<PAGE>
Filed Pursuant to Rule 497(b)
Registration File No.: 333-85851
MORGAN STANLEY DEAN WITTER
PRECIOUS METALS AND MINERALS TRUST
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(800) 869-NEWS
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 21, 1999
TO THE SHAREHOLDERS OF MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS
TRUST:
Notice is hereby given of a Special Meeting of the Shareholders of Morgan
Stanley Dean Witter Precious Metals and Minerals Trust ("Precious Metals") to be
held in the Career Development Room, Sixty-First Floor, Two World Trade Center,
New York, New York 10048, at 10:00 A.M., New York time, on December 21, 1999,
and any adjournments thereof (the "Meeting"), for the following purposes:
1. To consider and vote upon an Agreement and Plan of Reorganization, dated
July 29, 1999 (the "Reorganization Agreement"), between Precious Metals
and Morgan Stanley Dean Witter Natural Resource Development Securities
Inc. ("Natural Resource"), pursuant to which substantially all of the
assets of Precious Metals would be combined with those of Natural Resource
and shareholders of Precious Metals would become shareholders of Natural
Resource receiving shares of Natural Resource with a value equal to the
value of their holdings in Precious Metals (the "Reorganization"); and
2. To act upon such other matters as may properly come before the Meeting.
The Reorganization is more fully described in the accompanying Proxy
Statement and Prospectus and a copy of the Reorganization Agreement is attached
as Exhibit A thereto. Shareholders of record at the close of business on
September 17, 1999 are entitled to notice of, and to vote at, the Meeting.
Please read the Proxy Statement and Prospectus carefully before telling us,
through your proxy or in person, how you wish your shares to be voted.
Alternatively, if you are eligible to vote telephonically by touchtone telephone
or electronically on the Internet (as discussed in the enclosed Proxy Statement)
you may do so in lieu of attending the Meeting in person. THE BOARD OF TRUSTEES
OF PRECIOUS METALS RECOMMENDS YOU VOTE IN FAVOR OF THE REORGANIZATION. WE URGE
YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Trustees,
BARRY FINK,
Secretary
September 29, 1999
- --------------------------------------------------------------------------------
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO
ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE
TO BE PRESENT IN PERSON, PLEASE FILL IN, SIGN AND RETURN THE ENCLOSED PROXY
IN ORDER THAT THE NECESSARY QUORUM BE REPRESENTED AT THE MEETING. THE
ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. AS
DISCUSSED IN THE ENCLOSED PROXY STATEMENT, CERTAIN SHAREHOLDERS WILL BE ABLE
TO VOTE TELEPHONICALLY BY TOUCHTONE TELEPHONE OR ELECTRONICALLY ON THE
INTERNET BY FOLLOWING INSTRUCTIONS ON THEIR PROXY CARDS OR ON THE ENCLOSED
VOTING INFORMATION CARD.
- --------------------------------------------------------------------------------
<PAGE>
MORGAN STANLEY DEAN WITTER
NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
(800) 869-NEWS
ACQUISITION OF THE ASSETS OF
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
BY AND IN EXCHANGE FOR SHARES OF
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
This Proxy Statement and Prospectus is being furnished to shareholders of
Morgan Stanley Dean Witter Precious Metals and Minerals Trust ("Precious
Metals") in connection with an Agreement and Plan of Reorganization, dated July
29, 1999 (the "Reorganization Agreement"), pursuant to which substantially all
the assets of Precious Metals will be combined with those of Morgan Stanley Dean
Witter Natural Resource Development Securities Inc. ("Natural Resource") in
exchange for shares of Natural Resource (the "Reorganization"). As a result of
this transaction, shareholders of Precious Metals will become shareholders of
Natural Resource and will receive shares of Natural Resource with a value equal
to the value of their holdings in Precious Metals. The terms and conditions of
this transaction are more fully described in this Proxy Statement and Prospectus
and in the Reorganization Agreement between Precious Metals and Natural
Resource, attached hereto as Exhibit A. The address of Precious Metals is that
of Natural Resource set forth above. This Proxy Statement also constitutes a
Prospectus of Natural Resource, which is dated September 24, 1999, filed by
Natural Resource with the Securities and Exchange Commission (the "Commission")
as part of its Registration Statement on Form N-14 (the "Registration
Statement").
Natural Resource is an open-end diversified management investment company
whose investment objective is to seek capital growth. The fund seeks to achieve
its objective by investing at least 65% of its assets in common stocks of
companies engaged in the natural resource and related businesses.
This Proxy Statement and Prospectus sets forth concisely information about
Natural Resource that shareholders of Precious Metals should know before voting
on the Reorganization Agreement. A copy of the Prospectus for Natural Resource
dated June 30, 1999, is attached as Exhibit B and incorporated herein by
reference. Also enclosed and incorporated herein by reference is Natural
Resource's Annual Report for the fiscal year ended February 28, 1999. A
Statement of Additional Information relating to the Reorganization, described in
this Proxy Statement and Prospectus (the "Additional Statement"), dated
September 24, 1999, has been filed with the Commission and is also incorporated
herein by reference. Also incorporated herein by reference are Precious Metals'
Prospectus, dated February 22, 1999, and Annual Report for its fiscal year ended
October 31, 1998 and the succeeding unaudited Semi-Annual Report for the six
months ended April 30, 1999. Such documents are available without charge by
calling (800) 869-NEWS (TOLL FREE).
Investors are advised to read and retain this Proxy Statement and Prospectus
for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROXY STATEMENT AND PROSPECTUS IS DATED SEPTEMBER 24, 1999.
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS
PAGE
-----
INTRODUCTION ............................................................. 1
General ................................................................ 1
Record Date; Share Information ......................................... 1
Proxies ................................................................ 2
Expenses of Solicitation ............................................... 3
Vote Required .......................................................... 4
SYNOPSIS ................................................................. 4
The Reorganization ..................................................... 4
Fee Table .............................................................. 4
Tax Consequences of the Reorganization ................................. 8
Comparison of Precious Metals and Natural Resource ..................... 8
PRINCIPAL RISK FACTORS ................................................... 11
THE REORGANIZATION ....................................................... 12
The Proposal ........................................................... 12
The Board's Consideration .............................................. 12
The Reorganization Agreement ........................................... 13
Tax Aspects of the Reorganization ...................................... 15
Description of Shares .................................................. 16
Capitalization Table (unaudited) ....................................... 16
Appraisal Rights ....................................................... 17
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS ........... 17
Investment Objectives and Policies ..................................... 17
Investment Restrictions ................................................ 18
ADDITIONAL INFORMATION ABOUT PRECIOUS METALS AND NATURAL
RESOURCE ................................................................ 19
General ................................................................ 19
Financial Information .................................................. 19
Management ............................................................. 19
Description of Securities and Shareholder Inquiries .................... 19
Dividends, Distributions and Taxes ..................................... 19
Purchases, Repurchases and Redemptions ................................. 19
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE .............................. 19
FINANCIAL STATEMENTS AND EXPERTS ......................................... 20
LEGAL MATTERS ............................................................ 20
AVAILABLE INFORMATION .................................................... 20
OTHER BUSINESS ........................................................... 20
Exhibit A - Agreement and Plan of Reorganization, dated July 29, 1999,
by and between Precious Metals and Natural Resource ..................... A-1
Exhibit B - Prospectus of Natural Resource dated June 30, 1999 ........... B-1
<PAGE>
MORGAN STANLEY DEAN WITTER
PRECIOUS METALS AND MINERALS TRUST
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(800) 869-NEWS
--------------------
PROXY STATEMENT AND PROSPECTUS
--------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 21, 1999
INTRODUCTION
GENERAL
This Proxy Statement and Prospectus is being furnished to the shareholders
of Morgan Stanley Dean Witter Precious Metals and Minerals Trust ("Precious
Metals"), an open-end diversified management investment company, in connection
with the solicitation by the Board of Trustees of Precious Metals (the "Board")
of proxies to be used at the Special Meeting of Shareholders of Precious Metals
to be held in the Career Development Room, Sixty-First Floor, Two World Trade
Center, New York, New York 10048 at 10:00 A.M., New York time, on December 21,
1999, and any adjournments thereof (the "Meeting"). It is expected that the
mailing of this Proxy Statement and Prospectus will be made on or about
September 30, 1999.
At the Meeting, Precious Metals shareholders ("Shareholders") will consider
and vote upon an Agreement and Plan of Reorganization, dated July 29, 1999 (the
"Reorganization Agreement"), between Precious Metals and Morgan Stanley Dean
Witter Natural Resource Development Securities Inc. ("Natural Resource")
pursuant to which substantially all of the assets of Precious Metals will be
combined with those of Natural Resource in exchange for shares of Natural
Resource. As a result of this transaction, Shareholders will become shareholders
of Natural Resource and will receive shares of Natural Resource equal to the
value of their holdings in Precious Metals on the date of such transaction (the
"Reorganization"). Pursuant to the Reorganization, each Shareholder will receive
the class of shares of Natural Resource that corresponds to the class of shares
of Precious Metals currently held by that Shareholder. Accordingly, as a result
of the Reorganization, each Class A, Class B, Class C and Class D Shareholder of
Precious Metals will receive Class A, Class B, Class C and Class D shares of
Natural Resource, respectively. The shares to be issued by Natural Resource
pursuant to the Reorganization (the "Natural Resource Shares") will be issued at
net asset value without an initial sales charge. Further information relating to
Natural Resource is set forth herein and in Natural Resource's current
Prospectus, dated June 30, 1999 ("Natural Resource's Prospectus"), attached to
this Proxy Statement and Prospectus and incorporated herein by reference.
The information concerning Precious Metals contained herein has been
supplied by Precious Metals and the information concerning Natural Resource
contained herein has been supplied by Natural Resource.
RECORD DATE; SHARE INFORMATION
The Board has fixed the close of business on September 17, 1999 as the
record date (the "Record Date") for the determination of the Shareholders
entitled to notice of, and to vote at, the Meeting. As of the Record
1
<PAGE>
Date, there were 6,619,258.895 shares of Precious Metals issued and outstanding.
Shareholders on the Record Date are entitled to one vote per share on each
matter submitted to a vote at the Meeting. A majority of the outstanding shares
entitled to vote, represented in person or by proxy, will constitute a quorum at
the Meeting.
The following persons were known to own of record or beneficially 5% or more
of the outstanding shares of a Class of Precious Metals as of the Record Date:
Class B -- Michael S. Didion TTEE, Michael S. Didion LV TR DTD 6/30/93, Special
Account, 227 Ohmes Rd, Saint Peters, MO 63376-3805 (77.8%); DWR Cust for William
D. Hill, FBO Pooled Account, VIP Plus PFT Sharing DTD 01/01/96, 232 Forest Road,
Hurricane, WV 25526-9341 (7.5%). Class C -- Alan J. Stransky and Colleen R.
Stransky JTWROS, 11679 Valleybrook Place, Carmel, IN 46033-3374 (8.7%); Dean
Witter Reynolds Cust for William Randall McDonnell, IRA Rollover Dated 12/21/94,
54 Roan Lane, Saint Louis, MO 63124-1480 (5.3%); DWR Cust for Griffith L.
Thomas, FBO Griffith L. Thomas, Money Purchase Plan DTD 06/26/85, P. O. Box 642,
Tillamook, OR 97141-0642 (5.2%); Dean Witter Reynolds Cust for Robert N. Vogt,
IRA Standard Dated 04/20/99, 9525 Parshall Road, Bourbon, MO 65441-9618 (5.0%);
Charles J. Didion and Ruth M. Didion, TTEES FBO Charles J. Didion LIV TR DTD
11/20/89, 1213 Sherbrooke Rd, Saint Charles, MO 63303-4045 (5.0%). Class D --
Hare & Co, c/o The Bank of New York, P. O. Box 11203, New York, NY 10286-1203
(91.9%); Dean Witter Reynolds Cust for George A. Schuster, IRA SEP Dated
11/08/95, 330 Madison St, Joliet, IL 60435-6565 (6.9%). As of the Record Date,
the trustees and officers of Precious Metals, as a group, owned less than 1% of
the outstanding shares of Precious Metals.
The following person was known to own of record or beneficially 5% or more
of the outstanding shares of Natural Resource as of the Record Date: BBH & Co,
c/f A.F.P. Santa Maria para El Fondo de Pensiones, Attn: Brown Brothers Harriman
& Co, PO Box 976, New York, NY 10268-0976 (6.3%).
The following persons were known to own of record or beneficially 5% or more
of the outstanding shares of a Class of Natural Resource as of the Record Date:
Class B -- Dean Witter Reynolds Cust for Carolyn Bertelsen, IRA Standard Dated
05/24/95, 602 Palomar Rd, Ojai, CA 93023-1740 (14.3%); Morgan Stanley Dean
Witter TR FSB TTEE FBO OBGYN of Lancaster, Harborside Fin Center, Plaza 2, 7th
Floor, Jersey City, NJ 07311 (10.0%); Insulation & Refractories SVC Inc, P/S/T
U/A DTD 3/1/79 JG Whitsett JW Whitsett Freddie Veteto Mary Harri Carl W. Lovell
TTEES, 462 Decatur, Memphis, TN 38105 (9.8%); Ms. Sharon K. Komlofske, 1028
Elmwood Avenue, Wilmette, IL 60091-1712 (9.3%); MSDWT FSB Trustee, Prebon Yamane
USA Inc, 401(k) Profit Sharing Plan, P.O. Box 957, Jersey City, NJ 07303-0957
(7.8%). Class D -- BBH & Co c/f A.F.P. Santa Maria para El Fondo de Pensiones,
Attn: Brown Brothers Harriman & Co, PO Box 976, New York, NY 10268-0976 (29.4%);
BBH & Co c/f AFP Provida SA para El Fondo de Pensiones, Attn: Brown Brothers
Harriman & Co, PO Box 976, New York, NY 10268-0976 (22.5%); BBH & Co c/f AFP
Cuprum SA para El Fondo de Pensiones, Attn: Brown Brothers Harriman & Co, PO Box
976, New York, NY 10268-0976 (16.2%); BBH & Co c/f AFP Summa Bansander para El
Fondo de Pensiones, Attn: Brown Brothers Harriman & Co, PO Box 976, New York, NY
10268-0976 (8.7%); Hare & Co, c/o The Bank of New York, P. O. Box 11203, New
York, NY 10268-1203 (5.2%). As of the Record Date, the trustees and officers of
Natural Resource, as a group, owned less than 1% of the outstanding shares of
Natural Resource.
PROXIES
The enclosed form of proxy, if properly executed and returned, will be voted
in accordance with the choice specified thereon. The proxy will be voted in
favor of the Reorganization Agreement unless a choice is indicated to vote
against or to abstain from voting on the Reorganization Agreement. The Board
knows of no business, other than that set forth in the Notice of Special Meeting
of Shareholders, to be presented for consideration at the Meeting. However, the
proxy confers discretionary authority upon the persons named therein to vote as
they determine on other business, not currently contemplated, which may come
before the
2
<PAGE>
Meeting. Abstentions and, if applicable, broker "non-votes" will not count as
votes in favor of the Reorganization Agreement, and broker "non-votes" will not
be deemed to be present at the meeting for purposes of determining whether the
Reorganization Agreement has been approved. Broker "non-votes" are shares held
in street name for which the broker indicates that instructions have not been
received from the beneficial owners or other persons entitled to vote and for
which the broker does not have discretionary voting authority. If a Shareholder
executes and returns a proxy but fails to indicate how the votes should be cast,
the proxy will be voted in favor of the Reorganization Agreement. The proxy may
be revoked at any time prior to the voting thereof by: (i) delivering written
notice of revocation to the Secretary of Precious Metals at Two World Trade
Center, New York, New York 10048; (ii) attending the Meeting and voting in
person; or (iii) completing and returning a new proxy (whether by mail or, as
discussed below, by touchtone telephone or the Internet) (if returned and
received in time to be voted). Attendance at the Meeting will not in and of
itself revoke a proxy.
In the event that the necessary quorum to transact business or the vote
required to approve or reject the Reorganization Agreement is not obtained at
the Meeting, the persons named as proxies may propose one or more adjournments
of the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of the holders of a majority of shares of
Precious Metals present in person or by proxy at the Meeting. The persons named
as proxies will vote in favor of such adjournment those proxies which they are
entitled to vote in favor of the Reorganization Agreement and will vote against
any such adjournment those proxies required to be voted against the
Reorganization Agreement.
EXPENSES OF SOLICITATION
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement and Prospectus, will be borne by Precious Metals
which expenses are expected to approximate $125,000. Precious Metals and Natural
Resource will bear all of their respective other expenses associated with the
Reorganization. In addition to the solicitation of proxies by mail, proxies may
be solicited by officers of Precious Metals, and officers and regular employees
of Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors" or the "Investment
Manager") and Morgan Stanley Dean Witter Trust FSB ("MSDW Trust"), an affiliate
of MSDW Advisors, personally or by mail, telephone, telegraph or otherwise,
without compensation therefor. Brokerage houses, banks and other fiduciaries may
be requested to forward soliciting material to the beneficial owners of shares
and to obtain authorization for the execution of proxies.
Shareholders whose shares are registered with MSDW Trust will be able to
vote their shares by touchtone telephone or by Internet by following the
instructions on the proxy card or on the Voting Information Card accompanying
this Proxy Statement. To vote by touchtone telephone, Shareholders can call the
toll-free number 1-800-690-6903. To vote by Internet, Shareholders can access
the websites www.msdwt.com or www.proxyvote.com. Telephonic and Internet voting
with MSDW Trust presently are not available to Shareholders whose shares are
held in street name.
In certain instances, MSDW Trust, an affiliate of MSDW Advisors, may call
Shareholders to ask if they would be willing to have their votes recorded by
telephone. The telephone voting procedure is designed to authenticate
Shareholders' identities, to allow Shareholders to authorize the voting of their
shares in accordance with their instructions and to confirm that their
instructions have been recorded properly. No recommendation will be made as to
how a Shareholder should vote on the Reorganization Agreement other than to
refer to the recommendation of the Board. Precious Metals has been advised by
counsel that these procedures are consistent with the requirements of applicable
law. Shareholders voting by telephone in this manner will be asked for their
social security number or other identifying information and will be given an
opportunity to authorize proxies to vote their shares in accordance with their
instructions. To ensure that the Shareholders' instructions have been recorded
correctly, they will receive a confirmation of their instructions in the mail. A
special toll-free number will be available in case the information contained in
the confirmation
3
<PAGE>
is incorrect. Although a Shareholder's vote may be taken by telephone, each
Shareholder will receive a copy of this Proxy Statement and Prospectus and may
vote by mail using the enclosed proxy card or by touchtone telephone or the
Internet as set forth above. The last proxy vote received in time to be voted,
whether by proxy card, touchtone telephone or Internet, will be the vote that is
counted and will revoke all previous votes by the Shareholder.
VOTE REQUIRED
Approval of the Reorganization Agreement by the Shareholders requires the
affirmative vote of a majority (i.e., more than 50%) of the shares of Precious
Metals represented in person or by proxy and entitled to vote at the Meeting,
provided a quorum is present at the Meeting. If the Reorganization Agreement is
not approved by Shareholders, Precious Metals will continue in existence and the
Board will consider alternative actions.
SYNOPSIS
The following is a synopsis of certain information contained in or
incorporated by reference in this Proxy Statement and Prospectus. This synopsis
is only a summary and is qualified in its entirety by the more detailed
information contained or incorporated by reference in this Proxy Statement and
Prospectus and the Reorganization Agreement. Shareholders should carefully
review this Proxy Statement and Prospectus and Reorganization Agreement in their
entirety and, in particular, Natural Resource's Prospectus, which is attached to
this Proxy Statement and incorporated herein by reference.
