MORGAN STANLEY DEAN WITTER TAX EXEMPT SECURITIES TRUST, 485BPOS, 2000-02-24

MORGAN STANLEY DEAN WITTER TAX EXEMPT SECURITIES TRUST
485BPOS, 2000-02-24

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 24, 2000
REGISTRATION NO. 2-66268
811-2979
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 23 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
AMENDMENT NO. 24 [X]

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

MORGAN STANLEY DEAN WITTER TAX-EXEMPT SECURITIES TRUST
(A MASSACHUSETTS BUSINESS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

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

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

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

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COPY TO:

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

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

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

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

immediately upon filing pursuant to paragraph (b)
----
X on February 24, 2000 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)
----
on (date) pursuant to paragraph (a) of rule 485.
----

AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PROSPECTUS - FEBRUARY 24, 2000

Morgan Stanley Dean Witter

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

TAX-EXEMPT SECURITIES TRUST

A MUTUAL FUND THAT SEEKS TO PROVIDE A HIGH LEVEL OF CURRENT INCOME EXEMPT FROM
FEDERAL INCOME TAX, CONSISTENT WITH THE PRESERVATION OF CAPITAL

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>
The Fund Investment Objective........................1
Principal Investment Strategies.............1
Principal Risks.............................2
Past Performance............................4
Fees and Expenses...........................6
Additional Investment Strategy Information..7
Additional Risk Information.................8
Fund Management.............................9

Shareholder Information Pricing Fund Shares........................10
How to Buy Shares..........................10
How to Exchange Shares.....................12
How to Sell Shares.........................14
Distributions..............................16
Tax Consequences...........................16
Share Class Arrangements...................18

Financial Highlights ..........................................25

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>

THE FUND

[GRAPHIC OMITTED]

INVESTMENT OBJECTIVE
- --------------------------------

Morgan Stanley Dean Witter Tax-Exempt Securities Trust (the "Fund")
seeks to provide a high level of current income exempt from federal
income tax, consistent with the preservation of capital.

[GRAPHIC OMITTED]

PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------

The Fund will normally invest at least 80% of its total
assets in securities that pay interest exempt from
federal income taxes. The Fund's "Investment Manager,"
Morgan Stanley Dean Witter Advisors Inc., generally
invests the Fund's assets in municipal obligations.
Municipal obligations are bonds, notes or short-term
commercial paper issued by state governments, local
governments, and their respective agencies. At least
75% of these municipal obligations will have the
following ratings at the time of purchase:

o municipal bonds -- within the three highest grades by
Moody's Investors Service Inc.
("Moody's"), Standard & Poor's
Corporation ("S&P"), or Fitch IBCA,
Inc. ("Fitch");

o municipal notes -- within the two highest grades or, if
not rated, have outstanding bonds
within the three highest grades by
Moody's, S&P or Fitch; and

o municipal commercial paper -- within the highest grade by
Moody's, S&P or Fitch.

[sidebar open]
INCOME
An investment objective having the goal of selecting securities to pay out
income rather than rise in price.
[end sidebar]

The Fund may invest up to 25% of its assets in municipal obligations
that are rated below the limits stated above or are not rated by
those rating agencies. However, the Fund may only invest up to 5% of
its assets in municipal obligations rated below investment grade or,
if unrated, of comparable quality as determined by the Investment
Manager (commonly known as "junk bonds").

The Fund may invest up to 10% of its assets in inverse floating rate
municipal obligations. The interest rates on these obligations
generally move in the reverse direction of market interest rates. If
market interest rates fall, the interest rate on the obligations will
increase and if market interest rates increase, the interest rate on
the obligations will fall.

The Fund may invest up to 20% of its assets in taxable money market
instruments or securities that pay interest income subject to the
"alternative minimum tax," and some

<PAGE>

taxpayers may have to pay tax on a Fund distribution of this income.
The Fund therefore may not be a suitable investment for these
investors. See the "Tax Consequences" section for more details.

Municipal bonds, notes and commercial paper are commonly classified
as either "general obligation" or "revenue." General obligation
bonds, notes, and commercial paper are secured by the issuer's faith
and credit including its taxing power, for payment of principal and
interest. Revenue bonds, notes and commercial paper, however, are
generally payable from a specific source of income. 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 category are participations in lease obligations.
The Fund's municipal obligation investments may include zero coupon
securities, which are purchased at a discount and accrue interest,
but make no interest payments until maturity.

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

[GRAPHIC OMITTED]

PRINCIPAL RISKS
- --------------------------

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

Credit and Interest Rate Risks. Municipal obligations, like other
debt securities, are subject to two types of risks: 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. In the case of revenue bonds, notes or commercial paper,
for example, the credit risk is the possibility that the user fees
from a project or other specified revenue sources are insufficient to
meet interest and/or principal payment obligations. The issuers of
private activity bonds, used to finance projects in sectors such as
industrial development and pollution control, also may be negatively
impacted by the general credit of the user of the project.

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

<PAGE>

securities that pay current interest. As a general illustration of
the relationship between fixed-income securities and interest rates,
the following table shows how interest rates affect bond prices.

HOW INTEREST RATES AFFECT BOND PRICES
----------------------------------------------------------

<TABLE>
<CAPTION>
PRICE PER $1,000 OF A MUNICIPAL BOND
IF INTEREST
RATES:
-----------------------------------
INCREASE* DECREASE**
-----------------------------------
BOND MATURITY COUPON 1% 2% 1% 2%
- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year 2000 3.95% $990 $981 $1,010 $1,020
- --------------------------------------------------------------------
5 Years 2004 4.70% $957 $916 $1,045 $1,093
- --------------------------------------------------------------------
10 Years 2009 5.05% $926 $858 $1,082 $1,171
- --------------------------------------------------------------------
20 Years 2019 5.80% $892 $799 $1,128 $1,278
- --------------------------------------------------------------------
30 Years 2029 5.95% $875 $773 $1,155 $1,350
- --------------------------------------------------------------------
</TABLE>

Source: Municipal Market Data (a division of Thomson
Financial Municipal Group); "Aaa" yield curve as of
12/31/99. The table is not representative of price
changes for inverse floating rate municipal
obligations which typically respond to changes in
interest rates to a greater extent than comparable
obligations. 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.

* Assumes no effect from market discount calculation.
**Assumes bonds are non-callable.

The Fund is not limited as to the maturities of the municipal
obligations in which it may invest. Thus, a rise in the general level
of interest rates may cause the price of the Fund's portfolio
securities to fall substantially.

Inverse Floating Rate Municipal Obligations. The inverse floating
rate municipal obligations in which the Fund may invest are typically
created through a division of a fixed rate municipal obligation into
two separate instruments, a short-term obligation and a long-term
obligation. The interest rate on the short-term obligation is set at
periodic auctions. The interest rate on the long-term obligation is
the rate the issuer would have paid on the fixed income obligation:
(i) plus the difference between such fixed rate and the rate on the
short-term obligation, if the short-term rate is lower than the fixed
rate; or (ii) minus such difference if the interest rate on the
short-term obligation is higher than the fixed rate. Inverse floating
rate municipal obligations offer the potential for higher income than
is available from fixed rate obligations of comparable maturity and
credit rating. They also carry greater risks. In particular, the
prices of inverse floating rate municipal obligations are more
volatile, i.e., they increase and decrease in response to changes in
interest rates to a greater extent than comparable fixed rate
obligations.

<PAGE>

Other Risks. The performance of the Fund also will depend on whether
the Investment Manager is successful in pursuing the Fund's
investment strategy. The Fund is also subject to other risks from its
permissible investments including the risks associated with its lease
obligations investments. For more information about these risks, see
the "Additional Risk Information" section.

Shares of the Fund are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

[GRAPHIC OMITTED]

PAST PERFORMANCE
- ----------------------------

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

ANNUAL TOTAL RETURNS -- CALENDAR YEARS

[GRAPHIC OMITTED]

1990 5.86%
1991 12.71%
1992 9.09%
1993 11.23%
1994 -5.55%
1995 17.37%
1996 3.61%
1997 8.73%
1998 6.11%
1999 -2.71%

The bar chart reflects the performance of Class D
shares. All shares held prior to the Fund adopting its
Multi-Class Structure on July 28, 1997 were designated
Class D Shares. Prior to that date, shares were subject
to a front-end sales charge, which is not reflected in
the bar chart. The performance of the other Classes
will differ because the Classes have different ongoing
fees.

[open 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]

During the periods shown in the bar chart, the highest
return for a calendar quarter was 6.89% (quarter ended
March 31, 1995) and the lowest return for a calendar
quarter was --5.50% (quarter ended March 31, 1994).

<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999)
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<TABLE>
<CAPTION>
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A1 -6.95% 5.27% 5.73%
- -------------------------------------------------------------------------------------
Class B2 -7.86% -- --
- -------------------------------------------------------------------------------------
Class C2 -4.29% -- --
- -------------------------------------------------------------------------------------
Class D3 -2.71% 6.42% 6.44%
- -------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index4 -2.06% 6.91% 6.89%
- -------------------------------------------------------------------------------------
</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 4.00%
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 Municipal Bond Index tracks the performance of
Municipal bonds with maturities of 2 years or more and a minimum credit
rating of Baa or BBB, as measured by Moody's Investor Service, Inc. or
Standard & Poor's Corp. The Index does not include any expenses, fees, or
changes. The Index is unmanaged and should not be considered an investment.

[sidebar open]
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Fund's average annual 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]

<PAGE>

[GRAPHIC OMITTED]

FEES AND EXPENSES
- -----------------------------

The table below briefly describes the fees and expenses that you may
pay if you buy and hold shares of the Fund. The Fund offers four
Classes of shares: Classes A, B, C and D. Each Class has a different
combination of fees, expenses and other features. The Fund does not
charge account or exchange fees. See the "Share Class Arrangements"
section for further fee and expense information.

<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) None2 5.00%3 1.00%4 None
- --------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------------------------------
Management fee 0.44 % 0.44 % 0.44 % 0.44%
- --------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.13 % 0.60 % 0.70 % None
- --------------------------------------------------------------------------------------------------------
Other expenses 0.07 % 0.07 % 0.07 % 0.07%
- --------------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 0.64 % 1.11 % 1.21 % 0.51%
- --------------------------------------------------------------------------------------------------------
</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.

[sidebar open]
SHAREHOLDER FEES
These fees are paid directly from your investment.
[end sidebar]

[sidebar open]
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted from the Fund's assets and are based on expenses
paid for the fiscal year ended December 31, 1999.
[end sidebar]

<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
(redeem) your shares at the end of each period.

<TABLE>
<CAPTION>
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES:
--------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- -------- --------- --------- ---------- --------- --------- --------- ---------
CLASS A $ 488 $621 $767 $1,189 $ 488 $621 $767 $ 1,189
- ----------- ----- ---- ---- ------ ----- ---- ---- -------
CLASS B $ 613 $653 $812 $1,352 $ 113 $353 $612 $ 1,352
- ----------- ----- ---- ---- ------ ----- ---- ---- -------
CLASS C $ 223 $384 $665 $1,466 $ 123 $384 $665 $ 1,466
- ----------- ----- ---- ---- ------ ----- ---- ---- -------
CLASS D $52 $164 $285 $640 $ 52 $164 $285 $640
- ----------- ----- ---- ---- ------ ----- ---- ---- -------
</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.

[GRAPHIC OMITTED]

ADDITIONAL INVESTMENT STRATEGY INFORMATION
- ---------------------------------------------------------
This section provides additional information relating to the Fund's
principal strategies.

Lease Obligations. Included within the revenue bonds category are
participations in lease obligations or installment purchase contracts
of municipalities. Generally, state and local agencies or authorities
issue lease obligations to acquire equipment and facilities for
public and private purposes.

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 taxable securities, or in
tax-exempt securities subject to the federal alternative minimum tax
for individual shareholders 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 Fund's ability to provide
tax-exempt income. When the Fund takes a defensive position, it may
not achieve its investment objective.

The percentage limitations relating to the composition of the Fund's
portfolio apply at the time the Fund acquires an investment and refer
to the Fund's net assets, unless otherwise noted. Subsequent
percentage changes that result from market fluctuations

<PAGE>

will not require the Fund to sell any portfolio security. The Fund
may change its principal investment strategies without shareholder
approval; however, you would be notified of any changes.

[GRAPHIC OMITTED]

ADDITIONAL RISK INFORMATION
- ----------------------------------------

This section provides additional information relating to the
principal risks of investing in the Fund.

Bond Insurance Risk. Many of the municipal obligations the Fund
invests in will be covered by insurance at the time of issuance or at
a later date. Such insurance covers the remaining term of the
security. Insured municipal obligations would generally be assigned a
lower rating if the rating were based primarily on the credit quality
of the issuer without regard to the insurance feature. If the
claims-paying ability of the insurer were downgraded, the ratings on
the municipal obligations it insures may also be downgraded.

Lease Obligations. Lease obligations may have risks not normally
associated with general obligation or other revenue bonds. Leases and
installment purchase or conditional sale contracts (which may provide
for title to the leased asset to pass eventually to the issuer) have
developed, in part, as a means for governmental issuers to acquire
property and equipment without the necessity of complying with the
constitutional and statutory requirements generally applicable for
the issuance of debt. Certain lease obligations contain
"non-appropriation" clauses that provide that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for that purpose by the appropriate
legislative body on an annual or other periodic basis. Consequently,
continued lease payments on those lease obligations containing
"non-appropriation" clauses are dependent on future legislative
actions. If these legislative actions do not occur, the holders of
the lease obligation may experience difficulty in exercising their
rights, including disposition of the property.

<PAGE>

[GRAPHIC OMITTED]

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.

[sidebar open]
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 $145 billion in assets under
management as of January 31, 2000.
[end sidebar]

The Fund's portfolio is managed within the Investment
Manager's Tax-Exempt Group. James F. Willison, Senior
Vice President and Director of the Tax-Exempt
Fixed-Income Group of the Investment Manager has been
a primary portfolio manager of the Fund since its
inception. Joseph R. Arcieri, Senior Vice President of
the Investment Manager, has been a primary portfolio
manager of the Fund since February 1997. Mr. Willison
and Mr. Arcieri have been portfolio managers 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 December 31, 1999, the Fund accrued
total compensation to the Investment Manager amounting
to 0.44% of the Fund's average daily net assets.

<PAGE>

SHAREHOLDER INFORMATION

[GRAPHIC OMITTED]

PRICING FUND SHARES
- -------------------------------
The price of Fund shares (excluding sales charges), called "net asset
value," is based on the value of the Fund's portfolio securities.
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 Fund's portfolio securities (except for short-term taxable debt
securities and certain other investments) are valued by an outside
independent pricing service. The service uses a computerized grid
matrix of tax-exempt securities and its evaluations in determining
what it believes is the fair value of the portfolio securities. The
Fund's Board of Trustees believes that timely and reliable market
quotations are generally not readily available to the Fund to value
tax-exempt securities and the valuations that the pricing service
supplies are more likely to approximate the fair value of the
securities.

An exception to the Fund's general pricing policy concerns its
short-term debt securities. Debt securities with remaining maturities
of sixty days or less at the time of purchase are valued at amortized
cost. However, if the cost does not reflect the securities' market
value, these securities will be valued at their fair value.

[GRAPHIC OMITTED]

HOW TO BUY SHARES

- ------------------------------
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. Your Financial Advisor or other authorized
financial representative 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.

[sidebar open]
CONTACTING A FINANCIAL ADVISOR
If you are new to the Morgan Stanley Dean Witter Family of Funds and would like
to contact a Financial Advisor, call (877) 937-MSDW (toll-free) for the
telephone number of the Morgan Stanley Dean Witter office nearest you. You may
also access our office locator on our Internet site at:
www.msdw.com/individual/funds
[end sidebar]

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.

<PAGE>

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.

MINIMUM INVESTMENT AMOUNTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MINIMUM INVESTMENT
-------------------------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
<S> <C> <C>
- -------------------------------------------------------------------
Regular Accounts $1,000 $100
- -------------------------------------------------------------------
EasyInvest(Service Mark)
(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.

[sidebar]
EASYINVEST(SERVICE MARK)
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]

There is no minimum investment amount if you purchase
Fund shares through: (1) the Investment Manager's
mutual fund asset allocation plan, (2) a program,
approved by the Fund's distributor, in which you pay
an asset-based fee for advisory, administrative and/or
brokerage services, or (3) employer-sponsored employee
benefit plan accounts.

Investment Options for Certain Institutional and Other
Investors/Class D Shares. To be eligible to purchase Class D shares,
you must qualify under one of the investor categories specified in
the "Share Class Arrangements" section of this Prospectus.

Subsequent Investments Sent Directly to the Fund. In addition to
buying additional Fund shares for an existing account by contacting
your Morgan Stanley Dean Witter Financial Advisor, you may send a
check directly to the Fund. To buy additional shares in this manner:

o Write a "letter of instruction" to the Fund specifying the
name(s) on the account, the account number, the social security or
tax identification number, the Class of shares you wish to purchase
and the investment amount (which would include any applicable
front-end sales charge). The letter must be signed by the account
owner(s).

o Make out a check for the total amount payable to: Morgan Stanley
Dean Witter Tax-Exempt Securities Trust.

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

<PAGE>

[GRAPHIC OMITTED]

HOW TO EXCHANGE SHARES
- ------------------------------------

Permissible Fund Exchanges. You may exchange shares of any Class of
the Fund for the same Class of any other continuously offered
Multi-Class Fund, or for shares of a No-Load Fund, a Money Market
Fund, North American Government Income Trust or Short-Term U.S.
Treasury Trust, without the imposition of an exchange fee. See the
inside back cover of this prospectus for each Morgan Stanley Dean
Witter Fund's designation as a Multi-Class Fund, No-Load Fund or
Money Market Fund. If a Morgan Stanley Dean Witter Fund is not
listed, consult the inside back cover of that Fund's prospectus for
its designation. For purposes of exchanges, shares of FSC Funds
(subject to a front-end sales charge) are treated as Class A shares
of a Multi-Class Fund.

Exchanges may be made after shares of the 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

<PAGE>

requiring various forms of personal identification such as name,
mailing address, social security or other tax identification number.
Telephone instructions also may be recorded.

Telephone instructions will be accepted if received by the Fund's
transfer agent between 9:00 a.m. and 4:00 p.m. Eastern time on any
day the New York Stock Exchange is open for business. During periods
of drastic economic or market changes, it is possible that the
telephone exchange procedures may be difficult to implement, although
this has not been the case with the Fund in the past.

Margin Accounts. If you have pledged your Fund shares in a margin
account, contact your Morgan 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 exchanges may result in
the Fund limiting or prohibiting, at its discretion, additional
purchases and/or exchanges. Determinations in this regard may be made
based on the frequency or dollar amount of previous exchanges. The
Fund will notify you in advance of limiting your exchange privileges.

CDSC Calculations on Exchanges. See the "Share Class Arrangements"
section of this Prospectus for a 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.

<PAGE>

[GRAPHIC OMITTED]

HOW TO SELL SHARES
- -------------------------------
You can sell some or all of your Fund shares at any time. If you sell
Class A, Class B or Class C shares, your net sale proceeds are
reduced by the amount of any applicable CDSC. Your shares will be
sold at the next price calculated after we receive your order to sell
as described below.

<TABLE>
<CAPTION>
OPTIONS PROCEDURES
- --------------------- --------------------------------------------------------------------------------------------
<S> <C>
Contact Your To sell your shares, simply call your Morgan Stanley Dean Witter Financial Advisor or
Financial Advisor other authorized financial representative.
--------------------------------------------------------------------------------------------
[GRAPHIC OMITTED] Payment will be sent to the address to which the account is registered or deposited in
your brokerage account.
- --------------------- --------------------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of instruction" that includes:
o your account number;
[GRAPHIC OMITTED] o the dollar amount or the number of shares you wish to sell;
o the Class of shares you wish to sell; and
o the signature of each owner as it appears on the account.
--------------------------------------------------------------------------------------------
If you are requesting payment to anyone other than the registered owner(s) or that
payment be sent to any address other than the address of the registered owner(s) or
pre-designated bank account, you will need a signature guarantee. You can obtain a
signature guarantee from an eligible guarantor acceptable to Morgan Stanley Dean
Witter Trust FSB. (You should contact Morgan Stanley Dean Witter Trust FSB at (800)
869-NEWS for a determination as to whether a particular institution is an eligible
guarantor.) A notary public cannot provide a signature guarantee. Additional
documentation may be required for shares held by a corporation, partnership, trustee
or executor.

--------------------------------------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at P.O. Box 983, Jersey City, NJ
07303. If you hold share certificates, you must return the certificates, along with the
letter and any required additional documentation.
--------------------------------------------------------------------------------------------

A check will be mailed to the name(s) and address in which the account is registered, or
otherwise according to your instructions.
- ------------------------------------------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter Family of Funds has a total
Withdrawal Plan market value of at least $10,000, you may elect to withdraw amounts of $25 or more,
or in any whole percentage of a Fund's balance (provided the amount is at least $25), on
[GRAPHIC OMITTED] a monthly, quarterly, semi-annual or annual basis, from any Fund with a balance of at least
$1,000. Each time you add a Fund to the plan, you must meet the plan requirements.
--------------------------------------------------------------------------------------------
Amounts withdrawn are subject to any applicable CDSC. A CDSC may be waived
under certain circumstances. See the Class B waiver categories listed in the "Share Class
Arrangements" section of this Prospectus.
--------------------------------------------------------------------------------------------
To sign up for the Systematic Withdrawal Plan, contact your Morgan Stanley Dean
Witter Financial Advisor or call (800) 869-NEWS. You may terminate or suspend your
plan at any time. Please remember that withdrawals from the plan are sales of shares,
not Fund "distributions," and ultimately may exhaust your account balance. The Fund
may terminate or revise the plan at any time.
--------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

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

Payment may be postponed or the right to sell your shares suspended,
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.

Reinstatement Privilege. If you sell Fund shares and have not
previously exercised the reinstatement privilege, you may, within 35
days after the date of sale, invest any portion of the proceeds in
the same Class of Fund shares at their net asset value and receive a
pro rata credit for any CDSC paid in connection with the sale.

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

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

<PAGE>

[GRAPHIC OMITTED]

DISTRIBUTIONS
- ------------------------
The Fund passes substantially all of its earnings from
income and capital gains along to its investors as
"distributions." The Fund earns 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."

[sidebar open]
TARGETED DIVIDENDS(SERVICE MARK)
You may select to have your Fund distributions automatically invested in other
Classes of Fund shares or Classes of another Morgan Stanley Dean Witter Fund
that you own. Contact your Morgan Stanley Dean Witter Financial Advisor for
further information about this service.
[end sidebar]

The Fund 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
declared on each day the New York Stock Exchange is
open for business, and are distributed to shareholders
monthly. Capital gains, if any, are usually
distributed in June and December. The Fund, however,
may retain and reinvest any long-term capital gains.
The Fund may at times make payments from sources other
than income or capital gains that represent a return
of a portion of your investment.

Distributions are reinvested automatically in additional shares of
the same Class and automatically credited to your account, unless you
request in writing that all distributions be paid in cash. If you
elect the cash option, processing of your dividend checks begins
immediately following the monthly payment date, and the Fund will
mail a monthly dividend check to you normally during the first seven
days of the following month. No interest will accrue on uncashed
checks. If you wish to change how your distributions are paid, your
request should be received by the Fund's transfer agent, Morgan
Stanley Dean Witter Trust FSB, at least five business days prior to
the record date of the distributions.

[GRAPHIC OMITTED]

TAX CONSEQUENCES
- ----------------------------
As with any investment, you should consider how your Fund investment
will be taxed. The tax information in this Prospectus is provided as
general information. You should consult your own tax professional
about the tax consequences of an investment in the Fund.

You need to be aware of the possible tax consequences when:

o The Fund makes distributions; and

o You sell Fund shares, including an exchange to another Morgan
Stanley Dean Witter Fund.

<PAGE>

Taxes on Distributions. Your income dividend distributions are
normally exempt from federal income taxes -- to the extent they are
derived from municipal obligations. Income derived from other
portfolio securities may be subject to federal, state and/or local
income taxes.

Income derived from some municipal securities is subject to the
federal "alternative minimum tax." Certain tax-exempt securities
whose proceeds are used to finance private, for-profit organizations
are subject to this special tax system that ensures that individuals
pay at least some federal taxes. Although interest on these
securities is generally exempt from federal income tax, some
taxpayers who have many tax deductions or exemptions nevertheless may
have to pay tax on the income.

If you borrow money to purchase shares of the Fund, the interest on
the borrowed money is generally not deductible for personal income
tax purposes.

If the Fund makes any capital gain distributions, those distributions
will normally be subject to federal income tax when they are paid,
whether you take them in cash or reinvest them in the Fund shares.
Any long-term capital gain distributions are taxable to you as
long-term capital gains, no matter how long you have owned shares in
the Fund.

The Fund may derive gains in part from municipal obligations the Fund
purchased below their principal or face values. All, or a portion, of
these gains may be taxable to you as ordinary income rather than
capital gains.

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.

<PAGE>

[GRAPHIC OMITTED]

SHARE CLASS ARRANGEMENTS
- -------------------------------------
The Fund offers several Classes of shares having different
distribution arrangements designed to provide you with different
purchase options according to your investment needs. Your Morgan
Stanley Dean Witter Financial Advisor or other authorized financial
representative can help you decide which Class may be appropriate for
you.

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

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

<TABLE>
<CAPTION>
MAXIMUM
CLASS SALES CHARGE ANNUAL 12B-1 FEE
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
A Maximum 4.25% initial sales charge reduced for purchases 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 0.60%
- --------------------------------------------------------------------------------------------------------------
C 1.0% CDSC during the first year 0.70%
- --------------------------------------------------------------------------------------------------------------
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.

<PAGE>

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>
[sidebar open]
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]

FRONT-END SALES CHARGE
-----------------------------------------------
AMOUNT OF PERCENTAGE OF APPROXIMATE PERCENTAGE
SINGLE TRANSACTION PUBLIC OFFERING PRICE OF 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 0
- -------------------------------------------------------------------------------------
</TABLE>

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

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

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

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

o Tax-exempt organizations.

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

Combined Purchase Privilege. You also will have the benefit of
reduced sales charges by combining purchases of Class A shares of the
Fund in a single transaction with purchases of Class A shares of
other Multi-Class Funds and shares of FSC Funds.

Right of Accumulation. You also may benefit from a reduction of sales
charges if the cumulative net asset value of Class A shares of the
Fund purchased in a single transaction, together with shares of other
Funds you currently own which were previously purchased at a price
including a front-end sales charge (including shares acquired through
reinvestment of distributions), amounts to $25,000 or more. Also, if
you have a cumulative net asset value of all your Class A and Class D
shares equal to at least $5 million (or $25 million for certain
employee benefit plans), you are eligible to purchase Class D shares
of any Fund subject to the Fund's minimum initial investment
requirement.

<PAGE>

You must notify your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative (or Morgan Stanley Dean
Witter Trust FSB if you purchase directly through the Fund), at the
time a purchase order is placed, that the purchase qualifies for the
reduced charge under the Right of Accumulation. Similar notification
must be made in writing when an order is placed by mail. The reduced
sales charge will not be granted if: (i) notification is not
furnished at the time of the order; or (ii) a review of the records
of Dean Witter Reynolds or other authorized dealer of Fund shares or
the Fund's transfer agent does not confirm your represented holdings.

Letter of Intent. The schedule of reduced sales charges for larger
purchases also will be available to you if you enter into a written
"letter of intent." A letter of intent provides for the purchase of
Class A shares of the Fund or other Multi-Class Funds or shares of
FSC Funds within a thirteen-month period. The initial purchase under
a letter of intent must be at least 5% of the stated investment goal.
To determine the applicable sales charge reduction, you may also
include: (1) the cost of shares of other Morgan Stanley Dean Witter
Funds which were previously purchased at a price including a
front-end sales charge during the 90-day period prior to the
distributor receiving the letter of intent, and (2) the cost of
shares of other Funds you currently own acquired in exchange for
shares of Funds purchased during that period at a price including a
front-end sales charge. You can obtain a letter of intent by
contacting your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative, or by calling (800) 869-NEWS. If
you do not achieve the stated investment goal within the
thirteen-month period, you are required to pay the difference between
the sales charges otherwise applicable and sales charges actually
paid, which may be deducted from your investment.

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

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

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

o 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.

<PAGE>

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

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

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.

