,900,000
--------------
9,765,000
--------------
MEDICAL/NURSING SERVICES (1.0%)
7,500 Pediatric Services of America, Inc.
(Series A)............................ 10.00 04/15/08 5,250,000
12,000 Unilab Finance Corp..................... 12.75 10/01/09 12,960,000
--------------
18,210,000
--------------
MOVIES/ENTERTAINMENT (0.2%)
29,250 Regal Cinemas, Inc...................... 9.50 06/01/08 2,632,500
--------------
OFFICE EQUIPMENT/SUPPLIES (1.3%)
10,000 Burhmann US Inc......................... 12.25 11/01/09 10,300,000
22,000 Mosler, Inc............................. 11.00 04/15/03 13,200,000
--------------
23,500,000
--------------
OIL REFINING/MARKETING (0.0%)
53,800 Transamerican Refining Corp. (Series B)
(a) (b)............................... 16.00 06/30/03 672,500
--------------
OTHER CONSUMER SERVICES (0.4%)
10,000 Source Media, Inc....................... 12.00 11/01/04 6,800,000
--------------
OTHER CONSUMER SPECIALTIES (1.6%)
35,000 Samsonite Corp.......................... 10.75 06/15/08 28,700,000
--------------
PUBLISHING: BOOKS/MAGAZINES (1.0%)
4,500 American Media Operations, Inc.......... 10.25 05/01/09 4,488,750
10,500 Perry-Judds, Inc........................ 10.625 12/15/07 9,345,000
5,000 Phoenix Color Corp...................... 10.375 02/01/09 4,200,000
--------------
18,033,750
--------------
RESTAURANTS (3.9%)
141,992 American Restaurant Group Holdings,
Inc. - 144A* (c)...................... 0.00 12/15/05 39,757,760
34,207 FRD Acquisition Corp. (Series B)........ 12.50 07/15/04 12,656,590
20,000 Friendly Ice Cream Corp................. 10.50 12/01/07 16,500,000
--------------
68,914,350
--------------
RETAIL - SPECIALTY (2.2%)
9,000 Mrs. Fields Holdings Co................. 14.00 ++ 12/01/05 4,050,000
1,000 National Wine & Spirits................. 10.125 01/15/09 970,000
18,225 Pantry, Inc............................. 10.25 10/15/07 17,860,500
17,500 Petro Stopping Centers L.P.............. 10.50 02/01/07 15,750,000
--------------
38,630,500
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
38
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SPECIALTY TELECOMMUNICATIONS (12.8%)
$ 11,500 Birch Telecom Inc....................... 14.00 % 06/15/08 $ 6,900,000
23,950 DTI Holdings, Inc. (Series B)........... 12.50 ++ 03/01/08 9,101,000
29,088 Esprit Telecom Group PLC (United
Kingdom).............................. 10.875 06/15/08 15,998,400
17,085 Esprit Telecom Group PLC (United
Kingdom).............................. 11.50 12/15/07 9,909,300
47,000 Firstworld Communications, Inc.......... 13.00 ++ 04/15/08 14,570,000
16,500 Globenet Comm Group Ltd. (Bermuda)...... 13.00 07/15/07 16,747,500
15,000 Pac-West Telecom Inc. (Series B)........ 13.50 02/01/09 14,400,000
3,000 Primus Telecommunications Group, Inc.... 11.75 08/01/04 1,950,000
7,000 Primus Telecommunications Group, Inc.... 11.25 01/15/09 4,410,000
7,000 Primus Telecommunications Group, Inc.... 12.75 10/15/09 4,480,000
32,900 Primus Telecommunications Group, Inc.
(Series B)............................ 9.875 05/15/08 19,740,000
2,000 RSL Communications PLC (United
Kingdom).............................. 9.125 03/01/08 470,000
9,000 RSL Communications PLC (United
Kingdom).............................. 10.50 11/15/08 2,880,000
3,000 RSL Communications PLC (United
Kingdom).............................. 9.875 11/15/09 720,000
13,000 Tele1 Europe BV (Netherlands)........... 13.00 05/15/09 12,935,000
12,000 Versatel Telecom BV (Netherlands)
(Issued 05/27/98)..................... 13.25 05/15/08 11,460,000
18,000 Versatel Telecom BV (Netherlands)
(Issued 12/03/98)..................... 13.25 05/15/08 17,190,000
21,695 Viatel Inc.............................. 11.25 04/15/08 12,366,150
6,750 Viatel Inc. (Issued 3/19/99)............ 11.50 03/15/09 3,847,500
18,000 Viatel Inc. (Issued 12/08/99)........... 11.50 03/15/09 10,260,000
35,100 World Access, Inc. (c).................. 13.25 01/15/08 29,835,000
11,500 Worldwide Fiber Inc. (Canada)........... 12.00 08/01/09 10,580,000
--------------
230,749,850
--------------
TELECOMMUNICATION EQUIPMENT (1.6%)
17,100 SBA Communications Corp................. 12.00++ 03/01/08 12,996,000
18,500 Spectrasite Holdings, Inc............... 12.00++ 07/15/08 12,580,000
3,500 Spectrasite Holdings, Inc............... 11.25++ 04/15/09 2,091,250
--------------
27,667,250
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
39
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TELECOMMUNICATIONS (14.4%)
$ 19,250 CapRock Communications Corp............. 11.50 % 05/01/09 $ 11,935,000
16,750 CapRock Communications Corp.
(Series B)............................ 12.00 07/15/08 10,552,500
20,000 Covad Communications Group, Inc......... 12.50 02/15/09 15,900,000
61,075 e. Spire Communications, Inc............ 13.75 07/15/07 31,759,000
26,700 Focal Communications Corp.
(Series B)............................ 12.125 02/15/08 16,687,500
28,250 GST Equipment Funding, Inc. (a)......... 13.25 05/01/07 18,503,750
15,000 Hyperion Telecommunication, Inc.
(Series B)............................ 12.25 09/01/04 14,475,000
26,500 Level 3 Communications, Inc............. 9.125 05/01/08 23,750,625
15,000 MGC Communications Inc. - 144A*......... 13.00 04/01/10 12,450,000
1,500 Nextlink Communications LLC............. 12.50 04/15/06 1,515,000
17,500 NEXTLINK Communications, Inc............ 9.00 03/15/08 15,618,750
12,500 NEXTLINK Communications, Inc............ 10.75 11/15/08 12,062,500
9,000 NEXTLINK Communications, Inc............ 10.75 06/01/09 8,685,000
56,800 Normex Technologies Corp.
(Series B) (a) (b).................... 14.00 05/15/02 2,272,000
27,850 Rhythms Netconnections, Inc............. 12.75 04/15/09 17,545,500
14,965 Rhythms Netconnections, Inc.
(Series B)............................ 13.50++ 05/15/08 5,911,175
13,850 Startec Global Communications Corp...... 12.00 05/15/08 11,080,000
11,300 Talton Holdings, Inc (Series B)......... 11.00 06/30/07 9,379,000
12,000 Williams Communications Group Inc....... 10.875 10/01/09 11,550,000
--------------
251,632,300
--------------
TRUCKS/CONSTRUCTION/FARM MACHINERY (0.7%)
13,350 J.B. Poindexter & Co., Inc.............. 12.50 05/15/04 12,615,750
--------------
WIRELESS COMMUNICATIONS (7.7%)
13,500 Advanced Radio Telecom Corp............. 14.00 02/15/07 11,880,000
18,150 AMSC Acquisition Co., Inc.
(Series B)............................ 12.25 04/01/08 13,612,500
9,000 Arch Communications, Inc................ 12.75 07/01/07 6,300,000
7,200 Arch Escrow Corp........................ 13.75 04/15/08 5,256,000
65,300 CellNet Data Systems Inc. (a)........... 14.00++ 10/01/07 4,571,000
19,610 Globalstar LP/Capital Corp.............. 10.75 11/01/04 5,588,850
10,000 Metricom Inc............................ 13.00 02/15/10 6,750,000
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
40
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED

TOTAL CORPORATE BONDS
(COST $2,504,300,986)......................................................... 1,684,679,722
--------------

CONVERTIBLE BONDS (0.1%)
HOTELS/RESORTS/CRUISELINES (0.1%)
1,643 Premier Cruises Ltd. - 144A* (COST
$1,643,000)........................... 10.00+ 08/15/05 1,610,140
--------------
</TABLE>

<TABLE>
<CAPTION>
NUMBER OF
SHARES
----------
<C> <S> <C>
COMMON STOCKS (d) (1.2%)
APPAREL/FOOTWEAR RETAIL (0.0%)
2,621,192 County Seat Stores, Inc. (c)............ 23,591
--------------
CASINO/GAMING (0.0%)
207,312 Fitzgerald Gaming Corp.................. 207
--------------
FOOD RETAIL (0.0%)
61,033 Eagle Food Centers, Inc. (c)............ 68,662
--------------
FOOD: SPECIALTY/CANDY (0.0%)
10,908 SFAC New Holdings Inc. (c).............. 2,727
574,725 Specialty Foods Acquisition Corp. -
144A*................................. 143,681
--------------
146,408
--------------
HOTELS/RESORTS/CRUISELINES (0.2%)
7,500 Motels of America, Inc. - 144A*......... 1,875
981,277 Premier Holdings Inc. (c)............... 2,943,831
781,421 Vagabond Inns, Inc. (Class D)........... 781
--------------
2,946,487
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
41
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------------------------------------------------------------------
<C> <S> <C>
MEDICAL/NURSING SERVICES (0.0%)
1,151,324 Raintree Healthcare Corp. (c)........... $ 10,362
--------------
MOTOR VEHICLES (0.0%)
709 Northern Holdings Industrial Corp.
(c)*.................................. 1
--------------
RESTAURANTS (0.0%)
38,057 American Restaurant Group Holdings,
Inc. - 144A*.......................... 9,514
--------------
SPECIALTY TELECOMMUNICATIONS (1.0%)
264,189 Tele1 Europe Holding AB (ADR)
(Sweden)*............................. 3,236,315
486,691 Versatel Telecom International NV (ADR)
(Netherlands)......................... 13,901,112
94,263 World Access, Inc. (c).................. 854,259
--------------
17,991,686
--------------
TELECOMMUNICATION EQUIPMENT (0.0%)
196,000 FWT Inc. (Class A) (c).................. 1,960
--------------
TEXTILES (0.0%)
1,754,730 United States Leather, Inc. (c)......... 15,793
--------------

TOTAL COMMON STOCKS
(COST $131,797,350)..................... 21,214,671
--------------

PREFERRED STOCKS (0.1%)
OIL REFINING/MARKETING (0.0%)
94,432 Transamerica Refining Corp. (Conv.)
(Class B)*............................ 944
51,938 Transamerica Refining Corp. (Conv.)
(Class C)*............................ 520
136,926 Transamerica Refining Corp. (Conv.)
(Class D)*............................ 1,369
283,295 Transamerica Refining Corp. (Conv.)
(Class E)*............................ 2,833
--------------
5,666
--------------
RESTAURANTS (0.1%)
4,404 American Restaurant Group Holdings, Inc.
(Series B)............................ 1,321,200
--------------
TELECOMMUNICATION EQUIPMENT (0.1%)
1,960,000 FWT Inc. (Series A)..................... 980,000
--------------

TOTAL PREFERRED STOCKS
(COST $14,518,815)...................... 2,306,866
--------------
</TABLE>

<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE
---------- ----------
<C> <S> <C> <C>
WARRANTS (d) (0.3%)
AEROSPACE & DEFENSE (0.0%)
9,000 Sabreliner Corp. - 144A*................ 04/15/03 90,000
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
42
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED

<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
---------------------------------------------------------------------------------
<C> <S> <C> <C>
CABLE/SATELLITE TV (0.1%)
57,000 Diva Systems Corp. - 144A*.............. 03/01/08 $ 798,000
15,000 Ono Finance PLC - 144A* (United
Kingdom).............................. 05/31/09 1,500,000
--------------
2,298,000
--------------
CASINO/GAMING (0.0%)
220,000 Aladdin Gaming, Inc. - 144A*............ 03/01/10 2,200
--------------
HOTELS/RESORTS/CRUISELINES (0.0%)
13,000 Epic Resorts LLC - 144A*................ 06/15/05 130
--------------
INTERNET SOFTWARE/SERVICES (0.0%)
13,300 Cybernet Internet Services Inc. -
144A*................................. 07/01/09 66,500
--------------
OIL REFINING/MARKETING (0.0%)
33,800 Transamerican Refining Corp. - 144A*.... 06/30/03 34
20,000 Transamerican Refining Corp. - 144A*.... 06/30/03 20
--------------
54
--------------
RESTAURANTS (0.0%)
3,500 American Restaurant Group Holdings,
Inc. - 144A*.......................... 08/15/08 35
--------------
RETAIL - SPECIALTY (0.0%)
9,000 Mrs. Fields Holding Inc................. 12/01/05 90,000
--------------
SPECIALTY TELECOMMUNICATIONS (0.1%)
11,500 Birch Telecom Inc. - 144A*.............. 06/15/08 1,150,000
119,750 DTI Holdings Inc. - 144A*............... 03/01/08 1,197
47,000 Firstworld Communications, Inc. -
144A*................................. 04/15/08 940,000
--------------
2,091,197
--------------
TELECOMMUNICATIONS (0.0%)
11,850 Startec Global Communications Corp. -
144A*................................. 05/15/08 11,850
--------------
WIRELESS COMMUNICATIONS (0.0%)
10,000 Metricom, Inc........................... 02/15/10 300,000
16,250 Motient Corp. - 144A*................... 04/01/08 568,750
--------------
868,750
--------------

TOTAL WARRANTS
(COST $7,758,300)................................... 5,518,716
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
43
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENT (0.5%)
REPURCHASE AGREEMENT
$ 9,685 The Bank of New York (dated 08/31/00;
proceeds $9,686,430) (e) (COST
9,684,698)............................ 6.438% 09/01/00 $ 9,684,698
--------------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(COST $2,669,703,149) (f)............................................................... 97.3% 1,725,014,813

OTHER ASSETS IN EXCESS OF LIABILITIES................................................... 2.7 47,158,184
----- ---------------

NET ASSETS.............................................................................. 100.0% $ 1,772,172,997
----- ---------------
----- ---------------
</TABLE>

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

ADR American Depository Receipt.
* Resale is restricted to qualified institutional investors.
+ Payment-in-kind security.
++ Currently a zero coupon bond that will pay interest at the rate shown at a
future specified date.
++ Consists of one or more classes of securities traded together as a unit;
bonds with attached warrants.
(a) Issuer in bankruptcy.
(b) Non-income producing security; bond in default.
(c) Acquired through exchange offer.
(d) Non-income producing securities.
(e) Collateralized by $14,593,725 Federal National Mortgage Assoc. 7.998% due
08/01/28 valued at $9,880,253.
(f) The aggregate cost for federal income tax purposes approximates the
aggregate cost for book purposes. The aggregate gross unrealized
appreciation is $38,429,897 and the aggregate gross unrealized depreciation
is $983,118,233, resulting in net unrealized depreciation of $944,688,336.