THE REORGANIZATION
The Reorganization Agreement provides for the transfer of substantially
all the assets of Precious Metals, subject to stated liabilities, to Natural
Resource in exchange for the Natural Resource Shares. The aggregate net asset
value of the Natural Resource Shares issued in the exchange will equal the
aggregate value of the net assets of Precious Metals received by Natural
Resource. On or after the closing date scheduled for the Reorganization (the
"Closing Date"), Precious Metals will distribute the Natural Resource Shares
received by Precious Metals to Shareholders as of the Valuation Date (as
defined below under "The Reorganization Agreement") in complete liquidation of
Precious Metals and Precious Metals will thereafter be dissolved and
deregistered under the Investment Company Act of 1940, as amended (the "1940
Act"). As a result of the Reorganization, each Shareholder will receive that
number of full and fractional Natural Resource Shares equal in value to such
Shareholder's pro rata interest in the net assets of Precious Metals
transferred to Natural Resource. Pursuant to the Reorganization, each
Shareholder will receive the class of shares of Natural Resource that
corresponds to the class of shares of Precious Metals currently held by that
Shareholder. Accordingly, as a result of the Reorganization, each Class A,
Class B, Class C and Class D Shareholder of Precious Metals will become holders
of Class A, Class B, Class C and Class D shares of Natural Resource,
respectively. Shareholders holding their shares of Precious Metals in
certificate form will be asked to surrender their certificates in connection
with the Reorganization. Shareholders who do not surrender their certificates
prior to the Closing Date will still receive their shares of Natural Resource;
however, such Shareholders will not be able to redeem, transfer or exchange the
Natural Resource Shares received until the old certificates have been
surrendered. The Board has determined that the interests of Shareholders will
not be diluted as a result of the Reorganization.
FOR THE REASONS SET FORTH BELOW UNDER "THE REORGANIZATION -- THE BOARD'S
CONSIDERATION," THE BOARD, INCLUDING THE TRUSTEES WHO ARE NOT "INTERESTED
PERSONS" OF PRECIOUS METALS ("INDEPENDENT TRUSTEES"), AS THAT TERM IS DEFINED IN
THE 1940 ACT, HAS CONCLUDED THAT THE REORGANIZATION IS IN THE BEST INTERESTS OF
PRECIOUS METALS AND ITS SHAREHOLDERS AND RECOMMENDS APPROVAL OF THE
REORGANIZATION AGREEMENT.
FEE TABLE
Precious Metals and Natural Resource each pay expenses for management of
their assets, distribution of their shares and other services, and those
expenses are reflected in the net asset value per share of each fund.
4
<PAGE>
The following table briefly describes the fees and expenses that a shareholder
of Precious Metals and Natural Resource may pay if they buy and hold shares of
each respective fund. These expenses are deducted from each respective fund's
assets and are based on expenses paid by Precious Metals for its fiscal year
ended October 31, 1998, and by Natural Resource for its fiscal year ended
February 28, 1999. The table also sets forth pro forma fees for the surviving
combined fund (Natural Resource) reflecting what the fee schedule would have
been on February 28, 1999, if the Reorganization had been consummated twelve
(12) months prior to that date.
Shareholder Fees
<TABLE>
<CAPTION>
PRECIOUS NATURAL PRO FORMA
METALS RESOURCE COMBINED
--------------- --------------- ---------------
<S> <C> <C> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES
(AS A PERCENTAGE OF OFFERING PRICE)
Class A ............................................... 5.25% (1) 5.25% (1) 5.25% (1)
Class B ............................................... none none none
Class C ............................................... none none none
Class D ............................................... none none none
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED
DIVIDENDS
Class A ............................................... none none none
Class B ............................................... none none none
Class C ............................................... none none none
Class D ............................................... none none none
MAXIMUM CONTINGENT DEFERRED SALES CHARGE (LOAD) (AS A
PERCENTAGE OF THE LESSER OF ORIGINAL PURCHASE PRICE OR
REDEMPTION PROCEEDS)
Class A ............................................... none (2) none (2) none (2)
Class B ............................................... 5.00% (3) 5.00% (3) 5.00% (3)
Class C ............................................... 1.00% (4) 1.00% (4) 1.00% (4)
Class D ............................................... none none none
REDEMPTION FEES
Class A ............................................... none none none
Class B ............................................... none none none
Class C ............................................... none none none
Class D ............................................... none none none
EXCHANGE FEE
Class A ............................................... none none none
Class B ............................................... none none none
Class C ............................................... none none none
Class D ............................................... none none none
</TABLE>
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
- ----------------------------------------------------------------------------
PRECIOUS NATURAL PRO FORMA
METALS RESOURCE COMBINED
---------- ---------- ----------
MANAGEMENT FEES
Class A ......... 0.80% 0.62% 0.62%
Class B ......... 0.80% 0.62% 0.62%
Class C ......... 0.80% 0.62% 0.62%
Class D ......... 0.80% 0.62% 0.62%
5
<PAGE>
<TABLE>
<CAPTION>
PRECIOUS NATURAL PRO FORMA
METALS RESOURCE COMBINED
--------- ---------- -----------
<S> <C> <C> <C>
DISTRIBUTION AND SERVICE (12B-1) FEES(5)(6)
Class A ................................... 0.23% 0.24% 0.23%
Class B ................................... 1.00% 1.00% 1.00%
Class C ................................... 1.00% 1.00% 1.00%
Class D ................................... none none none
OTHER EXPENSES (7)
Class A ................................... 0.98% 0.28% 0.29%
Class B ................................... 0.98% 0.28% 0.29%
Class C ................................... 0.98% 0.28% 0.29%
Class D ................................... 0.98% 0.28% 0.29%
TOTAL ANNUAL FUND OPERATING EXPENSES
Class A ................................... 2.01% 1.14% 1.14%
Class B ................................... 2.78% 1.90% 1.91%
Class C ................................... 2.78% 1.90% 1.91%
Class D ................................... 1.78% 0.90% 0.91%
</TABLE>
- ----------
(1) Reduced for purchases of $25,000 and over (see "Share Class Arrangements
-- Class A Shares" in each fund's Prospectus).
(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 redemptions made within one year after
purchase, except for certain specific circumstances (see "Purchases,
Exchanges and Redemptions" below and "Share Class Arrangements -- Class A
Shares" in each fund's Prospectus).
(3) The CDSC is scaled down to 1.00% during the sixth year, reaching zero
thereafter.
(4) Only applicable to redemptions made within one year after purchase (see
"Purchases, Exchanges and Redemptions" below and "Share Class
Arrangements -- Class C Shares" in each fund's Prospectus).
(5) The 12b-1 fee is accrued daily and payable monthly. With respect to each
fund, the entire 12b-1 fee payable by Class A and a portion of the 12b-1
fee payable by each of Class B and Class C equal to 0.25% of the average
daily net assets of the class are currently characterized as a service
fee within the meaning of National Association of Securities Dealers,
Inc. ("NASD") guidelines and are payments made for personal service and/
or maintenance of shareholder accounts. The remainder of the 12b-1 fee,
if any, is an asset-based sales charge, and is a distribution fee paid to
Morgan Stanley Dean Witter Distributors Inc. (the "Distributor") to
compensate it for the services provided and the expenses borne by the
Distributor and others in the distribution of each fund's shares (see
"Description of Shares" below and "Share Class Arrangements" in each
fund's Prospectus).
(6) Upon conversion of Class B shares to Class A shares, such shares will be
subject to the lower 12b-1 fee applicable to Class A shares. No sales
charge is imposed at the time of conversion of Class B shares to Class A
shares. Class C shares do not have a conversion feature and, therefore,
are subject to an ongoing 1.00% 12b-1 fee (see "Description of Shares"
below and "Share Class Arrangements" in each fund's Prospectus).
(7) The Investment Manager has agreed to reimburse or waive $50,000 in
expenses of the Combined Fund for the first year of combined operations.
6
<PAGE>
EXAMPLE
To attempt to show the effect of these expenses on an investment over time,
the hypotheticals shown below have been created. The Example assumes that an
investor invests $10,000 in either Precious Metals or Natural Resource or the
new combined fund (Natural Resource), that the investment has a 5% return each
year and that the operating expenses for each fund remain the same (as set forth
in the chart above). Although a shareholder's actual costs may be higher or
lower, the tables below show a shareholder's costs at the end of each period
based on these assumptions depending upon whether or not a shareholder sold his
shares at the end of each period.
If a Shareholder SOLD His Shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------
Precious Metals
Class A ......... $718 $1,122 $1,551 $2,740
Class B ......... $781 $1,162 $1,669 $3,109
Class C ......... $381 $ 862 $1,469 $3,109
Class D ......... $181 $ 560 $ 964 $2,095
Natural Resource
Class A ......... $640 $ 870 $1,120 $1,840
Class B ......... $690 $ 900 $1,230 $2,220
Class C ......... $290 $ 600 $1,030 $2,220
Class D ......... $ 90 $ 290 $ 500 $1,110
Pro Forma Combined
Class A ......... $640 $ 870 $1,120 $1,840
Class B ......... $690 $ 900 $1,230 $2,230
Class C ......... $290 $ 600 $1,030 $2,230
Class D ......... $ 90 $ 290 $ 500 $1,120
A Shareholder HELD His Shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------
Precious Metals
Class A ......... $718 $1,122 $1,551 $2,740
Class B ......... $281 $ 862 $1,469 $3,109
Class C ......... $281 $ 862 $1,469 $3,109
Class D ......... $181 $ 560 $ 964 $2,095
Natural Resource
Class A ......... $640 $ 870 $1,120 $1,840
Class B ......... $190 $ 600 $1,030 $2,220
Class C ......... $190 $ 600 $1,030 $2,220
Class D ......... $ 90 $ 290 $ 500 $1,110
Pro Forma Combined
Class A ......... $640 $ 870 $1,120 $1,840
Class B ......... $190 $ 600 $1,030 $2,230
Class C ......... $190 $ 600 $1,030 $2,230
Class D ......... $ 90 $ 290 $ 500 $1,120
7
<PAGE>
LONG-TERM SHAREHOLDERS OF CLASS A, CLASS B AND CLASS C SHARES OF PRECIOUS
METALS AND NATURAL RESOURCE MAY PAY MORE IN SALES CHARGES INCLUDING DISTRIBUTION
FEES THAN THE ECONOMIC EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGES
PERMITTED BY THE NASD.
The purpose of the foregoing fee table is to assist the investor or
shareholder in understanding the various costs and expenses that an investor or
shareholder in the fund will bear directly or indirectly. For a more complete
description of these costs and expenses, see "Comparison of Precious Metals and
Natural Resource -- Investment Management and Distribution Plan Fees, Other
Significant Fees, and Purchases, Exchanges and Redemptions" below.
TAX CONSEQUENCES OF THE REORGANIZATION
As a condition to the Reorganization, Precious Metals will receive an
opinion of Mayer, Brown & Platt to the effect that the Reorganization will
constitute a tax-free reorganization for Federal income tax purposes, and that
no gain or loss will be recognized by Precious Metals or the shareholders of
Precious Metals for Federal income tax purposes as a result of the transactions
included in the Reorganization. For further information about the tax
consequences of the Reorganization, see "The Reorganization -- Tax Aspects of
the Reorganization" below.
COMPARISON OF PRECIOUS METALS AND NATURAL RESOURCE
INVESTMENT OBJECTIVES AND POLICIES. Precious Metals and Natural Resource are
funds which have similar although not identical investment objectives. The
investment objective of Precious Metals is long-term capital appreciation. The
investment objective of Natural Resource is capital growth.
Precious Metals seeks to achieve its investment objective by normally
investing at least 65% of its assets in the common stock and other securities of
companies principally engaged in the precious metals and minerals business.
These include companies engaged in the exploration, mining, fabrication,
processing, distribution or trading of precious metals and minerals -- or in
financing, managing or operating companies engaged in these activities. Precious
Metals may also invest a portion of its assets in gold, silver, platinum and
palladium bullion and coins (or certificates, receipts or contracts representing
ownership interests in these metals). Natural Resource seeks to achieve its
investment objective by normally investing at least 65% of its assets in common
stocks of companies engaged in the natural resource and related areas. These
include companies involved in the exploration, development, production or
distribution of natural resources or in the development of energy-efficient
technologies or in providing natural resource related supplies or services. In
addition to precious metals, such natural resources also include oil, gas, coal,
minerals, water, timberland and forest products. Up to 35% of the assets of
Precious Metals may be invested in common stocks of companies not engaged in the
precious metals and minerals business, as well as in U.S. Government securities
and money market instruments. Natural Resource may invest up to 35% of its
assets in common stock of companies not in the natural resources areas, as well
as in investment grade corporate debt securities, U.S. Government securities and
money market instruments. Both funds may invest greater than 35% of their assets
in various money market instruments or cash when market conditions warrant a
reduction of the funds' securities holdings in order to adopt a temporary
defensive posture. The processes by which each fund selects common stocks and
other investments may differ and are more fully described under "Comparison of
Investment Objectives, Policies and Restrictions" below.
The principal differences between the funds' investment policies, as well as
certain similarities, are more fully described under "Comparison of Investment
Objectives, Policies and Restrictions" below.
The investment policies of both Precious Metals and Natural Resource are not
fundamental and may be changed by their respective Boards of Trustees.
INVESTMENT MANAGEMENT AND DISTRIBUTION PLAN FEES. Precious Metals and
Natural Resource obtain management services from MSDW Advisors. With respect to
Precious Metals, the fund pays MSDW Advisors
8
<PAGE>
monthly compensation calculated daily at an annual rate of 0.80% of the fund's
average daily net assets. With respect to Natural Resource, the fund pays MSDW
Advisors monthly compensation calculated daily by applying the annual rate of
0.625% to the portion of the fund's average daily net assets not exceeding $250
million and 0.50% to the portion of such daily net assets exceeding $250
million. Each class of both funds' shares is subject to the same management fee
rates applicable to the respective fund.
Both Precious Metals and Natural Resource have adopted similar distribution
plans ("Plans") pursuant to Rule 12b-1 under the 1940 Act. In the case of Class
A and Class C shares, each fund's Plan provides that the fund will reimburse the
Distributor and others for the expenses of certain activities and services
incurred by them in connection with the distribution of the Class A and Class C
Shares of the fund. Reimbursement for these expenses is made in monthly payments
by each fund to the Distributor which will in no event exceed amounts equal to
payments at the annual rates of 0.25% and 1.0% of the average daily net assets
of Class A and Class C shares, respectively. In the case of Class B shares,
Precious Metals's Plan provides that the fund will pay the Distributor a fee,
which is accrued daily and paid monthly, at the annual rate of 1.0% of the
lesser of (a) the average daily net sales of the fund's Class B shares or (b)
the average daily net assets of Class B of the fund. In the case of Natural
Resource's Class B shares, Natural Resource's Plan provides that the fund will
pay the Distributor a fee, which is accrued daily and paid monthly, at the
annual rate of (i) 1.0% of the lesser of (a) the average daily net sales of the
fund's Class B shares since the implementation of the Plan on July 2, 1984 or
(b) the average daily net assets of Class B attributable to shares issued, net
of related shares redeemed, since implementation of the Plan. The fee is paid
for the services provided and the expenses borne by the Distributor and others
in connection with the distribution of each fund's Class B shares. There are no
12b-1 fees applicable to both funds' Class D shares. For further information
relating to the 12b-1 fees applicable to each class of Natural Resource's
shares, see the section entitled "Share Class Arrangements" in Natural
Resource's Prospectus, attached hereto. The Distributor also receives the
proceeds of any contingent deferred sales charge ("CDSC") paid by the funds'
shareholders at the time of redemption. The CDSC schedules applicable to each of
Precious Metals and Natural Resource are set forth below under "Purchases,
Exchanges and Redemptions."
OTHER SIGNIFICANT FEES. Both Precious Metals and Natural Resource pay
additional fees in connection with their operations, including legal, auditing,
transfer agent, trustees fees and custodial fees. See "Synopsis -- Fee Table"
above for the percentage of average net assets represented by such "Other
Expenses."
PURCHASES, EXCHANGES AND REDEMPTIONS. Class A shares of each fund are sold
at net asset value plus an initial sales charge of up to 5.25%. The initial
sales charge is reduced for certain purchases. Investments of $1 million or more
(and investment by certain other limited categories of investors) are not
subject to any sales charges at the time of purchase, but are subject to a CDSC
of 1.0% on redemptions made within one year after purchase (except for certain
specific circumstances fully described in each fund's Prospectus).
Class B shares of each fund are offered at net asset value with no initial
sales charge, but are subject to the same CDSC schedule set forth below (Class B
shares of each fund purchased by certain qualified employer sponsored benefit
plans are subject to a reduced CDSC schedule):
CLASS B SHARES OF PRECIOUS METALS AND
YEAR SINCE PURCHASE PAYMENT MADE NATURAL RESOURCE
- ------------------------------------- --------------------------------------
First .......................... 5.0%
Second ......................... 4.0%
Third .......................... 3.0%
Fourth ......................... 2.0%
Fifth .......................... 2.0%
Sixth .......................... 1.0%
Seventh and thereafter ......... none
9
<PAGE>
Class C shares of each fund are sold at net asset value with no initial
sales charge, but are subject to a CDSC of 1.0% on redemptions made within one
year after purchase. The CDSC may be waived for certain redemptions (which are
fully described under the section "Share Class Arrangements" in each fund's
Prospectus).
Class D shares of each fund are available only to limited categories of
investors and are sold at net asset value with no initial sales charge or CDSC.
The CDSC charge is paid to the Distributor. Shares of Natural Resource and
Precious Metals are distributed by the Distributor and offered by Dean Witter
Reynolds Inc. and other dealers who have entered into selected dealer agreements
with the Distributor. For further information relating to the CDSC schedules
applicable to each of the classes of Natural Resource's shares, see the section
entitled "Share Class Arrangements" in Natural Resource's Prospectus.
Shares of each class of Precious Metals and Natural Resource may be
exchanged for shares of the same class of any other Morgan Stanley Dean Witter
Fund that offers its shares in more than one class, without the imposition of an
exchange fee. Additionally, shares of each class of Precious Metals and Natural
Resource may be exchanged for shares of Morgan Stanley Dean Witter Short-Term
U.S. Treasury Trust, Morgan Stanley Dean Witter North American Government Income
Trust, Morgan Stanley Dean Witter Limited Term Municipal Trust, Morgan Stanley
Dean Witter Short-Term Bond Fund and the five Morgan Stanley Dean Witter Funds
that are money market funds (the foregoing eight funds are collectively referred
to as the "Exchange Funds"), without the imposition of an exchange fee. Class A
shares of Precious Metals and Natural Resource may also be exchanged for shares
of Morgan Stanley Dean Witter Multi-State Municipal Series Trust and Morgan
Stanley Dean Witter Hawaii Municipal Trust. Upon consummation of the
Reorganization, the foregoing exchange privileges will still be applicable to
shareholders of the combined fund (Natural Resource).
With respect to both funds, no CDSC is imposed at the time of any exchange,
although any applicable CDSC will be imposed upon ultimate redemption. During
the period of time a Natural Resource or Precious Metals shareholder remains in
an Exchange Fund, the holding period (for purposes of determining the CDSC rate)
is frozen. Both Precious Metals and Natural Resource provide telephone exchange
privileges to their shareholders. For greater details relating to exchange
privileges applicable to Natural Resource, see the section entitled "How to
Exchange Shares" in Natural Resource's Prospectus.
Shareholders of Precious Metals and Natural Resource may redeem their shares
for cash at any time at the net asset value per share next determined; however,
such redemption proceeds may be reduced by the amount of any applicable CDSC.
Both Precious Metals and Natural Resource offer a reinstatement privilege
whereby a shareholder who has not previously exercised such privilege whose
shares have been redeemed or repurchased may, within thirty-five days after the
date of redemption or repurchase, reinstate any portion or all of the proceeds
thereof in shares of the same class from which such shares were redeemed or
repurchased and receive a pro rata credit for any CDSC paid in connection with
such redemption or repurchase. Precious Metals and Natural Resource may redeem
involuntarily, at net asset value, most accounts valued at less than $100.
DIVIDENDS. Each fund declares dividends separately for each of its classes.
Precious Metals and Natural Resource each pay dividends from net investment
income at least once each year. Both funds distribute net capital gains, if any,
at least annually. Each fund, however, may determine either to distribute or to
retain all or part of any net long-term capital gains in any year for
reinvestment. With respect to each fund, dividends and capital gains
distributions are automatically reinvested in additional shares of the same
class of shares of the fund at net asset value unless the shareholder elects to
receive cash.
10
<PAGE>
PRINCIPAL RISK FACTORS
The share price or net asset value of Natural Resource and Precious Metals
will fluctuate with changes in the market value of their respective portfolio
securities. The market value of the funds' portfolio securities will increase or
decrease due to a variety of economic, market and political factors, including
movements in interest rates, which cannot be predicted.
