MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC, 497, 1999-07-01

MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC
497, 1999-07-01

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<PAGE>
PROSPECTUS - JUNE 28, 1999

Morgan Stanley Dean Witter
DIVIDEND GROWTH SECURITIES

[COVER PHOTO]

A MUTUAL FUND THAT SEEKS TO PROVIDE REASONABLE CURRENT
INCOME AND LONG-TERM GROWTH OF INCOME AND 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> <C>
The Fund Investment Objective.................................. 1
Principal Investment Strategies....................... 1
Principal Risks....................................... 1
Past Performance...................................... 2
Fees and Expenses..................................... 3
Additional Investment Strategy Information............ 4
Additional Risk Information........................... 4
Fund Management....................................... 6

Shareholder Information Pricing Fund Shares................................... 7
How to Buy Shares..................................... 7
How to Exchange Shares................................ 9
How to Sell Shares.................................... 10
Distributions......................................... 12
Tax Consequences...................................... 13
Share Class Arrangements.............................. 13

Financial Highlights ...................................................... 21

Our Family of Funds ...................................................... Inside Back Cover

THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE FUND. PLEASE READ
IT CAREFULLY AND KEEP IT FOR FUTURE REFERENCE.
</TABLE>
<PAGE>
[Sidebar]
GROWTH AND INCOME
AN INVESTMENT OBJECTIVE HAVING THE GOAL OF SELECTING SECURITIES WITH THE
POTENTIAL TO RISE IN PRICE AND PAY OUT INCOME.
[End Sidebar]

THE FUND

[ICON] INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter Dividend Growth Securities Inc. (the
"Fund") seeks to provide reasonable current income and long-term
growth of income and capital.

[ICON] PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
The Fund will normally invest at least 70% of its total assets in
common stocks of companies with a record of paying dividends and the
potential for increasing dividends. The Fund's "Investment Manager,"
Morgan Stanley Dean Witter Advisors Inc., initially employs a
quantitative screening process in an attempt to identify a number of
common stocks which are undervalued and which have a record of paying
dividends. The Investment Manager then applies qualitative analysis
to determine which stocks it believes have the potential to increase
dividends and, finally, to determine whether any of the stocks should
be added to or sold from the Fund.

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

In addition, the Fund may invest in fixed-income, convertible and
foreign securities.

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 trading strategies it
uses. For example, the Investment Manager in its discretion may
determine to use some permitted trading strategies while not using
others.

[ICON] PRINCIPAL RISKS
- --------------------------------------------------------------------------------
There is no assurance that the Fund will achieve its investment
objective. The Fund's share price will fluctuate with changes in the
market value of the Fund's portfolio securities. When you sell Fund
shares, they may be worth less than what you paid for them and,
accordingly, you can lose money investing in this Fund.

A principal risk of investing in the Fund is associated with its
common stock investments. In general, stock values fluctuate in
response to activities specific to the company as well as general
market, economic and political conditions. Stock prices can fluctuate
widely in response to these factors.

The performance of the Fund also will depend on whether or not the
Investment Manager is successful in pursuing the Fund's investment
strategy. The Fund is also

1
<PAGE>

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

AVERAGE ANNUAL
TOTAL RETURNS
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL RETURNS WITH THOSE OF A BROAD
MEASURE OF MARKET PERFORMANCE OVER TIME, AS WELL AS WITH AN INDEX OF FUNDS WITH
SIMILAR INVESTMENT OBJECTIVES. 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]

subject to other risks from its permissible investments including the
risks associated with its investments in fixed-income, convertible
and foreign securities. For more information about these risks, see
the "Additional Risk Information" section.

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

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

ANNUAL TOTAL RETURNS - CALENDAR YEARS

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

The bar chart reflects the performance of Class B shares; the performance of the
other Classes will differ because the Classes have different ongoing fees. The
performance information in the bar chart does not reflect the deduction of sales
charges; if these amounts were reflected, returns would be less than shown.

During the periods shown in the bar chart, the highest return for a calendar
quarter was 15.74% (quarter ended June 30, 1997) and the lowest return for a
calendar quarter was -14.79% (quarter ended September 30, 1990). Year-to-date
total return as of March 31, 1999 was 0.95%.

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
- -------------------------------------------------------------------------------
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
Class A(1) 12.12% -- --
- -------------------------------------------------------------------------------
Class B 12.82% 17.98% 16.08%
- -------------------------------------------------------------------------------
Class C(1) 16.44% -- --
- -------------------------------------------------------------------------------
Class D(1) 18.63% -- --
- -------------------------------------------------------------------------------
S&P 500 Index(2) 28.58% 24.05% 19.19%
- -------------------------------------------------------------------------------
Lipper Growth and Income Funds
Index(3) 13.58% 17.83% 15.54%
- -------------------------------------------------------------------------------
</TABLE>

1 Classes A, C and D commenced operations on July 28, 1997.
2 The Standard & Poor's-Registered Trademark- 500 Stock Price Index is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The performance of the Index
does not include any expenses, fees or charges. The Index is unmanaged and
should not be considered an investment.
3 The Lipper Growth and Income Funds Index is an equally-weighted performance
index of the largest qualifying funds (based on net assets) in the Lipper
Growth and Income Funds objective. The Index, which is adjusted for capital
gains distributions and income dividends, is unmanaged and should not be
considered an investment. There are currently 30 funds represented in this
Index.

2
<PAGE>
[Sidebar]
SHAREHOLDER FEES
THESE FEES ARE PAID DIRECTLY FROM YOUR INVESTMENT.

ANNUAL FUND
OPERATING EXPENSES
THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES
PAID FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1999.
[End Sidebar]

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

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
- ---------------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 5.25%(1) None None None
- ---------------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load)
(as a percentage based on the lesser of
the offering price or net asset value at redemption) None(2) 5.00%(3) 1.00%(4) None
- ---------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- ---------------------------------------------------------------------------------------------------------
Management fee 0.35% 0.35% 0.35% 0.35%
- ---------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.21% 0.68% 1.00% None
- ---------------------------------------------------------------------------------------------------------
Other expenses 0.08% 0.08% 0.08% 0.08%
- ---------------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 0.64% 1.11% 1.43% 0.43%
- ---------------------------------------------------------------------------------------------------------
</TABLE>

1 Reduced for purchases of $25,000 and over.
2 Investments that are not subject to any sales charge at the time of
purchase are subject to a contingent deferred sales charge ("CDSC") of
1.00% that will be imposed if you sell your shares within one year after
purchase, except for certain specific circumstances.
3 The CDSC is scaled down to 1.00% during the sixth year, reaching zero
thereafter. See "Share Class Arrangements" for a complete discussion of the
CDSC.
4 Only applicable if you sell your shares within one year after purchase.

EXAMPLE
This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your
investment has a 5% return each year, and the Fund's operating
expenses remain the same. Although your actual costs may be higher or
lower, the tables below show your costs at the end of each period
based on these assumptions depending upon whether or not you sell
your shares at the end of each period.

<TABLE>
<CAPTION>
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES:
----------------------------------------- -----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------- -----------------------------------------
CLASS A $587 $719 $863 $1281 $587 $719 $863 $1281
- ---------------------------------------------------------- -----------------------------------------
CLASS B $613 $653 $812 $1352 $113 $353 $612 $1352
- ---------------------------------------------------------- -----------------------------------------
CLASS C $246 $452 $782 $1713 $146 $452 $782 $1713
- ---------------------------------------------------------- -----------------------------------------
CLASS D $ 44 $138 $241 $ 542 $ 44 $138 $241 $ 542
- ---------------------------------------------------------- -----------------------------------------
</TABLE>

3
<PAGE>
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 National
Association of Securities Dealers.

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

OTHER SECURITIES. In addition to common stocks, the Fund may invest
up to 30% of its assets in convertible debt securities, convertible
preferred securities, U.S. government securities, investment grade
corporate debt securities and/or money market securities. The Fund's
fixed-income investments may include zero coupon securities, which
are purchased at a discount and make no interest payments until
maturity. The Fund may also invest in securities of foreign companies
(including depository receipts) that are listed in the U.S. on a
national securities exchange. A depository receipt is generally
issued by a bank or financial institution and represents an ownership
interest in the common stock of other equity securities of a foreign
company.

DEFENSIVE INVESTING. The Fund may take temporary "defensive"
positions in attempting to respond to adverse market conditions. The
Fund may invest any amount of its assets in cash or money market
instruments in a defensive posture when the Investment Manager
believes it is advisable to do so. Although taking a defensive
posture is designed to protect the Fund from an anticipated market
downturn, it could have the effect of reducing the benefit from any
upswing in the market.

The percentage limitations relating to the composition of the Fund's
portfolio apply at the time the Fund acquires an investment and refer
to the Fund's net assets, unless otherwise noted. Subsequent
percentage changes that result from market fluctuations will not
require the Fund to sell any portfolio security. The Fund may change
its principal investment strategies without shareholder approval;
however, you would be notified of any changes.

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

CONVERTIBLE SECURITIES. The Fund also may invest a portion of its
assets in convertible securities, which are debt or preferred
securities that generally pay interest or dividends and may be
converted into common stock. These securities may carry risks
associated with both common stock and fixed-income securities. A
portion of the convertible

4
<PAGE>
securities in which the Fund may invest will generally be below
investment grade. Securities below investment grade are commonly
known as "junk bonds" and have speculative characteristics.

FIXED-INCOME SECURITIES. Principal risks of investing in the Fund are
associated with its fixed-income investments. All fixed-income
securities, such as U.S. government securities, corporate debt and
money market securities, are subject to two types of risk: credit
risk and interest rate risk. Credit risk refers to the possibility
that the issuer of a security will be unable to make interest
payments and/or repay the principal on its debt. While the credit
risk for U.S. government securities is minimal, the Fund's investment
grade corporate debt holdings may have speculative characteristics.

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

FOREIGN SECURITIES. The Fund's investments in foreign securities
(including depository receipts) involve risks that are in addition to
the risks associated with domestic securities. One additional risk is
currency risk. In particular, the price of securities could be
adversely affected by changes in the exchange rate between U.S.
dollars and a foreign market's local currency.

Foreign securities also have risks related to economic and political
developments abroad, including any effects of foreign social,
economic or political instability. Foreign companies, in general, are
not subject to the regulatory requirements of U.S. companies and, as
such, there may be less publicly available information about these
companies. Moreover, foreign accounting, auditing and financial
reporting standards generally are different from those applicable to
U.S. companies. Finally, in the event of a default of any foreign
debt obligations, it may be more difficult for the Fund to obtain or
enforce a judgment against the issuers of the securities.

YEAR 2000. The Fund could be adversely affected if the computer
systems necessary for the efficient operation of the Investment
Manager, the Fund's other service providers and the markets and
corporate and governmental issuers in which the Fund invests do not
properly process and calculate date-related information from and
after January 1, 2000. While year 2000-related computer problems
could have a negative effect on the Fund, the Investment Manager and
its affiliates are working hard to avoid any problems and to obtain
assurances from their service providers that they are taking similar
steps.

5
<PAGE>
[Sidebar]
MORGAN STANLEY DEAN WITTER ADVISORS INC.
THE INVESTMENT MANAGER IS WIDELY RECOGNIZED AS A LEADER IN THE MUTUAL FUND
INDUSTRY AND TOGETHER WITH MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC., ITS
WHOLLY-OWNED SUBSIDIARY, HAS MORE THAN $134.2 BILLION IN ASSETS UNDER MANAGEMENT
OR ADMINISTRATION AS OF MAY 31, 1999.
[End Sidebar]
data processing errors may result in production problems for
individual companies and overall economic uncertainties. Earnings of
individual issuers will be affected by remediation costs, which may be
substantial and may be reported inconsistently in U.S. and foreign
financial statements. Accordingly, the Fund's investments may be
adversely affected.

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

The Fund's portfolio is managed within the
Investment Manager's Growth and Income Group. Paul
D. Vance, a Senior Vice President of the Investment
Manager, has been the primary portfolio manager of
the Fund since its inception in March 1981. Mr.
Vance has been a portfolio manager with the
Investment Manager for over five years.

The Fund pays the Investment Manager a monthly
management fee as full compensation for the services
and facilities furnished to the Fund, and for Fund
expenses assumed by the Investment Manager. The fee
is based on the Fund's average daily net assets. For
the fiscal year ended February 28, 1999 the Fund
accrued total compensation to the Investment Manager
amounting to 0.35% of the Fund's average daily net
assets.

6
<PAGE>
[Sidebar]
CONTACTING A
FINANCIAL ADVISOR
IF YOU ARE NEW TO THE MORGAN STANLEY DEAN WITTER FAMILY OF FUNDS AND WOULD LIKE
TO CONTACT A FINANCIAL ADVISOR, CALL (800) THE-DEAN 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.DEANWITTER.COM/FUNDS
[End Sidebar]

SHAREHOLDER INFORMATION

[ICON] PRICING FUND SHARES
- --------------------------------------------------------------------------------
The price of Fund shares (excluding sales charges), called "net asset
value," is based on the value of the Fund's portfolio securities.
While the assets of each Class are invested in a single portfolio of
securities, the net asset value of each Class will differ because the
Classes have different ongoing distribution fees.

The net asset value per share of the Fund is determined once daily at
4:00 p.m. Eastern time on each day that the New York Stock Exchange
is open (or, on days when the New York Stock Exchange closes prior to
4:00 p.m., at such earlier time). Shares will not be priced on days
that the New York Stock Exchange is closed.

The value of the Fund's portfolio securities is based on the
securities' market price when available. When a market price is not
readily available, including circumstances under which the Investment
Manager determines that a security's market price is not accurate, a
portfolio security is valued at its fair value, as determined under
procedures established by the Fund's Board of Directors. In these
cases, the Fund's net asset value will reflect certain portfolio
securities' fair value rather than their market price.

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

[ICON] HOW TO BUY SHARES
- --------------------------------------------------------------------------------
You may open a new account to buy Fund shares or buy additional Fund
shares for an existing account by contacting your Morgan Stanley Dean
Witter Financial Advisor or other authorized financial
representative. Your Financial Advisor will assist you, step-by-step,
with the procedures to invest in the Fund. You may also purchase
shares directly by calling the Fund's transfer agent and requesting
an application.

Because every investor has different immediate financial needs and
long-term investment goals, the Fund offers investors four Classes of
shares: Classes A, B, C and D. Class D shares are only offered to a
limited group of investors. Each Class of shares offers a distinct
structure of sales charges, distribution and service fees, and other
features that are designed to address a variety of needs. Your
Financial Advisor or other authorized financial representative can
help you decide which Class may be most appropriate for you. When
purchasing Fund shares, you must specify which Class of shares you
wish to purchase.

7
<PAGE>
[Sidebar]
EASYINVEST-SM-
A PURCHASE PLAN THAT ALLOWS YOU TO TRANSFER MONEY AUTOMATICALLY FROM YOUR
CHECKING OR SAVINGS ACCOUNT OR FROM A MONEY MARKET FUND ON A SEMI-MONTHLY,
MONTHLY OR QUARTERLY BASIS. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL
ADVISOR FOR FURTHER INFORMATION ABOUT THIS SERVICE.
[End Sidebar]

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 in proper form.
Your payment is due on the third business day after you place your
purchase order. We reserve the right to reject any order for the
purchase of Fund shares.

