<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1999
REGISTRATION NOS.: 2-70423
811-3128
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 22 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
AMENDMENT NO. 23 /X/
-------------------
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
(A MARYLAND CORPORATION)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
BARRY FINK, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
-------------------
COPY TO:
DAVID M. BUTOWSKY, ESQ.
GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
-------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Post-Effective Amendment becomes effective.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
immediately upon filing pursuant to paragraph (b)
- -------
on (date), 1999 pursuant to paragraph (b)
- -------
X 60 days after filing pursuant to paragraph (a)
- -------
on (date) pursuant to paragraph (a) of rule 485.
- -------
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
-------------------------------------------------------
-------------------------------------------------------
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
CROSS-REFERENCE SHEET
FORM N-1A
<TABLE>
<CAPTION>
ITEM CAPTION
- --------------------------------------- ---------------------------------------
<S> <C>
PART A PROSPECTUS
1. .................................. Cover Page; Back Cover
2. .................................. Investment Objective: Principal
Investment Strategies, Principal Risks,
Past Performance
3. .................................. Fees and Expenses
4. .................................. Investment Objective: Principal
Investment Strategies; Principal Risks;
Additional Investment Strategy
Information; Additional Risk
Information
5. .................................. Not Applicable
6. .................................. Fund Management
7. .................................. Pricing Fund Shares; How to Buy Shares;
How to Exchange Shares; How to Sell
Shares; Distributions; Tax
Consequences
8. .................................. Share Class Arrangements
9. .................................. Financial Highlights
PART B STATEMENT OF ADDITIONAL INFORMATION
</TABLE>
Information required to be included in Part B is set forth under the
appropriate caption in Part B of this Registration Statement.
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
PROSPECTUS - JUNE , 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...................................... 12
Share Class Arrangements.............................. 13
Financial Highlights ...................................................... 20
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>
FUND CATEGORY
---------------------------
/ / Growth
/X/ GROWTH AND INCOME
/ / Income
/ / Money Market
<PAGE>
(SIDEBAR)
GROWTH AND INCOME
AN INVESTMENT OBJECTIVE HAVING THE GOAL OF SELECTING SECURITIES WITH THE
POTENTIAL TO RISE IN VALUE AND PAY OUT INCOME.
(END SIDEBAR)
THE FUND
ICON INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter Dividend Growth Securities Inc. (the
"Fund") is a mutual fund that seeks to provide reasonable current
income and long-term growth of income and capital. There is no
guarantee that the Fund will achieve this objective.
ICON PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
The Fund will normally invest at least 70% of its 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 develop 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 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 to the securities discussed above, 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
- --------------------------------------------------------------------------------
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
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 DURING 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. 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)
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 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 any bank, governmental entity, or the FDIC.
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
<TABLE>
<S> <C>
1989 31.50
90 -7.17
91 30.63
92 5.81
93 14.20
94 -3.18
95 34.89
96 19.27
97 25.66
98 17.82
</TABLE>
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 (FOR THE PERIODS ENDED THE 1998 CALENDAR YEAR)
- -------------------------------------------------------------------------------
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
Class A 12.12% -- --
- -------------------------------------------------------------------------------
Class B(1) 12.82% 17.98% 16.08%
- -------------------------------------------------------------------------------
Class C 16.44% -- --
- -------------------------------------------------------------------------------
Class D 18.63% -- --
- -------------------------------------------------------------------------------
S&P 500(2) 28.58% 24.05% 19.19%
- -------------------------------------------------------------------------------
Lipper Growth and Income Funds
Index(3) 13.58% 17.83% 15.54%
- -------------------------------------------------------------------------------
</TABLE>
1 Prior to July 28, 1997, the Fund only issued Class B shares.
2 The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based index, the
performance of which is based on the average performance of 500 widely held
common stocks. The performance of the Index does not include any expenses,
fees or charges. The Index is unmanaged and should not be considered an
investment.
3 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 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 table
below briefly describes the fees and expenses that you may pay if you buy
and hold shares of the Fund. 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 on sales made 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 to sales made 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>
ICON ADDITIONAL INVESTMENT STRATEGY INFORMATION
- --------------------------------------------------------------------------------
The Fund seeks to provide reasonable current income and long-term growth of
income and capital. There is no guarantee that the Fund will achieve this
objective.
This section provides additional information concerning the Fund's principal
strategies.
FIXED-INCOME 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 that are listed on a national
securities exchange.
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 referenced in "Principal Investment Strategies" apply at the time
the Fund acquires an investment. Subsequent percentage changes that result
from market fluctuations or changes in assets 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 regarding 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 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 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
4
<PAGE>
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 individual 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 affiliates are working hard to avoid any problems and
to obtain assurances from their service providers that they are taking
similar steps.
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.
5
<PAGE>
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.
(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 $ BILLION IN ASSETS UNDER MANAGEMENT
OR ADMINISTRATION AS OF MAY 31, 1999.
(END SIDEBAR)
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. 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>
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 investment order in proper
form. We reserve the right to reject any order for the purchase of
(SIDEBAR) Fund Shares.
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)
<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.
THREE DAY SETTLEMENT. Fund shares are sold through the Fund's
distributor, Morgan Stanley Dean Witter Distributors Inc., on a
normal three business day basis; that is, your payment for Fund
shares is due on the third business day (settlement day) after you
place a purchase order.
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, Money Market Fund
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 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.
9
<PAGE>
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.
------------------------------------------------------------
If you are requesting payment to anyone other than the
registered owner(s) or that payment be sent to any address
other than the address of the registered owner(s) or
pre-designated bank account, you will need a signature
guarantee. You can obtain a signature guarantee from an
eligible guarantor acceptable to Morgan Stanley Dean Witter
Trust FSB. (You should contact Morgan Stanley Dean Witter
Trust FSB at (800) 869-NEWS for a determination as to
whether a particular institution is an eligible guarantor.)
A notary public CANNOT provide a signature guarantee.
Additional documentation may be required for shares held by
a corporation, partnership, trustee or executor.
------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at
P.O. Box 983, Jersey City, New Jersey 07303. If you hold
share certificates, you must return the certificates, along
with the letter and any required additional documentation.
- --------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
<S> <C>
- --------------------------------------------------------------------------------
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.
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.
11
<PAGE>
MARGIN ACCOUNTS. Certain restrictions may apply to Fund shares
pledged in margin accounts with Dean Witter Reynolds or another
authorized broker-dealer of Fund shares. If you hold Fund shares in
this manner, please contact your Morgan Stanley Dean Witter Financial
Advisor or other authorized financial representative for more
(SIDEBAR) details.
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)
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 quarterly and capital gains are
distributed annually in December. The Fund, however,
may retain and reinvest any long-term capital gains.
The Fund may at times make payments from sources
other than income or capital gains that represent a
return of a portion of your investment.
Distributions are reinvested automatically in
additional shares of the same Class and
automatically credited to your account, unless you
request in writing that all distributions be paid in
cash. If you elect the cash option, the Fund will
mail a check to you no later than seven business days after the
distribution is declared. 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.
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.
12
<PAGE>
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.
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 0.25%
$25,000 or more; shares sold without an initial sales charge
are generally subject to a 1.0% CDSC during the first year
- ----------------------------------------------------------------------------------------
B Maximum 5.0% CDSC during the first year decreasing to 0% 1.0%
after six years
- ----------------------------------------------------------------------------------------
C 1.0% CDSC during the first year 1.0%
- ----------------------------------------------------------------------------------------
D None None
- ----------------------------------------------------------------------------------------
</TABLE>
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)
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 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>
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
14
<PAGE>
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 and/ or shares of FSC Funds. The initial
purchase under a letter of intent must be at least 5% of the stated
investment goal. To determine the applicable sales charge reduction, you may
also include: (1) the cost of shares of other Morgan Stanley Dean Witter
Funds which were previously purchased at a price including a front-end sales
charge during the 90-day period prior to the distributor receiving the
letter of intent, and (2) the cost of shares of other Funds you currently
own acquired in exchange for shares of Funds purchased during that period at
a price including a front-end sales charge. You can obtain a letter of
intent by contacting your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative, or by calling (800) 869-NEWS. If
you do not achieve the stated investment goal within the thirteen-month
period, you are required to pay the difference between the sales charges
otherwise applicable and sales charges actually paid.
OTHER FRONT-END 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.
15
<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)
- 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.
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,
16
<PAGE>
following attainment of age 59 1/2); (ii) distributions from an IRA or
403(b) Custodial Account following attainment of age 59 1/2; or (iii) a
tax-free return of an excess IRA contribution (a "distribution" does not
include a direct transfer of IRA, 403(b) Custodial Account or retirement
plan assets to a successor custodian or trustee).
- Sales of shares held for you as a participant in an MSDW Eligible Plan.
- Sales of shares in connection with the Systematic Withdrawal Plan of up to
12% annually of the value of each Fund from which plan sales are made. The
percentage is determined on the date you establish the Systematic
Withdrawal Plan and based on the next calculated share price. You may have
this CDSC waiver applied in amounts up to 1% per month, 3% per quarter, 6%
semi-annually or 12% annually. Shares with no CDSC will be sold first,
followed by those with the lowest CDSC. As such, the waiver 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.
All waivers will be granted only following the 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.
17
<PAGE>
If you exchange your Class B shares for shares of a Money Market Fund,
No-Load Fund or Short-Term U.S. Treasury Trust, the holding period for
conversion is frozen as of the last day of the month of the exchange and
resumes on the last day of the month you exchange back into Class B shares.
EXCHANGING SHARES SUBJECT TO A CDSC. There are special considerations when
you exchange Fund shares that are subject to a CDSC. When determining the
length of time you held the shares and the corresponding CDSC rate, any
period (starting at the end of the month) during which you held shares of a
fund that does NOT charge a CDSC WILL NOT BE COUNTED. Thus, in effect the
"holding period" for purposes of calculating the CDSC is frozen upon
exchanging into a fund that does not charge a CDSC.
For example, if you held Class B shares of the Fund 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.
18
<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.
19
<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>
CLASS B SHARES
- ---------------------------------------------------------------------------------------------
FOR THE YEAR ENDED FEBRUARY 28, 1999++ 1998*++ 1997 1996** 1995
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
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.
20
<PAGE>
<TABLE>
<CAPTION>
CLASS A SHARES++
- ----------------------------------------------------------------------------------------------
FOR THE YEAR ENDED FOR THE PERIOD JULY 28, 1997*
SELECTED PER SHARE DATA: FEBRUARY 28, 1999 THROUGH FEBRUARY 28, 1998
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
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.
21
<PAGE>
<TABLE>
<CAPTION>
CLASS C SHARES++
- ----------------------------------------------------------------------------------------------
FOR THE YEAR ENDED FOR THE PERIOD JULY 28, 1997*
SELECTED PER SHARE DATA: FEBRUARY 28, 1999 THROUGH FEBRUARY 28, 1998
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
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>
* 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>
CLASS D SHARES++
- ----------------------------------------------------------------------------------------------
FOR THE YEAR ENDED FOR THE PERIOD JULY 28, 1997*
PER SHARE OPERATING PERFORMANCE: FEBRUARY 28, 1999 THROUGH FEBRUARY 28, 1998
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
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.
23
<PAGE>
NOTES
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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 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
Global Dividend Growth Securities
International SmallCap Fund
Japan 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
Value-Added Market Series/Equity Portfolio
THEME FUNDS
Global Utilities Fund
Real Estate Fund
Utilities Fund
- --------------------------------------------------------------------------------
INCOME FUNDS
- ---------------------------------
GOVERNMENT INCOME FUNDS
Federal Securities Trust
Short-Term U.S. Treasury Trust
U.S. Government Securities Trust
DIVERSIFIED INCOME FUNDS
Diversified Income Trust
CORPORATE INCOME FUNDS
High Yield Securities
Intermediate Income Securities
Short-Term Bond Fund (NL)
GLOBAL INCOME FUNDS
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 front 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
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, 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.
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
TICKER SYMBOLS:
CLASS A: DIVAX CLASS C: DIVCX
- -------------------- --------------------
CLASS B: DIVBX CLASS D: DIVDX
- -------------------- --------------------
(Investment Company Act File No. 811-3128)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
JUNE , 1999
MORGAN STANLEY DEAN
WITTER
DIVIDEND GROWTH
SECURITIES INC.
- ----------------------------------------------------------------------
This STATEMENT OF ADDITIONAL INFORMATION is not a PROSPECTUS. The PROSPECTUS
(dated June , 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............................................ 15
A. Investment Manager................................................................ 15
B. Principal Underwriter............................................................. 16
C. Services Provided by the Investment Manager and Fund Expenses Paid by Third
Parties............................................................................. 16
D. Dealer Reallowances............................................................... 17
E. Rule 12b-1 Plan................................................................... 17
F. Other Service Providers........................................................... 21
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....................................... 24
A. Purchase/Redemption of Shares..................................................... 24
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 under current policy 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 Independent Directors
also serve as Independent Directors of "Discover Brokerage Index Series," a
mutual fund for which the Investment Manager is the investment advisor. Three of
the six Independent Directors are also Independent Directors or Trustees of
certain other mutual funds, referred to as the "TCW/DW Funds," for which MSDW
Services Company is the manager and TCW Funds Management, Inc. 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 85 Morgan Stanley Dean Witter Funds, the 11
TCW/DW 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, the TCW/DW Funds
Chief Executive Officer and Director and Discover Brokerage Index Series; formerly Chairman,
Two World Trade Center Chief Executive Officer and Director of the Investment
New York, New York Manager, the Distributor and MSDW Services Company;
Executive Vice President and Director of Dean Witter
Reynolds; Chairman and Director of the Transfer Agent;
formerly Director and/or officer of various MSDW
subsidiaries (until June 1998).