Both funds may invest their assets in foreign securities (up to 100% for
Precious Metals and up to 25% for Natural Resource) and, as such, are subject to
risks that are in addition to the risks associated with domestic securities. One
such additional risk is currency risk. While the price of a fund's shares is
quoted in U.S. dollars, the fund generally converts U.S. dollars to a foreign
market's local currency to purchase a security in that market. If the value of
that local currency falls relative to the U.S. dollar, the U.S. dollar value of
the foreign security will decrease. This is true even if the foreign security's
local price remains unchanged. Foreign securities also have risks related to
political and economic developments abroad, including the possibility of
expropriations or confiscatory taxation, limitations on the use or transfer of
fund assets and any effects of foreign social, economic or political
instability. Foreign companies are not subject to the regulatory requirements of
U.S. companies and, as such, there may be less publicly available information
about such companies. Moreover, foreign companies are not subject to uniform
accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies. Additionally, securities of
foreign issuers may be less liquid than comparable securities of U.S. issuers
and, as such, their price changes may be more volatile. Furthermore, foreign
exchanges and broker-dealers are generally subject to less government and
exchange scrutiny and regulation than their American counterparts and brokerage
commissions, dealer concessions and other transaction costs may be higher on
foreign markets than in the U.S.
Because both funds concentrate their investments in particular industries,
both funds' shares may be more volatile than that of investment companies that
do not similarly concentrate their investments and the overall portfolio of each
fund could decline due to developments specific to their respective industries.
Precious Metals invests to a greater extent than Natural Resource in gold and
other precious metals and minerals. Investments related to gold and other
precious metals and minerals are considered speculative and are impacted by a
host of world-wide economic, financial and political factors. Prices of gold and
other precious metals may fluctuate widely over short periods of time due to
changes in inflation or expectations regarding inflation in various countries,
the availability of supplies of these precious metals, changes in industrial and
commercial demand, and metal sales by governments, central banks or
international agencies. Prices also may fluctuate widely due to investment
speculation, monetary and other economic policies of various governments and
governmental restrictions on the private ownership of certain precious metals
and minerals. Additionally, the precious metals and minerals securities in which
Precious Metals may invest may not necessarily move in tandem with the prices of
actual precious metals and minerals. At the present time, there are five major
producers of gold bullion. In order of magnitude they are: the Republic of South
Africa, the successor states of the former Soviet Union, Canada, the United
States and Australia. Political and economic conditions in these countries may
have a direct effect on the mining, distribution and price of gold and sales of
central bank gold holdings.
Investments in natural resource industries can be significantly affected by
events relating to those industries, such as international political and
economic developments, energy conservation, the success of exploration projects,
tax and other government regulations, as well as other factors.
Precious Metals and Natural Resource each may enter into foreign currency
exchange contracts when purchasing foreign securities in order to facilitate
settlement and to limit the effect of changes in the relationship between the
U.S. dollar and the foreign currency during the period between trade date and
settlement date. Both Precious Metals and Natural Resource may engage in options
and futures transactions
11
<PAGE>
which involve certain risks. Additionally, both funds may enter into repurchase
agreements, may purchase securities on a when-issued and delayed delivery basis,
or on a when, as and if issued basis, may lend their portfolio securities, and
may enter into options and futures transactions, all of which involve certain
special risks.
The foregoing discussion is a summary of the principal risk factors. For a
more complete discussion of the risks of each fund, see "Principal Risks" and
"Additional Risk Information" in the Prospectus of Precious Metals and in
Natural Resource's Prospectus attached hereto and incorporated herein by
reference.
THE REORGANIZATION
THE PROPOSAL
The Board of Trustees of Precious Metals, including the Independent
Trustees, having reviewed the financial position of Precious Metals and the
prospects for achieving economies of scale through the Reorganization and having
determined that the Reorganization is in the best interests of Precious Metals
and its Shareholders and that the interests of Shareholders will not be diluted
as a result thereof, recommends approval of the Reorganization by Shareholders
of Precious Metals.
THE BOARD'S CONSIDERATION
At a meeting held on July 29, 1999, the Board, including all of the
Independent Trustees, unanimously approved the Reorganization Agreement and
determined to recommend that Shareholders approve the Reorganization Agreement.
In reaching this decision, the Board made an extensive inquiry into a number of
factors, particularly the comparative expenses currently incurred in the
operations of Precious Metals and Natural Resource. The Board also considered
other factors, including, but not limited to: the steadily shrinking asset base
of Precious Metals which may affect the long-term economic viability of the fund
because of higher costs and disadvantageous economies of scale; the general
compatibility of the investment objectives, policies, restrictions and
portfolios of Precious Metals and Natural Resource; the terms and conditions of
the Reorganization which would affect the price of shares to be issued in the
Reorganization; the tax-free nature of the Reorganization; and any direct or
indirect costs to be incurred by Precious Metals and Natural Resource in
connection with the Reorganization.
In recommending the Reorganization to Shareholders, the Board of Precious
Metals considered that the Reorganization would have the following benefits to
Shareholders:
1. Once the Reorganization is consummated, the expenses which would be borne
by shareholders of each class of the "combined fund" will be significantly lower
on a percentage basis than the expenses per share of each corresponding class of
Precious Metals. In part, this is because the estimated current rate of the
investment management fee to be paid by the surviving Natural Resource (0.62% of
average daily net assets) would be lower than the rate of the investment
management fee currently paid by Precious Metals (0.80% of average daily net
assets). Furthermore, to the extent that the Reorganization would result in
Shareholders becoming shareholders of a combined larger fund, further economies
of scale could be achieved since various fixed expenses (e.g., auditing and
legal) can be spread over a larger number of shares. The Board noted that the
expense ratio for each class of Precious Metals was higher (for its fiscal year
ended October 31, 1998) than the expense ratio for each corresponding class of
Natural Resource (for its fiscal year ended February 28, 1999).
2. Shareholders will be able to participate in an expanded diversified
portfolio of worldwide issuers consisting not only of precious metals companies
but also other companies in the entire natural resources industry, through
investment in Natural Resource.
12
<PAGE>
3. The Reorganization is intended to qualify as a tax-free reorganization
for Federal income tax purposes, pursuant to which no gain or loss will be
recognized by Precious Metals or its Shareholders for Federal income tax
purposes as a result of transactions included in the Reorganization.
4. The Board also took into consideration that absent the Reorganization,
Natural Resource will continue to compete for investor funds with Precious
Metals and that it appeared unlikely that Precious Metals would experience a
material growth in assets in the future. The Reorganization should allow for
more concentrated selling efforts to the benefit of both Precious Metals and
Natural Resource shareholders and avoid the inefficiencies associated with the
operation and distribution of two similar funds through the same sales
organization.
The Board of Trustees of Natural Resource, including a majority of the
Independent Trustees of Natural Resource, also have determined that the
Reorganization is in the best interests of Natural Resource and its shareholders
and that the interests of existing shareholders of Natural Resource will not be
diluted as a result thereof. The transaction will enable Natural Resource to
acquire investment securities which are consistent with Natural Resource's
investment objective, without the brokerage costs attendant to the purchase of
such securities in the market. Also, the addition of assets to Natural
Resource's portfolio will cause Natural Resource to reach a lower breakpoint
rate reduction in the investment management fee resulting from the addition of
more assets at a lower breakpoint in the management fee schedule. As a result,
future additions of assets will be assessed at the lower rate. Furthermore, like
the Shareholders of Precious Metals, the shareholders of Natural Resource may
also realize an intangible benefit in having the Morgan Stanley Dean Witter
sales organization concentrate its selling efforts on one rather than two
similar funds, which may result in further economies of scale. Finally, the
Board considered that even if the benefits enumerated above are not realized,
the costs to the Fund are sufficiently minor to warrant taking the opportunity
to realize those benefits.
THE REORGANIZATION AGREEMENT
The terms and conditions under which the Reorganization would be
consummated, as summarized below, are set forth in the Reorganization Agreement.
This summary is qualified in its entirety by reference to the Reorganization
Agreement, a copy of which is attached as Exhibit A to this Proxy Statement and
Prospectus.
The Reorganization Agreement provides that (i) Precious Metals will transfer
all of its assets, including portfolio securities, cash (other than cash amounts
retained by Precious Metals as a "Cash Reserve" in the amount sufficient to
discharge its liabilities not discharged prior to the Valuation Date (as defined
below) and for expenses of the dissolution), cash equivalents and receivables to
Natural Resource on the Closing Date in exchange for the assumption by Natural
Resource of stated liabilities of Precious Metals, including all expenses,
costs, charges and reserves, as reflected on an unaudited statement of assets
and liabilities of Precious Metals prepared by the Treasurer of Precious Metals
as of the Valuation Date (as defined below) in accordance with generally
accepted accounting principles consistently applied from the prior audited
period, and the delivery of the Natural Resource Shares; (ii) such Natural
Resource Shares would be distributed to Shareholders on the Closing Date or as
soon as practicable thereafter; (iii) Precious Metals would be dissolved; and
(iv) the outstanding shares of Precious Metals would be canceled.
The number of Natural Resource Shares to be delivered to Precious Metals
will be determined by dividing the aggregate net asset value of each class of
shares of Precious Metals acquired by Natural Resource by the net asset value
per share of the corresponding class of shares of Natural Resource; these values
will be calculated as of the close of business of the New York Stock Exchange on
the third business day following the receipt of the requisite approval by
Shareholders of the Reorganization Agreement or at such other time as Precious
Metals and Natural Resource may agree (the "Valuation Date"). As an
illustration, assume that on the Valuation Date, Class B shares of Precious
Metals had an aggregate net asset value (not including any Cash
13
<PAGE>
Reserve of Precious Metals) of $100,000. If the net asset value per Class B
share of Natural Resource were $10 per share at the close of business on the
Valuation Date, the number of Class B shares Natural Resource to be issued would
be 10,000 ($100,000 (divided by) $10). These 10,000 Class B shares of Natural
Resource would be distributed to the former Class B shareholders of Precious
Metals. This example is given for illustration purposes only and does not bear
any relationship to the dollar amounts or shares expected to be involved in the
Reorganization.
On the Closing Date or as soon as practicable thereafter, Precious Metals
will distribute pro rata to its Shareholders of record as of the close of
business on the Valuation Date, the Natural Resource Shares it receives. Each
Shareholder will receive the class of shares of Natural Resource that
corresponds to the class of shares of Precious Metals currently held by that
Shareholder. Accordingly, the Natural Resource Shares will be distributed as
follows: each of the Class A, Class B, Class C and Class D shares of Natural
Resource will be distributed to holders of Class A, Class B, Class C and Class D
shares of Precious Metals, respectively. Natural Resource will cause its
transfer agent to credit and confirm an appropriate number of Natural Resource
Shares to each Shareholder. Certificates for Natural Resource Shares will be
issued only upon written request of a Shareholder and only for whole shares,
with fractional shares credited to the name of the Shareholder on the books of
Natural Resource. Shareholders who wish to receive certificates representing
their Natural Resource Shares must, after receipt of their confirmations, make a
written request to Natural Resource's transfer agent Morgan Stanley Dean Witter
Trust FSB, Harborside Financial Center, Jersey City, New Jersey 07311.
Shareholders of Precious Metals holding their shares in certificate form will be
asked to surrender such certificates in connection with the Reorganization.
Shareholders who do not surrender their certificates prior to the Closing Date
will still receive their shares of Natural Resource; however, such Shareholders
will not be able to redeem, transfer or exchange the Natural Resource Shares
received until the old certificates have been surrendered.
The Closing Date will be the next business day following the Valuation Date.
The consummation of the Reorganization is contingent upon the approval of the
Reorganization by the Shareholders and the receipt of the other opinions and
certificates set forth in Sections 6, 7 and 8 of the Reorganization Agreement
and the occurrence of the events described in those Sections, certain of which
may be waived by Precious Metals or Natural Resource. The Reorganization
Agreement may be amended in any mutually agreeable manner. All expenses of this
solicitation, including the cost of preparing and mailing this Proxy Statement
and Prospectus, will be borne by Precious Metals, which expenses are expected to
approximate $125,000. Precious Metals and Natural Resource will bear all of
their respective other expenses associated with the Reorganization.
The Reorganization Agreement may be terminated and the Reorganization
abandoned at any time, before or after approval by Shareholders or by mutual
consent of Precious Metals and Natural Resource. In addition, either party may
terminate the Reorganization Agreement upon the occurrence of a material breach
of the Reorganization Agreement by the other party or if, by March 31, 2000, any
condition set forth in the Reorganization Agreement has not been fulfilled or
waived by the party entitled to its benefits.
Under the Reorganization Agreement, within one year after the Closing Date,
Precious Metals shall: either pay or make provision for all of its liabilities
and distribute any remaining amount of the Cash Reserve (after paying or making
provision for such liabilities and the estimated cost of making the
distribution) to former Shareholders of Precious Metals that received Natural
Resource Shares. Precious Metals shall be dissolved and deregistered as an
investment company promptly following the distributions of shares of Natural
Resource to Shareholders of record of Precious Metals.
The effect of the Reorganization is that Shareholders who vote their shares
in favor of the Reorganization Agreement are electing to sell their shares of
Precious Metals (at net asset value on the Valuation Date calculated after
subtracting any Cash Reserve) and reinvest the proceeds in Natural Resource
Shares at net
14
<PAGE>
asset value and without recognition of taxable gain or loss for Federal income
tax purposes. See "Tax Aspects of the Reorganization" below. As noted in "Tax
Aspects of the Reorganization" below, if Precious Metals recognizes net gain
from the sale of securities prior to the Closing Date, such gain, to the extent
not offset by capital loss carryforwards, will be distributed to Shareholders
prior to the Closing Date and will be taxable to Shareholders as capital gain.
Shareholders will continue to be able to redeem their shares of Precious
Metals at net asset value next determined after receipt of the redemption
request (subject to any applicable CDSC) until the close of business on the
business day next preceding the Closing Date. Redemption requests received by
Precious Metals thereafter will be treated as requests for redemption of shares
of Natural Resource.
TAX ASPECTS OF THE REORGANIZATION
At least one but not more than 20 business days prior to the Valuation Date,
Precious Metals will declare and pay a dividend or dividends which, together
with all previous such dividends, will have the effect of distributing to
Shareholders all of Precious Metals' investment company taxable income for all
periods since the inception of Precious Metals through and including the
Valuation Date (computed without regard to any dividends paid deduction), and
all of Precious Metals' net capital gain, if any, realized in such periods
(after reduction for any capital loss carryforward).
The Reorganization is intended to qualify for Federal income tax purposes as
a tax-free reorganization under Section 368(a)(1)(C) of the Internal Revenue
Code of 1986, as amended (the "Code").
As a condition to the Reorganization, Precious Metals and Natural Resource
will receive an opinion of Mayer, Brown & Platt to the effect that, based on
certain assumptions, facts, the terms of the Reorganization Agreement and
representations set forth in the Reorganization Agreement or otherwise provided
by Precious Metals and Natural Resource (including a representation to the
effect that Natural Resource has no plan or intention to sell or otherwise
dispose of more than fifty percent of the assets of Precious Metals acquired in
the Reorganization except for dispositions made in the ordinary course of
business):
1. The transfer of Precious Metals' assets in exchange for the Natural
Resource Shares and the assumption by Natural Resource of certain stated
liabilities of Precious Metals followed by the distribution by Precious Metals
of the Natural Resource Shares to Shareholders in exchange for their Precious
Metals shares pursuant to and in accordance with the terms of the Reorganization
Agreement will constitute a "reorganization" within the meaning of Section
368(a)(1)(C) of the Code, and Precious Metals and Natural Resource will each be
a "party to a reorganization" within the meaning of Section 368(b) of the Code;
2. No gain or loss will be recognized by Natural Resource upon the receipt
of the assets of Precious Metals solely in exchange for the Natural Resource
Shares and the assumption by Natural Resource of the stated liabilities of
Precious Metals;
3. No gain or loss will be recognized by Precious Metals upon the transfer
of the assets of Precious Metals to Natural Resource in exchange for the Natural
Resource Shares and the assumption by Natural Resource of the stated liabilities
or upon the distribution of Natural Resource Shares to Shareholders in exchange
for their Precious Metals shares;
4. No gain or loss will be recognized by Shareholders upon the exchange of
the shares of Precious Metals for the Natural Resource Shares;
5. The aggregate tax basis for the Natural Resource Shares received by each
of the Shareholders pursuant to the Reorganization will be the same as the
aggregate tax basis of the shares in Precious Metals held by each such
Shareholder immediately prior to the Reorganization;
15
<PAGE>
6. The holding period of the Natural Resource Shares to be received by each
Shareholder will include the period during which the shares in Precious Metals
surrendered in exchange therefor were held (provided such shares in Precious
Metals were held as capital assets on the date of the Reorganization);
7. The tax basis of the assets of Precious Metals acquired by Natural
Resource will be the same as the tax basis of such assets of Precious Metals
immediately prior to the Reorganization; and
8. The holding period of the assets of Precious Metals in the hands of
Natural Resource will include the period during which those assets were held by
Precious Metals.
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE EFFECT, IF ANY,
OF THE PROPOSED TRANSACTION IN LIGHT OF THEIR INDIVIDUAL CIRCUMSTANCES. BECAUSE
THE FOREGOING DISCUSSION ONLY RELATES TO THE FEDERAL INCOME TAX CONSEQUENCES OF
THE PROPOSED TRANSACTION, SHAREHOLDERS SHOULD ALSO CONSULT THEIR TAX ADVISORS AS
TO STATE AND LOCAL TAX CONSEQUENCES, IF ANY, OF THE PROPOSED TRANSACTION.
DESCRIPTION OF SHARES
Natural Resource shares to be issued pursuant to the Reorganization
Agreement will, when issued, be fully paid and non-assessable by Natural
Resource and transferable without restrictions and will have no preemptive
rights. Class B shares of Natural Resource, like Class B shares of Precious
Metals, have a conversion feature pursuant to which approximately ten (10)
years after the date of the original purchase of such shares, the shares will
convert automatically to Class A shares, based on the relative net asset values
of the two classes. For greater details regarding the conversion feature,
including the method by which the 10 year period is calculated and the
treatment of reinvested dividends, see "Purchase of Fund Shares" in each fund's
Prospectus.
CAPITALIZATION TABLE (UNAUDITED)
The following table sets forth the capitalization of Natural Resource and
Precious Metals as of June 30, 1999 and on a pro forma combined basis as if the
Reorganization had occurred on that date:
<TABLE>
<CAPTION>
NET ASSET
SHARES VALUE
NET ASSETS OUTSTANDING PER SHARE
-------------- ------------- ----------
<S> <C> <C> <C>
CLASS A
- -----------------------------------
Precious Metals ................... $ 1,258,234 263,581 $ 4.77
Natural Resource .................. $ 1,027,034 76,852 $13.36
Combined Fund (pro forma) ......... $ 2,285,268 171,031 $13.36
CLASS B
- ------------------------------------
Precious Metals ................... $ 27,659,664 5,884,748 $ 4.70
Natural Resource .................. $190,824,589 14,493,803 $13.17
Combined Fund (pro forma) ......... $218,484,253 16,594,005 $13.17
CLASS C
- ------------------------------------
Precious Metals ................... $ 1,893,501 403,014 $ 4.70
Natural Resource .................. $ 2,183,056 166,013 $13.15
Combined Fund (pro forma) ......... $ 4,076,557 310,005 $13.15
CLASS D
- ------------------------------------
Precious Metals ................... $ 780,594 164,832 $ 4.74
Natural Resource .................. $ 21,052,317 1,568,281 $13.42
Combined Fund (pro forma) ......... $ 21,832,911 1,626,447 $13.42
</TABLE>
16
<PAGE>
APPRAISAL RIGHTS
Shareholders will have no appraisal rights in connection with the
Reorganization.
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES AND POLICIES
Precious Metals and Natural Resource each are funds which have similar
although not identical investment objectives. The investment objective of
Precious Metals is long-term capital appreciation. The investment objective of
Natural Resource is capital growth. Precious Metals concentrates its investments
in the precious metals and minerals industry. Natural Resource concentrates its
investments in the natural resource industry which is a broad industry group
that includes not only precious metals and minerals but additionally oil, gas,
coal, water, timberland and forest products. Both funds seek to achieve their
objectives by investing principally in a diversified portfolio of securities in
accordance with their respective investment strategies set forth below.