CDSC AS A PERCENTAGE OF
YEAR SINCE PURCHASE PAYMENT MADE 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>

[sidebar open]
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]

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. A
lower CDSC schedule applies in most cases to shares of the Fund
acquired in connection with the reorganization of Dean Witter
National Municipal Trust and the Fund on November 7, 1997.

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

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

o Sales in connection with the following retirement plan
"distributions:" (i) lump-sum or other distributions from a
qualified corporate or self-employed retirement plan following
retirement (or, in the case of a "key employee" of a "top

<PAGE>

heavy" plan, following attainment of age 59 1 /2); (ii)
distributions from an IRA or 403(b) Custodial Account following
attainment of age 59 1 /2; or (iii) a tax-free return of an excess
IRA contribution (a "distribution" does not include a direct
transfer of IRA, 403(b) Custodial Account or retirement plan assets
to a successor custodian or trustee).

o Sales of shares in connection with the Systematic Withdrawal Plan
of up to 12% annually of the value of each Fund from which plan
sales are made. The percentage is determined on the date you
establish the Systematic Withdrawal Plan and based on the next
calculated share price. You may have this CDSC waiver applied in
amounts up to 1% per month, 3% per quarter, 6% semi-annually or 12%
annually. Shares with no CDSC will be sold first, followed by those
with the lowest CDSC. As such, the waiver benefit will be reduced
by the amount of your shares that are not subject to a CDSC. If you
suspend your participation in the plan, you may later resume plan
payments without requiring a new determination of the account value
for the 12% CDSC waiver.

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

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

Distribution Fee. Class B shares are also subject to an annual 12b-1
fee of 0.60% of the average daily net assets of Class B.

Conversion Feature. After ten (10) years, Class B shares will convert
automatically to Class A shares of the Fund with no initial sales
charge. The ten year period runs from the last day of the month in
which the shares were purchased, or in the case of Class B shares
acquired through an exchange, from the last day of the month in which
the original Class B shares were purchased; the shares will convert
to Class A shares based on their relative net asset values in the
month following the ten year period. At the same time, an equal
proportion of Class B shares acquired through automatically
reinvested distributions will convert to Class A shares on the same
basis. (Class B shares held before May 1, 1997, however, will convert
to Class A shares in May 2007.)

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.

<PAGE>

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.

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 0.70% 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.

<PAGE>

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 and the
following investor categories:

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

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

o Certain unit investment trusts sponsored by Dean Witter Reynolds.

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

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

Meeting Class D Eligibility Minimums. To meet the $5 million 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.

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 fiscal years of the Fund. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate an investor would have earned or lost
on an investment in the Fund (assuming reinvestment of all dividends and
distributions).

This information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Fund's financial statements, is
included in the annual report, which is available upon request.

CLASS A

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE FOR THE JULY 28, 1997*
YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA:
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.02 $ 12.09 $ 12.00
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.58 0.59 0.25
Net realized and unrealized gain (loss) ( 0.91) 0.10 0.14
-------- -------- ---------
Total income (loss) from investment operations ( 0.33) 0.69 0.39
- ---------------------------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income ( 0.58) ( 0.59) ( 0.25)
Net realized gain ( 0.03) ( 0.17) ( 0.05)
-------- -------- ---------
Total dividends and distributions ( 0.61) ( 0.76) ( 0.30)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.08 $ 12.02 $ 12.09
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ ( 2.82)% 5.86% 3.31%(1)
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ---------------------------------------------------------------------------------------------------------------------
Expenses 0.64%(4)(5) 0.74%(4)(5) 0.76%(2)(3)
Net investment income 4.98%(5) 4.88%(5) 4.96%(2)
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $17,198 $15,041 $3,857
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 13% 15% 16%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

* The date shares were first issued.
+ 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) Does not reflect the effect of expense offset of 0.02%.
(4) Does not reflect the effect of expense offset of 0.01%.
(5) Reflects overall Fund ratios for investment income and non-class specific
expenses.

<PAGE>

<TABLE>
<CAPTION>
CLASS B
- ---------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
FOR THE FOR THE JULY 28, 1997*
YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA:
Net asset value, beginning of period $ 12.07 $ 12.14 $ 12.00
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.53 0.55 0.23
Net realized and unrealized gain (loss) ( 0.91) 0.10 0.19
-------- -------- --------
Total income (loss) from investment operations ( 0.38) 0.65 0.42
- ---------------------------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income ( 0.53) ( 0.55) ( 0.23)
Net realized gain ( 0.03) ( 0.17) ( 0.05)
-------- -------- --------
Total dividends and distributions ( 0.56) ( 0.72) ( 0.28)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.13 $ 12.07 $ 12.14
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ ( 3.25)% 5.47% 3.57%(1)
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.11%(4)(5) 1.10%(4)(5) 1.14%(2)(3)
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 4.51%(5) 4.52%(5) 4.87%(2)
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $139,786 $132,303 $95,573
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 13% 15% 16%
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
CLASS C
- ----------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
FOR THE FOR THE JULY 28, 1997*
YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA:
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.04 $ 12.11 $ 12.00
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.51 0.53 0.23
Net realized and unrealized gain (loss) ( 0.91) 0.10 0.16
-------- --------- ---------
Total income (loss) from investment operations ( 0.40) 0.63 0.39
- ----------------------------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income ( 0.51) ( 0.53) ( 0.23)
Net realized gain ( 0.03) ( 0.17) ( 0.05)
-------- --------- ---------
Total dividends and distributions ( 0.54) ( 0.70) ( 0.28)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.10 $ 12.04 $ 12.11
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ ( 3.37)% 5.36% 3.28%(1)
- ----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ----------------------------------------------------------------------------------------------------------------------
Expenses 1.21%(4)(5) 1.20%(4)(5) 1.20%(2)(3)
- ----------------------------------------------------------------------------------------------------------------------
Net investment income 4.41%(5) 4.34%(5) 4.41%(2)
- ----------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $10,025 $7,599 $2,953
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 13% 15% 16%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

CLASS D
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 1999
- -------------------------------------------------------------------------------
<S> <C>
SELECTED PER-SHARE DATA:
- -------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.01
- -------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.59
Net realized and unrealized gain (loss) ( 0.91)
---------
Total income (loss) from investment operations ( 0.32)
- -------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income ( 0.59)
Net realized gain ( 0.03)
---------
Total dividends and distributions ( 0.62)
- -------------------------------------------------------------------------------
Net asset value, end of period $ 11.07
- -------------------------------------------------------------------------------
TOTAL RETURN+ ( 2.71)%
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -------------------------------------------------------------------------------
Expenses 0.51%(1)(2)
- -------------------------------------------------------------------------------
Net investment income 5.11%(2)
- -------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------
Net assets, end of period, in thousands $853,216
- -------------------------------------------------------------------------------
Portfolio turnover rate 13%
- -------------------------------------------------------------------------------

<CAPTION>
YEARS ENDED DECEMBER 31 1998* 1997* 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA:
Net asset value, beginning of period $ 12.08 $ 11.77 $ 12.09 $ 11.01
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.62 0.63 0.65 0.67
Net realized and unrealized gain (loss) 0.10 0.36 ( 0.24) 1.19
----------- ---------- ---------- ----------
Total income (loss) from investment operations 0.72 0.99 0.41 1.86
- ---------------------------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income ( 0.62) ( 0.63) ( 0.65) ( 0.67)
Net realized gain ( 0.17) ( 0.05) ( 0.08) ( 0.11)
----------- ---------- ---------- ----------
Total dividends and distributions ( 0.79) ( 0.68) ( 0.73) ( 0.78)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.01 $ 12.08 $ 11.77 $ 12.09
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 6.11% 8.73% 3.61% 17.37%
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ---------------------------------------------------------------------------------------------------------------------
Expenses 0.50 %(1)(2) 0.49% 0.48% 0.48%
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 5.12 %(2) 5.34% 5.52% 5.76%
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,023,246 $1,096,998 $1,190,034 $1,325,308
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 15% 16% 18% 21%
- ---------------------------------------------------------------------------------------------------------------------
</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.
+ Calculated based on the net asset value as of the last business day of
the period.
(1) Does not reflect the effect of expense offset of 0.01%.
(2) Reflects overall Fund ratios for investment income and non-class specific
expenses.

<PAGE>

NOTES

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

<PAGE>

MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS

The Morgan Stanley Dean Witter Family of Funds offers
investors a wide range of investment choices. Come on
in and meet the family!
- --------------------------------------------------------------------------------

GROWTH FUNDS

Aggressive Equity Fund
American Opportunities Fund
Capital Growth Securities
Developing Growth Securities
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust
Next Generation Trust
Small Cap Growth Fund
Special Value Fund
21st Century Trend Fund

THEME FUNDS

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

GLOBAL/INTERNATIONAL FUNDS

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

- --------------------------------------------------------------------------------
GROWTH & INCOME FUNDS

Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Equity Fund
Fund of Funds - Domestic Portfolio
Income Builder Fund
Mid-Cap Dividend Growth Securities
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 - FEBRUARY 24, 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

[GRAPHIC OMITTED]

You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:

WWW.MSDW.COM/INDIVIDUAL/FUNDS

Information about the Fund (including the Statement of Additional Information)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (202) 942-8090. Reports and
other information about the Fund are available on the EDGAR Database on the
SEC's Internet site (www.sec.gov), and copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the
following e-mail address: [email protected], or by writing the Public
Reference Section of the SEC, Washington, DC 20549-0102.

TICKER SYMBOLS:

Class A: TAXAX
- -------------------------------
Class B: TAXBX
- -------------------------------

Class C: TAXCX
- -------------------------------
Class D: TAXDX
- -------------------------------

(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-2979)

Morgan Stanley Dean Witter

TAX-EXEMPT SECURITIES TRUST

A MUTUAL FUND THAT SEEKS TO
PROVIDE A HIGH LEVEL OF CURRENT
INCOME EXEMPT FROM FEDERAL
INCOME TAX, CONSISTENT WITH
THE PRESERVATION OF CAPITAL

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
Morgan Stanley Dean Witter
Tax-Exempt Securities Trust
February 24, 2000

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

This Statement of Additional Information is not a Prospectus. The
Prospectus (dated February 24, 2000) for the Morgan Stanley Dean Witter
Tax-Exempt Securities Trust 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 Tax-Exempt Securities Trust
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 ..................... 9
III. Management of the Fund ......................................... 11
A. Board of Trustees ......................................... 11
B. Management Information .................................... 11
C. Compensation .............................................. 15
IV. Control Persons and Principal Holders of Securities ............ 17
V. Investment Management and Other Services ....................... 17
A. Investment Manager ........................................ 17
B. Principal Underwriter ..................................... 18
C. Services Provided by the Investment Manager ............... 18
D. Dealer Reallowances ....................................... 19
E. Rule 12b-1 Plan ........................................... 19
F. Other Service Providers ................................... 23
VI. Brokerage Allocation and Other Practices ....................... 24
A. Brokerage Transactions .................................... 24
B. Commissions ............................................... 24
C. Brokerage Selection ....................................... 25
D. Directed Brokerage ........................................ 25
E. Regular Broker-Dealers .................................... 25
VII. Capital Stock and Other Securities ............................. 26
VIII. Purchase, Redemption and Pricing of Shares ..................... 26
A. Purchase/Redemption of Shares ............................. 26
B. Offering Price ............................................ 27
IX. Taxation of the Fund and Shareholders .......................... 28
X. Underwriters ................................................... 30
XI. Calculation of Performance Data ................................ 30
XII. Financial Statements ........................................... 33
XIII. Appendix ....................................................... 54

</TABLE>

<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 is the Custodian of the Fund's assets.

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

"Distributor" - Morgan Stanley Dean Witter Distributors Inc., a
wholly-owned broker-dealer subsidiary of MSDW.

"Financial Advisors" - Morgan Stanley Dean Witter authorized financial
services representatives.

"Fund" - Morgan Stanley Dean Witter Tax-Exempt Securities Trust, a
registered open-end investment company.

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

"Independent Trustees" - Trustees who are not "interested persons" (as
defined by the Investment Company Act) of the Fund.

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

"Morgan Stanley Dean Witter Funds" - Registered investment companies (i)
for which the Investment Manager serves as the investment advisor and (ii) that
hold themselves out to investors as related companies for investment and
investor services.

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

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

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

"Trustees" - The Board of Trustees of the Fund.

3
<PAGE>

I. FUND HISTORY
- --------------------------------------------------------------------------------

The Fund was incorporated in the State of Maryland on December 31, 1979
under the name InterCapital Tax-Exempt Securities Inc. On March 17, 1983, the
Fund's shareholders approved a change in the Fund's name, effective March 21,
1983, to Dean Witter Tax-Exempt Securities Inc. On April 30, 1987, the Fund
reorganized as a Massachusetts business trust, with the name Dean Witter
Tax-Exempt Securities Trust. Effective June 22, 1998, the Fund's name was
changed to Morgan Stanley Dean Witter Tax-Exempt Securities Trust.

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

A. CLASSIFICATION

The Fund is an open-end, diversified management investment company whose
investment objective is to provide a high level of current income exempt from
federal income tax, consistent with the preservation of capital.

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."

TAXABLE SECURITIES. The Fund may invest up to 20% of its total assets, or
more than 20% of its total assets when assuming a temporary defensive position,
in taxable money market instruments or in tax-exempt securities subject to the
federal alternative minimum tax for individual shareholders. Investments in
taxable money market instruments would generally be made under any one of the
following circumstances: (a) pending investment of proceeds of the sale of the
Fund's shares or of portfolio securities, (b) pending settlement of purchases
of portfolio securities and (c) to maintain liquidity for the purpose of
meeting anticipated redemptions.

The types of taxable money market instruments in which the Fund may invest
are limited to the following short-term fixed-income securities (maturing in
one year or less from the time of purchase): (i) obligations of the United
States Government, its agencies, instrumentalities or authorities; (ii)
commercial paper rated P-1 by Moody's Investors Services, Inc. ("Moody's") or
A-1 by Standard & Poor's Corporation ("S&P"); (iii) certificates of deposit of
domestic banks with assets of $1 billion or more; and (iv) repurchase
agreements with respect to portfolio securities.

VARIABLE RATE AND FLOATING RATE OBLIGATIONS. The Fund may invest in
Municipal Bonds and Municipal Notes ("Municipal Obligations") of the type
called variable rate. The interest rate payable on a variable rate obligation
is adjusted either at predesignated periodic intervals or whenever there is a
change in the market rate of interest on which the interest rate payable is
based. Other features may include the right whereby the Fund may demand
prepayment of the principal amount of the obligation prior to its stated
maturity (a "demand feature") and the right of the issue to prepay the
principal amount prior to maturity. The principal benefit of a variable rate
obligation is that the interest rate adjustment minimizes changes in the market
value of the obligation. The principal benefit to the Fund of purchasing
obligations with a demand feature is that liquidity, and the ability of the
Fund to obtain repayment of the full principal amount of an obligation prior to
maturity, is enhanced.

FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Fund may invest in financial
futures contracts ("futures contracts") and related options thereon. These
futures contracts and related options thereon will be used only as a hedge
against anticipated interest rate changes. A futures contract sale creates an
obligation by the Fund, as seller, to deliver the specific type of instrument
called for in the contract at a specified future time for a specified price. A
futures contract purchase would create an obligation by the Fund, as purchaser,
to take delivery of the specific type of financial instrument at a specified
future time at a specified price. The specific securities delivered or taken,
respectively, at settlement date, would not be determined until on or near that
date. The determination would be in accordance with the rules of the exchange
on which the futures contract sale or purchase was effected.

<PAGE>

Although the terms of futures 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 at the 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 a 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.

Unlike a futures contract, which requires the parties to buy and sell a
security on a set date, an option on a futures contract entitles its holder to
decide on or before a future date whether to enter into such a contract (a long
position in the case of a call option and a short position in the case of a put
option). If the holder decides not to enter into the contract, the premium paid
for the contract is lost. Since the value of the option is fixed as the point
of sale, there are no daily payments of cash to reflect the change in the value
of the underlying contract, as discussed below for futures contracts. The value
of the option change is reflected in the net asset value of the particular Fund
holding the options.

The Fund is required to maintain margin deposits with brokerage firms
through which it effects futures contracts and options thereon. The initial
margin requirements vary according to the type of the underlying security. In
addition, due to current industry practice, daily variations in gains and
losses on open contracts are required to be reflected in cash in the form of
variation margin payments. The Fund may be required to make additional margin
payments during the term of the contract.

Currently, futures contracts can be purchased on debt securities such as
U.S. Treasury Bills and Bonds, U.S. Treasury Notes with maturities between 61/2
and 10 years, Certificates of the Government National Mortgage Association,
Bank Certificates of Deposit and on a municipal bond index. The Fund may invest
in interest rate futures contracts covering these types of financial
instruments as well as in new types of contracts that become available in the
future.

Financial futures contracts are traded in an auction environment on the
floors of several Exchanges - principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. Each Exchange
guarantees performance under contract provisions through a clearing
corporation, a nonprofit organization managed by the Exchange membership which
is also responsible for handling daily accounting of deposits or withdrawals of
margin. A risk in employing 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 a short time period. The correlation may be
further distorted since the futures contracts that are being used to hedge are
not based on municipal obligations.

Another risk is that the Fund's Investment 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 the interest rates went down instead,
causing bond prices to rise, the Fund would lose money on the sale. Put and
call options on financial futures have characteristics similar to Exchange
traded options.

In addition to the risks associated in investing in options on securities,
there are particular risks associated with investing in options on futures. In
particular, the ability to establish and close out positions on such options
will be subject to the development and maintenance of a liquid secondary
market. It is not certain that such a market will develop.

The Fund may not enter into futures contracts or related options thereon
if, immediately thereafter, the amount committed to margin plus the amount paid
for option premiums exceeds 5% of the value of the Fund's total assets. There
is no limit, however, on the percentage of the Fund's assets that may be
committed to hedging transactions.

Municipal Bond Index Futures. The Fund may utilize municipal bond index
futures contracts for hedging purposes. The strategies in employing such
contracts will be similar to that discussed above with respect to financial
futures and options thereon. A municipal bond index is a method of reflecting
in a single number the market value of many different municipal bonds and is
designed to be representative of the municipal bond market generally. The index
fluctuates in response to changes in the market values of the bonds included
within the index. Unlike futures contracts on particular financial instruments,
transactions in futures on a municipal bond index will be settled in cash, if
held until the close of trading in the contract. However, like any other
futures contract, a position in the contract may be closed out by a purchase or
sale of an offsetting contract for the same delivery month prior to expiration
of the contract.

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 will 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.

Presently there are no options on tax-exempt securities traded on national
securities exchanges. The Fund will not invest in options on debt securities in
the coming year or until such time as they become available on national
securities exchanges.

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

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 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.

If the Fund maintains a short position in a futures contract or has sold a
call option in a futures contract, it will cover this position by holding, in a
segregated account maintained on the books of the Fund, cash, U.S. government
securities or other liquid portfolio securities equal in value (when added to
any initial or variation margin on deposit) to the market value of the
securities underlying the futures contract or the exercise price of the option.
Such a position may also be covered by owning the securities underlying the
futures contract (in the case of a stock index futures contract a portfolio of
securities substantially replicating the relevant index), or by holding a call
option permitting the Fund to purchase the same contract at a price no higher
than the price at which the short position was established.

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

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 Trustees. In addition, as
described above, the value of the collateral underlying the repurchase
agreement will be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement. In the event of a default or
bankruptcy by a selling financial institution, the Fund will seek to liquidate
such collateral. However, the exercising of the Fund's right to liquidate such
collateral could involve certain costs or delays and, to the extent that
proceeds form any sale upon a default of the obligation to repurchase were less
than the repurchase price, the

7
<PAGE>

Fund could suffer a loss. It is the current policy of the Fund not to invest in
repurchase agreements that do not mature within seven days if any such
investment, together with any other illiquid assets held by the Fund, amounts
to more than 10% of its net assets.

LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities
to brokers, dealers and other financial institutions, provided that the loans
are callable at any time by the Fund, and are at all times secured by cash or
cash equivalents, which are maintained in a segregated account pursuant to
applicable regulations and that are equal to at least 100% of the market value,
determined daily, of the loaned securities. The advantage of these loans is
that the Fund continues to receive the income on the loaned securities while at
the same time earning interest on the cash amounts deposited as collateral,
which will be invested in short-term obligations. The Fund will not lend more
than 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

<PAGE>

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.

YEAR 2000. The investment management services provided to the Fund by the
Investment Manager and the services provided to shareholders by the Distributor
and the Transfer Agent depend on the smooth functioning of their computer
systems. Many computer software systems in use today were designed in such a
way that they may not be able to recognize the year 2000, but revert to 1900 or
some other date, due to the manner in which dates were encoded and calculated.
That failure could have a negative impact on the handling of securities trades,
pricing and account services.

Improperly functioning trading systems may result in settlement problems
and liquidity issues. Governmental data processing errors could result in
overall economic uncertainties. Operations ran smoothly from the last week in
December through the first few weeks of January, but the year 2000 issue may
yet have an adverse impact on financial market participants and other entities,
including the issuers whose securities are contained in the Fund's portfolio.

C. FUND POLICIES/INVESTMENT RESTRICTIONS

The investment objective, policies and restrictions listed below have been
adopted by the Fund as fundamental policies. Under the Investment Company Act
of 1940 (the "Investment Company Act"), a fundamental policy may not be changed
without the vote of a majority of the outstanding voting securities of the
Fund. The Investment Company Act defines a majority as the lesser of (a) 67% or
more of the shares present at a meeting of shareholders, if the holders of 50%
of the outstanding shares of the Fund are present or represented by proxy; or
(b) more than 50% of the outstanding shares of the Fund.

In addition, for purposes of the following restrictions: (a) an "issuer"
of a security is the entity whose assets and revenues are committed to the
payment of interest and principal on that particular security, provided that
the guarantee of a security will be considered a separate security and provided
further that a guarantee of a security shall not be deemed a security issued by
the guarantor if the value of all securities guaranteed by the guarantor and
owned by the Fund does not exceed 10% of the value of the total assets of the
Fund; (b) a "taxable security" is any security the interest on which is subject
to federal income tax; and (c) all percentage limitations apply immediately
after a purchase or initial investment, and any subsequent change in any
applicable percentage resulting from market fluctuations or other changes in
total or net assets does not require elimination of any security from the
portfolio.

The Fund will:

1. Seek to provide a high level of current income exempt from federal
income tax, consistent with the preservation of capital.

The Fund may not:

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

2. Purchase more than 10% of all outstanding taxable debt securities of
any one issuer (other than obligations issued, or guaranteed as to
principal and interest by, the United States Government, its agencies or
instrumentalities).

3. Invest more than 25% of the value of its total assets in taxable
securities of issuers in any one industry (industrial development and
pollution control bonds are grouped into industries based upon the
business in which the issuers of such obligations are engaged). This
restriction does not apply to obligations issued or guaranteed by the
United States Government, its agencies or instrumentalities or to cash
equivalents.

4. Invest more than 5% of the value of its total assets in taxable
securities of issuers having a record, together with predecessors, of
less than three years of continuous operation. This restriction shall not
apply to any obligations of the United States Government, its agencies or
instrumentalities.

5. Invest in common stock.

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

7. Invest in securities of any issuer, if, to the knowledge of the Fund,
any officer or trustee of the Fund or of the Investment Manager owns more
than 1/2 of 1% of the outstanding securities of the issuer, and the
officers and trustees who own more than 1/2 of 1% own in the aggregate
more than 5% of the outstanding securities of the issuer.

8. Purchase or sell real estate or interests therein, although it may
purchase securities secured by real estate or interests therein.

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

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

11. Pledge its assets or assign or otherwise encumber them except to secure
permitted borrowing. However, 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.

12. Issue senior securities as defined in the Investment Company Act,
except insofar as the Fund may be deemed to have issued a senior security
by reason of: (a) entering into any repurchase agreement; (b) purchasing
any securities on a when-issued or delayed delivery basis; (c) purchasing
or selling any financial futures contracts; (d) borrowing money; or (e)
lending portfolio securities.

13. Make loans of money or securities, except: (a) by the purchase of debt
obligations and (b) by investment in repurchase agreements.

14. Make short sales of securities.

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

16. 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.

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

18. Purchase oil, gas or other mineral leases, rights or royalty contracts,
or exploration or development programs.

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

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.

10
<PAGE>

III. MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------

A. BOARD OF TRUSTEES

The Board of Trustees of the Fund oversees the management of the Fund but
does not itself manage the Fund. The Trustees review various services provided
by or under the direction of the Investment Manager to ensure that the Fund's
general investment policies and programs are properly carried out. The Trustees
also conduct their review to ensure that administrative services are provided
to the Fund in a satisfactory manner.

Under state law, the duties of the Trustees are generally characterized as
a duty of loyalty and a duty of care. The duty of loyalty requires a Trustee to
exercise his or her powers in the interest of the Fund and not the Trustee's
own interest or the interest of another person or organization. A Trustee
satisfies his or her duty of care by acting in good faith with the care of an
ordinarily prudent person and in a manner the Trustee reasonably believes to be
in the best interest of the Fund and its shareholders.

B. MANAGEMENT INFORMATION

TRUSTEES AND OFFICERS. The Board of the Fund consists of eight (8)
Trustees. These same individuals also serve as directors or trustees for all of
the Morgan Stanley Dean Witter Funds. Six Trustees (75% of the total number)
have no affiliation or business connection with the Investment Manager or any
of its affiliated persons and do not own any stock or other securities issued
by the Investment Manager's parent company, MSDW. These are the
"non-interested" or "independent" Trustees. The other two Trustees (the
"management Trustees") are affiliated with the Investment Manager.

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

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
Michael Bozic (59) ........................ Vice Chairman of Kmart Corporation (since
Trustee December 1998); Director or Trustee of the Morgan
c/o Kmart Corporation Stanley Dean Witter Funds; formerly Chairman
3100 West Big Beaver Road and Chief Executive Officer of Levitz Furniture
Troy, Michigan Corporation (November 1995-November 1998) and
President and Chief Executive Officer of Hills
Department Stores (May 1991-July 1995); formerly
variously Chairman, Chief Executive Officer,
President and Chief Operating Officer (1987-1991)
of the Sears Merchandise Group of Sears, Roebuck
and Co.; Director of Weirton Steel Corporation.

Charles A. Fiumefreddo* (66) .............. Chairman, Director or Trustee, and Chief Executive
Chairman of the Board, Officer of the Morgan Stanley Dean Witter Funds;
Chief Executive Officer and Trustee formerly Chairman, Chief Executive Officer and
Two World Trade Center Director of the Investment Manager, the Distributor
New York, New York and MSDW Services Company; Executive Vice
President and Director of Dean Witter Reynolds;
Chairman and Director of the Transfer Agent;
formerly Director and/or officer of various MSDW
subsidiaries (until June 1998).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
Edwin J. Garn (67) ........................ Director or Trustee of the Morgan Stanley Dean
Trustee Witter Funds; formerly United States Senator (R-
c/o Huntsman Corporation Utah)(1974-1992) and Chairman, Senate Banking
500 Huntsman Way Committee (1980-1986); formerly Mayor of Salt
Salt Lake City, Utah Lake City, Utah (1971-1974); formerly Astronaut,
Space Shuttle Discovery (April 12-19, 1985); Vice
Chairman, Huntsman Corporation (chemical
company); Director of Franklin Covey (time
management systems), BMW Bank of North
America, Inc. (industrial loan corporation), United
Space Alliance (joint venture between Lockheed
Martin and the Boeing Company) and Nuskin Asia
Pacific (multilevel marketing); member of the board
of various civic and charitable organizations.

Wayne E. Hedien (66) ...................... Retired; Director or Trustee of the Morgan Stanley
Trustee Dean Witter Funds; Director of The PMI Group,
c/o Mayer, Brown & Platt Inc. (private mortgage insurance); Trustee and
Counsel to the Independent Trustees Vice Chairman of The Field Museum of Natural
1675 Broadway History; formerly associated with the Allstate
New York, New York Companies (1966-1994), most recently as
Chairman of The Allstate Corporation (March 1993-
December 1994) and Chairman and Chief
Executive Officer of its wholly-owned subsidiary,
Allstate Insurance Company (July 1989-December
1994); director of various other business and
charitable organizations.