SEE NOTES TO FINANCIAL STATEMENTS
44
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2000

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $2,669,703,149)... $1,725,014,813
Receivable for:
Interest................................................ 50,012,920
Capital stock sold...................................... 4,630,696
Prepaid expenses and other assets........................... 138,952
--------------
TOTAL ASSETS........................................... 1,779,797,381
--------------
LIABILITIES:
Payable for:
Capital stock repurchased............................... 4,265,193
Investments purchased................................... 1,573,028
Plan of distribution fee................................ 972,370
Investment management fee............................... 621,160
Accrued expenses and other payables......................... 192,633
--------------
TOTAL LIABILITIES...................................... 7,624,384
--------------
NET ASSETS............................................. $1,772,172,997
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................. $3,175,159,265
Net unrealized depreciation................................. (944,688,336)
Dividends in excess of net investment income................ (2,808,348)
Accumulated net realized loss............................... (455,489,584)
--------------
NET ASSETS............................................. $1,772,172,997
==============
CLASS A SHARES:
Net Assets.................................................. $ 57,273,029
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR
VALUE).................................................... 13,173,595
NET ASSET VALUE PER SHARE.............................. $4.35
==============

MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 4.44% OF NET ASSET VALUE)...... $4.54
==============
CLASS B SHARES:
Net Assets.................................................. $1,381,008,060
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR
VALUE).................................................... 318,378,888
NET ASSET VALUE PER SHARE.............................. $4.34
==============
CLASS C SHARES:
Net Assets.................................................. $ 86,950,510
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR
VALUE).................................................... 20,020,246
NET ASSET VALUE PER SHARE.............................. $4.34
==============
CLASS D SHARES:
Net Assets.................................................. $ 246,941,398
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR
VALUE).................................................... 56,793,347
NET ASSET VALUE PER SHARE.............................. $4.35
==============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
45
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2000

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

INTEREST INCOME............................................. $ 306,202,922
-------------

EXPENSES
Plan of distribution fee (Class A shares)................... 135,074
Plan of distribution fee (Class B shares)................... 12,574,558
Plan of distribution fee (Class C shares)................... 840,794
Investment management fee................................... 8,439,728
Transfer agent fees and expenses............................ 1,608,009
Custodian fees.............................................. 148,502
Shareholder reports and notices............................. 139,816
Registration fees........................................... 118,574
Professional fees........................................... 78,551
Directors' fees and expenses................................ 17,345
Other....................................................... 52,519
-------------

TOTAL EXPENSES......................................... 24,153,470
-------------

NET INVESTMENT INCOME.................................. 282,049,452
-------------

NET REALIZED AND UNREALIZED LOSS:
Net realized loss........................................... (16,496,280)
Net change in unrealized depreciation....................... (457,477,753)
-------------

NET LOSS............................................... (473,974,033)
-------------

NET DECREASE................................................ $(191,924,581)
=============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
46
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
AUGUST 31, 2000 AUGUST 31, 1999
------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment income.......................... $ 282,049,452 $ 289,651,675
Net realized loss.............................. (16,496,280) (65,548,410)
Net change in unrealized depreciation.......... (457,477,753) (193,563,887)
-------------- --------------

NET INCREASE (DECREASE)................... (191,924,581) 30,539,378
-------------- --------------

DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A shares................................. (9,668,632) (7,768,308)
Class B shares................................. (229,455,500) (229,484,007)
Class C shares................................. (13,449,909) (10,585,900)
Class D shares................................. (42,391,609) (47,045,091)
-------------- --------------

TOTAL DIVIDENDS........................... (294,965,650) (294,883,306)
-------------- --------------
Net increase (decrease) from capital stock
transactions................................. (179,646,437) 454,019,292
-------------- --------------

NET INCREASE (DECREASE)................... (666,536,668) 189,675,364

NET ASSETS:
Beginning of period............................ 2,438,709,665 2,249,034,301
-------------- --------------

END OF PERIOD
(INCLUDING DIVIDENDS IN EXCESS OF NET
INVESTMENT INCOME OF $2,808,348 AND
UNDISTRIBUTED NET INVESTMENT INCOME OF
$10,091,362, RESPECTIVELY)................. $1,772,172,997 $2,438,709,665
============== ==============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
47
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000

1. ORGANIZATION AND ACCOUNTING POLICIES

Morgan Stanley Dean Witter High Yield Securities Inc. (the "Fund") is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's primary investment objective is to
earn a high level of current income and, as a secondary objective, capital
appreciation, but only when consistent with its primary objective. The Fund was
incorporated in Maryland on June 14, 1979 and commenced operations on
September 26, 1979. On July 28, 1997, the Fund converted to a multiple class
share structure.

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, 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 securities are traded on more than one exchange, the securities are valued
on the exchange designated as the primary market pursuant to procedures adopted
by the Directors); (2) all other portfolio securities for which over-the-counter
market quotations are readily available are valued at the latest available bid
price. (3) when market quotations are not readily available, including
circumstances under which it is determined by Morgan Stanley Dean Witter
Advisors Inc. (the "Investment Manager"), that sale or bid prices are not
reflective of a security's market value, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the Directors (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); (4) certain portfolio
securities may be valued by an outside pricing service approved

48
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000, CONTINUED

by the Directors. The pricing service may utilize a matrix system incorporating
security quality, maturity and coupon as the evaluation model parameters, and/or
research and evaluations by its staff, including review of broker-dealer market
price quotations, if available, in determining what it believes is the fair
valuation of the portfolio securities valued by such pricing service; and
(5) 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.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily except where collection is not expected.

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. 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.

E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record 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.

49
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000, CONTINUED

2. INVESTMENT MANAGEMENT AGREEMENT

Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, calculated daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined as of the close
of each business day: 0.50% to the portion of daily net assets not exceeding
$500 million; 0.425% to the portion of daily net assets exceeding $500 million
but not exceeding $750 million; 0.375% to the portion of daily net assets
exceeding $750 million but not exceeding $1 billion; 0.35% to the portion of
daily net assets exceeding $1 billion but not exceeding $2 billion; 0.325% to
the portion of daily net assets exceeding $2 billion but not exceeding $3
billion; and 0.30% to the portion of daily net assets exceeding $3 billion.

3. PLAN OF DISTRIBUTION

Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund 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 -- 0.75% of the average
daily net assets of Class B; and (iii) Class C -- up to 0.85% 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
Directors will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts totaled
$59,549,106 at August 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 0.85% 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

50
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000, CONTINUED

other selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended August 31, 2000, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.20% and
0.85%, respectively.

The Distributor has informed the Fund that for the year ended August 31, 2000,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class A Shares, Class B shares and Class C shares of $26,734, $4,887,041
and $86,304, respectively and received $187,035 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 August 31, 2000, aggregated
$406,418,566 and $692,827,331, respectively.

Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At August 31, 2000, the Fund had
transfer agent fees and expenses payable of approximately $1,200.

The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Directors of the Fund who will have served as independent
Directors for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended August 31, 2000 included
in Directors' fees and expenses in the Statement of Operations amounted to
$5,845. At August 31, 2000, the Fund had an accrued pension liability of $53,705
which is included in accrued expenses in the Statement of Assets and
Liabilities.