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

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

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

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

- Make out a check for the total amount payable to: Morgan Stanley
Dean Witter Dividend Growth Securities Inc.

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

8
<PAGE>
[ICON] HOW TO EXCHANGE SHARES
- --------------------------------------------------------------------------------
PERMISSIBLE FUND EXCHANGES. You may exchange shares of any Class of
the Fund for the same Class of any other continuously offered
Multi-Class Fund, or for shares of a No-Load Fund, a Money Market
Fund, North American Government Income Trust or Short-Term U.S.
Treasury Trust, without the imposition of an exchange fee. 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.

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. Certain services normally available to shareholders of Money
Market Funds, including the check writing privilege, are not
available for Money Market Fund shares you acquire in an exchange.

TELEPHONE EXCHANGES. For your protection when calling Morgan Stanley
Dean Witter Trust FSB, we will employ reasonable procedures to
confirm that exchange instructions communicated over the telephone
are genuine. These procedures may include requiring various forms of
personal identification such as name, mailing address, social
security or other tax identification number. Telephone instructions
also may be recorded.

Telephone instructions will be accepted if received by the Fund's
transfer agent between 9:00 a.m. and 4:00 p.m. Eastern time on any
day the New York Stock Exchange is open

9
<PAGE>
for business. During periods of drastic economic or market changes,
it is possible that the telephone exchange procedures may be
difficult to implement, although this has not been the case with the
Fund in the past.

MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin
account, contact your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative regarding restrictions on
the exchange of such shares.

TAX CONSIDERATIONS OF EXCHANGES. If you exchange shares of the Fund
for shares of another Morgan Stanley Dean Witter Fund there are
important tax considerations. For tax purposes, the exchange out of
the Fund is considered a sale of Fund shares -- and the exchange into
the other Fund is considered a purchase. As a result, you may realize
a capital gain or loss.

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

FREQUENT EXCHANGES. A pattern of frequent exchanges may result in the
Fund limiting or prohibiting, at its discretion, additional purchases
and/or 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.

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

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

10
<PAGE>

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

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

Payment may be postponed or the right to sell your shares suspended
under unusual circumstances. If you request to sell shares that were
recently purchased by check, payment of the sale proceeds may be
delayed for the minimum time needed to verify that the check has been
honored (not more than fifteen days from the time we receive the
check).

TAX CONSIDERATIONS. Normally, your sale of Fund shares is subject to
federal and state income tax. You should review the "Tax
Consequences" section of this PROSPECTUS and consult your own tax
professional about the tax consequences of a sale.

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

11
<PAGE>
[Sidebar]
TARGETED DIVIDENDS-SM-
YOU MAY SELECT TO HAVE YOUR FUND DISTRIBUTIONS AUTOMATICALLY INVESTED IN OTHER
CLASSES OF FUND SHARES OR CLASSES OF ANOTHER MORGAN STANLEY DEAN WITTER FUND
THAT YOU OWN. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL ADVISOR FOR
FURTHER INFORMATION ABOUT THIS SERVICE.
[End Sidebar]

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

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

[ICON] DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Fund passes substantially all of its earnings
from income and capital gains along to its investors
as "distributions." The Fund earns income from
stocks and interest from fixed-income investments.
These amounts are passed along to Fund shareholders
as "income dividend distributions." The Fund
realizes capital gains whenever it sells securities
for a higher price than it paid for them. These
amounts may be passed along as "capital gain
distributions."

The Fund declares income dividends separately for
each Class. Distributions paid on Class A and Class
D shares usually will be higher than for Class B and
Class C because distribution fees that Class B and
Class C pay are higher. Normally, income dividends
are distributed to shareholders quarterly. Capital
gains, if any, are usually distributed in June and
December. The Fund, however, may retain and reinvest any long-term
capital gains. The Fund may at times make payments from sources other
than income or capital gains that represent a return of a portion of
your investment.

Distributions are reinvested automatically in additional shares of
the same Class and automatically credited to your account, unless you
request in writing that all distributions be paid in cash. If you
elect the cash option, the Fund will mail a check to you no later
than seven business days after the distribution is declared. No
interest will accrue on uncashed checks. If you wish to change how
your distributions are paid, your request should be received by the
Fund's transfer agent, Morgan Stanley Dean Witter Trust FSB, at least
five business days prior to the record date of the distributions.

12
<PAGE>
[ICON] TAX CONSEQUENCES
- --------------------------------------------------------------------------------
As with any investment, you should consider how your Fund investment
will be taxed. The tax information in this PROSPECTUS is provided as
general information. You should consult your own tax professional
about the tax consequences of an investment in the Fund.

Unless your investment in the Fund is through a tax-deferred
retirement account, such as a 401(k) plan or IRA, you need to be
aware of the possible tax consequences when:

- The Fund makes distributions; and

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

TAXES ON DISTRIBUTIONS. Your distributions are normally subject to
federal and state income tax when they are paid, whether you take
them in cash or reinvest them in Fund shares. A distribution also may
be subject to local income tax. Any income dividend distributions and
any short-term capital gain distributions are taxable to you as
ordinary income. Any long-term capital gain distributions are taxable
as long-term capital gains, no matter how long you have owned shares
in the Fund.

Every January, you will be sent a statement (IRS Form 1099-DIV)
showing the taxable distributions paid to you in the previous year.
The statement provides full information on your dividends and capital
gains for tax purposes.

TAXES ON SALES. Your sale of Fund shares normally is subject to
federal and state income tax and may result in a taxable gain or loss
to you. A sale also may be subject to local income tax. Your exchange
of Fund shares for shares of another Morgan Stanley Dean Witter Fund
is treated for tax purposes like a sale of your original shares and a
purchase of your new shares. Thus, the exchange may, like a sale,
result in a taxable gain or loss to you and will give you a new tax
basis for your new shares.

When you open your Fund account, you should provide your social
security or tax identification number on your investment application.
By providing this information, you will avoid being subject to a
federal backup withholding tax of 31% on taxable distributions and
redemption proceeds. Any withheld amount would be sent to the IRS as
an advance tax payment.

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

13
<PAGE>
[Sidebar]
FRONT-END SALES
CHARGE OR FSC

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

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 the maximum annual
12b-1 fee applicable to each Class:

<TABLE>
<CAPTION>
MAXIMUM ANNUAL
CLASS SALES CHARGE 12b-1 FEE
<S> <C> <C>
- ----------------------------------------------------------------------------------------
A Maximum 5.25% initial sales charge reduced for purchase of
$25,000 or more; shares sold without an initial sales charge
are generally subject to a 1.0% CDSC during the first year 0.25%
- ----------------------------------------------------------------------------------------
B Maximum 5.0% CDSC during the first year decreasing to 0%
after six years 1.0%
- ----------------------------------------------------------------------------------------
C 1.0% CDSC during the first year 1.0%
- ----------------------------------------------------------------------------------------
D None None
- ----------------------------------------------------------------------------------------
</TABLE>

CLASS A SHARES Class A shares are sold at net asset value plus an
initial sales charge of up to 5.25%. The initial sales charge is
reduced for purchases of $25,000 or more according to the schedule
below. Investments of $1 million or more are not subject to an initial
sales charge, but are generally subject to a contingent deferred sales
charge, or CDSC, of 1.0% on sales made within one year after the last
day of the month of purchase. The CDSC will be assessed in the same
manner and with the same CDSC waivers as with Class B shares. Class A
shares are also subject to a distribution (12b-1) fee of up to 0.25% of
the average daily net assets of the Class.

The offering price of Class A shares includes a sales charge (expressed as a
percentage of the offering price) on a single transaction as shown in the
following table:

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

14
<PAGE>
The reduced sales charge schedule is applicable to purchases of Class
A shares in a single transaction by:

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

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

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

- Tax-exempt organizations.

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

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

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

You must notify your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative (or Morgan Stanley Dean
Witter Trust FSB if you purchase directly through the Fund), at the
time a purchase order is placed, that the purchase qualifies for the
reduced 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

15
<PAGE>
charge. You can obtain a letter of intent by contacting your Morgan
Stanley Dean Witter Financial Advisor or other authorized financial
representative, or by calling (800) 869-NEWS. If you do not achieve
the stated investment goal within the thirteen-month period, you are
required to pay the difference between the sales charges otherwise
applicable and sales charges actually paid, which may be deducted
from your investment.

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

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

- Persons participating in a fee-based investment program (subject to
all of its terms and conditions, including 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.

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

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

- A client of a Morgan Stanley Dean Witter Financial Advisor who
joined us from another investment firm within six months prior to
the date of purchase of Fund shares, and you used the proceeds from
the sale of shares of a proprietary mutual fund of that Financial
Advisor's previous firm that imposed either a front-end or deferred
sales charge to purchase Class A shares, provided that: (1) you
sold the shares not more than 60 days prior to the purchase of Fund
shares, and (2) the sale proceeds were maintained in the interim in
cash or a money market fund.

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

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

16
<PAGE>
[Sidebar]
CONTINGENT DEFERRED SALES CHARGE OR CDSC
A FEE YOU PAY WHEN YOU SELL SHARES OF CERTAIN MORGAN STANLEY DEAN WITTER FUNDS
PURCHASED WITHOUT AN INITIAL SALES CHARGE. THIS FEE DECLINES THE LONGER YOU HOLD
YOUR SHARES AS SET FORTH IN THE TABLE.
[End Sidebar]

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

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

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

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

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

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

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

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

17
<PAGE>
CDSC will be sold first, followed by those with the lowest CDSC. As
such, the waiver benefit will be reduced by the amount of your
shares that are not subject to a CDSC. If you suspend your
participation in the plan, you may later resume plan payments
without requiring a new determination of the account value for the
12% CDSC waiver.

- Sales of shares that are attributable to reinvested distributions
from, or the proceeds of, certain unit investment trusts sponsored
by Dean Witter Reynolds.

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

DISTRIBUTION FEE. Class B shares are subject to an annual 12b-1 fee
of 1.0% of the lesser of: (a) the average daily aggregate gross
purchases by all shareholders of the Fund's Class B shares since the
inception of the 12b-1 plan on July 2, 1984 (not including
reinvestments of dividends or capital gains distributions), less the
average daily aggregate net asset value of the Fund's Class B shares
sold by all shareholders since the inception of the 12b-1 plan upon
which a CDSC has been imposed or waived, or (b) the average daily net
assets of Class B attributable to shares issued, net of related
shares sold, since the inception of the 12b-plan.

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

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

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

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

EXCHANGING SHARES SUBJECT TO A CDSC. There are special considerations
when you exchange Fund shares that are subject to a CDSC. When
determining the length of time

18
<PAGE>
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 in a regular
account for one year, exchanged to Class B of another Morgan Stanley
Dean Witter Multi-Class Fund for another year, then sold your shares,
a CDSC rate of 4% would be imposed on the shares based on a two year
holding period -- one year for each Fund. However, if you had
exchanged the shares of the Fund for a Money Market Fund (which does
not charge a CDSC) instead of the Multi-Class Fund, then sold your
shares, a CDSC rate of 5% would be imposed on the shares based on a
one year holding period. The one year in the Money Market Fund would
not be counted. Nevertheless, if shares subject to a CDSC are
exchanged for a Fund that does not charge a CDSC, you will receive a
credit when you sell the shares equal to the distribution (12b-1)
fees, if any, you paid on those shares while in that Fund up to the
amount of any applicable CDSC.

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

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

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

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

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

19
<PAGE>
- Persons participating in a fee-based investment program (subject to
all of its terms and conditions, including 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.

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

- Certain unit investment trusts sponsored by Dean Witter Reynolds.

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

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

MEETING CLASS D ELIGIBILITY MINIMUMS. To meet the $5 million ($25
million for MSDW Eligible Plans) initial investment to qualify to
purchase Class D shares you may combine: (1) purchases in a single
transaction of Class D shares of the Fund and other Morgan Stanley
Dean Witter Multi-Class Funds and/or (2) previous purchases of Class
A and Class D shares of Multi-Class Funds and shares of FSC Funds you
currently own, along with shares of Morgan Stanley Dean Witter Funds
you currently own that you acquired in exchange for those shares.

NO SALES CHARGES FOR REINVESTED CASH DISTRIBUTIONS If you receive a
cash payment representing an income dividend or capital gain and you
reinvest that amount in the applicable Class of shares by returning the
check within 30 days of the payment date, the purchased shares would
not be subject to an initial sales charge or CDSC.

PLAN OF DISTRIBUTION (RULE 12B-1 FEES) The Fund has adopted a Plan of
Distribution in accordance with Rule 12b-1 under the Investment Company
Act of 1940 with respect to the distribution of Class A, Class B and
Class C shares. The Plan allows the Fund to pay distribution fees for
the sale and distribution of these shares. It also allows the Fund to
pay for services to shareholders of Class A, Class B and Class C
shares. Because these fees are paid out of the Fund's assets on an
ongoing basis, over time these fees will increase the cost of your
investment in these Classes and may cost you more than paying other
types of sales charges.

20
<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 throughout each
year. The total returns in the table represent the rate an investor would have
earned or lost on an investment in the Fund (assuming reinvestment of all
dividends and distributions).

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

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28, 1999++ 1998*++ 1997 1996** 1995
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------------------------------------------------------

SELECTED PER SHARE DATA:
- --------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 58.36 $ 46.60 $ 39.65 $31.16 $30.86
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.77 0.84 0.81 0.75 0.72
Net realized and unrealized gain 3.58 12.50 7.55 8.50 0.24
------- ------- ------- ------- ------
Total income from investment operations 4.35 13.34 8.36 9.25 0.96
- --------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.75) (0.83) (0.88) (0.67) (0.66)
Net realized gain (1.78) (0.75) (0.53) (0.09) --
------- ------- ------- ------- ------
Total dividends and distributions (2.53) (1.58) (1.41) (0.76) (0.66)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 60.18 $ 58.36 $ 46.60 $39.65 $31.16
- --------------------------------------------------------------------------------------------------------------

TOTAL RETURN+ 7.59% 29.10% 21.37% 30.01% 3.25%
- --------------------------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS:
- --------------------------------------------------------------------------------------------------------------
Expenses 1.11%(1) 1.14% 1.22% 1.31% 1.42%
- --------------------------------------------------------------------------------------------------------------
Net investment income 1.29%(1) 1.61% 1.95% 2.14% 2.42%
- --------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period, in millions $18,061 $16,989 $12,907 $9,782 $7,101
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 13% 4% 4% 10% 6%
- --------------------------------------------------------------------------------------------------------------
</TABLE>

* Prior to July 28, 1997, the Fund issued one class of shares. All shares of the
Fund held prior to that date, other than shares which were purchased prior to
July 2, 1984 (and with respect to such shares, certain shares acquired through
reinvestment of dividends and capital gains distributions (collectively the
Old Shares)) and shares held by certain employee benefit plans established by
Dean Witter Reynolds Inc. and its affiliate, SPS Transaction Services, Inc.,
have been designated Class B shares. The Old Shares and shares held by those
employee benefit plans prior to July 28, 1997 have been designated Class D
shares.
** Year ended February 29.
++ The per share amounts were computed using an average number of shares
outstanding.
+ 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) Reflects overall Fund ratios for investment income and non-class specific
expenses.