Dr. Manuel H. Johnson (51) ................ Senior Partner, Johnson Smick International, Inc.,
Trustee a consulting firm; Co-Chairman and a founder of
c/o Johnson Smick International, Inc. the Group of Seven Council (G7C), an international
1133 Connecticut Avenue, N.W. economic commission; Chairman of the Audit
Washington, D.C. Committee and Director or Trustee of the Morgan
Stanley Dean Witter Funds; Director of Greenwich
Capital Markets, Inc. (broker-dealer) and NVR, Inc.
(home construction); Chairman and Trustee of the
Financial Accounting Foundation (oversight
organization of the Financial Accounting Standards
Board); formerly Vice Chairman of the Board of
Governors of the Federal Reserve System (1986-
1990) and Assistant Secretary of the U.S. Treasury.

Michael E. Nugent (63) .................... General Partner, Triumph Capital, L.P., a private
Trustee investment partnership; Chairman of the Insurance
c/o Triumph Capital, L.P. Committee and Director or Trustee of the Morgan
237 Park Avenue Stanley Dean Witter Funds; formerly Vice
New York, New York President, Bankers Trust Company and BT Capital
Corporation (1984-1988); director of various
business organizations.

Philip J. Purcell* (56) ................... Chairman of the Board of Directors and Chief
Trustee Executive Officer of MSDW, Dean Witter Reynolds
1585 Broadway and Novus Credit Services Inc.; Director of the
New York, New York Distributor; Director or Trustee of the Morgan
Stanley Dean Witter Funds; Director of American
Airlines, Inc. and its parent company, AMR
Corporation; Director and/or officer of various
MSDW subsidiaries.
</TABLE>

12
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
John L. Schroeder (69) .................... Retired; Chairman of the Derivatives Committee
Trustee and Director or Trustee of the Morgan Stanley
c/o Mayer, Brown & Platt Dean Witter Funds; Director of Citizens Utilities
Counsel to the Independent Trustees Company (telecommunications, gas, electric and
1675 Broadway water utilities company); formerly Executive Vice
New York, New York President and Chief Investment Officer of the
Home Insurance Company (August 1991-
September 1995).

Mitchell M. Merin (46) .................... President and Chief Operating Officer of Asset
President Management of MSDW (since December 1998);
Two World Trade Center President and Director (since April 1997) and Chief
New York, New York Executive Officer (since June 1998) of the
Investment Manager and MSDW Services
Company; Chairman, Chief Executive Officer and
Director of the Distributor (since June 1998);
Chairman and Chief Executive Officer (since
June 1998) and Director (since January 1998) of
the Transfer Agent; Director of various MSDW
subsidiaries; President of the Morgan Stanley Dean
Witter Funds (since May 1999); Trustee of various
Van Kampen investment companies (since
December 1999); previously Chief Strategic Officer
of the Investment Manager and MSDW Services
Company and Executive Vice President of the
Distributor (April 1997-June 1998), Vice President
of the Morgan Stanley Dean Witter Funds
(May 1997-April 1999), and Executive Vice
President of Dean Witter, Discover & Co.

Barry Fink (45) ........................... Executive Vice President (since December 1999)
Vice President, and Secretary and General Counsel (since
Secretary and General Counsel February 1997) and Director (since July 1998) of
Two World Trade Center the Investment Manager and MSDW Services
New York, New York Company; Executive Vice President (since
December 1999) and Assistant Secretary and
Assistant General Counsel (since February 1997)
of the Distributor; Assistant Secretary of Dean
Witter Reynolds (since August 1996); Vice
President, Secretary and General Counsel of the
Morgan Stanley Dean Witter Funds (since February
1997); previously Senior Vice President (March
1997-December 1999), First Vice President (June
1993-February 1997), Vice President and Assistant
Secretary and Assistant General Counsel of the
Investment Manager and MSDW Services
Company, Senior Vice President of the Distributor
(March 1997-December 1999) and Assistant
Secretary of the Morgan Stanley Dean Witter
Funds.

James F. Willison (56) .................... Senior Vice President and Director of the Tax-
Vice President Exempt Fixed-Income Group of the Investment
Two World Trade Center Manager; Vice President of various Morgan Stanley
New York, New York Dean Witter Funds.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
Joseph R. Arcieri (51) .................... Senior Vice President of the Investment Manager
Vice President (since December 1999); formerly Vice President of
Two World Trade Center the Investment Manager; Vice President of various
New York, New York Morgan Stanley Dean Witter Funds.
Thomas F. Caloia (53) ..................... First Vice President and Assistant Treasurer of the
Treasurer Investment Manager, the Distributor and MSDW
Two World Trade Center Services Company; Treasurer of the Morgan
New York, New York Stanley Dean Witter Funds.
</TABLE>

- ----------
* Denotes Trustees who are "interested persons" of the Fund as defined 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, Joseph J. McAlinden, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer
Agent, Peter M. Avelar, Senior Vice President of the Investment Manager and
Director of the High Yield Group of the Investment Manager, Jonathan R. Page,
Senior Vice President of the Investment Manager and Director of the Money
Market Group of the Investment Manager, Katherine H. Stromberg, Senior Vice
President of the Investment Manager, and Gerard J. Lian, Vice President 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 matters that arise from time to time. The
independent directors/trustees are required to select and nominate individuals
to fill any independent director/trustee vacancy on the board of any Fund that
has a Rule 12b-1 plan of distribution. Most of the Morgan Stanley Dean Witter
Funds have a Rule 12b-1 plan.

The Audit Committee is charged with recommending to the full board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing engagement;
approving professional services provided by the independent accountants and
other accounting firms prior to the performance of the services; reviewing the
independence of the independent accountants; considering the range of audit and
non-audit fees; reviewing the adequacy of the Fund's system of internal
controls; and preparing and submitting Committee meeting minutes to the full
board.

14
<PAGE>

The board of each Fund has a Derivatives Committee to approve parameters
for and monitor the activities of the Fund with respect to derivative
investments, if any, made by the Fund.

Finally, the board of each Fund has formed an Insurance Committee to
review and monitor the insurance coverage maintained by the Fund.

ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT DIRECTORS/TRUSTEES
FOR ALL MORGAN STANLEY DEAN WITTER FUNDS. The independent directors/trustees
and the Funds' management believe that having the same independent
directors/trustees for each of the Morgan Stanley Dean Witter Funds avoids the
duplication of effort that would arise from having different groups of
individuals serving as independent directors/trustees for each of the Funds or
even of sub-groups of Funds. They believe that having the same individuals
serve as independent directors/trustees of all the Funds tends to increase
their knowledge and expertise regarding matters which affect the Fund complex
generally and enhances their ability to negotiate on behalf of each Fund with
the Fund's service providers. This arrangement also precludes the possibility
of separate groups of independent directors/trustees arriving at conflicting
decisions regarding operations and management of the Funds and avoids the cost
and confusion that would likely ensue. Finally, having the same independent
directors/trustees serve on all Fund boards enhances the ability of each Fund
to obtain, at modest cost to each separate Fund, the services of independent
directors/trustees, of the caliber, experience and business acumen of the
individuals who serve as independent directors/trustees of the Morgan Stanley
Dean Witter Funds.

TRUSTEE AND OFFICER INDEMNIFICATION. The Fund's Declaration of Trust
provides that no Trustee, officer, employee or agent of the Fund is liable to
the Fund or to a shareholder, nor is any Trustee, officer, employee or agent
liable to any third persons in connection with the affairs of the Fund, except
as such liability may arise from his/her or its own bad faith, willful
misfeasance, gross negligence or reckless disregard of his/her or its duties.
It also provides that all third persons shall look solely to the Fund property
for satisfaction of claims arising in connection with the affairs of the Fund.
With the exceptions stated, the Declaration of Trust provides that a Trustee,
officer, employee or agent is entitled to be indemnified against all liability
in connection with the affairs of the Fund.

C. COMPENSATION

The Fund pays each Independent Trustee an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Trustees, the Independent
Trustees or Committees of the Board of Trustees attended by the Trustee (the
Fund pays the Chairman of the Audit Committee an additional annual fee of $750
and the Chairmen of the Derivatives and Insurance Committees additional annual
fees of $500). If a Board meeting and a meeting of the Independent Trustees or
a Committee meeting, or a meeting of the Independent Trustees and/or more than
one Committee meeting, take place on a single day, the Trustees are paid a
single meeting fee by the Fund. The Fund also reimburses such Trustees for
travel and other out-of-pocket expenses incurred by them in connection with
attending such meetings. Trustees and officers of the Fund who are or have been
employed by the Investment Manager or an affiliated company receive no
compensation or expense reimbursement from the Fund for their services as
Trustee.

The following table illustrates the compensation that the Fund paid to its
Independent Trustees for the fiscal year ended December 31, 1999.

FUND COMPENSATION

<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
- ------------------------------- --------------
<S> <C>
Michael Bozic ................................. $1,550
Edwin J. Garn ................................. 1,600
Wayne E. Hedien ............................... 1,600
Dr. Manuel H. Johnson ......................... 2,100
Michael E. Nugent ............................. 1,933
John L. Schroeder ............................. 1,933
</TABLE>

15
<PAGE>

The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1999 for services
to the 93 Morgan Stanley Dean Witter Funds that were in operation at December
31, 1999.

CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS

<TABLE>
<CAPTION>
TOTAL CASH
COMPENSATION
FOR SERVICES TO
93 MORGAN
NAME OF STANLEY DEAN
INDEPENDENT TRUSTEE WITTER FUNDS
- ------------------------------- ----------------
<S> <C>
Michael Bozic ................................. $134,600
Edwin J. Garn ................................. 138,700
Wayne E. Hedien ............................... 138,700
Dr. Manuel H. Johnson ......................... 208,638
Michael E. Nugent ............................. 193,324
John L. Schroeder ............................. 193,324
</TABLE>

As of the date of this Statement of Additional Information, 55 of the
Morgan Stanley Dean Witter Funds, including the Fund, have adopted a retirement
program under which an independent director/ trustee who retires after serving
for at least five years (or such lesser period as may be determined by the
Board) as an independent director/trustee of any Morgan Stanley Dean Witter
Fund that has adopted the retirement program (each such Fund referred to as an
"Adopting Fund" and each such director/ trustee referred to as an "Eligible
Director/Trustee") is entitled to retirement payments upon reaching the
eligible retirement age (normally, after attaining age 72). Annual payments are
based upon length of service.

Currently, upon retirement, each Eligible Director/Trustee is entitled to
receive from the Adopting Fund, commencing as of his or her retirement date and
continuing for the remainder of his or her life, an annual retirement benefit
(the "Regular Benefit") equal to 30.22% of his or her Eligible Compensation
plus 0.5036667% of such Eligible Compensation for each full month of service as
an independent director/trustee of any Adopting Fund in excess of five years up
to a maximum of 60.44% after ten years of service. The foregoing percentages
may be changed by the board.(1) "Eligible Compensation" is one-fifth of the
total compensation earned by such Eligible Director/Trustee for service to the
Adopting Fund in the five year period prior to the date of the Eligible
Director/Trustee's retirement. Benefits under the retirement program are
accrued as expenses on the books of the Adopting Funds. Such benefits are not
secured or funded by the Adopting Funds.

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

- ----------

(1) An Eligible Director/Trustee may elect alternative payments of his or her
retirement benefits based upon the combined life expectancy of the
Eligible Director/Trustee and his or her spouse on the date of such
Eligible Director/Trustee's retirement. In addition, the Eligible
Director/Trustee may elect that the surviving spouse's periodic payment
of benefits will be equal to a lower percentage of the periodic amount
when both spouses were alive. The amount estimated to be payable under
this method, through the remainder of the later of the lives of the
Eligible Director/Trustee and spouse, will be the actuarial equivalent of
the Regular Benefit.

<PAGE>

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

<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS
------------------------------
ESTIMATED ANNUAL
RETIREMENT BENEFITS BENEFITS
ESTIMATED ACCRUED AS EXPENSES UPON RETIREMENT(2)
CREDITED YEARS ESTIMATED ------------------- --------------------
OF SERVICE AT PERCENTAGE BY ALL FROM ALL
NAME OF RETIREMENT OF ELIGIBLE BY THE ADOPTING FROM THE ADOPTING
INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION FUND FUNDS FUND FUNDS
- -------------------------- ---------------- ------------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Michael Bozic ............ 10 60.44% $378 $20,933 $ 907 $50,588
Edwin J. Garn ............ 10 60.44 557 31,737 909 50,675
Wayne E. Hedien .......... 9 51.37 711 39,566 771 43,000
Dr. Manuel H. Johnson..... 10 60.44 229 13,129 1,360 75,520
Michael E. Nugent ........ 10 60.44 395 23,175 1,209 67,209
John L. Schroeder ........ 8 50.37 768 41,558 955 52,994
</TABLE>

- ----------
(2) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in Footnote (1) on
page 16.

IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
The following owned 5% or more of the outstanding Class A shares of the
Fund as of January 28, 2000: Morgan Stanley Dean Witter Trust FSB Trustee FBO
Richard K. Allen and Dorothy B. Allen Revocable Trust Husband and Wife Share,
P.O. Box 503, Jersey City, NJ 07311 - 5.603%; Howard C. Kauffmann & Suzanne M.
Kauffmann JTTEN, 2724 Peachtree Road NW, Atlanta, GA 30305-2978 - 5.335%;
Sylvia Corcoran and Edward V. Corcoran JTTEN, 5355 Nautilus Drive, Cape Coral,
FL 33904-5973 - 5.114%; Robert T. Smylie, 2512 Metropolitan Drive, Trevose, PA
19053-6738 - 5.095%; Sharon R. Frank, 338 Waycliffe North, Wayzata, MN
55391-1390 - 5.065%; Theodore S. Oparowski, Jr. and Elizabeth A. McCrave JTTEN,
c/o Mike Tinkler, 33 Beverly Ave., Lansdowne, PA 19050-2705 - 5.035%. The
following owned 5% or more of the outstanding shares of Class C on January 28,
2000: Danilo F. Piccinini & Lola Piccinini JTTEN, P.O. Box 5307, Incline Vlg.,
NV 89450-5307 - 5.881%.

As of the date of this Statement of Additional Information, the aggregate
number of shares of beneficial interest of the Fund owned by the Fund's
officers and Trustees as a group was less than 1% of the Fund's shares of
beneficial interest outstanding.

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

A. INVESTMENT MANAGER

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

Pursuant to an Investment Management Agreement (the "Management
Agreement") with the Investment Manager, the Fund has retained the Investment
Manager to provide administrative services and manage the investment of the
Fund's assets, including the placing of orders for the purchase and sale of
portfolio securities. The Fund pays the Investment Manager monthly compensation
calculated daily by applying the following annual rates to the net assets of
the Fund determined as of the close of each business day: 0.50% of the portion
of the daily net assets not exceeding $500 million; 0.425% of the portion of
the daily net assets exceeding $500 million but not exceeding $750 million;
0.375% of the portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; 0.35% of the portion of the daily net assets exceeding $1
billion but not exceeding $1.25 billion; and 0.325% of the portion of the daily
net assets exceeding $1.25 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 December 31, 1997, 1998 and 1999, the
Investment Manager accrued total compensation under the Management Agreement in
the amounts of $5,004,702, $5,139,570 and $4,908,427, respectively.

17
<PAGE>

The Investment Manager has retained its wholly-owned subsidiary, MSDW
Services Company, to perform administrative services for the Fund.

B. PRINCIPAL UNDERWRITER

The Fund's principal underwriter is the Distributor (which has the same
address as the Investment Manager). In this capacity, the Fund's shares are
distributed by the Distributor. The Distributor has entered into a selected
dealer agreement with Dean Witter Reynolds, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into similar agreements with other selected broker-dealers. The Distributor, a
Delaware corporation, is a wholly-owned subsidiary of MSDW.

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

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

C. SERVICES PROVIDED BY THE INVESTMENT MANAGER

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

Under the terms of the Management Agreement, in addition to managing the
Fund's investments, the Investment Manager maintains certain of the Fund's
books and records and furnishes, at its own expense, the office space,
facilities, equipment, clerical help, bookkeeping and certain legal services as
the Fund may reasonably require in the conduct of its business, including the
preparation of prospectuses, proxy statements and reports required to be filed
with federal and state securities commissions (except insofar as the
participation or assistance of independent accountants and attorneys is, in the
opinion of the Investment Manager, necessary or desirable). In addition, the
Investment Manager pays the salaries of all personnel, including officers of
the Fund, who are employees of the Investment Manager. The Investment Manager
also bears the cost of telephone service, heat, light, power and other
utilities provided to the Fund.

Expenses not expressly assumed by the Investment Manager under the
Management Agreement or by the Distributor, will be paid by the Fund. These
expenses will be allocated among the four Classes of shares pro rata based on
the net assets of the Fund attributable to each Class, except as described
below. Such expenses include, but are not limited to: expenses of the Plan of
Distribution pursuant to Rule 12b-1; charges and expenses of any registrar,
custodian, stock transfer and dividend disbursing agent; brokerage commissions;
taxes; engraving and printing share certificates; registration costs of the
Fund and its shares under federal and state securities laws; the cost and
expense of printing, including

<PAGE>

typesetting, and distributing prospectuses of the Fund and supplements thereto
to the Fund's shareholders; all expenses of shareholders' and Trustees'
meetings and of preparing, printing and mailing of proxy statements and reports
to shareholders; fees and travel expenses of Trustees or members of any
advisory board or committee who are not employees of the Investment Manager or
any corporate affiliate of the Investment Manager; all expenses incident to any
dividend, withdrawal or redemption options; charges and expenses of any outside
service used for pricing of the Fund's shares; fees and expenses of legal
counsel, including counsel to the Trustees who are not interested persons of
the Fund or of the Investment Manager (not including compensation or expenses
of attorneys who are employees of the Investment Manager); fees and expenses of
the Fund's independent accountants; membership dues of industry associations;
interest on Fund borrowings; postage; insurance premiums on property or
personnel (including officers and Trustees) of the Fund which inure to its
benefit; extraordinary expenses (including, but not limited to, legal claims
and liabilities and litigation costs and any indemnification relating thereto);
and all other costs of the Fund's operation. The 12b-1 fees relating to a
particular Class will be allocated directly to that Class. In addition, other
expenses associated with a particular Class (except advisory or custodial fees)
may be allocated directly to that Class, provided that such expenses are
reasonably identified as specifically attributable to that Class and the direct
allocation to that Class is approved by the Trustees.

The Management Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Investment Manager is not liable to the Fund or any
of its investors for any act or omission by the Investment Manager or for any
losses sustained by the Fund or its investors.

The Management Agreement will remain in effect from year to year, provided
continuance of the Management Agreement is approved at least annually by the
vote of the holders of a majority, as defined in the Investment Company Act, of
the outstanding shares of the Fund, or by the Trustees; provided that in either
event such continuance is approved annually by the vote of a majority of the
Trustees, including a majority of the Independent Trustees.

D. DEALER REALLOWANCES

Upon notice to selected broker-dealers, the Distributor may reallow up to
the full applicable front-end sales charge during periods specified in such
notice. During periods when 90% or more of the sales charge is reallowed, such
selected broker-dealers may be deemed to be underwriters as that term is
defined in the Securities Act.

E. RULE 12B-1 PLAN

The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under
the Investment Company Act (the "Plan") pursuant to which each Class, other
than Class D, pays the Distributor compensation accrued daily and payable
monthly at the following annual rates: 0.25%, 0.60% and 0.70% of the average
daily net assets of Class A, Class B and Class C, respectively.

19
<PAGE>

The Distributor also receives the proceeds of front-end sales charges
("FSCs") and of contingent deferred sales charges ("CDSCs") imposed on certain
redemptions of shares, which are separate and apart from payments made pursuant
to the Plan. The Distributor has informed the Fund that it and/or Dean Witter
Reynolds received the proceeds of CDSCs and FSCs, for the last three fiscal
years ended December 31, in approximate amounts as provided in the table below
(the Distributor did not retain any of these amounts).

<TABLE>
<CAPTION>
1999 1998 1997
------------------- ------------------- -------------------
<S> <C> <C> <C>
Class A .......... FSCs:(1) $107,818 FSCs:(1) $168,708 FSCs:(1) $ 69,207
CDSCs: $ 0 CDSCs: $ 0 CDSCs: $ 0
Class B .......... CDSCs: $274,899 CDSCs: $119,895 CDSCs: $ 10,314
Class C .......... CDSCs: $ 10,671 CDSCs: $ 6,087 CDSCs: $ 530
Class D .......... FSCs: $ 0 FSCs: $ 0 FSCs: $448,316(2)
</TABLE>

- ----------

(1) FSCs apply to Class A only.

(2) Prior to July 27, 1998 the Fund charged an FSC. On July 28, 1997 existing
shares of the Fund were designated Class D shares, which have no FSC.

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 0.15% 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 Trustees receive and
review promptly after the end of each calendar quarter a written report
provided by the Distributor of the amounts expended under the Plan and the
purpose for which such expenditures were made. Class B shares of the Fund
accrued amounts payable to the Distributor under the Plan, during the fiscal
year ended December 31, 1999, of $855,483. This amount is equal to 0.60% of the
average daily net assets of Class B for the fiscal year. For the fiscal year
ended December 31, 1999, Class A and Class C shares of the Fund accrued
payments under the Plan amounting to $23,738 and $67,457, respectively, which
amounts are equal to 0.13% and 0.70% of the average daily net assets of Class A
and Class C, respectively, for the fiscal year.

The Plan was adopted in order to permit the implementation of the Fund's
method of distribution. Under this distribution method the Fund offers four
Classes, each with a different distribution arrangement.

With respect to Class A shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from proceeds of the FSC, commissions for
the sale of Class A shares, currently a gross sales credit of up to 4.0% of the
amount sold (except as provided in the following sentence) and an annual
residual commission, currently a residual of up to 0.15% 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), 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 and an annual residual commission, currently a residual of up to 0.15% of
the current value (not including reinvested dividends or distributions) of the
amount sold in all cases.

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 0.70% of the current
value of the respective accounts for which they are the Financial Advisors of
record.

<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's Financial Advisors by paying them,
from its own funds, commissions for the sale of Class D shares, currently a
gross sales credit of up to 1.0% of the amount sold. There is a chargeback of
100% of the amount paid if the Class D shares are redeemed in the first year
and a chargeback of 50% of the amount paid if the Class D shares are redeemed
in the second year after purchase. The Investment Manager also compensates Dean
Witter Reynolds's Financial Advisors by paying them, from its own funds, an
annual residual commission, currently up to 0.10% of the current value of the
respective accounts for which they are the Financial Advisors of record (not
including accounts of participants in the Investment Manager's mutual fund
asset allocation program).

The gross sales credit is a charge which reflects commissions paid by Dean
Witter Reynolds to its Financial Advisors and Dean Witter Reynolds's
Fund-associated distribution-related expenses, including sales compensation,
and overhead and other branch office distribution-related expenses including
(a) the expenses of operating Dean Witter Reynolds's branch offices in
connection with the sale of Fund shares, including lease costs, the salaries
and employee benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies, (b) the costs of
client sales seminars, (c) travel expenses of mutual fund sales coordinators to
promote the sale of Fund shares and (d) other expenses relating to branch
promotion of Fund sales.

The Investment Manager pays a retention fee to Financial Advisors at an
annual rate of 0.05% of the value of shares of the Fund sold after January 1,
2000 and held for at least one year. Shares purchased through the reinvestment
of dividends will be eligible for a retention fee, provided that such dividends
were earned on shares otherwise eligible for a retention fee payment. Shares
owned in variable annuities, closed-end fund shares and shares held in 401(k)
plans where the Transfer Agent or Dean Witter Reynolds' 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 0.70%, 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

21
<PAGE>

and other authorized financial representatives, such amounts shall be
determined at the beginning of each calendar quarter by the Trustees,
including, a majority of the Independent Trustees. Expenses representing the
service fee (for Class A) or a gross sales credit or a residual to Financial
Advisors and other authorized financial representatives (for Class C) may be
reimbursed without prior determination. In the event that the Distributor
proposes that monies shall be reimbursed for other than such expenses, then in
making quarterly determinations of the amounts that may be reimbursed by the
Fund, the Distributor will provide and the Trustees will review a quarterly
budget of projected distribution expenses to be incurred on behalf of the Fund,
together with a report explaining the purposes and anticipated benefits of
incurring such expenses. The Trustees will determine which particular expenses,
and the portions thereof, that may be borne by the Fund, and in making such a
determination shall consider the scope of the Distributor's commitment to
promoting the distribution of the Fund's Class A and Class C shares.

Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the fiscal year ended December 31, 1999 to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $6,742,375 on behalf of Class B since the inception of the Plan. It
is estimated that this amount was spent in approximately the following ways:
(i) 14.64% ($987,346)-advertising and promotional expenses; (ii) 0.84%
($56,477)-printing of prospectuses for distribution to other than current
shareholders; and (iii) 84.52% ($5,698,552)-other expenses, including the gross
sales credit and the carrying charge, of which 1.47% ($83,916) represents
carrying charges, 22.95% ($1,307,909) represents commission credits to Dean
Witter Reynolds branch offices and other selected broker-dealers for payments
of commissions to Financial Advisors and other authorized financial
representatives, and 32.49% ($1,851,291) represents overhead and other branch
office distribution-related expenses. The amounts accrued by Class A and a
portion of the amounts accrued by Class C under the Plan during the fiscal year
ended December 31, 1999 were service fees. The remainder of the amounts accrued
by Class C were for expenses which relate to compensation of sales personnel
and associated overhead expenses.

In the case of Class B shares, at any given time, the expenses of
distributing shares of the Fund may be more or less than the total of (i) the
payments made by the Fund pursuant to the Plan; and (ii) the proceeds of CDSCs
paid by investors upon redemption of shares. For example, if $1 million in
expenses in distributing Class B shares of the Fund had been incurred and
$750,000 had been received as described in (i) and (ii) above, the excess
expense would amount to $250,000. The Distributor has advised the Fund that in
the case of Class B shares the excess distribution expenses, including the
carrying charge designed to approximate the opportunity costs incurred by Dean
Witter Reynolds which arise from it having advanced monies without having
received the amount of any sales charges imposed at the time of sale of the
Fund's Class B shares, totaled $4,717,309 as of December 31, 1999 (the end of
the Fund's fiscal year), which was equal to 3.37% of the net assets of Class B
on such date. Of this amount, $2,455,436 represents excess distribution
expenses of Dean Witter National Municipal Trust the net assets of which were
combined with those of the Fund on November 7, 1997 pursuant to an Agreement
and Plan of Reorganization. Because there is no requirement under the Plan that
the Distributor be reimbursed for all distribution expenses with respect to
Class B shares or any requirement that the Plan be continued from year to year,
this excess amount does not constitute a liability of the Fund. Although there
is no legal obligation for the Fund to pay expenses incurred in excess of
payments made to the Distributor under the Plan and the proceeds of CDSCs paid
by investors upon redemption of shares, if for any reason the Plan is
terminated, the Trustees will consider at that time the manner in which to
treat such expenses. Any cumulative expenses incurred, but not yet recovered
through distribution fees or CDSCs, may or may not be recovered through future
distribution fees or CDSCs.

In the case of Class A and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 0.70% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales commission credited to Morgan Stanley Dean Witter Financial
Advisors and other authorized financial representatives at the time of sale may
be reimbursed in the subsequent calendar year. The Distributor has advised the
Fund that there were no such expenses that may be

<PAGE>

reimbursed in the subsequent year in the case of Class A or Class C on December
31, 1999 (end of the calendar year). No interest or other financing charges
will be incurred on any Class A or Class C distribution expenses incurred by
the Distributor under the Plan or on any unreimbursed expenses due to the
Distributor pursuant to the Plan.

No interested person of the Fund nor any Independent Trustee has any
direct financial interest in the operation of the Plan except to the extent
that the Distributor, the Investment Manager, Dean Witter Reynolds, MSDW
Services Company or certain of their employees may be deemed to have such an
interest as a result of benefits derived from the successful operation of the
Plan or as a result of receiving a portion of the amounts expended thereunder
by the Fund.