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; Director of Franklin Covey (time management
systems), BMW Bank of North America, Inc., 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, the
TCW/DW 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 (62) ............................... 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, the TCW/DW Funds and Discover Brokerage Index
New York, New York Series; formerly Vice 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, the TCW/DW Funds and Discover Brokerage Index
Weitzen Shalov & Wein Series; Director of Citizens Utilities Company; formerly
Counsel to the Independent Directors Executive Vice President and Chief Investment Officer of
114 West 47th Street the Home Insurance Company (August, 1991-September, 1995).
New York, New York
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, the TCW/DW 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, the TCW/DW 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 and the TCW/DW 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 Mor-
gan Stanley Dean Witter Funds and the TCW/DW Funds.
Paul D. Vance (63) ................................... 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 and MSDW Services Company; Treasurer of
Two World Trade Center the Morgan Stanley Dean Witter Funds, the TCW/DW Funds and
New York, New York 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. Indeed, by serving on the Funds' Boards,
certain Directors who would otherwise be qualified and in demand to serve on
bank boards would be prohibited by law from doing so. All of the Independent
Directors serve as
12
<PAGE>
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.
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
13
<PAGE>
$750, and the Chairmen of the Derivatives and Insurance Committees additional
annual fees of $500). If a Board meeting and a meeting of the Independent
Directors or a Committee meeting, or a meeting of the Independent Directors
and/or more than one Committee meeting, take place on a single day, the
Directors are paid a single meeting fee by the Fund. The Fund also reimburses
such Directors for travel and other out-of-pocket expenses incurred by them in
connection with attending such meetings. Directors and officers of the Fund who
are or have been employed by the Investment Manager or an affiliated company
receive no compensation or expense reimbursement from the Fund for their
services as Director.
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 85 Morgan Stanley Dean Witter Funds and, in the case of Messrs. Johnson,
Nugent and Schroeder, the 11 TCW/DW Funds that were in operation at December 31,
1998. With respect to Messrs. Johnson, Nugent and Schroeder, the TCW/DW Funds
are included solely because of a limited exchange privilege between those Funds
and five Morgan Stanley Dean Witter Money Market Funds. 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 AND TCW/DW FUNDS
<TABLE>
<CAPTION>
TOTAL CASH
COMPENSATION
FOR SERVICE FOR SERVICES
AS DIRECTOR OR TO
TRUSTEE AND 85 MORGAN
COMMITTEE MEMBER FOR SERVICE AS STANLEY DEAN
OF 85 MORGAN TRUSTEE AND WITTER FUNDS
STANLEY COMMITTEE MEMBER AND 11
NAME OF INDEPENDENT DEAN WITTER OF 11 TCW/DW TCW/DW
DIRECTOR FUNDS FUNDS FUNDS
- --------------------------- ---------------- ---------------- -------------
<S> <C> <C> <C>
Michael Bozic.............. $120,150 -- $120,150
Edwin J. Garn.............. 132,450 -- 132,450
Wayne E. Hedien............ 132,350 -- 132,350
Dr. Manuel H. Johnson...... 128,400 $62,331 190,731
Michael E. Nugent.......... 132,450 62,131 194,581
John L. Schroeder.......... 132,450 64,731 197,181
</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 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
- --------------------------------------------------------------------------------
[5% ownership list]
As of the date of this STATEMENT OF ADDITIONAL INFORMATION, the aggregate
number of shares of common stock of the Fund owned by the Fund's officers and
Directors as a group was less than 1% of the Fund's shares of common stock
outstanding.
V. INVESTMENT MANAGEMENT AND OTHER SERVICES
- --------------------------------------------------------------------------------
A. INVESTMENT MANAGER
The Investment Manager to the Fund is Morgan Stanley Dean Witter Advisors
Inc., a Delaware corporation, whose address is Two World Trade Center, New York,
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.
15
<PAGE>
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 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.
16
<PAGE>
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.
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
17
<PAGE>
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 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
18
<PAGE>
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 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
19
<PAGE>
other than expenses representing a gross sales credit or a residual to Financial
Advisors and other authorized financial representatives, such amounts shall be
determined at the beginning of each calendar quarter by the 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 Class C
for distribution during the fiscal year ended February 28, 1999 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 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
20
<PAGE>
(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 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.
21
<PAGE>
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.
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.
22
<PAGE>
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 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
23
<PAGE>
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 shares of the Fund do not have cumulative voting rights, which means
that the holders of more than 50% of the shares voting for the election of
directors can elect 100% of the directors if they choose to do so, and in such
event, the holders of the remaining shares voting for the election of directors
will not be able to elect any person or persons to the Board of Directors.
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.
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
24
<PAGE>
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. 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
25
<PAGE>
New York Stock Exchange. The values of such securities used in computing the net
asset value of the Fund's shares are determined as of such times. Foreign
currency exchange rates are also generally determined prior to the close of the
New York Stock Exchange. Occasionally, events which may affect the values of
such securities and such exchange rates may occur between the times at which
they are determined and the close of the New York Stock Exchange and will
therefore not be reflected in the computation of the Fund's net asset value. If
events that may affect the value of such securities occur during such period,
then these securities may be valued at their fair value as determined in good
faith under procedures established by and under the supervision of the
Directors.
IX. TAXATION OF THE FUND AND SHAREHOLDERS
- --------------------------------------------------------------------------------
The Fund generally will make two basic types of distributions: ordinary
dividends and long-term capital gain distributions. These two types of
distributions are reported differently on a shareholder's income tax return and
they are also subject to different rates of tax. The tax treatment of the
investment activities of the Fund will affect the amount and timing and
character of the distributions made by the Fund. Tax issues relating to the Fund
are not generally a consideration for shareholders such as tax exempt entities
and tax-advantaged retirement vehicles such as an IRA or 401(k) plan.
Shareholders are urged to consult their own tax professionals regarding specific
questions as to federal, state or local taxes.
INVESTMENT COMPANY TAXATION. The Fund intends to remain qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986. As such, the Fund will not be subject to federal income tax on its net
investment income and capital gains, if any, to the extent that it distributes
such income and capital gains to its shareholders.
The Fund generally intends to distribute sufficient income and gains so that
the Fund will not pay corporate income tax on its earnings. The Fund also
generally intends to distribute to its shareholders in each calendar year a
sufficient amount of ordinary income and capital gains to avoid the imposition
of a 4% excise tax. However, the Fund may instead determine to retain all or
part of any net long-term capital gains in any year for reinvestment. In such
event, the Fund will pay federal income tax (and possibly excise tax) on such
retained gains.
Gains or losses on sales of securities by the Fund will be long-term capital
gains or losses if the securities have a tax holding period of more than one
year. Gains or losses on the sale of securities with a tax holding period of one
year or less will be short-term gains or losses.
Under certain tax rules, the Fund may be required to accrue a portion of any
discount at which certain securities are purchased as income each year even
though the Fund receives no payments in cash on the security during the year. To
the extent that the Fund invests in such securities, it would be required to pay
out such accrued discount as an income distribution in each year in order to
avoid taxation at the Fund level. Such distributions will be made from the
available cash of the Fund or by liquidation of portfolio securities if
necessary. If a distribution of cash necessitates the liquidation of portfolio
securities, the Investment Manager will select which securities to sell. The
Fund may realize a gain or loss from such sales. In the event the Fund realizes
net capital gains from such transactions, its shareholders may receive a larger
capital gain distribution, if any, than they would in the absence of such
transactions.
TAXATION OF DIVIDENDS AND DISTRIBUTIONS. Shareholders normally will have to
pay federal income taxes, and any state and/or local income taxes, on the
dividends and other distributions they receive from the Fund. Such dividends and
distributions, to the extent that they are derived from net investment income or
short-term capital gains, are taxable to the shareholder as ordinary income
regardless of whether the shareholder receives such payments in additional
shares or in cash.
26
<PAGE>
Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash. The 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 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.
27
<PAGE>
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. 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. Based on this
calculation, 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, 1999 and for the period July 28,
1997 through February 28, 1999 were 7.26% and 11.41%, respectively, and 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 the foregoing 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. Based on the
foregoing calculation, 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
28
<PAGE>
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, and 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 independent 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>
- ---------------------
* 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.
SEE NOTES TO FINANCIAL STATEMENTS
43
<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 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.
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.
45
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PARTC OTHER INFORMATION
ITEM 23. EXHIBITS
2. Amended and Restated By-Laws of the Registrant dated May 1, 1999.
5(b). Form of Selected Dealer Agreement.
6. Retirement Plan for Non-Interested Trustees or Directors.
10. Consent of Independent Accountants.
14. Financial Data Schedules.
All other exhibits were previously filed via EDGAR and are hereby incorporated
by reference.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
None
ITEM 25. INDEMNIFICATION
Reference is made to Section 3.15 of the Registrant's By-Laws and
Section 2-418 of the Maryland General Corporation Law.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant in
connection with the successful defense of any action, suit or proceeding)
is asserted against the Registrant by such director, officer or controlling
person in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act, and will be governed by the final adjudication of
such issue.
The Registrant hereby undertakes that it will apply the
indemnification provision of its by-laws in a manner consistent with
Release 11330 of the Securities and Exchange Commission under the
Investment Company Act of 1940, so long as the interpretation of Sections
17(h) and 17(i) of such Act remains in effect.
Registrant, in conjunction with the Investment Manager, Registrant's
Directors, and other registered investment management companies managed by
the Investment Manager, maintains insurance on behalf of any person who is
or was a Director, officer, employee, or agent of Registrant, or who is or
was serving at the request of Registrant as a trustee, director, officer,
employee or agent of another trust or corporation, against any liability
asserted against him and incurred by him or arising out of his position.
However, in no event will Registrant maintain insurance to indemnify any
such person for any act for which Registrant itself is not permitted to
indemnify him.
<PAGE>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
See "The Fund and Its Management" in the Prospectus regarding the business
of the investment advisor. The following information is given regarding
officers of Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"). MSDW
Advisors is a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co. The
principal address of the Morgan Stanley Dean Witter Funds is Two World Trade
Center, New York, New York 10048.
The term "Morgan Stanley Dean Witter Funds" refers to the following
registered investment companies:
CLOSED-END INVESTMENT COMPANIES
(1) Morgan Stanley Dean Witter California Insured Municipal Income Trust
(2) Morgan Stanley Dean Witter California Quality Municipal Securities
(3) Morgan Stanley Dean Witter Government Income Trust
(4) Morgan Stanley Dean Witter High Income Advantage Trust
(5) Morgan Stanley Dean Witter High Income Advantage Trust II
(6) Morgan Stanley Dean Witter High Income Advantage Trust III
(7) Morgan Stanley Dean Witter Income Securities Inc.
(8) Morgan Stanley Dean Witter Insured California Municipal Securities
(9) Morgan Stanley Dean Witter Insured Municipal Bond Trust
(10) Morgan Stanley Dean Witter Insured Municipal Income Trust
(11) Morgan Stanley Dean Witter Insured Municipal Securities
(12) Morgan Stanley Dean Witter Insured Municipal Trust
(13) Morgan Stanley Dean Witter Municipal Income Opportunities Trust
(14) Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
(15) Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
(16) Morgan Stanley Dean Witter Municipal Income Trust
(17) Morgan Stanley Dean Witter Municipal Income Trust II
(18) Morgan Stanley Dean Witter Municipal Income Trust III
(19) Morgan Stanley Dean Witter Municipal Premium Income Trust
(20) Morgan Stanley Dean Witter New York Quality Municipal Securities
(21) Morgan Stanley Dean Witter Prime Income Trust
(22) Morgan Stanley Dean Witter Quality Municipal Income Trust
(23) Morgan Stanley Dean Witter Quality Municipal Investment Trust
(24) Morgan Stanley Dean Witter Quality Municipal Securities
OPEN-END INVESTMENT COMPANIES
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Money Trust
(4) Active Assets Tax-Free Trust
(5) Morgan Stanley Dean Witter Aggressive Equity Fund
(6) Morgan Stanley Dean Witter American Opportunities Fund
(7) Morgan Stanley Dean Witter Balanced Growth Fund
(8) Morgan Stanley Dean Witter Balanced Income Fund
(9) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO"
<PAGE>
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(24) Morgan Stanley Dean Witter Hawaii Municipal Trust
(25) Morgan Stanley Dean Witter Health Sciences Trust
(26) Morgan Stanley Dean Witter High Yield Securities Inc.