21
<PAGE>

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

SELECTED PER SHARE DATA:
- ----------------------------------------------------------------------------------------------
Net asset value, beginning of period $58.39 $53.43
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 1.05 0.66
Net realized and unrealized gain 3.58 5.22
------ ------
Total income from investment operations 4.63 5.88
- ----------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (1.02) (0.67)
Net realized gain (1.78) (0.25)
------ ------
Total dividends and distributions (2.80) (0.92)
- ----------------------------------------------------------------------------------------------
Net asset value, end of period $60.22 $58.39
- ----------------------------------------------------------------------------------------------

TOTAL RETURN+ 8.10% 11.15%(1)
- ----------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS:
- ----------------------------------------------------------------------------------------------
Expenses 0.64%(3) 0.70%(2)
- ----------------------------------------------------------------------------------------------
Net investment income 1.76%(3) 2.09%(2)
- ----------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------
Net assets, end of period, in millions $ 227 $ 85
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate 13% 4%
- ----------------------------------------------------------------------------------------------
</TABLE>

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

22
<PAGE>

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

SELECTED PER SHARE DATA:
- ----------------------------------------------------------------------------------------------
Net asset value, beginning of period $58.28 $53.43
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.59 0.43
Net realized and unrealized gain 3.56 5.21
------ ------
Total income from investment operations 4.15 5.64
- ----------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.63) (0.54)
Net realized gain (1.78) (0.25)
------ ------
Total dividends and distributions (2.41) (0.79)
- ----------------------------------------------------------------------------------------------
Net asset value, end of period $60.02 $58.28
- ----------------------------------------------------------------------------------------------

TOTAL RETURN+ 7.26% 10.68%(1)
- ----------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS:
- ----------------------------------------------------------------------------------------------
Expenses 1.43%(3) 1.45%(2)
- ----------------------------------------------------------------------------------------------
Net investment income 0.97%(3) 1.37%(2)
- ----------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------
Net assets, end of period, in millions $ 144 $ 51
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate 13% 4%
- ----------------------------------------------------------------------------------------------
</TABLE>

23
<PAGE>

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

PER SHARE OPERATING PERFORMANCE:
- ----------------------------------------------------------------------------------------------
Net asset value, beginning of period $58.43 $53.43
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 1.17 0.76
Net realized and unrealized gain 3.59 5.20
------ ------
Total income from investment operations 4.76 5.96
- ----------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (1.15) (0.71)
Net realized gain (1.78) (0.25)
------ ------
Total dividends and distributions (2.93) (0.96)
- ----------------------------------------------------------------------------------------------
Net asset value, end of period $60.26 $58.43
- ----------------------------------------------------------------------------------------------

TOTAL RETURN+ 8.33% 11.31%(1)
- ----------------------------------------------------------------------------------------------

RATIOS TO AVERAGE NET ASSETS:
- ----------------------------------------------------------------------------------------------
Expenses 0.43%(3) 0.45%(2)
- ----------------------------------------------------------------------------------------------
Net investment income 1.97%(3) 2.39%(2)
- ----------------------------------------------------------------------------------------------

SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------
Net assets, end of period, in millions $ 489 $ 365
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate 13% 4%
- ----------------------------------------------------------------------------------------------
</TABLE>

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

24
<PAGE>
MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS
The Morgan Stanley Dean Witter Family of Funds offers
investors a wide range of investment choices. Come on
in and meet the family!
- --------------------------------------------------------------------------------
GROWTH FUNDS
- ---------------------------------
Aggressive Equity Fund
American Opportunities Fund
Capital Growth Securities
Developing Growth Securities
Equity Fund
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust

Small Cap Growth Fund

Special Value Fund
Value Fund

THEME FUNDS
Financial Services Trust
Health Sciences Trust

Information Fund

Natural Resource Development Securities
Precious Metals and Minerals Trust

GLOBAL/INTERNATIONAL FUNDS

Competitive Edge Fund - "Best Ideas"
Portfolio
European Growth Fund
Fund of Funds - International Portfolio
International SmallCap Fund
International Fund
Japan Fund
Latin American Growth Fund
Pacific Growth Fund
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUNDS
- ---------------------------------
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
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 Return Trust
Value-Added Market Series/Equity Portfolio

THEME FUNDS
Global Utilities Fund
Real Estate Fund
Utilities Fund

GLOBAL FUNDS
Global Dividend Growth Securities
- --------------------------------------------------------------------------------
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)
N.Y. 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 - JUNE 28, 1999

Additional information about the Fund's investments is available in the Fund's
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS. In the Fund's ANNUAL REPORT, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. The
Fund's Statement of Additional Information also provides additional information
about the Fund. The Statement of Additional Information is incorporated herein
by reference (legally is part of this PROSPECTUS). For a free copy of any of
these documents, to request other information about the Fund, or to make
shareholder inquiries, please call:

(800) 869-NEWS

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

http://www.deanwitter.com/funds

Information about the Fund (including the STATEMENT OF ADDITIONAL INFORMATION)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (800) SEC-0330. Reports and
other information about the Fund are available on the SEC's Internet site
(www.sec.gov) and copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Section of the SEC, Washington,
DC 20549-6009.

TICKER SYMBOLS:

CLASS A: DIVAX CLASS C: DIVCX
- -------------------- --------------------

CLASS B: DIVBX CLASS D: DIVDX
- -------------------- --------------------

(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-3128)

Morgan Stanley Dean Witter
DIVIDEND GROWTH SECURITIES

[BACK COVER PHOTO]

A MUTUAL FUND THAT SEEKS TO
PROVIDE REASONABLE CURRENT
INCOME AND LONG-TERM GROWTH
OF INCOME AND CAPITAL
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

JUNE 28, 1999
MORGAN STANLEY DEAN
WITTER
DIVIDEND GROWTH
SECURITIES INC.

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

This STATEMENT OF ADDITIONAL INFORMATION is not a PROSPECTUS. The PROSPECTUS
(dated June 28, 1999) for the Morgan Stanley Dean Witter Dividend Growth
Securities Inc. 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
Dividend Growth Securities Inc.
Two World Trade Center
New York, New York 10048
(800) 869-NEWS
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------

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

II. Description of the Fund and Its Investments and Risks.............................. 4
A. Classification.................................................................... 4
B. Investment Strategies and Risks................................................... 4
C. Fund Policies/Investment Restrictions............................................. 7

III. Management of the Fund............................................................ 9
A. Board of Directors................................................................ 9
B. Management Information............................................................ 9
C. Compensation...................................................................... 13

IV. Control Persons and Principal Holders of Securities................................ 15

V. Investment Management and Other Services............................................ 16
A. Investment Manager................................................................ 16
B. Principal Underwriter............................................................. 16
C. Services Provided by the Investment Manager and Fund Expenses Paid by Third
Parties............................................................................. 17
D. Dealer Reallowances............................................................... 18
E. Rule 12b-1 Plan................................................................... 18
F. Other Service Providers........................................................... 22

VI. Brokerage Allocation and Other Practices........................................... 22
A. Brokerage Transactions............................................................ 22
B. Commissions....................................................................... 22
C. Brokerage Selection............................................................... 23
D. Directed Brokerage................................................................ 24
E. Regular Broker-Dealers............................................................ 24

VII. Capital Stock and Other Securities................................................ 24

VIII. Purchase, Redemption and Pricing of Shares....................................... 25
A. Purchase/Redemption of Shares..................................................... 25
B. Offering Price.................................................................... 25

IX. Taxation of the Fund and Shareholders.............................................. 26

X. Underwriters........................................................................ 28

XI. Calculation of Performance Data.................................................... 28

XII. Financial Statements.............................................................. 29
</TABLE>

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

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

"CUSTODIAN"--The Bank of New York.

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

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

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

"FINANCIAL ADVISORS"--Morgan Stanley Dean Witter authorized financial services
representatives.

"FUND"--Morgan Stanley Dean Witter Dividend Growth Securities Inc., a registered
open-end investment company.

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

"INDEPENDENT DIRECTORS"--Directors 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.

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

The Fund was incorporated in the state of Maryland on December 22, 1980
under the name InterCapital Dividend Growth Securities Inc. On March 16, 1983
the Fund's shareholders approved a change in the Fund's name, effective March
22, 1983, to Dean Witter Dividend Growth Securities Inc. On June 22, 1998, the
name of the Fund was changed to Morgan Stanley Dean Witter Dividend Growth
Securities Inc.

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

A. CLASSIFICATION

The Fund is an open-end, diversified management investment company whose
investment objective is to provide reasonable current income and long-term
growth of income and 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."

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

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

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

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

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

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

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

REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements. When
cash may be available for only a few days, it may be invested by the Fund in
repurchase agreements until such time as it may otherwise be invested or used
for payments of obligations of the Fund. These agreements, which may be viewed
as a type of secured lending by the Fund, typically involve the acquisition by
the Fund of

4
<PAGE>
debt securities from a selling financial institution such as a bank, savings and
loan association or broker-dealer. The agreement provides that the Fund will
sell back to the institution, and that the institution will repurchase, the
underlying security serving as collateral at a specified price and at a fixed
time in the future, usually not more than seven days from the date of purchase.
The collateral will be marked-to-market daily to determine that the value of the
collateral, as specified in the agreement, does not decrease below the purchase
price plus accrued interest. If such decrease occurs, additional collateral will
be requested and, when received, added to the account to maintain full
collateralization. The Fund will accrue interest from the institution until the
time when the repurchase is to occur. Although this date is deemed by the Fund
to be the maturity date of a repurchase agreement, the maturities of securities
subject to repurchase agreements are not subject to any limits.

While repurchase agreements involve certain risks not associated with direct
investments in debt securities, the Fund follows procedures designed to minimize
such risks. These procedures include effecting repurchase transactions only with
large, well-capitalized and well-established financial institutions whose
financial condition will be continually monitored by the Investment Manager
subject to procedures established by the Directors. In addition, as described
above, the value of the collateral underlying the repurchase agreement will be
at least equal to the repurchase price, including any accrued interest earned on
the repurchase agreement. In the event of a default or bankruptcy by a selling
financial institution, the Fund will seek to liquidate such collateral. However,
the exercising of the Fund's right to liquidate such collateral could involve
certain costs or delays and, to the extent that proceeds from any sale upon a
default of the obligation to repurchase were less than the repurchase price, the
Fund could suffer a loss.

INVESTMENT IN REAL ESTATE INVESTMENT TRUSTS. The Fund may invest in real
estate investment trusts, which pool investors' funds for investments primarily
in commercial real estate properties. Investment in real estate investment
trusts may be the most practical available means for the Fund to invest in the
real estate industry (the Fund is prohibited from investing in real estate
directly). As a shareholder in a real estate investment trust, the Fund would
bear its ratable share of the real estate investment trust's expenses, including
its advisory and administration fees. At the same time the Fund would continue
to pay its own investment management fees and other expenses, as a result of
which the Fund and its shareholders in effect will be absorbing duplicate levels
of fees with respect to investments in real estate investment trusts.

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.

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

5
<PAGE>
securities on a forward commitment basis. When these transactions are
negotiated, the price is fixed at the time of the commitment, but delivery and
payment can take place a month or more after the date of commitment. While the
Fund will only purchase securities on a when-issued, delayed delivery or forward
commitment basis with the intention of acquiring the securities, the Fund may
sell the securities before the settlement date, if it is deemed advisable. The
securities so purchased or sold are subject to market fluctuation and no
interest or dividends accrue to the purchaser prior to the settlement date.

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

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

The value of the Fund's commitments to purchase the securities of any one
issuer, together with the value of all securities of such issuer owned by the
Fund, may not exceed 5% of the value of the Fund's total assets at the time the
initial commitment to purchase such securities is made. An increase in the
percentage of the Fund's assets committed to the purchase of securities on a
"when, as and if issued" basis may increase the volatility of its net asset
value. The Fund may also sell securities on a "when, as and if issued" basis
provided that the issuance of the security will result automatically from the
exchange or conversion of a security owned by the Fund at the time of sale.

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

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

6
<PAGE>
WARRANTS AND SUBSCRIPTION RIGHTS. The Fund may acquire warrants and
subscription rights attached to other securities. A warrant is, in effect, an
option to purchase equity securities at a specific price, generally valid for a
specific period of time, and has no voting rights, pays no dividends and has no
rights with respect to the corporation issuing it.

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

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 cannot 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. The Investment
Manager, the Distributor and the Transfer Agent have been actively working on
necessary changes to their own computer systems to prepare for the year 2000 and
expect that their systems will be adapted before that date, but there can be no
assurance that they will be successful, or that interaction with other
non-complying computer systems will not impair their services at that time.

In addition, it is possible that the markets for securities in which the
Fund invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues. In
addition, corporate and governmental data processing errors may result in
production problems for individual companies and overall economic uncertainties.
Earnings of individual issuers will be affected by remediation costs, which may
be substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Fund's investments may be adversely affected.

C. FUND POLICIES/INVESTMENT RESTRICTIONS

The investment objective, policies and restrictions listed below have been
adopted by the Fund as fundamental policies. Under the Investment Company Act of
1940 (the "Investment Company Act"), a fundamental policy may not be changed
without the vote of a majority of the outstanding voting securities of the Fund.
The Investment Company Act defines a majority as the lesser of (a) 67% or more
of the shares present at a meeting of shareholders, if the holders of 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b) more
than 50% of the outstanding shares of the Fund. For purposes of the following
restrictions: (i) all percentage limitations apply immediately after a purchase
or initial investment; and (ii) any subsequent change in any applicable
percentage resulting from market fluctuations or other changes in total or net
assets does not require elimination of any security from the portfolio.

The Fund will:

1. Seek to provide reasonable current income and long-term growth of
income and 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 voting securities or any
class of securities of any one issuer.

3. Invest more than 25% of the value of its total assets in securities
of issuers in any one industry. This restriction does not apply to bank
obligations or obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities.

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

5. Purchase or sell real estate or interests therein (including limited
partnership interests), although the Fund may purchase securities of issuers
which engage in real estate operations and securities secured by real estate
or interests therein.

6. Purchase or sell commodities or commodity futures contracts.

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

8. Pledge its assets or assign or otherwise encumber them, except to
secure permitted borrowings.

9. Issue senior securities as defined in the Investment Company Act,
except insofar as the Fund may be deemed to have issued a senior security by
reason of (a) entering into any repurchase agreement; (b) borrowing money in
accordance with restrictions described above; or (c) lending portfolio
securities.

10. Make loans of money or securities, except: (a) by the purchase of
debt obligations in which the Fund may invest consistent with its investment
objective and policies; (b) by investment in repurchase agreements; or (c)
by lending its portfolio securities.

11. Make short sales of securities.

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

13. Engage in the underwriting of securities, except insofar as the Fund
may be deemed an underwriter under the Securities Act in disposing of a
portfolio security and then only in an aggregate amount not to exceed 5% of
the Fund's total assets.