Natural Resource normally invests at least 65% of its assets in common
stocks of domestic and foreign companies engaged in the natural resource and
related business such as in the exploration, development, production or
distribution of natural resources, the development of energy-efficient
technologies or in providing natural resource related supplies or services.
In selecting securities for Natural Resource, the Investment Manager invests
in companies that it believes are responsive to domestic and world demand for
natural resources. Such companies may include those which own or process natural
resources, such as precious metals, other minerals, water, timberland and forest
products; own or produce sources of energy such as oil, natural gas, coal,
uranium, geothermal, oil shale and biomass; participate in the exploration for
and development of natural resource supplies from new and conventional sources;
own or control oil, gas, or other mineral leases, rights or royalty interests;
provide natural resource transportation, distribution or processing services,
such as refining and pipeline services; provide related services or supplies,
such as drilling, well servicing, chemicals, parts and equipment; or contribute
energy-efficient technologies, such as systems for energy conversion,
conservation and pollution control.
Precious Metals normally invests at least 65% of its assets in common stock
and other securities of foreign and domestic companies engaged in the precious
metals and minerals business such as companies engaged in the exploration,
mining, fabrication, processing, distribution or trading of precious metals and
minerals or in financing, managing or operating companies engaged in these
activities. The Investment Manager invests in companies which it believes have
growth potential based on a wide variety of factors.
Both Precious Metals and Natural Resource respectively may invest up to 35%
of their total assets in common stock of companies not in the precious metals or
natural resource businesses, in U.S. Government securities, corporate debt
securities rated investment grade by Moody's or S&P or if not rated, as deemed
to be of comparable quality by the Adviser (Natural Resource), and money market
instruments.
During periods in which, in the opinion of the Investment Manager, market
conditions warrant a reduction of some or all of each fund's securities
holdings, each fund may adopt a temporary "defensive" posture in which greater
than 35% of each fund's total assets are invested in money market instruments or
cash.
Both funds invest their assets in foreign securities, including securities
of foreign issuers denominated in foreign currencies or in the form of American
Depository Receipts ("ADRs") or European Depository Receipts ("EDRs"); however,
Natural Resource may only invest up to 25% of its total assets in securities of
foreign issuers which are not Canadian issuers or which are not listed in the
U.S. on a national securities exchange while Precious Metals has no such policy.
Additionally, Precious Metals may enter into forward foreign currency exchange
contracts in connection with its foreign securities investments as a hedge
against fluctuations in future foreign exchange rates.
17
<PAGE>
Both Precious Metals and Natural Resource may engage in options and futures
transactions. Both funds may purchase and sell (write) options on portfolio
securities denominated in U.S. dollars and foreign currencies (Precious Metals)
and may purchase and sell (write) options on the U.S. dollar and foreign
currencies (Precious Metals) which are or may be in the future listed on U.S.
and foreign securities exchanges or are written in over-the-counter transactions
("OTC options"). Both funds may write covered call options on portfolio
securities and currencies (Precious Metals) without limit, in order to hedge
against the decline in the value of a security or currency (Precious Metals) in
which such security is denominated and to close out long call option positions.
Both funds also may purchase listed and OTC call and put options in amounts
equaling up to 10% of their respective total assets and may invest in stock
index options. Both funds may purchase call and put options to close out covered
call or written put positions, as applicable, or to protect the value of the
relevant security. Both funds may purchase and sell futures contracts that are
currently traded, or may in the future be traded, on U.S. and foreign commodity
exchanges on underlying portfolio securities, on any currency (Precious Metals)
("currency" futures), as well as on U.S. and foreign fixed-income securities
("interest rate" futures) and on such indexes of U.S. or foreign equity or
fixed-income securities as may exist or come into being ("index" futures).
Both Natural Resource and Precious Metals may (i) purchase securities on a
when-issued or delayed delivery basis, (ii) purchase or sell securities on a
forward commitment basis, (iii) purchase securities on a "when, as and if
issued" basis, (iv) enter into repurchase agreements subject to certain
procedures designed to minimize risks associated with such agreements, (v)
purchase rights and warrants, (vi) invest in zero coupon securities and (vii)
invest up to 5% of their respective total assets in securities which are subject
to restrictions on resale because they have not been registered under the
Securities Act of 1933, as amended, or which are not otherwise readily
marketable (both funds do not include Rule 144A securities in this limitation).
The investment policies of both Precious Metals and Natural Resource are not
fundamental and may be changed by their respective Boards. The foregoing
discussion is a summary of the principal differences and similarities between
the investment policies of the funds. For a more complete discussion of each
fund's policies, see "Principal Investment Strategies" and "Additional
Investment Strategy Information" in each fund's Prospectus and "Description of
the Fund and Its Investments and Risks" in each fund's Statement of Additional
Information.
INVESTMENT RESTRICTIONS
The investment restrictions adopted by Precious Metals and Natural Resource
as fundamental policies are substantially similar and are summarized under the
caption "Description of the Fund and Its Investments and Risks -- Fund
Policies/Investment Restrictions" in their respective Statements of Additional
Information. A fundamental investment restriction cannot be changed without the
vote of the majority of the outstanding voting securities of a fund, as defined
in the 1940 Act. The material differences are as follows: (a) Natural Resource
may not, as to 100% of its total assets, invest more than 5% of the value of its
total assets in the securities of any one issuer (other than U.S. Government
securities); Precious Metals has a similar restriction with respect to 75% of
its total assets; (b) Precious Metals may not purchase warrants if as a result
the fund would have more than 5% of its net assets invested in warrants or more
than 2% of its net assets invested in warrants not listed on the New York or
American Stock Exchange; Natural Resource has adopted this restriction but not
as a fundamental policy; and (c) Natural Resource may not purchase securities of
other investment companies except in connection with a merger, consolidation,
reorganization or acquisition of assets; Precious Metals may purchase securities
of other investment companies in an amount of up to 10% of its total assets.
18
<PAGE>
ADDITIONAL INFORMATION ABOUT PRECIOUS METALS
AND NATURAL RESOURCE
GENERAL
For a discussion of the organization and operation of Natural Resource and
Precious Metals, see "The Fund and its Management," "Investment Objective and
Policies," "Investment Restrictions" and "Prospectus Summary" in, and the cover
page of, their respective Prospectuses.
FINANCIAL INFORMATION
For certain financial information about Natural Resource and Precious
Metals, see "Financial Highlights" and "Past Performance" in their respective
Prospectuses.
MANAGEMENT
For information about the respective Board of Trustees, Investment Manager,
and the Distributor of Natural Resource and Precious Metals, see "Fund
Management" in their respective Prospectuses.
DESCRIPTION OF SECURITIES AND SHAREHOLDER INQUIRIES
For a description of the nature and most significant attributes of shares of
Precious Metals and Natural Resource, and information regarding shareholder
inquiries, see Capital Stock and Other Securities in their respective Statements
of Additional Information.
DIVIDENDS, DISTRIBUTIONS AND TAXES
For a discussion of Natural Resource's and Precious Metals' policies with
respect to dividends, distributions and taxes, see "Distributions" and "Tax
Consequences" in their respective Prospectuses as well as the discussion herein
under "Synopsis -- Purchases, Exchanges and Redemptions."
PURCHASES, REPURCHASES AND REDEMPTIONS
For a discussion of how Natural Resource's and Precious Metals' shares may
be purchased, repurchased and redeemed, see "How to Buy Shares," "How to
Exchange Shares" and "How to Sell Shares" in their respective Prospectuses.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
For a discussion of Natural Resource's performance, see management's letter
to shareholders in its Annual Report for its fiscal year ended February 28, 1999
accompanying this Proxy Statement and Prospectus. For a discussion of the
performance of Precious Metals, see its Annual Report for its fiscal year ended
October 31, 1998 and its unaudited Semi-Annual Report for the six months ended
April 30, 1999.
19
<PAGE>
FINANCIAL STATEMENTS AND EXPERTS
The financial statements of Natural Resource, for the year ended February
28, 1999, and Precious Metals, for the year ended October 31, 1998 that are
incorporated by reference in the Statement of Additional Information relating to
the Registration Statement on Form N-14 of which this Proxy Statement and
Prospectus forms a part, have been audited by PricewaterhouseCoopers LLP,
independent accountants. The financial statements have been incorporated by
reference in reliance upon such reports given upon the authority of
PricewaterhouseCoopers LLP as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of Natural Resource
will be passed upon by Mayer, Brown & Platt, New York, New York. Such firm will
rely on Piper & Marbury L.L.P. as to matters of Maryland law.
AVAILABLE INFORMATION
Additional information about Precious Metals and Natural Resource is
available, as applicable, in the following documents which are incorporated
herein by reference: (i) Natural Resource's Prospectus dated June 30, 1999,
attached to this Proxy Statement and Prospectus, which Prospectus forms a part
of Post-Effective Amendment No. 26 to Natural Resource's Registration Statement
on Form N-1A (File Nos. 2-70421; 811-3129); (ii) Natural Resource's Annual
Report for its fiscal year ended February 28, 1999, accompanying this Proxy
Statement and Prospectus; (iii) Precious Metals' Prospectus dated February 22,
1999, which Prospectus forms a part of Post-Effective Amendment No. 11 to
Precious Metals' Registration Statement on Form N-1A (File Nos. 33-32872;
811-5988); and (iv) Precious Metals' Annual Report for its fiscal year ended
October 31, 1998 and its unaudited Semi-Annual Report for its six months ended
April 30, 1999. The foregoing documents may be obtained without charge by
calling (800) 869-NEWS (toll-free).
Precious Metals and Natural Resource are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and in
accordance therewith, file reports and other information with the Commission.
Proxy material, reports and other information about Precious Metals and Natural
Resource which are of public record can be inspected and copied at public
reference facilities maintained by the Commission at Room 1204, Judiciary Plaza,
450 Fifth Street, NW, Washington, D.C. 20549 and certain of its regional
offices, and copies of such materials can be obtained at prescribed rates from
the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, D.C. 20549.
OTHER BUSINESS
Management of Precious Metals knows of no business other than the matters
specified above which will be presented at the Meeting. Since matters not known
at the time of the solicitation may come before the Meeting, the proxy as
solicited confers discretionary authority with respect to such matters as
properly come before the Meeting, including any adjournment or adjournments
thereof, and it is the intention of the persons named as attorneys-in-fact in
the proxy to vote this proxy in accordance with their judgment on such matters.
By Order of the Board of Trustees
Barry Fink,
Secretary
September 29, 1999
20
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of this
29th day of July, 1999, by and between MORGAN STANLEY DEAN WITTER NATURAL
RESOURCE DEVELOPMENT SECURITIES INC., a Maryland corporation ("Natural
Resource") and MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST, a
Massachusetts business trust ("Precious Metals").
This Agreement is intended to be and is adopted as a "plan of
reorganization" within the meaning of Treas. Reg. 1.368-2(g), for a
reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"). The reorganization ("Reorganization") will consist of the
transfer to Natural Resource of substantially all of the assets of Precious
Metals in exchange for the assumption by Natural Resource of all stated
liabilities of Precious Metals and the issuance by Natural Resource of shares of
common stock, par value $0.01 per share (the "Natural Resource Shares"), to be
distributed, after the Closing Date hereinafter referred to, to the shareholders
of Precious Metals in liquidation of Precious Metals as provided herein, all
upon the terms and conditions hereinafter set forth in this Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. THE REORGANIZATION AND LIQUIDATION OF PRECIOUS METALS
1.1 Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, Precious Metals agrees
to assign, deliver and otherwise transfer the Precious Metals Assets (as defined
in paragraph 1.2) to Natural Resource and Natural Resource agrees in exchange
therefor to assume all of Precious Metals' stated liabilities on the Closing
Date as set forth in paragraph 1.3(a) and to deliver to Precious Metals the
number of Natural Resource Shares, including fractional Natural Resource Shares,
determined in the manner set forth in paragraph 2.3. Such transactions shall
take place at the closing provided for in paragraph 3.1 ("Closing").
1.2 (a) The "Precious Metals Assets" shall consist of all property,
including without limitation, all cash (other than the "Cash Reserve" (as
defined in paragraph 1.3(b)), cash equivalents, securities and dividend and
interest receivables owned by Precious Metals, and any deferred or prepaid
expenses shown as an asset on Precious Metals' books on the Valuation Date.
(b) On or prior to the Valuation Date, Precious Metals will provide Natural
Resource with a list of all of Precious Metals' assets to be assigned, delivered
and otherwise transferred to Natural Resource and of the stated liabilities to
be assumed by Natural Resource pursuant to this Agreement. Precious Metals
reserves the right to sell any of the securities on such list but will not,
without the prior approval of Natural Resource, acquire any additional
securities other than securities of the type in which Natural Resource is
permitted to invest and in amounts agreed to in writing by Natural Resource.
Natural Resource will, within a reasonable time prior to the Valuation Date,
furnish Precious Metals with a statement of Natural Resource's investment
objectives, policies and restrictions and a list of the securities, if any, on
the list referred to in the first sentence of this paragraph that do not conform
to Natural Resource's investment objective, policies and restrictions. In the
event that Precious Metals holds any investments that Natural Resource is not
permitted to hold, Precious Metals will dispose of such securities on or prior
to the Valuation Date. In addition, if it is determined that the portfolios of
Precious Metals and Natural Resource, when aggregated, would contain investments
exceeding certain percentage limitations imposed upon Natural Resource with
respect to such investments, Precious
A-1
<PAGE>
Metals if requested by Natural Resource will, on or prior to the Valuation Date,
dispose of and/or reinvest a sufficient amount of such investments as may be
necessary to avoid violating such limitations as of the Closing Date (as defined
in paragraph 3.1).
1.3 (a) Precious Metals will endeavor to discharge all of its liabilities
and obligations on or prior to the Valuation Date. Natural Resource will assume
all stated liabilities, which includes, without limitation, all expenses, costs,
charges and reserves reflected on an unaudited Statement of Assets and
Liabilities of Precious Metals prepared by the Treasurer of Precious Metals as
of the Valuation Date in accordance with generally accepted accounting
principles consistently applied from the prior audited period.
(b) On the Valuation Date, Precious Metals may establish a cash reserve,
which shall not exceed 5% of Precious Metals' net assets as of the close of
business on the Valuation Date ("Cash Reserve") to be retained by Precious
Metals and used for the payment of its liabilities not discharged prior to the
Valuation Date and for the expenses of dissolution.
1.4 In order for Precious Metals to comply with Section 852(a)(1) of the
Code and to avoid having any investment company taxable income or net capital
gain (as defined in Sections 852(b)(2) and 1222(11) of the Code, respectively)
in the short taxable year ending with its dissolution, Precious Metals will on
or before the Valuation Date (a) declare a dividend in an amount large enough so
that it will have declared dividends of all of its investment company taxable
income and net capital gain, if any, for such taxable year (determined without
regard to any deduction for dividends paid) and (b) distribute such dividend.
1.5 On the Closing Date or as soon as practicable thereafter, Precious
Metals will distribute Natural Resource Shares received by Precious Metals
pursuant to paragraph 1.1 pro rata to its shareholders of record determined as
of the close of business on the Valuation Date ("Precious Metals Shareholders").
Each Precious Metals Shareholder will receive the class of shares of Natural
Resource that corresponds to the class of shares of Precious Metals currently
held by that Precious Metals Shareholder. Accordingly, the Natural Resource
Shares will be distributed as follows: each of the Class A, Class B, Class C and
Class D shares of Natural Resource will be distributed to holders of Class A,
Class B, Class C and Class D shares of Precious Metals, respectively. Such
distribution will be accomplished by an instruction, signed by Precious Metals'
Secretary, to transfer Natural Resource Shares then credited to Precious Metals'
account on the books of Natural Resource to open accounts on the books of
Natural Resource in the names of the Precious Metals Shareholders and
representing the respective pro rata number of Natural Resource Shares due such
Precious Metals Shareholders. All issued and outstanding shares of Precious
Metals simultaneously will be canceled on Precious Metals' books; however, share
certificates representing interests in Precious Metals will represent a number
of Natural Resource Shares after the Closing Date as determined in accordance
with paragraph 2.3. Natural Resource will issue certificates representing
Natural Resource Shares in connection with such exchange only upon the written
request of a Precious Metals Shareholder.
1.6 Ownership of Natural Resource Shares will be shown on the books of
Natural Resource's transfer agent. Natural Resource Shares will be issued in the
manner described in Natural Resource's current Prospectus and Statement of
Additional Information.
1.7 Any transfer taxes payable upon issuance of Natural Resource Shares in
a name other than the registered holder of Natural Resource Shares on Precious
Metals' books as of the close of business on the Valuation Date shall, as a
condition of such issuance and transfer, be paid by the person to whom Natural
Resource Shares are to be issued and transferred.
1.8 Any reporting responsibility of Precious Metals is and shall remain the
responsibility of Precious Metals up to and including the date on which Precious
Metals is dissolved and deregistered pursuant to paragraph 1.9.
A-2
<PAGE>
1.9 Within one year after the Closing Date, Precious Metals shall pay or
make provision for the payment of all its liabilities and taxes, and distribute
to the shareholders of Precious Metals as of the close of business on the
Valuation Date any remaining amount of the Cash Reserve (as reduced by the
estimated cost of distributing it to shareholders). If and to the extent that
any trust, escrow account, or other similar entity continues after the close of
such one-year period in connection either with making provision for payment of
liabilities or taxes or with distributions to shareholders of Precious Metals,
such entity shall either (i) qualify as a liquidating trust under Section 7701
of the Code (and applicable Treasury Regulations thereunder) or other entity
which does not constitute a continuation of Precious Metals for federal income
tax purposes, or (ii) be subject to a waiver under Section 368(a)(2)(G)(ii) of
the complete distribution requirement of Section 368(a)(2)(G)(i) of the Code.
Precious Metals shall be dissolved as a Massachusetts business trust and
deregistered as an investment company under the Investment Company Act of 1940,
as amended ("1940 Act"), promptly following the making of all distributions
pursuant to paragraph 1.5 (and, in any event, within one year after the Closing
Date).
1.10 Copies of all books and records maintained on behalf of Precious
Metals in connection with its obligations under the 1940 Act, the Code, state
blue sky laws or otherwise in connection with this Agreement will promptly after
the Closing be delivered to officers of Natural Resource or their designee and
Natural Resource or its designee shall comply with applicable record retention
requirements to which Precious Metals is subject under the 1940 Act.
2. VALUATION
2.1 The value of the Precious Metals Assets shall be the value of such
assets computed as of 4:00 p.m. on the New York Stock Exchange on the third
business day following the receipt of the requisite approval by shareholders of
Precious Metals of this Agreement or at such time on such earlier or later date
after such approval as may be mutually agreed upon in writing (such time and
date being hereinafter called the "Valuation Date"), using the valuation
procedures set forth in Natural Resource's then current Prospectus and Statement
of Additional Information.
2.2 The net asset value of a Natural Resource Share shall be the net asset
value per share computed on the Valuation Date, using the valuation procedures
set forth in Natural Resource's then current Prospectus and Statement of
Additional Information.
2.3 The number of Natural Resource Shares (including fractional shares, if
any) to be issued hereunder shall be determined, with respect to each class, by
dividing the aggregate net asset value of each class of Precious Metals shares
(determined in accordance with paragraph 2.1) by the net asset value per share
of the corresponding class of shares of Natural Resource (determined in
accordance with paragraph 2.2). For purposes of this paragraph, the aggregate
net asset value of each class of shares of Precious Metals shall not include the
amount of the Cash Reserve.
2.4 All computations of value shall be made by Morgan Stanley Dean Witter
Services Company Inc. ("MSDW Services") in accordance with its regular practice
in pricing Natural Resource. Natural Resource shall cause MSDW Services to
deliver a copy of its valuation report at the Closing.
3. CLOSING AND CLOSING DATE
3.1 The Closing shall take place on the next business day following the
Valuation Date (the "Closing Date"). The Closing shall be held as of 9:00 a.m.