(27) Morgan Stanley Dean Witter Income Builder Fund
(28) Morgan Stanley Dean Witter Information Fund
(29) Morgan Stanley Dean Witter Intermediate Income Securities
(30) Morgan Stanley Dean Witter International SmallCap Fund
(31) Morgan Stanley Dean Witter Japan Fund
(32) Morgan Stanley Dean Witter Limited Term Municipal Trust
(33) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(34) Morgan Stanley Dean Witter Market Leader Trust
(35) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(36) Morgan Stanley Dean Witter Mid-Cap Growth Fund
(37) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(38) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(39) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(40) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(41) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(43) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(44) Morgan Stanley Dean Witter Real Estate Fund
(45) Morgan Stanley Dean Witter S&P 500 Index Fund
(46) Morgan Stanley Dean Witter S&P 500 Select Fund
(47) Morgan Stanley Dean Witter Select Dimensions Investment Series
(48) Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
(49) Morgan Stanley Dean Witter Short-Term Bond Fund
(50) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(51) Morgan Stanley Dean Witter Special Value Fund
(52) Morgan Stanley Dean Witter Strategist Fund
(53) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(54) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(55) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(56) Morgan Stanley Dean Witter U.S. Government Securities Trust
(57) Morgan Stanley Dean Witter Utilities Fund
(58) Morgan Stanley Dean Witter Value-Added Market Series
(59) Morgan Stanley Dean Witter Value Fund
(60) Morgan Stanley Dean Witter Variable Investment Series
(61) Morgan Stanley Dean Witter World Wide Income Trust
<PAGE>
The term "TCW/DW Funds" refers to the following registered investment companies:
OPEN-END INVESTMENT COMPANIES
(1) TCW/DW Emerging Markets Opportunities Trust
(2) TCW/DW Global Telecom Trust
(3) TCW/DW Income and Growth Fund
(4) TCW/DW Latin American Growth Fund
(5) TCW/DW Mid-Cap Equity Trust
(6) TCW/DW North American Government Income Trust
(7) TCW/DW Small Cap Growth Fund
(8) TCW/DW Total Return Trust
CLOSED-END INVESTMENT COMPANIES
(1) TCW/DW Term Trust 2000
(2) TCW/DW Term Trust 2002
(3) TCW/DW Term Trust 2003
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- -------------------- ------------------------------------------------
<S> <C>
Mitchell M. Merin President and Chief Operating Officer of Asset Management
President, Chief of Morgan Stanley Dean Witter & Co. ("MSDW); Chairman,
Executive Officer and Chief Executive Officer and Director of Morgan Stanley
Director Dean Witter Distributors Inc. ("MSDW Distributors") and
Morgan Stanley Dean Witter Trust FSB ("MSDW Trust"); President,
Chief Executive Officer and Director of Morgan Stanley
Dean Witter Services Company Inc. ("MSDW Services");
President of the Morgan Stanley Dean Witter Funds, TCW/DW
Funds and Discover Brokerage Index Series; Executive Vice
President and Director of Dean Witter Reynolds Inc.
("DWR"); Director of various MSDW subsidiaries.
Joseph J. McAlinden Vice President of the Morgan Stanley Dean Witter Funds
Executive Vice President and Discover Brokerage Index Series; Director of MSDW
and Chief Investment Trust.
Officer
Ronald E. Robison Executive Vice President, Chief Administrative Officer and
Executive Vice President, Director of MSDW Services; Vice President of the Morgan
Chief Administrative Stanley Dean Witter Funds, TCW/DW Funds and Discover
Officer and Director Brokerage Index Series.
Edward C. Oelsner, III
Executive Vice President
John Van Heuvelen President of MSDW Trust
Executive Vice President
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- -------------------- ------------------------------------------------
<S> <C>
Barry Fink Assistant Secretary of DWR; Senior Vice President,
Senior Vice President, Secretary, General Counsel and Director of MSDW
Secretary, General Services; Senior Vice President, Assistant Secretary
Counsel and Director and Assistant General Counsel of MSDW Distributors;
Vice President, Secretary and General Counsel of the
Morgan Stanley Dean Witter Funds, TCW/DW Funds and
Discover Brokerage Index Series.
Peter M. Avelar Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Mark Bavoso Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Douglas Brown
Senior Vice President
Rosalie Clough
Senior Vice President
and Director of Marketing
Richard Felegy
Senior Vice President
Edward F. Gaylor Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Robert S. Giambrone Senior Vice President of MSDW Services, MSDW
Senior Vice President Distributors and MSDW Trust and Director of MSDW Trust;
Vice President of the Morgan Stanley Dean Witter Funds,
TCW/DW Funds and Discover Brokerage Index Series.
Rajesh K. Gupta Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Kenton J. Hinchliffe Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds and Discover Brokerage Index Series.
Kevin Hurley Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Margaret Iannuzzi
Senior Vice President
Jenny Beth Jones Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- -------------------- ------------------------------------------------
<S> <C>
Michelle Kaufman Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
John B. Kemp, III President of MSDW Distributors.
Senior Vice President
Anita H. Kolleeny Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Jonathan R. Page Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Ira N. Ross Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Guy G. Rutherfurd, Jr. Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Rochelle G. Siegel Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
James Solloway
Senior Vice President
Jayne M. Stevlingson Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Paul D. Vance Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Elizabeth A. Vetell
Senior Vice President
and Director of Shareholder
Communication
James F. Willison Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Frank Bruttomesso First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds, TCW/DW Funds and
Discover Brokerage Index Series.
Toby Burroughs
First Vice President
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- -------------------- ------------------------------------------------
<S> <C>
Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President MSDW Services; Assistant Treasurer of MSDW
and Assistant Distributors; Treasurer and Chief Financial and Accounting
Treasurer Officer of the Morgan Stanley Dean Witter Funds,
TCW/DW Funds and Discover Brokerage Index Series..
Thomas Chronert
First Vice President
Marilyn K. Cranney Assistant Secretary of DWR; First Vice President and
First Vice President Assistant Secretary of MSDW Services; Assistant
and Assistant Secretary Secretary of MSDW Distributors, the Morgan Stanley Dean
Witter Funds, TCW/DW Funds and Discover Brokerage
Index Series.
Salvatore DeSteno First Vice President of MSDW Services.
First Vice President
Peter W. Gurman
First Vice President
Michael Interrante First Vice President and Controller of MSDW Services;
First Vice President Assistant Treasurer of MSDW Distributors; First Vice
and Controller President and Treasurer of MSDW Trust.
David Johnson
First Vice President
Stanley Kapica
First Vice President
Lou Anne D. McInnis First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds, TCW/DW Funds and
Discover Brokerage Index Series.
Carsten Otto First Vice President and Assistant Secretary of MSDW
First Vice President Services; Assistant Secretary of MSDW Distributors, the
and Assistant Secretary Morgan Stanley Dean Witter Funds, TCW/DW Funds and
Discover Brokerage Index Series.
Ruth Rossi First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors the
Assistant Secretary Morgan Stanley Dean Witter Funds, TCW/DW Funds and
Discover Brokerage Index Series.
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- -------------------- ------------------------------------------------
<S> <C>
James P. Wallin
First Vice President
Dale Albright
Vice President
Joan G. Allman
Vice President
Andrew Arbenz
Vice President
Joseph Arcieri
Vice President Vice President of various Morgan Stanley Dean Witter
Funds.
Armon Bar-Tur
Vice President
Raymond Basile
Vice President
Nancy Belza
Vice President
Maurice Bendrihem
Vice President and
Assistant Controller
Dale Boettcher
Vice President
Ronald Caldwell
Vice President
Joseph Cardwell
Vice President
Liam Carroll
Vice President
Philip Casparius
Vice President
Aaron Clark
Vice President
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- -------------------- ------------------------------------------------
<S> <C>
William Connerly
Vice President
David Dineen
Vice President
Sheila Finnerty
Vice President
Jeffrey D. Geffen
Vice President
Sandra Gelpieryn
Vice President
Michael Geringer
Vice President
Gail Gerrity
Vice President
Ellen Gold
Vice President
Stephen Greenhut
Vice President
Matthew Haynes Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Peter Hermann Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
David T. Hoffman
Vice President
Christopher Jones
Vice President
Kevin Jung Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Carol Espejo-Kane
Vice President
Nancy Kennedy
Vice President
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- -------------------- ------------------------------------------------
<S> <C>
Doug Ketterer
Vice President
Paula LaCosta Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Kimberly LaHart
Vice President
Thomas Lawlor
Vice President
Todd Lebo Vice President and Assistant Secretary of MSDW
Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds, TCW/DW Funds and
Discover Brokerage Index Series.
Gerard J. Lian Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Nancy Login
Vice President
Sharon Loguercio
Vice President
Steven MacNamara
Vice President
Catherine Maniscalco Vice President of Morgan Stanley Dean Witter Natural
Vice President Resource Development Securities Inc.
Albert McGarity
Vice President
Teresa McRoberts Vice President of Morgan Stanley Dean Witter S&P 500
Vice President Select Fund.
Mark Mitchell
Vice President
Julie Morrone
Vice President
Mary Beth Mueller
Vice President
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- -------------------- ------------------------------------------------
<S> <C>
David Myers Vice President of Morgan Stanley Dean Witter Natural
Vice President Resource Development Securities Inc.
James Nash
Vice President
Richard Norris
Vice President
George Paoletti Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Anne Pickrell Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Dawn Rorke
Vice President
John Roscoe Vice President of Morgan Stanley Dean Witter
Vice President Real Estate Fund
Hugh Rose
Vice President
Robert Rossetti Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Carl F. Sadler
Vice President
Deborah Santaniello
Vice President
Patrice Saunders
Vice President
Howard A. Schloss Vice President of Morgan Stanley Dean Witter Federal
Vice President Securities Trust.
Peter J. Seeley Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Robert Stearns
Vice President
Naomi Stein
Vice President
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- -------------------- ------------------------------------------------
<S> <C>
Michael Strayhorn
Vice President
Kathleen H. Stromberg Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Marybeth Swisher
Vice President
Stuart Taylor
Vice President
Michael Thayer
Vice President
Robert Vanden Assem
Vice President
Alice Weiss Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
John Wong
Vice President
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Morgan Stanley Dean Witter Distributors Inc. ("MSDW Distributors"), a
Delaware corporation, is the principal underwriter of the Registrant. MSDW
Distributors is also the principal underwriter of the following investment
companies:
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Money Trust
(4) Active Assets Tax-Free Trust
(5) Morgan Stanley Dean Witter Aggressive Equity Fund
(6) Morgan Stanley Dean Witter American Opportunities Fund
(7) Morgan Stanley Dean Witter Balanced Growth Fund
(8) Morgan Stanley Dean Witter Balanced Income Fund
(9) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
<PAGE>
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International SmallCap Fund
(32) Morgan Stanley Dean Witter Japan Fund
(33) Morgan Stanley Dean Witter Limited Term Municipal Trust
(34) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(35) Morgan Stanley Dean Witter Market Leader Trust
(36) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(37) Morgan Stanley Dean Witter Mid-Cap Growth Fund
(38) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(39) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(40) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(41) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(42) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(43) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(44) Morgan Stanley Dean Witter Prime Income Trust
(45) Morgan Stanley Dean Witter Real Estate Fund
(46) Morgan Stanley Dean Witter S&P 500 Index Fund
(47) Morgan Stanley Dean Witter S&P 500 Select Fund
(48) Morgan Stanley Dean Witter Short-Term Bond Fund
(49) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(50) Morgan Stanley Dean Witter Special Value Fund
(51) Morgan Stanley Dean Witter Strategist Fund
(52) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(53) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(54) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(55) Morgan Stanley Dean Witter U.S. Government Securities Trust
(56) Morgan Stanley Dean Witter Utilities Fund
(57) Morgan Stanley Dean Witter Value-Added Market Series
(58) Morgan Stanley Dean Witter Value Fund
(59) Morgan Stanley Dean Witter Variable Investment Series
(60) Morgan Stanley Dean Witter World Wide Income Trust
(1) TCW/DW Emerging Markets Opportunities Trust
(2) TCW/DW Global Telecom Trust
(3) TCW/DW Income and Growth
(4) TCW/DW Latin American Growth Fund
(5) TCW/DW Mid-Cap Equity Trust
(6) TCW/DW North American Government Income Trust
(7) TCW/DW Small Cap Growth Fund
(8) TCW/DW Total Return Trust
<PAGE>
(b) The following information is given regarding directors and officers of MSDW
Distributors not listed in Item 26 above. The principal address of MSDW
Distributors is Two World Trade Center, New York, New York 10048. Other than
Mr. Purcell, who is a Trustee of the Registrant, none of the following persons
has any position or office with the Registrant.
<TABLE>
<CAPTION>
Name Positions and Office with MSDW Distributors
- ---- -------------------------------------------
<S> <C>
Christine A. Edwards Executive Vice President, Secretary, Director and Chief Legal Officer.
Michael T. Gregg Vice President and Assistant Secretary.
James F. Higgins Director
Fredrick K. Kubler Senior Vice President, Assistant Secretary and Chief Compliance
Officer.
Philip J. Purcell Director
John Schaeffer Director
Charles Vadala Senior Vice President and Financial Principal.
</TABLE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained by the Investment Manager at its offices, except records relating to
holders of shares issued by the Registrant, which are maintained by the
Registrant's Transfer Agent, at its place of business as shown in the
prospectus.
ITEM 29. MANAGEMENT SERVICES
Registrant is not a party to any such management-related service contract.
ITEM 30. UNDERTAKINGS
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York on the 29th day of April, 1999.
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
By /s/Barry Fink
----------------------
Barry Fink
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 22 has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
(1) Principal Executive Officer President, Chief
Executive Officer,
Director and Chairman
By /s/ Charles A. Fiumefreddo 04/29/99
--------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By /s/ Thomas F. Caloia 04/29/99
--------------------
Thomas F. Caloia
(3) Majority of the Directors
Charles A. Fiumefreddo (Chairman)
Philip J. Purcell
By /s/ Barry Fink 04/29/99
--------------
Barry Fink
Attorney-in-Fact
Michael Bozic Manuel H. Johnson
Edwin J. Garn Michael E. Nugent
Wayne E. Hedien John L. Schroeder
By /s/ David M. Butowsky 04/29/99
---------------------
David M. Butowsky
Attorney-in-Fact
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
EXHIBIT INDEX
2. Amended and Restated By-Laws of the Registrant dated May 1, 1999.
5(b). Form of Selected Dealer Agreement.
6. Retirement Plan for Non-Interested Trustees or Directors.
10. Consent of Independent Accountants.
14. Financial Data Schedules.
<PAGE>
BY-LAWS
OF
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
AMENDED AND RESTATED AS OF MAY 1, 1999
ARTICLE I
OFFICES
SECTION 1.1. PRINCIPAL OFFICE. The principal office of the Corporation in
the State of Maryland shall be in the City of Baltimore.