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

15. Invest more than 5% of the value of its total assets in securities
of issuers having a record, together with predecessors, of less than 3 years
of continuous operation. This restriction shall not apply to any obligation
of the United States Government, its agencies or instrumentalities.

16. Purchase oil, gas or other mineral leases, rights or royalty
contracts or exploration or development programs, except that the Fund may
invest in the securities of companies which operate, invest in, or sponsor
these programs.

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

18. Write, purchase or sell puts, calls or combinations thereof.

19. Invest more than 5% of the value of its net assets in warrants,
including not more than 2% of such assets in warrants not listed on either
the New York or American Stock Exchange. However, the acquisition of
warrants attached to other securities is not subject to this restriction.

If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of total or net assets will not be considered a
violation of any of the foregoing restrictions.

8
<PAGE>
Notwithstanding any other investment policy or restriction, the Fund may
seek to achieve its investment objective by investing all or substantially all
of its assets in another investment company having substantially the same
investment objective and policies as the Fund.

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

A. BOARD OF DIRECTORS

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

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

B. MANAGEMENT INFORMATION

DIRECTORS AND OFFICERS. The Board of the Fund consists of eight (8)
Directors. These same individuals also serve as directors or trustees for all of
the Morgan Stanley Dean Witter Funds. Six Directors (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" Directors. The other two Directors (the "management Directors")
are affiliated with the Investment Manager. All of the Directors also serve as
Directors of "Discover Brokerage Index Series," a mutual fund for which the
Investment Manager is the investment advisor.

The Directors and executive officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with the
Investment Manager, and with the 90 Morgan Stanley Dean Witter Funds and
Discover Brokerage Index Series, are shown below.

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------ ----------------------------------------------------------
<S> <C>
Michael Bozic (58) ................................... Vice Chairman of Kmart Corporation (since December, 1998);
Director Director or Trustee of the Morgan Stanley Dean Witter
c/o Kmart Corporation Funds and Discover Brokerage Index Series; formerly
3100 West Big Beaver Road Chairman 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 Eaglemark Financial Services,
Inc. and Weirton Steel Corporation.
</TABLE>

9
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------ ----------------------------------------------------------
<S> <C>
Charles A. Fiumefreddo* (66) ......................... Chairman, Director or Trustee and Chief Executive Officer
Chairman of the Board, of the Morgan Stanley Dean Witter Funds and Discover
Chief Executive Officer and Director Brokerage Index Series; formerly Chairman, Chief Executive
Two World Trade Center Officer and Director of the Investment Manager, the
New York, New York Distributor and MSDW Services Company; Executive Vice
President and Director of Dean Witter Reynolds; Chairman
and Director of the Transfer Agent; formerly Director
and/or officer of various MSDW subsidiaries (until June
1998).

Edwin J. Garn (66) ................................... Director or Trustee of the Morgan Stanley Dean Witter
Director Funds and Discover Brokerage Index Series; formerly United
c/o Huntsman Corporation States Senator (R-Utah)(1974-1992) and Chairman, Senate
500 Huntsman Way Banking Committee (1980-1986); formerly Mayor of Salt Lake
Salt Lake City, Utah 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 (65) ................................. Retired; Director or Trustee of the Morgan Stanley Dean
Director Witter Funds and Discover Brokerage Index Series; Director
c/o Gordon Altman Butowsky of The PMI Group, Inc. (private mortgage insurance);
Weitzen Shalov & Wein Trustee and Vice Chairman of The Field Museum of Natural
Counsel to the Independent Directors History; formerly associated with the Allstate Companies
114 West 47th Street (1966-1994), most recently as Chairman of The Allstate
New York, New York 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 (50) ........................... Senior Partner, Johnson Smick International, Inc., a con-
Director sulting firm; Co-Chairman and a founder of the Group of
c/o Johnson Smick International, Inc. Seven Council (G7C), an international economic com-
1133 Connecticut Avenue, N.W. mission; Chairman of the Audit Committee and Director or
Washington, D.C. Trustee of the Morgan Stanley Dean Witter Funds and
Discover Brokerage Index Series; 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.
</TABLE>

10
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------ ----------------------------------------------------------
<S> <C>
Michael E. Nugent (63) ............................... General Partner, Triumph Capital, L.P., a private in-
Director vestment partnership; Chairman of the Insurance Committee
c/o Triumph Capital, L.P. and Director or Trustee of the Morgan Stanley Dean Witter
237 Park Avenue Funds and Discover Brokerage Index Series; formerly Vice
New York, New York President, Bankers Trust Company and BT Capital
Corporation (1984-1988); director of various business
organizations.

Philip J. Purcell* (55) .............................. Chairman of the Board of Directors and Chief Executive
Director Officer of MSDW, Dean Witter Reynolds and Novus Credit
1585 Broadway Services Inc.; Director of the Distributor; Director or
New York, New York Trustee of the Morgan Stanley Dean Witter Funds and
Discover Brokerage Index Series; Director and/or officer
of various MSDW subsidiaries.

John L. Schroeder (68) ............................... Retired; Chairman of the Derivatives Committee and
Director Director or Trustee of the Morgan Stanley Dean Witter
c/o Gordon Altman Butowsky Funds and Discover Brokerage Index Series; Director of
Weitzen Shalov & Wein Citizens Utilities Company (telecommunications, gas,
Counsel to the Independent Directors electric and water utilities company); formerly Executive
114 West 47th Street Vice President and Chief Investment Officer of the Home
New York, New York Insurance Company (August, 1991-September, 1995).

Mitchell M. Merin (45) ............................... President and Chief Operating Officer of Asset Management
President of MSDW (since December, 1998); President and Director
Two World Trade Center (since April, 1997) and Chief Executive Officer (since
New York, New York 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 and Discover Brokerage Index Series (since
May, 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 and Discover Brokerage Index Series (May,
1997-April, 1999), and Executive Vice President of Dean
Witter, Discover & Co.
</TABLE>

11
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------ ----------------------------------------------------------
<S> <C>
Barry Fink (44) ...................................... Senior Vice President (since March, 1997) and Secretary
Vice President, Secretary and General Counsel (since February, 1997) and Director
and General Counsel (since July, 1998) of the Investment Manager and MSDW
Two World Trade Center Services Company; Senior Vice President (since March,
New York, New York 1997) 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); Vice President, Secretary and General Counsel of
Discover Brokerage Index Series; previously First Vice
President (June, 1993-February, 1997), Vice President and
Assistant Secretary and Assistant General Counsel of the
Investment Manager and MSDW Services Company and Assistant
Secretary of the Morgan Stanley Dean Witter Funds.

Paul D. Vance (64) ................................... Senior Vice President of the Investment Manager; Vice
Vice President President of various Morgan Stanley Dean Witter Funds.
Two World Trade Center
New York, New York

Thomas F. Caloia (53) ................................ First Vice President and Assistant Treasurer of the
Treasurer Investment Manager, the Distributor and MSDW Services
Two World Trade Center Company; Treasurer of the Morgan Stanley Dean Witter Funds
New York, New York and Discover Brokerage Index Series.
</TABLE>

- ------------------------------
* Denotes Directors who are "interested persons" of the Fund as defined by the
Investment Company Act.

In addition, RONALD E. ROBISON, Executive Vice President, Chief
Administrative Officer and Director of the Investment Manager and MSDW Services
Company, ROBERT S. GIAMBRONE, Senior Vice President of the Investment Manager,
MSDW Services Company, the Distributor and the Transfer Agent and Director of
the Transfer Agent, and JOSEPH J. MCALINDEN, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer Agent,
and KENTON J. HINCHLIFFE, MARK BAVOSO and IRA N. ROSS, Senior Vice Presidents of
the Investment Manager, are Vice Presidents of the Fund.

In addition, FRANK BRUTTOMESSO, MARILYN K. CRANNEY, 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 TODD LEBO,
Vice President and Assistant General Counsel of the Investment Manager and MSDW
Services Company, are Assistant Secretaries of the Fund.

INDEPENDENT DIRECTORS AND THE COMMITTEES. Law and regulation establish both
general guidelines and specific duties for the Independent Directors. The Morgan
Stanley Dean Witter Funds seek as Independent Directors 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 serve as
members of the Audit Committee. Three of them also serve as members of the
Derivatives Committee. In addition, three of the Directors, including two
Independent Directors, serve as members of the Insurance Committee.

12
<PAGE>
The Independent Directors 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 are required to select and nominate individuals to fill
any Independent Director vacancy on the Board of any Fund that has a Rule 12b-1
plan of distribution. Most of the Morgan Stanley Dean Witter Funds have a Rule
12b-1 plan.

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

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

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 FOR ALL
MORGAN STANLEY DEAN WITTER FUNDS. The Independent Directors and the Funds'
management believe that having the same Independent Directors 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 for each of the Funds or even of sub-groups of Funds. They believe
that having the same individuals serve as Independent Directors 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 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 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, of
the caliber, experience and business acumen of the individuals who serve as
Independent Directors of the Morgan Stanley Dean Witter Funds.

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

C. COMPENSATION

The Fund pays each Independent Director an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Directors, the Independent
Directors or Committees of the Board of Directors attended by the Director (the
Fund pays the Chairman of the Audit Committee an additional annual fee of $750,
and the Chairmen of the Derivatives and Insurance Committees additional annual
fees of $500). If a Board meeting and a meeting of the Independent Directors or
a Committee meeting, or a meeting of the Independent Directors and/or more than
one Committee meeting, take place on a single day, the

13
<PAGE>
Directors are paid a single meeting fee by the Fund. The Fund also reimburses
such Directors for travel and other out-of-pocket expenses incurred by them in
connection with attending such meetings. Directors and officers of the Fund who
are or have been employed by the Investment Manager or an affiliated company
receive no compensation or expense reimbursement from the Fund for their
services as Director.

The following table illustrates the compensation that the Fund paid to its
Independent Directors for the fiscal year ended February 28, 1999.

FUND COMPENSATION

<TABLE>
<CAPTION>
AGGREGATE
NAME OF INDEPENDENT COMPENSATION
DIRECTOR FROM THE FUND
- ------------------------- ---------------
<S> <C>
Michael Bozic............ $ 1,550
Edwin J. Garn............ 1,700
Wayne E. Hedien.......... 1,700
Dr. Manuel H. Johnson.... 1,650
Michael E. Nugent........ 1,700
John L. Schroeder........ 1,700
</TABLE>

The following table illustrates the compensation paid to the Fund's
Independent Directors for the calendar year ended December 31, 1998 for services
to the 90 Morgan Stanley Dean Witter Funds that were in operation at December
31, 1998. No compensation was paid to the Fund's Independent Directors by
Discover Brokerage Index Series for the calendar year ended December 31, 1998.

CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS

<TABLE>
<CAPTION>
TOTAL CASH
COMPENSATION
FOR SERVICES
TO
90 MORGAN
NAME OF INDEPENDENT STANLEY DEAN
DIRECTOR WITTER FUNDS
- --------------------------- -------------
<S> <C>
Michael Bozic.............. $120,150
Edwin J. Garn.............. 132,450
Wayne E. Hedien............ 132,350
Dr. Manuel H. Johnson...... 155,681
Michael E. Nugent.......... 159,731
John L. Schroeder.......... 160,731
</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 who retires after serving for at least five
years (or such lesser period as may be determined by the Board) as an
Independent Director or Trustee of any Morgan Stanley Dean Witter Fund that has
adopted the retirement program (each such Fund referred to as an "Adopting Fund"
and each such Director referred to as an "Eligible Director") is entitled to
retirement payments upon reaching the eligible retirement age (normally, after
attaining age 72). Annual payments are based upon length of service.

14
<PAGE>
Currently, upon retirement, each Eligible Director is entitled to receive
from the Adopting Fund, commencing as of his or her retirement date and
continuing for the remainder of his or her life, an annual retirement benefit
(the "Regular Benefit") equal to 30.22% of his or her Eligible Compensation plus
0.5036667% of such Eligible Compensation for each full month of service as an
Independent Director or Trustee of any Adopting Fund in excess of five years up
to a maximum of 60.44% after ten years of service. The foregoing percentages may
be changed by the Board.(1) "Eligible Compensation" is one-fifth of the total
compensation earned by such Eligible Director for service to the Adopting Fund
in the five year period prior to the date of the Eligible Director's retirement.
Benefits under the retirement program are accrued as expenses on the books of
the Adopting Funds. Such benefits are not secured or funded by the Adopting
Funds.

The following table illustrates the retirement benefits accrued to the
Fund's Independent Directors by the Fund for the fiscal year ended February 28,
1999 and by the 55 Morgan Stanley Dean Witter Funds (including the Fund) for the
calendar year ended December 31, 1998, and the estimated retirement benefits for
the Independent Directors, to commence upon their retirement, from the Fund as
of February 28, 1999 and from the 55 Morgan Stanley Dean Witter Funds as of
calendar year ended December 31, 1998.

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

<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS
---------------------------
ESTIMATED ESTIMATED ANNUAL
CREDITED BENEFITS
YEARS ESTIMATED RETIREMENT BENEFITS UPON RETIREMENT(2)
OF SERVICE PERCENTAGE ACCRUED AS EXPENSES -----------------------
AT OF ----------------------- FROM
NAME OF INDEPENDENT RETIREMENT ELIGIBLE BY THE BY ALL THE FROM ALL
DIRECTOR (MAXIMUM 10) COMPENSATION FUND ADOPTING FUNDS FUND ADOPTING FUNDS
- ------------------------- ------------ ------------ ------- -------------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
Michael Bozic............ 10 60.44% $ 418 $ 22,377 $ 997 $ 52,250
Edwin J. Garn............ 10 60.44 635 35,225 997 52,250
Wayne E. Hedien.......... 9 51.37 781 41,979 848 44,413
Dr. Manuel H. Johnson.... 10 60.44 255 14,047 997 52,250
Michael E. Nugent........ 10 60.44 449 25,336 997 52,250
John L. Schroeder........ 8 50.37 843 45,117 838 44,343
</TABLE>

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

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

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

The following owned 5% or more of the outstanding shares of Class A on June
9, 1999: Morgan Stanley Dean Witter Trust as Trustee VVP America, P.O. Box 957,
Jersey City, NJ 07303-0957 - 5.19%. The following owned 5% or more of the
outstanding shares of Class D on June 9, 1999: Pace & Co. FBO DWR Employee
Retirement Investment, C/O Mellon Bank, P.O. Box 3198 M/F Operations,
Pittsburgh, PA 15230-3858 - 57.25%; The Chase Manhattan Bank, N.A Trustee FBO
the NFL Player Second Career Savings Plan, 3 Chase Metrotech Center, Brooklyn,
NY 11201-3858 - 7.98%.

As of the date of this STATEMENT OF ADDITIONAL INFORMATION, the aggregate
number of shares of common stock of the Fund owned by the Fund's officers and
Directors as a group was less than 1% of the Fund's shares of common stock
outstanding.