51
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000, CONTINUED

5. CAPITAL STOCK

Transactions in capital stock were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
AUGUST 31, 2000 AUGUST 31, 1999
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold.............................................. 20,398,269 $ 102,571,421 14,286,295 $ 83,691,711
Reinvestment of dividends......................... 938,139 4,701,847 663,857 3,835,707
Redeemed.......................................... (20,620,177) (103,264,873) (7,475,634) (43,226,489)
------------ ------------- ------------ -------------
Net increase - Class A............................ 716,231 4,008,395 7,474,518 44,300,929
------------ ------------- ------------ -------------

CLASS B SHARES
Sold.............................................. 83,309,893 422,185,285 158,254,779 925,430,936
Reinvestment of dividends......................... 16,592,293 82,984,770 14,916,788 86,253,971
Redeemed.......................................... (131,901,232) (669,368,755) (109,357,421) (637,513,069)
------------ ------------- ------------ -------------
Net increase (decrease) - Class B................. (31,999,046) (164,198,700) 63,814,146 374,171,838
------------ ------------- ------------ -------------

CLASS C SHARES
Sold.............................................. 10,104,080 51,348,473 20,141,052 117,563,491
Reinvestment of dividends......................... 1,362,762 6,824,019 965,180 5,575,865
Redeemed.......................................... (11,267,273) (57,763,912) (10,489,731) (60,989,647)
------------ ------------- ------------ -------------
Net increase - Class C............................ 199,569 408,580 10,616,501 62,149,709
------------ ------------- ------------ -------------

CLASS D SHARES
Sold.............................................. 9,035,431 45,961,462 13,701,316 80,018,104
Reinvestment of dividends......................... 4,875,203 24,378,740 4,485,925 26,008,989
Redeemed.......................................... (17,661,637) (90,204,914) (22,704,747) (132,630,277)
------------ ------------- ------------ -------------
Net decrease - Class D............................ (3,751,003) (19,864,712) (4,517,506) (26,603,184)
------------ ------------- ------------ -------------
Net increase (decrease) in Fund................... (34,834,249) $(179,646,437) 77,387,659 $ 454,019,292
============ ============= ============ =============
</TABLE>

6. FEDERAL INCOME TAX STATUS

At August 31, 2000, the Fund had a net capital loss carryover of approximately
$432,337,000, which may be used to offset future capital gains to the extent
provided by regulations, which is available through August 31 of the following
years:

<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
------------------------------------------------------------------------------------
2001 2002 2003 2004 2005 2006 2007 2008
------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$45,084 $166,660 $50,599 $23,296 $39,319 $12,603 $24,919 $69,857
======= ======== ======= ======= ======= ======= ======= =======
</TABLE>

52
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000, CONTINUED

Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $11,629,000 during fiscal 2000.

At August 31, 2000, the Fund had temporary book/tax differences primarily
attributable to post-October losses, capital loss deferrals on wash sales and
interest on bonds in default and permanent book/tax differences primarily
attributable to an expired capital loss carryover. To reflect reclassifications
rising from the permanent differences, paid-in-capital was charged $182,217,561,
accumulated net realized loss was credited $182,201,073 and dividends in excess
of net investment income was credited $16,488.

53
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS

Selected ratios and per share data for a share of capital stock outstanding
throughout each period:

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED AUGUST 31, JULY 28, 1997*
-------------------------------------- THROUGH
2000 1999 1998 AUGUST 31, 1997
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES++

SELECTED PER SHARE DATA:

Net asset value, beginning of period........................ $ 5.51 $ 6.16 $ 6.82 $ 6.83
------- ------- ------- -------

Income (loss) from investment operations:
Net investment income.................................... 0.69 0.72 0.76 0.07
Net realized and unrealized loss......................... (1.13) (0.63) (0.71) (0.03)
------- ------- ------- -------

Total income (loss) from investment operations.............. (0.44) 0.09 0.05 0.04
------- ------- ------- -------

Less dividends from net investment income................... (0.72) (0.74) (0.71) (0.05)
------- ------- ------- -------

Net asset value, end of period.............................. $ 4.35 $ 5.51 $ 6.16 $ 6.82
======= ======= ======= =======

TOTAL RETURN+............................................... (8.88)% 1.47% 0.40% 0.65%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.70 %(3) 0.68%(3) 0.75%(3) 0.93%(2)

Net investment income....................................... 13.62 %(3) 12.42%(3) 11.30%(3) 11.80%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $57,273 $68,667 $30,678 $1,996

Portfolio turnover rate..................................... 20 % 36% 66% 113%
</TABLE>

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

<TABLE>
<C> <S>
* The date shares were first issued.
++ 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.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
54
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED AUGUST 31, JULY 28, 1997*
-------------------------------------------- THROUGH
2000 1999 1998 AUGUST 31, 1997
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS B SHARES++

SELECTED PER SHARE DATA:

Net asset value, beginning of period..................... $ 5.50 $ 6.15 $ 6.82 $ 6.83
---------- ---------- ---------- -------

Income (loss) from investment operations:
Net investment income................................. 0.66 0.69 0.73 0.07
Net realized and unrealized loss...................... (1.13) (0.64) (0.72) (0.03)
---------- ---------- ---------- -------

Total income (loss) from investment operations........... (0.47) 0.05 0.01 0.04
---------- ---------- ---------- -------

Less dividends from net investment income................ (0.69) (0.70) (0.68) (0.05)
---------- ---------- ---------- -------

Net asset value, end of period........................... $ 4.34 $ 5.50 $ 6.15 $ 6.82
========== ========== ========== =======

TOTAL RETURN+............................................ (9.39)% 0.92% (0.23)% 0.62%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses................................................. 1.25 %(3) 1.24%(3) 1.25 %(3) 1.42%(2)

Net investment income.................................... 13.07 %(3) 11.86%(3) 10.80 %(3) 11.28%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................. $1,381,008 $1,927,186 $1,761,147 $15,828

Portfolio turnover rate.................................. 20 % 36% 66 % 113%
</TABLE>

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

SEE NOTES TO FINANCIAL STATEMENTS
55
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED

SELECTED PER SHARE DATA:

Net asset value, beginning of period $ 5.51 $ 6.15 $ 6.82 $ 6.83
---------- ---------- ---------- -------

Income (loss) from investment operations:
Net investment income................................. 0.66 0.68 0.72 0.07
Net realized and unrealized loss...................... (1.14) (0.62) (0.72) (0.03)
---------- ---------- ---------- -------

Total income (loss) from investment operations........... (0.48) 0.06 0.00 0.04
---------- ---------- ---------- -------

Less dividends from net investment income................ (0.69) (0.70) (0.67) (0.05)
---------- ---------- ---------- -------

Net asset value, end of period........................... $ 4.34 $ 5.51 $ 6.15 $ 6.82
========== ========== ========== =======

TOTAL RETURN+............................................ (9.66)% 0.99% (0.34)% 0.62%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses................................................. 1.35 %(3) 1.34%(3) 1.36 %(3) 1.52%(2)

Net investment income.................................... 12.97 %(3) 11.76%(3) 10.69 %(3) 11.18%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................. $86,951 $109,142 $56,626 $5,225

Portfolio turnover rate.................................. 20 % 36% 66 % 113%
</TABLE>

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

SEE NOTES TO FINANCIAL STATEMENTS
56
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED

<TABLE>
<CAPTION>
FOR THE YEAR ENDED AUGUST 31
--------------------------------------------------------------------
2000++ 1999++ 1998++ 1997* 1996
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS D SHARES

SELECTED PER SHARE DATA:

Net asset value, beginning of period................ $ 5.51 $ 6.16 $ 6.82 $ 6.71 $ 6.77
-------- -------- -------- -------- --------

Income (loss) from investment operations:
Net investment income............................ 0.70 0.74 0.78 0.79 0.83
Net realized and unrealized gain (loss).......... (1.13) (0.64) (0.71) 0.15 (0.12)
-------- -------- -------- -------- --------