SECTION 1.2. OTHER OFFICES. In addition to its principal office in the
State of Maryland, the Corporation may have an office or offices in the City of
New York, State of New York, and at such other places as the Board of Directors
may from time to time designate or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 2.1. PLACE OF MEETINGS. Meetings of stockholders shall be held at
such place, within or without the State of Maryland, as may be designated from
time to time by the Board of Directors.
SECTION 2.2. ANNUAL MEETINGS. An annual meeting of stockholders, when
required, at which the stockholders shall elect a Board of Directors and
transact such other business as may properly come before the meeting, shall be
held in June of each year, the precise date in June to be fixed by the Board of
Directors. Notwithstanding anything to the contrary contained herein, the
Corporation shall not be required to hold an annual meeting in any year in which
none of the following is required to be acted upon by stockholders under the
Investment Company Act of 1940, as amended:
(1) election of directors;
(2) approval of an investment advisory or management agreement;
(3) ratification of the selection of independent accountants; and
(4) approval of a distribution plan or agreement;
provided, however, that a special meeting of stockholders shall promptly be
called when requested in writing by the recordholders of not less than 10% of
the Corporation's shares.
SECTION 2.3. SPECIAL MEETINGS. Special meetings of stockholders of the
Corporation shall be held whenever called by the Board of Directors or the
President of the Corporation. Special meetings of stockholders shall also be
called by the Secretary upon the written request of the holders of shares
entitled to vote not less than twenty-five percent (25%) of all the votes
entitled to be cast at such meeting. Such request shall state the purpose or
purposes of such meeting and the matters proposed to be acted on thereat. The
Secretary shall inform such stockholders of the reasonable estimated cost of
reparing and mailing such notice of the meeting, and upon payment to the
Corporation of such costs, the Secretary shall give notice stating the purpose
or purposes of the meeting to all entitled to a vote at such meeting. Unless
requested by stockholders entitled to cast a majority of all the votes entitled
to be cast at the meeting, a special meeting need not be called to consider any
matter which is substantially the same as a matter voted upon at any special
meeting of stockholders held during the preceding twelve months.
SECTION 2.4. NOTICE OF MEETINGS. Written or printed notice of every
stockholders' meeting stating the place, date and time, and in the case of a
special meeting the purpose or purposes thereof, shall be given by the Secretary
not less than ten (10) nor more than ninety (90) days before such meeting to
each
<PAGE>
stockholder entitled to vote at such meeting, either by mail or by presenting
it to him personally, or by leaving it at his residence or usual place of
business. If mailed, such notice shall be deemed to be given when deposited
in the United States mail, postage prepaid, directed to the stockholder at
his address as it appears on the records of the Corporation.
SECTION 2.5. QUORUM AND ADJOURNMENT OF MEETINGS. Except as otherwise
provided by law, by the Charter of the Corporation, or by these By-Laws, at
all meetings of stockholders the holders of a majority of the shares issued
and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall be requisite and shall constitute a quorum for
the transaction of business. In the absence of a quorum, the stockholders
present or represented by proxy and entitled to vote thereat shall have power
to adjourn the meeting from time to time without notice other than
announcement at the meeting, until a quorum shall be present. At any
adjourned meeting at which a quorum shall be present, any business may be
transacted if the meeting had been held as originally called.
SECTION 2.6. VOTING RIGHTS, PROXIES. At each meeting of stockholders, each
holder of record of stock entitled to vote thereat shall be entitled to one
vote in person or by proxy for each share of stock of the Corporation and for
the fractional portion of one vote for each fractional share entitled to vote
so registered in his or her name on the records of the Corporation on the
date fixed as the record date for the determination of stockholders entitled
to vote at such meeting. Without limiting the manner in which a stockholder
may authorize another person or persons to act for such stockholder as proxy
pursuant hereto, the following shall constitute a valid means by which a
stockholder may grant such authority:
(i) A stockholder may execute a writing authorizing another person or
persons to act for such stockholder as proxy. Execution may be accomplished
by the stockholder or such stockholder's authorized officer, director,
employee, attorney-in-fact or another agent signing such writing or causing
such person's signature to be affixed to such writing by any reasonable
means including, but not limited to, by facsimile or telecopy signature. No
written evidence of authority of a stockholder's authorized officer,
director, employee, attorney-in-fact or other agent shall be required; and
(ii) A stockholder may authorize another person or persons to act for such
stockholder as proxy by transmitting or authorizing the transmission of a
telegram or cablegram or by other means of telephonic, electronic or
computer transmission to the person who will be the holder of the proxy or
to a proxy solicitation firm, proxy support service organization or like
agent duly authorized by the person who will be the holder of the proxy to
receive such transmission, provided that any such telegram or cablegram or
other means of telephonic, electronic or computer transmission must either
set forth or be submitted with information from which it can be determined
that the telegram, cablegram or other transmission was authorized by the
stockholder.
No proxy shall be valid after eleven months from its date, unless otherwise
provided in the proxy. At all meetings of stockholders, unless the voting is
conducted by inspectors, all questions relating to the qualification of voters
and the validity of proxies and the acceptance or rejection of votes shall be
decided by the chairman of the meeting. In determining whether a telegram,
cablegram or other electronic transmission is valid, the chairman or inspector,
as the case may be, shall specify the information upon which he or she relied.
Pursuant to a resolution of a majority of the Directors, proxies may be
solicited in the name of one or more Directors or Officers of the Corporation.
Proxy solicitations may be made in writing or by using telephonic or other
electronic solicitation procedures that include appropriate methods of verifying
the identity of the stockholder and confirming any instructions given thereby.
SECTION 2.7. VOTE REQUIRED. Except as otherwise provided by law, by the
Charter of the Corporation, or by these By-Laws, at each meeting of stockholders
at which a quorum is present, all matters shall be decided by a majority of the
votes cast by the stockholders present in person or represented by proxy and
entitled to vote with respect to any such matter.
SECTION 2.8. ACTION BY STOCKHOLDERS WITHOUT MEETING. Except as otherwise
provided by law, the provisions of these By-Laws relating to notices and
meetings to the contrary notwithstanding, any action required or permitted to be
taken at any meeting of stockholders may be taken without a meeting if a consent
in writing setting forth the action shall be signed by all the stockholders
entitled to vote upon the action and such consent shall be filed with the
records of the Corporation.
2
<PAGE>
SECTION 2.9. PRESENCE AT MEETINGS. Presence at meetings of stockholders
requires physical attendance by the stockholder or his or her proxy at the
meeting site and does not encompass attendance by telephonic or other
electronic means.
ARTICLE III
DIRECTORS
SECTION 3.1. NUMBER AND TERM. The Board of Directors shall consist of not
less than three (3) and not more than fifteen (15) directors, the number of
directors to be fixed from time to time within the above-specified limits by
the affirmative vote of a majority of the whole Board of Directors. At the
first annual meeting of stockholders and at each meeting thereafter called
for the purpose of electing directors, the stockholders shall elect directors
to hold office until their successors are elected and qualify. Directors need
not be stockholders of the Corporation.
SECTION 3.2. POWERS. The business of the Corporation shall be managed by
the Board of Directors which may exercise all powers of the Corporation and
do all lawful acts and things which are not by law or by the Charter of the
Corporation, or by these By-Laws, directed or required to be exercised or
done exclusively by the stockholders.
SECTION 3.3. ORGANIZATIONAL MEETINGS. The first meeting of each newly
elected Board of Directors for the purposes of organization and the election
of officers and otherwise shall be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of
the Board of Directors, or as shall be specified in a written waiver signed
by all directors.
SECTION 3.4. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held at such time and place as shall be determined from time to time
by the Board of Directors without further notice.
SECTION 3.5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called at any time by the President and shall be called by such
President or the Secretary upon the written request of any two (2) directors.
SECTION 3.6. NOTICE OF SPECIAL MEETINGS. Written notice of special
meetings of the Board of Directors, stating the place, date and time thereof,
shall be given not less than two (2) days before such meeting to each
director, personally, by telegram, by mail, or by leaving such notice at his
place of residence or usual place of business. If mailed, such notice shall
be deemed to be given when deposited in the United States mail, postage
prepaid, directed to the director at his address as it appears on the records
of the Corporation.
SECTION 3.7. TELEPHONE MEETINGS. Any member or members of the Board of
Directors or of any committee designated by the Board, may participate in a
meeting of the Board, or any such committee, as the case may be, by means of
a conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time.
Participation in a meeting by these means constitutes presence in person at
the meeting. This Section 3.7 shall not be applicable to meetings held for
the purpose of voting in respect of approval of contracts or agreements
whereby a person undertakes to serve or act as investment adviser of, or
principal underwriter for, the Corporation.
SECTION 3.8. QUORUM, VOTING AND ADJOURNMENT OF MEETINGS. At all meetings
of the Board of Directors, a majority of the whole Board shall be requisite
to and shall constitute a quorum for the transaction of business. If a quorum
is present, the affirmative vote of a majority of the directors present shall
be the act of the Board of Directors, unless the concurrence of a greater
proportion is expressly required for such action by law, the Charter of the
Corporation or these By-Laws. If at any meeting of the Board there be less
than a quorum present, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting
until a quorum shall have been obtained.
SECTION 3.9. REMOVAL. Any one or more of the directors may be removed,
either with or without cause, at any time, by the affirmative vote of the
stockholders holding a majority of the outstanding shares entitled to vote
for the election of directors. (For purposes of determining the circumstances
and
3
<PAGE>
procedures under which such removal of directors may take place, the
provisions of Section 16(c) of the Investment Company Act of 1940 shall be
applicable to the same extent as if the Corporation were subject to the
provisions of that Section.) The successor or successors of any director or
directors so removed may be elected by the stockholders entitled to vote
thereon at the same meeting to fill any resulting vacancies for the unexpired
term of removed directors. Except as provided by law, pending such an
election (or in the absence of such an election), the successor or successors
of any director or directors so removed may be chosen by the Board of
Directors.
SECTION 3.10. VACANCIES. Except as otherwise provided by law, any vacancy
occurring in the Board of Directors and newly created directorships resulting
from an increase in the authorized number of directors may be filled by the
vote of a majority of the directors then in office or, if only one director
shall then be in office, by such director. A director elected by the Board of
Directors to fill a vacancy shall be elected to hold office until the next
annual meeting of stockholders or until his successor is elected and
qualifies.
SECTION 3.11. ACTION BY DIRECTORS WITHOUT MEETING. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at
any meeting of the Board of Directors may be taken without a meeting if a
consent in writing setting forth the action shall be signed by all of the
directors entitled to vote upon the action and such written consent is filed
with the minutes of proceedings of the Board of Directors.
SECTION 3.12. EXPENSES AND FEES. Each director may be allowed expenses, if
any, for attendance at each regular or special meeting of the Board of
Directors and each director who is not an officer or employee of the
Corporation or of its investment manager or underwriter or of any corporate
affiliate of any of said persons shall receive for services rendered as a
director of the Corporation such compensation as may be fixed by the Board of
Directors. Nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 3.13. EXECUTION OF INSTRUMENTS AND DOCUMENTS AND SIGNING OF CHECKS
AND OTHER OBLIGATIONS AND TRANSFERS. All instruments, documents and other
papers shall be executed in the name and on behalf of the Corporation and all
checks, notes, drafts and other obligations for the payment of money by the
Corporation shall be signed, and all transfer of securities standing in the
name of the Corporation shall be executed, by the President, any Vice
President or the Treasurer or by any one or more officers or agents of the
Corporation as shall be designated for that purpose by vote of the Board of
Directors; notwithstanding the above, nothing in this Section 3.13 shall be
deemed to preclude the electronic authorization, by designated persons, of
the Corporation's Custodian to transfer assets of the Corporation.
SECTION 3.14. CONTRACTS. Except as otherwise provided by law or by the
Charter of the Corporation, no contract or transaction between the
Corporation and any partnership or corporation, and no act of the
Corporation, shall in any way be affected or invalidated by the fact that any
officer or director of the Corporation is pecuniarily or otherwise interested
therein or is a member, officer or director of such interest shall be known
to the Board of Directors of the Corporation. Specifically, but without
limitation of the foregoing, the Corporation may enter into one or more
contracts appointing Morgan Stanley Dean Witter Advisors Inc. investment
manager of the Corporation, and may otherwise do business with Morgan Stanley
Dean Witter Advisors Inc., notwithstanding the fact that one or more of the
directors of the Corporation and some or all of its officers are, have been
or may become directors, officers, members, employees, or stockholders of
Morgan Stanley Dean Witter Advisors Inc.; and in the absence of fraud, the
Corporation and Morgan Stanley Dean Witter Advisors Inc. may deal freely with
each other, and neither such contract appointing Morgan Stanley Dean Witter
Advisors Inc. investment manager to the Corporation nor any other contract or
transaction between the Corporation and Morgan Stanley Dean Witter Advisors
Inc. shall be invalidated or in any wise affected thereby, nor shall any
director or officer of the Corporation by reason thereof be liable to the
Corporation or to any stockholder or creditor of the Corporation or to any
other person for any loss incurred under or by reason of any such contract or
transaction. For purposes of this paragraph, any reference to "Morgan Stanley
Dean Witter Advisors Inc." shall be deemed to include said company and any
parent, subsidiary or affiliate of said company and any successor (by merger,
consolidation or otherwise) to said company or any such parent, subsidiary or
affiliate.
4
<PAGE>
SECTION 3.15. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS. (a) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent
of the Corporation. The indemnification shall be against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement, actually
and reasonably incurred by him in connection with the action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. Directors acting in their official capacity
must act in good faith and in a manner reasonably believed to be in the best
interest of the Corporation. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation,
and, with respect to any criminal action or proceeding, had reasonable cause
to believe that his conduct was unlawful. A director may not be indemnified
in respect of any proceeding charging improper personal benefit to the
director, whether or not involving action in the director's official
capacity, in which the director was adjudged to be liable on the basis that
personal benefit was improperly received.