15
<PAGE>
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,
New York 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: 0.625% to the portion of daily
net assets not exceeding $250 million; 0.50% to the portion of daily net assets
exceeding $250 million but not exceeding $1 billion; 0.475% to the portion of
daily net assets exceeding $1 billion but not exceeding $2 billion; 0.45% to the
portion of daily net assets exceeding $2 billion but not exceeding $3 billion;
0.425% to the portion of daily net assets exceeding $3 billion but not exceeding
$4 billion; 0.40% to the portion of daily net assets exceeding $4 billion but
not exceeding $5 billion; 0.375% to the portion of daily net assets exceeding $5
billion but not exceeding $6 billion; 0.350% to the portion of daily net assets
exceeding $6 billion but not exceeding $8 billion; 0.325% to the portion of
daily net assets exceeding $8 billion but not exceeding $10 billion; 0.30% to
the portion of daily net assets exceeding $10 billion but not exceeding $15
billion; 0.275% to the portion of daily net assets exceeding $15 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 February 28,
1997, 1998 and 1999, the Investment Manager accrued total compensation under the
Management Agreement in the amounts of $43,410,540, $54,825,425 and $64,189,996,
respectively.

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

B. PRINCIPAL UNDERWRITER

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

The Distributor bears all expenses it may incur in providing services under
the Distribution Agreement. These expenses include the payment of commissions
for sales of the Fund's shares and incentive compensation to Financial Advisors.
The 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

16
<PAGE>
negligence or reckless disregard of its obligations, the Distributor is not
liable to the Fund or any of its shareholders for any error of judgment or
mistake of law or for any act or omission or for any losses sustained by the
Fund or its shareholders.

C. SERVICES PROVIDED BY THE INVESTMENT MANAGER AND FUND EXPENSES PAID BY THIRD
PARTIES

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

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

17
<PAGE>
The Management Agreement will remain in effect from year to year, provided
continuance of the Management Agreement is approved at least annually by the
vote of the holders of a majority, as defined in the Investment Company Act, of
the outstanding shares of the Fund, or by the Directors; provided that in either
event such continuance is approved annually by the vote of a majority of the
Directors.

D. DEALER REALLOWANCES

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

E. RULE 12b-1 PLAN

The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act (the "Plan") pursuant to which each Class, other than
Class D, pays the Distributor compensation accrued daily and payable monthly at
the following annual rates: 0.25% and 1.0% of the average daily net assets of
Class A and Class C, respectively, and, with respect to Class B, 1.0% of the
lesser of: (a) the average daily aggregate gross sales of the Fund's Class B
shares since the inception of the Plan on July 2, 1984 (not including
reinvestment of dividends or capital gains distributions), less the average
daily aggregate net asset value of the Fund's Class B shares redeemed since the
Plan's inception upon which a contingent deferred sales charge has been imposed
or upon which such charge has been waived, or (b) the average daily net assets
of Class B attributable to Class B shares issued, net of Class B shares
redeemed, since the inception of the Plan.

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 February 28, 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> <C> <C> <C>
Class A.................. FSCs:(1) $ 995,027 FSCs: $ 805,310 FSCs: N/A(2)
CDSCs: $ 44,737 CDSCs: $ 0 CDSCs: N/A(2)
Class B.................. CDSCs: $ 15,587,266 CDSCs: $ 12,358,935 CDSCs: $ 9,636,045
Class C.................. CDSCs: $ 122,956 CDSCs: $ 16,047 CDSCs: N/A(2)
</TABLE>

- ------------------------
(1) FSCs apply to Class A only.

(2) This Class commenced operations on July 28, 1997.

The Distributor has informed the Fund that the entire fee payable by Class A
and a portion of the fees payable by each of Class B and Class C each year
pursuant to the Plan equal to 0.25% of such Class' average daily net assets are
currently each characterized as a "service fee" under the Rules of the National
Association of Securities Dealers, Inc. (of which the Distributor is a member).
The "service fee" is a payment made for personal service and/or the maintenance
of shareholder accounts. The remaining portion of the Plan fees payable by a
Class, if any, is characterized as an "asset-based sales charge" as such is
defined by the Rules of the Association.

Under the Plan and as required by Rule 12b-1, the Directors receive and
review promptly after the end of each calendar quarter a written report provided
by the Distributor of the amounts expended under the Plan and the purpose for
which such expenditures were made. Class B shares of the Fund accrued amounts
payable to the Distributor under the Plan, during the fiscal year ended February
28, 1999, of $120,000,897. This amount is equal to 0.68% of the average daily
net assets of Class B for the fiscal year and was calculated pursuant to clause
(a) of the compensation formula under the Plan. For the fiscal

18
<PAGE>
year ended February 28, 1999, Class A and Class C shares of the Fund accrued
payments under the Plan amounting to $329,437 and $1,021,408, respectively,
which amounts are equal to 0.21% and 1.00% 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 5.0% of the
amount sold (except as provided in the following sentence) and an annual
residual commission, currently a residual of up to 0.25% of the current value of
the respective accounts for which they are the Financial Advisors or dealers of
record in all cases. On orders of $1 million or more (for which no sales charge
was paid) or net asset value purchases by employer-sponsored employee benefit
plans, whether or not qualified under the Internal Revenue Code, for which the
Transfer Agent serves as Trustee or Dean Witter Reynolds Retirement Plan
Services serves as recordkeeper pursuant to a written Recordkeeping Services
Agreement ("MSDW Eligible Plans"), the Investment Manager compensates Financial
Advisors by paying them, from its own funds, a gross sales credit of 1.0% of the
amount sold.

With respect to Class B shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class B shares, currently a gross sales credit of up to 5.0% of the amount
sold (except as provided in the following sentence) and an annual residual
commission, currently a residual of up to 0.25% of the current value (not
including reinvested dividends or distributions) of the amount sold in all
cases. In the case of Class B shares purchased by MSDW Eligible Plans, Dean
Witter Reynolds compensates its Financial Advisors by paying them, from its own
funds, a gross sales credit of 3.0% of the amount sold.

With respect to Class C shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class C shares, currently a gross sales credit of up to 1.0% of the amount
sold and an annual residual commission, currently up to 1.0% of the current
value of the respective accounts for which they are the Financial Advisors of
record.

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

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

The 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

19
<PAGE>
charge"). In the Distributor's reporting of the distribution expenses to the
Fund, in the case of Class B shares, such assumed interest (computed at the
"broker's call rate") has been calculated on the gross credit as it is reduced
by amounts received by the Distributor under the Plan and any contingent
deferred sales charges received by the Distributor upon redemption of shares of
the Fund. No other interest charge is included as a distribution expense in the
Distributor's calculation of its distribution costs for this purpose. The
broker's call rate is the interest rate charged to securities brokers on loans
secured by exchange-listed securities.

The Fund is authorized to reimburse expenses incurred or to be incurred in
promoting the distribution of the Fund's Class A and Class C shares and in
servicing shareholder accounts. Reimbursement will be made through payments at
the end of each month. The amount of each monthly payment may in no event exceed
an amount equal to a payment at the annual rate of 0.25%, in the case of Class
A, and 1.0%, in the case of Class C, of the average net assets of the respective
Class during the month. No interest or other financing charges, if any, incurred
on any distribution expenses on behalf of Class A and Class C will be
reimbursable under the Plan. With respect to Class A, in the case of all
expenses other than expenses representing the service fee, and, with respect to
Class C, in the case of all expenses other than expenses representing a gross
sales credit or a residual to Financial Advisors and other authorized financial
representatives, such amounts shall be determined at the beginning of each
calendar quarter by the Directors, including, a majority of the Independent
Directors. Expenses representing the service fee (for Class A) or a gross sales
credit or a residual to Financial Advisors and other authorized financial
representatives (for Class C) may be reimbursed without prior determination. In
the event that the Distributor proposes that monies shall be reimbursed for
other than such expenses, then in making quarterly determinations of the amounts
that may be reimbursed by the Fund, the Distributor will provide and the
Directors will review a quarterly budget of projected distribution expenses to
be incurred on behalf of the Fund, together with a report explaining the
purposes and anticipated benefits of incurring such expenses. The Directors will
determine which particular expenses, and the portions thereof, that may be borne
by the Fund, and in making such a determination shall consider the scope of the
Distributor's commitment to promoting the distribution of the Fund's Class A and
Class C shares.

Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the fiscal year ended February 28, 1999 to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $990,683,790 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)
1.84% ($18,198,558)-- advertising and promotional expenses; (ii) 0.14%
($1,370,952)--printing of prospectuses for distribution to other than current
shareholders; and (iii) 98.02% ($971,114,280)--other expenses, including the
gross sales credit and the carrying charge, of which 9.75% ($94,635,589)
represents carrying charges, 37.37% ($362,862,178) 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 52.88% ($513,616,513) 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 were service fees
during the fiscal year ended February 28, 1999. 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 $261,764,444 as of February 28, 1999, which was
equal to 1.45% of the net assets of Class B on such date. Because there is no
requirement under the Plan

20
<PAGE>
that the Distributor be reimbursed for all distribution expenses with respect to
Class B shares or any requirement that the Plan be continued from year to year,
this excess amount does not constitute a liability of the Fund. Although there
is no legal obligation for the Fund to pay expenses incurred in excess of
payments made to the Distributor under the Plan and the proceeds of CDSCs paid
by investors upon redemption of shares, if for any reason the Plan is
terminated, the Directors will consider at that time the manner in which to
treat such expenses. Any cumulative expenses incurred, but not yet recovered
through distribution fees or CDSCs, may or may not be recovered through future
distribution fees or CDSCs.

In the case of Class A and Class C shares, expenses incurred pursuant to the
Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net
assets of Class A or Class C, respectively, will not be reimbursed by the Fund
through payments in any subsequent year, except that expenses representing a
gross sales commission credited to Morgan Stanley Dean Witter Financial Advisors
and other authorized financial representatives at the time of sale may be
reimbursed in the subsequent calendar year. The Distributor has advised the Fund
that unreimbursed expenses representing a gross sales commission credited to the
Morgan Stanley Dean Witter Financial Advisors and other authorized financial
representatives at the time of sale in the case of Class C totalled $252,571 as
of December 31, 1998 (end of the calendar year), which was equal to 0.19% of the
net assets of Class C on such date, and that there were no such expenses that
may be reimbursed in the subsequent year in the case of Class A on such date. No
interest or other financing charges will be incurred on any Class A or Class C
distribution expenses incurred by the Distributor under the Plan or on any
unreimbursed expenses due to the Distributor pursuant to the Plan.

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

On an annual basis, the Directors, including a majority of the Independent
Directors, consider whether the Plan should be continued. Prior to approving the
last continuation of the Plan, the Directors requested and received from the
Distributor and reviewed all the information which they deemed necessary to
arrive at an informed determination. In making their determination to continue
the Plan, the Directors considered: (1) the Fund's experience under the Plan and
whether such experience indicates that the Plan is operating as anticipated; (2)
the benefits the Fund had obtained, was obtaining and would be likely to obtain
under the Plan, including that: (a) the Plan is essential in order to give Fund
investors a choice of alternatives for payment of distribution and service
charges and to enable the Fund to continue to grow and avoid a pattern of net
redemptions which, in turn, are essential for effective investment management;
and (b) without the compensation to individual brokers and the reimbursement of
distribution and account maintenance expenses of Dean Witter Reynolds'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 Directors, including each of the
Independent Directors, determined that continuation of the Plan would be in the
best interest of the Fund and would have a reasonable likelihood of continuing
to benefit the Fund and its shareholders. In the Directors' quarterly review of
the Plan, they will consider its continued appropriateness and the level of
compensation provided therein.

The Plan may not be amended to increase materially the amount to be spent
for the services described therein without approval by the shareholders of the
affected Class or Classes of the Fund, and all material amendments to the Plan
must also be approved by the Directors in the manner described above. The Plan
may be terminated at any time, without payment of any penalty, by vote of a
majority of the Independent Directors or by a vote of a majority of the
outstanding voting securities of the Fund (as

21
<PAGE>
defined in the Investment Company Act) on not more than thirty days' written
notice to any other party to the Plan. So long as the Plan is in effect, the
election and nomination of Independent Directors shall be committed to the
discretion of the Independent Directors.

F. OTHER SERVICE PROVIDERS

(1) TRANSFER AGENT/DIVIDEND-PAYING AGENT

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

(2) CUSTODIAN AND INDEPENDENT ACCOUNTANTS

The Bank of New York, 90 Washington Street, New York, New York 10286 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, New York
10036, serves as the independent accountants of the Fund. The independent
accountants are responsible for auditing the annual financial statements of the
Fund.

(3) AFFILIATED PERSONS

The Transfer Agent is an affiliate of the Investment Manager, and of the
Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer
Agent's responsibilities include maintaining shareholder accounts, disbursing
cash dividends and reinvesting dividends, processing account registration
changes, handling purchase and redemption transactions, mailing prospectuses and
reports, mailing and tabulating proxies, processing share certificate
transactions, and maintaining shareholder records and lists. For these services,
the Transfer Agent receives a per shareholder account fee from the Fund and is
reimbursed for its out-of-pocket expenses in connection with such services.

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

A. BROKERAGE TRANSACTIONS

Subject to the general supervision of the Directors, the Investment Manager
is responsible for decisions to buy and sell securities for the Fund, the
selection of brokers and dealers to effect the transactions, and the negotiation
of brokerage commissions, if any. Purchases and sales of securities on a stock
exchange are effected through brokers who charge a commission for their
services. In the over-the-counter market, securities are generally traded on a
"net" basis with dealers acting as principal for their own accounts without a
stated commission, although the price of the security usually includes a profit
to the dealer. The Fund also expects that securities will be purchased at times
in underwritten offerings where the price includes a fixed amount of
compensation, generally referred to as the underwriter's concession or discount.
On occasion, the Fund may also purchase certain money market instruments
directly from an issuer, in which case no commissions or discounts are paid.

For the fiscal years ended February 28, 1997, 1998 and 1999, the Fund paid a
total of $1,915,909, $1,999,471 and $2,852,879, respectively, in brokerage
commissions.

B. COMMISSIONS

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

22
<PAGE>
During the fiscal years ended February 28, 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 Directors, including the Independent
Directors, have adopted procedures which are reasonably designed to provide that
any commissions, fees or other remuneration paid to an affiliated broker or
dealer are consistent with the foregoing standard. The Fund does not reduce the
management fee it pays to the Investment Manager by any amount of the brokerage
commissions it may pay to an affiliated broker or dealer.

During the fiscal years ended February 28, 1997, 1998 and 1999, the Fund
paid a total of $460,302, $401,017 and $306,619, respectively, in brokerage
commissions to Dean Witter Reynolds. During the fiscal year ended February 28,
1999, the brokerage commissions paid to Dean Witter Reynolds represented
approximately 10.75% of the total brokerage commissions paid by the Fund during
the year and were paid on account of transactions having an aggregate dollar
value equal to approximately 11.70% of the aggregate dollar value of all
portfolio transactions of the Fund during the year for which commissions were
paid.

During the period June 1, 1997 through February 28, 1998 and during the
fiscal year ended February 28, 1999, the Fund paid a total of $155,990 and
$189,929 respectively, in brokerage commissions to Morgan Stanley & Co., which
broker-dealer became an affiliate of the Investment Manager on May 31, 1997 upon
consummation of the merger of Dean Witter, Discover & Co. with Morgan Stanley
Group Inc. During the fiscal year ended February 28, 1999, the brokerage
commissions paid to Morgan Stanley & Co. represented approximately 6.66% of the
total brokerage commissions paid by the Fund for this period and were paid on
account of transactions having an aggregate dollar value equal to approximately
8.35% of the aggregate dollar value of all portfolio transactions of the Fund
during the year for which commissions were paid.