Total income (loss) from investment operations...... (0.43) 0.10 0.07 0.94 0.71
-------- -------- -------- -------- --------

Less dividends from net investment income........... (0.73) (0.75) (0.73) (0.83) (0.77)
-------- -------- -------- -------- --------

Net asset value, end of period...................... $ 4.35 $ 5.51 $ 6.16 $ 6.82 $ 6.71
======== ======== ======== ======== ========

TOTAL RETURN+....................................... (8.69)% 1.67% 0.63% 15.01% 11.07%

RATIOS TO AVERAGE NET ASSETS:
Expenses............................................ 0.50 %(1) 0.49%(1) 0.51%(1) 0.68% 0.66%

Net investment income............................... 13.82 %(1) 12.61%(1) 11.54%(1) 11.78% 12.27%

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............. $246,941 $333,714 $400,582 $479,020 $460,203

Portfolio turnover rate............................. 20 % 36% 66% 113% 49%
</TABLE>

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

<TABLE>
<C> <S>
* Prior to July 28, 1997, the Fund issued one class of shares.
All shares of the Fund held prior to that date have been
designated Class D shares.
++ The per share amounts were computed using an average number
of shares outstanding during the period.
+ Calculated based on the net asset value as of the last
business day of the period.
(1) Reflects overall Fund ratios for investment income and
non-class specific expenses.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
57
<PAGE>

<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECU-
RITIES INC.
INDEPENDENT AUDITORS' REPORT
</TABLE>

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES:

We have audited the accompanying statement of assets and liabilities of Morgan
Stanley Dean Witter High Yield Securities (the "Fund") including the portfolio
of investments, as of August 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 for the year ended August 31, 1999 and the financial
highlights for each of the respective stated periods ended August 31, 1999 were
audited by other independent accountants whose report, dated October 8, 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 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
August 31, 2000, by correspondence with the custodian. 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 High Yield Securities as of August 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
OCTOBER 9, 2000

58
<PAGE>

<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECU-
RITIES INC.
CHANGE IN INDEPENDENT ACCOUNTANTS
</TABLE>

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

The reports of PricewaterhouseCoopers LLP on the financial statements of the
Fund for the past two fiscal years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle.

In connection with its audit for the two most recent fiscal years 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 on the financial statements for such years.

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

59
<PAGE>

<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECU-
RITIES INC.
REPORT OF INDEPENDENT ACCOUNTANTS
</TABLE>

TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.:

In our opinion, the statement of changes in net assets and the financial
highlights of Morgan Stanley Dean Witter High Yield Securities Inc. (the "Fund")
(not presented separately herein) present fairly, in all material respects, the
changes in its net assets for the year ended August 31, 1999 and the financial
highlights for each of the years in the period ended August 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 August 31, 1999.

PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
OCTOBER 8, 1999

60
<PAGE>

MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.

PART C OTHER INFORMATION

Item 23. Exhibits
-------- ------------------------------------------------------------------

1(a). Articles of Incorporation of the Registrant, dated June 12, 1979
and amendments thereto, comprised of amended Articles of
Incorporation dated March 18, 1983, December 16, 1985 and
January 19, 1989, are incorporated by reference to Exhibit 1 of
Post-Effective Amendment No. 19 to the Registration Statement on
Form N-1A, filed on October 25, 1995.

1(b). Articles of Amendment, dated May 23, 1997 and July 28,1997, and
Articles Supplementary, dated July 28, 1997, are incorporated by
reference to Exhibit 1 of Post-Effective Amendment No. 21 to the
Registration Statement on Form N-1A, filed on July 3, 1997.

1(c). Articles of Amendment, dated June 22, 1998 are incorporated by
reference to Exhibit 1 of Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A, filed on October 29, 1998.

2. Amended and Restated By-Laws of the Registrant, dated May 1, 1999,
is incorporated by reference to Exhibit 2 of Post-Effective
Amendment No. 24 to the Registration Statement on Form N-1A, filed
on August 27, 1999.

3. Not Applicable.

4. Amended Investment Management Agreement between the Registrant and
Morgan Stanley Dean Witter Advisors Inc., dated April 30, 1998, is
incorporated by reference to Exhibit 5 of Post-Effective Amendment
No. 23 to the Registration Statement on Form N-1A, filed on
October 29, 1998.

5(a). Amended Distribution Agreement dated June 22, 1998 is incorporated
by reference to Exhibit 6 of Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A, filed on October 29, 1998.

5(b). Selected Dealer Agreement between Morgan Stanley Dean Witter
Distributors Inc. and Dean Witter Reynolds Inc. is incorporated by
reference to Exhibit 6(b) of Post-Effective Amendment No. 17 to the
Registration Statement on Form N-1A, filed on October 22, 1993.

5(c). Omnibus Selected Dealer Agreement between Morgan Stanley Dean
Witter Distributors Inc. and National Financial Services
Corporation, dated October 17, 1998, is incorporated by reference
to Exhibit 5(c) of Post-Effective No. 24 to the Registration
Statement on Form N-1A, filed on August 27, 1999.

6. Amended and Restated Retirement Plan for Non-Interested Trustees or
Directors, dated May 8, 1997, is incorporated by reference to
Post-Effective Amendment No. 24 to the Registration Statement on
Form N-1A, filed on August 27, 1999.
<PAGE>

7(a). Custody Agreement between The Bank of New York and the Registrant
is incorporated by reference to Exhibit 8 of Post-Effective
Amendment No. 19 to the Registration Statement on Form N-1A, filed
on October 25, 1995.

7(b). Amendment to Custody Agreement, dated April 17, 1996, is
incorporated by reference to Exhibit 8 of Post-Effective Amendment
No. 20 to the Registration Statement on Form N-1A, filed on October
24, 1996.

8(a). Amended and Restated Transfer Agency and Service Agreement between
the Registrant and Morgan Stanley Dean Witter Trust FSB, dated
September 1, 2000, filed herein.

8(b). Amended and Restated Services Agreement, dated June 22, 1998, is
incorporated by reference to Exhibit 9 of Post-Effective Amendment
No. 23 to the Registration Statement on Form N-1A, filed on October
29, 1998.

9. Legal Opinion of Dennis H. Greenwald, Esq., dated August 16, 1979,
is incorporated by reference to Exhibit 9 of Post-Effective
Amendment No. 24 to the Registration Statement on Form N-1A, filed
on August 27, 1999.

10(a). Consent of Independent Auditors, filed herein.

10(b). Consent of PricewaterhouseCoopers LLP, filed herein.

11. Not Applicable.

12. Not Applicable.

13. Amended and Restated Plan of Distribution pursuant to Rule 12b-1,
dated July 28, 1997, is incorporated by reference to Exhibit 15 of
Post-Effective Amendment No. 21 to the Registration Statement on
Form N-1A, filed on July 3, 1997.

14. Amended Multi-Class Plan pursuant to Rule 18f-3, dated August 15,
2000, filed herein.

15. Not Applicable.

16(a). Codes of Ethics of Morgan Stanley Dean Witter Advisors Inc., Morgan
Stanley Dean Witter Services Company Inc. and Morgan Stanley Dean
Witter Distributors Inc., filed herein.

16(b). Code of Ethics of the Morgan Stanley Dean Witter Funds, filed
herein.

Other The Power of Attorney for James F. Higgins is filed herein.
Powers of Attorney of Directors are incorporated by reference to
Exhibit (Other) of Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A, filed on October 28, 1994 and
of Post-Effective Amendment No. 22 to the Registration Statement on
Form N-1A, filed on October 31, 1997.
<PAGE>

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.

None

Item 25. INDEMNIFICATION.