(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or on behalf of the Corporation to obtain a judgment or decree in
its favor by reason of the fact that he is or was a director, officer,
employee, or agent of the Corporation. The indemnification shall be against
expenses, including attorney's fees actually and reasonably incurred by him
in connection with the defense or settlement of the action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation: except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which the person has been adjudged to be liable for negligence or misconduct
in the performance of his duty to the Corporation, except to the extent that
the court in which the action or suit was brought, or a court of equity in
the county in which the Corporation has its principal office, determines upon
application that, despite the adjudication of liability, but in view of all
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for those expenses which the court shall deem proper, provided such
director or officer is not adjudged to be liable by reason of his willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
(c) To the extent that a director, officer, employee, or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsection (a) or (b) or in defense
of any claim, issue or matter therein, he shall be indemnified against
expenses, including attorneys' fees, actually and reasonably incurred by him
in connection therewith.
(d)(1) Unless a court orders otherwise, any indemnification under
subsection (a) or (b) of this section may be made by the Corporation only as
authorized in the specific case after a determination that indemnification of
the director, officer, employee, or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in subsection
(a) or (b).
(2) The determination shall be made:
(i) By the Board of Directors, by a majority vote of a quorum
which consists of directors who were not parties to the action
("non-party directors"), suit or proceeding; or if a quorum of
non-party directors is not obtainable by a majority vote of a
committee of at least two non-party directors; or
(ii) If the required quorum is not obtainable; or if a quorum of
disinterested directors so directs, by independent legal counsel
in a written opinion; or
(iii) By the stockholders.
5
<PAGE>
(3) Authorization of indemnification and determination as to reasonableness
of expenses shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination that
indemnification is permissible is made by independent legal counsel,
authorization of indemnification and determination as to reasonableness of
expenses shall be made by a committee of non-party directors or by the non-party
quorum of the Board, or if neither exists, by the full Board.
(4) Notwithstanding the provisions of paragraphs (1) and (2) of this
subsection (d), no person shall be entitled to indemnification for any
liability, whether or not there is an adjudication of liability, arising by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of duties as described in Sections 17(h) and (i) of the Investment
Company Act of 1940, as amended ("disabling conduct"). A person shall be deemed
not liable by reason of disabling conduct if, either:
(i) a final decision on the merits is made by a court or other
body before whom the proceeding was brought that the person to
be indemnified ("indemnitee") was not liable by reason of
disabling conduct; or
(ii) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the
indemnitee was not liable by reason of disabling conduct, is made
by either--
(A) a majority of a quorum of directors who are neither
"interested persons" of the Corporation, as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as
amended, nor parties to the action, suit or proceeding, or
(B) an independent legal counsel in a written opinion.
(e) Expenses, including attorneys' fees, incurred by a director, officer,
employee or agent of the Corporation in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition thereof if:
(1) authorized in the specific case by the Board of Directors; and
(2) the Corporation receives an undertaking by or on behalf of the
director, officer, employee or agent of the Corporation to repay the
advance if it is not ultimately determined that such person is
entitled to be indemnified by the Corporation; and
(3) either
(i) such person provides a security for his undertaking, or
(ii) the Corporation is insured against losses by reason of any
lawful advances, or
(iii) a determination, based on a review of readily available
facts, that there is reason to believe that such person
ultimately will be found entitled to indemnification, is made by
either--
(A) a majority of a quorum which consists of directors who
are neither "interested persons" of the Corporation, as
defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended, nor parties to the action, suit or
proceeding, or
(B) an independent legal counsel in a written opinion.
(f) The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which a person may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding the office, and shall continue as to a person who has ceased to be
a director, officer, employee, or agent and inure to the benefit of the heirs,
executors and administrators of such person.
(g) The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent of the Corporation,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such. However, in no event will the
Corporation pay for that portion of the premium, if any, for insurance to
indemnify any officer or director against liability for any act for which the
Corporation itself is not permitted to indemnify him.
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(h) Nothing contained in this Section shall be construed to protect any
director or officer of the Corporation against any liability to the Corporation
or to its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
(i) Any indemnification of, or advance of expenses to, a director in
accordance with this Section, if arising out of a proceeding by or in the right
of the Corporation, shall be reported in writing to the shareholders with the
notice of the next stockholders' meeting or prior to the meeting.
ARTICLE IV
COMMITTEES
SECTION 4.1. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors, by
resolution adopted by a majority of the whole Board, may designate an Executive
Committee and/or other committees, each committee to consist of two (2) or more
of the directors of the Corporation and may delegate to such committees, in the
intervals between meetings of the Board of Directors, any or all of the powers
of the Board of Directors in the management of the business and affairs of the
Corporation, except the power to: declare dividends or distributions of stock;
issue stock; recommend to stockholders any action requiring stockholder
approval; amend the By-Laws of the Corporation; or approve any merger or share
exchange which does not require shareholder approval. In the absence of any
member of any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a member of the Board of
Directors to act in place of such absent member. Each such committee shall keep
a record of its proceedings.
The Executive Committee and any other committee shall fix its own rules or
procedure, but the presence of at least fifty percent (50%) of the members of
the whole committee shall in each case be necessary to constitute a quorum of
the committee and the affirmative vote of the majority of the members of the
committee present at the meeting shall be necessary to take action.
All actions of the Executive Committee shall be reported to the Board of
Directors at the meeting thereof next succeeding to the taking of such
action.
SECTION 4.2. ADVISORY COMMITTEE. The Board of Directors may appoint an
advisory committee which shall be composed of persons who do not serve the
Corporation in any other capacity and which shall have advisory functions
with respect to the investments of the Corporation, but which shall have no
power to determine that any security or other investment shall be purchased,
sold or otherwise disposed of by the Corporation. The number of persons
constituting any such advisory committee shall be determined from time to
time by the Board of Directors. The members of any such advisory committee
may receive compensation for their services and may be allowed such fees and
expenses for the attendance at meetings as the Board of Directors may from
time to time determine to be appropriate.
SECTION 4.3. COMMITTEE ACTION WITHOUT MEETING. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at
any meeting of any Committee of the Board appointed pursuant to Section 4.1
of these By-Laws may be taken without a meeting if a consent in writing
setting forth the action shall be signed by all members of the Committee
entitled to vote upon the action and such written consent is filed with the
records of the proceedings of the Committee.
ARTICLE V
OFFICERS
SECTION 5.1. EXECUTIVE OFFICERS. The executive officers of the Corporation
shall be a Chairman of the Board, a President, one or more Vice Presidents, a
Secretary and a Treasurer. The Chairman of the Board shall be selected from
among the Directors but none of the other executive officers need be a member
of the Board of Directors. Two or more offices, except those of President and
any Vice President, may be held by the same person, but no officer shall
execute, acknowledge or verify any instrument in
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more than one capacity. The executive officers of the Corporation shall be
elected annually by the Board of Directors and each executive officer so
elected shall hold office until his or her successor is elected and has
qualified.
SECTION 5.2. OTHER OFFICERS AND AGENTS. The Board of Directors may also
elect one or more Assistant Vice Presidents, Assistant Secretaries and
Assistant Treasurers and may elect, or may delegate to the Chairman the power
to appoint, such other officers and agents as the Board of Directors shall at
any time or from time to time deem advisable.
SECTION 5.3. TERM AND REMOVAL AND VACANCIES. Each officer of the
Corporation shall hold office until his or her successor is elected and has
qualified. Any officer or agent of the Corporation may be removed by the
Board of Directors whenever, in its judgment, the best interests of the
Corporation will be served thereby, but such removal shall be without
prejudice to the contractual rights, if any, of the person so removed.
SECTION 5.4. COMPENSATION OF OFFICERS. The compensation of officers and
agents of the Corporation shall be fixed by the Board of Directors, or by the
Chairman to the extent provided by the Board of Directors with respect to
officers appointed by the Chairman.
SECTION 5.5. POWERS AND DUTIES. All officers and agents of the
Corporation, as between themselves and the Corporation, shall have such
authority and perform such duties in the management of the Corporation as may
be provided in or pursuant to these By-Laws or, to the extent not so
provided, as may be prescribed by the Board of Directors; provided that no
rights of any third party shall be affected or impaired by any such By-Law or
resolution of the Board unless such third party has knowledge thereof.
SECTION 5.6. THE CHAIRMAN. The Chairman shall be the chief executive
officer of the Corporation, shall preside at all meetings of the stockholders
and of the Board of Directors, shall have general and active management of
the business of the Corporation, shall see that all orders and resolutions of
the Board of Directors are carried into effect and, in connection therewith,
shall be authorized to delegate to the President or to one or more Vice
Presidents such of his or her powers and duties at such times and in such
manner as he or she may deem advisable, shall be a signatory on all Annual
and Semi-Annual Reports as may be sent to stockholders, and shall perform
such other duties as the Board of Directors may from time to time prescribe.
SECTION 5.7. THE PRESIDENT. The President shall perform such duties as the
Board of Directors and the Chairman may from time to time prescribe and
shall, in the absence or disability of the Chairman, exercise the powers and
perform the duties of the Chairman. The President shall be authorized to
delegate to one or more Vice Presidents such of his or her powers and duties
at such times and in such manner as he or she may deem advisable.
SECTION 5.8. THE VICE PRESIDENTS. The Vice Presidents shall be of such
number and shall have such titles as may be determined from time to time by
the Board of Directors. The Vice President, or, if there shall be more than
one, the Vice Presidents in such order as may be determined from time to time
by the Board of Directors or the Chairman, shall, in the absence or
disability of the President, exercise the powers and perform the duties of
the President, and shall perform such other duties as the Board of Directors
or the Chairman may from time to time prescribe.
SECTION 5.9. THE ASSISTANT VICE PRESIDENTS. The Assistant Vice President,
or, if there shall be more than one, the Assistant Vice Presidents in such
order as may be determined from time to time by the Board of Directors or the
Chairman, shall perform such duties and have such powers as may be assigned
them from time to time by the Board of Directors or the Chairman.
SECTION 5.10. THE SECRETARY. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the stockholders and record all
the proceedings of the meetings of the stockholders and of the Board of
Directors in a book to be kept for that purpose, and shall perform like
duties for the standing committees when required. He or she shall give, or
cause to be given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such other duties and
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have such powers as the Board of Directors or the Chairman may from time to
time prescribe. He or she shall keep in safe custody the seal of the
Corporation and affix or cause the same to be affixed to any instrument
requiring it, and, when so affixed, it shall be attested by his or her
signature or by the signature of an Assistant Secretary.
SECTION 5.11. THE ASSISTANT SECRETARIES. The Assistant Secretary, or, if
there shall be more than one, the Assistant Secretaries in such order as may
be determined from time to time by the Board of Directors or the Chairman,
shall, in the absence or disability of the Secretary, perform the duties and
exercise the powers of the Secretary and shall perform such duties and have
such other powers as the Board of Directors or the Chairman may from time to
time prescribe.
SECTION 5.12. THE TREASURER. The Treasurer shall be the chief financial
officer of the Corporation. He or she shall keep or cause to be kept full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation, and he or she shall render to the Board of Directors and the
Chairman, whenever any of them require it, an account of his or her
transactions as Treasurer and of the financial condition of the Corporation,
and he or she shall perform such other duties as the Board of Directors or
the Chairman may from time to time prescribe.
SECTION 5.13. THE ASSISTANT TREASURERS. The Assistant Treasurer, or, if
there shall be more than one, the Assistant Treasurers in such order as may
be determined from time to time by the Board of Directors or the Chairman,
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties and
have such other powers as the Board of Directors or the Chairman may from
time to time prescribe.
SECTION 5.14. DELEGATION OF DUTIES. Whenever an officer is absent or
disabled, or whenever for any reason the Board of Directors may deem it
desirable, the Board of Directors may delegate the powers and duties of an
officer or officers to any other officer or officers or to any Director or
Directors.
ARTICLE VI
CAPITAL STOCK
SECTION 6.1. ISSUANCE OF STOCK. The Corporation shall not issue its shares
of capital stock except as approved by the Board of Directors.
SECTION 6.2. CERTIFICATES OF STOCK. Certificates for shares of each class
of the capital stock of the Corporation shall be in such form and of such
design as the Board of Directors shall approve, subject to the right of the
Board of Directors to change such form and design at any time or from time to
time, and shall be entered in the books of the Corporation as they are
issued. Each such certificate shall bear a distinguishing number; shall
exhibit the holder's name and certify the number of full shares owned by such
holder; shall be signed by or in the name of the Corporation by the
President, or a Vice President or an Assistant Treasurer, and countersigned
by the Secretary or an Assistant Secretary or the Treasurer of the
Corporation; shall be sealed with the corporate seal; and shall contain such
recitals as may be required by law. Where any stock certificate is signed by
a Transfer Agent or by a Registrar, the signature of such corporate officers
and the corporate seal may be facsimile, printed or engraved. The Corporation
may, at its option, defer the issuance of a certificate or certificates to
evidence shares of capital stock owned of record by any stockholder until
such time as demand therefor shall be made upon the Corporation or its
Transfer Agent, but upon the making of such demand each stockholder shall be
entitled to such certificate or certificates.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall appear on, any such certificate or certificates
shall cease to be such officer or officers of the Corporation, whether
because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate
or certificates shall, nevertheless, be adopted by the Corporation and be
issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures shall
appear therein had not ceased to be such officer or officers of the
Corporation.
No certificate shall be issued for any share of stock until such share is
fully paid.