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

23
<PAGE>
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 February 28, 1999, the Fund paid $2,151,707 in
brokerage commissions in connection with transactions in the aggregate amount of
$1,542,197,267 to brokers because of research services provided.

E. REGULAR BROKER-DEALERS

During the fiscal year ended February 28, 1999, the Fund purchased Common
Stock issued by BankAmerica, General Electric Co. and Ford Motor Co., which
issuers were among the ten brokers or the ten dealers that executed transactions
for or with the Fund in the largest dollar amounts during the year. At February
28, 1999, the Fund held Common Stock issued by Ford Motor Co., BankAmerica, J.P.
Morgan & Co. and General Electric Co. with market values of $232,801,562.50,
$551,521,478.75, $167,156,250 and $384,196,875, respectively.

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

The Fund is authorized to issue 500,000,000 shares of common stock of $0.01
par value for each Class. Shares of the Fund, when issued, are fully paid,
non-assessable, fully transferrable and redeemable at the option of the holder.
Except for agreements entered into by the Fund in its ordinary course of
business within the limitations of the Fund's fundamental investment policies
(which may be modified only by shareholder vote), the Fund will not issue any
securities other than common stock.

All shares of common stock are equal as to earnings, assets and voting
privileges except that each Class will have exclusive voting privileges with
respect to matters relating to distribution expenses borne solely by such Class
or any other matter in which the interests of one Class differ from the
interests of any other Class. In addition, Class B shareholders will have the
right to vote on any proposed material increase in Class A's expenses, if such
proposal is submitted separately to Class A shareholders. Also, as discussed
herein, Class A, Class B and Class C bear the expenses related to the
distribution of their respective shares.

The Fund is not required to hold annual meetings of shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Directors may call special meetings of shareholders for action by shareholder
vote as may be required by the Investment Company Act or the Fund's By-Laws.

Under certain circumstances the Directors may be removed by action of the
Directors. In addition, under certain circumstances the shareholders may call a
meeting to remove Directors and the Fund is required to provide assistance in
communicating with shareholders about such a meeting. The voting

24
<PAGE>
rights of shareholders are not cumulative, so that holders of more than 50
percent of the shares voting can, if they choose, elect all Directors being
selected, while the holders of the remaining shares would be unable to elect any
Directors.

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

A. PURCHASE/REDEMPTION OF SHARES

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

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

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

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

B. OFFERING PRICE

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

In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
stock exchange is valued at its latest sale price on that exchange, prior to the
time when assets are valued; if there were no sales that day, the security is
valued at the latest bid price (in cases where a security is traded on more than
one exchange, the security is valued on the exchange designated as the primary
market pursuant to procedures adopted by the Directors); and (2) all other
portfolio securities for which over-the-counter market quotations are readily
available are valued at the latest bid price. When market quotations are not
readily available, including circumstances under which it is determined by the
Investment Manager that sale or bid prices are not reflective of a security's
market value, portfolio securities are valued at their fair value as determined
in good faith under procedures established by and under the general supervision
of the Fund's Directors.

25
<PAGE>
For valuation purposes, quotations of foreign portfolio securities, other assets
and liabilities and forward contracts stated in foreign currency are translated
into U.S. dollar equivalents at the prevailing market rates prior to the close
of the New York Stock Exchange.

Short-term debt securities with remaining maturities of sixty days or less
at the time of purchase are valued at amortized cost, unless the Directors
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Directors.

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

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

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

The Fund generally will make two basic types of distributions: ordinary
dividends and long-term capital gain distributions. These two types of
distributions are reported differently on a shareholder's income tax return and
they are also subject to different rates of tax. The tax treatment of the
investment activities of the Fund will affect the amount and timing and
character of the distributions made by the Fund. Tax issues relating to the Fund
are not generally a consideration for shareholders such as tax exempt entities
and tax-advantaged retirement vehicles such as an IRA or 401(k) plan.
Shareholders are urged to consult their own tax professionals regarding specific
questions as to federal, state or local taxes.

INVESTMENT COMPANY TAXATION. The Fund intends to remain qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986. As such, the Fund will not be subject to federal income tax on its net
investment income and capital gains, if any, to the extent that it distributes
such income and capital gains to its shareholders.

The Fund generally intends to distribute sufficient income and gains so that
the Fund will not pay corporate income tax on its earnings. The Fund also
generally intends to distribute to its shareholders in each calendar year a
sufficient amount of ordinary income and capital gains to avoid the imposition
of a 4% excise tax. However, the Fund may instead determine to retain all or
part of any net long-term capital gains in any year for reinvestment. In such
event, the Fund will pay federal income tax (and possibly excise tax) on such
retained gains.

Gains or losses on sales of securities by the Fund will be long-term capital
gains or losses if the securities have a tax holding period of more than one
year. Gains or losses on the sale of securities with a tax holding period of one
year or less will be short-term gains or losses.

Under certain tax rules, the Fund may be required to accrue a portion of any
discount at which certain securities are purchased as income each year even
though the Fund receives no payments in cash on the security during the year. To
the extent that the Fund invests in such securities, it would be required to pay
out such accrued discount as an income distribution in each year in order to
avoid

26
<PAGE>
taxation at the Fund level. Such distributions will be made from the available
cash of the Fund or by liquidation of portfolio securities if necessary. If a
distribution of cash necessitates the liquidation of portfolio securities, the
Investment Manager will select which securities to sell. The Fund may realize a
gain or loss from such sales. In the event the Fund realizes net capital gains
from such transactions, its shareholders may receive a larger capital gain
distribution, if any, than they would in the absence of such transactions.

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

Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash. The Taxpayer Relief Act of 1997 reduced the
maximum tax on long-term capital gains applicable to individuals from 28% to
20%.

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

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

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

After the end of each calendar year, shareholders will be sent full
information on their dividends and capital gain distributions for tax purposes,
including the portion taxable as ordinary income, and the portion taxable as
long-term capital gains.

PURCHASES AND REDEMPTIONS AND EXCHANGES OF FUND SHARES. Any dividend or
capital gains distribution received by a shareholder from any investment company
will have the effect of reducing the net asset value of the shareholder's stock
in that company by the exact amount of the dividend or capital gains
distribution. Furthermore, such dividends and capital gains distributions are
subject to federal income taxes. If the net asset value of the shares should be
reduced below a shareholder's cost as a result of the payment of dividends or
the distribution of realized long-term capital gains, such payment or
distribution would be in part a return of the shareholder's investment but
nonetheless would be taxable to the shareholder. Therefore, an investor should
consider the tax implications of purchasing Fund shares immediately prior to a
distribution record date.

In general, a sale of shares results in capital gain or loss, and for
individual shareholders, is taxable at a federal rate dependent upon the length
of time the shares were held. A redemption of a shareholder's Fund shares is
normally treated as a sale for tax purposes. Fund shares held for a period of
one year or less will, for tax purposes, generally result in short-term gains or
losses and those held for more than one year generally result in long-term gain
or loss. Any loss realized by shareholders upon a 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

27
<PAGE>
made (including shares acquired through reinvestment of dividends and
distributions) so they can compute the tax basis of their shares. Under certain
circumstances a shareholder may compute and use an average cost basis in
determining the gain or loss on the sale or redemption of shares.

Exchanges of Fund shares for shares of another fund, including shares of
other Morgan Stanley Dean Witter Funds, are also subject to similar tax
treatment. Such an exchange is treated for tax purposes as a sale of the
original shares in the first fund, followed by the purchase of shares in the
second fund.

If a shareholder realizes a loss on the redemption or exchange of a fund's
shares and reinvests in that fund's shares within 30 days before or after the
redemption or exchange, the transactions may be subject to the "wash sale"
rules, resulting in a postponement of the recognition of such loss for tax
purposes.

X. UNDERWRITERS
- --------------------------------------------------------------------------------

The Fund's shares are offered to the public on a continuous basis. The
Distributor, as the principal underwriter of the shares, has certain obligations
under the Distribution Agreement concerning the distribution of the shares.
These obligations and the compensation the Distributor receives are described
above in the sections titled "Principal Underwriter" and "Rule 12b-1 Plans."

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

From time to time, the Fund may quote its "total return" in advertisements
and sales literature. These figures are computed separately for Class A, Class
B, Class C and Class D shares. The Fund's "average annual total return"
represents an annualization of the Fund's total return over a particular period
and is computed by finding the annual percentage rate which will result in the
ending redeemable value of a hypothetical $1,000 investment made at the
beginning of a one, five or ten year period, or for the period from the date of
commencement of operations, if shorter than any of the foregoing. The ending
redeemable value is reduced by any contingent deferred sales charge ("CDSC") at
the end of the one, five, ten year or other period. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment (which in the case of Class A shares is reduced by the Class A
initial sales charge), taking a root of the quotient (where the root is
equivalent to the number of years in the period) and subtracting 1 from the
result. Based on this calculation, the average annual total returns for Class B
for the one year, five year and ten year periods ended February 28, 1999 were
2.59%, 17.53% and 15.23%, respectively. The average annual total returns of
Class A for the fiscal year ended February 28, 1999 and for the period July 28,
1997 (inception of the Class) through February 28, 1999 were 2.42% and 8.51%,
respectively. The average annual total returns of Class C for the fiscal year
ended February 28, 1999 and for the period July 28, 1997 (inception of the
Class) through February 28, 1999 were 6.26% and 11.41%, respectively. The
average annual total returns of Class D for the fiscal year ended February 28,
1999 and for the period July 28, 1997 (inception of the Class) through February
28, 1999 were 8.33% and 12.51%, respectively.

In addition, the Fund may advertise its total return for each Class over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. These calculations may or may not reflect the
imposition of the maximum front-end sales charge for Class A or the deduction of
the CDSC for each of Class B and Class C which, if reflected, would reduce the
performance quoted. For example, the average annual total return of the Fund may
be calculated in the manner described above, but without deduction for any
applicable sales charge. Based on this calculation, the average annual total
returns of Class B for the one year, five year and ten year periods ended
February 28, 1999, were 7.59 %, 17.74% and 15.23%, respectively. The average
annual total returns of Class A for the fiscal year ended February 28, 1999 and
for the period July 28, 1997 through February 28, 1999 were 8.10% and 12.25%,
respectively. The average annual total returns of Class C for the fiscal year
ended February 28,

28
<PAGE>
1999 and for the period July 28, 1997 through February 28, 1999 were 7.26% and
11.41%, respectively. The average annual total returns of Class D for the fiscal
year ended February 28, 1999 and for the period July 28, 1997 through February
28, 1999 were 8.33% and 12.51%, 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 this calculation, the total returns
for Class B for the one year, five year and ten year periods ended February 28,
1999, were 7.59%, 126.29% and 312.71%, respectively. The total returns of Class
A for the fiscal year ended February 28, 1999 and for the period July 28, 1997
through February 28, 1999 were 8.10% and 20.15%, respectively. The total returns
of Class C for the fiscal year ended February 28, 1999 and for the period July
28, 1997 through February 28, 1999 were 7.26% and 18.71%, respectively. The
total returns of Class D for the fiscal year ended February 28, 1999 and for the
period July 28, 1997 through February 28, 1999 were 8.33% and 20.58%,
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
$9,475, $48,000 and $97,000 in the case of Class A (investments of $10,000,
$50,000 and $100,000 adjusted for the initial sales charge) or by $10,000,
$50,000 and $100,000 in the case of each of Class B, Class C and Class D, as the
case may be. Investments of $10,000, $50,000 and $100,000 in each Class at
inception of the Class would have grown to the following amounts at February 28,
1999:

<TABLE>
<CAPTION>
INVESTMENT AT INCEPTION OF:
INCEPTION ---------------------------------------
CLASS DATE: $10,000 $50,000 $100,000
- -------------------------------------------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Class A..................................... 07/28/97 $ 11,384 $ 57,672 $ 116,546
Class B..................................... 03/30/81 134,021 670,105 1,340,210
Class C..................................... 07/28/97 11,871 59,355 118,710
Class D..................................... 07/28/97 12,058 60,290 120,580
</TABLE>

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

XII. FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

EXPERTS. The financial statements of the Fund for the fiscal year ended
February 28, 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.

29
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (92.4%)
AEROSPACE (3.2%)
2,300,000 Goodrich (B.F.) Co. (The)......................................................... $ 78,487,500
3,800,000 Lockheed Martin Corp.............................................................. 143,212,500
3,100,000 United Technologies Corp.......................................................... 384,012,500
---------------
605,712,500
---------------
ALUMINUM (1.7%)
3,900,000 Alcan Aluminium Ltd. (Canada)..................................................... 94,818,750
5,418,000 Alcoa Inc......................................................................... 219,429,000
---------------
314,247,750
---------------
APPAREL (0.6%)
2,250,000 VF Corp........................................................................... 108,281,250
---------------
AUTO PARTS: O.E.M. (1.9%)
2,550,000 Dana Corp......................................................................... 96,262,500
1,446,000 Delphi Automotive Systems Corp.*.................................................. 26,660,625
2,150,000 Johnson Controls, Inc............................................................. 132,225,000
2,350,000 TRW Inc........................................................................... 111,037,500
---------------
366,185,625
---------------
AUTOMOTIVE AFTERMARKET (0.6%)
2,475,000 Goodyear Tire & Rubber Co......................................................... 114,468,750
---------------
BEVERAGES - NON-ALCOHOLIC (2.3%)
3,900,000 Coca Cola Co...................................................................... 249,356,250
5,072,500 PepsiCo, Inc...................................................................... 190,852,812
---------------
440,209,062
---------------
BUILDING PRODUCTS (0.3%)
1,225,000 Armstrong World Industries, Inc................................................... 60,254,687
---------------
COMPUTER HARDWARE (2.5%)
2,820,000 International Business Machines Corp.............................................. 479,400,000
---------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (1.4%)
2,600,000 Caterpillar, Inc.................................................................. 118,462,500
4,275,000 Deere & Co........................................................................ 139,739,062
---------------
258,201,562
---------------
CONSUMER ELECTRONICS/APPLIANCES (0.5%)
2,200,000 Whirlpool Corp.................................................................... 95,700,000
---------------
CONTAINERS/PACKAGING (0.5%)
3,100,000 Crown Cork & Seal Co., Inc........................................................ 86,025,000
---------------
DEPARTMENT STORES (1.4%)
2,591,000 May Department Stores Co.......................................................... 153,516,750
2,950,000 Sears, Roebuck & Co............................................................... 119,843,750
---------------
273,360,500
---------------