Reference is made to Section 3.15 of the Registrant's By-Laws and
Section 2-418 of the Maryland General Corporation Law.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ( the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities ( other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in connection with the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such director, officer or controlling person
in connection with the shares being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act, and will
be governed by the final adjudication of such issue.

The Registrant hereby undertakes that it will apply the indemnification
provision of its by-laws in a manner consistent with release 11330 of the
Securities and Exchange Commission under the Investment Company Act of 1940, so
long as the interpretation of Sections 17 (h) and 17 (I) of such Act remains in
effect.

Registrant, in conjunction with the Investment Manager, Registrant's
Directors, and other registered investment management companies managed by the
Investment Manager, maintains insurance on behalf of any person who is or was a
Director, officer, employee, or agent of registrant, or who is or was serving at
the request of registrant as a trustee, director, officer, employee or agent of
another trust or corporation, against any liability asserted against him and
incurred by him or arising out of his position. However, in no event will
registrant maintain insurance to indemnify any such person for any act for which
Registrant itself is not permitted to indemnify him.

Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR

See "The Fund and Its Management" in the Prospectus regarding the
business of the investment advisor. The following information is given regarding
officers of Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"). MSDW
Advisors is a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.

The term "Morgan Stanley Dean Witter Funds" refers to the following
registered investment companies:

CLOSED-END INVESTMENT COMPANIES
(1) Morgan Stanley Dean Witter California Insured Municipal Income Trust
(2) Morgan Stanley Dean Witter California Quality Municipal Securities
(3) Morgan Stanley Dean Witter Government Income Trust
<PAGE>

(4) Morgan Stanley Dean Witter High Income Advantage Trust
(5) Morgan Stanley Dean Witter High Income Advantage Trust II
(6) Morgan Stanley Dean Witter High Income Advantage Trust III
(7) Morgan Stanley Dean Witter Income Securities Inc.
(8) Morgan Stanley Dean Witter Insured California Municipal Securities
(9) Morgan Stanley Dean Witter Insured Municipal Bond Trust
(10) Morgan Stanley Dean Witter Insured Municipal Income Trust
(11) Morgan Stanley Dean Witter Insured Municipal Securities
(12) Morgan Stanley Dean Witter Insured Municipal Trust
(13) Morgan Stanley Dean Witter Municipal Income Opportunities Trust
(14) Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
(15) Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
(16) Morgan Stanley Dean Witter Municipal Income Trust
(17) Morgan Stanley Dean Witter Municipal Income Trust II
(18) Morgan Stanley Dean Witter Municipal Income Trust III
(19) Morgan Stanley Dean Witter Municipal Premium Income Trust
(20) Morgan Stanley Dean Witter New York Quality Municipal Securities
(21) Morgan Stanley Dean Witter Prime Income Trust
(22) Morgan Stanley Dean Witter Quality Municipal Income Trust
(23) Morgan Stanley Dean Witter Quality Municipal Investment Trust
(24) Morgan Stanley Dean Witter Quality Municipal Securities

OPEN-END INVESTMENT COMPANIES
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Institutional Money Trust
(4) Active Assets Money Trust
(5) Active Assets Premier Money Trust
(6) Active Assets Tax-Free Trust
(7) Morgan Stanley Dean Witter 21st Century Trend Fund
(8) Morgan Stanley Dean Witter Aggressive Equity Fund
(9) Morgan Stanley Dean Witter American Opportunities Fund
(10) Morgan Stanley Dean Witter Balanced Growth Fund
(11) Morgan Stanley Dean Witter Balanced Income Fund
(12) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(13) Morgan Stanley Dean Witter California Tax-Free Income Fund
(14) Morgan Stanley Dean Witter Capital Growth Securities
(15) Morgan Stanley Dean Witter Competitive Edge Fund,"BEST IDEAS PORTFOLIO"
(16) Morgan Stanley Dean Witter Convertible Securities Trust
(17) Morgan Stanley Dean Witter Developing Growth Securities Trust
(18) Morgan Stanley Dean Witter Diversified Income Trust
(19) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(20) Morgan Stanley Dean Witter Equity Fund
(21) Morgan Stanley Dean Witter European Growth Fund Inc.
(22) Morgan Stanley Dean Witter Federal Securities Trust
(23) Morgan Stanley Dean Witter Financial Services Trust
(24) Morgan Stanley Dean Witter Fund of Funds
(25) Morgan Stanley Dean Witter Global Dividend Growth Securities
(26) Morgan Stanley Dean Witter Global Utilities Fund
(27) Morgan Stanley Dean Witter Growth Fund
(28) Morgan Stanley Dean Witter Hawaii Municipal Trust
<PAGE>

(29) Morgan Stanley Dean Witter Health Sciences Trust
(30) Morgan Stanley Dean Witter High Yield Securities Inc.
(31) Morgan Stanley Dean Witter Income Builder Fund
(32) Morgan Stanley Dean Witter Information Fund
(33) Morgan Stanley Dean Witter Intermediate Income Securities
(34) Morgan Stanley Dean Witter International Fund
(35) Morgan Stanley Dean Witter International SmallCap Fund
(36) Morgan Stanley Dean Witter Japan Fund
(37) Morgan Stanley Dean Witter Latin American Growth Fund
(38) Morgan Stanley Dean Witter Limited Term Municipal Trust
(39) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(40) Morgan Stanley Dean Witter Market Leader Trust
(41) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(42) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(43) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(44) Morgan Stanley Dean Witter New Discoveries Fund
(45) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(46) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(47) Morgan Stanley Dean Witter Next Generation Trust
(48) Morgan Stanley Dean Witter North American Government Income Trust
(49) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(50) Morgan Stanley Dean Witter Real Estate Fund
(51) Morgan Stanley Dean Witter S&P 500 Index Fund
(52) Morgan Stanley Dean Witter S&P 500 Select Fund
(53) Morgan Stanley Dean Witter Select Dimensions Investment Series
(54) Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
(55) Morgan Stanley Dean Witter Short-Term Bond Fund
(56) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(57) Morgan Stanley Dean Witter Small Cap Growth Fund
(58) Morgan Stanley Dean Witter Special Value Fund
(59) Morgan Stanley Dean Witter Strategist Fund
(60) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(61) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(62) Morgan Stanley Dean Witter Tax-Managed Growth Fund
(63) Morgan Stanley Dean Witter Technology Fund
(64) Morgan Stanley Dean Witter Total Market Index Fund
(65) Morgan Stanley Dean Witter Total Return Trust
(66) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(67) Morgan Stanley Dean Witter U.S. Government Securities Trust
(68) Morgan Stanley Dean Witter Utilities Fund
(69) Morgan Stanley Dean Witter Value-Added Market Series
(70) Morgan Stanley Dean Witter Value Fund
(71) Morgan Stanley Dean Witter Variable Investment Series
(72) Morgan Stanley Dean Witter World Wide Income Trust
<PAGE>

<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
---------------------- ------------------------------------------------
<S> <C>

Mitchell M. Merin President and Chief Operating Officer of Asset
President, Chief Management of Morgan Stanley Dean Witter & Co.
Executive Officer and ("MSDW); Chairman, Chief Executive Officer and Director
Director of Morgan Stanley Dean Witter Distributors Inc. ("MSDW
Distributors") and Morgan Stanley Dean Witter Trust FSB
("MSDW Trust"); President, Chief Executive Officer and
Director of Morgan Stanley Dean Witter Services Company
Inc. ("MSDW Services"); President of the Morgan Stanley
Dean Witter Funds; Executive Vice President and Director
of Dean Witter Reynolds Inc. ("DWR"); Director of various
MSDW subsidiaries; Trustee of various Van Kampen
investment companies.