On an annual basis, the Trustees, including a majority of the Independent
Trustees, consider whether the Plan should be continued. Prior to approving the
last continuation of the Plan, the Trustees requested and received from the
Distributor and reviewed all the information which they deemed necessary to
arrive at an informed determination. In making their determination to continue
the Plan, the Trustees considered: (1) the Fund's experience under the Plan and
whether such experience indicates that the Plan is operating as anticipated;
(2) the benefits the Fund had obtained, was obtaining and would be likely to
obtain under the Plan, including that: (a) the Plan is essential in order to
give Fund investors a choice of alternatives for payment of distribution and
service charges and to enable the Fund to continue to grow and avoid a pattern
of net redemptions which, in turn, are essential for effective investment
management; and (b) without the compensation to individual brokers and the
reimbursement of distribution and account maintenance expenses of Dean Witter
Reynolds's branch offices made possible by the 12b-1 fees, Dean Witter Reynolds
could not establish and maintain an effective system for distribution,
servicing of Fund shareholders and maintenance of shareholder accounts; and (3)
what services had been provided and were continuing to be provided under the
Plan to the Fund and its shareholders. Based upon their review, the Trustees,
including each of the Independent Trustees, determined that continuation of the
Plan would be in the best interest of the Fund and would have a reasonable
likelihood of continuing to benefit the Fund and its shareholders. In the
Trustees' quarterly review of the Plan, they will consider its continued
appropriateness and the level of compensation provided therein.

The Plan may not be amended to increase materially the amount to be spent
for the services described therein without approval by the shareholders of the
affected Class or Classes of the Fund, and all material amendments to the Plan
must also be approved by the Trustees in the manner described above. The Plan
may be terminated at any time, without payment of any penalty, by vote of a
majority of the Independent Trustees or by a vote of a majority of the
outstanding voting securities of the Fund (as defined in the Investment Company
Act) on not more than thirty days' written notice to any other party to the
Plan. So long as the Plan is in effect, the election and nomination of
Independent Trustees shall be committed to the discretion of the Independent
Trustees.

F. OTHER SERVICE PROVIDERS

(1) TRANSFER AGENT/DIVIDEND-PAYING AGENT

Morgan Stanley Dean Witter Trust FSB is the Transfer Agent for the Fund's
shares and the Dividend Disbursing Agent for payment of dividends and
distributions on Fund shares and Agent for shareholders under various
investment plans. The principal business address of the Transfer Agent is
Harborside Financial Center, Plaza Two, Jersey City, NJ 07311.

(2) CUSTODIAN AND INDEPENDENT ACCOUNTANTS

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

PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, NY
10036, serves as the independent accountants of the Fund. The independent
accountants are responsible for auditing the annual financial statements of the
Fund.

23
<PAGE>

(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.

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

A. BROKERAGE TRANSACTIONS

Subject to the general supervision of the Board of Trustees, the
Investment Manager is responsible for decisions to buy and sell securities for
the Fund, the selection of brokers and dealers to effect the transactions, and
the negotiation of brokerage commissions, if any. Purchases and sales of
securities on a stock exchange are effected through brokers who charge a
commission for their services. The Fund expects that the primary market for the
securities in which it intends to invest will generally be the over-the-counter
market. 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 expects that securities will be purchased at times in
underwritten offerings where the price includes a fixed amount of compensation,
generally referred to as the underwriter's concession or discount. Options and
futures transactions will usually be effected through a broker and a commission
will be charged. On occasion, the Fund may also purchase certain money market
instruments directly from an issuer, in which case no commissions or discounts
are paid.

For the fiscal years ended December 31, 1997, 1998 and 1999, the Fund paid
no 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 December 31, 1997, 1998 and 1999, the Fund
did not effect any principal transactions with Dean Witter Reynolds.

Brokerage transactions in securities listed on exchanges or admitted to
unlisted trading privileges may be effected through Dean Witter Reynolds,
Morgan Stanley & Co. and other affiliated brokers and dealers. In order for an
affiliated broker or dealer to effect any portfolio transactions on an exchange
for the Fund, the commissions, fees or other remuneration received by the
affiliated broker or dealer must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection
with comparable transactions involving similar securities being purchased or
sold on an exchange during a comparable period of time. This standard would
allow the affiliated broker or dealer to receive no more than the remuneration
which would be expected to be received by an unaffiliated broker in a
commensurate arm's-length transaction. Furthermore, the Trustees, including the
Independent Trustees, have adopted procedures which are reasonably designed to
provide that any commissions, fees or other remuneration paid to an affiliated
broker or dealer are consistent with the foregoing

<PAGE>

standard. The Fund does not reduce the management fee it pays to the Investment
Manager by any amount of the brokerage commissions it may pay to an affiliated
broker or dealer.

During the fiscal years ended December 31, 1997, 1998 and 1999, the Fund
did not effect any securities transactions through any affiliated brokers or
dealers.

C. BROKERAGE SELECTION

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

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

The Investment Manager currently serves as investment manager to a number
of clients, including other investment companies, and may in the future act as
investment manager or advisor to others. It is the practice of the Investment
Manager to cause purchase and sale transactions to be allocated among the Fund
and others whose assets it manages in such manner as it deems equitable. In
making such allocations among the Fund and other client accounts, various
factors may be considered, including the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held and the opinions of the persons responsible for managing the
portfolios of the Fund and other client accounts. In the case of certain
initial and secondary public offerings, the Investment Manager utilizes a pro
rata allocation process based on the size of the Morgan Stanley Dean Witter
Funds involved and the number of shares available from the public offering.

D. DIRECTED BROKERAGE

During the fiscal year ended December 31, 1999, the Fund did not pay any
brokerage commissions to brokers because of research services provided.

E. REGULAR BROKER-DEALERS

During the fiscal year ended December 31, 1999, 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. As of December 31, 1999, the Fund did not own
any securities issued by any of such issuers.

25
<PAGE>

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

The shareholders of the Fund are entitled to a full vote for each full
share of beneficial interest held. The Fund is authorized to issue an unlimited
number of shares of beneficial interest. All shares of beneficial interest of
the Fund are of $0.01 par value and are equal as to earnings, assets and voting
privileges except that each Class will have exclusive voting privileges with
respect to matters relating to distribution expenses borne solely by such Class
or any other matter in which the interests of one Class differ from the
interests of any other Class. In addition, Class B shareholders will have the
right to vote on any proposed material increase in Class A's expenses, if such
proposal is submitted separately to Class A shareholders. Also, Class A, Class
B and Class C bear expenses related to the distribution of their respective
shares.

The Fund's Declaration of Trust permits the Trustees to authorize the
creation of additional series of shares (the proceeds of which would be
invested in separate, independently managed portfolios) and additional Classes
of shares within any series. The Trustees have not presently authorized any
such additional series or Classes of shares other than as set forth in the
Prospectus.

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

Under Massachusetts law, shareholders of a business trust may, under
certain limited circumstances, be held personally liable as partners for the
obligations of the Fund. However, the Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Fund,
requires that notice of such Fund obligations include such disclaimer, and
provides for indemnification out of the Fund's property for any shareholder
held personally liable for the obligations of the Fund. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund itself would be unable to meet its
obligations. Given the above limitations on shareholder personal liability, and
the nature of the Fund's assets and operations, the possibility of the Fund
being unable to meet its obligations is remote and thus, in the opinion of
Massachusetts counsel to the Fund, the risk to Fund shareholders of personal
liability is remote.

All of the Trustees have been elected by the shareholders of the Fund,
most recently at a Special Meeting of Shareholders held on May 21, 1997. The
Trustees themselves have the power to alter the number and the terms of office
of the Trustees (as provided for in the Declaration of Trust), and they may at
any time lengthen or shorten their own terms or make their terms of unlimited
duration and appoint their own successors, provided that always at least a
majority of the Trustees has been elected by the shareholders of the Fund.

VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
- --------------------------------------------------------------------------------

A. PURCHASE/REDEMPTION OF SHARES

Information concerning how Fund shares are offered to the public (and how
they are redeemed and exchanged) is provided in the Fund's Prospectus.

In the case of Class B shares of the Fund issued in exchange for shares of
Dean Witter National Municipal Trust ("National Municipal") in connection with
the reorganization of National Municipal with the Fund on November 7, 1997
pursuant to an Agreement and Plan of Reorganization (the "Reorganization"),
that were subject to the lower CDSC schedule of National Municipal (as
described below), will continue to be subject to that lower CDSC schedule
unless (i) such shares are subsequently exchanged

<PAGE>

for shares of a fund with a higher CDSC schedule or (ii) having been exchanged
for shares of Morgan Stanley Dean Witter North American Government Income
Trust, Morgan Stanley Dean Witter Global Short-Term Income Fund Inc. or Morgan
Stanley Dean Witter Short-Term U.S. Treasury Trust, Morgan Stanley Dean Witter
Limited Term Municipal Trust, Morgan Stanley Dean Witter Short-Term Bond Fund,
and the five Morgan Stanley Dean Witter funds which are money market funds (the
"Exchange Funds") are re-exchanged back into the Fund. Under such
circumstances, the CDSC schedule applicable to shares of the fund with the
higher CDSC schedule acquired in the exchange will apply to redemptions of such
fund's shares or, in the case of shares of any of the Exchange Funds acquired
in an exchange and then subsequently re-exchanged back into the Fund, the CDSC
schedule set forth in the above table will apply to redemptions of any of such
shares. The CDSC schedule applicable to National Municipal was as follows:
Shares held for three years or more after purchase (calculated as described in
the paragraph above) are not subject to any CDSC upon redemption. However,
shares redeemed earlier than three years after purchase may be subject to a
CDSC (calculated as described in the paragraph above), the percentage of which
depends on how long the shares have been held, as set forth in the following
table:

<TABLE>
<CAPTION>
Year Since CDSC as a Percentage
Purchase Payment Made of Amount Redeemed
- ------------------------------- ---------------------
<S> <C>
First ........................................ 3.0%
Second ....................................... 2.0%
Third ........................................ 1.0%
Fourth and thereafter ........................ None
</TABLE>

Transfer Agent as Agent. With respect to the redemption or repurchase of
Fund shares, the application of proceeds to the purchase of new shares in the
Fund or any other Morgan Stanley Dean Witter Funds and the general
administration of the exchange privilege, the Transfer Agent acts as agent for
the Distributor and for the shareholder's authorized broker-dealer, if any, in
the performance of such functions. With respect to exchanges, redemptions or
repurchases, the Transfer Agent shall be liable for its own negligence and not
for the default or negligence of its correspondents or for losses in transit.
The Fund shall not be liable for any default or negligence of the Transfer
Agent, the Distributor or any authorized broker-dealer.

The Distributor and any authorized broker-dealer have appointed the
Transfer Agent to act as their agent in connection with the application of
proceeds of any redemption of Fund shares to the purchase of shares of any
other Morgan Stanley Dean Witter Fund and the general administration of the
exchange privilege. No commission or discounts will be paid to the Distributor
or any authorized broker-dealer for any transaction pursuant to the exchange
privilege.

Transfers of Shares. In the event a shareholder requests a transfer of
Fund shares to a new registration, the shares will be transferred without sales
charge at the time of transfer. With regard to the status of shares which are
either subject to the CDSC or free of such charge (and with regard to the
length of time shares subject to the charge have been held), any transfer
involving less than all of the shares in an account will be made on a pro rata
basis (that is, by transferring shares in the same proportion that the
transferred shares bear to the total shares in the account immediately prior to
the transfer). The transferred shares will continue to be subject to any
applicable CDSC as if they had not been so transferred.

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

27
<PAGE>

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.

Portfolio securities (other than short-term debt securities and futures
and options) are valued for the Fund by an outside independent pricing service
approved by the Trustees. The pricing service has informed the Fund that in
valuing the portfolio securities for the Fund it uses both a computerized grid
matrix of tax-exempt securities and evaluations by its staff, in each case
based on information concerning market transactions and quotations from dealers
which reflect the bid side of the market each day. The portfolio securities for
the Fund are thus valued by reference to a combination of transactions and
quotations for the same or other securities believed to be comparable in
quality, coupon, maturity, type of issue, call provisions, trading
characteristics and other features deemed to be relevant. The Trustees believe
that timely and reliable market quotations are generally not readily available
to the Fund for purposes of valuing tax-exempt securities and that the
valuations supplied by the pricing service, using the procedures outlined above
and subject to periodic review, are more likely to approximate the fair value
of such securities. The Investment Manager will periodically review and
evaluate the procedures, methods and quality of services provided by the
pricing service then being used by the Fund and may, from time to time,
recommend to the Trustees the use of other pricing services or discontinuance
of the use of any pricing service in whole or part. The Trustees may determine
to approve such recommendation or take other provisions for pricing of the
portfolio securities for the Fund.

Short-term taxable debt securities with remaining maturities of 60 days or
less at time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees. Other taxable short-term debt securities with maturities of more than
60 days will be valued on a market to market basis until such time as they
reach a maturity of 60 days, whereupon they will be valued at amortized cost
using their value on the 61st day unless the Trustees determine such does not
reflect the securities' fair value, in which case these securities will be
valued at their fair market value as determined by the Trustees. 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 Trustees determine
that such price does not reflect their market value, in which case they will be
valued at their fair value as determined in good faith under procedures
established by and under the supervision of the Trustees. 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 Trustees.

IX. TAXATION OF THE FUND AND SHAREHOLDERS
- --------------------------------------------------------------------------------

The Fund generally will make three basic types of distributions: tax
exempt dividends, ordinary dividends and long-term capital gain distributions.
These 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. 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.

<PAGE>

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 ordinary income or 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.

In computing net investment income, the Fund will amortize any premiums
and original issue discounts on securities owned, if applicable. Capital gains
or losses realized upon sale or maturity of such securities will be based on
their amortized cost.

All or a portion of any gain from tax-exempt obligations purchased at a
market discount may be treated as ordinary income rather than capital gain.

From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on municipal securities. Similar proposals may be introduced in the
future. If such a proposal were enacted, the availability of municipal
securities for investment by the Fund could be affected. In that event, the
Fund would re-evaluate its investment objective and policies.

TAXATION OF DIVIDENDS AND DISTRIBUTIONS. The Fund intends to qualify to
pay "exempt-interest dividends" to its shareholders by maintaining, as of the
close of each quarter end of its taxable years, at least 50% of the value of its
assets in tax-exempt securities. An exempt-interest dividend is that part of the
dividend distributions made by the Fund which consists of interest received by
the Fund on tax-exempt securities upon which the shareholder incurs no federal
income taxes. Exempt-interest dividends are included, however, in determining
what portion, if any, of a person's Social Security benefits are subject to
federal income tax.

The Fund intends to invest a portion of its assets in certain "private
activity bonds". As a result, a portion of the exempt-interest dividends paid
by the Fund will be an item of tax preference to shareholders subject to the
alternative minimum tax. Certain corporations which are subject to the
alternative minimum tax may also have to include exempt-interest dividends in
calculating their alternative minimum taxable income in situations where the
"adjusted current earnings" of the corporation exceeds its alternative minimum
taxable income.

Shareholders will be subject to federal income tax on dividends paid from
interest income derived from taxable securities and on distributions of net
short-term capital gains. Such dividends and distributions are taxable to the
shareholder as ordinary dividend income regardless of whether the shareholder
receives such distributions in additional shares or in cash. Distributions of
long-term capital gains, if any, are taxable as long-term capital gains,
regardless of how long the shareholder has held the Fund shares and regardless
of whether the distribution is received in additional shares or in cash. Since
the income of the Fund is expected to be derived entirely from interest rather
than dividends, it is anticipated that no portion of such dividend
distributions will be eligible for the federal dividends received deduction
available to corporations.

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.

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 any taxable interest income and short term
capital gains.

After the end of each calendar year, shareholders will be sent full
information on their dividends and capital gain distributions for tax purposes,
including the portion taxable as ordinary income, the portion taxable as
long-term capital gains and the percentage of any distributions which
constitute an item of tax preference for purposes of the alternative minimum
tax.

29
<PAGE>

PURCHASES AND REDEMPTIONS AND EXCHANGES OF FUND SHARES. Any dividend or
capital gains distribution received by a shareholder from the Fund will have
the effect of reducing the net asset value of the shareholder's stock in the
Fund by the exact amount of the dividend or capital gains distribution.
Furthermore, capital gains distributions and some portion of the dividends may
be subject to federal income taxes. If a shareholder of the Fund receives
exempt-interest dividends with respect to any share and if such share is held
by the shareholder for six months or less, then any loss on the sale or
exchange of such share may, to the extent of such exempt-interest dividends, be
disallowed. 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 shares of the Fund 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 shares is
normally treated as a sale for tax purposes. Shares of the Fund 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 individual 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 shares in the Fund for 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 Fund, followed
by the purchase of shares in the Fund.

If a shareholder realizes a loss on the redemption or exchange of a shares
in the Fund and reinvests in shares of the Fund 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.

Interest on indebtedness incurred by shareholders to purchase or carry
shares of the Fund is not deductible. Furthermore, entities or persons who are
"substantial users" (or related persons) of facilities financed by industrial
development bonds should consult their tax advisers before purchasing shares of
the Fund. "Substantial user" is defined generally by Treasury Regulation
Section 1.103-11(b) as including a "non-exempt person" who regularly uses in a
trade or business a part of a facility financed from the proceeds of industrial
development bonds.

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
Plans."

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

Prior to July 28, 1997, the Fund offered only one Class of shares subject
to a maximum sales charge of 4.0% and no 12b-1 fee. Because the distribution
arrangement for Class A most closely resembles the

<PAGE>

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 charges 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. Following the restated performance
information for Class A and Class D is the actual performance of the Fund based
on its original, single class sales charge structure as of its last fiscal
year. Also set forth below is the actual performance of Class B and Class C as
of their last fiscal year.

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. For the 30-day period ended December 31, 1999, the yield,
calculated pursuant to the formula described above, was approximately 4.66%,
4.51%, 4.42% and 5.12% for Class A, Class B, Class C and Class D, respectively.

The Fund may also quote a "tax-equivalent yield" for each Class determined
by dividing the tax-exempt portion of quoted yield by 1 minus the stated income
tax rate and adding the result to the portion of the yield that is not
tax-exempt. The yield for Class A, Class B, Class C and Class D shares, based
upon a Federal personal income tax bracket of 39.60% (the highest current
individual marginal tax rate), for the 30-day period ended December 31, 1999
were 7.72%, 7.47%, 7.32% and 8.48% respectively, based upon the yield quoted
above.

The Fund's "average annual total return" represents an annualization of
the Fund's total return over a particular period and is computed by finding the
annual percentage rate which will result in the ending redeemable value of a
hypothetical $1,000 investment made at the beginning of a one, five or ten year
period, or for the period from the date of commencement of operations, if
shorter than any of the foregoing. The ending redeemable value is reduced by
any contingent deferred sales charge ("CDSC") at the end of the one, five, ten
year or other period. For the purpose of this calculation, it is assumed that
all dividends and distributions are reinvested. The formula for computing the
average annual total return involves a percentage obtained by dividing the
ending redeemable value by the amount of the initial investment (which in the
case of Class A shares is reduced by the Class A initial sales charge), taking
a root of the quotient (where the root is equivalent to the number of years in
the period) and subtracting 1 from the result. The average annual total returns
of the Class A and Class D shares of the Fund for the year ended December 31,
1999 were -6.95% and -2.71%, respectively; the restated average annual total
returns for the five years ended December 31, 1999 were 5.27% and 6.42%,
respectively; and the restated average annual total returns for the ten years
ended December, 1999 were 5.73% and 6.44%, respectively. The average annual
total returns of Class B for the fiscal year ended December 31, 1999 and for
the period July 28, 1997 (inception of the Class) through December 31, 1999
were -7.86% and 1.19%, respectively. The average annual total returns of Class
C for the fiscal year ended December 31, 1999 and for the period July 28, 1997
(inception of the Class) through December 31, 1999 were -4.29% and 2.09%,
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 December 31,
1999 was -2.82% and the restated average annual total return for the five years
ended December 31, 1999 was 6.19% and the

31
<PAGE>

restated average annual total return for the ten years ended December 31, 1999
was 6.19%. 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 December 31, 1999 and for the period July 28, 1997 through December 31,
1999 were -3.25% and 2.31%, respectively. The average annual total returns of
Class C for the fiscal year ended December 31, 1999 and for the period July 28,
1997 through December 31, 1999 were -3.37% and 2.09%, respectively.

In addition, the Fund may compute its aggregate total return for each
Class for specified periods by determining the aggregate percentage rate which
will result in the ending value of a hypothetical $1,000 investment made at the
beginning of the period. For the purpose of this calculation, it is assumed
that all dividends and distributions are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value (without reduction for any sales charge) by the initial $1,000 investment
and subtracting 1 from the result. Based on the foregoing calculation, the
Fund's total returns for Class A and Class D shares for the year ended December
31, 1999 were -2.82% and -2.71%, respectively, the restated total returns for
the five years ended December 31, 1999 were 35.03% and 36.51%, and the restated
total returns for the ten years ended December 31, 1999 were 82.35% and 86.65%.
Based on the foregoing calculation, the Fund's total returns for Class B and
Class C shares for the year ended December 31, 1999 were -3.25% and -3.37%,
respectively, the total returns for the period July 28, 1997 through December
31, 1999 were 5.70% and 5.15%, 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 to the following amounts at December
31, 1999:

<TABLE>
<CAPTION>
INVESTMENT AT INCEPTION OF:
-------------------------------------
INCEPTION
CLASS DATE: $10,000 $50,000 $100,000
- ----------------- ----------------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Class A ......... 03/27/80(1) $48,187 $242,823 $489,420
Class B ......... 07/28/97 10,570 52,850 105,700
Class C ......... 07/28/97 10,515 52,575 105,150
Class D ......... 03/27/80 52,775 263,875 527,750
</TABLE>

- ----------
(1) 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.

All shares of the Fund held prior to July 28, 1997 were designated Class D
shares and accordingly, the actual performance numbers set forth below
represent the actual performance of the continuing Class D. The actual average
annual total returns of the Fund, calculated with the deduction of maximum
applicable sales charge described above, for the five years ended December 31,
1999 and for the ten years ended December 31, 1999 were 5.56% and 6.01%,
respectively. The actual average annual total returns of the Fund calculated
without the deduction for any applicable sales charge for the five years ended
December 31, 1999 and for the ten years ended December 31, 1999, were 6.42% and
6.44%, respectively. The Fund's actual aggregate total return, without the
deduction for any application sales charge for the five years ended December
31, 1999 was 36.51% and the actual total return for the ten years ended
December 31, 1999 was 86.65%. Investments of $10,000, $50,000 and $100,000,
adjusted for the sales charges in effect at such time (4.0%, 3.25% or 2.75%,
respectively), in the Fund at inception would have grown to $50,664, $255,299
and $513,237, respectively, at December 31, 1999.

The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by recognized organizations.

<PAGE>

XII. FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
EXPERTS. The financial statements of the Fund for the fiscal year ended
December 31, 1999 included in this Statement of Additional Information and
incorporated by reference in the Prospectus have been so included and
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

* * * * *

This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the SEC. The complete Registration Statement may be obtained from
the SEC.

33
<PAGE>

MORGAN STANLEY DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS December 31, 1999

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- -------------
<S> <C>
TAX-EXEMPT MUNICIPAL BONDS (90.1%)
General Obligation (14.5%)
North Slope Borough, Alaska,
$ 5,000 Ser 1992 A Conv (MBIA) ......................................................
15,000 Ser 1994 B (FSA) ............................................................
15,000 Ser 1995 A (MBIA) ...........................................................
10,000 Ser 1996 B (MBIA) ...........................................................
10,000 Ser 1996 B (MBIA) ...........................................................
9,500 Ser 1999 A (MBIA) ...........................................................
4,000 Connecticut, College Savings 1989 Ser A ......................................
Florida Board of Education, Capital Outlay
5,000 Refg Ser 1999 B (MBIA) ......................................................
5,000 Ser 1998 A ..................................................................
20,000 Massachusetts, Refg 1996 Ser A (AMBAC) .......................................
4,000 Clark County, Nevada, Transportation Ser 1992 A (AMBAC) ......................
New York City, New York,
1,500 1995 Ser D (MBIA) ...........................................................
1,925 1990 Ser D ..................................................................
1,545 1990 Ser D ..................................................................
North Carolina,
10,000 1997 Ser A ..................................................................
8,000 Public School Building, Ser 1999 ............................................
10,000 South-Western City School District, Ohio, Ser 1999 (AMBAC) ...................
10,000 Pennsylvania, First Ser 1995 (FGIC) ..........................................
4,000 Shelby County, Tennessee, Refg 1995 Ser A ....................................
20,000 King County, Washington, Ltd Tax 1995 (MBIA) .................................
2,000 Washington, Ser 1994 A .......................................................
----------
171,470
----------
Educational Facilities Revenue (3.9%)
10,000 Indiana University, Student Fee Ser K (MBIA) .................................
4,000 Maryland State Health & Educational Facilities Authority,
The Johns Hopkins University Refg Ser 1998 ...................................
7,000 Massachusetts Health & Educational Facilities Authority, Boston University
1991 Ser K & L (MBIA) ........................................................
5,000 Missouri Health & Educational Facilities Authority, Washington University
Ser 1998 A ...................................................................
2,000 New Jersey Economic Development Authority, The Seeing Eye Inc 1991 ...........
8,000 New Jersey Educational Facilities Authority, Princeton University
Ser 1999 A ...................................................................
5,000 New York State Dormitory Authority, State University Ser 1989 B ..............
2,000 Ohio State University, General Receipts, Ser 1999 A ..........................
----------
43,000
----------

<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------- -------- ---------- -----------------
<S> <C> <C> <C>
$ 5,000 5.90% 06/30/03 $ 5,181,450
15,000 0.00 06/30/05 11,304,150
15,000 0.00 06/30/06 10,676,400
10,000 0.00 06/30/06 7,117,600
10,000 0.00 06/30/07 6,715,500
9,500 0.00 06/30/10 5,314,015
4,000 0.00 07/01/08 2,553,640
5,000 4.50 06/01/24 3,927,000
5,000 4.75 06/01/28 4,008,500
20,000 6.00 11/01/10 21,195,199
4,000 6.50 06/01/17 4,295,040
1,500 6.20 02/01/07 1,598,640
1,925 6.00 08/01/07 1,927,522
1,545 6.00 08/01/08 1,547,024
10,000 5.20 03/01/16 9,400,100
8,000 4.60 04/01/17 6,782,960
10,000 4.75 12/01/19 8,354,000
10,000 5.50 05/01/12 10,032,300
4,000 5.625 04/01/14 3,997,680
20,000 6.00 01/01/23 19,633,400
2,000 5.80 09/01/08 2,056,160
---------- --------------
171,470 147,618,280
---------- --------------
10,000 5.875 08/01/20 9,749,000
4,000
5.125 07/01/20 3,582,480
7,000
6.66 10/01/31 7,261,660
5,000
4.75 11/15/37 3,807,050
2,000 7.30 04/01/11 2,046,560
8,000
4.75 07/01/25 6,576,320
5,000 0.00 05/15/02 4,458,600
2,000 5.80 12/01/29 1,923,120
---------- --------------
43,000 39,404,790
---------- --------------
</TABLE>

See Notes to Financial Statements
34

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Portfolio of Investments December 31, 1999, continued

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- -------------
<S> <C>
Electric Revenue (14.0%)
$ 25,000 Salt River Project Agricultural Improvement & Power District, Arizona,
Refg 1993 Ser C (Secondary MBIA) ..............................................
10,000 Sacramento Municipal Utility District, California, Refg 1994 Ser I (MBIA) .....
10,000 Municipal Electric Authority of Georgia, Ser Y (Secondary MBIA) ...............
5,000 Long Island Power Authority, New York, Ser 1998 A (FSA) .......................
Puerto Rico Electric Power Authority,
1,500 Power Ser X ..................................................................
15,000 Power Ser O ..................................................................
5,000 Power Ser EE (MBIA) ..........................................................
15,000 South Carolina Public Service Authority, 1995 Refg Ser A (AMBAC) ..............
710 Austin, Texas, Combined Utilities Refg Ser 1994 (FGIC) ........................
20,000 Lower Colorado River Authority, Texas, Refg Ser 1999 A ........................
San Antonio, Texas, Electric & Gas
13,000 Refg Ser 1994 C ..............................................................
5,000 Refg Ser 1998 A ..............................................................
Intermountain Power Agency, Utah,
5,000 Refg Ser 1998 A (MBIA) .......................................................
10,000 Refg 1997 Ser B (MBIA) .......................................................
15,000 Washington Public Power Supply System, Proj #2 Refg Ser 1994 A
----------
(Secondary MBIA) ..............................................................
155,210
----------
Hospital Revenue (3.8%)
Rochester, Minnesota,
5,000 Mayo Foundation/Medical Center Ser 1992 I ....................................
3,700 Mayo Foundation/Medical Center Ser 1992 F ....................................
10,000 Missouri Health & Educational Facilities Authority, Barnes-Jewish Inc/
Christian Health Services Ser 1993 A ..........................................
1,300 New Hampshire Higher Educational & Health Facilities Authority,
St Joseph Hospital Ser 1994 (Connie Lee) ......................................
6,000 New York State Medical Care Facilities Finance Agency, Presbyterian
Hospital - FHA Insured Mtge Ser 1994 A ........................................
5,000 North Central Texas Health Facilities Development Corporation, University
Medical Center Inc Ser 1997 (FSA) .............................................
10,000 Fredericksburg Industrial Development Authority, Virginia, Medicorp
----------
Health Refg Ser 1996 (AMBAC) ..................................................
41,000
----------
Industrial Development/Pollution Control Revenue (4.1%)
1,500 Hawaii Department of Budget & Finance, Hawaiian Electric Co
Ser 1995 A (AMT) (MBIA) .......................................................
10,000 Clark County, Nevada, Nevada Power Co Ser 1992 A (AMT) (FGIC) .................
5,000 Washoe County, Nevada, Sierra Pacific Power Co Ser 1987 (AMBAC) ...............
5,000 Alliance Airport Authority, Texas, AMR Corp Ser 1990 (AMT) ....................