<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DISCOUNT CHAINS (2.9%)
8,700,000 Dayton Hudson Corp................................................................ $ 544,293,750
---------------
DIVERSIFIED ELECTRONIC PRODUCTS (0.8%)
2,282,000 Honeywell, Inc.................................................................... 159,597,375
---------------
DIVERSIFIED FINANCIAL SERVICES (1.7%)
3,075,000 Providian Financial Corp.......................................................... 314,034,375
---------------
DIVERSIFIED MANUFACTURING (0.8%)
1,984,000 Minnesota Mining & Manufacturing Co............................................... 146,940,000
---------------
ELECTRIC UTILITIES (3.4%)
2,550,000 Dominion Resources, Inc........................................................... 98,493,750
2,425,000 FPL Group, Inc.................................................................... 124,735,937
3,250,000 GPU, Inc.......................................................................... 129,593,750
4,842,500 Reliant Energy, Inc............................................................... 129,839,531
4,525,500 Unicom Corp....................................................................... 160,938,094
---------------
643,601,062
---------------
ELECTRONIC COMPONENTS (0.9%)
3,050,000 AMP, Inc.......................................................................... 162,221,875
---------------
ENGINEERING & CONSTRUCTION (0.4%)
2,400,000 Fluor Corp........................................................................ 84,450,000
---------------
FINANCE COMPANIES (3.2%)
4,000,000 Associates First Capital Corp. (Class A).......................................... 162,500,000
3,800,400 Fannie Mae........................................................................ 266,028,000
4,250,000 Household International, Inc...................................................... 172,656,250
---------------
601,184,250
---------------
FOOD CHAINS (1.5%)
2,850,000 Albertson's, Inc.................................................................. 162,450,000
93,000 American Stores Co................................................................ 3,138,750
2,500,000 Winn-Dixie Stores, Inc............................................................ 109,531,250
---------------
275,120,000
---------------
FOOD DISTRIBUTORS (1.1%)
3,650,000 Supervalu, Inc.................................................................... 87,828,125
4,500,000 SYSCO Corp........................................................................ 127,125,000
---------------
214,953,125
---------------
FOREST PRODUCTS (0.8%)
2,763,000 Weyerhaeuser Co................................................................... 154,037,250
---------------
HOME FURNISHINGS (0.2%)
900,000 Rubbermaid, Inc................................................................... 29,756,250
---------------
INTEGRATED OIL COMPANIES (5.1%)
2,000,000 Atlantic Richfield Co............................................................. 109,250,000
2,350,000 BP Amoco PLC (ADR) (United Kingdom)............................................... 199,750,000
3,389,000 Exxon Corp........................................................................ 225,580,312
1,629,500 Kerr-McGee Corp................................................................... 46,542,594
2,600,000 Mobil Corp........................................................................ 216,287,500
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
30
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
3,900,000 Royal Dutch Petroleum Co. (ADR) (Netherlands)..................................... $ 171,112,500
---------------
968,522,906
---------------
LIFE INSURANCE (1.8%)
1,575,000 Aegon N.V. (ARS) (Netherlands).................................................... 164,784,375
2,550,000 Jefferson-Pilot Corp.............................................................. 172,921,875
---------------
337,706,250
---------------
MAJOR BANKS (4.7%)
8,444,348 BankAmerica Corp.................................................................. 551,521,479
5,200,000 KeyCorp........................................................................... 167,700,000
1,500,000 Morgan (J.P.) & Co., Inc.......................................................... 167,156,250
---------------
886,377,729
---------------
MAJOR CHEMICALS (3.3%)
1,575,000 Dow Chemical Co................................................................... 154,940,625
4,047,000 Du Pont (E.I.) de Nemours & Co., Inc.............................................. 207,661,687
2,975,000 Hercules, Inc..................................................................... 82,370,312
3,830,000 Monsanto Co....................................................................... 174,504,375
---------------
619,476,999
---------------
MAJOR PHARMACEUTICALS (11.0%)
6,664,000 Abbott Laboratories............................................................... 309,459,500
6,450,000 American Home Products Corp....................................................... 383,775,000
3,373,400 Bristol-Myers Squibb Co........................................................... 424,837,563
10,200,000 Schering-Plough Corp.............................................................. 570,562,500
5,600,000 Smithkline Beecham PLC (ADR) (United Kingdom)..................................... 398,300,000
---------------
2,086,934,563
---------------
MAJOR U.S. TELECOMMUNICATIONS (3.2%)
3,660,000 Bell Atlantic Corp................................................................ 210,221,250
3,100,000 GTE Corp.......................................................................... 201,112,500
3,550,000 U.S. West, Inc.................................................................... 189,259,375
---------------
600,593,125
---------------
MANAGED HEALTH CARE (0.7%)
1,875,000 Aetna Inc......................................................................... 138,867,188
---------------
MILITARY/GOV'T/TECHNICAL (0.9%)
3,099,000 Raytheon Co. (Class B)............................................................ 165,602,813
---------------
MOTOR VEHICLES (3.5%)
2,272,657 DaimlerChrysler AG (Germany)*..................................................... 213,487,717
3,925,000 Ford Motor Co..................................................................... 232,801,563
2,700,000 General Motors Corp............................................................... 222,918,750
---------------
669,208,030
---------------
MULTI-LINE INSURANCE (1.2%)
2,375,000 Lincoln National Corp............................................................. 224,882,813
---------------

<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MULTI-SECTOR COMPANIES (2.5%)
3,830,000 General Electric Co............................................................... $ 384,196,875
3,350,000 Tenneco, Inc...................................................................... 100,290,625
---------------
484,487,500
---------------
NATURAL GAS (0.7%)
2,300,000 Consolidated Natural Gas Co....................................................... 126,356,250
---------------
OFFICE EQUIPMENT/SUPPLIES (3.4%)
4,850,000 Pitney Bowes, Inc................................................................. 306,459,375
6,200,000 Xerox Corp........................................................................ 342,162,500
---------------
648,621,875
---------------
OIL & GAS PRODUCTION (0.6%)
3,350,000 Burlington Resources, Inc......................................................... 108,456,250
---------------
OIL REFINING/MARKETING (0.6%)
5,150,000 USX-Marathon Group................................................................ 106,540,625
---------------
OIL/GAS TRANSMISSION (2.1%)
3,150,000 El Paso Energy Corp............................................................... 114,778,125
3,250,000 Enron Corp........................................................................ 211,250,000
2,850,000 Sonat, Inc........................................................................ 72,140,625
---------------
398,168,750
---------------
OTHER METALS/MINERALS (0.5%)
1,875,000 Phelps Dodge Corp................................................................. 90,937,500
---------------
PACKAGE GOODS/COSMETICS (5.8%)
6,000,000 Avon Products, Inc................................................................ 249,750,000
5,800,000 Gillette Co....................................................................... 311,025,000
2,100,000 International Flavors & Fragrances, Inc........................................... 86,493,750
2,750,000 Kimberly-Clark Corp............................................................... 129,937,500
3,650,000 Procter & Gamble Co............................................................... 326,675,000
---------------
1,103,881,250
---------------
PACKAGED FOODS (0.9%)
3,049,000 Quaker Oats Company (The)......................................................... 166,551,625
---------------
PAINTS/COATINGS (0.6%)
2,125,000 PPG Industries, Inc............................................................... 110,632,813
---------------
PAPER (1.1%)
2,750,000 International Paper Co............................................................ 115,500,000
3,100,000 Mead Corp......................................................................... 94,356,250
---------------
209,856,250
---------------
PHOTOGRAPHIC PRODUCTS (0.8%)
2,300,000 Eastman Kodak Co.................................................................. 152,231,250
---------------
RAILROADS (1.4%)
4,800,000 Burlington Northern Santa Fe Corp................................................. 159,000,000
2,725,000 CSX Corp.......................................................................... 106,956,250
---------------
265,956,250
---------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
31
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1999, CONTINUED

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
RENTAL/LEASING COMPANIES (0.3%)
2,275,000 Ryder System, Inc................................................................. $ 61,425,000
---------------
SPECIALTY FOODS/CANDY (0.5%)
3,350,000 ConAgra, Inc...................................................................... 100,918,750
---------------
TOBACCO (0.6%)
4,100,000 UST, Inc.......................................................................... 121,206,250
---------------

TOTAL COMMON STOCKS
(IDENTIFIED COST $8,198,778,984).................................................. 17,486,636,602
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ---------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS (3.2%)
$100,000 U.S. Treasury Note
5.50% due 02/29/00................................................................ 100,438,000
500,000 U.S. Treasury Note
5.625% due 04/30/00............................................................... 503,000,000
---------------

TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $599,855,468)...................................................... 603,438,000
---------------

SHORT-TERM INVESTMENTS (4.1%)
COMMERCIAL PAPER (a) (3.2%)
FINANCE - AUTOMOTIVE (3.2%)
140,000 BMW U.S. Capital Corp. 4.78% due 03/16/99........................................... 139,721,167
150,000 Chrysler Financial Corp. 4.81% due 03/01/99......................................... 150,000,000
150,000 Ford Motor Credit Co. 4.84% due 03/04/99............................................ 149,939,500
160,000 General Motors Acceptance Corp. 4.82% due 03/08/99.................................. 159,850,044
---------------

TOTAL COMMERCIAL PAPER
(AMORTIZED COST $599,510,711)....................................................... 599,510,711
---------------

U.S. GOVERNMENT AGENCY (a) (0.9%)
179,000 Federal Home Loan Mortgage Corp. 4.70% due 03/01/99 (AMORTIZED COST $179,000,000)... 179,000,000
---------------

<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>

REPURCHASE AGREEMENT (0.0%)
$ 403 The Bank of New York 4.75% due 03/01/99 (dated 02/26/99; proceeds $403,090) (b)
(IDENTIFIED COST $402,984)........................................................ $ 402,984
---------------

TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $778,913,695)...................................................... 778,913,695
---------------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $9,577,548,147) (C)................................................... 99.7 % 18,868,988,297

OTHER ASSETS IN EXCESS OF LIABILITIES.................................................. 0.3 52,727,763
------ ----------------

NET ASSETS............................................................................. 100.0 % $ 18,921,716,060
------ ----------------
------ ----------------
</TABLE>

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

ADR American Depository Receipt.
ARS American Registered Share.
* Non-income producing security.
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $319,808 U.S. Treasury Bond 8.125% due 08/15/21 valued at
$411,044.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $9,710,807,883 and the
aggregate gross unrealized depreciation is $419,367,733, resulting in net
unrealized appreciation of $9,291,440,150.

SEE NOTES TO FINANCIAL STATEMENTS
32
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $9,577,548,147)......................................................... $18,868,988,297
Receivable for:
Dividends.............................................................................. 45,852,522
Capital stock sold..................................................................... 21,317,954
Interest............................................................................... 12,166,197
Prepaid expenses and other assets.......................................................... 417,537
---------------
TOTAL ASSETS.......................................................................... 18,948,742,507
---------------
LIABILITIES:
Payable for:
Plan of distribution fee............................................................... 10,554,522
Capital stock repurchased.............................................................. 10,280,184
Investment management fee.............................................................. 5,435,703
Accrued expenses and other payables........................................................ 756,038
---------------
TOTAL LIABILITIES..................................................................... 27,026,447
---------------
NET ASSETS............................................................................ $18,921,716,060
---------------
---------------
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................ $ 9,324,194,628
Net unrealized appreciation................................................................ 9,291,440,150
Accumulated undistributed net investment income............................................ 56,427,122
Accumulated undistributed net realized gain................................................ 249,654,160
---------------
NET ASSETS............................................................................ $18,921,716,060
---------------
---------------
CLASS A SHARES:
Net Assets................................................................................. $227,456,994
Shares Outstanding (500,000,000 SHARES AUTHORIZED, $.01 PAR VALUE)......................... 3,777,381
NET ASSET VALUE PER SHARE............................................................. $60.22
---------------
---------------

MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)..................................... $63.56
---------------
---------------
CLASS B SHARES:
Net Assets................................................................................. $18,060,847,702
Shares Outstanding (500,000,000 SHARES AUTHORIZED, $.01 PAR VALUE)......................... 300,101,280
NET ASSET VALUE PER SHARE............................................................. $60.18
---------------
---------------
CLASS C SHARES:
Net Assets................................................................................. $144,424,733
Shares Outstanding (500,000,000 SHARES AUTHORIZED, $.01 PAR VALUE)......................... 2,406,129
NET ASSET VALUE PER SHARE............................................................. $60.02
---------------
---------------
CLASS D SHARES:
Net Assets................................................................................. $488,986,631
Shares Outstanding (500,000,000 SHARES AUTHORIZED, $.01 PAR VALUE)......................... 8,115,165
NET ASSET VALUE PER SHARE............................................................. $60.26
---------------
---------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
33
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 1999

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

INCOME
Dividends (net of $1,825,517 foreign withholding tax)....................................... $ 339,824,396
Interest.................................................................................... 100,266,418
--------------

TOTAL INCOME........................................................................... 440,090,814
--------------

EXPENSES
Plan of distribution fee (Class A shares)................................................... 329,437
Plan of distribution fee (Class B shares)................................................... 120,000,897
Plan of distribution fee (Class C shares)................................................... 1,021,408
Investment management fee................................................................... 64,189,996
Transfer agent fees and expenses............................................................ 13,000,952
Custodian fees.............................................................................. 754,506
Shareholder reports and notices............................................................. 640,887
Registration fees........................................................................... 522,305
Professional fees........................................................................... 52,743
Directors' fees and expenses................................................................ 17,622
Other....................................................................................... 199,775
--------------

TOTAL EXPENSES......................................................................... 200,730,528
--------------

NET INVESTMENT INCOME.................................................................. 239,360,286
--------------

NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................................................... 606,047,528
Net change in unrealized appreciation....................................................... 480,919,311
--------------

NET GAIN............................................................................... 1,086,966,839
--------------

NET INCREASE................................................................................ $1,326,327,125
--------------
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
34
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
FEBRUARY 28, 1999 FEBRUARY 28, 1998*
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>

INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment income............................................ $ 239,360,286 $ 242,721,488
Net realized gain................................................ 606,047,528 262,042,293
Net change in unrealized appreciation............................ 480,919,311 3,358,692,314
----------------- ----------------------

NET INCREASE................................................ 1,326,327,125 3,863,456,095
----------------- ----------------------

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares............................................... (2,629,429) (589,361)
Class B shares............................................... (221,780,945) (235,858,916)
Class C shares............................................... (1,069,758) (262,929)
Class D shares............................................... (8,313,813) (4,131,290)
Net realized gain
Class A shares............................................... (5,076,567) (252,349)
Class B shares............................................... (523,178,010) (212,169,081)
Class C shares............................................... (3,300,551) (142,422)
Class D shares............................................... (13,056,873) (1,469,529)
----------------- ----------------------

TOTAL DIVIDENDS AND DISTRIBUTIONS........................... (778,405,946) (454,875,877)
----------------- ----------------------

Net increase from capital stock transactions..................... 883,514,920 1,174,921,008
----------------- ----------------------

NET INCREASE................................................ 1,431,436,099 4,583,501,226

NET ASSETS:
Beginning of period.............................................. 17,490,279,961 12,906,778,735
----------------- ----------------------

END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $56,427,122
AND $50,860,781, RESPECTIVELY)............................... $ 18,921,716,060 $ 17,490,279,961
----------------- ----------------------
----------------- ----------------------
</TABLE>

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

* Class A, Class C and Class D shares were issued July 28, 1997.