Eastern time, or at such other time as the parties may agree. The Closing shall
be held in a location mutually agreeable to the parties hereto. All acts taking
place at the Closing shall be deemed to take place simultaneously as of 9:00
a.m. Eastern time on the Closing Date unless otherwise provided.
A-3
<PAGE>
3.2 Portfolio securities held by Precious Metals and represented by a
certificate or other written instrument shall be presented by it or on its
behalf to The Bank of New York (the "Custodian"), as custodian for Natural
Resource, for examination no later than five business days preceding the
Valuation Date. Such portfolio securities (together with any cash or other
assets) shall be delivered by Precious Metals to the Custodian for the account
of Natural Resource on or before the Closing Date in conformity with applicable
custody provisions under the 1940 Act and duly endorsed in proper form for
transfer in such condition as to constitute good delivery thereof in accordance
with the custom of brokers. The portfolio securities shall be accompanied by all
necessary Federal and state stock transfer stamps or a check for the appropriate
purchase price of such stamps. Portfolio securities and instruments deposited
with a securities depository (as defined in Rule 17f-4 under the 1940 Act) shall
be delivered on or before the Closing Date by book-entry in accordance with
customary practices of such depository and the Custodian. The cash delivered
shall be in the form of a Federal Funds wire, payable to the order of "The Bank
of New York, Custodian for Morgan Stanley Dean Witter Natural Resource
Development Securities Inc."
3.3 In the event that on the Valuation Date, (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted or
(b) trading or the reporting of trading on such Exchange or elsewhere shall be
disrupted so that, in the judgment of both Natural Resource and Precious Metals,
accurate appraisal of the value of the net assets of Natural Resource or the
Precious Metals Assets is impracticable, the Valuation Date shall be postponed
until the first business day after the day when trading shall have been fully
resumed without restriction or disruption and reporting shall have been
restored.
3.4 If requested, Precious Metals shall deliver to Natural Resource or its
designee (a) at the Closing, a list, certified by its Secretary, of the names,
addresses and taxpayer identification numbers of the Precious Metals
Shareholders and the number and percentage ownership of outstanding Precious
Metals shares owned by each such Precious Metals Shareholder, all as of the
Valuation Date, and (b) as soon as practicable after the Closing, all original
documentation (including Internal Revenue Service forms, certificates,
certifications and correspondence) relating to the Precious Metals Shareholders'
taxpayer identification numbers and their liability for or exemption from
back-up withholding. Natural Resource shall issue and deliver to such Secretary
a confirmation evidencing delivery of Natural Resource Shares to be credited on
the Closing Date to Precious Metals or provide evidence satisfactory to Precious
Metals that such Natural Resource Shares have been credited to Precious Metals'
account on the books of Natural Resource. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request.
4. COVENANTS OF NATURAL RESOURCE AND PRECIOUS METALS
4.1 Except as otherwise expressly provided herein with respect to Precious
Metals, Natural Resource and Precious Metals each will operate its business in
the ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include customary
dividends and other distributions.
4.2 Natural Resource will prepare and file with the Securities and Exchange
Commission ("Commission") a registration statement on Form N-14 under the
Securities Act of 1933, as amended ("1933 Act"), relating to Natural Resource
Shares ("Registration Statement"). Precious Metals will provide Natural Resource
with the Proxy Materials as described in paragraph 4.3 below, for inclusion in
the Registration Statement. Precious Metals will further provide Natural
Resource with such other information and documents relating to Precious Metals
as are reasonably necessary for the preparation of the Registration Statement.
4.3 Precious Metals will call a meeting of its shareholders to consider and
act upon this Agreement and to take all other action necessary to obtain
approval of the transactions contemplated herein. Precious Metals
A-4
<PAGE>
will prepare the notice of meeting, form of proxy and proxy statement
(collectively, "Proxy Materials") to be used in connection with such meeting;
provided that Natural Resource will furnish Precious Metals with its currently
effective prospectus for inclusion in the Proxy Materials and with such other
information relating to Natural Resource as is reasonably necessary for the
preparation of the Proxy Materials.
4.4 Precious Metals will assist Natural Resource in obtaining such
information as Natural Resource reasonably requests concerning the beneficial
ownership of Precious Metals shares.
4.5 Subject to the provisions of this Agreement, Natural Resource and
Precious Metals will each take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
4.6 Precious Metals shall furnish or cause to be furnished to Natural
Resource within 30 days after the Closing Date a statement of Precious Metals'
assets and liabilities as of the Closing Date, which statement shall be
certified by Precious Metals' Treasurer and shall be in accordance with
generally accepted accounting principles consistently applied. As promptly as
practicable, but in any case within 60 days after the Closing Date, Precious
Metals shall furnish Natural Resource, in such form as is reasonably
satisfactory to Natural Resource, a statement certified by Precious Metals'
Treasurer of Precious Metals' earnings and profits for Federal income tax
purposes that will be carried over to Natural Resource pursuant to Section 381
of the Code.
4.7 As soon after the Closing Date as is reasonably practicable, Precious
Metals (a) shall prepare and file all Federal and other tax returns and reports
of Precious Metals required by law to be filed with respect to all periods
ending on or before the Closing Date but not theretofore filed and (b) shall pay
all Federal and other taxes shown as due thereon and/or all Federal and other
taxes that were unpaid as of the Closing Date, including without limitation, all
taxes for which the provision for payment was made as of the Closing Date (as
represented in paragraph 5.2(k)).
4.8 Natural Resource agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act and the 1940 Act and to
make such filings required by the state Blue Sky and securities laws as it may
deem appropriate in order to continue its operations after the Closing Date.
5. REPRESENTATIONS AND WARRANTIES
5.1 Natural Resource represents and warrants to Precious Metals as follows:
(a) Natural Resource is a validly existing Maryland corporation with
full power to carry on its business as presently conducted;
(b) Natural Resource is a duly registered, open-end, management
investment company, and its registration with the Commission as an
investment company under the 1940 Act and the registration of its shares
under the 1933 Act are in full force and effect;
(c) All of the issued and outstanding shares of Natural Resource have
been offered and sold in compliance in all material respects with
applicable registration requirements of the 1933 Act and state securities
laws. Shares of Natural Resource are registered in all jurisdictions in
which they are required to be registered under state securities laws and
other laws, and said registrations, including any periodic reports or
supplemental filings, are complete and current, all fees required to be
paid have been paid, and Natural Resource is not subject to any stop order
and is fully qualified to sell its shares in each state in which its shares
have been registered;
(d) The current Prospectus and Statement of Additional Information of
Natural Resource conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the regulations
A-5
<PAGE>
thereunder and do not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading;
(e) Natural Resource is not in, and the execution, delivery and
performance of this Agreement will not result in a, material violation of
any provision of Natural Resource's Articles of Incorporation or By-Laws or
of any agreement, indenture, instrument, contract, lease or other
undertaking to which Natural Resource is a party or by which it is bound;
(f) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or, to its
knowledge, threatened against Natural Resource or any of its properties or
assets which, if adversely determined, would materially and adversely
affect its financial condition or the conduct of its business; and Natural
Resource knows of no facts that might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects, or is reasonably likely to materially and
adversely effect, its business or its ability to consummate the
transactions herein contemplated;
(g) The Statement of Assets and Liabilities, Statement of Operations,
Statement of Changes in Net Assets and Financial Highlights for the year
ended February 28, 1999, of Natural Resource certified by
PricewaterhouseCoopers LLP (copies of which have been furnished to Precious
Metals), fairly present, in all material respects, Natural Resource's
financial condition as of such date in accordance with generally accepted
accounting principles, and its results of such operations, changes in its
net assets and financial highlights for such period, and as of such date
there were no known liabilities of Natural Resource (contingent or
otherwise) not disclosed therein that would be required in accordance with
generally accepted accounting principles to be disclosed therein;
(h) All issued and outstanding Natural Resource Shares are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid
and nonassessable with no personal liability attaching to the ownership
thereof, except as set forth under the caption "Additional Information" in
Natural Resource's current Prospectus incorporated by reference in the
Registration Statement. Natural Resource does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of its
shares;
(i) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of Natural Resource,
and this Agreement constitutes a valid and binding obligation of Natural
Resource enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors rights and to general equity
principles. No other consents, authorizations or approvals are necessary in
connection with Natural Resource's performance of this Agreement;
(j) Natural Resource Shares to be issued and delivered to Precious
Metals, for the account of the Precious Metals Shareholders, pursuant to
the terms of this Agreement will at the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly
issued Natural Resource Shares, and will be fully paid and non-assessable
with no personal liability attaching to the ownership thereof, except as
set forth under the caption "Capital Stock and Other Securities" in Natural
Resource's current Statement of Additional Information incorporated by
reference in the Statement of Additional Information to this Registration
Statement;
(k) All material Federal and other tax returns and reports of Natural
Resource required by law to be filed on or before the Closing Date have
been filed and are correct, and all Federal and other taxes
A-6
<PAGE>
shown as due or required to be shown as due on said returns and reports
have been paid or provision has been made for the payment thereof, and to
the best of Natural Resource's knowledge, no such return is currently under
audit and no assessment has been asserted with respect to any such return;
(l) For each taxable year since its inception, Natural Resource has met
the requirements of Subchapter M of the Code for qualification and
treatment as a "regulated investment company" and neither the execution or
delivery of nor the performance of its obligations under this Agreement
will adversely affect, and no other events are reasonably likely to occur
which will adversely affect the ability of Natural Resource to continue to
meet the requirements of Subchapter M of the Code;
(m) Since February 28, 1999 there has been no change by Natural
Resource in accounting methods, principles, or practices, including those
required by generally accepted accounting principles;
(n) The information furnished or to be furnished by Natural Resource
for use in registration statements, proxy materials and other documents
which may be necessary in connection with the transactions contemplated
hereby shall be accurate and complete in all material respects and shall
comply in all material respects with Federal securities and other laws and
regulations applicable thereto; and
(o) The Proxy Materials to be included in the Registration Statement
(only insofar as they relate to Natural Resource) will, on the effective
date of the Registration Statement and on the Closing Date, not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
materially misleading.
5.2 Precious Metals represents and warrants to Natural Resource as
follows:
(a) Precious Metals is a validly existing Massachusetts business trust
with full power to carry on its business as presently conducted;
(b) Precious Metals is a duly registered, open-end, management
investment company, and its registration with the Commission as an
investment company under the 1940 Act and the registration of its shares
under the 1933 Act are in full force and effect;
(c) All of the issued and outstanding shares of beneficial interest of
Precious Metals have been offered and sold in compliance in all material
respects with applicable requirements of the 1933 Act and state securities
laws. Shares of Precious Metals are registered in all jurisdictions in
which they are required to be registered and said registrations, including
any periodic reports or supplemental filings, are complete and current, all
fees required to be paid have been paid, and Precious Metals is not subject
to any stop order and is fully qualified to sell its shares in each state
in which its shares have been registered;
(d) The current Prospectus and Statement of Additional Information of
Precious Metals conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the regulations
thereunder and do not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading;
(e) Precious Metals is not, and the execution, delivery and performance
of this Agreement will not result, in a material violation of any provision
of Precious Metals' Declaration of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which
Precious Metals is a party or by which it is bound;
(f) No litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or, to its
knowledge, threatened against Precious Metals or any of its
A-7
<PAGE>
properties or assets which, if adversely determined, would materially and
adversely affect its financial condition or the conduct of its business;
and Precious Metals knows of no facts that might form the basis for the
institution of such proceedings and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects, or is reasonably likely to
materially and adversely effect, its business or its ability to consummate
the transactions herein contemplated;
(g) The Statement of Assets and Liabilities, Statement of Operations,
Statement of Changes in Net Assets and Financial Highlights of Precious
Metals for the year ended October 31, 1998, certified by
PricewaterhouseCoopers LLP (copies of which have been or will be furnished
to Natural Resource) fairly present, in all material respects, Precious
Metals' financial condition as of such date, and its results of operations,
changes in its net assets and financial highlights for such period in
accordance with generally accepted accounting principles, and as of such
date there were no known liabilities of Precious Metals (contingent or
otherwise) not disclosed therein that would be required in accordance with
generally accepted accounting principles to be disclosed therein;
(h) Precious Metals has no material contracts or other commitments
(other than this Agreement) that will be terminated with liability to it
prior to the Closing Date;
(i) All issued and outstanding shares of Precious Metals are, and at
the Closing Date will be, duly and validly issued and outstanding, fully
paid and nonassessable with no personal liability attaching to the
ownership thereof, except as set forth under the caption "Capital Stock and
Other Securities" in Precious Metals' current Statement of Additional
Information incorporated by reference in the Statement of Additional
Information to this Registration Statement. Precious Metals does not have
outstanding any options, warrants or other rights to subscribe for or
purchase any of its shares, nor is there outstanding any security
convertible to any of its shares. All such shares will, at the time of
Closing, be held by the persons and in the amounts set forth in the list of
shareholders submitted to Natural Resource pursuant to paragraph 3.4;
(j) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action on
the part of Precious Metals, and subject to the approval of Precious
Metals' shareholders, this Agreement constitutes a valid and binding
obligation of Precious Metals, enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors rights and to
general equity principles. No other consents, authorizations or approvals
are necessary in connection with Precious Metals' performance of this
Agreement;
(k) All material Federal and other tax returns and reports of Precious
Metals required by law to be filed on or before the Closing Date shall have
been filed and are correct and all Federal and other taxes shown as due or
required to be shown as due on said returns and reports have been paid or
provision has been made for the payment thereof, and to the best of
Precious Metals' knowledge, no such return is currently under audit and no
assessment has been asserted with respect to any such return;
(l) For each taxable year since its inception, Precious Metals has met
all the requirements of Subchapter M of the Code for qualification and
treatment as a "regulated investment company" and neither the execution or
delivery of nor the performance of its obligations under this Agreement
will adversely affect, and no other events are reasonably likely to occur
which will adversely affect the ability of Precious Metals to continue to
meet the requirements of Subchapter M of the Code;
(m) At the Closing Date, Precious Metals will have good and valid title
to the Precious Metals Assets, subject to no liens (other than the
obligation, if any, to pay the purchase price of portfolio securities
A-8
<PAGE>
purchased by Precious Metals which have not settled prior to the Closing
Date), security interests or other encumbrances, and full right, power and
authority to assign, deliver and otherwise transfer such assets hereunder,
and upon delivery and payment for such assets, Natural Resource will
acquire good and marketable title thereto, subject to no restrictions on
the full transfer thereof, including any restrictions as might arise under
the 1933 Act;
(n) On the effective date of the Registration Statement, at the time of
the meeting of Precious Metals' shareholders and on the Closing Date, the
Proxy Materials (exclusive of the currently effective Natural Resource
Prospectus contained therein) will (i) comply in all material respects with
the provisions of the 1933 Act, the Securities Exchange Act of 1934, as
amended ("1934 Act") and the 1940 Act and the regulations thereunder and
(ii) not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. Any other information furnished by
Precious Metals for use in the Registration Statement or in any other
manner that may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall comply in all
material respects with applicable Federal securities and other laws and
regulations thereunder;
(o) Precious Metals will, on or prior to the Valuation Date, declare
one or more dividends or other distributions to shareholders that, together
with all previous dividends and other distributions to shareholders, shall
have the effect of distributing to the shareholders all of its investment
company taxable income and net capital gain, if any, through the Valuation
Date (computed without regard to any deduction for dividends paid);
(p) Precious Metals has maintained or has caused to be maintained on
its behalf all books and accounts as required of a registered investment
company in compliance with the requirements of Section 31 of the 1940 Act
and the Rules thereunder; and
(q) Precious Metals is not acquiring Natural Resource Shares to be
issued hereunder for the purpose of making any distribution thereof other
than in accordance with the terms of this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PRECIOUS METALS
The obligations of Precious Metals to consummate the transactions provided
for herein shall be subject, at its election, to the performance by Natural
Resource of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
6.1 All representations and warranties of Natural Resource contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date;
6.2 Natural Resource shall have delivered to Precious Metals a certificate
of its President and Treasurer, in a form reasonably satisfactory to Precious
Metals and dated as of the Closing Date, to the effect that the representations
and warranties of Natural Resource made in this Agreement are true and correct
at and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such other matters as
Precious Metals shall reasonably request;
6.3 Precious Metals shall have received a favorable opinion from Mayer,
Brown & Platt, counsel to Natural Resource, dated as of the Closing Date, to the
effect that:
(a) Natural Resource is a validly existing Maryland corporation, and
has the power to own all of its properties and assets and to carry on its
business as presently conducted (Maryland counsel may be relied
A-9
<PAGE>
upon in delivering such opinion); (b) Natural Resource is a duly
registered, open-end, management investment company, and its registration
with the Commission as an investment company under the 1940 Act is in full
force and effect; (c) this Agreement has been duly authorized, executed and
delivered by Natural Resource and, assuming that the Registration Statement
complies with the 1933 Act, the 1934 Act and the 1940 Act and regulations
thereunder and assuming due authorization, execution and delivery of this
Agreement by Precious Metals, is a valid and binding obligation of Natural
Resource enforceable against Natural Resource in accordance with its terms,
subject as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors rights and to
general equity principles; (d) Natural Resource Shares to be issued to
Precious Metals Shareholders as provided by this Agreement are duly
authorized and upon such delivery will be validly issued, fully paid and
non-assessable (except as set forth under the caption "Capital Stock and
Other Securities" in Natural Resource's Statement of Additional
Information), and no shareholder of Natural Resource has any preemptive
rights to subscription or purchase in respect thereof (Maryland counsel may
be relied upon in delivering such opinion); (e) the execution and delivery
of this Agreement did not, and the consummation of the transactions
contemplated hereby will not, violate Natural Resource's Articles of
Incorporation or By-Laws; and (f) to the knowledge of such counsel, no
consent, approval, authorization or order of any court or governmental
authority of the United States or any state is required for the
consummation by Natural Resource of the transactions contemplated herein,
except such as have been obtained under the 1933 Act, the 1934 Act and the
1940 Act and such as may be required under state securities laws; and
6.4 As of the Closing Date, there shall have been no material change in the
investment objective, policies and restrictions nor any increase in the
investment management fees or annual fees pursuant to Natural Resource's 12b-1
plan of distribution from those described in Natural Resource's Prospectus dated
June 30, 1999 and Statement of Additional Information dated June 30, 1999.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF NATURAL RESOURCE
The obligations of Natural Resource to complete the transactions provided
for herein shall be subject, at its election, to the performance by Precious
Metals of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of Precious Metals contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date;
7.2 Precious Metals shall have delivered to Natural Resource at the Closing
a certificate of its President and its Treasurer, in form and substance
satisfactory to Natural Resource and dated as of the Closing Date, to the effect
that the representations and warranties of Precious Metals made in this
Agreement are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement, and as to such
other matters as Natural Resource shall reasonably request;
7.3 Precious Metals shall have delivered to Natural Resource a statement of
the Precious Metals Assets and its liabilities, together with a list of Precious
Metals' portfolio securities and other assets showing the respective adjusted
bases and holding periods thereof for income tax purposes, as of the Closing
Date, certified by the Treasurer of Precious Metals;
7.4 Precious Metals shall have delivered to Natural Resource within three
business days after the Closing a letter from PricewaterhouseCoopers LLP dated
as of the Closing Date stating that (a) such firm has performed a limited review
of the Federal and state income tax returns of Precious Metals for each of the
last
A-10
<PAGE>
three taxable years and, based on such limited review, nothing came to their
attention that caused them to believe that such returns did not properly
reflect, in all material respects, the Federal and state income tax liabilities
of Precious Metals for the periods covered thereby, (b) for the period from
October 31, 1998 to and including the Closing Date, such firm has performed a
limited review (based on unaudited financial data) to ascertain the amount of
applicable Federal, state and local taxes and has determined that same either
have been paid or reserves have been established for payment of such taxes, and,
based on such limited review, nothing came to their attention that caused them
to believe that the taxes paid or reserves set aside for payment of such taxes
were not adequate in all material respects for the satisfaction of all Federal,
state and local tax liabilities for the period from October 31, 1998 to and
including the Closing Date and (c) based on such limited reviews, nothing came
to their attention that caused them to believe that Precious Metals would not
qualify as a regulated investment company for Federal income tax purposes for
any such year or period;
7.5 Natural Resource shall have received at the Closing a favorable opinion
from Mayer, Brown & Platt, counsel to Precious Metals, dated as of the Closing
Date to the effect that:
(a) Precious Metals is a validly existing Massachusetts business trust
and has the power to own all of its properties and assets and to carry on
its business as presently conducted (Massachusetts counsel may be relied
upon in delivering such opinion); (b) Precious Metals is a duly registered,
open-end, management investment company under the 1940 Act, and its
registration with the Commission as an investment company under the 1940
Act is in full force and effect; (c) this Agreement has been duly
authorized, executed and delivered by Precious Metals and, assuming that
the Registration Statement complies with the 1933 Act, the 1934 Act and the
1940 Act and the regulations thereunder and assuming due authorization,
execution and delivery of this Agreement by Natural Resource, is a valid
and binding obligation of Precious Metals enforceable against Precious
Metals in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors rights and to general equity principles; (d) the
execution and delivery of this Agreement did not, and the consummation of
the transactions contemplated hereby will not, violate Precious Metals'
Declaration of Trust or By-Laws; and (e) to the knowledge of such counsel,
no consent, approval, authorization or order of any court or governmental
authority of the United States or any state is required for the
consummation by Precious Metals of the transactions contemplated herein,
except such as have been obtained under the 1933 Act, the 1934 Act and the
1940 Act and such as may be required under state securities laws; and
7.6 On the Closing Date, the Precious Metals Assets shall include no assets
that Natural Resource, by reason of limitations of the fund's Declaration of
Trust or otherwise, may not properly acquire.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF NATURAL RESOURCE
AND PRECIOUS METALS
The obligations of Precious Metals and Natural Resource hereunder are each
subject to the further conditions that on or before the Closing Date:
8.1 This Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of
Precious Metals in accordance with the provisions of Precious Metals'
Declaration of Trust, and certified copies of the resolutions evidencing such
approval shall have been delivered to Natural Resource;
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated herein;
A-11
<PAGE>
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities, including
"no-action" positions of and exemptive orders from such Federal and state
authorities) deemed necessary by Natural Resource or Precious Metals to permit
consummation, in all material respects, of the transactions contemplated herein
shall have been obtained, except where failure to obtain any such consent, order
or permit would not involve risk of a material adverse effect on the assets or
properties of Natural Resource or Precious Metals;
8.4 The Registration Statement shall have become effective under the 1933
Act, no stop orders suspending the effectiveness thereof shall have been issued
and, to the best knowledge of the parties hereto, no investigation or proceeding
for that purpose shall have been instituted or be pending, threatened or
contemplated under the 1933 Act;
8.5 Precious Metals shall have declared and paid a dividend or dividends
and/or other distribution or distributions that, together with all previous such
dividends or distributions, shall have the effect of distributing to the
Precious Metals Shareholders all of Precious Metals' investment company taxable
income (computed without regard to any deduction for dividends paid) and all of
its net capital gain (after reduction for any capital loss carry-forward and
computed without regard to any deduction for dividends paid) for all taxable
years ending on or before the Closing Date; and
8.6 The parties shall have received the opinion of the law firm of Mayer,
Brown & Platt (based on such representations as such law firm shall reasonably
request), addressed to Natural Resource and Precious Metals, which opinion may
be relied upon by the shareholders of Precious Metals, substantially to the
effect that, for Federal income tax purposes:
(a) The transfer of Precious Metals' assets in exchange for Natural
Resource Shares and the assumption by Natural Resource of certain stated
liabilities of Precious Metals followed by the distribution by Precious
Metals of Natural Resource Shares to the Precious Metals Shareholders in
exchange for their Precious Metals shares pursuant to and in accordance
with the terms of the Reorganization Agreement will constitute a
"reorganization" within the meaning of Section 368(a)(1)(C) of the Code,
and Precious Metals and Natural Resource will each be a "party to a
reorganization" within the meaning of Section 368(b) of the Code;
(b) No gain or loss will be recognized by Natural Resource upon the
receipt of the assets of Precious Metals solely in exchange for Natural
Resource Shares and the assumption by Natural Resource of the stated
liabilities of Precious Metals;
(c) No gain or loss will be recognized by Precious Metals upon the
transfer of the assets of Precious Metals to Natural Resource in exchange
for Natural Resource Shares and the assumption by Natural Resource of the
stated liabilities or upon the distribution of Natural Resource Shares to
the Precious Metals Shareholders in exchange for their Precious Metals
shares;
(d) No gain or loss will be recognized by the Precious Metals
Shareholders upon the exchange of the Precious Metals shares for Natural
Resource Shares;
(e) The aggregate tax basis for Natural Resource Shares received by
each Precious Metals Shareholder pursuant to the reorganization will be the
same as the aggregate tax basis of the Precious Metals Shares held by each
such Precious Metals Shareholder immediately prior to the Reorganization;
(f) The holding period of Natural Resource Shares to be received by
each Precious Metals Shareholder will include the period during which the
Precious Metals Shares surrendered in exchange therefor were held (provided
such Precious Metals Shares were held as capital assets on the date of the
Reorganization);
A-12
<PAGE>
(g) The tax basis of the assets of Precious Metals acquired by Natural
Resource will be the same as the tax basis of such assets to Precious
Metals immediately prior to the Reorganization; and
(h) The holding period of the assets of Precious Metals in the hands of
Natural Resource will include the period during which those assets were
held by Precious Metals.