COUPON MATURITY
RATE DATE VALUE
- ---- -------- ---------- -----------------
<C> <C> <C>
$
5.50% 01/01/10 $ 25,559,500
5.75 01/01/15 10,060,400
6.50 01/01/17 10,739,000
5.125 12/01/22 4,368,800
6.00 07/01/15 1,518,030
0.00 07/01/17 5,267,700
4.50 07/01/18 4,139,400
6.25 01/01/22 15,028,050
6.25 05/15/16 725,301
5.50 05/15/21 18,531,000
4.70 02/01/06 12,756,900
4.50 02/01/21 3,928,100
5.25 07/01/15 4,687,300
5.75 07/01/19 9,681,400

-
6.00 07/01/07 15,794,550
--------------
142,785,431
- --------------
5.75 11/15/21 4,860,300
6.25 11/15/21 3,733,596

5.25 05/15/14 9,480,300

6.35 01/01/07 1,368,406

5.25 08/15/14 5,738,220

5.45 04/01/15 4,736,800

-
5.25 06/15/16 9,153,800
--------------
39,071,422
- --------------

6.60 01/01/25 1,549,665
6.70 06/01/22 10,233,600
6.30 12/01/14 5,156,900
7.50 12/01/29 5,154,600
</TABLE>

See Notes to Financial Statements
35

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Portfolio of Investments December 31, 1999, continued

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- -------------
<S> <C>
$ 10,000 Dallas-Fort Worth International Airport Facility Improvement Corporation,
Texas, American Airlines Inc Ser 1995 ........................................
10,000 Weston, Wisconsin, Wisconsin Public Service Co Refg Ser 1993 A ...............
----------
41,500
----------
Mortgage Revenue - Multi-Family (2.3%)
880 Massachusetts Housing Finance Agency, Rental 1994 Ser A (AMT)
(AMBAC) ......................................................................
5,560 Michigan Housing Development Authority, Rental 1992 Ser A
(Bifurcated FSA) .............................................................
9,000 New Jersey Housing & Mortgage Finance Agency, 1995 Ser A (AMBAC) .............
New York City Housing Development Corporation, New York,
4,260 Ruppert Proj - FHA Ins Sec 223F .............................................
4,114 Stevenson Commons Proj - FHA Ins Sec 223F ...................................
----------
23,814
----------
Mortgage Revenue - Single Family (6.6%)
7,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A (MBIA) ...........
2,440 California Housing Finance Agency, Home Cap Apprec 1983 Ser B ................
Colorado Housing & Finance Authority,
2,000 1998 Ser A-2 (AMT) ..........................................................
2,500 1997 Ser C-2 (AMT) ..........................................................
12,100 Illinios Housing Development Authority, Residential 1991 Ser C (AMT) .........
Missouri Housing Development Commission, Homeownership
3,020 GNMA/FNMA Collateralized 1996 Ser C (AMT) ...................................
3,910 GNMA/FNMA Collateralized 1997 Ser C-1 .......................................
2,800 Nebraska Investment Finance Authority, GNMA-Backed 1990 (AMT) ................
3,450 Ohio Housing Finance Agency, GNMA-Backed 1991 Ser A 1 & 2 (AMT) ..............
10,000 Pennsylvania Housing Finance Agency, Ser 1991-31 C (AMT) .....................
Tennessee Housing Development Agency,
3,955 Mortgage Finance 1993 Ser A .................................................
1,000 Mortgage Finance 1994 Ser B (AMT) ...........................................
10,785 Mortgage Finance 1993 Ser A .................................................
275 Utah Housing Finance Agency, Fed Ins/Guaranteed Loans 1994 Issue E
(AMT) ........................................................................
2,800 Wisconsin Housing & Economic Development Authority, Home Ownership
----------
1991 Ser (AMT) ...............................................................
68,035
----------
Public Facilities Revenue (1.1%)
2,000 North City West School Facilities Authority, California, Community Dist #1
Special Tax Ser 1995 B (FSA) .................................................
3,500 Denver, Colorado, Excise Tax Ser 1985 A (Secondary FSA) ......................
5,000 Ohio Building Authority, 1985 Ser C ..........................................
----------
10,500
----------

<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------- -------- ---------- -----------------
<S> <C> <C> <C>
$ 10,000
6.00% 11/01/14 $ 9,477,500
10,000 6.90 02/01/13 10,794,900
---------- --------------
41,500 42,367,165
---------- --------------
880
6.65 07/01/19 905,177
5,560
6.50 04/01/23 5,796,133
9,000 6.05 11/01/20 8,894,160
4,260 6.50 11/15/18 4,302,400
4,114 6.50 05/15/18 4,154,020
---------- --------------
23,814 24,051,890
---------- --------------
7,000 5.875 12/01/24 6,781,740
2,440 0.00 08/01/15 496,686
2,000 6.60 05/01/28 2,024,320
2,500 6.875 11/01/28 2,617,225
12,100 6.875 02/01/18 12,468,929
3,020 7.45 09/01/27 3,210,411
3,910 6.55 09/01/28 4,049,274
2,800 7.631 09/10/30 2,884,140
3,450 6.903 03/01/31 3,550,844
10,000 7.00 10/01/23 10,366,800
3,955 5.90 07/01/18 3,919,880
1,000 6.55 07/01/19 1,009,990
10,785 5.95 07/01/28 10,454,440
275
6.50 07/01/26 277,852
2,800
----------
7.097 10/25/22 2,899,568
--------------
68,035 67,012,099
---------- --------------
2,000
6.00 09/01/19 1,997,520
3,500 5.00 11/01/08 3,468,500
5,000 9.75 10/01/05 6,102,150
---------- --------------
10,500 11,568,170
---------- --------------
</TABLE>

See Notes to Financial Statements
36

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Portfolio of Investments December 31, 1999, continued

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------- -------- ---------- -----------------
<S> <C> <C> <C> <C>
Recreational Facilities Revenue (0.3%)
Metropolitan Football Stadium District, Colorado,
$ 4,000 Sales Tax Ser 1999 A (MBIA) ........................................... 0.00% 01/01/10 $ 2,300,240
2,000 Sales Tax Ser 1999 A (MBIA) ........................................... 0.00 01/01/12 1,010,600
---------- --------------
6,000 3,310,840
---------- --------------
Resource Recovery Revenue (1.7%)
7,000 Savannah Resource Recovery Development Authority, Georgia, Savannah
Energy Systems Co Ser 1992 ............................................. 6.30 12/01/06 7,228,970
10,000 Northeast Maryland Waste Disposal Authority, Montgomery County
----------
Ser 1993 A (AMT) ....................................................... 6.30 07/01/16 10,116,400
--------------
17,000 17,345,370
---------- --------------
Transportation Facilities Revenue (16.0%)
5,000 San Francisco Bay Area Rapid Transit District, California, Sales Tax
Ser 1998 (AMBAC) ....................................................... 4.75 07/01/23 4,130,550
13,000 San Joaquin Hills Transportation Corridor Agency, California, Toll Road
Refg Ser 1997 A (MBIA) ................................................. 0.00 01/15/26 2,611,440
5,000 E-470 Public Highway Authority, Colorado, Ser 1997 B (MBIA) ............ 0.00 09/01/16 1,824,850
1,000 Lee County, Florida, Ser 1995 (MBIA) ................................... 5.75 10/01/22 976,350
Mid-Bay Bridge Authority, Florida,
8,965 Ser 1993 A (AMBAC) ..................................................... 5.85 10/01/13 9,107,095
3,000 Ser 1997 A (AMBAC) ..................................................... 0.00 10/01/21 770,250
10,000 Atlanta, Georgia, Airport Ser 1990 (AMT) ............................... 6.25 01/01/21 9,816,700
5,000 Hawaii, Airports Second Ser 1991 (AMT) ................................. 7.00 07/01/18 5,211,650
4,000 Regional Transportation Authority, Illinois, Refg Ser 1999 (FSA) ....... 5.75 06/01/21 3,875,400
2,000 Kansas, Highway Refg Ser 1998 .......................................... 5.50 09/01/12 2,029,020
Kentucky Turnpike Authority,
9,000 Economic Development Road Refg Ser 1995 (AMBAC) ....................... 6.50 07/01/08 9,847,350
30,000 Resource Recovery Road 1987 Ser A ..................................... 5.00 07/01/08 29,430,599
13,385 Massachusetts Turnpike Authority, Western 1997 Ser A (MBIA) ............ 5.55 01/01/17 13,312,186
7,700 Minneapolis - St Paul Metropolitan Airports Commission, Minnesota,
Ser 1998 A (AMBAC) ..................................................... 5.00 01/01/30 6,421,107
New Jersey Highway Authority,
7,000 Sr Parkway 1999 Ser ................................................... 5.625 01/01/30 6,608,980
11,000 Sr Parkway Refg 1992 Ser .............................................. 6.25 01/01/14 11,396,220
5,000 New Jersey Transportation Trust Fund Authority, 1999 Ser A ............. 5.75 06/15/16 5,021,000
6,595 Albuquerque, New Mexico, Airport Refg Ser 1997 (AMT) (AMBAC) ........... 6.375 07/01/15 6,801,028
5,000 Ohio Turnpike Commission, Ser 1998 B (FGIC) ............................ 4.50 02/15/24 3,906,550
Pennsylvania Turnpike Commission,
5,000 Ser L of 1991 (MBIA) .................................................. 6.00 06/01/15 5,093,750
5,000 Ser A 1998 (AMBAC) .................................................... 4.75 12/01/27 3,987,300
8,000 Puerto Rico Highway & Transportation Authority, Refg Ser X ............. 5.50 07/01/15 7,748,800
10,000 South Carolina Transportation Infrastructure Bank, Ser 1999 A (AMBAC) .. 5.50 10/01/16 9,669,900
3,000 Virginia Transportation Board, US Route 58 Corridor Ser 1993 B ......... 5.625 05/15/13 3,003,210
---------- --------------
182,645 162,601,285
---------- --------------
</TABLE>

See Notes to Financial Statements
37

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Portfolio of Investments December 31, 1999, continued

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- -------------
<S> <C>
Water & Sewer Revenue (9.0%)
$ 10,000 Phoenix Civic Improvement Corporation, Arizona, Jr Lien Water Ser 1994 .....
10,000 California Department of Water Resources, Central Valley Ser L .............
10,000 Los Angeles, California, Wastewater Ser 1994-A (MBIA) ......................
5,000 Fulton County, Georgia, Water & Sewerage Ser 1998 (FGIC) ...................
10,000 Louisville & Jefferson County Metropolitan Sewer District, Kentucky,
Ser 1998 A (FGIC) ..........................................................
9,500 Massachusetts Water Resources Authority, Refg 1992 Ser B ...................
Detroit, Michigan,
3,320 Sewage Refg Ser 1993 A (FGIC) ..............................................
10,000 Water Supply 1997 Ser A (MBIA) .............................................
10,000 Cleveland, Ohio, Waterworks Impr & Refg 1998 Ser I (FSA) ...................
5,000 Spartanburg, South Carolina, Jr Lien Water System Ser 1998 (FGIC) ..........
11,000 Metropolitan Government of Nashville & Davidson County, Tennessee,
Refg Ser 1998 A (FGIC) .....................................................
10,000 Dallas, Texas, Waterworks & Sewer Refg Ser 1998 (FSA) ......................
----------
103,820
----------
Other Revenue (0.8%)
5,000 New York Local Government Assistance Corporation, Ser 1993 C ...............
3,000 Houston, Texas, Sr Lien Hotel Occupancy Tax Refg Ser 1995 (FSA) ............
----------
8,000
----------
Refunded (12.0%)
10,000 Birmingham Water Works & Sewer Board, Alabama, Ser 1994 ....................
9,000 Los Angeles Convention and Exhibition Center Authority, California,
Ser 1985 COPs ..............................................................
2,500 Mid-Bay Bridge Authority, Florida, Ser 1991 A (ETM) ........................
2,500 Massachusetts Health & Educational Facilities Authority,
Malden Hospital - FHA Ins Mtge Ser A (ETM) .................................
10,000 Massachusetts Water Resources Authority, 1996 Ser A (FGIC) .................
14,000 New York State Dormitory Authority, Suffolk County Judicial Ser 1986
(ETM) ......................................................................
7,000 San Antonio, Texas, Electric & Gas Refg Ser 1994 C (ETM) ...................
25,000 Intermountain Power Agency, Utah, Refg 1985 Ser H (GAINS) ..................
5,000 Salt Lake City, Utah, IHC Hospital Inc Ser 1983 (ETM) ......................
28,000 Fairfax County Industrial Development Authority, Virginia, Fairfax
----------
Hospital/Inova Health Ser 1991 .............................................
113,000
----------
984,994
----------
TOTAL TAX-EXEMPT MUNICIPAL BONDS (Identified Cost $902,914,260) ............

<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------- -------- ------------- -----------------
<S> <C> <C> <C>
$ 10,000 5.45% 07/01/19 $ 9,366,200
10,000 5.50 12/01/23 9,332,800
10,000 5.875 06/01/24 9,878,100
5,000 4.75 01/01/28 4,000,300
10,000
4.75 05/15/28 7,973,400
9,500 5.50 11/01/15 9,111,640
3,320 5.70 07/01/13 3,334,276
10,000 5.00 07/01/21 8,606,500
10,000 5.00 01/01/23 8,594,300
5,000 5.25 06/01/28 4,362,750
11,000
4.75 01/01/22 9,053,110
10,000 5.00 10/01/29 8,331,300
---------- --------------
103,820 91,944,676
---------- --------------
5,000 5.50 04/01/17 4,837,350
3,000 5.50 07/01/11 3,000,000
---------- --------------
8,000 7,837,350
---------- --------------
10,000 5.50 01/01/04\+ 10,417,500
9,000
9.00 12/01/05\+ 10,978,200
2,500 6.875 10/01/22 2,777,700
2,500
5.00 08/01/16 2,318,800
10,000 5.50 11/01/06\+ 10,387,600
14,000
7.375 07/01/16 16,367,400
7,000 4.70 02/01/06 6,819,120
25,000 0.00# 07/01/03\+ 28,104,000
5,000 5.00 06/01/15 4,691,150
28,000
----------
6.801 08/15/01\+ 29,404,760
--------------
113,000 122,266,230
---------- --------------
984,994
----------
919,184,998
--------------
</TABLE>

See Notes to Financial Statements
38

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Portfolio of Investments December 31, 1999, continued

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------- -------- --------------- ---------------
<S> <C> <C> <C> <C>
$ 15,000 Maricopa County, Arizona Public Service Co Ser 1994 C (Demand 01/03/00).. 4.80*% 05/01/29 $ 15,000,000
SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (8.6%)
21,000 Collier County Health Facilities Authority, Florida, Cleveland Clinic Heal 4.70* 01/01/33 21,000,000
Ser 1999 (Demand 01/03/00) ...............................................
7,000 Louisiana Public Facilities Authority, Kenner Hotel Ser 1985 5.00* 12/01/15 7,000,000
(Demand 01/03/00) ........................................................ 7.00 05/15/00+ 20,607,000
20,000 New York State Dormitory Authority, State University Ser 1990 B ..........
24,000 Harris County Health Facilities Development Corporation, Texas,
---------- 4.80* 12/01/25 24,000,000
Methodist Hospital Ser 1994 (Demand 01/03/00) ........................... --------------
87,000 TOTAL SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (Identified Cost 87,607,000
---------- --------------
$87,607,000) 98.7% 1,006,791,998
$1,071,994 TOTAL INVESTMENTS (Identified Cost $990,521,260) (a) .....................
========== 1.3 13,433,289
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ........................... --------------
NET ASSETS ............................................................... 100.0% $1,020,225,287
==============

</TABLE>

- --------------
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
ETM Escrowed to maturity.
GAINS Growth and Income Security.
+ Prerefunded to call date shown.
# Currently a zero coupon bond; will convert to 10.00% coupon on
July 1, 2000.
* Current coupon of variable rate demand obligation.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$38,326,839 and the aggregate gross unrealized depreciation is
$22,056,101, resulting in net unrealized appreciation of
$16,270,738.

Bond Insurance:
- --------------
AMBAC AMBAC Assurance Corporation.
Connie Lee Connie Lee Insurance Company - A wholly owned subsidiary of AMBAC
Assurance Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.

See Notes to Financial Statements
39

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Financial Statements

STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999

<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value
(identified cost $990,521,260) .................................. $1,006,791,998
Cash .............................................................. 1,692,345
Receivable for:
Interest ....................................................... 15,344,365
Shares of beneficial interest sold ............................. 190,362
Investments sold ............................................... 35,000
Prepaid expenses and other assets ................................. 63,621
--------------
TOTAL ASSETS ................................................... 1,024,117,691
--------------
LIABILITIES:
Payable for:
Dividends to shareholders ...................................... 2,408,252
Shares of beneficial interest repurchased ...................... 869,861
Investment management fee ...................................... 393,153
Plan of distribution fee ....................................... 83,114
Accrued expenses .................................................. 138,024
--------------
TOTAL LIABILITIES .............................................. 3,892,404
--------------
NET ASSETS ..................................................... $1,020,225,287
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................................... $1,008,602,876
Net unrealized appreciation ....................................... 16,270,738
Accumulated undistributed net investment income ................... 20,278
Accumulated net realized loss ..................................... (4,668,605)
--------------
NET ASSETS ..................................................... $1,020,225,287
==============
CLASS A SHARES:
Net Assets ........................................................ $ 17,198,331
Shares Outstanding (unlimited authorized, $.01 par value) ......... 1,552,372
NET ASSET VALUE PER SHARE ...................................... $ 11.08
==============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 4.44% of net asset value) .............. $ 11.57
==============
CLASS B SHARES:
Net Assets ........................................................ $ 139,786,097
Shares Outstanding (unlimited authorized, $.01 par value) ......... 12,564,649
NET ASSET VALUE PER SHARE ...................................... $ 11.13
==============
CLASS C SHARES:
Net Assets ........................................................ $ 10,024,734
Shares Outstanding (unlimited authorized, $.01 par value) ......... 902,958
NET ASSET VALUE PER SHARE ...................................... $ 11.10
==============
CLASS D SHARES:
Net Assets ........................................................ $ 853,216,125
Shares Outstanding (unlimited authorized, $.01 par value) ......... 77,068,274
NET ASSET VALUE PER SHARE ...................................... $ 11.07
==============
</TABLE>

See Notes to Financial Statements
40

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Financial Statements, continued

STATEMENT OF OPERATIONS
For the year ended December 31, 1999

<TABLE>
<CAPTION>
NET INVESTMENT INCOME:
<S> <C>
INTEREST INCOME ................................... $ 62,752,799
-------------
EXPENSES
Investment management fee ......................... 4,908,427
Plan of distribution fee (Class A shares) ......... 23,738
Plan of distribution fee (Class B shares) ......... 855,483
Plan of distribution fee (Class C shares) ......... 67,457
Transfer agent fees and expenses .................. 391,939
Registration fees ................................. 97,797
Shareholder reports and notices ................... 88,271
Professional fees ................................. 84,185
Custodian fees .................................... 45,589
Trustees' fees and expenses ....................... 18,226
Other ............................................. 38,492
-------------
TOTAL EXPENSES ................................. 6,619,604
Less: expense offset .............................. (45,456)
-------------
NET EXPENSES ................................... 6,574,148
-------------
NET INVESTMENT INCOME .......................... 56,178,651
-------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss ................................. (4,668,605)
Net change in unrealized appreciation ............. (82,789,197)
-------------
NET LOSS ....................................... (87,457,802)
-------------
NET DECREASE ...................................... $ (31,279,151)
=============
</TABLE>

See Notes to Financial Statements
41

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Financial Statements, continued

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................ $ 56,178,651 $ 59,803,857
Net realized gain (loss) ............................. (4,668,605) 15,111,631
Net change in unrealized appreciation ................ (82,789,197) (5,416,357)
-------------- --------------
NET INCREASE (DECREASE) ........................... (31,279,151) 69,499,131
-------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares .................................... (929,080) (460,545)
Class B shares .................................... (6,430,720) (5,022,084)
Class C shares .................................... (422,770) (218,789)
Class D shares .................................... (48,394,252) (54,102,439)
Net realized gain
Class A shares .................................... (52,982) (187,529)
Class B shares .................................... (400,237) (1,743,115)
Class C shares .................................... (27,144) (93,965)
Class D shares .................................... (2,638,565) (14,360,329)
-------------- --------------
TOTAL DIVIDENDS AND DISTRIBUTIONS ................. (59,295,750) (76,188,795)
-------------- --------------
Net decrease from transactions in shares of beneficial
interest ........................................... (67,388,661) (14,502,186)
-------------- --------------
NET DECREASE ...................................... (157,963,562) (21,191,850)
NET ASSETS:
Beginning of period .................................. 1,178,188,849 1,199,380,699
-------------- --------------
END OF PERIOD
(Including undistributed net investment income of
$20,278 and $18,572, respectively) ................ $1,020,225,287 $1,178,188,849
============== ==============
</TABLE>

See Notes to Financial Statements
42

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Notes to Financial Statements December 31, 1999

1. ORGANIZATION AND ACCOUNTING POLICIES

Morgan Stanley Dean Witter Tax-Exempt Securities Trust (the "Fund") is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Fund's investment
objective is to provide a high level of current income which is exempt from
federal income tax, consistent with the preservation of capital. The Fund was
incorporated in Maryland in 1979, commenced operations on March 27, 1980 and
reorganized as a Massachusetts business trust on April 30, 1987. 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 - Portfolio securities are valued for the Fund by
an outside independent pricing service approved by the Trustees. The pricing
service has informed the Fund that in valuing the Fund's portfolio securities,
it uses both a computerized matrix of tax-exempt securities and evaluations by
its staff, in each case based on information concerning market transactions and
quotations from dealers which reflect the bid side of the market each day. The
Fund's portfolio securities are thus valued by reference to a combination of
transactions and quotations for the same or other securities believed to be
comparable in quality, coupon, maturity, type of issue, call provisions,
trading characteristics and other features deemed to be relevant. 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.
The Fund amortizes premiums and accretes discounts over the life of the
respective securities. Interest income is accrued daily.

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Notes to Financial Statements December 31, 1999, continued

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 and nontaxable 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 financial
reporting purposes but not for tax purposes are reported as dividends in excess
of net investment income or distributions in excess of net realized capital
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of paid-in-capital.

2. INVESTMENT MANAGEMENT AGREEMENT

Pursuant to an Investment Management Agreement with Morgan Stanley Dean Witter
Advisors Inc. (the "Investment Manager"), the Fund pays the Investment Manager
a management fee, accrued daily and payable monthly, by applying the following
annual rates to the Fund's net assets 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 $1.25 billion; and 0.325% to the
portion of daily net assets exceeding $1.25 billion.

Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services,
heat, light, power and other utilities provided to the Fund.

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Notes to Financial Statements December 31, 1999, continued

3. PLAN OF DISTRIBUTION

Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan"), pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund will pay the Distributor a fee which is
accrued daily and paid monthly at the following annual rates: (i) Class A - up
to 0.25% of the average daily net assets of Class A; (ii) Class B - 0.60% of
the average daily net assets of Class B; and (iii) Class C - up to 0.70% of the
average daily net assets of Class C. In the case of Class A shares, amounts
paid under the Plan are paid to the Distributor for services provided. In the
case of Class B and Class C shares, amounts paid under the Plan are paid to the
Distributor for (1) services provided and the expenses borne by it and others
in the distribution of the shares of these Classes, including the payment of
commissions for sales of these Classes and incentive compensation to, and
expenses of, Morgan Stanley Dean Witter Financial Advisors and others who
engage in or support distribution of the shares or who service shareholder
accounts, including overhead and telephone expenses; (2) printing and
distribution of prospectuses and reports used in connection with the offering
of these shares to other than current shareholders; and (3) preparation,
printing and distribution of sales literature and advertising materials. In
addition, the Distributor may utilize fees paid pursuant to the Plan, in the
case of Class B shares, to compensate Dean Witter Reynolds Inc. ("DWR"), an
affiliate of the Investment Manager and Distributor, and other selected
broker-dealers for their opportunity costs in advancing such amounts, which
compensation would be in the form of a carrying charge on any unreimbursed
expenses.

In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. Although there is no legal obligation for
the Fund to pay expenses incurred in excess of payments made to the Distributor
under the Plan and the proceeds of contingent deferred sales charges paid by
investors upon redemption of shares, if for any reason the Plan is terminated,
the Trustees will consider at that time the manner in which to treat such
expenses. The Distributor has advised the Fund that such excess amounts,
including carrying charges, totaled $4,717,309 at December 31, 1999.

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 0.70% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Notes to Financial Statements December 31, 1999, continued

broker-dealer representatives may be reimbursed in the subsequent calendar
year. For the year ended December 31, 1999, the distribution fee was accrued
for Class A shares and Class C shares at the annual rate of 0.13% and 0.70%,
respectively.

The Distributor has informed the Fund that for the year ended December 31,
1999, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $274,899 and $10,671,
respectively and received $107,818 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 December 31, 1999
aggregated $137,618,438 and $245,779,835, respectively.

Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager
and Distributor, is the Fund's transfer agent. At December 31, 1999, the Fund
had transfer agent fees and expenses payable of approximately $13,800.

The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees 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 December 31, 1999
included in Trustees' fees and expenses in the Statement of Operations amounted
to $5,892. At December 31, 1999, the Fund had an accrued pension liability of
$52,664 which is included in accrued expenses in the Statement of Assets and
Liabilities.

5. FEDERAL INCOME TAX STATUS

At December 31, 1999, the Fund had a net capital loss carryover of
approximately $4,670,000 which will be available through December 31, 2007 to
offset future capital gains to the extent provided by regulations.

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Notes to Financial Statements December 31, 1999, continued

6. SHARES OF BENEFICIAL INTEREST

Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ........................................ 1,023,382 $ 11,894,433 1,188,860 $ 14,401,331
Reinvestment of dividends and distributions . 35,276 407,295 23,219 279,925
Redeemed .................................... (757,512) (8,588,318) (279,886) (3,403,298)
--------- -------------- --------- --------------
Net increase - Class A ...................... 301,146 3,713,410 932,193 11,277,958
--------- -------------- --------- --------------
CLASS B SHARES
Sold ........................................ 5,634,037 65,447,290 4,978,407 60,561,390
Reinvestment of dividends and distributions . 304,367 3,532,880 307,110 3,717,941
Redeemed .................................... (4,333,128) (49,694,515) (2,198,759) (26,762,285)
---------- -------------- ---------- --------------
Net increase - Class B ...................... 1,605,276 19,285,655 3,086,758 37,517,046
---------- -------------- ---------- --------------
CLASS C SHARES
Sold ........................................ 843,726 9,755,515 505,118 6,127,960
Reinvestment of dividends and distributions . 26,647 307,538 18,393 222,199
Redeemed .................................... (598,459) (6,828,777) (136,298) (1,653,180)
---------- -------------- ---------- --------------
Net increase - Class C ...................... 271,914 3,234,276 387,213 4,696,979
---------- -------------- ---------- --------------
CLASS D SHARES
Sold ........................................ 1,880,172 21,134,542 264,495 3,195,718
Reinvestment of dividends and distributions . 2,424,240 28,046,032 3,213,005 38,720,154
Redeemed .................................... (12,402,477) (142,802,576) (9,095,698) (109,910,041)
----------- -------------- ---------- --------------
Net decrease - Class D ...................... (8,098,065) (93,622,002) (5,618,198) (67,994,169)
----------- -------------- ---------- --------------
Net decrease in Fund ........................ (5,919,729) $ (67,388,661) (1,212,034) $ (14,502,186)
=========== ============== ========= ==============
</TABLE>

7. SUBSEQUENT EVENT

On January 26, 2000, the Board of Trustees of the Fund and of Morgan Stanley
Dean Witter Multi-State Municipal Series Trust - Massachusetts Series
("Massachusetts"), Michigan Series ("Michigan"), Minnesota Series ("Minnesota")
and Ohio Series ("Ohio") each approved four reorganization plans ("the Plans")
whereby Massachusetts, Michigan, Minnesota and Ohio would be merged into the
Fund. The Plans are subject to the consent of Massachusetts', Michigan's,
Minnesota's and Ohio's shareholders. If the Plans are approved (each Plan is
independent of the other and therefore, the effectiveness of each Plan is not

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Notes to Financial Statements December 31, 1999, continued

dependent upon the approval of the other Plans), the assets of Massachusetts,
Michigan, Minnesota and Ohio would be combined with the assets of the Fund and
shareholders of Massachusetts, Michigan, Minnesota and Ohio would become Class
D shareholders of the Fund, receiving Class D shares of the Fund equal to the
value of their holdings in Massachusetts, Michigan, Minnesota and Ohio,
respectively.