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SECTION 6.3. TRANSFER OF STOCK. Transfers of shares of the capital stock
of the Corporation shall be made only on the books of the Corporation by the
holder thereof, or by his attorney thereunto duly authorized by a power of
attorney duly executed and filed with the Corporation or a Transfer Agent of
the Corporation, if any, upon written request in proper form if no share
certificate has been issued, or in the event such certificate has been
issued, upon presentation and surrender in proper form of said certificate.
SECTION 6.4. RECORD DATE. The Board of Directors may fix in advance a date
as the record date for the purpose of determining stockholders entitled to
notice of, or to vote at, any meeting of stockholders, or stockholders
entitled to receive payment of any dividend or the allotment of any rights,
or in order to make a determination of stockholders for any other purpose.
Such date, in any case shall be not more than ninety (90) days, and in case
of a meeting of stockholders not less than ten (10) days prior to the date on
which particular action requiring such determination of stockholders is to be
taken. In lieu of fixing a record date the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, twenty (20) days. If the stock transfer books are closed
for the purpose of determining stockholders entitled to notice of a vote at a
meeting of stockholders, such books shall be closed for at least ten (10)
days immediately preceding such meeting.
SECTION 6.5. LOST, STOLEN, DESTROYED AND MULTILATED CERTIFICATES. The
Board of Directors may direct a new certificate or certificates to be issued
in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon satisfactory
proof of such loss, theft, or destruction; and the Board of Directors may, in
its discretion, require the owner of the lost, stolen or destroyed
certificate, or his legal representative, to give to the Corporation and to
such Registrar, Transfer Agent and/or Transfer Clerk as may be authorized or
required to countersign such new certificate or certificates, a bond in such
sum and of such type as they may direct, and with such surety or sureties, as
they may direct, as indemnity against any claim that may be against them or
any of them on account of or in connection with the alleged loss, theft or
destruction of any such certificate.
SECTION 6.6. REGISTERED OWNERS OF STOCK. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares of stock to receive dividends, and to vote as such owner, and
to hold liable for calls and assessments a person registered on its books as
the owner of shares of stock, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Maryland.
SECTION 6.7. FRACTIONAL DENOMINATIONS. Subject to any applicable
provisions of law and the Charter of the Corporation, the Corporation may
issue shares of its capital stock in fractional denominations, provided that
the transactions in which and the terms and conditions upon which shares in
fractional denominations may be issued may from time to time be limited or
determined by or under the authority of the Board of Directors.
ARTICLE VII
SALE AND REDEMPTION OF STOCK
SECTION 7.1. SALE OF STOCK. Upon the sale of each share of its Common
Stock, except as otherwise permitted by applicable laws and regulations, the
Corporation shall receive in cash or in securities not less than the current
net asset value thereof, exclusive of any distributing commission or
discount, and in no event less than the par value thereof.
SECTION 7.2. REDEMPTION OF STOCK. Subject to and in accordance with any
applicable laws and regulations and any applicable provisions of the
Corporation's Articles of Incorporation, the Corporation shall redeem all
outstanding shares of its capital stock duly delivered or offered for
redemption by any registered stockholder in a manner prescribed by or under
authority of the Board of Directors. Any shares so delivered or offered for
redemption shall be redeemed at a redemption price prescribed by the Board of
Directors in accordance with applicable laws and regulations; provided that
in no event shall such price be less than the applicable net asset value of
such shares. The Corporation may redeem, at current net asset value, shares
not offered for redemption held by any shareholder whose shares have a value
of less
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than $100, or such lesser amount as may be fixed by the Board of Directors;
provided that before the Corporation redeems such shares it must notify the
shareholder that the value of his shares is less than $100 and allow him 60
days to make an additional investment in an amount which will increase the
value of his account to $100 or more. The Corporation shall pay redemption
prices in cash.
ARTICLE VIII
DIVIDENDS AND DISTRIBUTIONS
Subject to any applicable provisions of law and the Charter of the
Corporation, dividends and distributions upon the Common Stock of the
Corporation may be declared at such intervals as the Board of Directors may
determine, in cash, in securities or other property, or in shares of stock of
the Corporation, from any sources permitted by law, all as the Board of
Directors shall from time to time determine.
Inasmuch as the computation of net income and net profits from the sale of
securities or other properties for federal income tax purposes may vary from
the computation thereof on the books of the Corporation, the Board of
Directors shall have power, in its discretion, to distribute as income
dividends and as capital gain distributions, respectively, amounts sufficient
to enable the Corporation to avoid or reduce liability for federal income
taxes.
ARTICLE IX
BOOKS AND RECORDS
SECTION 9.1. LOCATION. The books and records of the Corporation may be
kept outside the State of Maryland at such place or places as the Board of
Directors may from time to time determine, except as otherwise required by
law.
SECTION 9.2. STOCK LEDGERS. The Corporation shall maintain at the office
of its Transfer Agent an original stock ledger containing the names and
addresses of all stockholders and the number of shares held by each
stockholder. Such stock ledger may be in written form or any other form
capable of being converted into written form within a reasonable time for
visual inspection.
SECTION 9.3. ANNUAL STATEMENT. The President or a Vice President or the
Treasurer shall prepare or cause to be prepared annually a full and correct
statement of the affairs of the Corporation, including a statement of assets
and liabilities and a statement of operations for the preceding fiscal year,
which shall be submitted at the annual meeting of stockholders if such
meeting be held, and shall be filed within twenty (20) days thereafter at the
principal office of the Corporation in the State of Maryland.
ARTICLE X
WAIVER OF NOTICE
Whenever any notice of the time, place or purpose of any meeting of
stockholders, directors, or of any committee is required to be given under
the provisions of the statute or under the provisions of the Charter of the
Corporation or these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice and filed with the records of the
meeting, whether before or after the holding thereof, or actual attendance at
the meeting of Directors or committee in person, shall be deemed equivalent
to the giving of such notice to such person.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. SEAL. The Board of Directors shall adopt a corporate seal,
which shall be in the form of a circle, and shall have inscribed thereon the
name of the Corporation, the year of its incorporation, and the words
"Corporate Seal--Maryland." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
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SECTION 11.2. FISCAL YEAR. The fiscal year of the Corporation shall end on
such date as the Board of Directors may by resolution specify, and the Board
of Directors may by resolution change such date for future fiscal years at
any time and from time to time.
SECTION 11.3. ORDERS FOR PAYMENT OF MONEY. All orders or instructions for
the payment of money of the Corporation, and all notes or other evidences of
indebtedness issued in the name of the Corporation, shall be signed by such
officer or officers or such other person or persons as the Board of Directors
may from time to time designate, or as may be specified in or pursuant to the
agreement between the Corporation and the bank or trust company appointed as
Custodian of the securities and funds of the Corporation.
ARTICLE XII
COMPLIANCE WITH FEDERAL REGULATIONS
The Board of Directors is hereby empowered to take such action as they may
deem to be necessary, desirable or appropriate so that the Corporation is or
shall be in compliance with any federal or state statute, rule or regulation
with which compliance by the Corporation is required.
ARTICLE XIII
AMENDMENTS
These By-Laws may be amended, altered, or repealed at any annual or
special meeting of the stockholders by the affirmative vote of the holders of
a majority of the shares of capital stock of the Corporation issued and
outstanding and entitled to vote, provided notice of the general purpose of
the proposed amendment, alteration or repeal is given in the notice of said
meeting; or, at any meeting of the Board of Directors, by a vote of a
majority of the whole Board of Directors, provided, however, that any By-Law
or amendment or alteration of the By-Laws adopted by the Board of Directors
may be amended, altered or repealed and any By-Law repealed by the Board of
Directors may be reinstated, by vote of the stockholders of the Corporation.
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MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
OMNIBUS SELECTED DEALER AGREEMENT
Dear Sir or Madam:
We, Morgan Stanley Dean Witter Distributors Inc. (the "Distributor") have a
distribution agreement (the "Distribution Agreement") with each of the open-end
investment companies listed in Schedule A attached hereto (each, a "Fund"),
pursuant to which we act as the Distributor for the sale of each Fund's shares
of common stock or beneficial interest, as the case may be, (the "Shares").
Under the Distribution Agreement, we have the right to distribute Shares for
resale.
Each Fund is an open-end management investment company registered under the
Investment Company Act of 1940, as amended, and the Shares being offered to the
public are registered under the Securities Act of 1933, as amended (the
"Securities Act"). You have received a copy of the Distribution Agreements
between us and each Fund and reference is made herein to certain provisions of
such Distribution Agreements. The terms used herein, including "Prospectus" and
"Registration Statement" of each Fund and "Selected Dealer" shall have the same
meaning in this Agreement as in the Distribution Agreements. As principal, we
offer to sell Shares to your customers, upon the following terms and conditions:
1. In all sales of Shares to the public you shall act on behalf of your
customers which for purposes of this Agreement are limited to customers for
which Nations Banc Investments, Inc. is the Introducing Broker, and in no
transaction shall you have any authority to act as agent for a Fund, for us or
for any Selected Dealer.
2. Orders received from you will be accepted through us or on our behalf
only at the public offering price applicable to each order, as set forth in the
applicable current Prospectus. The procedure relating to the handling of orders
shall be subject to written instructions which we or the applicable Fund shall
forward from time to time to you. All orders are subject to acceptance or
rejection by us or a Fund in the sole discretion of either. The Distributor of
the Fund will promptly notify you in writing of any such rejection.
3. You shall not place orders for any Shares unless you have already
received purchase orders for such Shares at the applicable public offering price
and subject to the terms hereof and of the applicable Distribution Agreement and
Prospectus. In connection herewith, you agree to abide by the terms of the
applicable Distribution Agreement and Prospectus to the extent required
hereunder. Furthermore, you agree that (i) you will offer or sell any of the
Shares only under circumstances that will result in compliance with all
applicable Federal and state securities laws; (ii) you will not furnish or cause
to be furnished to any person any information relating to the Shares which is
inconsistent in any respect with the information contained in the applicable
Prospectus (as then amended or supplemented) or cause any advertisements to be
published by radio or television or in any newspaper or posted in any public
place or use any sales promotional material without our consent and the consent
of the applicable Fund; and (iii) you will endeavor to obtain proxies from
purchasers of Shares. You also agree that you will be liable to Distributor for
payment of the purchase price for Shares purchased by customers and that you
shall make payment for such shares when due.
4. We will compensate you for sales of shares of the Funds and personal
services to Fund shareholders by paying you a sales charge and/or other
commission (which may be in the form of a gross sales credit and/or an annual
residual commission) and/or a service fee, each as separately agreed by you and
us with respect to each Fund.
5. If any Shares sold to your customers under the terms of this Agreement
are repurchased by us for the account of a Fund or are tendered for redemption
within seven business days after the date of the confirmation of the original
purchase by you, it is agreed that you shall forfeit your right to, and refund
to us, any commission received by you with respect to such Shares.
6. No person is authorized to make any representations concerning the Shares
or the Funds except those contained in the current applicable Prospectus and in
such printed information subsequently issued by us or a Fund as information
supplemental to such Prospectus. In selling Shares, you shall rely solely on the
representations contained in the applicable Prospectus and supplemental
information mentioned above. Any printed information which we furnish you other
than the Prospectus and the Funds' periodic reports and
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proxy solicitation materials are our sole responsibility and not the
responsibility of the Funds, and you agree that the Funds shall have no
liability or responsibility to you in these respects unless expressly assumed in
connection therewith.
7. You are hereby authorized (i) to place orders directly with a Fund or its
agent for shares of the Fund to be sold by us subject to the applicable terms
and conditions governing the placement of orders for the purchase of Fund
Shares, as set forth in the Distribution Agreement, and (ii) to tender Shares
directly to the Fund or its agent for redemption subject to the applicable terms
and conditions set forth in the Distribution Agreement. We will provide you with
copies of any updates to the Distribution Agreement.
8. We reserve the right in our discretion, without notice, to suspend sales
or withdraw the offering of Shares entirely. Each party hereto has the right to
cancel this agreement with respect to one or more Funds upon fifteen days prior
written notice to the other party.
9. I. You shall indemnify and hold us harmless from and against any and all
losses, costs, (including reasonable attorney's fees) claims, damages and
liabilities which arise as a result of action taken pursuant to instructions
from you, or on your behalf to: (a)(i) place orders for Shares of a Fund with
the Fund's transfer agent or direct the transfer agent to receive instructions
for the order of Shares, and (ii) accept monies or direct that the transfer
agent accept monies as payment for the order of such Shares, all as contemplated
by and in accordance with Section 3 of the applicable Distribution Agreement;
(b)(i) place orders for the redemption of Shares of a Fund with the Fund's
transfer agent or direct the transfer agent to receive instruction for the
redemption of such Shares and (ii) to pay redemption proceeds or to direct that
the transfer agent pay redemption proceeds in connection with orders for the
redemption of Shares, all as contemplated by and in accordance with Section 4 of
the applicable Distribution Agreement; Distributor agrees to indemnify and hold
harmless you and your affiliates, officers, directors, control persons and
employees from and against any and all losses, costs (including reasonable
attorney's fees), claims, damages and liabilities which arise as a result of
Distributor's failure to fulfill its obligations hereunder and from any alleged
inaccuracy, omission or misrepresentation contained in any prospectus or any
advertising, or sales literature prepared by Distributor or the Fund provided,
however, that in no case, (i) is this indemnity in favor of you or us and any of
other party's such controlling persons to be deemed to protect us or any such
controlling persons against any liability to which we or any such controlling
persons would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of our duties or by reason of reckless
disregard of our obligations and duties under this Agreement or the applicable
Distribution Agreement; or (ii) are you to be liable under the indemnity
agreement contained in this paragraph with respect to any claim made against us
or any such controlling persons, unless we or any such controlling persons, as
the case may be, shall have notified you in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon us or such controlling persons (or
after we or such controlling persons shall have received notice of such service
on any designated agent), notwithstanding the failure to notify you of any such
claim shall not relieve you from any liability which you may have to the person
against whom such action is brought otherwise than on account of the indemnity
agreement contained in this paragraph.