Notwithstanding anything herein to the contrary, neither Natural Resource
nor Precious Metals may waive the conditions set forth in this paragraph 8.6.
9. FEES AND EXPENSES
9.1 (a) Natural Resource shall bear its expenses incurred in connection
with the entering into, and carrying out of, the provisions of this Agreement,
including legal, accounting, Commission registration fees and Blue Sky expenses.
Precious Metals shall bear its expenses incurred in connection with the entering
into and carrying out of the provisions of this Agreement, including legal and
accounting fees, printing, filing and proxy solicitation expenses and portfolio
transfer taxes (if any) incurred in connection with the consummation of the
transactions contemplated herein.
(b) In the event the transactions contemplated herein are not consummated
by reason of Precious Metals being either unwilling or unable to go forward
(other than by reason of the nonfulfillment or failure of any condition to
Precious Metals' obligations specified in this Agreement), Precious Metals' only
obligation hereunder shall be to reimburse Natural Resource for all reasonable
out-of-pocket fees and expenses incurred by Natural Resource in connection with
those transactions.
(c) In the event the transactions contemplated herein are not consummated
by reason of Natural Resource being either unwilling or unable to go forward
(other than by reason of the nonfulfillment or failure of any condition to
Natural Resource's obligations specified in this Agreement), Natural Resource's
only obligation hereunder shall be to reimburse Precious Metals for all
reasonable out-of-pocket fees and expenses incurred by Precious Metals in
connection with those transactions.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 This Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated herein, except
that the representations, warranties and covenants of Precious Metals hereunder
shall not survive the dissolution and complete liquidation of Precious Metals in
accordance with Section 1.9.
11. TERMINATION
11.1 This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
(a) by the mutual written consent of Precious Metals and Natural
Resource;
(b) by either Natural Resource or Precious Metals by notice to the
other, without liability to the terminating party on account of such
termination (providing the terminating party is not otherwise in material
default or breach of this Agreement) if the Closing shall not have occurred
on or before March 31, 2000; or
(c) by either Natural Resource or Precious Metals, in writing without
liability to the terminating party on account of such termination (provided
the terminating party is not otherwise in material default
A-13
<PAGE>
or breach of this Agreement), if (i) the other party shall fail to perform
in any material respect its agreements contained herein required to be
performed on or prior to the Closing Date, (ii) the other party materially
breaches any of its representations, warranties or covenants contained
herein, (iii) the Precious Metals shareholders fail to approve this
Agreement at any meeting called for such purpose at which a quorum was
present or (iv) any other condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably
appears that it will not or cannot be met.
11.2 (a) Termination of this Agreement pursuant to paragraphs 11.1 (a) or
(b) shall terminate all obligations of the parties hereunder and there shall be
no liability for damages on the part of Natural Resource or Precious Metals, or
the trustees or officers of Natural Resource or Precious Metals, to any other
party or its trustees or officers.
(b) Termination of this Agreement pursuant to paragraph 11.1 (c) shall
terminate all obligations of the parties hereunder and there shall be no
liability for damages on the part of Natural Resource or Precious Metals,
or the trustees or officers of Natural Resource or Precious Metals, except
that any party in breach of this Agreement shall, upon demand, reimburse
the non-breaching party for all reasonable out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by this
Agreement, including legal, accounting and filing fees.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the parties.
13. MISCELLANEOUS
13.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
13.5 The obligations and liabilities of Natural Resource hereunder are
solely those of Natural Resource. It is expressly agreed that no shareholder,
nominee, trustee, officer, agent, or employee of Natural Resource shall be
personally liable hereunder. The execution and delivery of this Agreement have
been authorized by the trustees of Natural Resource and signed by authorized
officers of Natural Resource acting as such, and neither such authorization by
such trustees nor such execution and delivery by such officers shall be deemed
to have been made by any of them individually or to impose any liability on any
of them personally.
13.6 The obligations and liabilities of Precious Metals hereunder are
solely those of Precious Metals. It is expressly agreed that no shareholder,
nominee, trustee, officer, agent, or employee of Precious Metals shall be
personally liable hereunder. The execution and delivery of this Agreement have
been authorized by the
A-14
<PAGE>
trustees of Precious Metals and signed by authorized officers of Precious
Metals acting as such, and neither such authorization by such trustees nor such
execution and delivery by such officers shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by a duly authorized officer.
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND
MINERALS TRUST
By: /s/ CHARLES A. FIUMEFREDDO
--------------------------------------------
Name: Charles A. Fiumefreddo
Title: Chairman
MORGAN STANLEY DEAN WITTER NATURAL
RESOURCE DEVELOPMENT SECURITIES INC.
By: /s/ BARRY FINK
--------------------------------------------
Name: Barry Fink
Title: Vice President
A-15
<PAGE>
PROSPECTUS - JUNE 30, 1999
EXHIBIT B
MORGAN STANLEY DEAN WITTER
NATURAL RESOURCE DEVELOPMENT SECURITIES
[COVER PHOTO]
A MUTUAL FUND THAT SEEKS CAPITAL GROWTH
The Securities and Exchange Commission has not approved or disapproved these
Securities or passed upon the adequacy of this PROSPECTUS. Any representation
to the contrary is a criminal offense.
<PAGE>
CONTENTS
<TABLE>
<S> <C> <C>
The Fund Investment Objective.................................. 1
Principal Investment Strategies....................... 1
Principal Risks....................................... 2
Past Performance...................................... 4
Fees and Expenses..................................... 5
Additional Investment Strategy Information............ 6
Additional Risk Information........................... 7
Fund Management....................................... 8
Shareholder Information Pricing Fund Shares................................... 9
How to Buy Shares..................................... 9
How to Exchange Shares................................ 11
How to Sell Shares.................................... 12
Distributions......................................... 14
Tax Consequences...................................... 15
Share Class Arrangements.............................. 15
Financial Highlights ...................................................... 23
Our Family of Funds ...................................................... Inside Back Cover
THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE FUND. PLEASE READ
IT CAREFULLY AND KEEP IT FOR FUTURE REFERENCE.
</TABLE>
<PAGE>
THE FUND
[ICON] INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter Natural Resource Development Securities
Inc. seeks capital growth.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
The Fund will normally invest at least 65% of its total assets in
common stocks of domestic and foreign companies engaged in the
natural resource and related businesses. These companies may be
engaged in the exploration, development, production or distribution
of natural resources, the development of energy-efficient
technologies or in providing natural resource related supplies or
services. A company will be considered engaged in the natural
resource and related businesses if it derives at least 50% of its
revenues from those businesses or it devotes at least 50% of its
assets to activities in those businesses. The Investment Manager will
seek to identify favorable industries within the natural resource and
related business area and will seek to invest in companies with
attractive valuations or business prospects within those industries.
[Sidebar]
CAPITAL GROWTH
AN INVESTMENT OBJECTIVE HAVING THE GOAL OF SELECTING SECURITIES WITH
THE POTENTIAL TO RISE IN PRICE RATHER THAN PAY OUT INCOME.
[End Sidebar]
The Fund's "Investment Manager," Morgan Stanley Dean Witter Advisors
Inc., invests in companies that it believes are responsive to
domestic and world demand for natural resources and that engage in
the development of natural resources. These companies include those
that:
- own or process natural resources, such as precious metals, other
minerals, water, timberland and forest products;
- own or produce sources of energy such as oil, natural gas, coal,
uranium, geothermal, oil shale and biomass;
- participate in the exploration for and development of natural
resource supplies from new and conventional sources;
- own or control oil, gas, or other mineral leases, rights or royalty
interests;
- provide natural resource transportation, distribution or processing
services, such as refining and pipeline services;
- provide related services or supplies, such as drilling, well
servicing, chemicals, parts and equipment; or
- contribute energy-efficient technologies, such as systems for
energy conversion, conservation and pollution control.
1
<PAGE>
Common stock is a share ownership or equity interest in a
corporation. It may or may not pay dividends, as some companies
reinvest all of their profits back into their businesses, while
others pay out some of their profits to shareholders as dividends. A
depository receipt is generally issued by a bank or financial
institution and represents an ownership interest in the common stock
or other equity securities of a foreign company.
The Fund may invest up to 25% of its assets in foreign securities
(including depository receipts). This percentage limitation, however,
does not apply to securities of foreign companies (including
depository receipts) that are listed in the U.S. on a national
securities exchange or to securities of Canadian issuers.
The Fund also may invest up to 35% of its assets in: common stock of
companies not in the natural resource areas; investment grade
corporate debt securities (including zero coupon securities); and
U.S. government securities (including zero coupon securities).
In pursuing the Fund's investment objective, the Investment Manager
has considerable leeway in deciding which investments it buys, holds
or sells on a day-to-day basis -- and which trading strategies it
uses. For example, the Investment Manager in its discretion may
determine to use some permitted trading strategies while not using
others.
[ICON] PRINCIPAL RISKS
- --------------------------------------------------------------------------------
There is no assurance that the Fund will achieve its investment
objective. The Fund's share price will fluctuate with changes in the
market value of the Fund's portfolio securities. When you sell Fund
shares, they may be worth less than what you paid for them and,
accordingly, you can lose money investing in this Fund.
A principal risk of investing in the Fund is associated with its
common stock investments. In general, stock values fluctuate in
response to activities specific to the company as well as general
market, economic and political conditions. Stock prices can fluctuate
widely in response to these factors.
NATURAL RESOURCES. The Fund's investments in natural resource
industries can be significantly affected by events relating to those
industries, such as international political and economic
developments, energy conservation, the success of exploration
projects, tax and other government regulations, as well as other
factors. The Fund's portfolio securities, and consequently the Fund's
net asset value, may experience substantial price fluctuations as a
result of these factors. Unlike most diversified mutual funds, the
Fund is subject to the risks associated with concentrating its assets
in a particular sector--natural resources. Thus, the Fund's overall
portfolio may decline in value due to developments specific to this
sector. Given the Fund's concentration policy, Fund shares should not
be considered a complete investment program.
2
<PAGE>
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. While the price of Fund shares is quoted in U.S.
dollars, the Fund generally converts U.S. dollars to a foreign
market's local currency to purchase a security in that market. If the
value of that local currency falls relative to the U.S. dollar, the
U.S. dollar value of the foreign security will decrease. This is true
even if the foreign security's local price remains unchanged.
Foreign securities also have risks related to economic and political
developments abroad, including expropriations, confiscatory taxation,
exchange control regulation, limitations on the use or transfer of
Fund assets and any effects of foreign social, economic or political
instability. Foreign companies, in general, are not subject to the
regulatory requirements of U.S. companies and, as such, there may be
less publicly available information about these companies. Moreover,
foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies.
Finally, in the event of a default of any foreign debt obligations,
it may be more difficult for the Fund to obtain or enforce a judgment
against the issuers of the securities.
Securities of foreign issuers may be less liquid than comparable
securities of U.S. issuers and, as such, their price changes may be
more volatile. Furthermore, foreign exchanges and broker-dealers are
generally subject to less government and exchange scrutiny and
regulation than their U.S. counterparts. In addition, differences in
clearance and settlement procedures in foreign markets may occasion
delays in settlement of the Fund's trades effected in those markets.
Many European countries have adopted or are in the process of
adopting a single European currency, referred to as the "euro." The
consequences of the euro conversion for foreign exchange rates,
interest rates and the value of European securities the Fund may
purchase are presently unclear. The consequences may adversely affect
the value and/or increase the volatility of securities held by the
Fund.
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
fixed-income investments. For more information about these risks, see
the "Additional Risk Information" section.
Shares of the Fund are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.
3
<PAGE>
[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.
[Sidebar]
ANNUAL TOTAL RETURNS
THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S CLASS B SHARES HAS VARIED
FROM YEAR TO YEAR OVER THE PAST 10 CALENDAR YEARS.
[End Sidebar]
ANNUAL TOTAL RETURNS - CALENDAR YEARS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1989 31.63%
`90 -8.73%
`91 6.39%
`92 6.67%
`93 17.45%
`94 -0.93%
`95 23.40%
`96 27.00%
`97 14.02%
`98 -21.76%
</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 14.68% (quarter ended September 30, 1997) and the lowest return for
a calendar quarter was -18.59% (quarter ended September 30, 1998). Year-to-date
total return as of March 31, 1999 was 6.57%.
[Sidebar]
AVERAGE ANNUAL
TOTAL RETURNS
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL RETURNS WITH THOSE OF A BROAD
MEASURE OF MARKET PERFORMANCE OVER TIME, AS WELL AS WITH AN INDEX OF FUNDS WITH
SIMILAR INVESTMENT OBJECTIVES. THE FUND'S RETURNS INCLUDE THE MAXIMUM APPLICABLE
SALES CHARGE FOR EACH CLASS AND ASSUME YOU SOLD YOUR SHARES AT THE END OF EACH
PERIOD.
[End Sidebar]
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
- --------------------------------------------------------------------------------------------------------
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Class A(1) -25.32% -- --
- --------------------------------------------------------------------------------------------------------
Class B -25.63% 6.45% 8.29%
- --------------------------------------------------------------------------------------------------------
Class C(1) -22.61% -- --
- --------------------------------------------------------------------------------------------------------
Class D(1) -21.01% -- --
- --------------------------------------------------------------------------------------------------------
S&P 500 Index(2) -28.58% 24.05% 19.19%
- --------------------------------------------------------------------------------------------------------
Lipper Natural Resources Funds Average(3) -23.92% 3.06% 6.33%
- --------------------------------------------------------------------------------------------------------
</TABLE>
1 Classes A, C and D commenced operations on July 28, 1997.
2 The Standard & Poor's-Registered Trademark- 500 Composite Stock Price Index
is a broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The performance of the Index
does not include any expenses, fees or charges. The Index is unmanaged and
should not be considered an investment.
3 The Lipper Natural Resources Funds Average tracks the performance of all
funds which invest more than 65% of their equity commitment in natural
resource stocks, as reported by Lipper Analytical Services, Inc.
<PAGE>
[ICON] FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below briefly describes the fees and expenses that you may
pay if you buy and hold shares of the Fund. The Fund offers four
Classes of shares: Classes A, B, C and D. Each Class has a different
combination of fees, expenses and other features. The Fund does not
charge account or exchange fees. See the "Share Class Arrangements"
section for further fee and expense information.
[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]
<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 0.62% 0.62% 0.62% 0.62%
- ---------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.24% 1.00% 1.00% None
- ---------------------------------------------------------------------------------------------------------
Other expenses 0.28% 0.28% 0.28% 0.28%
- ---------------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 1.14% 1.90% 1.90% 0.90%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
1 Reduced for purchases of $25,000 and over.
2 Investments that are not subject to any sales charge at the time of
purchase are subject to a contingent deferred sales charge ("CDSC") of
1.00% that will be imposed if you sell your shares within one year after
purchase, except for certain specific circumstances.
3 The CDSC is scaled down to 1.00% during the sixth year, reaching zero
thereafter. See "Share Class Arrangements" for a complete discussion of the
CDSC.