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Financial Highlights

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

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ------------------------- ----------------------
<S> <C> <C> <C>
CLASS A SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $ 12.02 $ 12.09 $ 12.00
-------- ---------- ----------
Income (loss) from investment operations:
Net investment income ................................. 0.58 0.59 0.25
Net realized and unrealized gain (loss) ............... ( 0.91) 0.10 0.14
-------- ---------- ----------
Total income (loss) from investment operations ......... ( 0.33) 0.69 0.39
-------- ---------- ----------
Less dividends and distributions from:
Net investment income ................................. ( 0.58) ( 0.59) ( 0.25)
Net realized gain ..................................... ( 0.03) ( 0.17) ( 0.05)
-------- ----------- ----------
Total dividends and distributions ...................... ( 0.61) ( 0.76) ( 0.30)
-------- ----------- ----------
Net asset value, end of period ......................... $ 11.08 $ 12.02 $ 12.09
======== =========== ==========
TOTAL RETURN\^ ......................................... ( 2.82)% 5.86% 3.31%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 0.64 %(4)(5) 0.74%(4)(5) 0.76%(2)(3)
Net investment income .................................. 4.98 %(5) 4.88%(5) 4.96%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $17,198 15,041 $ 3,857
Portfolio turnover rate ................................ 13 % 15% 16%
</TABLE>

- -------------
* The date shares were first issued.
+ 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) Does not reflect the effect of expense offset of 0.02%.
(4) Does not reflect the effect of expense offset of 0.01%.
(5) Reflects overall Fund ratios for investment income and non-class specific
expenses.

See Notes to Financial Statements
49

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Financial Highlights, continued

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ---------------------- ----------------------
<S> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $ 12.07 $ 12.14 $ 12.00
---------- ------------ ----------
Income (loss) from investment operations:
Net investment income ................................. 0.53 0.55 0.23
Net realized and unrealized gain (loss) ............... ( 0.91) 0.10 0.19
---------- ------------ ----------
Total income (loss) from investment operations ......... ( 0.38) 0.65 0.42
---------- ------------ ----------
Less dividends and distributions from:
Net investment income ................................. ( 0.53) ( 0.55) ( 0.23)
Net realized gain ..................................... ( 0.03) ( 0.17) ( 0.05)
---------- ------------ ----------
Total dividends and distributions ...................... ( 0.56) ( 0.72) ( 0.28)
---------- ------------ ----------
Net asset value, end of period ......................... $ 11.13 $ 12.07 $ 12.14
========== ============ ==========
TOTAL RETURN\^ ......................................... ( 3.25)% 5.47% 3.57%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 1.11 %(4)(5) 1.10%(4)(5) 1.14%(2)(3)
Net investment income .................................. 4.51 %(5) 4.52%(5) 4.87%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $139,786 $132,303 $ 95,573
Portfolio turnover rate ................................ 13 % 15% 16%
</TABLE>

See Notes to Financial Statements
50

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Financial Highlights, continued

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ---------------------- ----------------------
<S> <C> <C> <C>
CLASS C SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $ 12.04 $ 12.11 $ 12.00
-------- ---------- ----------
Income (loss) from investment operations:
Net investment income ................................. 0.51 0.53 0.23
Net realized and unrealized gain (loss) ............... ( 0.91) 0.10 0.16
-------- ---------- ----------
Total income (loss) from investment operations ......... ( 0.40) 0.63 0.39
-------- ---------- ----------
Less dividends and distributions from:
Net investment income ................................. ( 0.51) ( 0.53) ( 0.23)
Net realized gain ..................................... ( 0.03) ( 0.17) ( 0.05)
-------- ---------- ----------
Total dividends and distributions ...................... ( 0.54) ( 0.70) ( 0.28)
-------- ---------- ----------
Net asset value, end of period ......................... $ 11.10 $ 12.04 $ 12.11
======== ========== ==========
TOTAL RETURN\^ ......................................... ( 3.37)% 5.36% 3.28%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 1.21 %(4)(5) 1.20%(4)(5) 1.20%(2)(3)
Net investment income .................................. 4.41 %(5) 4.34%(5) 4.41%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $10,025 $ 7,599 $ 2,953
Portfolio turnover rate ................................ 13 % 15% 16%
</TABLE>

See Notes to Financial Statements
51

<PAGE>

Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Financial Highlights, continued

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------
1999 1998
----------------- ----------------------
<S> <C> <C>
CLASS D SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............... $ 12.01 $ 12.08
---------- -------------
Income (loss) from investment operations:
Net investment income ............................. 0.59 0.62
Net realized and unrealized gain (loss) ........... ( 0.91) 0.10
---------- -------------
Total income (loss) from investment operations ..... ( 0.32) 0.72
---------- -------------
Less dividends and distributions from:
Net investment income ............................. ( 0.59) ( 0.62)
Net realized gain ................................. ( 0.03) ( 0.17)
---------- -------------
Total dividends and distributions .................. ( 0.62) ( 0.79)
---------- -------------
Net asset value, end of period ..................... $ 11.07 $ 12.01
========== =============
TOTAL RETURN+ ..................................... ( 2.71)% 6.11 %
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................... 0.51 %(1)(2) 0.50 %(1)(2)
Net investment income .............................. 5.11 %(2) 5.12 %(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ............ $853,216 $1,023,246
Portfolio turnover rate ............................ 13 % 15 %

<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997* 1996 1995
------------------ ------------------ ------------------
<S> <C> <C> <C>
CLASS D SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............... $ 11.77 $ 12.09 $ 11.01
------------- ------------- -------------
Income (loss) from investment operations:
Net investment income ............................. 0.63 0.65 0.67
Net realized and unrealized gain (loss) ........... 0.36 ( 0.24) 1.19
------------- -------------- -------------
Total income (loss) from investment operations ..... 0.99 0.41 1.86
------------- -------------- -------------
Less dividends and distributions from:
Net investment income ............................. ( 0.63) ( 0.65) ( 0.67)
Net realized gain ................................. ( 0.05) ( 0.08) ( 0.11)
-------------- -------------- --------------
Total dividends and distributions .................. ( 0.68) ( 0.73) ( 0.78)
-------------- -------------- --------------
Net asset value, end of period ..................... $ 12.08 $ 11.77 $ 12.09
============== ============== ==============
TOTAL RETURN+ ..................................... 8.73% 3.61% 17.37%
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................... 0.49% 0.48% 0.48%
Net investment income .............................. 5.34% 5.52% 5.76%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ............ $1,096,998 $1,190,034 $1,325,308
Portfolio turnover rate ............................ 16% 18% 21%
</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.

+ Calculated based on the net asset value as of the last business day of
the period.
(1) Does not reflect the effect of expense offset of 0.01%.
(2) Reflects overall Fund ratios for investment income and non-class specific
expenses.

See Notes to Financial Statements
52

<PAGE>

MORGAN STANLEY DEAN WITTER TAX-EXEMPT SECURITIES TRUST
REPORT OF INDEPENDENT ACCOUNTANTS

TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER TAX-EXEMPT SECURITIES TRUST

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter
Tax-Exempt Securities Trust (the "Fund") at December 31, 1999, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended and the financial highlights for each
of the periods presented, in conformity with accounting principles generally
accepted in the United States. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at December 31, 1999 by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 7, 2000

1999 FEDERAL TAX NOTICE (unaudited)

During the year ended December 31, 1999, the Fund paid the following per
share amounts from tax-exempt income: $0.58 to Class A shareholders,
$0.53 to Class B shareholders, $0.51 to Class C shareholders and $0.59 to
Class D shareholders.

For the year ended December 31, 1999, the Fund paid long-term capital
gains of $0.03 per share to Class A, B, C and D shareholders.

<PAGE>

XIII. APPENDIX

RATINGS OF INVESTMENTS
- --------------------------------------------------------------------------------
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")

MUNICIPAL BOND RATINGS

<TABLE>
<S> <C>
Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree
of investment risk and are generally referred to as "gilt edge." Interest payments are protected
by a large or by an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are most unlikely
to impair the fundamentally strong position of such issues.

Aa Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa
group they comprise what are generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes and are to be considered
as upper medium grade obligations. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility to impairment
sometime in the future.

Baa Bonds which are rated Baa are considered as medium grade obligations; i.e., they are neither
highly protected nor poorly secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.

Bonds rated Aaa, Aa, A and Baa are considered investment grade bonds.

Ba Bonds which are rated Ba are judged to have speculative elements; their future cannot be
considered as well assured. Often the protection of interest and principal payments may be very
moderate, and therefore not well safeguarded during both good and bad times in the future.
Uncertainty of position characterizes bonds in this class.

B Bonds which are rated B generally lack characteristics of a desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract over any long
period of time may be small.

Caa Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.

Ca Bonds which are rated Ca present obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings.

C Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be
regarded as having extremely poor prospects of ever attaining any real investment standing.
</TABLE>

Conditional Rating: Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These bonds are secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed or (d) payments to which some
other limiting condition attaches. Parenthetical rating denotes probable credit
stature upon completion of construction or elimination of basis of condition.

<PAGE>

Rating Refinements: Moody's may apply numerical modifiers, 1, 2, and 3 in
each generic rating classification from Aa through B in its municipal bond
rating system. The modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and a modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.

MUNICIPAL NOTE RATINGS

Moody's ratings for state and municipal note and other short-term loans
are designated Moody's Investment Grade (MIG). MIG 1 denotes best quality and
means there is present strong protection for established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing. MIG 2 denotes high quality and means that margins of protection
are ample although not as large as in MIG 1. MIG 3 denotes favorable quality
and means that all security elements are accounted for but that the undeniable
strength of the previous grades, MIG 1 and MIG 2, is lacking. MIG 4 denotes
adequate quality and means that the protection commonly regarded as required of
an investment security is present and that while the notes are not distinctly
or predominantly speculative, there is specific risk.

VARIABLE RATE DEMAND OBLIGATIONS

A short-term rating, in addition to the Bond or MIG ratings, designated
VMIG may also be assigned to an issue having a demand feature. The assignment
of the VMIG symbol reflects such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity. The VMIG rating criteria are identical to the MIG criteria discussed
above.

COMMERCIAL PAPER RATINGS

Moody's Commercial Paper ratings are opinions of the ability to repay
punctually promissory obligations not having an original maturity in excess of
nine months. These ratings apply to Municipal Commercial Paper as well as
taxable Commercial Paper. Moody's employs the following three designations, all
judged to be investment grade, to indicate the relative repayment capacity of
rated issuers: Prime-1, Prime-2, Prime-3.

Issuers rated Prime-1 have a superior capacity for repayment of short-term
promissory obligations. Issuers rated Prime-2 have a strong capacity for
repayment of short-term promissory obligations; and Issuers rated Prime-3 have
an acceptable capacity for repayment of short-term promissory obligations.
Issuers rated Not Prime do not fall within any of the Prime rating categories.

STANDARD & POOR'S CORPORATION ("STANDARD & POOR'S")

MUNICIPAL BOND RATINGS

A Standard & Poor's municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers or
lessees.

The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. The
ratings are based, in varying degrees, on the following considerations: (1)
likelihood of default-capacity and willingness of the obligor as to the timely
payment of interest and repayment of principal in accordance with the terms of
the obligation; (2) nature of and provisions of the obligation; and (3)
protection afforded by, and relative position of the obligation in the event of
bankruptcy, reorganization or other arrangement under the laws of bankruptcy
and other laws affecting creditors' rights.

Standard & Poor's does not perform an audit in connection with any rating
and may, on occasion, rely on unaudited financial information. The ratings may
be changed, suspended or withdrawn as a result of changes in, or unavailability
of, such information, or for other reasons.

<PAGE>

<TABLE>
<S> <C>
AAA Debt rated "AAA" has the highest rating assigned by Standard & Poor's. Capacity to pay interest
and repay principal is extremely strong.

AA Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from
the highest-rated issues only in small degree.

A Debt rated "A" has a strong capacity to pay interest and repay principal although they are
somewhat more susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher-rated categories.

BBB Debt rated "BBB" is regarded as having an adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for debt in higher-rated categories.
Bonds rated AAA, AA, A and BBB are considered investment grade bonds.

BB Debt rated "BB" has less near-term vulnerability to default than other speculative grade debt.
However, it faces major ongoing uncertainties or exposure to adverse business, financial or
economic conditions which would lead to inadequate capacity or willingness to pay interest and
repay principal.

B Debt rated "B" has a greater vulnerability to default but presently has the capacity to meet
interest payments and principal repayments. Adverse business, financial or economic conditions
would likely impair capacity or willingness to pay interest and repay principal.

CCC Debt rated "CCC" has a current identifiable vulnerability to default, and is dependent upon
favorable business, financial and economic conditions to meet timely payments of interest and
repayments of principal. In the event of adverse business, financial or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.

CC The rating "CC" is typically applied to debt subordinated to senior debt which is assigned an
actual or implied "CCC" rating.

C The rating "C" is typically applied to debt subordinated to senior debt which is assigned an actual
or implied "CCC-" debt rating.

Cl The rating "Cl" is reserved for income bonds on which no interest is being paid.

D Debt rated "D" is in payment default. The `D' rating category is used when interest payments or
principal payments are not made on the date due even if the applicable grace period has not
expired, unless S&P believes that such payments will be made during such grace period. The
`D' rating also will be used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

NR Indicates that no rating has been requested, that there is insufficient information on which to
base a rating or that Standard & Poor's does not rate a particular type of obligation as a matter
of policy.

Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal. "BB" indicates the
least degree of speculation and "C" the highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.

Plus (+) or minus(-): The ratings from "AA" to "CCC" may be modified by the addition of a plus
or minus sign to show relative standing within the major ratings categories.
</TABLE>

<PAGE>

The foregoing ratings are sometimes followed by a "p" which indicates that the
rating is provisional. A provisional rating assumes the successful completion of
the project being financed by the bonds being rated and indicates that payment
of debt service requirements is largely or entirely dependent upon the
successful and timely completion of the project. This rating, however, while
addressing credit quality subsequent to completion of the project, makes no
comment on the likelihood or risk of default upon failure of such completion.

MUNICIPAL NOTE RATINGS

Commencing on July 27, 1984, Standard & Poor's instituted a new rating
category with respect to certain municipal note issues with a maturity of less
than three years. The new note ratings denote the following:

SP-1 denotes a very strong or strong capacity to pay principal and
interest. Issues determined to possess overwhelming safety characteristics
are given a plus (+) designation (SP-1+).

SP-2 denotes a satisfactory capacity to pay principal and interest.

SP-3 denotes a speculative capacity to pay principal and interest.

COMMERCIAL PAPER RATINGS

Standard and Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. The commercial paper rating is not a recommendation to purchase
or sell a security. The ratings are based upon current information furnished by
the issuer or obtained by S&P from other sources it considers reliable. The
ratings may be changed, suspended, or withdrawn as a result of changes in or
unavailability of such information. Ratings are graded into group categories,
ranging from "A" for the highest quality obligations to "D" for the lowest.
Ratings are applicable to both taxable and tax-exempt commercial paper. The
categories are as follows:

Issues assigned A ratings are regarded as having the greatest capacity
for timely payment. Issues in this category are further refined with the
designation 1, 2 and 3 to indicate the relative degree of safety.

A-1 indicates that the degree of safety regarding timely payments is
very strong.

A-2 indicates capacity for timely payment on issues with this designation
is strong. However, the relative degree of safety is not as overwhelming as
for issues designated "A-1".

A-3 indicates a satisfactory capacity for timely payment. Obligations
carrying this designation are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the
higher designations.

FITCH IBCA, INC. ("FITCH")

MUNICIPAL BOND RATINGS

Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The rating
represents Fitch's assessment of the issuer's ability to meet the obligations
of a specific debt issue or class of debt in a timely manner.

The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the
issuer's future financial strength and credit quality.

Fitch ratings do not reflect any credit enhancement that may be provided
by insurance policies or financial guarantees unless otherwise indicated.

Bonds carrying the same rating are of similar but not necessarily
identical credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.

<PAGE>

Fitch ratings are not recommendations to buy, sell, or hold any security.
Ratings do not comment on the adequacy of market price, the suitability of any
security for a particular investor, or the tax-exempt nature or taxability of
payments made in respect of any security.

Fitch ratings are based on information obtained from issuers, other
obligors, underwriters, their experts, and other sources Fitch believes to be
reliable. Fitch does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended, or withdrawn as a result of
changes in, or the unavailability of, information or for other reasons.

<TABLE>
<S> <C>
AAA Bonds considered to be investment grade and of the highest credit quality. The obligor
has an exceptionally strong ability to pay interest and repay principal, which is unlikely
to be affected by reasonably foreseeable events.

AA Bonds considered to be investment grade and of very high credit quality. The obligor's
ability to pay interest and repay principal is very strong, although not quite as strong
as bonds rated "AAA." Because bonds rated in the "AAA" and "AA" categories are not
significantly vulnerable to foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+."

A Bonds considered to be investment grade and of high credit quality. The obligor's
ability to pay interest and repay principal is considered to be strong, but may be more
vulnerable to adverse changes in economic conditions and circumstances than bonds
with higher ratings.

BBB Bonds considered to be investment grade and of satisfactory credit quality. The
obligor's ability to pay interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances, however, are more
likely to have adverse impact on these bonds, and therefore impair timely payment.
The likelihood that the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.

Plus (+) or Plus and minus signs are used with a rating symbol to indicate the relative position of
Minus (-) a credit within the rating category. Plus and minus signs, however, are not used in the
"AAA" category.

NR Indicates that Fitch does not rate the specific issue.

Conditional A conditional rating is premised on the successful completion of a project or the
occurrence of a specific event.

Suspended A rating is suspended when Fitch deems the amount of information available from the
issuer to be inadequate for rating purposes.

Withdrawn A rating will be withdrawn when an issue matures or is called or refinanced and, at
Fitch's discretion, when an issuer fails to furnish proper and timely information.

FitchAlert Ratings are placed on FitchAlert to notify investors of an occurrence that is likely to
result in a rating change and the likely direction of such change. These are designated
as "Positive," indicating a potential upgrade, "Negative," for potential downgrade, or
"Evolving," where ratings may be raised or lowered. FitchAlert is relatively short-term,
and should be resolved within 12 months.

Ratings Outlook An outlook is used to describe the most likely direction of any rating change over the
intermediate term. It is described as "Positive" or "Negative." The absence of a
designation indicates a stable outlook.
</TABLE>

Speculative Grade Bond Ratings: Fitch speculative grade bond ratings
provide a guide to investors in determining the credit risk associated with a
particular security. The ratings ("BB" to "C") represent Fitch's assessment of
the likelihood of timely payment of principal and interest in accordance with
the terms of obligation for bond issues not in default. For defaulted bonds,
the rating ("DDD" to "D") is an assessment of the ultimate recovery value
through reorganization or liquidation.

<PAGE>

Bonds that have the rating are of similar but not necessarily identical
credit quality since rating categories cannot fully reflect the differences in
degrees of credit risk.

<TABLE>
<S> <C>
BB Bonds are considered speculative. The obligor's ability to pay interest and repay
principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the obligor in
satisfying its debt service requirements.

B Bonds are considered highly speculative. While bonds in this class are currently
meeting debt service requirements, the probability of continued timely payment of
principal and interest reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity throughout the life of the issue.

CCC Bonds have certain identifiable characteristics which, if not remedied, may lead to
default. The ability to meet obligations requires an advantageous business and
economic environment.

CC Bonds are minimally protected. Default in payment of interest and/or principal seems
probable over time.

C Bonds are in imminent default in payment of interest or principal.

DDD Bonds are in default on interest and/or principal payments. Such bonds are extremely
DD and D speculative and should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. "DDD" represents the highest potential for
recovery on these bonds, and "D" represents the lowest potential for recovery

Plus (+) or Plus and minus signs are used with a rating symbol to indicate the relative position
Minus (-) of a credit within the rating category. Plus and minus signs, however, are not used in
the "DDD," "DD," or "D" categories.
</TABLE>

SHORT-TERM RATINGS

Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.

The short-term rating places greater emphasis than a long-term rating on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.

Fitch short-term ratings are as follows:

<TABLE>
<S> <C>
F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as
having the strongest degree of assurance for timely payment.

F-1 Very Strong Credit Quality. Issues assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated "F-1+."

F-2 Good Credit Quality. Issues assigned this rating have a satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as for issues
assigned "F-1+" and "F-1" ratings.

F-3 Fair Credit Quality. Issues assigned this rating have characteristics suggesting that
the degree of assurance for timely payment is adequate; however, near-term adverse
changes could cause these securities to be rated below investment grade.
</TABLE>

<PAGE>

<TABLE>
<S> <C>
F-S Weak Credit Quality. Issues assigned this rating have characteristics suggesting a
minimal degree of assurance for timely payment and are vulnerable to near-term
adverse changes in financial and economic conditions.

D Default. Issues assigned this rating are in actual or imminent payment default.

LOC The symbol "LOC" indicates that the rating is based on a letter of credit issued by a
commercial bank.
</TABLE>

<PAGE>

MORGAN STANLEY DEAN WITTER TAX-EXEMPT SECURITIES TRUST

PART C OTHER INFORMATION

Item 23. Exhibits

1(a). Declaration of Trust of the Registrant, dated April 6, 1987,
is incorporated by reference to Exhibit 1 of Post-Effective
Amendment No. 18 to the Registration Statement on Form N-1A,
filed on February 22, 1996.

1(b). Amendment to the Declaration of Trust, dated June 22, 1998, is
incorporated by reference to Exhibit 1 of Post-Effective
Amendment No. 22 to the Registration Statement on Form N-1A,
filed on February 26, 1999.

1(c). Instrument Establishing and Designating Additional Classes,
dated July 28, 1997, is incorporated by reference to Exhibit 1
of Post-Effective Amendment No. 20 to the Registration
Statement on Form N-1A, filed on July 3, 1997.

2. Amended and Restated By-Laws of the Registrant, dated May 1,
1999, is filed herein.

3. Not Applicable.

4. Investment Management Agreement between the Registrant and
Morgan Stanley Dean Witter Advisors Inc., dated April 30,
1998, is incorporated by reference to Exhibit 4 of
Post-Effective Amendment No. 22 to the Registration Statement
on Form N-1A, filed on February 26, 1999.

5(a). Amended Distribution Agreement, dated June 22, 1998, is
incorporated by reference to Exhibit 5(a) of Post-Effective
Amendment No. 22 to the Registration Statement on Form N-1A,
filed on February 26, 1999.

5(b). 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(b) of Post-Effective Amendment No. 22
to the Registration Statement on Form N-1A, filed on February
26, 1999.

5(c). Selected Dealers Agreement between Dean Witter Distributors
Inc. and Dean Witter Reynolds Inc., dated January 4, 1993, is
incorporated by reference to Exhibit 2 of Post-Effective
Amendment No. 18 to the Registration Statement on Form N-1A,
filed on February 22, 1996.

6. Second Amended and Restated Retirement Plan for Non-Interested
Directors or Trustees, dated May 8, 1997, is filed herein.

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. 18 to the Registration Statement
on Form N-1A, filed on February 22, 1996.

<PAGE>

7(b). Amendment to the Custodian Agreement, dated April 17, 1996,
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 March 24, 1997.

8(a). Amended and Restated Transfer Agency and Service Agreement is
incorporated by reference to Exhibit 8(a) of Post-Effective
Amendment No. 22 to the Registration Statement on Form N-1A,
filed on February 26, 1999.

8(b). Amended Services Agreement, dated June 22, 1998, is
incorporated by reference to Exhibit 8(b) of Post-Effective
Amendment No. 22 to the Registration Statement on Form N-1A,
filed on February 26, 1999.

9. Opinion of Sheldon Curtis, Esq., dated April 29, 1987, is
incorporated by reference to Exhibit 10 of Post-Effective
Amendment No. 9 to the Registration Statement on Form N-1A,
filed on April 29, 1987, and is filed herein.

10. Consent of Independent Accountants, is 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. 20 to the
Registration Statement on Form N-1A, filed on July 3, 1997.

14. Amended Multi-Class Plan pursuant to Rule 18f-3, dated June
22, 1998, is incorporated by reference to Exhibit 15 of
Post-Effective Amendment No. 22 to the Registration Statement
on Form N-1A, filed on February 26, 1999.

Other Powers of Attorney are incorporated by reference to Exhibit
(Other) of Post-Effective Amendment No. 17 to the Registration
Statement on Form N-1A, filed on February 23, 1995, and in the
case of Wayne E. Hedien, is incorporated by reference to
Exhibit (Other) of Post-Effective Amendment No. 21 to the
Registration Statement on Form N-1A, filed on April 17, 1998.

Item 24. Persons Controlled by or Under Common Control with the Fund.

None

Item 25. Indemnification.

Pursuant to Section 5.3 of the Registrant's Declaration of Trust
and under Section 4.8 of the Registrant's By-Laws, the indemnification of the
Registrant's trustees, officers, employees and agents is permitted if it is
determined that they acted under the belief that their actions were in or not
opposed to the best interest of the Registrant, and, with respect to any
criminal proceeding, they had reasonable cause to believe their conduct was not
unlawful. In addition, indemnification is permitted only if it is determined
that the actions in question did not render them liable by reason of willful
misfeasance, bad faith or gross negligence in the performance of their duties or
by reason of reckless disregard of their obligations and duties to the
Registrant.

<PAGE>

Trustees, officers, employees and agents will be indemnified for the expense of
litigation if it is determined that they are entitled to indemnification against
any liability established in such litigation. The Registrant may also advance
money for these expenses provided that they give their undertakings to repay the
Registrant unless their conduct is later determined to permit indemnification.

Pursuant to Section 5.2 of the Registrant's Declaration of Trust
and paragraph 8 of the Registrant's Investment Management Agreement, neither the
Investment Manager nor any trustee, officer, employee or agent of the Registrant
shall be liable for any action or failure to act, except in the case of bad
faith, willful misfeasance, gross negligence or reckless disregard of duties to
the Registrant.

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

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

Registrant, in conjunction with the Investment Manager,
Registrant's Trustees, and other registered investment management companies
managed by the Investment Manager, maintains insurance on behalf of any person
who is or was a Trustee, officer, employee, or agent of Registrant, or who is or
was serving at the request of Registrant as a trustee, director, officer,
employee or agent of another trust or corporation, against any liability
asserted against him and incurred by him or arising out of his position.
However, in no event will Registrant 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:

3
<PAGE>

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

Open-end Investment Companies
- -----------------------------
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Institutional Money Trust
(4) Active Assets Money Trust
(5) Active Assets Premier Money Trust
(6) Active Assets Tax-Free Trust
(7) Morgan Stanley Dean Witter 21st Century Trend Fund
(8) Morgan Stanley Dean Witter Aggressive Equity Fund
(9) Morgan Stanley Dean Witter American Opportunities Fund
(10) Morgan Stanley Dean Witter Balanced Growth Fund
(11) Morgan Stanley Dean Witter Balanced Income Fund
(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

4
<PAGE>

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

5
<PAGE>

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

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

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

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

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

Edward C. Oelsner, III
Executive Vice President

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

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

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

Douglas Brown
Senior Vice President

6
<PAGE>

Rosalie Clough
Senior Vice President
and Director of Marketing

Richard Felegy
Senior Vice President

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

Edward F. Gaylor Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.