Barry Fink General Counsel of Asset Management of MSDW;
Executive Vice President, Executive Vice President, Secretary, General Counsel
Secretary, General Counsel and Director of MSDW Services; Vice President and
and Director Secretary of MSDW Distributors; Vice President, Secretary
and General Counsel of the Morgan Stanley Dean Witter
Funds.

Joseph J. McAlinden Vice President of the Morgan Stanley Dean Witter Funds;
Executive Vice President Director of MSDW Trust.
and Chief Investment
Officer

Ronald E. Robison Executive Vice President, Chief Administrative Officer
Executive Vice President, and Director of MSDW Services; Vice President of the
Chief Administrative Morgan Stanley Dean Witter Funds.
Officer and Director

Edward C. Oelsner, III
Executive Vice President

Joseph R. Arcieri Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.

Peter M. Avelar Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the High
Yield Group

Mark Bavoso Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.

Douglas Brown
Senior Vice President
<PAGE>

Richard G. DeSalvo
Senior Vice President
and Director of Investment
Management Services

Richard Felegy
Senior Vice President

Sheila A. Finnerty Vice President of Morgan Stanley Dean Witter Prime
Senior Vice President Income Trust.

Edward F. Gaylor Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Director of the Research
Group

Robert S. Giambrone Senior Vice President of MSDW Services, MSDW
Senior Vice President Distributors and MSDW Trust and Director of MSDW Trust;
Vice President of the Morgan Stanley Dean Witter Funds.

Rajesh K. Gupta Vice President of various Morgan Stanley Dean Witter
Senior Vice President, Funds.
Director of the Taxable
Fixed Income Group and
Chief Administrative Officer -
Investments

Kenton J. Hinchliffe Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.

Kevin Hurley Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.

Jenny Beth Jones Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.

Michelle Kaufman Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.

John B. Kemp, III President of MSDW Distributors.
Senior Vice President
<PAGE>

<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
---------------------- ------------------------------------------------
<S> <C>
Anita H. Kolleeny Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of Sector
Rotation

Jonathan R. Page Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Money
Market Group

Ira N. Ross Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.

Guy G. Rutherfurd, Jr. Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Growth
Group

Rochelle G. Siegel Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.

James Solloway Jr.
Senior Vice President

Katherine H. Stromberg Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.

Paul D. Vance Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Growth
and Income Group

Elizabeth A. Vetell
Senior Vice President
and Director of Shareholder
Communication

James F. Willison Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the
Tax-Exempt Fixed
Income Group

Raymond A. Basile
First Vice President
<PAGE>

<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
---------------------- ------------------------------------------------
<S> <C>
Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President MSDW Services; Assistant Treasurer of MSDW
and Assistant Distributors; Treasurer and Chief Financial and Accounting
Treasurer Officer of the Morgan Stanley Dean Witter Funds.

Thomas Chronert
First Vice President

Richard Colville First Vice President and Controller of MSDW Services;
First Vice President Assistant Treasurer of MSDW Distributors; First Vice
and Controller President and Treasurer of MSDW Trust.

Marilyn K. Cranney Assistant Secretary of DWR; First Vice President and
First Vice President Assistant Secretary of MSDW Services; Assistant
and Assistant Secretary Secretary of MSDW Distributors and the Morgan Stanley
Dean Witter Funds.

Salvatore DeSteno First Vice President of MSDW Services.
First Vice President

Peter W. Gurman
First Vice President

David Johnson
First Vice President

Stanley Kapica
First Vice President

Douglas J. Ketterer
First Vice President

Todd Lebo First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors and
Assistant Secretary the Morgan Stanley Dean Witter Funds.

Lou Anne D. McInnis First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors and
Assistant Secretary the Morgan Stanley Dean Witter Funds.

Carsten Otto First Vice President and Assistant Secretary of MSDW
First Vice President Services; Assistant Secretary of MSDW Distributors and
and Assistant Secretary the Morgan Stanley Dean Witter Funds.

Carl F. Sadler
First Vice President
<PAGE>

<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
---------------------- ------------------------------------------------
<S> <C>
Ruth Rossi First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors and
Assistant Secretary the Morgan Stanley Dean Witter Funds.

James P. Wallin
First Vice President

Robert Abreu
Vice President

Dale Albright
Vice President

Joan G. Allman
Vice President

Andrew Arbenz Vice President of Morgan Stanley Dean Witter Global
Vice President Utilities Fund.

Sean Aurigemma
Vice President

Armon Bar-Tur Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

Thomas A. Bergeron
Vice President

Philip Bernstein
Vice President

Dale Boettcher
Vice President

Michelina Calandrella
Vice President

Ronald Caldwell
Vice President

Joseph Cardwell
Vice President

Christie Carr-Waldron
Vice President
<PAGE>

Philip Casparius
Vice President

Annette Celenza
Vice President

Aaron Clark Vice President of Morgan Stanley Dean Witter Market
Vice President Leader Trust.

William Connerly
Vice President

Virginia Connors
Vice President

Michael J. Davey
Vice President

David Dineen Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

June Ewers
Vice President

Jeffrey D. Geffen Vice President of Morgan Stanley Dean Witter U.S.
Vice President Government Securities Trust.

Sandra Gelpieryn
Vice President

Charmaine George
Vice President

Michael Geringer
Vice President

Gail Gerrity Burke
Vice President

Peter Gewirtz
Vice President

Mina Gitsevich
Vice President
<PAGE>

Amy Golub
Vice President

Stephen Greenhut
Vice President

Joan Hamilton
Vice President

Trey Hancock
Vice President

Matthew T. Haynes Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

Peter Hermann Jr. Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

David T. Hoffman
Vice President

Thomas G. Hudson II
Vice President

Linda Jones
Vice President

Norman Jones
Vice President

Kevin Jung Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

Carol Espejo-Kane
Vice President

Nancy Karole Kennedy
Vice President

Paula LaCosta Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

Kimberly LaHart
Vice President
<PAGE>

Lester Lay
Vice President

Phuong Le
Vice President

Gerard J. Lian Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

Cameron J. Livingstone
Vice President

Nancy Login Cole
Vice President

Sharon Loguercio
Vice President

Stephanie Lovinger
Vice President

Steven MacNamara
Vice President

Catherine Maniscalco Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

Peter R. McDowell
Vice President

Albert McGarity
Vice President

Teresa McRoberts Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

Mark Mitchell
Vice President

Thomas Moore
Vice President

Julie Morrone Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
<PAGE>

David Myers Vice President of Morgan Stanley Dean Witter Natural
Vice President Resource Development Securities Inc.

James Nash
Vice President

Daniel Niland
Vice President

Richard Norris
Vice President

Hilary A. O'Neill
Vice President

Steven Orlov
Vice President

Mori Paulsen
Vice President

Anne Pickrell
Vice President

Reginald Rigaud
Vice President

Frances Roman
Vice President

Dawn Rorke
Vice President

John Roscoe Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

Hugh Rose
Vice President

Robert Rossetti Vice President of Morgan Stanley Dean Witter Competitive
Vice President Edge Fund.

Sally Sancimino Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
<PAGE>

Patrice Saunders
Vice President

Donna Savoca
Vice President

Howard A. Schloss Vice President of Morgan Stanley Dean Witter Federal
Vice President Securities Trust.