SEE NOTES TO FINANCIAL STATEMENTS
35
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999

1. ORGANIZATION AND ACCOUNTING POLICIES

Morgan Stanley Dean Witter Dividend Growth Securities Inc. (the "Fund"),
formerly Dean Witter Dividend Growth Securities Inc., is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund's investment objective is to
provide reasonable current income and long-term growth of income and capital.
The Fund seeks to achieve its objective by investing primarily in common stocks
of companies with a record of paying dividends and the potential for increasing
dividends. The Fund was incorporated in Maryland on December 22, 1980 and
commenced operations on March 30, 1981. On July 28, 1997, the Fund commenced
offering three additional classes of shares, with the then current shares, other
than shares which were purchased prior to July 2, 1984 (and with respect to such
shares, certain shares acquired through reinvestment of dividends and capital
gains distributions (collectively the "Old Shares")) and shares held by certain
employee benefit plans established by Dean Witter Reynolds Inc. and its
affiliate, SPS Transaction Services, Inc., designated as Class B shares. The Old
Shares and shares held by those employee benefit plans prior to July 28, 1997
have been designated Class D shares.

The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares, are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York or American or other domestic or foreign stock exchange is valued at
its latest sale price on that exchange prior to the time when assets are valued;
if there were no sales that day, the security is valued at the latest bid price;
(2) all other portfolio securities for which over-the-counter market quotations
are readily available are valued at the latest available bid price prior to the
time of valuation; (3) when market quotations are not readily available,
including circumstances under which it is determined by

36
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999, CONTINUED

Morgan Stanley Dean Witter Advisors Inc. (the "Investment Manager"), formerly
Dean Witter InterCapital Inc., that sale or bid prices are not reflective of a
security's market value, portfolio securities are valued at their fair value as
determined in good faith under procedures established by and under the general
supervision of the Directors (valuation of debt securities for which market
quotations are not readily available may be based upon current market prices of
securities which are comparable in coupon, rating and maturity or an appropriate
matrix utilizing similar factors); and (4) short-term debt securities having a
maturity date of more than sixty days at time of purchase are valued on a mark-
to-market basis until sixty days prior to maturity and thereafter at amortized
cost based on their value on the 61st day. Short-term debt securities having a
maturity date of sixty days or less at the time of purchase are valued at
amortized cost.

B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.

C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.

D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.

E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment

37
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999, CONTINUED

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 the Investment Manager, the
Fund pays a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined at the close of
each business day: 0.625% to the portion of daily net assets not exceeding $250
million; 0.50% to the portion of daily net assets exceeding $250 million but not
exceeding $1 billion; 0.475% to the portion of daily net assets exceeding $1
billion but not exceeding $2 billion; 0.45% to the portion of daily net assets
exceeding $2 billion but not exceeding $3 billion; 0.425% to the portion of
daily net assets exceeding $3 billion but not exceeding $4 billion; 0.40% to the
portion of daily net assets exceeding $4 billion but not exceeding $5 billion;
0.375% to the portion of daily net assets exceeding $5 billion but not exceeding
$6 billion; 0.35% to the portion of daily net assets exceeding $6 billion but
not exceeding $8 billion; 0.325% to the portion of daily net assets exceeding $8
billion but not exceeding $10 billion; 0.30% to the portion of daily net assets
exceeding $10 billion but not exceeding $15 billion; and 0.275% to the portion
of daily net assets exceeding $15 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.

3. PLAN OF DISTRIBUTION

Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan"), pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund will pay the Distributor a fee which is
accrued daily and paid monthly at the following annual rates: (i) Class A -- up
to 0.25% of the average daily net assets of Class A; (ii) Class B -- 1.0% of the
lesser of: (a) the average daily aggregate gross sales of the Class B shares
since the inception of the Plan on July 2, 1984 (not including reinvestment of
dividend or capital gain distributions) less the

38
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999, CONTINUED

average daily aggregate net asset value of the Class B shares redeemed since the
Plan's inception upon which a contingent deferred sales charge has been imposed
or waived; or (b) the average daily net assets of Class B attributable to shares
issued, net of related shares redeemed, since the Plan's inception; and (iii)
Class C -- up to 1.0% of the average daily net assets of Class C. In the case of
Class A shares, amounts paid under the Plan are paid to the Distributor for
services provided. In the case of Class B and Class C shares, amounts paid under
the Plan are paid to the Distributor for (1) services provided and the expenses
borne by it and others in the distribution of the shares of these Classes,
including the payment of commissions for sales of these Classes and incentive
compensation to, and expenses of, Morgan Stanley Dean Witter Financial Advisors,
and others who engage in or support distribution of the shares or who service
shareholder accounts, including overhead and telephone expenses; (2) printing
and distribution of prospectuses and reports used in connection with the
offering of these shares to other than current shareholders; and (3)
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may utilize fees paid pursuant to the
Plan, in the case of Class B shares, to compensate Dean Witter Reynolds Inc.
("DWR"), an affiliate of the Investment Manager and Distributor, and other
selected broker-dealers for their opportunity costs in advancing such amounts,
which compensation would be in the form of a carrying charge on any unreimbursed
expenses.

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 $261,764,444 at February 28, 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 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that the expenses
representing a gross sales credit to account executives may be reimbursed in the
subsequent calendar year. For the year ended February 28, 1999, the distribution
fee was accrued for Class A shares and Class C shares at the annual rate of
0.21% and 1.00%, respectively.

39
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999, CONTINUED

The Distributor has informed the Fund that for the year ended February 28, 1999,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class A shares, Class B shares and Class C shares of $44,737, $15,587,266
and $122,956, respectively and received $995,027 in front-end sales charges from
sales of the Fund's Class A shares. The respective shareholders pay such charges
which are not an expense of the Fund.

4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES

The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended February 28, 1999 aggregated
$2,536,002,792 and $2,263,829,326, respectively. Included in the aforementioned
are purchases and sales of U.S. Government securities of $845,542,969 and
$1,630,108,594, respectively.

For the year ended February 28, 1999, the Fund incurred $306,619 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.

For the year ended February 28, 1999, the Fund incurred brokerage commissions of
$189,929 with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager
and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Directors of the Fund who will have served as independent
Directors for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended February 28, 1999
included in Directors' fees and expenses in the Statement of Operations amounted
to $6,407. At February 28, 1999, the Fund had an accrued pension liability of
$52,676 which is included in accrued expenses in the Statement of Assets and
Liabilities.

Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At February 28, 1999, the Fund had
transfer agent fees and expenses payable of approximately $72,500.

40
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999, CONTINUED

5. CAPITAL STOCK

Transactions in capital stock were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
FEBRUARY 28, 1999 FEBRUARY 28, 1998+*
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold......................................... 2,876,877 $ 170,240,232 1,531,951 $ 82,190,159
Reinvestment of dividends and
distributions............................... 115,901 6,832,652 10,089 547,397
Redeemed..................................... (670,884) (39,915,516) (86,553) (4,728,188)
---------------- ---------------- ---------------- ----------------
Net increase - Class A....................... 2,321,894 137,157,368 1,455,487 78,009,368
---------------- ---------------- ---------------- ----------------

CLASS B SHARES
Sold......................................... 41,065,402 2,454,734,237 51,834,503 2,670,318,255
Reinvestment of dividends and
distributions............................... 11,692,435 692,257,292 7,994,489 416,521,197
Redeemed..................................... (43,749,714) (2,596,707,850) (39,948,415) (2,062,805,412)
---------------- ---------------- ---------------- ----------------
Net increase - Class B....................... 9,008,123 550,283,679 19,880,577 1,024,034,040
---------------- ---------------- ---------------- ----------------

CLASS C SHARES
Sold......................................... 1,945,008 116,417,760 930,792 50,207,370
Reinvestment of dividends and
distributions............................... 71,052 4,189,216 6,914 374,891
Redeemed..................................... (481,183) (28,373,226) (66,455) (3,610,402)
---------------- ---------------- ---------------- ----------------
Net increase - Class C....................... 1,534,877 92,233,750 871,251 46,971,859
---------------- ---------------- ---------------- ----------------

CLASS D SHARES
Sold......................................... 1,439,703 86,416,098 841,753 45,989,589
Reinvestment of dividends and
distributions............................... 351,263 20,757,304 101,638 5,504,556
Shares issued in connection with the
acquisition of Dean Witter Retirement
Series--Dividend Growth Series.............. 1,765,858 96,172,282 -- --
Redeemed..................................... (1,689,580) (99,505,561) (474,716) (25,588,404)
---------------- ---------------- ---------------- ----------------
Net increase - Class D....................... 1,867,244 103,840,123 468,675 25,905,741
---------------- ---------------- ---------------- ----------------
Net increase in Fund......................... 14,732,138 $ 883,514,920 22,675,990 $ 1,174,921,008
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
</TABLE>

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

+ On July 28, 1997, 5,779,246 shares representing $308,785,103 were
transferred to Class D.
* For Class A, C, and D shares, for the period July 28, 1997 (issue date)
through February 28, 1998.

6. FUND ACQUISITION

As of the close business on September 11, 1998, the Fund acquired all the net
assets of Dean Witter Retirement Series -- Dividend Growth Series ("Retirement
Dividend Growth") pursuant to a plan of reorganization approved by shareholders
of Retirement Dividend Growth on August 19, 1998. The acquisition was
accomplished by a tax-free exchange of 1,765,858 Class D shares of the Fund at a
net asset value of $54.47 per share for 6,721,613 shares of Retirement Dividend
Growth. The net assets of the Fund and Retirement Dividend Growth immediately
before the acquisition were $16,582,111,142 and $96,172,282, respectively,
including unrealized appreciation of $8,813,294 for the Retirement Dividend
Growth. Immediately after the acquisition, the combined net assets of the Fund
amounted to $16,678,283,424.

41
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28,
----------------------------------------
1999++ 1998*++ 1997 1996** 1995
- ----------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
CLASS B SHARES

SELECTED PER SHARE DATA:

Net asset value, beginning of period.... $ 58.36 $ 46.60 $39.65 $31.16 $30.86
------- ------- ------ ------ ------

Income from investment operations:
Net investment income................ 0.77 0.84 0.81 0.75 0.72
Net realized and unrealized gain..... 3.58 12.50 7.55 8.50 0.24
------- ------- ------ ------ ------

Total income from investment
operations............................. 4.35 13.34 8.36 9.25 0.96
------- ------- ------ ------ ------

Less dividends and distributions from:
Net investment income................ (0.75) (0.83) (0.88) (0.67) (0.66)
Net realized gain.................... (1.78) (0.75) (0.53) (0.09) --
------- ------- ------ ------ ------

Total dividends and distributions....... (2.53) (1.58) (1.41) (0.76) (0.66)
------- ------- ------ ------ ------

Net asset value, end of period.......... $ 60.18 $ 58.36 $46.60 $39.65 $31.16
------- ------- ------ ------ ------
------- ------- ------ ------ ------

TOTAL RETURN+........................... 7.59% 29.10% 21.37% 30.01% 3.25%

RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 1.11 (1) 1.14% 1.22% 1.31% 1.42%

Net investment income................... 1.29 (1) 1.61% 1.95% 2.14% 2.42%

SUPPLEMENTAL DATA:
Net assets, end of period, in
millions............................... $18,061 $16,989 $12,907 $9,782 $7,101

Portfolio turnover rate................. 13% 4% 4% 10% 6%
</TABLE>

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

* Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date, other than shares which were purchased
prior to July 2, 1984 (and with respect to such shares, certain shares
acquired through reinvestment of dividends and capital gains distributions
(collectively the Old Shares)) and shares held by certain employee benefit
plans established by Dean Witter Reynolds Inc. and its affiliate, SPS
Transaction Services, Inc., have been designated Class B shares. The Old
Shares and shares held by those employee benefit plans prior to July 28,
1997 have been designated Class D shares.
** Year ended February 29.
++ The per share amounts were computed using an average number of shares
outstanding.
+ 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) Reflects overall Fund ratios for investment income and non-class specific
expenses.

SEE NOTES TO FINANCIAL STATEMENTS
42
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
FEBRUARY 28, FEBRUARY 28,
1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 58.39 $ 53.43
------ ------
Income from investment operations:
Net investment income.............................................. 1.05 0.66
Net realized and unrealized gain................................... 3.58 5.22
------ ------
Total income from investment operations............................... 4.63 5.88
------ ------
Less dividends and distributions from:
Net investment income.............................................. (1.02) (0.67)
Net realized gain.................................................. (1.78) (0.25)
------ ------
Total dividends and distributions..................................... (2.80) (0.92)
------ ------
Net asset value, end of period........................................ $ 60.22 $ 58.39
------ ------
------ ------
TOTAL RETURN+......................................................... 8.10% 11.15%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.64%(3) 0.70%(2)
Net investment income................................................. 1.76%(3) 2.09%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions................................ $227 $85
Portfolio turnover rate............................................... 13% 4%

CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 58.28 $ 53.43
------ ------
Income from investment operations:
Net investment income.............................................. 0.59 0.43
Net realized and unrealized gain................................... 3.56 5.21
------ ------
Total income from investment operations............................... 4.15 5.64
------ ------
Less dividends and distributions from:
Net investment income.............................................. (0.63) (0.54)
Net realized gain.................................................. (1.78) (0.25)
------ ------
Total dividends and distributions..................................... (2.41) (0.79)
------ ------
Net asset value, end of period........................................ $ 60.02 $ 58.28
------ ------
------ ------
TOTAL RETURN+......................................................... 7.26% 10.68%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.43%(3) 1.45%(2)
Net investment income................................................. 0.97%(3) 1.37%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions................................ $144 $51
Portfolio turnover rate............................................... 13% 4%
</TABLE>

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

SEE NOTES TO FINANCIAL STATEMENTS
43
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED

<S> <C> <C>
CLASS D SHARES++

PER SHARE OPERATING PERFORMANCE:

Net asset value, beginning of period.................................. $ 58.43 $ 53.43
------ ------

Income from investment operations:
Net investment income.............................................. 1.17 0.76
Net realized and unrealized gain................................... 3.59 5.20
------ ------

Total income from investment operations............................... 4.76 5.96
------ ------

Less dividends and distributions from:
Net investment income.............................................. (1.15) (0.71)
Net realized gain.................................................. (1.78) (0.25)
------ ------

Total dividends and distributions..................................... (2.93) (0.96)
------ ------

Net asset value, end of period........................................ $ 60.26 $ 58.43
------ ------
------ ------

TOTAL RETURN+......................................................... 8.33% 11.31%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.43%(3) 0.45%(2)

Net investment income................................................. 1.97%(3) 2.39%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in millions................................ $489 $365

Portfolio turnover rate............................................... 13% 4%
</TABLE>

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

SEE NOTES TO FINANCIAL STATEMENTS
44
<PAGE>

MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH
SECURITIES INC.
REPORT OF INDEPENDENT ACCOUNTANTS

TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.

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 Dividend
Growth Securities Inc. (the "Fund"), formerly Dean Witter Dividend Growth
Securities Inc., at February 28, 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
indicated, in conformity with generally accepted accounting principles. 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 generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
February 28, 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
APRIL 13, 1999

1999 FEDERAL TAX NOTICE

During the year ended February 28, 1999, the Fund paid to its
shareholders $1.76 per share from long-term capital gains. For
such period, 100% of the income paid qualified for the dividends
received deduction available to corporations.