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

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

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

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

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

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

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

Anita H. Kolleeny Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
and Director of Sector
Rotation

7
<PAGE>

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

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

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

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

James Solloway
Senior Vice President

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

Paul D. Vance Vice President of various Morgan Stanley Dean
Senior Vice President Witter 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
Senior Vice President Witter Funds.
and Director of the
Tax-Exempt Fixed
Income Group

Raymond A. Basile
First Vice President

Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President MSDW Services; Assistant Treasurer of MSDW
and Assistant Distributors; Treasurer and Chief Financial and
Treasurer Accounting Officer of the Morgan Stanley Dean
Witter Funds.

8
<PAGE>

Thomas Chronert
First Vice President

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

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

Peter W. Gurman
First Vice President

Michael Interrante First Vice President and Controller of MSDW
First Vice President Services; Assistant Treasurer of MSDW
and Controller Distributors; First Vice President and Treasurer
of MSDW Trust.

David Johnson
First Vice President

Stanley Kapica
First Vice President

Douglas J. Ketterer
First Vice President

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

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

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

Carl F. Sadler
First Vice President

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

9
<PAGE>

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
Vice President Global Utilities Fund.

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

Maurice Bendrihem
Vice President and
Assistant Controller

Thomas A. Bergeron
Vice President

Philip Bernstein
Vice President

Dale Boettcher
Vice President

Michelina Calandrella
Vice President

Ronald Caldwell
Vice President

Joseph Cardwell
Vice President

Liam Carroll
Vice President

10
<PAGE>

Philip Casparius
Vice President

Annette Celenza
Vice President

Aaron Clark
Vice President

William Connerly
Vice President

Michael J. Davey
Vice President

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

Glen H. Frey Vice President of Morgan Stanley Dean Witter
Vice President Information Fund.

Jeffrey D. Geffen
Vice President

Sandra Gelpieryn
Vice President

Charmaine George
Vice President

Michael Geringer
Vice President

Gail Gerrity-Burke
Vice President

Peter Gewirtz
Vice President

Ellen Gold
Vice President

Stephen Greenhut
Vice President

Trey Hancock
Vice President

11
<PAGE>

Laury A. Haskamp
Vice President

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

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

David T. Hoffman
Vice President

Thomas G. Hudson II
Vice President

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

Carol Espejo-Kane
Vice President

Nancy Karole-Kennedy
Vice President

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

Kimberly LaHart
Vice President

Thomas Lawlor
Vice President

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

Cameron J. Livingstone
Vice President

Nancy Login
Vice President

Sharon Loguercio
Vice President

Steven MacNamara
Vice President

12
<PAGE>

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

Peter R. McDowell
Vice President

Albert McGarity
Vice President

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

Mark Mitchell
Vice President

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

Mary Beth Mueller
Vice President

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

James Nash
Vice President

Richard Norris
Vice President

Hilary A. O'Neill
Vice President

Anne Pickrell
Vice President

Mori Paulson
Vice President

Frances Roman
Vice President

Dawn Rorke
Vice President

John Roscoe Vice President of Morgan Stanley Dean Witter
Vice President Real Estate Fund.

Hugh Rose
Vice President

13
<PAGE>

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

Sally Sancimino
Vice President

Deborah Santaniello
Vice President

Patrice Saunders
Vice President

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

Alison M. Sharkey
Vice President

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

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

Robert Stearns
Vice President

Naomi Stein
Vice President

William Stevens
Vice President

Michael Strayhorn
Vice President

Marybeth Swisher
Vice President

Michael Thayer
Vice President

Robert Vanden Assem
Vice President

David Walsh
Vice President

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

14
<PAGE>

John Wong
Vice President

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

Item 27. Principal Underwriters

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

(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Institutional Money Trust
(4) Active Assets Money Trust
(5) Active Assets Premier Money Trust
(6) Active Assets Tax-Free Trust
(7) Morgan Stanley Dean Witter 21st Century Trend Fund
(8) Morgan Stanley Dean Witter Aggressive Equity Fund
(9) Morgan Stanley Dean Witter American Opportunities Fund
(10) Morgan Stanley Dean Witter Balanced Growth Fund
(11) Morgan Stanley Dean Witter Balanced Income Fund
(12) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(13) Morgan Stanley Dean Witter California Tax-Free Income Fund
(14) Morgan Stanley Dean Witter Capital Growth Securities
(15) Morgan Stanley Dean Witter Competitive Edge Fund, "Best Ideas Portfolio"
(16) Morgan Stanley Dean Witter Convertible Securities Trust
(17) Morgan Stanley Dean Witter Developing Growth Securities Trust
(18) Morgan Stanley Dean Witter Diversified Income Trust
(19) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(20) Morgan Stanley Dean Witter Equity Fund
(21) Morgan Stanley Dean Witter European Growth Fund Inc.
(22) Morgan Stanley Dean Witter Federal Securities Trust
(23) Morgan Stanley Dean Witter Financial Services Trust
(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

15
<PAGE>

(33) Morgan Stanley Dean Witter Intermediate Income Securities
(34) Morgan Stanley Dean Witter International Fund
(35) Morgan Stanley Dean Witter International SmallCap Fund
(36) Morgan Stanley Dean Witter Japan Fund
(37) Morgan Stanley Dean Witter Latin American Growth Fund
(38) Morgan Stanley Dean Witter Limited Term Municipal Trust
(39) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(40) Morgan Stanley Dean Witter Market Leader Trust
(41) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(42) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(43) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(44) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(45) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(46) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(47) Morgan Stanley Dean Witter Next Generation Trust
(48) Morgan Stanley Dean Witter North American Government Income Trust
(49) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(50) Morgan Stanley Dean Witter Prime Income Trust
(51) Morgan Stanley Dean Witter Real Estate Fund
(52) Morgan Stanley Dean Witter S&P 500 Index Fund
(53) Morgan Stanley Dean Witter S&P 500 Select Fund
(54) Morgan Stanley Dean Witter Short-Term Bond Fund
(55) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(56) Morgan Stanley Dean Witter Small Cap Growth Fund
(57) Morgan Stanley Dean Witter Special Value Fund
(58) Morgan Stanley Dean Witter Strategist Fund
(59) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(60) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(61) Morgan Stanley Dean Witter Total Market Index Fund
(62) Morgan Stanley Dean Witter Total Return Trust
(63) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(64) Morgan Stanley Dean Witter U.S. Government Securities Trust
(65) Morgan Stanley Dean Witter Utilities Fund
(66) Morgan Stanley Dean Witter Value-Added Market Series
(67) Morgan Stanley Dean Witter Value Fund
(68) Morgan Stanley Dean Witter Variable Investment Series
(69) 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 Mr.
Purcell, who is a Trustee of the Registrant, none of the following persons has
any position or office with the Registrant.

Name Positions and Office with MSDW Distributors
- ---- -------------------------------------------

Michael T. Gregg Vice President and Assistant Secretary.

James F. Higgins Director

Philip J. Purcell Director

16
<PAGE>

Name Positions and Office with MSDW Distributors
- ---- -------------------------------------------

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 24th day of February, 2000.

MORGAN STANLEY DEAN WITTER
TAX-EXEMPT SECURITIES TRUST

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. 23 has been signed below by the following persons
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signatures Title Date

<S> <C> <C>
(1) Principal Executive Officer Chairman, Chief Executive Officer
and Trustee

By: /s/ Charles A. Fiumefreddo 02/24/00
--------------------------
Charles A. Fiumefreddo

(2) Principal Financial Officer Treasurer and Principal
Accounting Officer

By: /s/ Thomas F. Caloia 02/24/00
--------------------------
Thomas F. Caloia

(3) Majority of the Trustees

Charles A. Fiumefreddo (Chairman)
Philip J. Purcell

By: /s/ Barry Fink 02/24/00
--------------------------
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 02/24/00
--------------------------
David M. Butowsky
Attorney-in-Fact
</TABLE>

<PAGE>

MORGAN STANLEY DEAN WITTER TAX-EXEMPT SECURITIES TRUST

EXHIBIT INDEX

2. Amended and Restated By-Laws of the Registrant, dated May 1, 1999.

6. Second Amended and Restated Retirement Plan for Non-Interested Directors
or Trustees, dated May 8, 1997.

9. Opinion of Sheldon Curtis, Esq., Dated April 29, 1987.

10. Consent of Independent Accountants.

<PAGE>

BY-LAWS

MORGAN STANLEY DEAN WITTER TAX-EXEMPT SECURITIES TRUST

AMENDED AND RESTATED AS OF MAY 1, 1999

ARTICLE I

DEFINITIONS

The terms "Commission," "Declaration," "Distributor," "Investment
Adviser," "Majority Shareholder Vote," "1940 Act," "Shareholder," "Shares,"
"Transfer Agent," "Trust," "Trust Property," and "Trustees" have the respective
meanings given them in the Declaration of Trust of Morgan Stanley Dean Witter
Tax-Exempt Securities Trust dated April 6, 1987, as amended from time to time.

ARTICLE II

OFFICES

SECTION 2.1. Principal Office. Until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall be in
the City of Boston, County of Suffolk.

SECTION 2.2. Other Offices. In addition to its principal office in the
Commonwealth of Massachusetts, the Trust may have an office or offices in the
City of New York, State of New York, and at such other places within and
without the Commonwealth as the Trustees may from time to time designate or the
business of the Trust may require.

ARTICLE III

SHAREHOLDERS' MEETINGS

SECTION 3.1. Place of Meetings. Meetings of Shareholders shall be held at
such place, within or without the Commonwealth of Massachusetts, as may be
designated from time to time by the Trustees.

SECTION 3.2. Meetings. Meetings of Shareholders of the Trust shall be held
whenever called by the Trustees or the President of the Trust and whenever
election of a Trustee or Trustees by Shareholders is required by the provisions
of Section 16(a) of the 1940 Act, for that purpose. Meetings of Shareholders
shall also be called by the Secretary upon the written request of the holders
of Shares entitled to vote not less than twenty-five percent (25%) of all the
votes entitled to be cast at such meeting. Such request shall state the purpose
or purposes of such meeting and the matters proposed to be acted on thereat.
The Secretary shall inform such Shareholders of the reasonable estimated cost
of preparing and mailing such notice of the meeting, and upon payment to the
Trust of such costs, the Secretary shall give notice stating the purpose or
purposes of the meeting to all entitled to vote at such meeting. No meeting
need be called upon the request of the holders of Shares entitled to cast less
than a majority of all votes entitled to be cast at such meeting, to consider
any matter which is substantially the same as a matter voted upon at any
meeting of Shareholders held during the preceding twelve months.

SECTION 3.3. Notice of Meetings. Written or printed notice of every
Shareholders' meeting stating the place, date, and purpose or purposes thereof,
shall be given by the Secretary not less than ten (10) nor more than ninety
(90) days before such meeting to each Shareholder entitled to vote at such
meeting. Such notice shall be deemed to be given when deposited in the United
States mail, postage prepaid, directed to the Shareholder at his address as it
appears on the records of the Trust.

SECTION 3.4. Quorum and Adjournment of Meetings. Except as otherwise
provided by law, by the Declaration or by these By-Laws, at all meetings of
Shareholders, the holders of a majority of the Shares issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
be requisite and shall constitute a quorum for the transaction of business. In
the absence of a quorum, the

<PAGE>

Shareholders present or represented by proxy and entitled to vote thereat shall
have the power to adjourn the meeting from time to time. The Shareholders
present in person or represented by proxy at any meeting and entitled to vote
thereat also shall have the power to adjourn the meeting from time to time if
the vote required to approve or reject any proposal described in the original
notice of such meeting is not obtained (with proxies being voted for or against
adjournment consistent with the votes for and against the proposal for which
the required vote has not been obtained). The affirmative vote of the holders
of a majority of the Shares then present in person or represented by proxy
shall be required to adjourn any meeting. Any adjourned meeting may be
reconvened without further notice or change in record date. At any reconvened
meeting at which a quorum shall be present, any business may be transacted that
might have been transacted at the meeting as originally called.

SECTION 3.5. Voting Rights, Proxies. At each meeting of Shareholders,
each holder of record of Shares entitled to vote thereat shall be entitled to
one vote in person or by proxy for each Share of beneficial interest of the
Trust and for the fractional portion of one vote for each fractional Share
entitled to vote so registered in his or her name on the records of the Trust
on the date fixed as the record date for the determination of Shareholders
entitled to vote at such meeting. Without limiting the manner in which a
Shareholder may authorize another person or persons to act for such Shareholder
as proxy pursuant hereto, the following shall constitute a valid means by which
a Shareholder may grant such authority:

(i) A Shareholder may execute a writing authorizing another person or
persons to act for such Shareholder as proxy. Execution may be accomplished
by the Shareholder or such Shareholder's authorized officer, director,
employee, attorney-in-fact or another agent signing such writing or causing
such person's signature to be affixed to such writing by any reasonable
means including, but not limited to, by facsimile or telecopy signature. No
written evidence of authority of a Shareholder's authorized officer,
director, employee, attorney-in-fact or other agent shall be required; and

(ii) A Shareholder may authorize another person or persons to act for such
Shareholder as proxy by transmitting or authorizing the transmission of a
telegram or cablegram or by other means of telephonic, electronic or
computer transmission to the person who will be the holder of the proxy or
to a proxy solicitation firm, proxy support service organization or like
agent duly authorized by the person who will be the holder of the proxy to
receive such transmission, provided that any such telegram or cablegram or
other means of telephonic, electronic or computer transmission must either
set forth or be submitted with information from which it can be determined
that the telegram, cablegram or other transmission was authorized by the
Shareholder.

No proxy shall be valid after eleven months from its date, unless otherwise
provided in the proxy. At all meetings of Shareholders, unless the voting is
conducted by inspectors, all questions relating to the qualification of voters
and the validity of proxies and the acceptance or rejection of votes shall be
decided by the chairman of the meeting. In determining whether a telegram,
cablegram or other electronic transmission is valid, the chairman or inspector,
as the case may be, shall specify the information upon which he or she relied.
Pursuant to a resolution of a majority of the Trustees, proxies may be
solicited in the name of one or more Trustees or Officers of the Trust. Proxy
solicitations may be made in writing or by using telephonic or other electronic
solicitation procedures that include appropriate methods of verifying the
identity of the Shareholder and confirming any instructions given thereby.

SECTION 3.6. Vote Required. Except as otherwise provided by law, by the
Declaration of Trust, or by these By-Laws, at each meeting of Shareholders at
which a quorum is present, all matters shall be decided by Majority Shareholder
Vote.

SECTION 3.7. Inspectors of Election. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman of any meeting of Shareholders may, and on the request
of any Shareholder or his proxy shall, appoint Inspectors of Election of the
meeting. In case any person appointed as Inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the Trustees
in advance of the convening of the meeting or at the meeting by the person
acting as chairman. The Inspectors of Election shall determine the number of
Shares outstanding, the Shares

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represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, shall receive votes, ballots or consents, shall
hear and determine all challenges and questions in any way arising in
connection with the right to vote, shall count and tabulate all votes or
consents, determine the results, and do such other acts as may be proper to
conduct the election or vote with fairness to all Shareholders. On request of
the chairman of the meeting, or of any Shareholder or his proxy, the Inspectors
of Election shall make a report in writing of any challenge or question or
matter determined by them and shall execute a certificate of any facts found by
them.

SECTION 3.8. Inspection of Books and Records. Shareholders shall have such
rights and procedures of inspection of the books and records of the Trust as
are granted to Shareholders under Section 32 of the Business Corporation Law of
the Commonwealth of Massachusetts.

SECTION 3.9. Action by Shareholders Without Meeting. Except as otherwise
provided by law, the provisions of these By-Laws relating to notices and
meetings to the contrary notwithstanding, any action required or permitted to
be taken at any meeting of Shareholders may be taken without a meeting if a
majority of the Shareholders entitled to vote upon the action consent to the
action in writing and such consents are filed with the records of the Trust.
Such consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.

SECTION 3.10. Presence at Meetings. Presence at meetings of shareholders
requires physical attendance by the shareholder or his or her proxy at the
meeting site and does not encompass attendance by telephonic or other
electronic means.

ARTICLE IV

TRUSTEES

SECTION 4.1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or special meetings of the Trustees. Regular
meetings of the Trustees may be held at such time and place as shall be
determined from time to time by the Trustees without further notice. Special
meetings of the Trustees may be called at any time by the President and shall
be called by the President or the Secretary upon the written request of any two
(2) Trustees.

SECTION 4.2. Notice of Special Meetings. Written notice of special
meetings of the Trustees, stating the place, date and time thereof, shall be
given not less than two (2) days before such meeting to each Trustee,
personally, by telegram, by mail, or by leaving such notice at his place of
residence or usual place of business. If mailed, such notice shall be deemed to
be given when deposited in the United States mail, postage prepaid, directed to
the Trustee at his address as it appears on the records of the Trust. Subject
to the provisions of the 1940 Act, notice or waiver of notice need not specify
the purpose of any special meeting.

SECTION 4.3. Telephone Meetings. Subject to the provisions of the 1940
Act, any Trustee, or any member or members of any committee designated by the
Trustees, may participate in a meeting of the Trustees, or any such committee,
as the case may be, by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means
constitutes presence in person at the meeting.

SECTION 4.4. Quorum, Voting and Adjournment of Meetings. At all meetings
of the Trustees, a majority of the Trustees shall be requisite to and shall
constitute a quorum for the transaction of business. If a quorum is present,
the affirmative vote of a majority of the Trustees present shall be the act of
the Trustees, unless the concurrence of a greater proportion is expressly
required for such action by law, the Declaration or these By-Laws. If at any
meeting of the Trustees there be less than a quorum present, the Trustees
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall have been obtained.

SECTION 4.5. Action by Trustees Without Meeting. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required

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or permitted to be taken at any meeting of the Trustees may be taken without a
meeting if a consent in writing setting forth the action shall be signed by all
of the Trustees entitled to vote upon the action and such written consent is
filed with the minutes of proceedings of the Trustees.

SECTION 4.6. Expenses and Fees. Each Trustee may be allowed expenses, if
any, for attendance at each regular or special meeting of the Trustees, and
each Trustee who is not an officer or employee of the Trust or of its
investment manager or underwriter or of any corporate affiliate of any of said
persons shall receive for services rendered as a Trustee of the Trust such
compensation as may be fixed by the Trustees. Nothing herein contained shall be
construed to preclude any Trustee from serving the Trust in any other capacity
and receiving compensation therefor.

SECTION 4.7. Execution of Instruments and Documents and Signing of Checks
and Other Obligations and Transfers. All instruments, documents and other
papers shall be executed in the name and on behalf of the Trust and all checks,
notes, drafts and other obligations for the payment of money by the Trust shall
be signed, and all transfer of securities standing in the name of the Trust
shall be executed, by the Chairman, the President, any Vice President or the
Treasurer or by any one or more officers or agents of the Trust as shall be
designated for that purpose by vote of the Trustees; notwithstanding the above,
nothing in this Section 4.7 shall be deemed to preclude the electronic
authorization, by designated persons, of the Trust's Custodian (as described
herein in Section 9.1) to transfer assets of the Trust, as provided for herein
in Section 9.1.

SECTION 4.8. Indemnification of Trustees, Officers, Employees and
Agents. (a) The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Trustee, officer, employee, or agent of the Trust. The
indemnification shall be against expenses, including attorneys' fees,
judgments, fines, and amounts paid in settlement, actually and reasonably
incurred by him in connection with the action, suit, or proceeding, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.

(b) The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or on behalf of the Trust to obtain a judgment or decree in its favor
by reason of the fact that he is or was a Trustee, officer, employee, or agent
of the Trust. The indemnification shall be against expenses, including
attorneys' fees actually and reasonably incurred by him in connection with the
defense or settlement of the action or suit, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Trust; except that no indemnification shall be made in respect of any
claim, issue, or matter as to which the person has been adjudged to be liable
for negligence or misconduct in the performance of his duty to the Trust,
except to the extent that the court in which the action or suit was brought, or
a court of equity in the county in which the Trust has its principal office,
determines upon application that, despite the adjudication of liability but in
view of all circumstances of the case, the person is fairly and reasonably
entitled to indemnity for those expenses which the court shall deem proper,
provided such Trustee, officer, employee or agent is not adjudged to be liable
by reason of his willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.

(c) To the extent that a Trustee, officer, employee, or agent of the Trust
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in subsection (a) or (b) or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses, including
attorneys' fees, actually and reasonably incurred by him in connection
therewith.

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(d) (1) Unless a court orders otherwise, any indemnification under
subsections (a) or (b) of this section may be made by the Trust only as
authorized in the specific case after a determination that indemnification of
the Trustee, officer, employee, or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in subsections (a) or
(b).

(2) The determination shall be made:

(i) By the Trustees, by a majority vote of a quorum which consists of
Trustees who were not parties to the action, suit or proceeding; or

(ii) If the required quorum is not obtainable, or if a quorum of
disinterested Trustees so directs, by independent legal counsel in a
written opinion; or

(iii) By the Shareholders.

(3) Notwithstanding any provision of this Section 4.8, no person shall
be entitled to indemnification for any liability, whether or not there is
an adjudication of liability, arising by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of duties as described in
Section 17(h) and (i) of the Investment Company Act of 1940 ("disabling
conduct"). A person shall be deemed not liable by reason of disabling
conduct if, either:

(i) a final decision on the merits is made by a court or other body
before whom the proceeding was brought that the person to be indemnified
("indemnitee") was not liable by reason of disabling conduct; or

(ii) in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the indemnitee was not liable by
reason of disabling conduct, is made by either--

(A) a majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a)(19) of
the Investment Company Act of 1940, nor parties to the action, suit or
proceeding, or

(B) an independent legal counsel in a written opinion.

(e) Expenses, including attorneys' fees, incurred by a Trustee, officer,
employee or agent of the Trust in defending a civil or criminal action, suit or
proceeding may be paid by the Trust in advance of the final disposition thereof
if:

(1) authorized in the specific case by the Trustees; and

(2) the Trust receives an undertaking by or on behalf of the Trustee,
officer, employee or agent of the Trust to repay the advance if it is not
ultimately determined that such person is entitled to be indemnified by
the Trust; and

(3) either, (i) such person provides a security for his undertaking,
or

(ii) the Trust is insured against losses by reason of any lawful
advances, or

(iii) a determination, based on a review of readily available facts,
that there is reason to believe that such person ultimately will be found
entitled to indemnification, is made by either--

(A) a majority of a quorum which consists of Trustees who are
neither "interested persons" of the Trust, as defined in Section
2(a)(19) of the 1940 Act, nor parties to the action, suit or
proceeding, or

(B) an independent legal counsel in a written opinion.

(f) The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which a person may be entitled under any
by-law, agreement, vote of Shareholders or disinterested Trustees or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding the office, and shall continue as to a person who has ceased to
be a Trustee, officer, employee, or agent and inure to the benefit of the
heirs, executors and administrators of such person; provided that no

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person may satisfy any right of indemnity or reimbursement granted herein or to
which he may be otherwise entitled except out of the property of the Trust, and
no Shareholder shall be personally liable with respect to any claim for
indemnity or reimbursement or otherwise.

(g) The Trust may purchase and maintain insurance on behalf of any person
who is or was a Trustee, officer, employee, or agent of the Trust, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such. However, in no event will the Trust purchase
insurance to indemnify any officer or Trustee against liability for any act for
which the Trust itself is not permitted to indemnify him.

(h) Nothing contained in this Section shall be construed to protect any
Trustee or officer of the Trust against any liability to the Trust or to its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.

ARTICLE V

COMMITTEES

SECTION 5.1. Executive and Other Committees. The Trustees, by resolution
adopted by a majority of the Trustees, may designate an Executive Committee
and/or committees, each committee to consist of two (2) or more of the Trustees
of the Trust and may delegate to such committees, in the intervals between
meetings of the Trustees, any or all of the powers of the Trustees in the
management of the business and affairs of the Trust. In the absence of any
member of any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a Trustee to act in place
of such absent member. Each such committee shall keep a record of its
proceedings.

The Executive Committee and any other committee shall fix its own rules or
procedure, but the presence of at least fifty percent (50%) of the members of
the whole committee shall in each case be necessary to constitute a quorum of
the committee and the affirmative vote of the majority of the members of the
committee present at the meeting shall be necessary to take action.

All actions of the Executive Committee shall be reported to the Trustees
at the meeting thereof next succeeding to the taking of such action.

SECTION 5.2. Advisory Committee. The Trustees may appoint an advisory
committee which shall be composed of persons who do not serve the Trust in any
other capacity and which shall have advisory functions with respect to the
investments of the Trust but which shall have no power to determine that any
security or other investment shall be purchased, sold or otherwise disposed of
by the Trust. The number of persons constituting any such advisory committee
shall be determined from time to time by the Trustees. The members of any such
advisory committee may receive compensation for their services and may be
allowed such fees and expenses for the attendance at meetings as the Trustees
may from time to time determine to be appropriate.

SECTION 5.3. Committee Action Without Meeting. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of any Committee of the Trustees appointed pursuant to Section 5.1 of
these By-Laws may be taken without a meeting if a consent in writing setting
forth the action shall be signed by all members of the Committee entitled to
vote upon the action and such written consent is filed with the records of the
proceedings of the Committee.

ARTICLE VI

OFFICERS

SECTION 6.1. Executive Officers. The executive officers of the Trust shall
be a Chairman, a President, one or more Vice Presidents, a Secretary and a
Treasurer. The Chairman shall be selected from among the Trustees but none of
the other executive officers need be a Trustee. Two or more offices, except
those of President and any Vice President, may be held by the same person, but
no officer shall execute,

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acknowledge or verify any instrument in more than one capacity. The executive
officers of the Trust shall be elected annually by the Trustees and each
executive officer so elected shall hold office until his or her successor is
elected and has qualified.

SECTION 6.2. Other Officers and Agents. The Trustees may also elect one or
more Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers
and may elect, or may delegate to the Chairman the power to appoint, such other
officers and agents as the Trustees shall at any time or from time to time deem
advisable.

SECTION 6.3. Term and Removal and Vacancies. Each officer of the Trust
shall hold office until his or her successor is elected and has qualified. Any
officer or agent of the Trust may be removed by the Trustees whenever, in their
judgment, the best interests of the Trust will be served thereby, but such
removal shall be without prejudice to the contractual rights, if any, of the
person so removed.

SECTION 6.4. Compensation of Officers. The compensation of officers and
agents of the Trust shall be fixed by the Trustees, or by the Chairman to the
extent provided by the Trustees with respect to officers appointed by the
Chairman.

SECTION 6.5. Powers and Duties. All officers and agents of the Trust, as
between themselves and the Trust, shall have such authority and perform such
duties in the management of the Trust as may be provided in or pursuant to
these By-Laws or, to the extent not so provided, as may be prescribed by the
Trustees; provided that no rights of any third party shall be affected or
impaired by any such By-Law or resolution of the Trustees unless such third
party has knowledge thereof.

SECTION 6.6. The Chairman. The Chairman shall be the chief executive
officer of the Trust, shall preside at all meetings of the Shareholders and of
the Trustees, shall have general and active management of the business of the
Trust, shall see that all orders and resolutions of the Trustees are carried
into effect and, in connection therewith, shall be authorized to delegate to
the President or to one or more Vice Presidents such of his or her powers and
duties at such times and in such manner as he or she may deem advisable, shall
be a signatory on all Annual and Semi-Annual Reports as may be sent to
Shareholders, and shall perform such other duties as the Trustees may from time
to time prescribe.

SECTION 6.7. The President. The President shall perform such duties as the
Trustees and the Chairman may from time to time prescribe and shall, in the
absence or disability of the Chairman, exercise the powers and perform the
duties of the Chairman. The President shall be authorized to delegate to one or
more Vice Presidents such of his or her powers and duties at such times and in
such manner as he or she may deem advisable.

SECTION 6.8. The Vice Presidents. The Vice Presidents shall be of such
number and shall have such titles as may be determined from time to time by the
Trustees. The Vice President, or, if there shall be more than one, the Vice
Presidents in such order as may be determined from time to time by the Trustees
or the Chairman, shall, in the absence or disability of the President, exercise
the powers and perform the duties of the President, and shall perform such
other duties as the Trustees or the Chairman may from time to time prescribe.