II. You will be entitled to participate at your own expense in the defense,
or, if you so elect, to assume the defense, of any suit brought to enforce any
such liability, but if you elect to assume the defense, such defense shall be
conducted by counsel chosen by you and reasonably satisfactory to us or such
controlling person or persons, defendant or defendants in the suit. In the event
you elect to assume the defense of any such suit and retain such counsel, we or
such controlling person or persons, defendant or defendants in the suit, shall
bear the fees and expenses of any additional counsel retained by them, but, in
case you do not elect to assume the defense of any such suit, you will reimburse
us or such controlling person or persons, defendant or defendants in the suit,
for the reasonable fees and expenses of any counsel retained by them. Each party
shall promptly notify the other party to this Agreement of the commencement of
any litigation or proceedings against it or any of its officers or directors in
connection with the issuance or sale of the Shares pursuant to this Agreement.
2
<PAGE>
III. If the indemnification provided for in this Section 9 is unavailable or
insufficient to hold harmless the Distributor, as provided above in respect of
any losses, claims, damages, liabilities or expenses (or actions in respect
thereof) referred to herein, then you shall contribute to the amount paid or
payable by us as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by you on the one hand and us on the
other from the offering of the Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law, then you
shall contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative benefits but
also your relative fault on the one hand and our relative fault on the other, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses (or actions in respect thereof), as
well as any other relevant equitable considerations. You and we agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above. The amount paid or payable by us
as a result of the losses, claims, damages, liabilities or expenses (or actions
in respect thereof) referred to above shall be deemed to include any legal or
other expenses reasonably incurred by us in connection with investigating or
defending any such claim. Notwithstanding the provisions of this subsection
(III), you shall not be required to contribute any amount in excess of the
amount by which the total price at which the Shares distributed by you to the
public were offered to the public exceeds the amount of any damages which you
have otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
IV. Notwithstanding the provisions of subsections (I), (II) and (III), we
shall indemnify, defend and hold harmless you and your officers, directors,
employees, affiliates, agents, successors and assigns from and against any and
all claims and all related losses, expenses, damages, cost and liabilities
including reasonable attorneys' fees and expenses incurred in investigation or
defense, arising out of or related to any breach of any representation, warranty
or covenant by us contained in Section 15 of this Agreement.
11. We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the distribution and
redemption of Shares. Neither party shall be under any liability to the other
party except for lack of good faith and for obligations expressly assumed
herein. Nothing contained in this paragraph is intended to operate as, and the
provisions of this paragraph shall not in any way whatsoever constitute, a
waiver by you of compliance with any provision of the Securities Act, or of the
rules and regulations of the Securities and Exchange Commission issued
thereunder.
12. Each party represents that it is a member in good standing of the
National Association of Securities Dealers, Inc. and, with respect to any sales
in the United States, each party hereby agrees to abide by the Rules of Fair
Practice of such Association relating to the performance of the obligations
hereunder.
13. We will inform you in writing as to the states in which we believe the
Shares have been qualified for sale under, or are exempt from the requirements
of, the respective securities laws of such states, but we assume no
responsibility or obligation as to your right to sell Shares in any
jurisdiction.
14. Notwithstanding any other provision of this Agreement to the contrary,
we represent and warrant that the names and addresses of your customers (or
customers of your affiliates) which have or which may come to our attention in
connection with this Agreement are confidential and are your exclusive property
and shall not be utilized by us except in connection with the functions
performed by us in connection with this Agreement. Notwithstanding the
foregoing, should a customer request, that we or an organization affiliated with
us, provide services to such customer, we or such affiliated organization shall
in no way violate this representation and warranty, nor be considered in breach
of this Agreement.
15. We represent, warrant, and covenant to you that the marketing materials,
any communications distributed to the public and training materials designed by
us or our agents relating to the product sold under this Agreement are true and
accurate and do not omit to state a fact necessary to make the
3
<PAGE>
information contained therein not misleading and comply with applicable federal
and state laws. We further represent, warrant, and covenant to you that the
performance by us of our obligations under this Agreement in no way constitutes
an infringement on or other violation of copyright, trade secret, trademark,
proprietary information or non-disclosure rights of any other party.
16. We shall maintain a contingency disaster recovery plan, and, in the
event you are so required by any regulatory or governmental agency, we shall
make such plan available to you for inspection at your office upon reasonable
advance notice by you. Each party agrees that it will at all times conduct its
activities under this Agreement in an equitable, legal and professional manner.
17. We understand that the performance of your and our obligations under
this Agreement is subject to examination during business hours by your
authorized representatives and auditors and by federal and state regulatory
agencies, and we agree that upon being given reasonable notice and proper
identification we shall submit or furnish at a reasonable time and place to any
such representative or regulatory agency reports, information, or other data
relating to this Agreement as may reasonably be required or requested by you. We
shall maintain and make available to you upon reasonable notice all material,
data, files, and records relating to this Agreement for a period of not less
than three years after the termination of this Agreement.
18. The sales, advertising and promotional materials designed by either
party or its agents relating to products sold under this Agreement shall comply
with applicable federal and state laws. Each party agrees that the sales,
advertising and promotional materials shall be made available to the other party
prior to distribution to your employees or customers.
19. Any controversy or claim between or among the parties hereto arising out
of or relating to this Agreement, including any claim based on or arising from
an alleged tort, shall be determined by binding arbitration in accordance with
the rules of the National Association of Securities Dealers, Inc. Judgment upon
any arbitration award may be entered in any court having jurisdiction. Any party
to this Agreement may bring an action, including a summary or expedited
proceeding, to compel arbitration of any controversy or claim to which this
Agreement applies in any court having jurisdiction over such action.
20. All notices or other communications under this Agreement shall be in
writing and given as follows:
If to us: Morgan Stanley Dean Witter Distributors
Inc.
Attn: Barry Fink,
Two World Trade Center
New York, NY 10048
If to you: National Financial
Services Corporation
Attn: Robert [Illegible]
4201 Congress Street, Suite 245
Boston, MA
or such other address as the parties may hereafter specify in writing. Each such
notice to any party shall be either hand-delivered or transmitted, postage
prepaid, by registered or certified United States mail with return receipt
requested, and shall be deemed effective only upon receipt.
4
<PAGE>
21. This Agreement shall become effective as of the date of your acceptance
hereof, provided that you return to us promptly a signed and dated copy.
MORGAN STANLEY DEAN WITTER
DISTRIBUTORS INC.
By /s/ [Illegible]
...................................
(Authorized Signature)
Please return one signed copy of this agreement to:
Morgan Stanley Dean Witter
Distributors Inc.
Two World Trade Center
New York, New York 10048
Accepted:
Firm Name: /s/ National Financial Services Corp.
......................................
By: /s/ [Illegible]
.............................................
Address: 200 Liberty Street
........................................
New York, New York
........................................
Date: October 17, 1998
...........................................
5
<PAGE>
SCHEDULE A
<TABLE>
<C> <S>
Dean Witter Global Asset Allocation Fund
Morgan Stanley Dean Witter American Value Fund
Morgan Stanley Dean Witter Balanced Growth Fund
Morgan Stanley Dean Witter Balanced Income Fund
Morgan Stanley Dean Witter California Tax-Free Income Fund
Morgan Stanley Dean Witter Capital Appreciation Fund
Morgan Stanley Dean Witter Capital Growth Securities
Morgan Stanley Dean Witter Competitive Edge Fund, "Best Ideas" Portfolio
Morgan Stanley Dean Witter Convertible Securities Trust
Morgan Stanley Dean Witter Developing Growth Securities Trust
Morgan Stanley Dean Witter Diversified Income Trust
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Morgan Stanley Dean Witter Equity Fund
Morgan Stanley Dean Witter European Growth Fund Inc.
Morgan Stanley Dean Witter Federal Securities Trust
Morgan Stanley Dean Witter Financial Services Trust
Morgan Stanley Dean Witter Fund of Funds
Morgan Stanley Dean Witter Global Dividend Growth Securities
Morgan Stanley Dean Witter Global Short-Term Income Fund Inc.
Morgan Stanley Dean Witter Global Utilities Fund
Morgan Stanley Dean Witter Growth Fund
Morgan Stanley Dean Witter Hawaii Municipal Trust
Morgan Stanley Dean Witter Health Sciences Trust
Morgan Stanley Dean Witter High Yield Securities Inc.
Morgan Stanley Dean Witter Income Builder Fund
Morgan Stanley Dean Witter Information Fund
Morgan Stanley Dean Witter Intermediate Income Securities Inc.
Morgan Stanley Dean Witter International SmallCap Fund
Morgan Stanley Dean Witter Japan Fund
Morgan Stanley Dean Witter Limited Term Municipal Trust
Morgan Stanley Dean Witter Market Leader Trust
Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
Morgan Stanley Dean Witter Mid-Cap Growth Fund
Morgan Stanley Dean Witter Multi-State Municipal Series Trust
Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
Morgan Stanley Dean Witter New York Tax-Free Income Fund
Morgan Stanley Dean Witter Pacific Growth Fund Inc.
Morgan Stanley Dean Witter Precious Metals and Minerals Trust
Morgan Stanley Dean Witter S&P 500 Index Fund
Morgan Stanley Dean Witter S&P 500 Select Fund
Morgan Stanley Dean Witter Short-Term Bond Fund
Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
Morgan Stanley Dean Witter Special Value Fund
Morgan Stanley Dean Witter Strategist Fund
Morgan Stanley Dean Witter Tax-Exempt Securities Trust
Morgan Stanley Dean Witter U.S. Government Securities Trust
Morgan Stanley Dean Witter Utilities Fund
Morgan Stanley Dean Witter Value-Added Market Series
Morgan Stanley Dean Witter Value Fund
Morgan Stanley Dean Witter World Wide Income Trust
</TABLE>
A-1
<PAGE>
SECOND AMENDED AND RESTATED
RETIREMENT PLAN FOR
NON-INTERESTED TRUSTEES
OR DIRECTORS
Certain of the investment companies for which Morgan Stanley Dean Witter
Advisors Inc. ("MSDW Advisors") currently acts as manager or adviser adopted a
Retirement Plan for Non-Interested Trustees and Directors (the "Original Plan")
on February 21, 1991 (the "Commencement Date"). The Original Plan was amended
and restated on October 22, 1993, effective January 1, 1994 and further amended
by First Amendment dated December 19, 1995 and by Second Amendment dated May 8,
1997. The participating Funds now desire to amend and restate the Plan further
as provided herein effective as of the Commencement Date (as so amended, the
"Plan"), for the purposes of expanding the flexibility of Non-Interested
Trustees and Directors to make and change their elections of benefits.
1. DEFINITIONS
(a) "Independent Board Member" shall mean (i) a Trustee of an Adopting Fund
if the Adopting Fund is organized as a Massachusetts business trust, (ii) a
Director of an Adopting Fund if the Adopting Fund is organized as a corporation,
and (iii) a "director" (as such term is defined in Section 2(a)(12) of the
Investment Company Act of 1940, as amended [the "Act"]) of an Adopting Fund if
the Adopting Fund is any other type of organization, who in any such case is not
an interested person (as such term is defined in Section 2(a)(19) of the Act) of
MSDW Advisors.
(b) "Eligible Board Member" shall mean an Independent Board Member who at
the time of Retirement (as hereinafter defined) has served as an Independent
Board Member of any Adopting Fund for at least five years, or such lesser period
as may be determined by the Board.
(c) "Eligible Service" shall mean service as an Independent Board Member.
(d) "Eligible Retirement Date" shall mean, with respect to any Independent
Board Member, the later of (i) January 1, 1993, (ii) the first day of the
calendar month following the month in which such Independent Board Member's
seventy-second birthday occurs, or (iii) such later date as the Board may
establish as his or her "Eligible Retirement Date."
(e) "Retirement" shall mean any termination of service of an Independent
Board Member except any termination which the Board determines to have resulted
from the Independent Board Member's willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Independent Board Member.
(f) "Benefit" shall mean with respect to any Eligible Board Member, (i) the
Regular Benefit, unless the Alternate Benefit has been elected or the Early
Benefit granted, (ii) the Alternate Benefit, if elected by such Eligible Board
Member, unless the Early Benefit has been granted, or (iii) the Early Benefit,
if granted by the Board.
(g) "Eligible Compensation" shall mean, with respect to any Eligible Board
Member of any Adopting Fund, an amount equal to one-fifth of the total
compensation, inclusive of compensation as a member of the Board or of a Board
Committee or as chairperson of a Board Committee, earned by such Eligible Board
Member for Eligible Service with respect to such Adopting Fund (other than under
this Plan) in the five year period prior to the date of his or her Retirement.
(h) "Actuarial Equivalent" shall mean an actuarially equivalent benefit, as
computed by the Board with the advice of an enrolled actuary (as defined in the
Employee Retirement Income Security Act of 1974, as amended ["ERISA"]), using
assumptions determined by the Board at the time of the computation.
(i) "Board" shall mean, with respect to any Adopting Fund, the Board of
Directors or Trustee or "directors," (as such term is defined in Section
2(a)(12) of the Act, of such Adopting Fund.
(j) "Adoption Date" shall mean February 21, 1991.
1
<PAGE>
2. ELIGIBILITY
Each Eligible Board Member will be eligible to receive a Benefit from each
Adopting Fund commencing on such Eligible Board Member's Eligible Retirement
Date.