4 Only applicable if you sell your shares within one year after purchase.
5
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund, your
investment has a 5% return each year, and the Fund's operating
expenses remain the same. Although your actual costs may be higher or
lower, the tables below show your costs at the end of each period
based on these assumptions depending upon whether or not you sell
your shares at the end of each period.
<TABLE>
<CAPTION>
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES:
----------------------------------------- -----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CLASS A $640 $870 $1,120 $1,840 $640 $870 $1,120 $1,840
- ---------------------------------------------------------- -----------------------------------------
CLASS B $690 $900 $1,230 $2,220 $190 $600 $1,030 $2,220
- ---------------------------------------------------------- -----------------------------------------
CLASS C $290 $600 $1,030 $2,220 $190 $600 $1,030 $2,220
- ---------------------------------------------------------- -----------------------------------------
CLASS D $ 90 $290 $ 500 $1,110 $ 90 $290 $ 500 $1,110
- ---------------------------------------------------------- -----------------------------------------
</TABLE>
Long-term shareholders of Class B and Class C may pay more in sales
charges, including distribution fees, than the economic equivalent of
the maximum front-end sales charges permitted by the NASD.
[ICON] ADDITIONAL INVESTMENT STRATEGY INFORMATION
- --------------------------------------------------------------------------------
This section provides additional information relating to the Fund's
principal strategies.
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.
PORTFOLIO TURNOVER. The Fund may engage in active and frequent
trading of portfolio securities to achieve its principal investment
strategies. The portfolio turnover rate is not expected to exceed
200% annually under normal circumstances. A high turnover rate, such
as 200%, will increase Fund brokerage costs. It also may increase the
Fund's capital gains, which are passed along to Fund shareholders as
distributions. This, in turn, may increase your tax liability as a
Fund shareholder. See the sections on "Distributions" and "Tax
Consequences."
The percentage limitations relating to the composition of the Fund's
portfolio apply at the time the Fund acquires an investment and refer
to the Fund's net assets, unless otherwise noted. Subsequent
percentage changes that result from market fluctuations will not
require the Fund to sell any portfolio security. The Fund may change
its principal investment strategies without shareholder approval;
however, you would be notified of any changes.
6
<PAGE>
[ICON] ADDITIONAL RISK INFORMATION
- --------------------------------------------------------------------------------
This section provides additional information relating to the
principal risks of investing in the Fund.
FIXED-INCOME SECURITIES. Principal risks of investing in the Fund are
associated with its fixed-income investments. All fixed-income
securities, such as corporate debt, are subject to two types of risk:
credit risk and interest rate risk. Credit risk refers to the
possibility that the issuer of a security will be unable to make
interest payments and/or repay the principal on its debt.
Interest rate risk refers to fluctuations in the value of a
fixed-income security resulting from changes in the general level of
interest rates. When the general level of interest rates goes up, the
prices of most fixed-income securities go down. When the general
level of interest rates goes down, the prices of most fixed-income
securities go up. (Zero coupon securities are typically subject to
greater price fluctuations than comparable securities that pay
interest.)
While the credit risk of U.S. government securities is minimal, the
Fund's corporate debt investments may have speculative
characteristics.
YEAR 2000. The Fund could be adversely affected if the computer
systems necessary for the efficient operation of the Investment
Manager, the Fund's other service providers and the markets and
corporate and governmental issuers in which the Fund invests do not
properly process and calculate date-related information from and
after January 1, 2000. While year 2000-related computer problems
could have a negative effect on the Fund, the Investment Manager and
its affiliates are working hard to avoid any problems and to obtain
assurances from their service providers that they are taking similar
steps.
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.
7
<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 $134.2
BILLION IN ASSETS UNDER MANAGEMENT OR ADMINISTRATION AS OF MAY 31,
1999.
[End Sidebar]
The Fund is managed within the Investment Manager's Growth Group.
David F. Myers and Catherine A. Maniscalco, each a Vice President of
the Investment Manager and a member of the Growth Group, have been
the primary portfolio managers of the Fund since July 1997. Mr. Myers
has been a portfolio manager at the Investment Manager for over five
years. PriorF to joining the Investment Manager in March 1995, Ms.
Maniscalco was a portfolio management software product specialist at
National Investor Data Services (April 1994-March 1995).
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 0.62% of the Fund's average daily net
assets.
8
<PAGE>
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. In addition,
if the Fund holds securities primarily listed on foreign exchanges,
the value of the Fund's portfolio securities may change on days when
you will not be able to purchase or sell your shares.
An exception to the Fund's general policy of using market prices
concerns its short-term debt portfolio securities. Debt securities
with remaining maturities of sixty days or less at the time of
purchase are valued at amortized cost. However, if the cost does not
reflect the securities' market value, these securities will be valued
at their fair value.
[ICON] HOW TO BUY SHARES
- --------------------------------------------------------------------------------
You may open a new account to buy Fund shares or buy additional Fund
shares for an existing account by contacting your Morgan Stanley Dean
Witter Financial Advisor or other authorized financial
representative. Your Financial Advisor will assist you, step-by-step,
with the procedures to invest in the Fund. You may also purchase
shares directly by calling the Fund's transfer agent and requesting
an application.
[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]
Because every investor has different immediate financial needs and
long-term investment goals, the Fund offers investors four Classes of
shares: Classes A, B, C and D. Class D shares are only offered to a
limited group of investors. Each Class of shares offers a distinct
structure of sales charges, distribution and service fees, and other
features that are designed to address a variety of needs. Your
Financial Advisor or other authorized financial representative can
help you decide which Class may be most appropriate for you. When
purchasing Fund shares, you must specify which Class of shares you
wish to purchase.
9
<PAGE>
When you buy Fund shares, the shares are purchased at the next share
price calculated (less any applicable front-end sales charge for
Class A shares) after we receive your purchase order. Your payment is
due on the third business day after you place your purchase order. We
reserve the right to reject any order for the purchase of Fund
Shares.
[Sidebar]
EASYINVEST-SM-
A PURCHASE PLAN THAT ALLOWS YOU TO TRANSFER MONEY AUTOMATICALLY FROM YOUR
CHECKING OR SAVINGS ACCOUNT OR FROM A MONEY MARKET FUND ON A SEMI-MONTHLY,
MONTHLY OR QUARTERLY BASIS. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL
ADVISOR FOR FURTHER INFORMATION ABOUT THIS SERVICE.
[End Sidebar]
<TABLE>
<CAPTION>
MINIMUM INVESTMENT AMOUNTS
- ------------------------------------------------------------------------------------------------
MINIMUM INVESTMENT
----------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Regular accounts $1,000 $ 100
- ------------------------------------------------------------------------------------------------
Individual Retirement Accounts: Regular IRAs $1,000 $ 100
Education IRAs $500 $ 100
- ------------------------------------------------------------------------------------------------
EASYINVEST-SM- (Automatically from your checking
or savings account or Money Market
Fund) $100* $ 100*
- ------------------------------------------------------------------------------------------------
</TABLE>
* Provided your schedule of investments totals $1,000 in twelve months.
There is no minimum investment amount if you purchase Fund shares
through: (1) the Investment Manager's mutual fund asset allocation
plan, (2) a program, approved by the Fund's distributor, in which you
pay an asset-based fee for advisory, administrative and/ or brokerage
services, or (3) employer-sponsored employee benefit plan accounts.
INVESTMENT OPTIONS FOR CERTAIN INSTITUTIONAL AND OTHER
INVESTORS/CLASS D SHARES. To be eligible to purchase Class D shares,
you must qualify under one of the investor categories specified in
the "Share Class Arrangements" section of this PROSPECTUS.
SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In addition to
buying additional Fund shares for an existing account by contacting
your Morgan Stanley Dean Witter Financial Advisor, you may send a
check directly to the Fund. To buy additional shares in this manner:
- Write a "letter of instruction" to the Fund specifying the name(s)
on the account, the account number, the social security or tax
identification number, the Class of shares you wish to purchase and
the investment amount (which would include any applicable front-end
sales charge). The letter must be signed by the account owner(s).
- Make out a check for the total amount payable to: Morgan Stanley
Dean Witter Natural Resource Development Securities Inc.
- Mail the letter and check to Morgan Stanley Dean Witter Trust FSB
at P.O. Box 1040, Jersey City, NJ 07303.
10
<PAGE>
[ICON] HOW TO EXCHANGE SHARES
- --------------------------------------------------------------------------------
PERMISSIBLE FUND EXCHANGES. You may exchange shares of any Class of
the Fund for the same Class of any other continuously offered
Multi-Class Fund, or for shares of a No-Load Fund, a Money Market
Fund, North American Government Income Trust or Short-Term U.S.
Treasury Trust, without the imposition of an exchange fee. 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
11
<PAGE>
for business. During periods of drastic economic or market changes,
it is possible that the telephone exchange procedures may be
difficult to implement, although this has not been the case with the
Fund in the past.
MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin
account, contact your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative regarding restrictions on
the sale of such shares.
TAX CONSIDERATIONS OF EXCHANGES. If you exchange shares of the Fund
for shares of another Morgan Stanley Dean Witter Fund there are
important tax considerations. For tax purposes, the exchange out of
the Fund is considered a sale of Fund shares -- and the exchange into
the other Fund is considered a purchase. As a result, you may realize
a capital gain or loss.
You should review the "Tax Consequences" section and consult your own
tax professional about the tax consequences of an exchange.
FREQUENT EXCHANGES. A pattern of frequent exchanges may result in the
Fund limiting or prohibiting, at its discretion, additional purchases
and/or exchanges. The Fund will notify you in advance of limiting
your exchange privileges.
CDSC CALCULATIONS ON EXCHANGES. See the "Share Class Arrangements"
section of this PROSPECTUS for a further discussion of how applicable
contingent deferred sales charges (CDSCs) are calculated for shares
of one Morgan Stanley Dean Witter Fund that are exchanged for shares
of another.
For further information regarding exchange privileges, you should
contact your Morgan Stanley Dean Witter Financial Advisor or call
(800) 869-NEWS.
[ICON] HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You can sell some or all of your Fund shares at any time. If you sell
Class A, Class B or Class C shares, your net sale proceeds are
reduced by the amount of any applicable CDSC. Your shares will be
sold at the next price calculated after we receive your order to sell
as described below.
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
<S> <C>
- --------------------------------------------------------------------------------
Contact your To sell your shares, simply call your Morgan Stanley Dean
Financial Advisor Witter Financial Advisor or other authorized financial
representative.
------------------------------------------------------------
[ICON]
Payment will be sent to the address to which the account is
registered or deposited in your brokerage account.
- --------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of
instruction" that includes:
[ICON]
- your account number;
- the dollar amount or the number of shares you wish to
sell;
- the Class of shares you wish to sell; and
- the signature of each owner as it appears on the account.
------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
- --------------------------------------------------------------------------------
<S> <C>
By Letter, If you are requesting payment to anyone other than the
continued registered owner(s) or that payment be sent to any address
other than the address of the registered owner(s) or
pre-designated bank account, you will need a signature
guarantee. You can obtain a signature guarantee from an
eligible guarantor acceptable to Morgan Stanley Dean Witter
Trust FSB. (You should contact Morgan Stanley Dean Witter
Trust FSB at (800) 869-NEWS for a determination as to
whether a particular institution is an eligible guarantor.)
A notary public CANNOT provide a signature guarantee.
Additional documentation may be required for shares held by
a corporation, partnership, trustee or executor.
------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at
P.O. Box 983, Jersey City, New Jersey 07303. If you hold
share certificates, you must return the certificates, along
with the letter and any required additional documentation.
A check will be mailed to the name(s) and address in which
the account is registered, or otherwise according to your
instructions.
- --------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter
Withdrawal Plan Family of Funds has a total market value of at least
[ICON] $10,000, you may elect to withdraw amounts of $25 or more,
or in any whole percentage of a Fund's balance (provided the
amount is at least $25), on a monthly, quarterly,
semi-annual or annual basis, from any Fund with a balance of
at least $1,000. Each time you add a Fund to the plan, you
must meet the plan requirements.
------------------------------------------------------------
Amounts withdrawn are subject to any applicable CDSC. A CDSC
may be waived under certain circumstances. See the Class B
waiver categories listed in the "Share Class Arrangements"
section of this Prospectus.
------------------------------------------------------------
To sign up for the Systematic Withdrawal Plan, contact your
Morgan Stanley Dean Witter Financial Advisor or call (800)
869-NEWS. You may terminate or suspend your plan at any
time. Please remember that withdrawals from the plan are
sales of shares, not Fund "distributions," and ultimately
may exhaust your account balance. The Fund may terminate or
revise the plan at any time.
- --------------------------------------------------------------------------------
</TABLE>
PAYMENT FOR SOLD SHARES. After we receive your complete instructions
to sell as described above, a check will be mailed to you within
seven days, although we will attempt to make payment within one
business day. Payment may also be sent to your brokerage account.
Payment may be postponed or the right to sell your shares suspended
under unusual circumstances. If you request to sell shares that were
recently purchased by check, 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.
13
<PAGE>
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.
MARGIN ACCOUNTS. If you pledged your Fund shares in a margin account,
contact your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative regarding restrictions on the
sale of such shares.
[ICON] DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Fund passes substantially all of its earnings from income and
capital gains along to its investors as "distributions." The Fund
earns income from stocks and interest from fixed-income investments.
These amounts are passed along to Fund shareholders as "income
dividend distributions." The Fund realizes capital gains whenever it
sells securities for a higher price than it paid for them. These
amounts may be passed along as "capital gain distributions."
[Sidebar]
TARGETED DIVIDENDS-SM-
YOU MAY SELECT TO HAVE YOUR FUND DISTRIBUTIONS AUTOMATICALLY INVESTED
IN OTHER CLASSES OF FUND SHARES OR CLASSES OF ANOTHER MORGAN STANLEY
DEAN WITTER FUND THAT YOU OWN. CONTACT YOUR MORGAN STANLEY DEAN
WITTER FINANCIAL ADVISOR FOR FURTHER INFORMATION ABOUT THIS SERVICE.
[End Sidebar]
The Fund declares income dividends separately for each Class.
Distributions paid on Class A and Class D shares usually will be
higher than for Class B and Class C because distribution fees that
Class B and Class C pay are higher. Normally, income dividends are
distributed to shareholders semi-annually. Capital gains, if any, are
usually distributed in June and December. The Fund, however, may
retain and reinvest any long-term capital gains. The Fund may at
times make payments from sources other than income or capital gains
that represent a return of a portion of your investment.
Distributions are reinvested automatically in additional shares of
the same Class and automatically credited to your account, unless you
request in writing that all distributions be paid in cash. If you
elect the cash option, the Fund will mail a check to you no later
than seven business days after the distribution is declared. No
interest will accrue on uncashed checks. If you wish to change how
your distributions are paid, your request should be received by the
Fund's transfer agent, Morgan Stanley Dean Witter Trust FSB, at least
five business days prior to the record date of the distributions.
14
<PAGE>
[ICON] TAX CONSEQUENCES
- --------------------------------------------------------------------------------
As with any investment, you should consider how your Fund investment
will be taxed. The tax information in this PROSPECTUS is provided as
general information. You should consult your own tax professional
about the tax consequences of an investment in the Fund.
Unless your investment in the Fund is through a tax-deferred
retirement account, such as a 401(k) plan or IRA, you need to be
aware of the possible tax consequences when:
- The Fund makes distributions; and
- You sell Fund shares, including an exchange to another Morgan
Stanley Dean Witter Fund.
TAXES ON DISTRIBUTIONS. Your distributions are normally subject to
federal and state income tax when they are paid, whether you take
them in cash or reinvest them in Fund shares. A distribution also may
be subject to local income tax. Any income dividend distributions and
any short-term capital gain distributions are taxable to you as
ordinary income. Any long-term capital gain distributions are taxable
as long-term capital gains, no matter how long you have owned shares
in the Fund.
Every January, you will be sent a statement (IRS Form 1099-DIV)
showing the taxable distributions paid to you in the previous year.
The statement provides 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.
15
<PAGE>
The general public is offered three Classes: Class A shares, Class B
shares and Class C shares, which differ principally in terms of sales
charges and ongoing expenses. A fourth Class, Class D shares, is
offered only to a limited category of investors. Shares that you
acquire through reinvested distributions will not be subject to any
front-end sales charge or CDSC -- contingent deferred sales charge.
Sales personnel may receive different compensation for selling each
Class of shares. The sales charges applicable to each Class provide
for the distribution financing of shares of that Class.
The chart below compares the sales charge and maximum annual 12b-1
fee applicable to each Class:
<TABLE>
<CAPTION>
MAXIMUM ANNUAL
CLASS SALES CHARGE 12b-1 FEE
<S> <C> <C>
- ----------------------------------------------------------------------------------------
A Maximum 5.25% initial sales charge reduced for purchase of
$25,000 or more; shares sold without an initial sales charge
are generally subject to a 1.0% CDSC during the first year 0.25%
- ----------------------------------------------------------------------------------------
B Maximum 5.0% CDSC during the first year decreasing to 0%
after six years 1.0%
- ----------------------------------------------------------------------------------------
C 1.0% CDSC during the first year 1.0%
- ----------------------------------------------------------------------------------------
D None None
- ----------------------------------------------------------------------------------------
</TABLE>
CLASS A SHARES Class A shares are sold at net asset value plus an
initial sales charge of up to 5.25%. The initial sales charge is
reduced for purchases of $25,000 or more according to the schedule
below. Investments of $1 million or more are not subject to an initial
sales charge, but are generally subject to a contingent deferred sales
charge, or CDSC, of 1.0% on sales made within one year after the last
day of the month of purchase. The CDSC will be assessed in the same
manner and with the same CDSC waivers as with Class B shares. Class A
shares are also subject to a distribution (12b-1) fee of up to 0.25% of
the average daily net assets of the Class.
[Sidebar]
FRONT-END SALES
CHARGE OR FSC
AN INITIAL SALES CHARGE YOU PAY WHEN PURCHASING CLASS A SHARES THAT
IS BASED ON A PERCENTAGE OF THE OFFERING PRICE. THE PERCENTAGE
DECLINES BASED UPON THE DOLLAR VALUE OF CLASS A SHARES YOU PURCHASE.
WE OFFER THREE WAYS TO REDUCE YOUR CLASS A SALES CHARGES - THE
COMBINED PURCHASE PRIVILEGE, RIGHT OF ACCUMULATION AND LETTER OF
INTENT.
[End Sidebar]
The 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 0
- ------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
The reduced sales charge schedule is applicable to purchases of Class
A shares in a single transaction by:
- A single account (including an individual, trust or fiduciary
account).
- Family member accounts (limited to husband, wife and children under
the age of 21).
- Pension, profit sharing or other employee benefit plans of
companies and their affiliates.
- Tax-exempt organizations.
- Groups organized for a purpose other than to buy mutual fund
shares.
COMBINED PURCHASE PRIVILEGE. You also will have the benefit of
reduced sales charges by combining purchases of Class A shares of the
Fund in a single transaction with purchases of Class A shares of
other Multi-Class Funds and shares of FSC Funds.
RIGHT OF ACCUMULATION. You also may benefit from a reduction of sales
charges if the cumulative net asset value of Class A shares of the
Fund purchased in a single transaction, together with shares of other
Funds you currently own which were previously purchased at a price
including a front-end sales charge (including shares acquired through
reinvestment of distributions), amounts to $25,000 or more. Also, if
you have a cumulative net asset value of all your Class A and Class D
shares equal to at least $5 million (or $25 million for certain
employee benefit plans), you are eligible to purchase Class D shares
of any Fund subject to the Fund's minimum initial investment
requirement.
You must notify your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative (or Morgan Stanley Dean
Witter Trust FSB if you purchase directly through the Fund), at the
time a purchase order is placed, that the purchase qualifies for the
reduced 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 within a thirteen month period. The initial purchase
under a letter of intent must be at least 5% of the stated investment
goal. To determine the applicable sales charge reduction, you may
also include: (1) the cost of shares of other Morgan Stanley Dean
Witter Funds which were previously purchased at a price including a
front-end sales charge during the 90-day period prior to the
distributor receiving the letter of intent, and (2) the cost of
shares of other Funds you currently own acquired in exchange for
shares of Funds purchased during that period at a price including a
front-
17
<PAGE>
end sales charge. You can obtain a letter of intent by contacting
your Morgan Stanley Dean Witter Financial Advisor or other authorized
financial representative, or by calling (800) 869-NEWS. If you do not
achieve the stated investment goal within the thirteen-month period,
you are required to pay the difference between the sales charges
otherwise applicable and sales charges actually paid, which may be
deducted from your investment.