SECTION 6.9. The Assistant Vice Presidents. The Assistant Vice President,
or, if there shall be more than one, the Assistant Vice Presidents in such
order as may be determined from time to time by the Trustees or the Chairman,
shall perform such duties and have such powers as may be assigned them from
time to time by the Trustees or the Chairman.

SECTION 6.10. The Secretary. The Secretary shall attend all meetings of
the Trustees and all meetings of the Shareholders and record all the
proceedings of the meetings of the Shareholders and of the Trustees in a book
to be kept for that purpose, and shall perform like duties for the standing
committees when required. He or she shall give, or cause to be given, notice of
all meetings of the Shareholders and special meetings of the Trustees, and
shall perform such other duties and have such powers as the Trustees or the
Chairman may from time to time prescribe. He or she shall keep in safe custody
the seal of the Trust and affix or cause the same to be affixed to any
instrument requiring it, and, when so affixed, it shall be attested by his or
her signature or by the signature of an Assistant Secretary.

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SECTION 6.11. The Assistant Secretaries. The Assistant Secretary, or, if
there shall be more than one, the Assistant Secretaries in such order as may be
determined from time to time by the Trustees or the Chairman, shall, in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary and shall perform such duties and have such other
powers as the Trustees or the Chairman may from time to time prescribe.

SECTION 6.12. The Treasurer. The Treasurer shall be the chief financial
officer of the Trust. He or she shall keep or cause to be kept full and
accurate accounts of receipts and disbursements in books belonging to the
Trust, and he or she shall render to the Trustees and the Chairman, whenever
any of them require it, an account of his or her transactions as Treasurer and
of the financial condition of the Trust, and he or she shall perform such other
duties as the Trustees or the Chairman may from time to time prescribe.

SECTION 6.13. The Assistant Treasurers. The Assistant Treasurer, or, if
there shall be more than one, the Assistant Treasurers in such order as may be
determined from time to time by the Trustees or the Chairman, shall, in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have such other
powers as the Trustees or the Chairman may from time to time prescribe.

SECTION 6.14. Delegation of Duties. Whenever an officer is absent or
disabled, or whenever for any reason the Trustees may deem it desirable, the
Trustees may delegate the powers and duties of an officer or officers to any
other officer or officers or to any Trustee or Trustees.

ARTICLE VII

DIVIDENDS AND DISTRIBUTIONS

Subject to any applicable provisions of law and the Declaration, dividends
and distributions upon the Shares may be declared at such intervals as the
Trustees may determine, in cash, in securities or other property, or in Shares,
from any sources permitted by law, all as the Trustees shall from time to time
determine.

Inasmuch as the computation of net income and net profits from the sales
of securities or other properties for federal income tax purposes may vary from
the computation thereof on the records of the Trust, the Trustees shall have
power, in their discretion, to distribute as income dividends and as capital
gain distributions, respectively, amounts sufficient to enable the Trust to
avoid or reduce liability for federal income taxes.

ARTICLE VIII

CERTIFICATES OF SHARES

SECTION 8.1. Certificates of Shares. Certificates for Shares of each
series or class of Shares shall be in such form and of such design as the
Trustees shall approve, subject to the right of the Trustees to change such
form and design at any time or from time to time, and shall be entered in the
records of the Trust as they are issued. Each such certificate shall bear a
distinguishing number; shall exhibit the holders' name and certify the number
of full Shares owned by such holder; shall be signed by or in the name of the
Trust by the President, or a Vice President, and countersigned by the Secretary
or an Assistant Secretary or the Treasurer and an Assistant Treasurer of the
Trust; shall be sealed with the seal; and shall contain such recitals as may be
required by law. Where any certificate is signed by a Transfer Agent or by a
Registrar, the signature of such officers and the seal may be facsimile,
printed or engraved. The Trust may, at its option, determine not to issue a
certificate or certificates to evidence Shares owned of record by any
Shareholder.

In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall appear on, any such certificate or certificates
shall cease to be such officer or officers of the Trust, whether because of
death, resignation or otherwise, before such certificate or certificates shall
have been delivered by the Trust, such certificate or certificates shall,
nevertheless, be adopted by the Trust and be issued and

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delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures shall appear therein
had not ceased to be such officer or officers of the Trust.

No certificate shall be issued for any share until such share is fully
paid.

SECTION 8.2. Lost, Stolen, Destroyed and Mutilated Certificates. The
Trustees may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Trust alleged to have
been lost, stolen or destroyed, upon satisfactory proof of such loss, theft, or
destruction; and the Trustees may, in their discretion, require the owner of
the lost, stolen or destroyed certificate, or his legal representative, to give
to the Trust and to such Registrar, Transfer Agent and/or Transfer Clerk as may
be authorized or required to countersign such new certificate or certificates,
a bond in such sum and of such type as they may direct, and with such surety or
sureties, as they may direct, as indemnity against any claim that may be
against them or any of them on account of or in connection with the alleged
loss, theft or destruction of any such certificate.

ARTICLE IX

CUSTODIAN

SECTION 9.1. Appointment and Duties. The Trust shall at times employ a
bank or trust company having capital, surplus and undivided profits of at least
five million dollars ($5,000,000) as custodian with authority as its agent, but
subject to such restrictions, limitations and other requirements, if any, as
may be contained in these By-Laws and the 1940 Act:

(1) to receive and hold the securities owned by the Trust and deliver
the same upon written or electronically transmitted order;

(2) to receive and receipt for any moneys due to the Trust and deposit
the same in its own banking department or elsewhere as the Trustees may
direct;

(3) to disburse such funds upon orders or vouchers;

all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian. If so directed by a Majority Shareholder Vote, the custodian
shall deliver and pay over all property of the Trust held by it as specified in
such vote.

The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of
the custodian and upon such terms and conditions as may be agreed upon between
the custodian and such sub-custodian and approved by the Trustees.

SECTION 9.2. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust.

ARTICLE X

WAIVER OF NOTICE

Whenever any notice of the time, place or purpose of any meeting of
Shareholders, Trustees, or of any committee is required to be given in
accordance with law or under the provisions of the Declaration or these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to such notice and filed with the records of the meeting, whether before or
after the holding thereof, or actual attendance at the meeting of Shareholders,
Trustees or committee, as the case may be, in person, shall be deemed
equivalent to the giving of such notice to such person.

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ARTICLE XI

MISCELLANEOUS

SECTION 11.1. Location of Books and Records. The books and records of the
Trust may be kept outside the Commonwealth of Massachusetts at such place or
places as the Trustees may from time to time determine, except as otherwise
required by law.

SECTION 11.2. Record Date. The Trustees may fix in advance a date as the
record date for the purpose of determining the Shareholders entitled to (i)
receive notice of, or to vote at, any meeting of Shareholders, or (ii) receive
payment of any dividend or the allotment of any rights, or in order to make a
determination of Shareholders for any other proper purpose. The record date, in
any case, shall not be more than one hundred eighty (180) days, and in the case
of a meeting of Shareholders not less than ten (10) days, prior to the date on
which such meeting is to be held or the date on which such other particular
action requiring determination of Shareholders is to be taken, as the case may
be. In the case of a meeting of Shareholders, the meeting date set forth in the
notice to Shareholders accompanying the proxy statement shall be the date used
for purposes of calculating the 180 day or 10 day period, and any adjourned
meeting may be reconvened without a change in record date. In lieu of fixing a
record date, the Trustees may provide that the transfer books shall be closed
for a stated period but not to exceed, in any case, twenty (20) days. If the
transfer books are closed for the purpose of determining Shareholders entitled
to notice of a vote at a meeting of Shareholders, such books shall be closed
for at least ten (10) days immediately preceding the meeting.

SECTION 11.3. Seal. The Trustees shall adopt a seal, which shall be in
such form and shall have such inscription thereon as the Trustees may from time
to time provide. The seal of the Trust may be affixed to any document, and the
seal and its attestation may be lithographed, engraved or otherwise printed on
any document with the same force and effect as if it had been imprinted and
attested manually in the same manner and with the same effect as if done by a
Massachusetts business corporation under Massachusetts law.

SECTION 11.4. Fiscal Year. The fiscal year of the Trust shall end on such
date as the Trustees may by resolution specify, and the Trustees may by
resolution change such date for future fiscal years at any time and from time
to time.

SECTION 11.5. Orders for Payment of Money. All orders or instructions for
the payment of money of the Trust, and all notes or other evidences of
indebtedness issued in the name of the Trust, shall be signed by such officer
or officers or such other person or persons as the Trustees may from time to
time designate, or as may be specified in or pursuant to the agreement between
the Trust and the bank or trust company appointed as Custodian of the
securities and funds of the Trust.

ARTICLE XII

COMPLIANCE WITH FEDERAL REGULATIONS

The Trustees are hereby empowered to take such action as they may deem to
be necessary, desirable or appropriate so that the Trust is or shall be in
compliance with any federal or state statute, rule or regulation with which
compliance by the Trust is required.

ARTICLE XIII

AMENDMENTS

These By-Laws may be amended, altered, or repealed, or new By-Laws may be
adopted, (a) by a Majority Shareholder Vote, or (b) by the Trustees; provided,
however, that no By-Law may be amended, adopted or repealed by the Trustees if
such amendment, adoption or repeal requires, pursuant to law, the Declaration,
or these By-Laws, a vote of the Shareholders. The Trustees shall in no event
adopt By-Laws which are in conflict with the Declaration, and any apparent
inconsistency shall be construed in favor of the related provisions in the
Declaration.

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<PAGE>

ARTICLE XIV

DECLARATION OF TRUST

The Declaration of Trust establishing Morgan Stanley Dean Witter
Tax-Exempt Securities Trust, dated April 6, 1987, a copy of which, together
with all amendments thereto, is on file in the office of the Secretary of the
Commonwealth of Massachusetts, provides that the name Morgan Stanley Dean
Witter Tax-Exempt Securities Trust refers to the Trustees under the Declaration
collectively as Trustees, but not as individuals or personally; and no Trustee,
Shareholder, officer, employee or agent of Morgan Stanley Dean Witter
Tax-Exempt Securities Trust shall be held to any personal liability, nor shall
resort be had to their private property for the satisfaction of any obligation
or claim or otherwise, in connection with the affairs of said Morgan Stanley
Dean Witter Tax-Exempt Securities Trust, but the Trust Estate only shall be
liable.

<PAGE>

SECOND AMENDED AND RESTATED
RETIREMENT PLAN FOR
NON-INTERESTED TRUSTEES
OR DIRECTORS

Certain of the investment companies for which Morgan Stanley Dean Witter
Advisors Inc. ("MSDW Advisors") currently acts as manager or adviser adopted a
Retirement Plan for Non-Interested Trustees and Directors (the "Original Plan")
on February 21, 1991 (the "Commencement Date"). The Original Plan was amended
and restated on October 22, 1993, effective January 1, 1994 and further amended
by First Amendment dated December 19, 1995 and by Second Amendment dated May 8,
1997. The participating Funds now desire to amend and restate the Plan further
as provided herein effective as of the Commencement Date (as so amended, the
"Plan"), for the purposes of expanding the flexibility of Non-Interested
Trustees and Directors to make and change their elections of benefits.

1. DEFINITIONS

(a) "Independent Board Member" shall mean (i) a Trustee of an Adopting
Fund if the Adopting Fund is organized as a Massachusetts business trust, (ii)
a Director of an Adopting Fund if the Adopting Fund is organized as a
corporation, and (iii) a "director" (as such term is defined in Section
2(a)(12) of the Investment Company Act of 1940, as amended [the "Act"]) of an
Adopting Fund if the Adopting Fund is any other type of organization, who in
any such case is not an interested person (as such term is defined in Section
2(a)(19) of the Act) of MSDW Advisors.

(b) "Eligible Board Member" shall mean an Independent Board Member who at
the time of Retirement (as hereinafter defined) has served as an Independent
Board Member of any Adopting Fund for at least five years, or such lesser
period as may be determined by the Board.

(d) "Eligible Retirement Date" shall mean, with respect to any Independent
Board Member, the later of (i) January 1, 1993, (ii) the first day of the
calendar month following the month in which such Independent Board Member's
seventy-second birthday occurs, or (iii) such later date as the Board may
establish as his or her "Eligible Retirement Date."

(e) "Retirement" shall mean any termination of service of an Independent
Board Member except any termination which the Board determines to have resulted
from the Independent Board Member's willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Independent Board Member.

(f) "Benefit" shall mean with respect to any Eligible Board Member, (i)
the Regular Benefit, unless the Alternate Benefit has been elected or the Early
Benefit granted, (ii) the Alternate Benefit, if elected by such Eligible Board
Member, unless the Early Benefit has been granted, or (iii) the Early Benefit,
if granted by the Board.

(g) "Eligible Compensation" shall mean, with respect to any Eligible Board
Member of any Adopting Fund, an amount equal to one-fifth of the total
compensation, inclusive of compensation as a member of the Board or of a Board
Committee or as chairperson of a Board Committee, earned by such Eligible Board
Member for Eligible Service with respect to such Adopting Fund (other than
under this Plan) in the five year period prior to the date of his or her
Retirement.

(h) "Actuarial Equivalent" shall mean an actuarially equivalent benefit,
as computed by the Board with the advice of an enrolled actuary (as defined in
the Employee Retirement Income Security Act of 1974, as amended ["ERISA"]),
using assumptions determined by the Board at the time of the computation.

(i) "Board" shall mean, with respect to any Adopting Fund, the Board of
Directors or Trustee or "directors," (as such term is defined in Section
2(a)(12) of the Act, of such Adopting Fund.

(j) "Adoption Date" shall mean February 21, 1991.

<PAGE>

2. ELIGIBILITY

Each Eligible Board Member will be eligible to receive a Benefit from each
Adopting Fund commencing on such Eligible Board Member's Eligible Retirement
Date.

3. RETIREMENT DATE; AMOUNT OF BENEFIT

(a) Retirement. Each Independent Board Member will retire not later than
his or her Eligible Retirement Date. The foregoing provision shall be deemed by
the adoption of this Plan by any Fund to be an amendment of such Fund's by-laws
superseding any provision therein that an Independent Board Member shall serve
until his or her successor shall have been elected and qualified.
Notwithstanding the foregoing, the Board of any Adopting Fund may, to avoid the
simultaneous retirement of more than one of the Independent Board Members or
for any other appropriate reason, waive the obligation of any Independent Board
Member to retire on such date and may establish a later date as his or her
"Eligible Retirement Date." Any establishment of an Eligible Retirement Date
may be further extended by the Board.

(b) Regular Retirement Benefit. Upon Retirement, each Eligible Board
Member will receive, commencing as of such Eligible Board Member's Eligible
Retirement Date and continuing for the remainder of the Eligible Board Member's
life, from each Adopting Fund a retirement benefit (the "Regular Benefit") paid
at an annual rate equal to the percentage of his or her Eligible Compensation
established by resolution of the Board of such Adopting Fund most recently
adopted prior to the date of his or her retirement (the "Most Recent
Resolution") as the "Minimum Percentage," PLUS an additional percentage of such
Eligible Compensation for each full month of Eligible Service for any of the
Adopting Funds in excess of five years established by the Most Recent
Resolution as the "Monthly Additional Percentage," up to the percentage
established by the Most Recent Resolution as the "Maximum Percentage" of such
Eligible Compensation for ten or more years of Eligible Service for any of the
Adopting Funds.

(c) Election of Alternate Payment of Benefit. Each Independent Board
Member shall have the option, exercisable at any time, and revisable at any
time and from time to time, prior to his or her first acceptance of benefits
under the Plan to elect (i) to receive, subject to being or becoming an
Eligible Board Member, a retirement benefit (the "Alternate Benefit") based
upon the combined life expectancy of such Eligible Board Member and his or her
spouse on the date of such Eligible Board Member's Retirement (rather than
solely upon such Eligible Board Member's own life, as shall be the case unless
such Eligible Board Member shall otherwise elect as provided in this Section
3(c)), and (ii) if the Independent Board Member elects to receive the Alternate
Benefit, to elect a benefit either (x) to the last survivor of the Eligible
Board Member or spouse, whether the Eligible Board Member or spouse is the last
survivor (a "joint and last survivor" benefit) or (y) to the Eligible Board
Member's spouse if the spouse survives the Eligible Board Member (a "joint and
contingent survivor" benefit) equal in periodic amount to a percentage (the
"Designated Survivor's Percentage") of the periodic amount that would be, or
would be assumed to be, in effect while both the Eligible Board Member and
spouse were alive. The Designated Survivor's Percentage shall be the percentage
stated in the most recently delivered notice of election given by such
Independent Board Member, or, if no percentage is stated in any such notice,
100%. Payment of the Alternate Benefit shall commence on the later of such
Eligible Board Member's Eligible Retirement Date or the date of his or her
Retirement, shall be reduced to the Designated Survivor's Percentage (if less
than 100%) upon the earlier of the deceases of the Eligible Board Member and
spouse in the case of a joint and last survivor benefit, or of the Eligible
Board Member in the case of a joint and contingent survivor benefit, and shall
be payable through the remainder of the life of the survivor of such Eligible
Board Member and spouse. The Alternate Benefit shall be the Actuarial
Equivalent of the Regular Benefit provided under paragraph 3(b). In the event
of the death of an Eligible Board Member who has chosen the Alternate Benefit
prior to such Eligible Board Member's Retirement, his or her spouse shall be
entitled to a retirement benefit, commencing upon such death, which shall be
the Actuarial Equivalent of the benefit such spouse would have received had
such Eligible Board Member died on his or her Eligible Retirement Date.

2
<PAGE>

(d) Early Payment of Benefit. An Eligible Board Member for good cause may
apply to the Board of any Adopting Fund for, and, at the discretion of such
Board, may be granted, a retirement benefit (the "Early Benefit") which is the
Actuarial Equivalent of the Regular Benefit or Alternate Benefit previously
elected by such Eligible Board Member. Payment of the Early Benefit shall
commence on a date fixed by the Board in its sole discretion as such Eligible
Board Member's Eligible Retirement Date and shall be payable through the
remainder of such Eligible Board Member's life, or, if the Alternate Benefit
had been elected, the later of the lives of such Eligible Board Member and
spouse. Good cause for these purposes may include (but is not limited to) the
permanent disability of the Eligible Board Member.

(e) Anything contained herein to the contrary notwithstanding, upon the
adoption by an Adopting Fund of a plan of liquidation, such Adopting Fund shall
pay to each Eligible Board Member who has retired, in lieu of his or her
Benefit from such Adopting Fund, an amount (the "Lump Sum") equal to the then
present value of the Benefit, using a discount rate determined by the Board at
the time of the computation. The Lump Sum shall be paid by such Adopting Fund
at or before the final liquidation and dissolution of such Adopting Fund.

4. TIME OF PAYMENT

The Benefit to each Eligible Board Member or his or her spouse will,
except as provided in Section 3(c), 3(d) or 3(e) hereof, commence on such
Eligible Board Member's Eligible Retirement Date and will be paid each year in
quarterly installments that are as nearly equal as possible on the first day of
each calendar quarter.

5. PAYMENT OF BENEFIT; ALLOCATION OF COSTS

Each Adopting Fund is responsible for the payment of Benefits based upon
Eligible Compensation from such Adopting Fund, as well as its proportionate
share of all expenses of administration of the Plan, including without
limitation all accounting and legal fees and expenses and fees and expenses of
any enrolled actuary. The obligations of each Adopting Fund to pay such
benefits and expenses will not be secured or funded in any manner, and such
obligations will not have any preference over the lawful claims of the Adopting
Funds' creditors and stockholders, shareholders, beneficiaries or limited
partners, as the case may be. To the extent that an Adopting Fund consists of
one or more separate portfolios, such costs and expenses will be allocated
among such portfolios in the proportion that compensation of Independent Board
Members is allocated among such portfolios.

6. ADMINISTRATION

(a) Administration. Any question involving entitlement to payments under
or the administration of the Plan will be referred to the Board, which shall
make all interpretations and determinations necessary or desirable for the
Plan's administration (such interpretations and determinations to be final and
conclusive) and shall cause such records to be kept as may be necessary for the
administration of the Plan.

7. MISCELLANEOUS

(a) Rights Not Assignable. The right to receive any payment under the Plan
is not transferable or assignable. Except as otherwise provided herein with
respect to the Alternate Benefit, the Plan shall not create any benefit, cause
of action, right of sale, transfer, assignment, pledge, encumbrance, or other
such right in any spouse or heirs or the estate of any Eligible Board Member or
retired Eligible Board Member.

(b) Amendment, etc. With respect to each Adopting Fund, the Board,
including a majority of the Independent Board Members of such Board, may at any
time amend or terminate the Plan or waive any provision of the Plan, PROVIDED,
that except as otherwise provided herein, no amendment, termination or waiver
will impair the rights of an Independent Board Member to receive upon
Retirement the payments which would have been made to such Independent Board
Member had there been no such amendment, termination or waiver (based upon such
Board Member's Eligible Service to the date of such amendment, termination or
waiver) or the rights of a retired Eligible Board Member to receive any Benefit
due under the Plan, without the consent of such Independent Board Member or
Eligible Board Member. Notwithstanding any provision to the contrary, the
Board, with the concurrence of a majority of the Independent Board Members of
such Board and without the consent of any individual Independent

3
<PAGE>

Board Member, may at any time (i) amend or terminate the Plan to comply with
any applicable provision of law or any rule or regulation adopted, or proposed
to be adopted, by any governmental agency or any decision of any court or
administrative agency, (ii) change any assumptions used to determine what
benefit may be an Actuarial Equivalent, or (iii) terminate the Plan of an
Adopting Fund (an "Acquired Adopting Fund") substantially all the assets of
which are acquired by an entity which is itself an Adopting Fund (the
"Acquiring Adopting Fund") pursuant to a plan of reorganization between the
Acquired Adopting Fund and the Acquiring Adopting Fund (the "Reorganization
Plan"), such termination to be deemed approved upon adoption of the
Reorganization Plan and to be effective upon the effectiveness of the
reorganization contemplated thereby without liability or further obligation for
any benefits accrued or otherwise payable to an Independent Board Member by the
Acquired Adopting Fund.

(c) No Right to Reelection. Nothing in the Plan will create any obligation
on the part of the Board to nominate any Independent Board Member for
reelection.

(d) Vacancies. Although the Board will retain the right to increase or
decrease its size, it shall be the general policy to replace each retired
Independent Board Member by selecting a new Independent Board Member from
candidates recommended by the remaining Independent Board Members.

(e) Consulting. Each retired Eligible Board Member may render such
services for any of the Adopting Funds, for such compensation, as may be agreed
upon from time to time by such retired Eligible Board Member and the Board.

(f) Effectiveness. The Plan will be effective for all Independent Board
Members who have dates of Retirement occurring on or after the Adoption Date.
Periods of Eligible Service shall include periods commencing prior to such
date.

4
<PAGE>

SCHEDULE A

MORGAN STANLEY DEAN WITTER FUNDS:
FUNDS THAT HAVE ADOPTED THE RETIREMENT PLAN
FOR NON-INTERESTED TRUSTEES OR DIRECTORS

MARCH 1999

<TABLE>
<S> <C>
1. Active Assets California Tax-Free Trust
2. Active Assets Government Securities Trust
3. Active Assets Money Trust
4. Active Assets Tax-Free Trust
5. Morgan Stanley Dean Witter American Value Fund
6. Morgan Stanley Dean Witter California Insured Municipal Income Trust
7. Morgan Stanley Dean Witter California Quality Municipal Securities
8. Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
9. Morgan Stanley Dean Witter California Tax-Free Income Fund
10. Morgan Stanley Dean Witter Capital Growth Securities
11. Morgan Stanley Dean Witter Convertible Securities Trust
12. Morgan Stanley Dean Witter Developing Growth Securities Trust
13. Morgan Stanley Dean Witter Diversified Income Trust
14. Morgan Stanley Dean Witter Dividend Growth Securities Inc.
15. Morgan Stanley Dean Witter European Growth Fund Inc.
16. Morgan Stanley Dean Witter Federal Securities Trust
17. Morgan Stanley Dean Witter Global Dividend Growth Securities
18. Morgan Stanley Dean Witter Government Income Trust
19. Morgan Stanley Dean Witter Health Sciences Trust
20. Morgan Stanley Dean Witter High Income Advantage Trust
21. Morgan Stanley Dean Witter High Income Advantage Trust II
22. Morgan Stanley Dean Witter High Yield Securities Inc.
23. Morgan Stanley Dean Witter Income Securities Inc.
24. Morgan Stanley Dean Witter Insured Municipal Bond Trust
25. Morgan Stanley Dean Witter Insured Municipal Income Trust
26. Morgan Stanley Dean Witter Insured Municipal Securities
27. Morgan Stanley Dean Witter Insured Municipal Trust
28. Morgan Stanley Dean Witter Intermediate Income Securities
29. Morgan Stanley Dean Witter Limited Term Municipal Trust
30. Morgan Stanley Dean Witter Liquid Asset Fund Inc.
31. Morgan Stanley Dean Witter Multi-State Municipal Series Trust
32. Morgan Stanley Dean Witter Municipal Income Opportunities Trust
33. Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
34. Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
35. Morgan Stanley Dean Witter Municipal Income Trust
36. Morgan Stanley Dean Witter Municipal Income Trust II
37. Morgan Stanley Dean Witter Municipal Premium Income Trust
38. Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
39. Morgan Stanley Dean Witter New York Municipal Money Market Trust
40. Morgan Stanley Dean Witter New York Tax-Free Income Fund
41. Morgan Stanley Dean Witter Pacific Growth Fund Inc.
42. Morgan Stanley Dean Witter Prime Income Trust
43. Morgan Stanley Dean Witter Quality Municipal Income Trust
</TABLE>

5
<PAGE>

<TABLE>
<S> <C>
44. Morgan Stanley Dean Witter Quality Municipal Investment Trust
45. Morgan Stanley Dean Witter Quality Municipal Securities
46. Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
47. Morgan Stanley Dean Witter Strategist Fund
48. Morgan Stanley Dean Witter Tax-Exempt Securities Trust
49. Morgan Stanley Dean Witter Tax-Free Daily Income Trust
50. Morgan Stanley Dean Witter U.S. Government Money Market Trust
51. Morgan Stanley Dean Witter U.S. Government Securities Trust
52. Morgan Stanley Dean Witter Utilities Fund
53. Morgan Stanley Dean Witter Value-Added Market Series
54. Morgan Stanley Dean Witter Variable Investment Series
55. Morgan Stanley Dean Witter World Wide Income Trust
</TABLE>

<PAGE>

DEAN WITTER TAX-EXEMPT SECURITIES TRUST

April 29, 1987

Dean Witter Tax-Exempt Securities Trust
One World Trade Center
New York, New York 10048

Dear Sirs:

With respect to Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A (File No. 2-66268) (the "Registration Statement") filed
with the Securities and Exchange Commission by Dean Witter Tax-Exempt Securities
Trust, a Massachusetts business trust (the "Trust"), as successor to Dean Witter
Tax-Exempt Securities Inc., for the purpose of registering under the Securities
Act of 1933, as amended, an indefinite number of shares of beneficial interest
of $0.01 par value of the Trust (the "Shares"), I, as your counsel, have
examined such Trust records, certificates and other documents and reviewed such
questions of law as I have considered necessary or appropriate for the purposes
of this opinion, and on the basis of such examination and review, I advise you
that, in my opinion, proper trust proceedings have been taken by the Trust so
that the Shares have been validly authorized; and when the shares have been
issued and sold in accordance with the terms of the Distribution Agreement
referred to in the aforesaid Post-Effective Amendment, the Shares will be
validly issued, fully paid and non-assessable.

As to matters of Massachusetts law contained in the forgoing opinion, I
have relied upon the opinion of Gaston Snow & Ely Bartlett, dated the date
hereof.

I hereby consent to the filing of this opinion as an exhibit to the
aforesaid Post-Effective Amendment and to the reference to me under the caption
"Legal Counsel" in the Statement of Additional Information forming a part of the
aforesaid Post-Effective Amendment. In giving this consent, I do not thereby
admit that I am within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.

Very truly yours,

/s/ Sheldon Curtis
-----------------------------------------
Sheldon Curtis
General Counsel

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form N-1A of our
report dated February 7, 2000, relating to the financial statements and
financial highlights of Morgan Stanley Dean Witter Tax-Exempt Securities Trust,
which appears in such Registration Statement. We also consent to the references
to us under the headings "Custodian and Independent Accountants" and "Experts"
in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 21, 2000