3. RETIREMENT DATE; AMOUNT OF BENEFIT
(a) RETIREMENT. Each Independent Board Member will retire not later than his
or her Eligible Retirement Date. The foregoing provision shall be deemed by the
adoption of this Plan by any Fund to be an amendment of such Fund's by-laws
superseding any provision therein that an Independent Board Member shall serve
until his or her successor shall have been elected and qualified.
Notwithstanding the foregoing, the Board of any Adopting Fund may, to avoid the
simultaneous retirement of more than one of the Independent Board Members or for
any other appropriate reason, waive the obligation of any Independent Board
Member to retire on such date and may establish a later date as his or her
"Eligible Retirement Date." Any establishment of an Eligible Retirement Date may
be further extended by the Board.
(b) REGULAR RETIREMENT BENEFIT. Upon Retirement, each Eligible Board Member
will receive, commencing as of such Eligible Board Member's Eligible Retirement
Date and continuing for the remainder of the Eligible Board Member's life, from
each Adopting Fund a retirement benefit (the "Regular Benefit") paid at an
annual rate equal to the percentage of his or her Eligible Compensation
established by resolution of the Board of such Adopting Fund most recently
adopted prior to the date of his or her retirement (the "Most Recent
Resolution") as the "Minimum Percentage," PLUS an additional percentage of such
Eligible Compensation for each full month of Eligible Service for any of the
Adopting Funds in excess of five years established by the Most Recent Resolution
as the "Monthly Additional Percentage," up to the percentage established by the
Most Recent Resolution as the "Maximum Percentage" of such Eligible Compensation
for ten or more years of Eligible Service for any of the Adopting Funds.
(c) ELECTION OF ALTERNATE PAYMENT OF BENEFIT. Each Independent Board Member
shall have the option, exercisable at any time, and revisable at any time and
from time to time, prior to his or her first acceptance of benefits under the
Plan to elect (i) to receive, subject to being or becoming an Eligible Board
Member, a retirement benefit (the "Alternate Benefit") based upon the combined
life expectancy of such Eligible Board Member and his or her spouse on the date
of such Eligible Board Member's Retirement (rather than solely upon such
Eligible Board Member's own life, as shall be the case unless such Eligible
Board Member shall otherwise elect as provided in this Section 3(c)), and (ii)
if the Independent Board Member elects to receive the Alternate Benefit, to
elect a benefit either (x) to the last survivor of the Eligible Board Member or
spouse, whether the Eligible Board Member or spouse is the last survivor (a
"joint and last survivor" benefit) or (y) to the Eligible Board Member's spouse
if the spouse survives the Eligible Board Member (a "joint and contingent
survivor" benefit) equal in periodic amount to a percentage (the "Designated
Survivor's Percentage") of the periodic amount that would be, or would be
assumed to be, in effect while both the Eligible Board Member and spouse were
alive. The Designated Survivor's Percentage shall be the percentage stated in
the most recently delivered notice of election given by such Independent Board
Member, or, if no percentage is stated in any such notice, 100%. Payment of the
Alternate Benefit shall commence on the later of such Eligible Board Member's
Eligible Retirement Date or the date of his or her Retirement, shall be reduced
to the Designated Survivor's Percentage (if less than 100%) upon the earlier of
the deceases of the Eligible Board Member and spouse in the case of a joint and
last survivor benefit, or of the Eligible Board Member in the case of a joint
and contingent survivor benefit, and shall be payable through the remainder of
the life of the survivor of such Eligible Board Member and spouse. The Alternate
Benefit shall be the Actuarial Equivalent of the Regular Benefit provided under
paragraph 3(b). In the event of the death of an Eligible Board Member who has
chosen the Alternate Benefit prior to such Eligible Board Member's Retirement,
his or her spouse shall be entitled to a retirement benefit, commencing upon
such death, which shall be the Actuarial Equivalent of the benefit such spouse
would have received had such Eligible Board Member died on his or her Eligible
Retirement Date.
(d) EARLY PAYMENT OF BENEFIT. An Eligible Board Member for good cause may
apply to the Board of any Adopting Fund for, and, at the discretion of such
Board, may be granted, a retirement benefit (the "Early Benefit") which is the
Actuarial Equivalent of the Regular Benefit or Alternate Benefit previously
elected
2
<PAGE>
by such Eligible Board Member. Payment of the Early Benefit shall commence on a
date fixed by the Board in its sole discretion as such Eligible Board Member's
Eligible Retirement Date and shall be payable through the remainder of such
Eligible Board Member's life, or, if the Alternate Benefit had been elected, the
later of the lives of such Eligible Board Member and spouse. Good cause for
these purposes may include (but is not limited to) the permanent disability of
the Eligible Board Member.
(e) Anything contained herein to the contrary notwithstanding, upon the
adoption by an Adopting Fund of a plan of liquidation, such Adopting Fund shall
pay to each Eligible Board Member who has retired, in lieu of his or her Benefit
from such Adopting Fund, an amount (the "Lump Sum") equal to the then present
value of the Benefit, using a discount rate determined by the Board at the time
of the computation. The Lump Sum shall be paid by such Adopting Fund at or
before the final liquidation and dissolution of such Adopting Fund.
4. TIME OF PAYMENT
The Benefit to each Eligible Board Member or his or her spouse will, except
as provided in Section 3(c), 3(d) or 3(e) hereof, commence on such Eligible
Board Member's Eligible Retirement Date and will be paid each year in quarterly
installments that are as nearly equal as possible on the first day of each
calendar quarter.
5. PAYMENT OF BENEFIT; ALLOCATION OF COSTS
Each Adopting Fund is responsible for the payment of Benefits based upon
Eligible Compensation from such Adopting Fund, as well as its proportionate
share of all expenses of administration of the Plan, including without
limitation all accounting and legal fees and expenses and fees and expenses of
any enrolled actuary. The obligations of each Adopting Fund to pay such benefits
and expenses will not be secured or funded in any manner, and such obligations
will not have any preference over the lawful claims of the Adopting Funds'
creditors and stockholders, shareholders, beneficiaries or limited partners, as
the case may be. To the extent that an Adopting Fund consists of one or more
separate portfolios, such costs and expenses will be allocated among such
portfolios in the proportion that compensation of Independent Board Members is
allocated among such portfolios.
6. ADMINISTRATION
(a) ADMINISTRATION. Any question involving entitlement to payments under or
the administration of the Plan will be referred to the Board, which shall make
all interpretations and determinations necessary or desirable for the Plan's
administration (such interpretations and determinations to be final and
conclusive) and shall cause such records to be kept as may be necessary for the
administration of the Plan.
7. MISCELLANEOUS
(a) RIGHTS NOT ASSIGNABLE. The right to receive any payment under the Plan
is not transferable or assignable. Except as otherwise provided herein with
respect to the Alternate Benefit, the Plan shall not create any benefit, cause
of action, right of sale, transfer, assignment, pledge, encumbrance, or other
such right in any spouse or heirs or the estate of any Eligible Board Member or
retired Eligible Board Member.
(b) AMENDMENT, ETC. With respect to each Adopting Fund, the Board, including
a majority of the Independent Board Members of such Board, may at any time amend
or terminate the Plan or waive any provision of the Plan, PROVIDED, that except
as otherwise provided herein, no amendment, termination or waiver will impair
the rights of an Independent Board Member to receive upon Retirement the
payments which would have been made to such Independent Board Member had there
been no such amendment, termination or waiver (based upon such Board Member's
Eligible Service to the date of such amendment, termination or waiver) or the
rights of a retired Eligible Board Member to receive any Benefit due under the
Plan, without the consent of such Independent Board Member or Eligible Board
Member. Notwithstanding any provision to the contrary, the Board, with the
concurrence of a majority of the Independent Board Members of such Board and
without the consent of any individual Independent Board Member, may at any time
(i) amend or terminate the Plan to comply with any applicable provision of law
or any rule or regulation adopted, or proposed to be adopted, by any
governmental agency or any decision of any court or administrative agency, (ii)
change any assumptions used to determine what benefit may be an
3
<PAGE>
Actuarial Equivalent, or (iii) terminate the Plan of an Adopting Fund (an
"Acquired Adopting Fund") substantially all the assets of which are acquired by
an entity which is itself an Adopting Fund (the "Acquiring Adopting Fund")
pursuant to a plan of reorganization between the Acquired Adopting Fund and the
Acquiring Adopting Fund (the "Reorganization Plan"), such termination to be
deemed approved upon adoption of the Reorganization Plan and to be effective
upon the effectiveness of the reorganization contemplated thereby without
liability or further obligation for any benefits accrued or otherwise payable to
an Independent Board Member by the Acquired Adopting Fund.
(c) NO RIGHT TO REELECTION. Nothing in the Plan will create any obligation
on the part of the Board to nominate any Independent Board Member for
reelection.
(d) VACANCIES. Although the Board will retain the right to increase or
decrease its size, it shall be the general policy to replace each retired
Independent Board Member by selecting a new Independent Board Member from
candidates recommended by the remaining Independent Board Members.
(e) CONSULTING. Each retired Eligible Board Member may render such services
for any of the Adopting Funds, for such compensation, as may be agreed upon from
time to time by such retired Eligible Board Member and the Board.
(f) EFFECTIVENESS. The Plan will be effective for all Independent Board
Members who have dates of Retirement occurring on or after the Adoption Date.
Periods of Eligible Service shall include periods commencing prior to such date.
4
<PAGE>
MORGAN STANLEY DEAN WITTER FUNDS:
FUNDS THAT HAVE ADOPTED THE RETIREMENT PLAN
FOR NON-INTERESTED TRUSTEES OR DIRECTORS
SCHEDULE A
MARCH 1999
<TABLE>
<S> <C>
1) Active Assets California Tax-Free Trust
2) Active Assets Government Securities Trust
3) Active Assets Money Trust
4) Active Assets Tax-Free Trust
5) Morgan Stanley Dean Witter American Value Fund
6) Morgan Stanley Dean Witter California Insured Municipal Income Trust
7) Morgan Stanley Dean Witter California Quality Municipal Securities
8) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
9) Morgan Stanley Dean Witter California Tax-Free Income Fund
10) Morgan Stanley Dean Witter Capital Growth Securities
11) Morgan Stanley Dean Witter Convertible Securities Trust
12) Morgan Stanley Dean Witter Developing Growth Securities Trust
13) Morgan Stanley Dean Witter Diversified Income Trust
14) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
15) Morgan Stanley Dean Witter European Growth Fund Inc.
16) Morgan Stanley Dean Witter Federal Securities Trust
17) Morgan Stanley Dean Witter Global Dividend Growth Securities
18) Morgan Stanley Dean Witter Government Income Trust
19) Morgan Stanley Dean Witter Health Sciences Trust
20) Morgan Stanley Dean Witter High Income Advantage Trust
21) Morgan Stanley Dean Witter High Income Advantage Trust II
22) Morgan Stanley Dean Witter High Yield Securities Inc.
23) Morgan Stanley Dean Witter Income Securities Inc.
24) Morgan Stanley Dean Witter Insured Municipal Bond Trust
25) Morgan Stanley Dean Witter Insured Municipal Income Trust
26) Morgan Stanley Dean Witter Insured Municipal Securities
27) Morgan Stanley Dean Witter Insured Municipal Trust
28) Morgan Stanley Dean Witter Intermediate Income Securities
29) Morgan Stanley Dean Witter Limited Term Municipal Trust
30) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
31) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
32) Morgan Stanley Dean Witter Municipal Income Opportunities Trust
33) Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
34) Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
35) Morgan Stanley Dean Witter Municipal Income Trust
36) Morgan Stanley Dean Witter Municipal Income Trust II
37) Morgan Stanley Dean Witter Municipal Premium Income Trust
38) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
39) Morgan Stanley Dean Witter New York Municipal Money Market Trust
40) Morgan Stanley Dean Witter New York Tax-Free Income Fund
41) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
42) Morgan Stanley Dean Witter Prime Income Trust
43) Morgan Stanley Dean Witter Quality Municipal Income Trust
44) Morgan Stanley Dean Witter Quality Municipal Investment Trust
45) Morgan Stanley Dean Witter Quality Municipal Securities
46) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
47) Morgan Stanley Dean Witter Strategist Fund
5
<PAGE>
48) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
49) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
50) Morgan Stanley Dean Witter U.S. Government Money Market Trust
51) Morgan Stanley Dean Witter U.S. Government Securities Trust
52) Morgan Stanley Dean Witter Utilities Fund
53) Morgan Stanley Dean Witter Value-Added Market Series
54) Morgan Stanley Dean Witter Variable Investment Series
55) Morgan Stanley Dean Witter World Wide Income Trust
</TABLE>
6
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 22 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
April 13, 1999, relating to the financial statemenst and financial highlights of
Morgan Stanley Dean Witter Dividend Growth Securities Inc., formerly Dean
Witter Dividend Growth Securities Inc., which appears in such Statement of
Additional Information, and to the incorporation by reference of our report
into the Prospectus which constitutes part of this Registration Statement. We
also consent to the references to us under the headings "Custodian and
Independent Accountants" and "Experts" in such Statement of Additional
Information and to the reference to us under the heading "Financial
Highlights" in such Prospectus.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
April 26, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER>011
<NAME> MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES - CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-END> FEB-28-1999
<INVESTMENTS-AT-COST> 9,577,548,147
<INVESTMENTS-AT-VALUE> 18,868,988,297
<RECEIVABLES> 79,336,673
<ASSETS-OTHER> 417,537
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18,948,742,507
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27,026,447
<TOTAL-LIABILITIES> 27,026,447
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,324,194,628
<SHARES-COMMON-STOCK> 3,777,381
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<NAME> MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES - CLASS B
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<NAME> MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES - CLASS C
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<NAME> MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES - CLASS D
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