Alison M. Sharkey
Vice President

Peter J. Seeley Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

Ronald B. Silvestri Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

Herbert Simon
Vice President

Martha Slezak
Vice President

Frank Smith
Vice President

Otha Smith
Vice President

Stuart Smith
Vice President

Robert Stearns
Vice President

Naomi Stein
Vice President

William Stevens
Vice President

Michael Strayhorn
Vice President
<PAGE>

Michael Thayer
Vice President

Bradford Thomas
Vice President

Barbara Toich
Vice President

Robert Vanden Assem
Vice President

Frank Vindigni
Vice President

David Walsh
Vice President

Alice Weiss Vice President of various Morgan Stanley Dean Witter
Vice President Funds.

John Wong
Vice President
</TABLE>

The principal address of MSDW Advisors, MSDW Services, MSDW Distributors,
DWR, and the Morgan Stanley Dean Witter Funds is Two World Trade Center, New
York, New York 10048. The principal address of MSDW is 1585 Broadway, New York,
New York 10036. The principal address of MSDW Trust is 2 Harborside Financial
Center, Jersey City, New Jersey 07311.

Item 27. PRINCIPAL UNDERWRITERS

(a) Morgan Stanley Dean Witter Distributors Inc. ("MSDW Distributors"), a
Delaware corporation, is the principal underwriter of the Registrant. MSDW
Distributors is also the principal underwriter of the following investment
companies:

(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Institutional Money Trust
(4) Active Assets Money Trust
(5) Active Assets Premier Money Trust
(6) Active Assets Tax-Free Trust
(7) Morgan Stanley Dean Witter 21st Century Trend Fund
(8) Morgan Stanley Dean Witter Aggressive Equity Fund
<PAGE>

(9) Morgan Stanley Dean Witter American Opportunities Fund
(10) Morgan Stanley Dean Witter Balanced Growth Fund
(11) Morgan Stanley Dean Witter Balanced Income Fund
(12) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(13) Morgan Stanley Dean Witter California Tax-Free Income Fund
(14) Morgan Stanley Dean Witter Capital Growth Securities
(15) Morgan Stanley Dean Witter Competitive Edge Fund,"BEST IDEAS PORTFOLIO"
(16) Morgan Stanley Dean Witter Convertible Securities Trust
(17) Morgan Stanley Dean Witter Developing Growth Securities Trust
(18) Morgan Stanley Dean Witter Diversified Income Trust
(19) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(20) Morgan Stanley Dean Witter Equity Fund
(21) Morgan Stanley Dean Witter European Growth Fund Inc.
(22) Morgan Stanley Dean Witter Federal Securities Trust
(23) Morgan Stanley Dean Witter Financial Services Trust
(24) Morgan Stanley Dean Witter Fund of Funds
(25) Morgan Stanley Dean Witter Global Dividend Growth Securities
(26) Morgan Stanley Dean Witter Global Utilities Fund
(27) Morgan Stanley Dean Witter Growth Fund
(28) Morgan Stanley Dean Witter Hawaii Municipal Trust
(29) Morgan Stanley Dean Witter Health Sciences Trust
(30) Morgan Stanley Dean Witter High Yield Securities Inc.
(31) Morgan Stanley Dean Witter Income Builder Fund
(32) Morgan Stanley Dean Witter Information Fund
(33) Morgan Stanley Dean Witter Intermediate Income Securities
(34) Morgan Stanley Dean Witter International Fund
(35) Morgan Stanley Dean Witter International SmallCap Fund
(36) Morgan Stanley Dean Witter Japan Fund
(37) Morgan Stanley Dean Witter Latin American Growth Fund
(38) Morgan Stanley Dean Witter Limited Term Municipal Trust
(39) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(40) Morgan Stanley Dean Witter Market Leader Trust
(41) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(42) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(43) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(44) Morgan Stanley Dean Witter New Discoveries Fund
(45) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(46) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(47) Morgan Stanley Dean Witter Next Generation Trust
(48) Morgan Stanley Dean Witter North American Government Income Trust
(49) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(50) Morgan Stanley Dean Witter Prime Income Trust
(51) Morgan Stanley Dean Witter Real Estate Fund
(52) Morgan Stanley Dean Witter S&P 500 Index Fund
(53) Morgan Stanley Dean Witter S&P 500 Select Fund
(54) Morgan Stanley Dean Witter Short-Term Bond Fund
(55) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(56) Morgan Stanley Dean Witter Small Cap Growth Fund
(57) Morgan Stanley Dean Witter Special Value Fund
(58) Morgan Stanley Dean Witter Strategist Fund
(59) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
<PAGE>

(60) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(61) Morgan Stanley Dean Witter Tax-Managed Growth Fund
(62) Morgan Stanley Dean Witter Technology Fund
(63) Morgan Stanley Dean Witter Total Market Index Fund
(64) Morgan Stanley Dean Witter Total Return Trust
(65) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(66) Morgan Stanley Dean Witter U.S. Government Securities Trust
(67) Morgan Stanley Dean Witter Utilities Fund
(68) Morgan Stanley Dean Witter Value-Added Market Series
(69) Morgan Stanley Dean Witter Value Fund
(70) Morgan Stanley Dean Witter Variable Investment Series
(71) Morgan Stanley Dean Witter World Wide Income Trust

(b) The following information is given regarding directors and officers of
MSDW Distributors not listed in Item 26 above. The principal address of MSDW
Distributors is Two World Trade Center, New York, New York 10048. Other than
Messrs. Higgins and Purcell, who are Directors of the Registrant, none of the
following persons has any position or office with the Registrant.

NAME POSITIONS AND OFFICE WITH MSDW DISTRIBUTORS

James F. Higgins Director

Philip J. Purcell Director

John Schaeffer Director

Charles Vadala Senior Vice President and Financial Principal.

Item 28. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained by the Investment Manager at its offices, except records relating to
holders of shares issued by the Registrant, which are maintained by the
Registrant's Transfer Agent, at its place of business as shown in the
prospectus.

Item 29. MANAGEMENT SERVICES

Registrant is not a party to any such management-related service
contract.

Item 30. UNDERTAKINGS

Registrant hereby undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York on the 30th day of October, 2000.

MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.

By: /s/ Barry Fink
--------------------------------
Barry Fink
Vice President and Secretary

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No.26 has been signed below by the following persons in
the capacities and on the dates indicated.

Signatures Title Date
---------- ----- ----
<S> <C> <C>
(1) Principal Executive Officer Chairman, Chief Executive Officer
and Director

By: /s/ Charles A. Fiumefreddo 10/30/00
------------------------------
Charles A. Fiumefreddo

(2) Principal Financial Officer Treasurer and Principal
Accounting Officer

By: /s/ Thomas F. Caloia 10/30/00
------------------------------
Thomas F. Caloia

(3) Majority of the Directors

Charles A. Fiumefreddo (Chairman)
Philip J. Purcell
James F. Higgins

By: /s/ Barry Fink 10/30/00
------------------------------
Barry Fink
Attorney-in-Fact

Michael Bozic Manuel H. Johnson
Edwin J. Garn Michael E. Nugent
Wayne E. Hedien John L. Schroeder

By: /s/ David M. Butowsky 10/30/00
------------------------------
David M. Butowsky
Attorney-in-Fact
</TABLE>
<PAGE>

MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.

PART C OTHER INFORMATION

8(a). Amended and Restated Transfer Agency and Service Agreement between the
Registrant and Morgan Stanley Dean Witter Trust FSB

10(a). Consent of Independent Auditors

10(b). Consent of PricewaterhouseCoopers LLP

14. Amended Multi-Class Plan pursuant to Rule 18f-3

16(a). Codes of Ethics of Morgan Stanley Dean Witter Advisors Inc., Morgan
Stanley Dean Witter Services Company Inc. and Morgan Stanley Dean
Witter Distributors Inc.

16(b). Code of Ethics of the Morgan Stanley Dean Witter Funds

Other Power of Attorney of James F. Higgins