OTHER SALES CHARGE WAIVERS. In addition to investments of $1 million
or more, your purchase of Class A shares is not subject to a
front-end sales charge (or a CDSC upon sale) if your account
qualifies under one of the following categories:
- A trust for which Morgan Stanley Dean Witter Trust FSB provides
discretionary trustee services.
- Persons participating in a fee-based investment program (subject to
all of its terms and conditions, including mandatory sale or
transfer restrictions on termination) approved by the Fund's
distributor pursuant to which they pay an asset-based fee for
investment advisory, administrative and/or brokerage services.
- Employer-sponsored employee benefit plans, whether or not qualified
under the Internal Revenue Code, for which Morgan Stanley Dean
Witter Trust FSB serves as trustee or Dean Witter Reynolds'
Retirement Plan Services serves as recordkeeper under a written
Recordkeeping Services Agreement ("MSDW Eligible Plans") which have
at least 200 eligible employees.
- An MSDW Eligible Plan whose Class B shares have converted to Class
A shares, regardless of the plan's asset size or number of eligible
employees.
- A client of a Morgan Stanley Dean Witter Financial Advisor who
joined us from another investment firm within six months prior to
the date of purchase of Fund shares, and you used the proceeds from
the sale of shares of a proprietary mutual fund of that Financial
Advisor's previous firm that imposed either a front-end or deferred
sales charge to purchase Class A shares, provided that: (1) you
sold the shares not more than 60 days prior to the purchase of Fund
shares, and (2) the sale proceeds were maintained in the interim in
cash or a money market fund.
- Current or retired Directors/Trustees of the Morgan Stanley Dean
Witter Funds, such persons' spouses and children under the age of
21, and trust accounts for which any of such persons is a
beneficiary.
- Current or retired directors, officers and employees of Morgan
Stanley Dean Witter & Co. and any of its subsidiaries, such
persons' spouses and children under the age of 21, and trust
accounts for which any of such persons is a beneficiary.
18
<PAGE>
[Sidebar]
CONTINGENT DEFERRED SALES CHARGE OR CDSC
A FEE YOU PAY WHEN YOU SELL SHARES OF CERTAIN MORGAN STANLEY DEAN WITTER FUNDS
PURCHASED WITHOUT AN INITIAL SALES CHARGE. THIS FEE DECLINES THE LONGER YOU HOLD
YOUR SHARES AS SET FORTH IN THE TABLE.
[End Sidebar]
CLASS B SHARES Class B shares are offered at net asset value with no
initial sales charge but are subject to a contingent deferred sales
charge, or CDSC, as set forth in the table below. For the purpose of
calculating the CDSC, shares are deemed to have been purchased on the
last day of the month during which they were purchased.
<TABLE>
<CAPTION>
CDSC AS A PERCENTAGE
YEAR SINCE PURCHASE PAYMENT MADE OF AMOUNT REDEEMED
<S> <C>
- --------------------------------------------------------------
First 5.0%
- --------------------------------------------------------------
Second 4.0%
- --------------------------------------------------------------
Third 3.0%
- --------------------------------------------------------------
Fourth 2.0%
- --------------------------------------------------------------
Fifth 2.0%
- --------------------------------------------------------------
Sixth 1.0%
- --------------------------------------------------------------
Seventh and thereafter None
- --------------------------------------------------------------
</TABLE>
Each time you place an order to sell or exchange shares, shares with
no CDSC will be sold or exchanged first, then shares with the lowest
CDSC will be sold or exchanged next. For any shares subject to a
CDSC, the CDSC will be assessed on an amount equal to the lesser of
the current market value or the cost of the shares being sold.
CDSC WAIVERS. A CDSC, if otherwise applicable, will be waived in the
case of:
- Sales of shares held at the time you die or become disabled (within
the definition in Section 72(m)(7) of the Internal Revenue Code
which relates to the ability to engage in gainful employment), if
the shares are: (i) registered either in your name (not a trust) or
in the names of you and your spouse as joint tenants with right of
survivorship; or (ii) held in a qualified corporate or
self-employed retirement plan, IRA or 403(b) Custodial Account,
provided in either case that the sale is requested within one year
of your death or initial determination of disability.
- Sales in connection with the following retirement plan
"distributions": (i) lump-sum or other distributions from a
qualified corporate or self-employed retirement plan following
retirement (or, in the case of a "key employee" of a "top heavy"
plan, following attainment of age 59 1/2); (ii) distributions from
an IRA or 403(b) Custodial Account following attainment of age 59
1/2; or (iii) a tax-free return of an excess IRA contribution (a
"distribution" does not include a direct transfer of IRA, 403(b)
Custodial Account or retirement plan assets to a successor
custodian or trustee).
- Sales of shares held for you as a participant in an MSDW Eligible
Plan.
- Sales of shares in connection with the Systematic Withdrawal Plan
of up to 12% annually of the value of each Fund from which plan
sales are made. The percentage is determined on the date you
establish the Systematic Withdrawal Plan and based on the next
calculated share price. You may have this CDSC waiver applied in
amounts up to 1% per month, 3% per quarter, 6% semi-annually or 12%
annually. Shares with no CDSC will be sold first, followed by those
with the lowest CDSC. As such, the waiver
19
<PAGE>
benefit will be reduced by the amount of your shares that are not
subject to a CDSC. If you suspend your participation in the plan,
you may later resume plan payments without requiring a new
determination of the account value for the 12% CDSC waiver.
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 12b-1 plan's inception upon which
a CDSC has been imposed or waived, or (b) the average daily net
assets of Class B shares attributable to shares purchased, net of
related shares sold, since inception of the 12b-1 plan.
CONVERSION FEATURE. After ten (10) years, Class B shares will convert
automatically to Class A shares of the Fund with no initial sales
charge. The ten year period runs from the last day of the month in
which the shares were purchased, or in the case of Class B shares
acquired through an exchange, from the last day of the month in which
the original Class B shares were purchased; the shares will convert
to Class A shares based on their relative net asset values in the
month following the ten year period. At the same time, an equal
proportion of Class B shares acquired through automatically
reinvested distributions will convert to Class A shares on the same
basis. (Class B shares held before May 1, 1997, however, will convert
to Class A shares in May 2007.)
In the case of Class B shares held in an MSDW Eligible Plan, the plan
is treated as a single investor and all Class B shares will convert
to Class A shares on the conversion date of the Class B shares of a
Morgan Stanley Dean Witter Fund purchased by that plan.
Currently, the Class B share conversion is not a taxable event; the
conversion feature may be cancelled if it is deemed a taxable event
in the future by the Internal Revenue Service.
If you exchange your Class B shares for shares of a Money Market
Fund, a No-Load Fund, North American Government Income Trust or
Short-Term U.S. Treasury Trust, the holding period for conversion is
frozen as of the last day of the month of the exchange and resumes on
the last day of the month you exchange back into Class B shares.
EXCHANGING SHARES SUBJECT TO A CDSC. There are special considerations
when you exchange Fund shares that are subject to a CDSC. When
determining the length of time you held the shares and the
corresponding CDSC rate, any period (starting at the end of
20
<PAGE>
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.
21
<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.
22
<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 outstanding
throughout each year. The total returns in the table represent the rate an
investor would have earned or lost on an investment in the Fund (assuming
reinvestment of all dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the Fund's financial statements, is included in the annual report,
which is available upon request.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28 1999 1998*++ 1997 1996** 1995
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- -------------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.81 $ 13.34 $ 12.70 $ 10.77 $ 11.82
- -------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.04) (0.02) -- 0.06 0.09
Net realized and unrealized gain (loss) (3.60) 2.18 2.66 2.53 (0.24)
--------- --------- --------- --------- ---------
Total income (loss) from investment operations (3.64) 2.16 2.66 2.59 (0.15)
- -------------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income -- (0.01) (0.02) (0.04) (0.12)
Net realized gain (0.14) (1.68) (2.00) (0.62) (0.78)
--------- --------- --------- --------- ---------
Total dividends and distributions (0.14) (1.69) (2.02) (0.66) (0.90)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.03 $ 13.81 $ 13.34 $ 12.70 $ 10.77
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ (26.60)% 16.93% 20.88% 24.32% (1.26)%
- -------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -------------------------------------------------------------------------------------------------------------------------
Expenses 1.90%(1) 1.80% 1.84% 1.90% 1.90%
- -------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.20)%(1) (0.15)% 0.05% 0.52% 0.77%
- -------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $ 147,527 $ 273,333 $ 247,989 $ 152,661 $ 132,812
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 67% 156% 49% 59%
- -------------------------------------------------------------------------------------------------------------------------
</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")), have been designated Class B shares. The
Old Shares have been designated Class D shares.
** Year ended February 29.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Reflects overall Fund ratios for investment income and non-class specific
expenses.
23
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD JULY 28, 1997*
FEBRUARY 28, 1999 THROUGH FEBRUARY 28, 1998++
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
CLASS A SHARES
- ---------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.87 $14.44
- ---------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income 0.03 0.04
Net realized and unrealized loss (3.61) (0.10)
------- ------
Total loss from investment operations (3.58) (0.06)
- ---------------------------------------------------------------------------------------------
Less distributions from net realized
gain (0.14) (0.51)
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.15 $13.87
- ---------------------------------------------------------------------------------------------
TOTAL RETURN+ (26.04)% (0.22)%(1)
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ---------------------------------------------------------------------------------------------
Expenses 1.14%(3) 1.11%(2)
- ---------------------------------------------------------------------------------------------
Net investment income 0.56%(3) 0.45%(2)
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------
Net assets, end of period, in
thousands $ 691 $ 309
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 67%(1)
- ---------------------------------------------------------------------------------------------
</TABLE>
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
24
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD JULY 28, 1997*
FEBRUARY 28, 1999 THROUGH FEBRUARY 28, 1998++
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
CLASS C SHARES
- ---------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.81 $14.44
- ---------------------------------------------------------------------------------------------
LOSS FROM INVESTMENT OPERATIONS:
Net investment loss (0.02) (0.02)
Net realized and unrealized loss (3.63) (0.10)
------- ------
Total loss from investment operations (3.65) (0.12)
- ---------------------------------------------------------------------------------------------
Less distributions from net realized
gain (0.14) (0.51)
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.02 $13.81
- ---------------------------------------------------------------------------------------------
TOTAL RETURN+ (26.67)% (0.64)%(1)
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ---------------------------------------------------------------------------------------------
Expenses 1.90%(3) 1.87%(2)
- ---------------------------------------------------------------------------------------------
Net investment loss (0.20)%(3) (0.23)%(2)
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------
Net assets, end of period, in
thousands $ 1,278 $1,488
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate(1) 26% 67%
- ---------------------------------------------------------------------------------------------
</TABLE>
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
25
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD JULY 28, 1997*
FEBRUARY 28, 1999 THROUGH FEBRUARY 28, 1998++
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
CLASS D SHARES
- ------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.89 $ 14.44
- ------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.05 0.07
Net realized and unrealized loss (3.61) (0.11)
------- -------
Total loss from investment operations (3.56) (0.04)
- ------------------------------------------------------------------------------------------------------------------
Less distributions from net realized gain (0.14) (0.51)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.19 $ 13.89
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ (25.86)% (0.08)%(1)
- ------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ------------------------------------------------------------------------------------------------------------------
Expenses 0.90%(3) 0.84%(2)
- ------------------------------------------------------------------------------------------------------------------
Net investment income 0.80%(3) 0.82%(2)
- ------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $15,454 $13,161
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 67%(1)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* The date shares were first issued. Shareholders who held shares of the Fund
prior to July 28, 1997 (the date the Fund converted to a multiple class
share structure) should refer to the Financial Highlights of Class B to
obtain the historical per share data and ratio information of their shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
26
<PAGE>
NOTES
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
27
<PAGE>
NOTES
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
28
<PAGE>
MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS
The Morgan Stanley Dean Witter Family of Funds offers
investors a wide range of investment choices. Come on
in and meet the family!
- --------------------------------------------------------------------------------
GROWTH FUNDS
- ---------------------------------
GROWTH FUNDS
Aggressive Equity Fund
American Opportunities Fund
Capital Growth Securities
Developing Growth Securities
Equity Fund
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust
Small Cap Growth Fund
Special Value Fund
Value Fund
THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities
Precious Metals and Minerals Trust
GLOBAL/INTERNATIONAL FUNDS
Competitive Edge Fund - "Best Ideas"
Portfolio
European Growth Fund
Fund of Funds - International Portfolio
International Fund
International SmallCap Fund
Japan Fund
Latin American Growth Fund
Pacific Growth Fund
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUNDS
- ---------------------------------
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Fund of Funds - Domestic Portfolio
Income Builder Fund
Mid-Cap Dividend Growth Securities
S&P 500 Index Fund
S&P 500 Select Fund
Strategist Fund
Total Return Trust
Value-Added Market Series/Equity Portfolio
THEME FUNDS
Global Utilities Fund
Real Estate Fund
Utilities Fund
GLOBAL FUNDS
Global Dividend Growth Securities
- --------------------------------------------------------------------------------
INCOME FUNDS
- ---------------------------------
GOVERNMENT INCOME FUNDS
Federal Securities Trust
Short-Term U.S. Treasury Trust
U.S. Government Securities Trust
DIVERSIFIED INCOME FUNDS
Diversified Income Trust
CORPORATE INCOME FUNDS
High Yield Securities
Intermediate Income Securities
Short-Term Bond Fund (NL)
GLOBAL INCOME FUNDS
North American Government Income Trust
World Wide Income Trust
TAX-FREE INCOME FUNDS
California Tax-Free Income Fund
Hawaii Municipal Trust (FSC)
Limited Term Municipal Trust (NL)
Multi-State Municipal Series Trust (FSC)
New York Tax-Free Income Fund
Tax-Exempt Securities Trust
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
- ---------------------------------
TAXABLE MONEY MARKET FUNDS
Liquid Asset Fund (MM)
U.S. Government Money Market Trust (MM)
TAX-FREE MONEY MARKET FUNDS
California Tax-Free Daily Income Trust (MM)
N.Y. Municipal Money Market Trust (MM)
Tax-Free Daily Income Trust (MM)
There may be Funds created after this PROSPECTUS was published. Please consult
the inside back cover of a new Fund's prospectus for its designation, e.g.,
Multi-Class Fund or Money Market Fund.
Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund, except for
North American Government Income Trust and Short-Term U.S. Treasury Trust, is a
Multi-Class Fund. A Multi-Class Fund is a mutual fund offering multiple Classes
of shares. The other types of funds are: NL - No-Load (Mutual) Fund; MM - Money
Market Fund; FSC - A mutual fund sold with a front-end sales charge and a
distribution (12b-1) fee.
<PAGE>
PROSPECTUS - JUNE 30, 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:
www.deanwitter.com/funds
Information about the Fund (including the STATEMENT OF ADDITIONAL INFORMATION)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (800) SEC-0330. Reports and
other information about the Fund are available on the SEC's Internet site
(www.sec.gov) and copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Section of the SEC, Washington,
DC 20549-6009.
TICKER SYMBOLS:
CLASS A: NREAX CLASS C: NRECX
- -------------------- --------------------
CLASS B: NREBX CLASS D: NREDX
- -------------------- --------------------
(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-3129)
MORGAN STANLEY DEAN WITTER
NATURAL RESOURCE
DEVELOPMENT SECURITIES
[BACK COVER PHOTO]
A MUTUAL FUND THAT
SEEKS CAPITAL GROWTH
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 21, 1999
The undersigned shareholder of Morgan Stanley Dean Witter Precious Metals
and Minerals Trust does hereby appoint Barry Fink, Ronald E. Robison and Joseph
J. McAlinden and each of them, as attorneys-in-fact and proxies of the
undersigned, each with the full power of substitution, to attend the Special
Meeting of Shareholders of Morgan Stanley Dean Witter Precious Metals and
Minerals Trust to be held on December 21, 1999, in the Career Development Room,
Sixty-First Floor, Two World Trade Center, New York, New York at 10:00 A.M.,
New York time, and at all adjournments thereof and to vote the shares held in
the name of the undersigned on the record date for said meeting for the
Proposal specified on the reverse side hereof. Said attorneys-in-fact shall
vote in accordance with their best judgment as to any other matter.
(Continued on reverse side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE PROPOSAL SET FORTH ON THE REVERSE HEREOF AND AS RECOMMENDED BY
THE BOARD OF TRUSTEES.
IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
<PAGE>
- --------------------------------------------------------------------------------
PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK [X]
TO VOTE BY MAIL, PLEASE COMPLETE AND RETURN THIS CARD
YOU ALSO MAY VOTE A PROXY BY TOUCH-TONE PHONE OR BY INTERNET
(SEE ENCLOSED VOTING INFORMATION CARD FOR FURTHER INSTRUCTIONS)
TO VOTE A PROXY BY PHONE, call Toll-Free: 1-800-690-6903
TO VOTE A PROXY BY INTERNET, visit our Website(s): WWW/MSDWT.COM or
WWW.PROXYVOTE.COM
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The Proposal:
Approval of the Agreement and Plan of Reorganization, dated as of July 29, 1999,
pursuant to which substantially all of the assets of Morgan Stanley Dean Witter
Precious Metals and Minerals Trust would be combined with those of Morgan
Stanley Dean Witter Natural Resource Development Securities Inc. and
shareholders of Morgan Stanley Dean Witter Precious Metals and Minerals Trust
would become shareholders of Morgan Stanley Dean Witter Natural Resource
Development Securities Inc. receiving shares in Morgan Stanley Dean Witter
Natural Resource Development Securities Inc. with a value equal to the value of
their holdings in Morgan Stanley Dean Witter Precious Metals and Minerals Trust.
Please sign personally. If the shares are registered in more than one name,
each joint owner or each fiduciary should sign personally. Only authorized
officers should sign for corporations.
Please make sure to sign and date this Proxy using black or blue ink.
Date-----------------------------------------
[ ]
Shareholder sign in the box above
[ ]
Co-Owner (if any) sign in the box above
- - PLEASE FOLD AND DETACH AT PERFORATION ALONG DOTTED LINES - --
MORGAN STANLEY DEAN WITTER PRECIOUS METALS
AND MINERALS TRUST
IMPORTANT
USE ONE OF THE THREE EASY WAYS TO VOTE YOUR PROXY
1. BY MAIL. PLEASE DATE, SIGN AND RETURN THE ABOVE PROXY CARD IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
2. BY INTERNET. HAVE YOUR PROXY CARD AT HAND. GO TO THE "VOTE YOUR PROXY HERE"
LINK ON THE WEBSITE WWW.MSDWT.COM OR WWW.PROXYVOTE.COM. ENTER YOUR 12
DIGIT CONTROL NUMBER LOCATED ON THE PROXY CARD AND FOLLOW THE SIMPLE
INSTRUCTIONS.
3. BY TELEPHONE. HAVE YOUR PROXY CARD AT HAND. CALL 1-800-690-6903 ON A
TOUCH-TONE PHONE. ENTER YOUR 12-DIGIT CONTROL NUMBER LOCATED ON THE PROXY
CARD AND FOLLOW THE SIMPLE RECORDED INSTRUCTIONS.
144, 459, 460, 461
<PAGE>
MORGAN STANLEY DEAN WITTER FUNDS
OFFERS TWO NEW WAYS TO VOTE YOUR PROXY
24 HOURS A DAY, 7 DAYS A WEEK
You can now vote your proxy in a matter of minutes with the ease and convenience
of the Internet or the telephone. You may still vote by mail. But remember, if
you are voting by Internet or telephone, do not mail the proxy.
TO VOTE BY INTERNET:
1. Read the enclosed Proxy Statement and have your Proxy Card available.
2. Go to the "Proxy Voting" link on www.msdwt.com or to website
www.proxyvote.com.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Follow the simple instructions.
TO VOTE BY TELEPHONE:
1. Read the enclosed Proxy Statement and have your Proxy Card available.
2. Call toll-free 1-800-690-6903.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Follow the simple recorded instructions.
YOUR PROXY VOTE IS IMPORTANT!
Thank You for Submitting Your Proxy.
